Schools and Community Colleges Banned from Using Sole Source Procurement for Prop. 39 Funded Projects: Contracts Must Be Awarded Based On Best Value Criteria

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Many California school districts and community college districts are gearing up to perform, or are in the process of performing, energy efficiency improvements and renewable energy projects with funds derived from Proposition 39, the California Clean Energy Jobs Act (Act). Funds for the Act are allocated through its enabling legislation, Senate Bill 73, and regulated by the California Energy Commission, which approved implementing guidelines in December. The Act, however, does come with certain restrictions, including a prohibition on the sole source process, that may impact how districts procure projects funded by Prop. 39.

Under the Act, school districts and community college districts may not use a sole source process for Prop. 39 projects. Instead, the Act requires districts to use the best value criteria as defined in Public Contract Code section 20133(c)(1). Best value criteria, as set forth in the law, includes objective criteria related to price, features, functions and life-cycle costs. Prior to Prop. 39, many districts performed energy efficiency improvements or clean energy generation projects under Government Code section 4217.10 et seq. (Section 4217) procedure. Section 4217 provides local agencies great flexibility to use the contracting method that the governing body determines to be in the best interest of the agency, including sole source procurement. School districts and community college districts may continue to rely on Section 4217 for Prop. 39 funded energy efficiency improvements and clean energy generation projects provided that they abstain from using the sole source process and instead rely on a Request-For-Proposals (RFP) process that incorporates the best value criteria.

Some districts have raised concerns that the Act may require a two-stage Request for Qualifications (RFQ) and then a Request for Proposal (RFP) procurement process for Prop. 39 projects. However, nothing in the Act or its enabling guidelines suggests that such a procedure or any other form of prequalification of contractors is necessary. There have been additional questions regarding whether the prohibition on sole source procurement may affect a district’s ability to use cooperative purchasing, otherwise known as piggyback contracts. It is our opinion that the authority of districts to use piggyback contracts is likely not affected by the Act’s prohibition on sole source procurement because unlike a sole source contract, a piggyback contract has undergone a competitive procurement process completed by another public entity.

Topics:  Clean Energy, Energy, Energy Policy, Renewable Energy

Published In: Education Updates, Energy & Utilities Updates, Government Contracting Updates, Commercial Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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