BILL NUMBER: SBX2 9	CHAPTERED
	BILL TEXT

	CHAPTER  7
	FILED WITH SECRETARY OF STATE  FEBRUARY 20, 2009
	APPROVED BY GOVERNOR  FEBRUARY 20, 2009
	PASSED THE SENATE  FEBRUARY 14, 2009
	PASSED THE ASSEMBLY  FEBRUARY 15, 2009
	AMENDED IN SENATE  FEBRUARY 14, 2009

INTRODUCED BY   Senator Padilla

                        FEBRUARY 11, 2009

   An act to amend Sections 17250.30 and 81704 of the Education Code,
to amend Section 6531 of the Government Code, to amend Section
1771.5 of, to amend and repeal Sections 1771.7 and 1771.8 of, to add
Sections 1771.3, 1771.55, 1771.75 and 1771.85 to, and to repeal and
add Section 1771.9 of, the Labor Code, to amend Sections 20133,
20175.2, 20193, 20209.7, 20209.24, and 20919.3 of the Public Contract
Code, and to add Section 8007 to the Water Code, relating to public
works, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 9, Padilla. Public works: labor compliance.
   (1) Existing law defines "public works," for purposes of
regulating public works contracts, as, among other things,
construction, alteration, demolition, installation, or repair work
that is performed under contract and paid for, in whole or in part,
out of public funds. Pursuant to existing law, all workers employed
on public works shall be paid not less than the general prevailing
rate of per diem wages for work, except for public works projects of
$1,000 or less.
   This bill would specify that, for purposes of these provisions,
the definition of "public works" includes a capital improvement
project undertaken by a charter city to extend that city's water,
sewer, or storm drain system or similar system to a disadvantaged
community in an unincorporated area, but would provide that it does
not include any subsequent project to construct, expand, reconstruct,
install, or repair such systems that have been so extended, where
that project is conducted within that city's political boundaries.
   (2) Existing law authorizes the awarding body for a public works
project to not require the payment of the general prevailing rate of
per diem wages on public works projects of specified sizes and types
of work, if the awarding body elects to initiate and enforce a labor
compliance program containing specified requirements for every public
works project under the authority of the awarding body.
   This bill would instead authorize the awarding body for a public
works project to not require the payment of the general prevailing
rate of per diem wages on public works projects of specified sizes
and types of work, if the awarding body elects to meet certain
requirements with regard to any public works project under its
authority, including payment of a fee to the Department of Industrial
Relations for the enforcement of prevailing wage obligations, as
specified, which would be determined by the department and deposited
in the State Public Works Enforcement Fund.
   This bill would establish the State Public Works Enforcement Fund
in the State Treasury, and would continuously appropriate moneys in
the fund for the department's enforcement of prevailing wage
requirements applicable to public works projects and labor compliance
enforcement. The bill would require the department to meet certain
requirements with regard to all projects required to pay a fee into
the State Public Works Enforcement Fund, including the adoption of
regulations setting forth the manner in which the department will
ensure compliance with and enforce prevailing wage requirements on
the project, and would require the department to report to the
Legislature on the fund, as specified.
   (3) Existing law requires an awarding body that chooses to use
funds from the Kindergarten-University Public Education Facilities
Bond Act of 2002 for a public works project or an awarding body for
any contract for a public works project financed in any part with
funds made available by the Water Security, Clean Drinking Water,
Coastal and Beach Protection Act of 2002 to initiate and enforce, or
contract with a 3rd party to initiate and enforce, a labor compliance
program for that public works project.
   This bill would require the Director of Industrial Relations, with
the approval of the Director of Finance, to assess a fee on any
awarding body using funds derived from any bonds issued by the state
to fund public works projects, as specified, which would be deposited
in the State Public Works Enforcement Fund. The bill would also
require an awarding body that chooses to use funds derived from
either the Kindergarten-University Public Education Facilities Bond
Act of 2002 or the Kindergarten-University Public Education
Facilities Bond Act of 2004, or the body awarding any contract for a
public works project financed in any part with funds made available
by the Water Security, Clean Drinking Water, Coastal and Beach
Protection Act of 2002 of the Safe, Reliable High-Speed Passenger
Train Bond Act for the 21st Century, to pay a fee to the department
sufficient to support the department's costs in ensuring compliance
with and enforcing prevailing wage requirements on the project and
labor compliance enforcement, as specified. The bill would require
all fees collected pursuant to these provisions to be deposited in
the State Public Works Enforcement Fund and to be used only for
enforcement of prevailing wage requirements on those projects. The
bill would authorize the department to waive the fee for an awarding
body if specified criteria are met.
   (4) Existing law gives specified authority for certain school
district governing boards, governing boards of community college
districts and community college facility construction projects,
cities, counties, qualified entities that operate a wastewater
facility, solid waste management facility, or water recycling
facility, transit operators, and unified school districts to enter
into design-build contracts for specified projects if certain
requirements are met, including the establishment and enforcement of
a labor compliance program or the contracting with a 3rd-party to
operate a labor compliance program. Existing law gives specified
authority for the San Diego Model School Development Agency to award
construction contracts, as specified, and requires it to establish
and enforce a labor compliance program or to contract with a
3rd-party to operate a labor compliance program.
   This bill would instead require entities contracting under the
above provisions to pay a fee to the department, established by the
department as specified, sufficient to support the department's costs
in ensuring compliance with and enforcing prevailing wage
requirements on the project and labor compliance. The bill would
require all fees collected pursuant to these provisions to be
deposited in the State Public Works Enforcement Fund and to be used
only for enforcement of prevailing wages requirements on those
projects. The bill would authorize the department to waive the fee if
specified criteria are met.
   Appropriation: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature hereby finds and declares all of the
following:
   (a) The Legislature has previously found that the prevailing wage
law addresses statewide concerns (Section 1 of Chapter 892 of the
Statutes of 2002; Section 1 of Chapter 868 of the Statutes of 2002)
and has reaffirmed its intent that the prevailing wage law apply to
all public projects, including the projects of charter cities
(Chapter 135 of the Statutes of 2003).
   (b) Nothing in Section 8007 of the Water Code shall be interpreted
to be inconsistent with that intent. The legal issue whether the
Legislature has the constitutional authority to apply the prevailing
wage law to the municipal projects of charter cities was declared to
be an "open" question by the California Supreme Court in City of Long
Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942,
947 and that legal question is presently under submission before the
California Court of Appeal in State Building and Construction Trades
Council v. City of Vista, Case No. D0521181.
   (c) The purpose of Section 8007 of the Water Code is solely to
provide that, if the Legislature does not have the constitutional
authority to apply the prevailing wage law to the municipal projects
of charter cities, then the extension of a city's water, sewer, or
storm drain system or similar system to a disadvantaged community in
an unincorporated area shall not thereby subject future work on that
system within that city's boundaries to the prevailing wage law.
  SEC. 2.  Section 17250.30 of the Education Code is amended to read:

   17250.30.  (a) Any design-build entity that is selected to design
and build a project pursuant to this chapter 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 chapter 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.
   (b) Any payment or performance bond written for the purposes of
this chapter shall use a bond form developed by the Department of
General Services pursuant to subdivision (g) of Section 14661 of the
Government Code. The purpose of this subdivision is to promote
uniformity of bond forms to be used on school district design-build
projects throughout the state.
   (c) (1) All subcontracts that were not listed by the design-build
entity in accordance with Section 17250.25 shall be awarded by the
design-build entity.
   (2) The design-build entity shall do all of the following:
   (A) Provide public notice of the availability of work to be
subcontracted.
   (B) Provide a fixed date and time on which the subcontracted work
will be awarded.
   (3) Subcontractors bidding on contracts pursuant to this
subdivision shall be afforded the protections contained in Chapter 4
(commencing with Section 4100) of Part 1 of Division 2 of the Public
Contract Code.
   (4) (A) If the school district elects to award a project pursuant
to this section, retention proceeds withheld by the school district
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.
   (B) In a contract between the design-build entity and a
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld shall not exceed the percentage specified in the contract
between the school district 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 school district and the design-build entity from
any payment made by the design-build entity to the subcontractor.
   (5) In accordance with the provisions of applicable state law, the
design-build entity may be permitted to substitute securities in
lieu of the withholding from progress payments. Substitutions shall
be made in accordance with Section 22300 of the Public Contract Code.

   (d) (1) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fees established by the department pursuant paragraph
(2), the school district shall establish and enforce a labor
compliance program containing the requirements outlined in Section
1771.5 of the Labor Code or 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 projects where the school district or the design-build
entity has entered into a collective bargaining agreement that binds
all of the contractors performing work on the project.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this paragraph,
the school district shall pay a fee to the department, in an amount
that the department shall establish, and as it may from time to time
amend, sufficient to support the department's costs in ensuring
compliance with and enforcing prevailing wage requirements on the
project, and labor compliance enforcement as set forth in subdivision
(b) of Section 1771.55. All fees collected pursuant to this
subdivision shall be deposited in the State Public Works Enforcement
Fund created by Section 1771.3 of the Labor Code, and shall be used
only for enforcement of prevailing wage requirements on those
projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) for a school district that has previously been
granted approval by the director to initiate and operate a labor
compliance program on the district's projects, and that requests to
continue to operate that labor compliance program on its projects in
lieu of labor compliance by the department pursuant to subdivision
(b) of Section 1771.55. The fee shall not be waived for a district
that contracts with a third party to initiate and enforce labor
compliance programs on the district's projects.
  SEC. 3.  Section 81704 of the Education Code is amended to read:
   81704.  (a) Any design-build entity that is selected to design and
build a project pursuant to this chapter shall possess or obtain
sufficient bonding to cover the contract amount for nondesign
services, and errors and omission insurance coverage sufficient to
cover all design and architectural services provided in the contract.
This chapter 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.
   (b) Any payment or performance bond written for the purposes of
this chapter shall use a bond form developed by the Department of
General Services pursuant to subdivision (i) of Section 14661 of the
Government Code. The purpose of this subdivision is to promote
uniformity of bond forms to be used on community college district
design-build projects throughout the state.
   (c) (1) All subcontracts that were not listed by the design-build
entity in accordance with Section 81703 shall be awarded by the
design-build entity in accordance with the design-build process set
forth by the community college district in the design-build package.
   (2) The design-build entity shall do all of the following:
   (A) Provide public notice of the availability of work to be
subcontracted.
   (B) Provide a fixed date and time on which the subcontracted work
will be awarded.
   (3) Subcontractors bidding on contracts pursuant to this
subdivision shall be afforded the protections contained in Chapter 4
(commencing with Section 4100) of Part 1 of Division 2 of the Public
Contract Code.
   (4) (A) If the community college district elects to award a
project pursuant to this section, retention proceeds withheld by the
community college district 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.
   (B) In a contract between the design-build entity and a
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld shall not exceed the percentage specified in the contract
between the community college district 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 community college district and the
design-build entity from any payment made by the design-build entity
to the subcontractor.
   (5) In accordance with the provisions of applicable state law, the
design-build entity may be permitted to substitute securities in
lieu of the withholding from progress payments. Substitutions shall
be made in accordance with Section 22300 of the Public Contract Code.

   (d) (1) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fees established by the department pursuant to paragraph
(2), the community college district shall establish and enforce a
labor compliance program containing the requirements outlined in
Section 1771.5 of the Labor Code or 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 projects where the community college district or the
design-build entity has entered into a collective bargaining
agreement that binds all of the contractors performing work on the
project.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this paragraph,
the community college district shall pay a fee to the department, in
an amount that the department shall establish, and as it may from
time to time amend, sufficient to support the department's costs in
ensuring compliance with and enforcing prevailing wage requirements
on the project, and labor compliance enforcement as set forth in
subdivision (b) of Section 1771.55. All fees collected pursuant to
this subdivision shall be deposited in the State Public Works
Enforcement Fund created by Section 1771.3 of the Labor Code, and
shall be used only for enforcement of prevailing wage requirements on
those projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) for a community college district that has
previously been granted approval by the director to initiate and
operate a labor compliance program on the district's projects, and
that requests to continue to operate that labor compliance program on
its projects in lieu of labor compliance by the department pursuant
to subdivision (b) of Section 1771.55. The fee shall not be waived
for a district that contracts with a third party to initiate and
enforce labor compliance programs on the district's projects.
  SEC. 4.  Section 6531 of the Government Code is amended to read:
   6531.  (a) The Legislature finds and declares all of the
following:
   (1) It is in the best interests of communities located within the
City of San Diego for the local public agencies that have
jurisdiction within the city to form a joint powers agency to provide
for the orderly and coordinated acquisition, construction, and
development of model school projects. These projects may include the
acquisition of land by negotiation or eminent domain, the
construction of schools, the construction of recreational facilities
or park sites or both, and the construction of replacement and other
housing, including market rate, moderate-income, and low-income
housing.
   (2) The coordinated construction of these projects by
redevelopment agencies, school districts, housing authorities,
housing commissions, and the city is of great public benefit and will
save public money and time in supplying much needed replacement
housing lost when schools are constructed within existing
communities.
   (3) Legislation is needed to allow redevelopment agencies, school
districts, housing authorities, housing commissions, and the city to
use their powers to the greatest extent possible to expedite,
coordinate, and streamline the construction and eventual operation of
such projects.
   (b) (1) Notwithstanding any other provision of law, the
Redevelopment Agency of the City of San Diego, the Housing Authority
of the City of San Diego, the San Diego Housing Commission, the San
Diego Unified School District, and the City of San Diego may enter
into a joint powers agreement to create and operate a joint powers
agency for the development and construction of a model school project
located within the City Heights Project Area. The agency created
pursuant to this section shall be known as the San Diego Model School
Development Agency. The San Diego Model School Development Agency
shall have all the powers of a redevelopment agency pursuant to Part
1 (commencing with Section 33000) of Division 24 of the Health and
Safety Code, all of the powers of a housing authority pursuant to
Part 2 (commencing with Section 34200) of Division 24 of the Health
and Safety Code, and all of the powers of the San Diego Unified
School District, as well as all the powers of a joint powers agency
granted pursuant to this chapter, to acquire property and to
construct and improve and finance one or more schools, housing
projects, parks, recreational facilities, and any other facilities
reasonably necessary for their proper operation. Further, the San
Diego Model School Development Agency shall have all of the powers of
the City of San Diego pursuant to its charter and state law to
acquire property and to finance and operate parks and recreational
facilities and any other facilities reasonably necessary for their
proper operation.
   (2) Notwithstanding paragraph (1), neither the San Diego Model
School Development Agency nor the Redevelopment Agency of the City of
San Diego shall expend any property tax increment revenues to
acquire property, and to construct, improve, and finance a school
within the City Heights Project Area.
   (3) Nothing in this section shall relieve the San Diego Model
School Development Agency or the Redevelopment Agency of the City of
San Diego from its obligations to increase, improve, and preserve the
community's supply of low- and moderate-income housing, including,
but not limited to, the obligation to provide relocation assistance,
the obligation to provide replacement housing, the obligation to meet
housing production quotas, and the obligation to set aside property
tax increment funds for those purposes.
   (4) The San Diego Model School Development Agency shall perform
any construction activities in accordance with the applicable
provisions of the Public Contract Code, the Education Code, and the
Labor Code that apply, respectively, to the redevelopment agency,
housing authority, housing commission, school district, or city
creating the San Diego Model School Development Agency. Funding
pursuant to Proposition MM, a local San Diego County bond measure
enacted by the voters for the purpose of school construction, shall
be used only for the design, development, construction, and financing
of school-related facilities and improvements, including schools, as
authorized and to the extent authorized under Proposition MM.
   (c) Any member of the joint powers agency, including the school
district, may, to the extent permitted by law, transfer and
contribute funds to the agency, including bond funds, to be deposited
into and to be held in a facility fund to be expended for purposes
of the acquisition of property for, and the development and
construction of, any school, housing project, or other facility
described in this section.
   (d) Nothing contained in this section shall preclude the joint
powers agency from distributing funds, upon completion of
construction, the school, housing project, park, recreational
facility, or other facility to a member of the agency to operate the
school, housing project, park, or other facility that the member is
otherwise authorized to operate. These distribution provisions shall
be set forth in the joint powers agreement, if applicable.
   (e) The San Diego Model School Development Agency may construct a
school in the City Heights Project Area pursuant to Chapter 2.5
(commencing with Section 17250.10) of Part 10.5 of the Education
Code.
   (f) (1) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fees established by the department pursuant to paragraph
(2), the San Diego Model School Development Agency shall establish
and enforce, with respect to construction contracts awarded by the
joint powers agency, a labor compliance program containing the
requirements outlined in Section 1771.5 of the Labor Code or shall
contract with a third party to operate a labor compliance program
containing those requirements. This requirement shall not apply to
projects that are subject to a collective bargaining agreement that
binds all of the contractors and subcontractors performing work on
the project, but nothing shall prevent the joint powers agency from
operating a labor compliance program with respect to those projects.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this paragraph,
the agency shall pay a fee to the department, in an amount that the
department shall establish, and as it may from time to time amend,
sufficient to support the department's costs in ensuring compliance
with and enforcing prevailing wage requirements on the project, and
labor compliance enforcement as set forth in subdivision (b) of
Section 1771.55. All fees collected pursuant to this subdivision
shall be deposited in the State Public Works Enforcement Fund created
by Section 1771.3 of the Labor Code, and shall be used only for
enforcement of prevailing wage requirements on those projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) if the agency has previously been granted
approval by the director to initiate and operate a labor compliance
program on its projects and requests to continue to operate that
labor compliance program on its projects in lieu of labor compliance
by the department pursuant to subdivision (b) of Section 1771.55. The
fee shall not be waived for the agency if it contracts with a third
party to initiate and enforce labor compliance programs on its
projects.
   (g) Construction workers employed as apprentices by contractors
and subcontractors on contracts awarded by the San Diego Model School
Development Agency shall be enrolled in a registered apprenticeship
program, approved by the California Apprenticeship Council, that has
graduated apprentices in the same craft in each of the preceding five
years. This graduation requirement shall be applicable for any craft
that was first deemed by the Department of Labor and the Department
of Industrial Relations to be an apprenticeable craft prior to
January 1, 1998. A contractor or subcontractor need not submit
contract award information to an apprenticeship program that does not
meet the graduation requirements of this subdivision. If no
apprenticeship program meets the graduation requirements of this
subdivision for a particular craft, the graduation requirements shall
not apply for that craft.
  SEC. 5.  Section 1771.3 is added to the Labor Code, to read:
   1771.3.  (a) (1) The State Public Works Enforcement Fund is hereby
created as a special fund in the State Treasury. Notwithstanding
Section 13340 of the Government Code, moneys in the fund shall be
continuously appropriated for the purposes the Department of
Industrial Relations' enforcement of prevailing wage requirements
applicable to public works pursuant to this chapter, and labor
compliance enforcement as set forth in subdivision (b) of Section
1771.55, and shall not be used or borrowed for any other purpose.
   (2) The Director of Industrial Relations, with the approval of the
Director of Finance, shall determine and assess a fee on any
awarding body using funds derived from any bond issued by the state
to fund public works projects, in an amount not to exceed one-fourth
of 1 percent of the bond proceeds. The fee shall be set to cover the
expenses of the Department of Industrial Relations for administering
the prevailing wage requirements on public works projects using those
bond funds. All fees collected pursuant to this subdivision section
shall be deposited in the State Public Works Enforcement Fund, and
shall be used only for enforcement of prevailing wage requirements on
projects using bond funds and other projects for which awarding
bodies pay into the fund. The administration and enforcement of
prevailing wage requirements is an administrative expense associated
with public works construction.
   (b) The fee imposed by this section shall not apply to any
contract awarded prior to the effective date of regulations adopted
by the department pursuant to paragraph (2) of subdivision (b) of
Section 1771.55.
   (c) The department shall report to the Legislature, not later than
March 1, 2011, on its administration of the State Public Works
Enforcement Fund, and the prevailing wage enforcement activities
undertaken by the department utilizing that funding.
  SEC. 6.  Section 1771.5 of the Labor Code is amended to read:
   1771.5.  (a) Notwithstanding Section 1771, an awarding body may
not require the payment of the general prevailing rate of per diem
wages or the general prevailing rate of per diem wages for holiday
and overtime work for any public works project of twenty-five
thousand dollars ($25,000) or less when the project is for
construction work, or for any public works project of fifteen
thousand dollars ($15,000) or less when the project is for
alteration, demolition, repair, or maintenance work, if the awarding
body elects to initiate and enforce a labor compliance program
pursuant to subdivision (b) for every public works project under the
authority of the awarding body.
   (b) For purposes of this section, a labor compliance program shall
include, but not be limited to, the following requirements:
   (1) All bid invitations and public works contracts shall contain
appropriate language concerning the requirements of this chapter.
   (2) A prejob conference shall be conducted with the contractor and
subcontractors to discuss federal and state labor law requirements
applicable to the contract.
   (3) Project contractors and subcontractors shall maintain and
furnish, at a designated time, a certified copy of each weekly
payroll containing a statement of compliance signed under penalty of
perjury.
   (4) The awarding body shall review, and, if appropriate, audit
payroll records to verify compliance with this chapter.
   (5) The awarding body shall withhold contract payments when
payroll records are delinquent or inadequate.
   (6) The awarding body shall withhold contract payments equal to
the amount of underpayment and applicable penalties when, after
investigation, it is established that underpayment has occurred.
   (c) For purposes of this chapter, "labor compliance program" means
a labor compliance program that is approved, as specified in state
regulations, by the Director of the Department of Industrial
Relations.
   (d) For purposes of this chapter, the Director of the Department
of Industrial Relations may revoke the approval of a labor compliance
program in the manner specified in state regulations.
   (e) This section shall not apply to contracts awarded after the
latter of either the effective date of any fee adopted by the
Department of Industrial Relations to be deposited in the State
Public Works Enforcement Fund, pursuant to Sections 1771.3, 1771.55,
1771.75, 1771.85, and 1771.9 of this code, subdivision (d) of Section
17250.30 of, and subdivision (d) of Section 81704, of the Education
Code, subdivision (f) of Section 6531 of the Government Code, and
paragraph (3) of subdivision (b) of Section 20133 of, paragraph (5)
of subdivision (b) of Section 20175.2 of, subdivision (b) of Section
20193 of, subdivision (c) of Section 20209.7 of, Section 20209.24 of,
and subdivision (a) of Section 20919.3 of the Public Contract Code,
or the effective date of the regulations adopted by the department
pursuant to paragraph (2) of subdivision (b) of Section 1771.55.
  SEC. 7.  Section 1771.55 is added to the Labor Code, to read:
   1771.55.  (a) Notwithstanding Section 1771, an awarding body may
not require the payment of the general prevailing rate of per diem
wages or the general prevailing rate of per diem wages for holiday
and overtime work for any public works project of twenty-five
thousand dollars ($25,000) or less when the project is for
construction work, or for any public works project of fifteen
thousand dollars ($15,000) or less when the project is for
alteration, demolition, repair, or maintenance work, if the awarding
body elects to undertake all of the following for every public works
project under the authority of the awarding body:
   (1) Ensure that all bid invitations and public works contracts
contain appropriate language concerning the requirements of this
chapter.

(2) Conduct a prejob conference with the contractor and subcontractor
to discuss federal and state labor law requirements applicable to
contract.
   (3) Pay a fee to the Department of Industrial Relations for the
enforcement of prevailing wage obligations in an amount that the
department shall establish, and as it may from time to time amend, in
an amount not to exceed one-fourth of 1 percent of the total public
works project costs, sufficient to support the department's costs in
ensuring compliance with and enforcing prevailing wage requirements
on the project. All fees collected pursuant to this subdivision shall
be deposited in the State Public Works Enforcement Fund created by
Section 1771.3, and shall be used only for enforcement of prevailing
wage requirements on those projects.
   (b) For all projects required to pay a fee into the State Public
Works Enforcement Fund, the Department of Industrial Relations shall
do the following:
   (1) Review on a monthly basis, and if appropriate, audit payroll
records to verify compliance with this chapter.
   (2) Adopt reasonable regulations setting forth the manner in which
the department will ensure compliance with and enforce prevailing
wage requirements on the project. In adopting these regulations, the
department shall give consideration to the duties of labor compliance
programs as set forth in Sections 16421 to 16439, inclusive, of
Title 8 of the California Code of Regulations.
   (c) The department may waive the fee set forth in this section for
an awarding body that has previously been granted approval by the
director to initiate and operate a labor compliance program on the
awarding body's projects, and that requests to continue to operate
that labor compliance program on its projects in lieu of labor
compliance by the department pursuant to subdivision (b). This fee
shall not be waived for an awarding body that contracts with a third
party to initiate and enforce labor compliance programs on the
awarding body's projects.
   (d) Subdivisions (a) and (c) of this section shall only apply to a
contract awarded on or after both the effective date of the
department's adoption of the fee set forth in subdivision (a) and of
regulations pursuant to paragraph (2) of subdivision (b).
  SEC. 8.  Section 1771.7 of the Labor Code is amended to read:
   1771.7.  (a) (1) An awarding body that chooses to use funds
derived from either the Kindergarten-University Public Education
Facilities Bond Act of 2002 or the Kindergarten-University Public
Education Facilities Bond Act of 2004 for a public works project,
shall initiate and enforce, or contract with a third party to
initiate and enforce, a labor compliance program, as described in
subdivision (b) of Section 1771.5, with respect to that public works
project.
   (2) If an awarding body described in paragraph (1) chooses to
contract with a third party to initiate and enforce a labor
compliance program for a project described in paragraph (1), that
third party shall not review the payroll records of its own employees
or the employees of its subcontractors, and the awarding body or an
independent third party shall review these payroll records for
purposes of the labor compliance program.
   (b) This section applies to public works that commence on or after
April 1, 2003. For purposes of this subdivision, work performed
during the design and preconstruction phases of construction,
including, but not limited to, inspection and land surveying work,
does not constitute the commencement of a public work.
   (c) (1) For purposes of this section, if any campus of the
California State University chooses to use the funds described in
subdivision (a), then the "awarding body" is the Chancellor of the
California State University. For purposes of this subdivision, if the
chancellor is required by subdivision (a) to initiate and enforce,
or to contract with a third party to initiate and enforce, the labor
compliance program described in that subdivision, then in addition to
the requirements imposed upon an awarding body by subdivision (b) of
Section 1771.5, the Chancellor of the California State University
shall review the payroll records described in paragraphs (3) and (4)
of subdivision (b) of Section 1771.5 on at least a monthly basis to
ensure the awarding body's compliance with the labor compliance
program.
   (2) For purposes of this subdivision, if an awarding body
described in subdivision (a) is the University of California or any
campus of that university, and that awarding body is required by
subdivision (a) to initiate and enforce, or to contract with a third
party to initiate and enforce, the labor compliance program described
in that subdivision, then in addition to the requirements imposed
upon an awarding body by subdivision (b) of Section 1771.5, the
payroll records described in paragraphs (3) and (4) of subdivision
(b) of Section 1771.5 shall be reviewed on at least a monthly basis
to ensure the awarding body's compliance with the labor compliance
program.
   (d) (1) An awarding body described in subdivision (a) shall make a
written finding that the awarding body has initiated and enforced,
or has contracted with a third party to initiate and enforce, the
labor compliance program described in subdivision (a).
   (2) (A) If an awarding body described in subdivision (a) is a
school district, the governing body of that district shall transmit
to the State Allocation Board, in the manner determined by that
board, a copy of the finding described in paragraph (1).
   (B) The State Allocation Board shall not release the funds
described in subdivision (a) to an awarding body that is a school
district until the State Allocation Board has received the written
finding described in paragraph (1).
   (C) If the State Allocation Board conducts a postaward audit
procedure with respect to an award of the funds described in
subdivision (a) to an awarding body that is a school district, the
State Allocation Board shall verify, in the manner determined by that
board, that the school district has complied with the requirements
of this subdivision.
   (3) If an awarding body described in subdivision (a) is a
community college district, the Chancellor of the California State
University, or the office of the President of the University of
California or any campus of the University of California, that
awarding body shall transmit, in the manner determined by the
Director of the Department of Industrial Relations, a copy of the
finding described in paragraph (1) to the director of that
department, or the director of any successor agency that is
responsible for the oversight of employee wage and employee work
hours laws.
   (e) Notwithstanding Section 17070.63 of the Education Code, for
purposes of this act, the State Allocation Board shall increase the
grant amounts as described in Chapter 12.5 (commencing with Section
17070.10) of Part 10 of Division 1 of Title 1 of the Education Code
to accommodate the state's share of the increased costs of a new
construction or modernization project due to the initiation and
enforcement of the labor compliance program.
   (f) This section shall become inoperative upon the latter of the
effective date of regulations adopted by the Department of Industrial
Relations pursuant to paragraph (2) of subdivision (b) of Section
1771.55 or the effective date of the fees adopted by the department
pursuant to Section 1771.75, and shall be repealed on the January 1
next following that date.
  SEC. 9.  Section 1771.75 is added to the Labor Code, to read:
   1771.75.  (a) An awarding body that chooses to use funds derived
from either the Kindergarten-University Public Education Facilities
Bond Act of 2002 or the Kindergarten-University Public Education
Facilities Bond Act of 2004 for a public works project, shall pay a
fee to the Department of Industrial Relations, in an amount that the
department shall establish, and as it may from time to time amend, in
an amount not to exceed one-fourth of 1 percent of the bond
proceeds, sufficient to support the department's costs in ensuring
compliance with and enforcing prevailing wage requirements on the
project, and labor compliance enforcement as set forth in subdivision
(b) of Section 1771.55. All fees collected pursuant to this
subdivision shall be deposited in the State Public Works Enforcement
Fund created by Section 1771.3, and shall be used only for
enforcement of prevailing wage requirements on those projects. The
department may waive the fee set forth in this section for an
awarding body that has previously been granted approval by the
director to initiate and operate a labor compliance program on the
awarding body's projects, and requests to continue to operate that
labor compliance program on its projects in lieu of labor compliance
by the department pursuant to subdivision (b) of Section 1771.55.
This fee shall not be waived for an awarding body that contracts with
a third party to initiate and enforce labor compliance programs on
the awarding body's projects.
   (b) This section applies to public works that commence on or after
April 1, 2003. For purposes of this subdivision, work performed
during the design and preconstruction phases of construction,
including, but not limited to, inspection and land surveying work,
does not constitute the commencement of a public work.
   (c) (1) For purposes of this section, if any campus of the
California State University chooses to use the funds described in
subdivision (a), then the awarding body is the Chancellor of the
California State University and the chancellor is required by
subdivision (a) to pay a fee to the Department of Industrial
Relations.
   (2) For purposes of this subdivision, if an awarding body
described in subdivision (a) is the University of California or any
campus of that university, and that awarding body is required by
subdivision (a) to pay a fee to the Department of Industrial
Relations, then the university shall review the payroll records on at
least a monthly basis to ensure the university's compliance with
prevailing wage obligations.
   (d) The department shall notify the State Allocation Board of
awarding bodies that have paid a fee as required by subdivision (a).
   (e) Notwithstanding Section 17070.63 of the Education Code, for
purposes of this section, the State Allocation Board shall increase
the grant amounts as described in Chapter 12.5 (commencing with
Section 17070.10) of Part 10 of Division 1 of Title 1 of the
Education Code to accommodate the state's share of the increased
costs of a new construction or modernization project due to the fee
required to be paid to the Department of Industrial Relations to
ensure compliance with and enforcement of prevailing wage laws on the
project. All fees collected pursuant to this subdivision shall be
deposited in the State Public Works Enforcement Fund created by
Section 1771.3.
   (f) This section shall only apply to a contract awarded on or
after both the effective date of the department's adoption of the fee
set forth in subdivision (a) and of regulations pursuant to
paragraph (2) of subdivision (b) of Section 1771.55.
  SEC. 10.  Section 1771.8 of the Labor Code is amended to read:
   1771.8.  (a) The body awarding any contract for a public works
project financed in any part with funds made available by the Water
Security, Clean Drinking Water, Coastal and Beach Protection Act of
2002 (Division 26.5 (commencing with Section 79500) of the Water
Code) shall adopt and enforce, or contract with a third party to
adopt and enforce, a labor compliance program pursuant to subdivision
(b) of Section 1771.5 for application to that public works project.
   (b) This section shall become operative only if the Water
Security, Clean Drinking Water, Coastal and Beach Protection Act of
2002 (Division 26.5 (commencing with Section 79500) of the Water
Code) is approved by the voters at the November 5, 2002, statewide
general election.
   (c) This section shall become inoperative on the latter of the
effective date of the regulations adopted by the Department of
Industrial Relations pursuant to paragraph (2) of subdivision (b) of
Section 1771.55 or the effective date of the fees adopted by the
department pursuant to Section 1771.85, and shall be repealed on the
January 1 next following that date.
  SEC. 11.  Section 1771.85 is added to the Labor Code, to read:
   1771.85.  (a) The body awarding any contract for a public works
project financed in any part with funds made available by the Water
Security, Clean Drinking Water, Coastal and Beach Protection Act of
2002 (Division 26.5 (commencing with Section 79500) of the Water
Code) shall pay a fee to the Department of Industrial Relations, in
an amount that the department shall establish, and as it may from
time to time amend, in an amount not to exceed one-fourth of 1
percent of the bond proceeds, sufficient to support the department's
costs in ensuring compliance with and enforcing prevailing wage
requirements on the project, and labor compliance enforcement as set
forth in subdivision (b) of Section 1771.55. All fees collected
pursuant to this subdivision shall be deposited in the State Public
Works Enforcement Fund created by Section 1771.3, and shall be used
only for enforcement of prevailing wage requirements on those
projects. The department may waive the fee set forth in this section
for an awarding body that has previously been granted approval by the
director to initiate and operate a labor compliance program on the
awarding body's projects, and requests to continue to operate that
labor compliance program on its projects in lieu of labor compliance
by the department pursuant to subdivision (b) of Section 1771.55.
This fee shall not be waived for an awarding body that contracts with
a third party to initiate and enforce labor compliance programs on
the awarding body's projects.
   (b) This section shall only apply to a contract awarded on or
after both the effective date of the department's adoption of the fee
set forth in subdivision (a) and of regulations pursuant to
paragraph (2) of subdivision (b) of Section 1771.55.
  SEC. 12.  Section 1771.9 of the Labor Code is repealed.
  SEC. 13.  Section 1771.9 is added to the Labor Code, to read:
   1771.9.  (a) The body awarding any contract for a public works
project financed in any part with funds made available by the Safe,
Reliable High-Speed Passenger Train Bond Act for the 21st Century
(Chapter 20 (commencing with Section 2704) of Division 3 of the
Streets and Highways Code) shall pay a fee to the Department of
Industrial Relations, in an amount that the department shall
establish, and as it may from time to time amend, in an amount not to
exceed one-fourth of 1 percent of the bond proceeds, sufficient to
support the department's costs in ensuring compliance with and
enforcing prevailing wage requirements on the project, and labor
compliance enforcement as set forth in subdivision (b) of Section
1771.55. All fees collected pursuant to this subdivision shall be
deposited in the State Public Works Enforcement Fund created by
Section 1771.3, and shall be used only for enforcement of prevailing
wage requirements on those projects. The department may waive the fee
set forth in this section for an awarding body that has previously
been granted approval by the director to initiate and operate a labor
compliance program on the awarding body's projects, and requests to
continue to operate that labor compliance program on its projects in
lieu of labor compliance by the department pursuant to subdivision
(b) of Section 1771.55. This fee shall not be waived for an awarding
body that contracts with a third party to initiate and enforce labor
compliance programs on the awarding body's projects.
   (b) This section shall apply only to a contract awarded on or
after both the effective date of the department's adoption of the fee
set forth in subdivision (a) and of regulations pursuant to
paragraph (2) of subdivision (b) of Section 1771.55.
  SEC. 14.  Section 20133 of the Public Contract Code is amended to
read:
   20133.  (a)  A county, with approval of the board of supervisors,
may utilize an alternative procedure for bidding on construction
projects in the county in excess of two million five hundred thousand
dollars ($2,500,000) and 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 counties to
utilize design-build for buildings and county sanitation wastewater
treatment facilities. It is not the intent of the Legislature to
authorize this procedure for other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructures.
   (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.
   (3) (A) For contracts awarded prior to either the effective date
of regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code or
the fees established by the department pursuant to subparagraph (B),
if the board of supervisors elects to proceed under this section, the
board of supervisors 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 county 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.
   (B) For contracts awarded on or after both the effective date of
regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this subparagraph,
the board of supervisors shall pay a fee to the department, in an
amount that the department shall establish, and as it may from time
to time amend, sufficient to support the department's costs in
ensuring compliance with and enforcing prevailing wage requirements
on the project, and labor compliance enforcement as set forth in
subdivision (b) of Section 1771.55. All fees collected pursuant to
this paragraph shall be deposited in the State Public Works
Enforcement Fund created by Section 1771.3 of the Labor Code, and
shall be used only for enforcement of prevailing wages requirements
on those projects.
   (C) The Department of Industrial Relations may waive the fee set
forth in subparagraph (B) if the board of supervisors has previously
been granted approval by the director to initiate and operate a labor
compliance program on its projects and requests to continue to
operate that labor compliance program on its projects in lieu of
labor compliance by the department pursuant to subdivision (b) of
Section 1771.55. The fee shall not be waived for the board of
supervisors if it contracts with a third party to initiate and
enforce labor compliance programs on its projects.
   (c) As used in this section:
   (1) "Best value" means a value determined by objective criteria
related 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, and
county sanitation wastewater treatment facilities, but does not
include the construction of other infrastructure, including, but not
limited to, 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 county 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
public improvement, 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 county'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 county 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
county shall prepare a request for proposals that invites interested
parties to submit competitive sealed proposals in the manner
prescribed by the county. 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 county to inform interested parties of the
contracting opportunity, to include the methodology that will be used
by the county to evaluate proposals and specifically if the contract
will be awarded to the lowest responsible bidder.
   (ii) Significant factors that the county 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 county 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 county to ensure that any discussions or negotiations
are conducted in good faith.
   (3) (A) The county shall establish a procedure to prequalify
design-build entities using a standard questionnaire developed by the
county. In preparing the questionnaire, the county 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 county 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 (P.L. 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 in which 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 in which the entity, or 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 Contributions Act (FICA; 26 U.S.C. Sec. 3101 et
seq.) 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
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code) shall not be open to public inspection.
   (4) The county 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) A county may use a design-build competition based upon best
value and other criteria set forth in paragraph (2). 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.
   (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 county 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 county's
second and third ranked design-build entities.
   (v) For 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 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 omission 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
county.
   (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 county
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 county.
   (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 county.
   (h) The county 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 county elects to award a project pursuant to this
section, retention proceeds withheld by the county 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 county 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 county and the design-build entity from any
payment made by the design-build entity to the subcontractor.
   () Each county 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 and completed after November 1,
2004, 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 length of time to complete the
project.
   (5) The estimated and actual project costs.
   (6) 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.
   (7) An assessment of the prequalification process and criteria.
   (8) An assessment of the effect of retaining 5-percent retention
on the project.
   (9) A description of the Labor Force Compliance Program and an
assessment of the project impact, where required.
   (10) A description of the method used to award the contract. If
best value was the method, 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.
   (11) An assessment of the project impact of "skilled labor force
availability."
   (12) An assessment of the design-build dollar limits on county
projects. This assessment shall include projects where the county
wanted to use design-build and was precluded by the dollar
limitation. This assessment shall also include projects where the
best value method was not used due to dollar limitations.
   (13) An assessment of the most appropriate uses for the
design-build approach.
   (m) Any county that elects to not use the authority granted by
this section may submit a report to the Legislative Analyst's Office
explaining why the county elected to not use the design-build method.

   (n) On or before January 1, 2010, the Legislative Analyst shall
report to the Legislature on the use of the design-build method by
counties pursuant to this section, including the information listed
in subdivision (). The report may include recommendations for
modifying or extending this section.
   (o) Except as provided in this section, nothing in this act shall
be construed to affect the application of any other law.
   (p) This section shall remain in effect only until January 1,
2011, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2011, deletes or extends
that date.
  SEC. 15.  Section 20175.2 of the Public Contract Code is amended to
read:
   20175.2.  (a) (1) A city, with approval of the appropriate city
council, may utilize an alternative procedure for bidding on building
construction projects in the city in excess of one million dollars
($1,000,000), except as provided in subdivision (p).
   (2) 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) (A) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fees established by the department pursuant to
subparagraph (B), 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.
   (B) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this subparagraph,
the city council shall pay a fee to the department, in an amount
that the department shall establish, and as it may from time to time
amend, sufficient to support the department's costs in ensuring
compliance with and enforcing prevailing wage requirements on the
project, and labor compliance enforcement as set forth in subdivision
(b) of Section 1771.55. All fees collected pursuant to this
paragraph shall be deposited in the State Public Works Enforcement
Fund created by Section 1771.3 of the Labor Code, and shall be used
only for enforcement of prevailing wage requirements on those
projects.
   (C) The Department of Industrial Relations may waive the fee set
forth in subparagraph (2) if the city council has previously been
granted approval by the director to initiate and operate a labor
compliance program on its projects and requests to continue to
operate that labor compliance program on its projects in lieu of
labor compliance by the department pursuant to subdivision (b) of
Section 1771.55. The fee shall not be waived for the city council if
it contracts with a third party to initiate and enforce labor
compliance programs on its 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
resource 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 (commencing with Section 6250) 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 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 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, 2014, a report containing a description of
each public works project procured through the design-build process
that is completed after January 1, 2011, and before November 1, 2014.
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, 2015, 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) Except as provided in this section, nothing in this act shall
be construed to affect the application of any other law.
   (p) Before January 1, 2011, the project limitation of one million
dollars ($1,000,000), as set forth in subdivision (a), shall not
apply to any city in the Counties of Solano and Yolo, or to the
Cities of Stanton and Victorville.
   (q) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
  SEC. 16.  Section 20193 of the Public Contract Code is amended to
read:
   20193.  (a) (1) Notwithstanding any other law and subject to the
limitations of this article, a qualified entity, with approval of its
governing body, may utilize an alternative procedure on bidding on
projects in excess of two million five hundred thousand dollars
($2,500,000).
   (2) Only 20 design-build projects shall be authorized under this
article.
   (3) A qualified entity may award a project using either the lowest
responsible bidder or by best value.
   (4) For purposes of this article, "qualified entity" means an
entity that meets both of the following:
   (A) The entity is any of the following:
   (i) A city.
   (ii) A county.
   (iii) A city and county.
   (iv) A special district.
   (B) The entity operates wastewater facilities, solid waste
management facilities, or water recycling facilities.
   (b) (1) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fees established by the department pursuant to paragraph
(2), if a qualified entity elects to proceed under this section, the
qualified entity 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 qualified entity
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.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this paragraph,
the qualified entity shall pay a fee to the department, in an amount
that the department shall establish, and as it may from time to time
amend, sufficient to support the department's costs in ensuring
compliance with and enforcing prevailing wage requirements on the
project, and labor compliance enforcement as set forth in subdivision
(b) of Section 1771.55. All fees collected pursuant to this
subdivision shall be deposited in the State Public Works Enforcement
Fund created by Section 1771.3 of the Labor Code, and shall be used
only for enforcement of prevailing wage requirements on those
projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) if the qualified entity has previously been
granted approval by the director to initiate and operate a labor
compliance program on its projects and requests to continue to
operate that labor compliance program on its projects in lieu of
labor compliance by the department pursuant to subdivision (b) of
Section 1771.55. The fee shall not be waived for the qualified entity
if it contracts with a third party to initiate and enforce labor
compliance programs on its projects.
   (c) As used in this section:
   (1) "Best value" means a value determined by objective criteria
related to price, features, functions, small business contracting
plans, past performance, 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 regional and local
wastewater treatment facilities, regional and local solid waste
facilities, or regional and local water recycling facilities.
   (d) Design-build projects shall progress in a four-step process,
as follows:
   (1) (A) The qualified entity 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 project and site, performance specifications covering the
quality of materials, equipment, and workmanship, preliminary plans
or project layouts, or any other information deemed necessary to
describe adequately the qualified entity'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 qualified entity 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
qualified entity shall prepare a request for proposals that invites
interested parties to submit competitive sealed proposals in the
manner prescribed by the qualified entity. 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 qualified entity to inform interested parties of the
contracting opportunity, to include the methodology that will be
used by the qualified entity to evaluate proposals and specifically
if the contract will be awarded to the lowest responsible bidder.
   (ii) Significant factors that the qualified entity 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 qualified entity 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 qualified entity 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 qualified entity to ensure that any
discussions or negotiations are conducted in good faith.
   (3) (A) The qualified entity shall establish a procedure to
prequalify design-build entities using a standard questionnaire
developed by the qualified entity. In preparing the questionnaire,
the qualified entity 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 special district 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 owner, 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 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code) shall not be open to public inspection.
   (4) The qualified entity 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) A qualified entity 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.
   (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 qualified entity shall publicly announce its
award, identifying the contractor to which 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
qualified entity's second and third ranked design-build entities.
   (v) For 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 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
qualified entity.
   (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
qualified entity 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 qualified
entity.
   (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 qualified
entity.
   (h) The qualified entity 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 qualified entity elects to award a project pursuant
to this section, retention proceeds withheld by the qualified entity
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 qualified entity 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 qualified entity and the design-build entity
from any payment made by the design-build entity to the
subcontractor.
   (l) Each qualified entity that elects to proceed under this
section and uses the design-build method on a public works project
shall do both of the following:
   (1) Notify the Legislative Analyst's Office upon initiation of the
project and upon completion of the project.
   (2) Submit to the Legislative Analyst's Office, upon completion of
the project, a report containing a description of the public works
project procured through the design-build process pursuant to this
section and completed after January 1, 2009. The report shall
include, but shall not be limited to, all of the following
information:
   (A) The type of project.
   (B) The gross square footage of the project.
   (C) The design-build entity that was awarded the project.
   (D) The estimated and actual project costs.
   (E) 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.
   (F) An assessment of the prequalification process and criteria.
   (G) An assessment of the effect of retaining 5-percent retention
on the project.
   (H) A description of the Labor Force Compliance Program and an
assessment of the project impact, where required.
   (I) A description of the method used to award the contract. If
best value was the method, 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.
   (J) An assessment of the project impact of "skilled labor force
availability."
   (K) An assessment of the most appropriate uses for the
design-build approach.
   (m) Any qualified entity that elects not to use the authority
granted by this section may submit a report to the Legislative
Analyst's Office explaining why the qualified entity elected to not
use the design-build method.
   (n) (1) In order to comply with paragraph (2) of subdivision (a),
the Office of Planning and Research is required to maintain the list
of entities that have applied and are eligible to be qualified for
this authority.
   (2) Each entity that is interested in proceeding under the
authority in this section must apply to the Office of Planning and
Research.
   (A) The application to proceed must be in writing.
   (B) An entity must have complied with the California Environmental
Quality Act review process pursuant to Division 13 (commencing with
Section 21000) of the Public Resources Code prior to its application,
and must include its approved notice of determination or notice of
completion in its application.
   (3) The Office of Planning and Research must approve or deny an
application, in writing, within 30 days. The authority to deny an
application shall only be exercised if the conditions set forth in
either or both paragraph (2) of subdivision (a) and subparagraph (B)
of paragraph (2) of this subdivision have not been satisfied.
   (4) An entity utilizing this section must, after it determines it
no longer is interested in using this authority, notify the Office of
Planning and Research in writing within 30 days of its
determination. Upon notification, the Office of Planning and Research
may contact any previous applicants, denied pursuant to paragraph
(2) of subdivision (a), to inform them of the availability to proceed
under this section.
   (o) The Legislative Analyst shall report to the Legislature on the
use of the design-build method by qualified entities pursuant to
this section, including the information listed in subdivision (l).
The report may include recommendations for modifying or extending
this section, and shall be submitted on either of the following
dates, whichever occurs first:
   (1) Within one year of the completion of the 20 projects, if the
projects are completed prior to January 1, 2019.
   (2) No later than January 1, 2020.
  SEC. 17.  Section 20209.7 of the Public Contract Code is amended to
read:
   20209.7.  Design-build projects shall progress in a three-step
process, as follows:
   (a) The transit operator shall prepare a set of documents setting
forth the scope of the project. The documents shall include, but are
not limited to, the size, type, and desired design character of the
buildings, transit facilities, 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 transit operator's needs.
The performance specifications and any plans shall be prepared by a
design professional duly licensed or registered in California.
   (b) Any architectural or engineering firm or individual retained
by the transit operator to assist in the development criteria or
preparation of the request for proposal (RFP) is not eligible to
participate in the competition for the design-build entity.
   (c) (1) For contracts awarded prior to the effective date of
either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fee established by the department pursuant to paragraph
(2), if the transit operator does not already have a labor compliance
program, as defined in Section 1771.5 of the Labor Code, the transit
operator shall establish and enforce a labor compliance program for
the design-build contract containing the requirements outlined in
Section 1771.5 of the Labor Code or shall contract with a third party
to operate this labor compliance program containing the requirements
outlined in Section 1771.5 of the Labor Code. This requirement
applies only to the design-build contract and does not apply to
projects where the transit operator or the design-build entity has
entered into a collective bargaining agreement that binds all of the
contractors performing work on the project, or to any other project
of the transit operator that is not design-build.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fee established by the department pursuant to this paragraph, the
transit operator shall pay a fee to the department, in an amount
that the department shall establish, and as it may from time to time
amend, sufficient to support the department's costs in ensuring
compliance with and enforcing prevailing wage requirements on the
project, and labor compliance enforcement as set forth in subdivision
(b) of Section 1771.55 of the Labor Code. All fees collected
pursuant to this subdivision shall be deposited in the State Public
Works Enforcement Fund created by Section 1771.3 of the Labor Code,
and shall be used only for enforcement of prevailing wage
requirements on those projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) if the transit operator has previously been
granted approval by the director to initiate and operate a labor
compliance program on its projects and requests to continue to
operate that labor compliance program on its projects in lieu of
labor compliance by the department
          pursuant to subdivision (b) of Section 1771.55 of the Labor
Code. The fee shall not be waived for the transit operator if it
contracts with a third party to initiate and enforce labor compliance
programs on its projects.
   (d) (1) Each RFP shall identify the basic scope and needs of the
project or contract, the expected cost range, and other information
deemed necessary by the contracting agency to inform interested
parties of the contracting opportunity.
   (2) Each RFP shall invite interested parties to submit competitive
sealed proposals in the manner prescribed by the contracting agency.

   (3) Each RFP shall include a section identifying and describing:
   (A) All significant factors that the agency reasonably expects to
consider in evaluating proposals, including cost or price and all
nonprice-related factors.
   (B) The methodology and rating or weighting process that will be
used by the agency in evaluating competitive proposals and
specifically whether proposals will be rated according to numeric or
qualitative values.
   (C) The relative importance or weight assigned to each of the
factors identified in the RFP. If a nonweighted system is used, the
agency shall specifically disclose whether all evaluation factors
other than cost or price, when combined, are any of the following:
   (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.
   (D) If the contracting agency wishes to reserve the right to hold
discussions or negotiations with offerors, it shall specify the same
in the RFP and shall publish separately or incorporate into the RFP
applicable rules and procedures to be observed by the agency to
ensure that any discussions or negotiations are conducted in a fair
and impartial manner.
   (e) (1) The transit operator shall establish a procedure to
prequalify design-build entities using a standard questionnaire
developed by the Director of Industrial Relations. The standardized
questionnaire shall not require prospective bidders to disclose any
violations of Chapter 1 (commencing with Section 1720) of Part 7 of
Division 2 of the Labor Code committed prior to January 1, 1998, if
the violation was based on a subcontractor's failure to comply with
these provisions and the bidder had no knowledge of the subcontractor'
s violations and the bidder complied with the conditions set forth in
subdivision (b) of Section 1775 of the Labor Code. In preparing the
questionnaire, the director shall consult with the construction
industry, building trades, transit operators, and other affected
parties. This questionnaire shall require information relevant to the
architecture or engineering firm that will be the lead on the
design-build project. The questionnaire shall include, but is not
limited to, all of the following:
   (A) A listing of all the contractors that are part of the
design-build entity.
   (B) 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.
   (C) The licenses, registrations, and credentials required to
design and construct the project, including information on the
revocation or suspension of any license, credential, or registration.

   (D) 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, as well as a
financial statement that assures the transit operator that the
design-build entity has the capacity to complete the project.
   (E) 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 (P.L. 91-596),
settled against any member of the design-build entity, and
information concerning a contractor member's workers' compensation
experience history and worker safety program.
   (F) 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 by an awarding body not to be a responsible bidder.
   (G) Any instance where the entity, its owner, officers, or
managing employees defaulted on a construction contract.
   (H) 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.
   (I) Information concerning the bankruptcy or receivership of any
member of the entity, and information concerning all legal claims,
disputes, or lawsuits arising from any construction project of any
member of the entity during the past three years, including
information concerning any work completed by a surety.
   (J) 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 who will participate as
subcontractors in the design-build contract.
   (K) 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-year period
immediately 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.
   (L) 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 liable for full performance under the design-build
contract.
   (2) 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 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code) shall not be open to public inspection.
   (f) The transit operator shall establish a procedure for final
selection of the design-build entity. Selection shall be subject to
the following conditions:
   (1) In no case shall the transit operator award a contract to a
design-build entity pursuant to this article for a capital
maintenance or capacity-enhancing rail project unless that project
exceeds twenty-five million dollars ($25,000,000) in cost.
   (2) For nonrail transit projects that exceed two million five
hundred thousand dollars ($2,500,000), the transit operator may award
the project to the lowest responsible bidder or by using the best
value method.
   (3) For the acquisition and installation of technology
applications or surveillance equipment designed to enhance safety,
disaster preparedness, and homeland security efforts, there shall be
no cost threshold and the transit operator may award the contract to
the lowest responsible bidder or by using the best value method.
   (g) Except as provided in this section, nothing in this act shall
be construed to affect the application of any other law.
  SEC. 18.  Section 20209.24 of the Public Contract Code is amended
to read:
   20209.24.  (a) For contracts awarded prior to the effective date
of either the regulations adopted by the Department of Industrial
Relations pursuant to subdivision (b) of Section 1771.55 of the Labor
Code or the fee established by the department pursuant to
subdivision (b) the authority shall implement a labor compliance
program as described in Section 1771.5 of the Labor Code, or it shall
contract with a third party to implement on the authority's behalf a
labor compliance program subject to that statute. This requirement
does not apply to any project where the authority 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.
   (b) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fee established by the department pursuant to this subdivision,
the unified school district shall pay a fee to the department, in an
amount that the department shall establish, and as it may from time
to time amend, sufficient to support the department's costs in
ensuring compliance with and enforcing prevailing wage requirements
on the project, and labor compliance enforcement as set forth in
subdivision (b) of Section 1771.55 of the Labor Code. All fees
collected pursuant to this section shall be deposited in the State
Public Works Enforcement Fund created by Section 1771.3 of the Labor
Code, and shall be used only for enforcement of prevailing wage
requirements on those projects.
   (c) The Department of Industrial Relations may waive the fee set
forth in subdivision (b) if the unified school district has
previously been granted approval by the director to initiate and
operate a labor compliance program on its projects and requests to
continue to operate that labor compliance program on its projects in
lieu of labor compliance by the department pursuant to subdivision
(b) of Section 1771.55 of the Labor Code. The fee shall not be waived
for the unified school district if it contracts with a third party
to initiate and enforce labor compliance programs on its projects.
  SEC. 19.  Section 20919.3 of the Public Contract Code is amended to
read:
   20919.3.  (a) (1) For contracts awarded prior to the effective
date of either the regulations adopted by the Department of
Industrial Relations pursuant to subdivision (b) of Section 1771.55
of the Labor Code or the fees established by the department pursuant
to paragraph (2), the unified school district shall establish and
enforce for job order contracts 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 that provision. This
requirement does not apply to any project where the unified school
district or the job order contractor has entered into any collective
bargaining agreement or agreements that bind all of the contractors
performing work on the projects.
   (2) For contracts awarded on or after the effective date of both
the regulations adopted by the Department of Industrial Relations
pursuant to subdivision (b) of Section 1771.55 of the Labor Code and
the fees established by the department pursuant to this paragraph,
the unified school district shall pay a fee to the department, in an
amount that the department shall establish, and as it may from time
to time amend, sufficient to support the department's costs in
ensuring compliance with and enforcing prevailing wage requirements
on the project, and labor compliance enforcement as set forth in
subdivision (b) of Section 1771.55 of the Labor Code. All fees
collected pursuant to this subdivision shall be deposited in the
State Public Works Enforcement Fund created by Section 1771.3 of the
Labor Code, and shall be used only for enforcement of prevailing wage
requirements on those projects.
   (3) The Department of Industrial Relations may waive the fee set
forth in paragraph (2) if the unified school district has previously
been granted approval by the director to initiate and operate a labor
compliance program on its projects and requests to continue to
operate that labor compliance program on its projects in lieu of
labor compliance by the department pursuant to subdivision (b) of
Section 1771.55 of the Labor Code. The fee shall not be waived for
the unified school district if it contracts with a third party to
initiate and enforce labor compliance programs on its projects.
   (b) The unified school district shall prepare an execution plan
for all modernization projects that may be eligible for job order
contracting pursuant to this article. The unified school district
shall select from that plan a sufficient number of projects to be
initiated as job order contracts during each calendar year and shall
determine for each selected project that job order contracting will
reduce the total cost of that project. Job order contracting shall
not be used if the unified school district finds that it will
increase the total cost of the project.
   (c) No later than June 30, 2005, the unified school district shall
submit an interim report on all job order contract projects
completed by December 31, 2004, to the Office of Public School
Construction in the Department of General Services and the Senate and
the Assembly Committees on Business and Professions and the Senate
and Assembly Committees on Education. The interim report shall be
prepared by an independent third party and the unified school
district shall pay for the cost of the report. The report shall
include the information specified in subdivisions (a) through (h) of
Section 20919.12.
  SEC. 20.  Section 8007 is added to the Water Code, to read:
   8007.  A capital improvement project undertaken by a charter city
to extend that city's water, sewer, or storm drain system or similar
system to a disadvantaged community in an unincorporated area shall
be considered a public work for the purpose of Section 1720 of the
Labor Code, but any subsequent project to construct, expand,
reconstruct, install, or repair such systems that have been so
extended and that are conducted within that city's political
boundaries shall not be considered a public work for the purpose of
Section 1720 of the Labor Code as a result of the extension. For the
purpose of this section, "disadvantaged community" means a
disadvantaged community as defined in Section 79505.5.