BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           879 (Cox)
          
          Hearing Date:  05/10/2010           Amended: 04/26/2010
          Consultant: Mark McKenzie       Policy Vote: L Gov 3-2
          _________________________________________________________________ 
          ____
          BILL SUMMARY:   SB 879 would make the following changes to the  
          authority for cities and counties to use the design-build  
          procurement method for contracting:
           Extend the authority for counties to use design-build for five  
            years, require an additional report of information to the  
            Legislative Analyst's Office (LAO), and require the LAO to  
            report to the Legislature.  The reporting requirements and  
            sunset date for the county authority would align with the  
            existing sunset and reporting requirements for cities'  
            authority to use of design-build.
           Lower the cost threshold for county design-build projects from  
            $2.5 million to $1 million.
           Require prospective design-build entities to disclose detailed  
            information if a court found that the firm submitted a claim  
            that violated federal or state False Claims Acts.
           Require a successful design-build entity to submit lists of  
            subcontractors, bidders, and bid awards within 14 days of the  
            awarding of the contract.  These documents would be public  
            records and available for public inspection.
           Make several other changes to make the county and city  
            authority and requirements consistent.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

          Major Provisions         2010-11      2011-12       2012-13     Fund
           DIR: LCP oversight     minor costs, covered by fees     Special*

          LAO report             minor costs to add county  
          design-buildGeneral
                                 information to existing city design-build  
          report
          ____________
          * State Public Works Enforcement Fund (a continuously  
          appropriated fund)
          _________________________________________________________________ 
          ____











          STAFF COMMENTS: 
          
          Existing law requires public entities to comply with certain  
          procedures in soliciting and evaluating bids and awarding  
          contracts for the construction of public works.  The traditional  
          approach to public contracting is referred to as the  
          design-bid-build method, which requires local officials to  
          invite bids for construction projects, based on a completed set  
          of engineering plans, then award the construction bid to the  
          lowest bidder.  Current law authorizes all cities and counties  
          to utilize the design-build method, by which a public entity can  
          procure both design and construction services from a single  
          company before the development of complete plans and  
          specifications.  County design-build authority expires on  
          January 1, 2011, while cities' authority sunsets on January 1,  
          2016.  The LAO recently reported on counties' experience with  
          the design-build method.  A report on cities' use of  
          design-build is due to the Legislature on January 1, 2015.
          Page 2
          SB 879 (Cox)

          Existing law requires cities and counties that elect to use  
          design-build to pay a fee into the State Public Works  
          Enforcement Fund to pay for the Department of Industrial  
          Relations' (DIR) enforcement of prevailing wage requirements on  
          public works projects through labor compliance programs (LCPs).   
          By extending the sunset on county design-build authority for  
          five years, this bill would extend the terms of a continuously  
          appropriated special fund, thereby making an appropriation.   
          Costs for DIR to administer LCPs for counties that use  
          design-build would be minor and fully covered by the fees.

          SB 879 would require counties that use design-build pursuant to  
          the extended authority provided in this bill to report specified  
          information on their use of design-build to the LAO by December  
          1, 2014.  The LAO would compile that information and report to  
          the Legislature by January 1, 2015.  The authority for counties  
          to use design-build would sunset on January 1, 2016.  Staff  
          notes that current law imposes the same reporting requirements  
          and timelines on cities and the LAO with respect to cities' use  
          of design-build.  Costs to compile additional county information  
          and include it in the same LAO report would be minor.

          The LAO recently issued a report on county governments'  
          experience with constructing projects with the design-build  










          delivery method.  The report included information provided by  
          counties on 15 design-build projects from nine counties; only  
          five of the projects were completed at the time the reports were  
          submitted.  The LAO indicated that it was difficult to draw  
          conclusions from the small sampling of reports received about  
          the effectiveness of design-build compared to other delivery  
          methods, but there was no evidence to discourage the Legislature  
          from continuing authority for local agencies to use  
          design-build.  The LAO recommends that extended authorization  
          for use of the design-build statutes should include a uniform  
          and consistent statute providing the same authority and  
          limitations to all local agencies, and recommends that project  
          cost should constitute a larger factor in awarding the contract.  
           While SB 879 makes the county and city design-build authority  
          consistent, the bill does not include any changes to the  
          design-build statutes that make price a more important  
          consideration in the award of the contract.