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Study Review: Extraordinary Audit of the Weed Union Elementary School District
Fiscal Crisis & Management Assistance Team (FCMAT)
Part 2 of 2
In Part 1, the Construction Management Multi-Prime (CMMP) delivery method was discussed. As depicted below, the district manages the construction project by awarding contracts to selected prime contractors. Using this method, the district assumes more risks, including the burden of processing each contract and billing.
Part 2 is a discussion on the Request for Proposal (RFP) / Request for Quote (RFQ) as a part of the procurement process. Bond construction projects involve architectural and engineering designs, followed by construction. Public contracts are issued to perform the work. Public Contracting Code (PCC) 2011(a) requires the school district's governing board to get competing bids and award to the lowest responsible bidder on any contract that includes expenditures of more than $50,000. Contracts subject to competitive bidding include:
- Purchase of equipment, materials, or supplies to be furnished, sold, or leased to the school district.
- Services that are not construction services.
- Repairs, including maintenance as defined in PCC 20115 that are not public projects as defined in PCC 22002(c).
Any public project that exceeds the established minimum value threshold must be publicly bid on. Bid splitting occurs when a contract is split into smaller parts to avoid the public bid threshold requirements. Public Contract Code 20116 states:
"It shall be unlawful to split or separate into smaller work orders or projects any work, project, service, or purchase for the purpose of evading the provisions of this article requiring contracting after competitive bidding."
– At Weed Elementary School, the District decided to split materials and labor, taking the purchase of materials away from the contractors. While this approach was used for several projects, the district believed that they were not bid-splitting and material costs would be higher had they not self-supplied. By self-supplying construction materials, the district was able to avoid contractor markups, and the amounts were under the bid thresholds. A single project requires labor and materials to construct or repair facilities. When materials or services (i.e. labor), are separated, resulting in separate purchase orders or contracts, the cost may fall below the public contracting threshold levels. However, this decision was flawed because project costs cannot be split.
– The disregard of PCC requirements is characteristic of a failure in its governing board’s fiduciary duties of care, good faith, and prudence. The governing board, administrator, and construction manager did not perform their due diligence to understand public contracting codes; they did not abide by the law, and did not fulfill their duties and responsibilities.
For more information, please see the Weed's FCMAT audit on their website:
https://fcmat.org/PublicationsReports/siskiyou-coe-weed-uesd-ab-139-final-report.pdf
*Diagram source: Construction Management Task Force California School Board Asso.: Nov. 2007
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