BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: SB 1509
AUTHOR: Simitian
INTRODUCED: February 24, 2012
FISCAL COMM: Yes HEARING DATE: April 11, 2012
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Design-Build Contracts.
SUMMARY
This bill deletes the existing sunset on the authority of school
districts to enter into a design-build contract for the design
and construction of a school facility, thereby permanently
establishing the authority of K-12 districts to enter into
design-build contracts.
BACKGROUND
Current law authorizes a school district governing board to
enter into a design-build contract for the design and
construction of a school facility for projects in excess of two
million five hundred thousand dollars ($2,500,000) if, after
evaluating traditional design-bid-build and design build
processes in a public meeting, the governing board makes written
findings that use of the design-build process on a specific
project will either:
Reduce comparable project costs.
Expedite the project's completion.
Provide features not achievable through the traditional
design-bid-build method.
Current law establishes specific procedures for the progression
of a K-12 school facility design-build project, outlines the
specific elements to be included in a request for proposal
(including significant factors, subfactors, methodology, rating
and weighting schemes for evaluating proposals), and
establishes, among other things, pre-qualification, bonding, and
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labor compliance program requirements.
(Education Code § 17250.10 - § 17250.50)
Current law also provides parallel authority, procedures and
requirements for community college district governing boards to
conduct design build projects.
(EC § 81700 - § 81708)
ANALYSIS
This bill deletes the current sunset (January 1, 2014) on the
authority of a school district governing board to enter into a
design-build contract, thereby permanently establishing the
authority of K-12 districts to enter into design-build
contracts.
STAFF COMMENTS
1) What is design-build ? There are two primary construction
delivery systems used in the public and private sectors,
"design-bid-build" and "design-build."
Current law requires that school districts award
construction contracts over $15,000 to the lowest
responsible bidder. Current law also allows contracts for
architectural services to be awarded on the basis of
demonstrated competence and professional qualifications to
be performed at a fair and reasonable price (not
necessarily lowest bidder). These laws have meant that
schools (and most public construction work) have been built
using a "design-bid-build" methodology wherein a separate
contract is awarded for the design work by an architect and
another contract is awarded to the lowest responsible
bidder for the construction.
In the 1990's, the state began the enactment of various
legislation authorizing state and local entities to use a
"design-build" system under specified circumstances.
Under this approach a single contract is awarded to a
professional team, a "design-build" entity, to conduct both
types of work. Rather than awarding such a contract to the
lowest responsible bidder, it may be awarded on the basis
of the experience and qualifications of the competitors, or
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on a determination that a particular competitor provides
the best value to the project.
2) Drafting error correction . According to the author, is the
intent to eliminate the sunset on the design-build
authority for both community college and school district
governing boards. As the result of a drafting error, the
bill's provisions currently only delete the sunset for K-12
school districts. Staff recommends the bill be amended to
reflect the author's intent to delete the sunset on the
authority to enter into design-build contracts for
community college districts.
3) Prior Legislation .
a) AB 1402 (Simitian, Chapter 421, 2001) authorized
K-12 school districts to enter into design-build
contracts for construction of school facilities
costing in excess of ten million dollars
($10,000,000). AB 1402 also required the Legislative
Analyst Office (LAO) to submit a report by January 1,
2006, providing specified information and making
recommendations for changing the design-build
legislation. It also provided for the repeal of its
provisions as of January 1, 2007.
AB 1000 (Simitian, Chapter 637, 2002) authorized three
specific community college districts (Los Angeles
Community College District, San Jose-Evergreen
Community College District and the San Mateo Community
College District) to enter into design-build contracts
for construction of facilities costing in excess of
$10 million. In addition, AB 1000 authorized the
Chancellor of the California Community Colleges to
select up to five community college facility
construction projects from districts other than the
three specified to use the design build procedures
established by the bill's provisions. It also
required a report from the LAO by January 1, 2007,
providing specified information and making
recommendations for changing the design-build
legislation. AB 1000 provided for the repeal of its
provisions as of January 1, 2008.
b) Proposition 1D, authorized by AB 127 (Nunez and
Perata) and approved by the voters in November 2006,
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provided $7.3 billion for K-12 and $3.1 billion for
higher education facilities construction and
modernization projects. Among its provisions, AB 127
extended the repeal dates on the design-build statutes
established by AB 1402 and AB 1000 to January 1, 2010,
and January 1, 2011, respectively.
c) SB 614 (Simitian, Chapter 471, statutes of 2007)
made various changes to the design build provisions
including, reducing the contract threshold for these
projects from $10 million to $2.5 million, extending
the authority to enter into a design-build contract to
all community college districts, and extending the
sunset of the design build provisions to January 1,
2014.
4) How many projects ? According to data from the Office of
Public School Construction, school districts have reported
using design-build on 29 K-12 school facility projects. Of
these projects, two were completed in 2008, two completed
in 2009, and four projects completed in 2011. Nineteen
projects are either going through the funding process or
have already started construction but are not finished. Two
design-build projects failed to receive funding.
5) Related reports .
a) In February 2005, the LAO issued a report on
Design-Build: An Alternative Construction System in
which it reported its consolidated findings on
design-build across several public works sectors. The
LAO made the following recommendations:
i) The state should adopt a single statute
applying to all public
entities.
ii) Design-build be available as an option
and not a
replacement for "design-bid-build."
iii) Contracts for most of the project costs
should be objectively
awarded based on competitive bidding.
iv) No cost threshold should be imposed on
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the authority to use
design-build.
v) Access for small and newly established
contractors should
be assured by requiring that design build
contracts be awarded to contractors with
experience and qualifications that are consistent
with the needs of the project, rather than
limited to the biggest and longest-established
firms.
vi) The authority should only be granted to
construct buildings
and directly related infrastructure given the
more complex issues associated with
transportation, public transit, and water
resources facilities.
The LAO also noted that advantages of the design-build
delivery method included price certainty, avoidance of
conflicts and disputes between the architect/engineer
and the construction contractor, involvement of the
builder in the design process, faster project
delivery, and less need for technical staff to manage
projects within the public agency. Disadvantages noted
included a limited assurance of quality control since
the building is not typically defined in detail at the
time of entering into the contract, a more subjective
process for awarding contracts and evaluating
qualifications and experience, and limited access for
small contractors without the range of experience of
larger, long-established firms.
b) In January 2010, the LAO presented a summary of
reports received from California counties that had
completed construction projects using the design-build
delivery method, as required under the legislation
extending design-build authority to county governments
(Public Contract Code Section 20133).
i) The LAO noted that although difficult
to draw conclusions from the reports received
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about the effectiveness of design-build compared
to other project delivery methods, there was no
evidence to discourage the Legislature from
granting design-build authority to local agencies
on an ongoing basis.
ii) The LAO also recommended that the
Legislature consider some changes such as
creating uniform design-build statute,
eliminating cost limitations, and requiring
project cost to be a larger factor in awarding
the design-build contract.
SUPPORT
Coalition for Adequate School Housing
County School Facilities Consortium
Design-Build Institute of America, Western Pacific Region
Los Angeles Unified School District
San Mateo County Community College District
OPPOSITION
American Federation of State, County and Municipal Employees,
AFL-CIO
Professional Engineers in California Government (PECG)