Piggyback Contracts for SAB-Administered Programs

School districts that use piggyback contracts for modular facilities are ineligible for state funding from State Allocation Board administered programs.

In 2006, Office of Public School Construction (OPSC) staff presented the Attorney General’s (AG) Opinion 05-405 dated January 24, 2006 to the State Allocation Board (SAB), which concluded that school districts must competitively bid contracts to acquire modular school facilities for installation on a permanent foundation. At the direction of the SAB at the January and February 2006 meetings, staff provided numerous notices to ensure that school districts were aware that all contracts related to acquisition and installation of permanent modular facilities signed after January 25, 2006, must be competitively bid to receive funding consideration by the SAB.

As a result of recent communications between staff and stakeholders, staff has learned that alternate interpretations of the AG opinion to acquire and install modular school facilities exist. On February 23, 2022, staff presented the current SAB members with a copy of the original Board reports and the AG’s opinion, to remind all stakeholders of the Public Contract Code (PCC) requirements.

The SAB requested that staff prepare a follow-up item to the report presented at the February 2022 meeting that discusses the following question:

Should school districts be allowed to use piggyback contracts for modular school facilities?

At the June 22, 2022 SAB meeting, staff presented an item regarding piggyback contracts and PCC compliance relative to modular school facilities. After staff’s presentation, discussion from the SAB members, and public comment, the SAB took the following action:

Provide a grace period for SAB-administered programs for projects with construction contracts signed on or within sixty calendar days (through August 21, 2022) of this Board action. Create a new process to begin after this grace period where Staff evaluates the contracts during the time of application processing and prior to fund release to ensure no piggyback contracts have been used for modular facilities.

With this action, staff would:

Continue to process and present applications that signed piggyback contracts prior to the conclusion of the grace period.
Notify all District Superintendents and District Representatives on file with OPSC, as well as all stakeholders on OPSC’s master email subscription list via email that consistent with the PCC and the AG Opinion, modular school facilities must be competitively bid.
Create this webpage to advise school districts of the Public Contract Code requirements and its applicability to state funding.
Establish a specific process during application processing and/or in advance of fund release for thoroughly reviewing contracts to ensure that funds are not released for projects that use piggyback contracts for modular school facilities.
For any contracts entered into after fund release (after OPSC’s review), staff would work with the State Controller’s Office to amend the K-12 Audit Guide for Appendices B and C, to ensure that as part of the project audit, and the K-12 local auditor would review the contracts for compliance.

Application Intake

Beginning August 21, 2022, upon submittal of a new Application for Funding for any SAB-administered program, OPSC’s Plan Verification Team will review the Division of the State Architect (DSA) approved plans to determine if the project includes modular facilities.

If not already submitted, staff will request a copy of existing bid documents and construction contracts for the project as part of the application intake process. If construction contracts have not yet been entered into, the school district must provide a written statement to staff acknowledging that they have not yet signed contracts and that modular facilities cannot be procured via piggyback contract in order to continue processing the application.

OPSC will review the bid documents and contracts to verify if piggyback contracts for modular facilities were entered into on or prior to August 21, 2022. If it is determined that the piggyback contracts are after August 21, 2022, the funding application will be returned to the school district and the application will not be assigned an “Application Received Date”.

If the plans include modular facilities, OPSC’s confirmation letter indicating the application has been received and determined to be a complete application will include a reminder that piggyback contracts for modular facilities are not eligible for funding if the contracts are entered into after August 21, 2022.

Application Processing

Beginning August 21, 2022, OPSC’s Plan Verification Team, will review the Division of the State Architect (DSA) approved plans to determine if the project includes modular facilities.

If the plans include modular facilities, OPSC’s 15/4-day letters will indicate that the application is being processed and determined to have modular facilities. The letter will include a reminder that piggyback contracts for modular facilities are not eligible for funding if the contracts were entered into after August 21, 2022.

If not already submitted, staff will also request a copy of existing bid documents and construction contracts for the project as part of the application review process. If construction contracts have not yet been entered into, the school district must provide a written statement to staff acknowledging that they have not yet signed contracts and that modular facilities cannot be procured via piggyback contract in order to continue processing the application.

OPSC will review the contracts to verify if piggyback contracts for modular facilities were entered into on or prior to August 21, 2022. If it is determined that the piggyback contracts are after August 21, 2022, the funding application will be returned to the school district and the application will considered “Revoked” by OPSC.

Fund Release Processing

Beginning August 21, 2022, if not already submitted, school districts will be required to submit copies of the bid documents and the construction contracts for the project in order for the Fund Release Authorization (Form SAB 50-05) to be considered valid. Failure to submit copies of construction contracts will result in staff returning the unprocessed Form SAB 50-05 to the school district.

OPSC will review the contracts to verify if piggyback contracts for modular facilities were entered into on or prior to August 21, 2022. If it is determined that the piggyback contracts are after August 21, 2022, the Form SAB 50-05 will be returned to the school district and the application will be presented to the next available SAB meeting for recission.

K-12 Audit

Beginning August 21, 2022, if not already submitted, school districts will be required to submit copies of the construction contracts for the project.

The school district’s K-12 Auditor will review the bid documents and construction contracts to verify if piggyback contracts for modular facilities were entered into on or prior to August 21, 2022. If it is determined that the piggyback contracts are after August 21, 2022, the auditor will document the finding and recommend recission of the project or a reduction of funding for the project, as applicable.

Policy Meetings

OPSC Notification to School Districts, July 5, 2022