BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 155 HEARING: 6/25/14
AUTHOR: Alejo FISCAL: No
VERSION: 6/17/14 TAX LEVY: No
CONSULTANT: Weinberger
MONTEREY COUNTY WATER RESOURCES AGENCY'S
DESIGN-BUILD CONTRACTS (URGENCY)
Allows the Monterey County Water Resources Agency to use
design-build contracting to construct a pipeline or tunnel
connecting two lakes owned and operated by the agency.
Background and Existing Law
The Local Agency Public Construction Act requires local
officials to invite bids for construction projects and then
award contracts to the lowest responsible bidder. This
design-bid-build method is the traditional, and most
widely-used, approach to public works construction. This
approach splits construction projects into two distinct
phases: design and construction. During the design phase,
the local agency prepares detailed project plans and
specifications using its own employees or by hiring outside
architects and engineers. Once project designs are
complete, local officials invite bids from the construction
community and award the contract to the lowest responsible
bidder.
State law also allows state and local officials to use the
design-build method to procure both design and construction
services from a single company before the development of
complete plans and specifications. Under design-build, a
public agency contracts with a single entity - which can be
a single firm, a consortium, or a joint venture - to design
and construct a project. Before inviting bids, the agency
prepares documents that describe the basic concept of the
project, as opposed to a complete set of drawings and
specifications of what will be constructed. In the bidding
phase, the agency typically evaluates bids on a best-value
basis, incorporating technical factors, such as
qualifications and design quality, in addition to price.
AB 155 -- 6/17/14 -- Page 2
All counties can use the design-build method to construct
buildings and related improvements and wastewater treatment
facilities that cost more than $2.5 million (SB 416,
Ashburn, 2007). Similarly, all cities can use the
design-build method to construct buildings and related
improvements worth more than $1 million (AB 642, Wolk,
2008). A pilot program also permits cities, counties, and
special districts to use the design-build method to
construct 20 local wastewater treatment facilities, local
solid waste facilities, or local water recycling facilities
(AB 642, Wolk 2008).
The Legislature also has passed several bills authorizing
individual special districts to construct projects using
the same design-build contracting procedures used by
counties:
AB 674 (Dutra, 2001) allowed the Santa Clara Valley
Water District to use counties' design-build
procedures for building construction contracts.
SB 645 (Correa, 2007) allowed the Orange County
Sanitation District to use counties' design-build
procedures to build projects in excess of $6 million,
including public wastewater facilities.
SB 1699 (Wiggins, 2008) allowed the Sonoma Valley
Hospital District to use counties' design-build
procedures to construct a building or improvements at
the Sonoma Valley Hospital.
SB 268 (Gaines, 2014) allowed the Last Frontier
Health Care District to use counties' design-build
procedures to construct a building or improvements at
the Modoc Medical Center.
The Monterey County Water Resources Agency (MCWRA) is a
special act special district created to function as a flood
control and water agency in Monterey County (SB 2580,
Mello, 1990). MCWRA manages Lake Nacimiento and Lake San
Antonio, two reservoirs on the Salinas River. Because Lake
Nacimiento's watershed fills that reservoir nearly three
times faster than Lake San Antonio is filled by its
watershed, MCWRA officials must sometimes release water
from Lake Nacimiento, when it is at capacity, while Lake
San Antonio still has excess storage available. MCWRA
officials are considering building a tunnel or pipeline
between Lake Nacimiento and Lake San Antonio to redirect
water from Lake Nacimiento that would otherwise be released
out to sea and use it, instead, to fill excess capacity in
AB 155 -- 6/17/14 -- Page 3
Lake San Antonio.
Proposed Law
Assembly Bill 155 allows the Monterey County Water
Resources Agency, notwithstanding any other law, to award a
design-build contract for the combined design and
construction of a project to connect Lake San Antonio and
Lake Nacimiento with an underground tunnel or pipeline for
the purpose of maximizing water storage, supply, and
groundwater recharge at the lakes, and within the Salinas
Valley Groundwater Basin and the Salinas Valley proper,
including all necessary subsurface and surface
improvements.
AB 155 specifies that MCWRA may utilize a design-build
contract solely for the project to connect the two lakes
with an underground tunnel or pipeline, as defined in the
bill, and for no other purpose.
AB 155 requires that, if MCWRA does award a design-build
contract as authorized by the bill, it must:
Establish a procedure for the selection of the
design-build entity for the project.
Award the contract based upon a written proposal
that is determined to be the most advantageous to the
agency.
Ensure that the design-build entity selected for
the project enters into a project labor agreement that
will bind all of the contractors performing work on
the project.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . When it comes to public works
projects, taxpayers want local officials to hold down
costs, but they also want to be sure that their tax dollars
are spent wisely. While the traditional contracting
process minimizes opportunities for public officials to
AB 155 -- 6/17/14 -- Page 4
award construction contracts based on subjective factors,
it also can be more time consuming and more expensive than
the design-build method. Faced with severely reduced water
supplies caused by the drought, the Monterey County Water
Resources Agency wants to use design-build contracting to
streamline the bidding process and speed up the completion
of its project to increase water storage by connecting Lake
San Antonio and Lake Nacimiento. The drought conditions
not only create an urgent need for additional water but
also, by lowering the level of Lake San Antonio, have made
it easier to construct a tunnel or pipeline. MCWRA
officials anticipate that using the design-build method
will speed up the construction process, thereby benefitting
taxpayers and helping to ensure that the agency will expand
its water storage capabilities in a timely manner.
2. One of these things is not like the others . When
authorizing individual special districts to use the
design-build contracting method, the Legislature has
consistently specified that those districts must comply
with the statutory requirements governing counties'
design-build contracts. The counties' design-build statute
specifically defines the "best value" criteria that must be
considered as part of the design-build contracting process
and requires that counties must request interested parties
to submit competitive sealed proposals. By contrast, AB
155 does not specify what criteria MCWRA officials must
consider as part of their procurement process and doesn't
require the district to solicit competitive proposals. The
bill doesn't even explicitly require price to be considered
in awarding a contract for MCWRA's pipeline or tunnel
project. To remain consistent with the precedent
established in other special districts' design-build
statutes, the Committee may wish to consider amending AB
155 to specify that the district may award a contract using
the same design-build contracting procedures used by
counties.
3. Try, try again . AB 155 is not MCWRA's first effort to
get the Legislature to grant it design-build contracting
authority. SB 908 (Denham, 2003) would have allowed MCWRA
to use the design-build contracting method to build an
$11.5 million seasonal diversion dam on the lower Salinas
River as part of a seawater intrusion project. The Senate
Local Government Committee's analysis of SB 908 noted that
the bill's definition of best value would have allowed the
AB 155 -- 6/17/14 -- Page 5
district to award a contract based on "other criteria
deemed appropriate." The analysis expressed concern that
local officials could deem just about anything
"appropriate" and suggested that an open-ended list of
criteria invites favoritism and collusion. SB 908 died in
the Senate Local Government Committee.
4. Related legislation . Earlier this year, the Committee
approved SB 268 (Gaines, 2014) which authorized the Last
Frontier Health Care District to use the design-build
contracting method for it planned hospital construction
project. Last year, the Governance & Finance Committee
approved SB 785 (Wolk, 2013), which repeals state laws
authorizing state and local government agencies to use
design-build contracting and enacts new, uniform statutes
governing agencies' design-build contracts. That bill is
currently awaiting a vote on the Senate Floor.
5. Urgency . Regular statutes take effect on January 1
following their enactment; bills passed in 2014 take effect
on January 1, 2015. The California Constitution allows
bills with urgency clauses to take effect immediately if
they're needed for the public peace, health, and safety.
AB 155 contains an urgency clause declaring that it is
necessary for its provisions to go into effect immediately
to mitigate the conditions within the County of Monterey
caused by the current drought.
6. Special legislation . The California Constitution
prohibits special legislation when a general law can apply
(Article IV, §16). AB 155 contains findings and
declarations explaining the need for legislation that
applies only to the Monterey County Water Resources Agency.
7. Gut and amend . As introduced and passed by the
Assembly, AB 155 clarified employees' rights to access
their payroll records. In February, 2014, AB 155 was
amended to delete that language and insert language
requiring the Monterey County Water Resources Agency to
establish a Salinas River Management Program. The Senate
Governance & Finance Committee never heard either of those
versions of the bill. The June 9 amendments again deleted
AB 155's contents and inserted the current language
relating to design-build contracts for the Monterey County
Water Resources Agency.
AB 155 -- 6/17/14 -- Page 6
Assembly Actions
Not relevant to the June 17 version of the bill.
Support and Opposition (6/19/14)
Support : Monterey County Water Resources Agency; CH2M Hill.
Opposition : Associated Builders and Contractors of
California; Western Electrical Contractors Association;
Plumbing-Heating-Cooling Contractors Association of
California; Associated Builders and Contractors - San Diego
Chapter; Air Conditioning Trade Association.