BILL ANALYSIS
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THIRD READING
Bill No: SB 614
Author: Simitian (D)
Amended: 5/15/07
Vote: 21
SENATE EDUCATION COMMITTEE : 7-0, 4/25/07
AYES: Scott, Alquist, Maldonado, Padilla, Romero,
Simitian, Torlakson
NO VOTE RECORDED: Wyland, Denham
SENATE APPROPRIATIONS COMMITTEE : 12-2, 5/29/07
AYES: Torlakson, Cox, Aanestad, Ashburn, Cedillo, Corbett,
Kuehl, Ridley-Thomas, Runner, Simitian, Steinberg, Yee
NOES: Dutton, Oropeza
NO VOTE RECORDED: Battin, Florez, Wyland
SUBJECT : Public works: design-build contracts
SOURCE : Author
DIGEST : This bill authorizes school districts and
community colleges to utilize design-build construction
contracts for projects exceeding $2 million, rather than
the $10 million floor currently provided in law. This bill
also extends the use of the design-build process to all
community college districts, rather than just those that
are currently specified in law.
ANALYSIS : AB 1402 (Simitian), Chapter 421, Statutes of
2001, authorized K-12 school districts to enter into
CONTINUED
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design-build contracts for construction of school
facilities costing in excess of $10 million. AB 1402 also
required the Legislative Analyst Office (LAO) to submit a
report by January 1, 2006, providing specified information
and making recommendations for changing the design-build
legislation. It also provided for the repeal of its
provisions as of January 1, 2007.
AB 1000 (Simitian), Chapter 637, Statutes of 2002,
authorized three specific community college districts (Los
Angeles Community College District, San Jose-Evergreen
Community College District and the San Mateo Community
College District) to enter into design-build contracts for
construction of facilities costing in excess of $10
million. In addition, AB 1000 authorized the Chancellor of
the California Community Colleges to select up to five
community college facility construction projects from
districts other than the three specified to use the design
build procedures established by the bill's provisions. It
also required a report from the LAO by January 1, 2007,
providing specified information and making recommendations
for changing the design-build legislation. AB 1000
provided for the repeal of its provisions as of January 1,
2008.
In October 2003, the LAO, in its "Interim Report on the Use
of Design-Build for K-12 School Construction" found that no
districts had reported using the authorization provided by
AB 1402. The LAO noted, however, that school construction
projects can take three to four years to complete and that
they did not expect to receive post-construction reports
until late 2004. In February 2005, the LAO issued a report
on "Design-Build: An Alternative Construction System" in
which it reported its consolidated findings on design-build
across several public works sectors. The LAO made several
recommendations.
Proposition 1D, authorized by AB 127 (Nunez and Perata) and
approved by the voters in November 2006, provided $7.3
billion for K-12 and $3.1 billion for higher education
facilities construction and modernization projects. Among
its provisions, AB 127 extended the repeal dates on the
design-build statutes established by AB 1402 and AB 1000 to
January 1, 2010, and January 1, 2011, respectively.
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This bill:
1. Specifies that, for purposes of design-build, "plans"
submitted to the Department of General Services for
approval include plans for foundations submitted prior
to the receipt of completed building plans, as
specified.
2. Deletes the requirement that a subcontractor who is not
a member of the design-build entity be notified of the
requirement to furnish a bond prior to or at the time
the bid is requested in order for a design-build entity
to withhold retention proceeds from a subcontractor in
excess of the percentage specified in its contract with
the school district if the subcontractor is unable or
refuses to furnish a bond.
3. Expands the authority of K-12 and community college
districts to enter into design-build contracts for
school facilities construction. Specifically it:
A. Reduces the amount of a contract that may be
authorized for design-build from $10 million to $2
million.
B. Deletes the restriction under current law to three
community college districts and five chancellor
selected facility construction projects, thereby
expanding the authority to all community college
districts.
4. Provides that the bill's provisions do not affect the
application of any other law.
5. Does not amend the sunset date for school districts and
community colleges to enter into design-build contracts.
Comments
What is design-build ? There are two primary construction
delivery systems used in the public and private sectors,
"design-bid-build" and "design-build."
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Current law requires that school districts award
construction contracts over $15,000 to the lowest
responsible bidder. Current law also allows contracts for
architectural services to be awarded on the basis of
demonstrated competence and professional qualifications to
be performed at a fair and reasonable price (not
necessarily lowest bidder). These laws have meant that
schools (and most public construction work) have been built
using a "design-bid-build" methodology wherein a separate
contract is awarded for the design work by an architect and
another contract is awarded to the lowest responsible
bidder for the construction.
In the 1990s, the state began the enactment of various
legislation authorizing state and local entities to use a
"design-build" system under specified circumstances. Under
this approach, a single contract is awarded to a
professional team, a "design-build" entity, to conduct both
types of work. The contract may be awarded on other than a
lowest responsible bidder basis.
LAO Report . Both AB 1402 and AB 1000 required that the LAO
submit a report providing specified information and making
recommendations for changing the design-build legislation.
The LAO issued a final report on the use of design-build
for K-12 construction projects, as required by AB 1402,
based upon information submitted by one K-12 school
district. As of the date of this analysis, the LAO had not
received any information from community college districts
to complete the report required by AB 1000.
According to the Community College Chancellor's Office,
five projects have been selected to use the design build
procedures authorized by AB 1000 (Glendale, Santa Clarita,
San Joaquin Delta, and two projects at Riverside). Only
one project in Riverside has been completed and the
remainder is still being planned/constructed. Of the three
districts given explicit authority to use design-build,
only San Mateo has completed a project. Riverside and San
Mateo are expected to provide information for LAO to use in
preparing its report by May 2007.
Senate Education Committee staff notes that the LAO 2005
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report on design-build across several public works sectors
recommended the elimination of any contract thresholds on
the design-build authority in order to encourage greater
use of the alternative contract delivery system.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09
2009-10 Fund
Expanded design- Savings/costs subject
toBond/
build authority appropriate
assessmentGeneral
of contracting market
SUPPORT : (Verified 5/30/07)
California Association of School Business Officials
California Coalition for Adequate School Housing
County School Facilities Consortia
Kern Community College District
Los Angeles Community College District
Los Angeles County Office of Education
Los Angeles Unified School District
Los Rios Community College District
Rio Hondo Community College District
San Jose-Evergreen Community College District
West Kern Community College District
OPPOSITION : (Verified 5/30/07)
American Federation of Sate, County and Municipal Employees
Engineering & Utility Contractors Association
NC:mw 5/30/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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