Opinion ID: 2598207
Heading Depth: 2
Heading Rank: 4

Heading: Continuing Validity of the QBS Procedure

Text: The remaining issue before us is the continued validity of the QBS procedure, set forth in sections 4525 to 4529.5, used by Caltrans to select private architectural and engineering firms. The QBS procedure requires the agency to negotiate a contract with the best qualified firm for such services at compensation which the state agency head determines is fair and reasonable to the State of California or the political subdivision involved. (§ 4528, subd. (a)(1).) Thus, qualifications, not cost, is the primary competitive measure by which contracts are awarded under the QBS procedure. But cost is not irrelevant. If the agency is unable to negotiate a contract with the most qualified firm at a fair and reasonable price, negotiations are terminated and the agency is directed to undertake negotiations with the second most qualified firm, and then, failing that, with the third most qualified firm. (§ 4528, subd. (a)(2).) If this process fails to produce a contract, the agency shall select additional firms in order of their competence and qualifications and continue negotiations ... until an agreement is reached. (§ 4528, subd. (a)(3).) As an additional cost safeguard, administrative regulations require Caltrans to prepare its own cost estimate for a project before commencing price negotiations. That estimate may be based on such factors as a market survey, comparison with fees paid to other departments' or agencies' contractors for similar services, or comparison with the salaries of comparable positions within the Department, within State service, or within other governmental entities. This estimate shall serve as a guide in determining fair and reasonable compensation for the services rendered. (Cal.Code Regs., tit. 21, § 1520.4.) In the trial court and the Court of Appeal, Professional Engineers contended that Proposition 35 implicitly repealed these statutes because the QBS procedure was inconsistent with the initiative's cost-saving mandate. In this court, however, Professional Engineers has retreated from that position. Instead, it argues only that, to meet the initiative's cost-saving mandate, [l]egislation implementing Proposition 35 must add a cost savings mechanism to the consultant selection process. We agree with the Court of Appeal that the QBS procedure is not inconsistent with Proposition 35's requirement that contracting for architectural and engineering services occur[] through a fair, competitive selection process, (Voter Information Guide, Gen. elec. (Nov. 7, 2000) text of Prop. 35, § 2, subd. (e) p. 65; § 4529.12; see appen. A, pp. ii-iv), for the reasons given by that court. First, the QBS process is a competitive process and while cost may be a less salient consideration in the qualifications-based selection procedure than in a competitive bidding process, it is a consideration nevertheless. Second, section 4529.16 requires that the initiative shall not be applied in a manner that will result in the loss of federal funding to any governmental entity. As the Court of Appeal explained: Federal law requires the use of a qualifications-based selection procedure where the construction of federal-aid highways is to be performed by a state transportation department or under its supervision, contracts for architectural and engineering services must be awarded pursuant to the Brooks Act (40 U.S.C. § 1101 et seq.) or an equivalent state qualifications-based selection procedure. (23 U.S.C. § 112(b)(2)(A).) The Brooks Act establishes a qualification-based selection procedure virtually identical to Government Code chapter 10, sections 4525-4529.5. (40 U.S.C. § 1101 et seq.) About 84 percent of Caltrans architectural and engineering contracts are subject to these federal requirements. At a minimum, as to federally funded projects, section 4529.16 compels a construction of section 4529.12 that allows the use of the qualifications based procedure. Third, while the initiative mentions taxpayer savings, the ballot materials made clear that cost savings were not necessarily the measure of the value to the taxpayers of permitting private contracting by public entities. As the Court of Appeal observed: The official summary of the initiative prepared by the Attorney General, and the Legislative Analyst's analysis of the measure both indicate that the fiscal impact of the initiative was unknown. The Legislative Analyst specifically notes that in some cases costs may be higher when an agency contracts out. `It may still be in the state's best interests to do so, however, because of other considerations' such as avoiding the delay of formally hiring and training state employees to meet a short-term surge in workload, and the financial benefits derived from completing construction projects more quickly. Moreover, the official summary clearly states that competitive bidding on the contracts (the prevailing method of public contractor selection that gives prominent weight to cost) is permitted but not required under Proposition 35. In addition, the argument in favor of the initiative specifically informed voters that existing selection statutes would be utilized to procure architectural and engineering services. Prop. 35 would simply restore state and local agencies' choice to utilize private experts using the same fair selection process on the books today to select the most qualified architects or engineers to get these projects designed and built on time and on budget. (Voter Information Guide, Gen. Elec. (Nov. 7, 2000) Argument in Favor of Prop. 35, p. 20; see appen. A, p. xi.) The voters are deemed to have understood that reference was to the QBS statutes then in effect. ( People v. Weidert, supra, 39 Cal.3d at p. 844, 218 Cal.Rptr. 57, 705 P.2d 380.) We conclude, therefore, that the QBS procedure is not inconsistent with Proposition 35 and Caltrans's use of that procedure is not improper. To the extent that Professional Engineers' argument is that Proposition 35 requires some legislative alteration of the QBS procedure to give cost savings a more prominent role, that argument is best directed at the Legislature. Proposition 35 gives the Legislature the power to amend the initiative by statute to further its purposes. (Voter Information Guide, Gen. Elec. (Nov. 7, 2000) text of Prop. 35, § 5; see appen. A, p. iv.) Unless and until the Legislature does so, however, we are in no position to pass upon the validity of such amendment.