BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1549|
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THIRD READING
Bill No: SB 1549
Author: Vargas (D)
Amended: 4/30/12
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-0, 4/17/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal,
Pavley, Rubio, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/24/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
SUBJECT : Transportation projects: alternative project
delivery methods
SOURCE : San Diego Association of Governments
DIGEST : This bill authorizes the San Diego Association
of Governments (SANDAG) to use specified alternative
project delivery methods for an unlimited number of transit
projects.
ANALYSIS : Existing law establishes the Design-Build
Demonstration Program, which authorizes local entities to
use the design-build method of procurement for up to five
projects and Department of Transportation (Caltrans) to use
IT for up to 10 projects, subject to the California
Transportation Commission (CTC) approval. The design-build
projects must be in one of the following: State
CONTINUED
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Transportation Improvement Program, Traffic Congestion
Relief Program, Proposition 1B, and the State Highway
Operations and Protection Program. In addition, regional
transportation planning agencies and Caltrans may enter
into an unlimited number of public private partnerships for
transportation projects until January 1, 2017. Finally,
state law allows use of the best value selection method for
procuring design-build services.
This bill:
1. Authorizes the use of an alternative project delivery
method if SANDAG makes a written finding in a public
meeting that use of the alternative method would reduce
project costs, expedite project completion, or provide
features not achievable through design-bid-build.
2. Requires SANDAG to reimburse the Department of
Industrial Relations (DIR) for service related to
prevailing wage monitoring and enforcement.
Alternatively, SANDAG may operate a labor compliance
program that is approved by DIR.
3. Requires SANDAG to award all construction
manager/general contractor (CMGC) projects according to
the procedures authorized in existing law for
design-build contracts, including awarding contracts
using the best value selection methodology.
Design-sequencing projects would be awarded pursuant to
existing requirements in the Public Contract Code,
including awarding contracts to the lowest responsible
bidder.
4. Requires SANDAG, when using the CMGC method, to enter
into a contract with a construction manager for
preconstruction services that includes a fee for those
services but may not include provisions for payment for
construction services. The contract would provide for
subsequent negotiation for construction.
5. Requires a CMGC construction services to be awarded
after plans are sufficiently developed and either a
fixed price or guaranteed maximum price, as specified.
If this cannot be negotiated, SANDAG is free to contract
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for construction using any procurement method authorized
by law.
6. Clarifies that Caltrans is responsible for
pre-construction project development services and
construction inspection services when projects are
constructed on state highways.
7. Requires SANDAG, upon completion of projects using an
alternative delivery method, to prepare a progress
report for its governing body that includes specified
information, including estimated and actual costs and
project completion schedules. This report would also be
posted on its website.
Comments
Purpose of this bill . SANDAG is the regional
transportation planning agency under state for San Diego
County and under federal law is the metropolitan planning
organization for the region. SANDAG also manages a local,
voter approved half-percent transportation sales tax.
SANDAG has a broad scope of authority. Central to all its
activities is the $214 billion regional transportation plan
that it intends to implement between now and 2050. SANDAG
believes that the authorization provided will provide it
with additional tools for constructing transportation
projects in San Diego County.
Alternative project delivery methods . The traditional
project delivery process is the design-bid-build. This
method requires the public agency to design a project and
put the plans out to bid to general contractors. The
agency awards the contract to the lowest, responsible
bidder. Design-bid-build procurement results in project
risks being largely borne by the agency that designs the
project. If plans are inadequate or there are
unanticipated construction issues, the agency bears the
financial burden through the issuance of change orders or
having to resolve construction claims by contractors.
In the last several years, public agencies have been
adopting alternative project delivery methods. The
principle reason for this is the desire to shift
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construction risk from the agency/owner to the project
contractor. The most widely used alternative project
delivery technique is design-build. This method requires
the public agency to prepare plans to 30% completion and
then put them out to bid to teams of engineers and general
contractors. The teams bid a fixed cost for the project.
The bids are evaluated using the best value methodology,
which includes evaluating a bid on the basis of
qualifications of the firm, proposed approach to design,
experience, and other factors. The design-contractor team
completes the project and commences construction. Because
the team finishes the design work, it carries most of the
risk associated with the adequacy of plans. Often
construction can commence on a phase of the project before
the entire project is designed, reducing the construction
time.
Design-sequencing . Design-sequencing is a method of
contracting that enables the sequencing of design
activities to permit each project construction phase to
commence when design for that phase is complete, rather
than requiring design for the entire project to be
completed before commencing construction. When the
contractor bids, the first phase of the project is
completed and the remaining phases must be at 30%
completion according to Caltrans guidelines. The award is
made to the lowest, responsible bidder. There is little
risk transfer from the public agency to the contractor
because the public agency is responsible for design. The
benefit of design-sequencing is assumed to be time savings.
State law has authorized design-sequencing but Caltrans'
authority lapsed in 2010. This bill authorizes Caltrans to
resume design-sequencing procurement for projects in San
Diego County.
CMGC . The CMGC project delivery method allows an agency to
engage a construction manager during the design process to
provide assistance to the design team, including advice
regarding scheduling, pricing, phasing, and other input
that helps the owner design a more constructible project.
The agency selects the construction manager on the basis of
qualifications, past experience, or a best-value basis.
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According to the Federal Highway Administration, when
design reaches approximately 60 to 90% completion, the
agency and the construction manager negotiate a guaranteed
maximum price for the construction of the project based on
the defined scope and schedule. If this price is
acceptable to both parties, a contract is executed for
construction services, and the construction manager becomes
the general contractor. The benefits of this procurement
method is that the public agency does not sacrifice control
over the design of the project and during the construction
phase the contractor is very familiar with the project
design resulting in less disputes over design issues.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee, potential
for increased transit project costs (Public Transportation
Account, State Transit Assistance Account, or Local Funds)
to the extent that the alternative project delivery method
chosen by SANDAG results in a higher overall project cost
than the traditional design-bid-build method. If an
alternative delivery method is chosen, SANDAG must make a
written finding in a public meeting that the alternative
method would provide a benefit that may be deemed to have a
greater value than project cost alone, such as expedited
project delivery or other features not achievable through
design-bid-build. The overall value of a project may be
measured by criteria other than cost.
SUPPORT : (Verified 5/24/12)
San Diego Association of Governments (source)
Automobile Club of Southern California
Metropolitan Transit System
Riverside County Transportation Commission
JJA:kc 5/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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