BILL NUMBER: SB 535 CHAPTERED
BILL TEXT
CHAPTER 244
FILED WITH SECRETARY OF STATE SEPTEMBER 14, 2006
APPROVED BY GOVERNOR SEPTEMBER 14, 2006
PASSED THE SENATE AUGUST 22, 2006
PASSED THE ASSEMBLY AUGUST 17, 2006
AMENDED IN ASSEMBLY JUNE 22, 2006
AMENDED IN ASSEMBLY JUNE 8, 2006
AMENDED IN SENATE MAY 12, 2005
AMENDED IN SENATE MAY 4, 2005
AMENDED IN SENATE APRIL 4, 2005
INTRODUCED BY Senator Runner
FEBRUARY 18, 2005
An act to amend Section 20175.2 of the Public Contract Code,
relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
SB 535, Runner Design-build contracts: City of Victorville.
Existing law requires public entities to comply with certain
procedures in soliciting and evaluating bids and awarding contracts
for the erection, construction, alteration, repair, or improvement of
any public structure, building, road, or other public improvement.
Existing law, until January 1, 2011, permits cities in the Counties
of Solano and Yolo, with the approval of the appropriate city
council, to enter into specified design-build contracts, as defined,
in accordance with specified provisions. Existing law requires any
city that elects to use the design-build method to make a specified
report to the Legislative Analyst's Office before December 1, 2009,
and requires the Legislative Analyst's Office to report to the
Legislature regarding the use of the design-build method by each
city, as provided.
This bill, until January 1, 2011, would permit the City of
Victorville, with the approval of the city council, to enter into
design-build contracts, as defined, in accordance with specified
provisions. This bill would require the City of Victorville, if it
elects to use the design-build method, to make a specified report to
the Legislative Analyst's Office before December 1, 2009, and would
require the Legislative Analyst's Office to report to the Legislature
regarding the effectiveness of the design-build method. This bill
would make a legislative finding and declaration of the necessity to
enact special legislation with respect to the City of Victorville.
This bill would require specified information to be verified under
oath, thus imposing a state-mandated local program by expanding the
scope of the existing crime of perjury.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 20175.2 of the Public Contract Code is amended
to read:
20175.2. (a) (1) This section provides an alternative procedure
for bidding on building construction projects applicable in cities in
the Counties of Solano and Yolo and the City of Victorville upon
approval of the appropriate city council.
(2) These cities may award the project using either the lowest
responsible bidder or by best value.
(b) (1) It is the intent of the Legislature to enable cities to
utilize cost-effective options for building and modernizing public
facilities. The Legislature also recognizes the national trend,
including authorization in California, to allow public entities to
utilize design-build contracts as a project delivery method. It is
not the intent of the Legislature to authorize this procedure for
transportation facilities, including, but not limited to, roads and
bridges.
(2) The Legislature also finds and declares that utilizing a
design-build contract requires a clear understanding of the roles and
responsibilities of each participant in the design-build process.
The Legislature also finds that the cost-effective benefits to cities
are achieved by shifting the liability and risk for cost containment
and project completion to the design-build entity.
(3) It is the intent of the Legislature to provide an alternative
and optional procedure for bidding and building construction projects
for cities.
(4) The design-build approach may be used, but is not limited to
use, when it is anticipated that it will: reduce project cost,
expedite project completion, or provide design features not
achievable through the design-bid-build method.
(5) If a city council elects to proceed under this section, the
city council shall establish and enforce, for design-build projects,
a labor compliance program containing the requirements outlined in
Section 1771.5 of the Labor Code, or it shall contract with a third
party to operate a labor compliance program containing the
requirements outlined in Section 1771.5 of the Labor Code. This
requirement shall not apply to any project where the city or the
design-build entity has entered into any collective bargaining
agreement or agreements that bind all of the contractors performing
work on the projects.
(c) As used in this section:
(1) "Best value" means a value determined by objectives relative
to price, features, functions, and life cycle costs.
(2) "Design-build" means a procurement process in which both the
design and construction of a project are procured from a single
entity.
(3) "Design-build entity" means a partnership, corporation, or
other legal entity that is able to provide appropriately licensed
contracting, architectural, and engineering services, as needed,
pursuant to a design-build contract.
(4) "Project" means the construction of a building and
improvements directly related to the construction of a building, but
does not include streets and highways, public rail transit, or water
resources facilities and infrastructure.
(d) Design-build projects shall progress in a four-step process,
as follows:
(1) (A) The city shall prepare a set of documents setting forth
the scope of the project. The documents may include, but are not
limited to, the size, type, and desired design character of the
buildings and site, performance specifications covering the quality
of materials, equipment, and workmanship, preliminary plans or
building layouts, or any other information deemed necessary to
describe adequately the city's needs. The performance specifications
and any plans shall be prepared by a design professional who is duly
licensed and registered in California.
(B) Any architect or engineer retained by the city to assist in
the development of the project-specific documents shall not be
eligible to participate in the preparation of a bid with any
design-build entity for that project.
(2) (A) Based on the documents prepared in paragraph (1), the city
shall prepare a request for proposals that invites interested
parties to submit competitive sealed proposals in the manner
prescribed by the city. The request for proposals shall include, but
is not limited to, the following elements:
(i) Identification of the basic scope and needs of the project or
contract, the expected cost range, and other information deemed
necessary by the city to inform interested parties of the contracting
opportunity, to include the methodology that will be used by the
city to evaluate proposals, and specifically if the contract will be
awarded to the lowest responsible bidder.
(ii) Significant factors which the city reasonably expects to
consider in evaluating proposals, including cost or price and all
nonprice related factors.
(iii) The relative importance of weight assigned to each of the
factors identified in the request for proposals.
(B) With respect to clause (iii) of subparagraph (A), if a
nonweighted system is used, the agency shall specifically disclose
whether all evaluation factors, other than cost or price, when
combined are:
(i) Significantly more important than cost or price.
(ii) Approximately equal in importance to cost or price.
(iii) Significantly less important than cost or price.
(C) If the city chooses to reserve the right to hold discussions
or negotiations with responsive bidders, it shall so specify in the
request for proposal and shall publish separately, or incorporate
into the request for proposal, applicable rules and procedures to be
observed by the city to ensure that any discussions or negotiations
are conducted in good faith.
(3) (A) The city shall establish a procedure to prequalify
design-build entities using a standard questionnaire developed by the
city. In preparing the questionnaire, the city shall consult with
the construction industry, including representatives of the building
trades and surety industry. This questionnaire shall require
information including, but not limited to, all of the following:
(i) If the design-build entity is a partnership, limited
partnership, or other association, a listing of all of the partners,
general partners, or association members known at the time of bid
submission who will participate in the design-build contract,
including, but not limited to, mechanical subcontractors.
(ii) Evidence that the members of the design-build entity have
completed, or demonstrated the experience, competency, capability,
and capacity to complete projects of similar size, scope, or
complexity, and that proposed key personnel have sufficient
experience and training to competently manage and complete the design
and construction of the project, as well as a financial statement
that assures the city that the design-build entity has the capacity
to complete the project.
(iii) The licenses, registration, and credentials required to
design and construct the project, including information on the
revocation or suspension of any license, credential, or registration.
(iv) Evidence that establishes that the design-build entity has
the capacity to obtain all required payment and performance bonding,
liability insurance, and errors and omissions insurance.
(v) Any prior serious or willful violation of the California
Occupational Safety and Health Act of 1973, contained in Part 1
(commencing with Section 6300) of Division 5 of the Labor Code or the
federal Occupational Safety and Health Act of 1970 (Public Law
91-596) settled against any member of the design-build entity, and
information concerning workers' compensation experience history and
worker safety program.
(vi) Information concerning any debarment, disqualification, or
removal from a federal, state, or local government public works
project. Any instance where an entity, its owners, officers, or
managing employees submitted a bid on a public works project and were
found to be nonresponsive, or were found by an awarding body not to
be a responsible bidder.
(vii) Any instance where the entity, its owners, officers, or
managing employees defaulted on a construction contract.
(viii) Any violations of the Contractors' State License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), excluding alleged violations of
federal or state law including the payment of wages, benefits,
apprenticeship requirements, or personal income tax withholding, or
of Federal Insurance Contribution Act (FICA) withholding requirements
settled against any member of the design-build entity.
(ix) Information concerning the bankruptcy or receivership of any
member of the design-build entity, including information concerning
any work completed by a surety.
(x) Information concerning all settled adverse claims, disputes,
or lawsuits between the owner of a public works project and any
member of the design-build entity during the five years preceding
submission of a bid pursuant to this section, in which the claim,
settlement, or judgment exceeds fifty thousand dollars ($50,000).
Information shall also be provided concerning any work completed by a
surety during this period.
(xi) In the case of a partnership or other association that is not
a legal entity, a copy of the agreement creating the partnership or
association and specifying that all partners or association members
agree to be fully liable for the performance under the design-build
contract.
(B) The information required pursuant to this subdivision shall be
verified under oath by the entity and its members in the manner in
which civil pleadings in civil actions are verified. Information that
is not a public record pursuant to the California Public Records Act
(Chapter 3.5 of Division 7 of Title 1 of the Government Code) shall
not be open to public inspection.
(4) The city shall establish a procedure for final selection of
the design-build entity. Selection shall be based on either of the
following criteria:
(A) A competitive bidding process resulting in lump-sum bids by
the prequalified design-build entities. Awards shall be made to the
lowest responsible bidder.
(B) The city may use a design-build competition based upon best
value and other criteria set forth in paragraph (2) of subdivision
(d). The design-build competition shall include the following
elements:
(i) Competitive proposals shall be evaluated by using only the
criteria and selection procedures specifically identified in the
request for proposal. However, the following minimum factors shall
each represent at least 10 percent of the total weight of
consideration given to all criteria factors: price, technical design
and construction expertise, life cycle costs over 15 years or more,
skilled labor force availability, and acceptable safety record. Each
of these factors shall be weighted equally.
(ii) Once the evaluation is complete, the top three responsive
bidders shall be ranked sequentially from the most advantageous to
the least.
(iii) The award of the contract shall be made to the responsible
bidder whose proposal is determined, in writing, to be the most
advantageous.
(iv) Notwithstanding any provision of this code, upon issuance of
a contract award, the city shall publicly announce its award,
identifying the contractor to whom the award is made, along with a
written decision supporting its contract award and stating the basis
of the award. The notice of award shall also include the city's
second and third ranked design-build entities.
(v) For the purposes of this paragraph, "skilled labor force
availability" shall be determined by the existence of an agreement
with a registered apprenticeship program, approved by the California
Apprenticeship Council, which has graduated apprentices in each of
the preceding five years. This graduation requirement shall not apply
to programs providing apprenticeship training for any craft that has
been deemed by the Department of Labor and the Department of
Industrial Relations to be an apprenticeable craft in the five years
prior to enactment of this act.
(vi) For the purposes of this paragraph, a bidder's "safety record"
shall be deemed "acceptable" if their experience modification rate
for the most recent three-year period is an average of 1.00 or less,
and their average Total Recordable Injury/Illness rate and average
lost work rate for the most recent three-year period does not exceed
the applicable statistical standards for its business category, or if
the bidder is a party to an alternative dispute resolution system,
as provided for in Section 3201.5 of the Labor Code.
(e) (1) Any design-build entity that is selected to design and
build a project pursuant to this section shall possess or obtain
sufficient bonding to cover the contract amount for nondesign
services and errors and omissions insurance coverage sufficient to
cover all design and architectural services provided in the contract.
This section does not prohibit a general or engineering contractor
from being designated the lead entity on a design-build entity for
the purposes of purchasing necessary bonding to cover the activities
of the design-build entity.
(2) Any payment or performance bond written for the purposes of
this section shall be written using a bond form developed by the
city.
(f) All subcontractors that were not listed by the design-build
entity in accordance with clause (i) of subparagraph (A) of paragraph
(3) of subdivision (d) shall be awarded by the design-build entity
in accordance with the design-build process set forth by the city in
the design-build package. All subcontractors bidding on contracts
pursuant to this section shall be afforded the protections contained
in Chapter 4 (commencing with Section 4100) of Part 1. The
design-build entity shall do both of the following:
(1) Provide public notice of the availability of work to be
subcontracted in accordance with the publication requirements
applicable to the competitive bidding process of the city.
(2) Provide a fixed date and time on which the subcontracted work
will be awarded in accordance with the procedure established pursuant
to this section.
(g) The minimum performance criteria and design standards
established pursuant to paragraph (1) of subdivision (d) shall be
adhered to by the design-build entity. Any deviations from those
standards may only be allowed by written consent of the city.
(h) The city may retain the services of a design professional or
construction project manager, or both, throughout the course of the
project in order to ensure compliance with this section.
(i) Contracts awarded pursuant to this section shall be valid
until the project is completed.
(j) Nothing in this section is intended to affect, expand, alter,
or limit any rights or remedies otherwise available at law.
(k) (1) If the city elects to award a project pursuant to this
section, retention proceeds withheld by the city from the
design-build entity shall not exceed 5 percent if a performance and
payment bond, issued by an admitted surety insurer, is required in
the solicitation of bids.
(2) In a contract between the design-build entity and the
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the city and the design-build entity. If the design-build
entity provides written notice to any subcontractor who is not a
member of the design-build entity, prior to or at the time the bid is
requested, that a bond may be required and the subcontractor
subsequently is unable or refuses to furnish a bond to the
design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the city and the design-build entity from any
payment made by the design-build entity to the subcontractor.
(l) Each city that elects to proceed under this section and uses
the design-build method on a public works project shall submit to the
Legislative Analyst's Office before December 1, 2009, a report
containing a description of each public works project procured
through the design-build process that is completed after January 1,
2006, and before November 1, 2009. The report shall include, but
shall not be limited to, all of the following information:
(1) The type of project.
(2) The gross square footage of the project.
(3) The design-build entity that was awarded the project.
(4) The estimated and actual project costs.
(5) A description of any written protests concerning any aspect of
the solicitation, bid, proposal, or award of the design-build
project, including the resolution of the protests.
(6) An assessment of the prequalification process and criteria.
(7) An assessment of the effect of retaining 5 percent retention
on the project.
(8) A description of the Labor Force Compliance Program and an
assessment of the project impact, where required.
(9) A description of the method used to award the contract. If the
best value method was used, the report shall describe the factors
used to evaluate the bid, including the weighting of each factor and
an assessment of the effectiveness of the methodology.
(10) An assessment of the project impact of "skilled labor force
availability."
(11) An assessment of the most appropriate uses for the
design-build approach.
(m) Any city that elects not to use the authority granted by this
section may submit a report to the Legislative Analyst's Office
explaining why the city elected not to use the design-build method.
(n) On or before January 1, 2010, the Legislative Analyst's Office
shall report to the Legislature on the use of the design-build
method by cities pursuant to this section, including the information
listed in subdivision (l). The report may include recommendations for
modifying or extending this section.
(o) This section shall remain in effect only until January 1,
2011, and of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2011, deletes or extends that date.
SEC. 2. The Legislature finds and declares that a special law is
necessary and that a general law cannot be made applicable within the
meaning of Section 16 of Article IV of the California Constitution
because of the unique need to build public facilities in a
cost-effective manner in the City of Victorville.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.