BILL ANALYSIS Ó
AB 155
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 155 (Alejo)
As Amended August 12, 2014
Majority vote
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|ASSEMBLY: | |(May 30, 2013 ) |SENATE: |25-10|(August 18, |
| | | | | |2014) |
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(vote not relevant)
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|COMMITTEE VOTE: |5-2 |(August 27, 2014) |RECOMMENDATION: |Concur |
|(L. Gov.) | | | | |
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Original Committee Reference: L. & E.
SUMMARY : Allows the Monterey County Water Resources Agency
(Agency) to use design-build contracting to construct a pipeline or
tunnel that will connect two reservoirs that the Agency owns and
operates.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Allow the Agency, upon approval by its Board of Directors (Board)
to use the design-build (DB) process authorized under current law
for counties to assign contracts for the design and construction
of a project that will connect Lake San Antonio, located in
Monterey County, and Lake Nacimiento, located in San Luis Obispo
County (the lakes).
2)Specify that the project will connect the lakes with an
underground tunnel or pipeline for the purpose of maximizing
water storage, supply, and groundwater recharge at the lakes, and
within the Salinas River Groundwater Basin (Basin) and the
Salinas Valley (Valley) proper.
3)Require the Agency to ensure that the DB entity selected for the
project enters into a project labor agreement (PLA) that will
bind all of the contractors performing work on the project.
4)Provide that the Agency may utilize a DB process solely to award
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contracts for the project specified in this bill and for no other
purpose.
5)Provide definitions for the authority granted under this bill and
makes a number of findings and declarations regarding the Valley,
its economic benefits to the state, the impacts of drought
conditions on the economic viability and agricultural production
of the Valley, the role the lakes play in the Basin, prior Agency
projects to improve water storage and groundwater recharge in the
Basin, and the expected benefits of using DB in the Agency's
proposal to connect the lakes.
6)Declare that a special law is necessary because of the unique
circumstances of the Agency.
7)Provide chaptering language that allows the Agency to use instead
the DB procedure for local agencies as established by SB 785
(Wolk) of the current legislative session, if SB 785 is enacted
and takes effect on or before January 1, 2015.
AS PASSED BY THE ASSEMBLY , this bill provided that a current or
former employee has a right to receive a copy of their payroll
records.
FISCAL EFFECT : None
COMMENTS :
1)Monterey County Water Resources Agency. The Agency is a special
act special district created as a flood control and water agency
in Monterey County. The Agency manages Lake Nacimiento and Lake
San Antonio, two reservoirs that provide flood control, water
supply and recreation in the Salinas Valley. Lake Nacimiento's
watershed fills the Lake Nacimiento reservoir nearly three times
faster than Lake San Antonio's watershed fills that reservoir.
The Agency often releases water from Lake Nacimiento because it
reaches its capacity, even when Lake San Antonio still has excess
storage available. Agency officials have proposed 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, instead, use it to fill excess capacity
in Lake San Antonio.
2)Author's statement. According to the author, "AB 155 will
authorize the Monterey County Water Resource Agency to award a
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design-build contract for the combined design and construction of
a project to connect Lake San Antonio and Lake Nacimiento with an
underground pipeline for the purpose of maximizing water storage,
supply, and groundwater recharge.
"The Salinas Valley contains some of the most fertile land in the
world and is one of the largest agricultural production areas in
the state. Due to the expansive economic impact of the area's
agricultural production, a consistent and adequate water supply
is needed to ensure the general economic well-being of the local
economy and its contributions to the state.
"The project considered under this bill will maximize overall
water storage at the lakes by allowing the conveyance of water to
Lake San Antonio for storage that may otherwise overflow from
Lake Nacimiento. This will improve the benefits provided by the
lakes and the Salinas Valley Water Project to the basin and the
valley. It will mitigate the impact of the drought, and improve
the economic viability of the valley, the environmental
sustainability of the region, and agricultural production."
3)Design-build and public works projects. State law generally
requires public agencies to invite bids for construction projects
and then award contracts to the lowest responsible bidder. This
design-bid-build method is the traditional approach to public
works construction.
Under the DB method, a single contract covers the design and
construction of a project with a single company or consortium
that acts as both the project designer and builder. The DB
entity arranges all architectural, engineering, and construction
services, and is responsible for delivering the project at a
guaranteed price and schedule based upon performance criteria set
by the public agency. The DB method can be set by the public
agency. The DB method can be faster and, therefore, cheaper,
than the design-bid-build method, but it requires a higher level
of management sophistication since design and construction may
occur simultaneously.
Advocates for the DB method of contracting for public works
contend that project schedule savings can be realized because
only a single request for proposals is needed to select the
project's designer and builder. The more traditional
design-bid-build project approach requires the separate selection
of the design consultant or contractor, completion of design, and
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then advertising for bids and selection of the construction
contractor. Proponents add that DB allows the overlap of design
and construction activities, resulting in additional time savings
and lower project costs. By avoiding the delays and change
orders that result from the traditional design-bid-build method
of contracting, proponents argue that DB can deliver public works
faster and cheaper.
Detractors of DB contend that it eliminates competitive bidding,
allows the private contractor or consortium to inspect and sign
off on their own work, and increases project delivery costs.
All counties can use the DB method to construct buildings and
related improvements and wastewater treatment facilities that
cost more than $2.5 million. Similarly, all cities can use DB to
construct buildings and related improvements worth more than $1
million. A pilot program also permits cities, counties, and
special districts to use DB to construct a total of 20 local
wastewater treatment facilities, local solid waste facilities, or
local water recycling facilities. The Legislature also has
passed a number of bills authorizing some special districts to
construct projects using DB.
4)Legislative Analyst's Office (LAO) reports and recommendations on
design-build. The LAO issued a report to the Legislature on
February 3, 2005, titled Design-Build: An Alternative
Construction System, which reported on all DB authorities granted
to various types of government entities. After analyzing the
claims of proponents and opponents and reviewing the experience
of local agencies that were authorized to use DB at the time, the
LAO recommended that "the Legislature grant design-build
authority only to buildings and directly related infrastructure.
There are more complex issues associated with other public works
projects such as transportation, public transit, and water
resources facilities. Evaluation of design-build as a
construction delivery option for these other infrastructure
facilities is beyond the scope of this report."
In January of 2010, the LAO issued a second report, this time
updating the Legislature on the use of DB by counties in
California, based on data received from counties that utilized
this methodology. In the report, LAO states that "although it
was difficult to draw conclusions from the reports received about
the effectiveness of design-build compared to other project
delivery methods, we do not think that the reports provide any
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evidence that would discourage the Legislature from granting
design-build authority to local agencies on an ongoing basis. In
doing so, however, we recommend the Legislature consider some
changes such as creating a uniform design-build statute,
eliminating cost limitations, and requiring project cost to be a
larger factor in awarding the design-build contract."
5)Project labor agreements. A PLA is a pre-hire agreement that
establishes the terms and conditions of employment for a specific
construction project. They are completed before any workers are
hired to determine the wage rates and benefits of all employees
working on the project and to agree to prevent any strikes,
lockouts, or other work stoppages for the duration of the
project. The terms of the agreement apply to all contractors and
subcontractors who successfully bid on the project, union or
non-union, and supersede any existing collective bargaining
agreements.
PLAs are used on both public and private projects, and their
specific provisions are tailored by the contracting parties to
meet the needs of a particular project. By governing and
establishing work rules, pay rates, and dispute resolution
processes for every worker on the project, PLAs can maximize
project stability, efficiency and productivity. PLAs can also
help minimize the risks and inconvenience to the public that can
accompany public works projects, helping ensure that projects are
completed on time and on or under budget.
According to a 2001 California Research Bureau report, "PLAs are
arguably the most important change in labor management relations
in the construction industry in recent years. They have become a
fairly common part of the organization of major construction
projects in California? Construction of Shasta Dam, which ran
from 1938 to 1944, was the first project involving a PLA in
California. It was a remarkable success, at least in the sense
that the project was completed without a labor strike, at a time
when other projects in the western states were plagued with
strikes and other labor disturbances. Other notable PLA projects
in California include the Bay Area Rapid Transit (BART), San
Francisco's Yerba Buena Project, Los Angeles' Blue Line, the Los
Angeles Convention Center, the San Joaquin Hills Corridor toll
road, the Eastside Reservoir Project (the reservoir now known as
Diamond Valley), the National Ignition Facility at Lawrence
Livermore Labs, San Francisco International Airport's newest
terminals, construction for several large school districts, and
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others.
"Perhaps surprisingly, private construction projects in
California are much more likely to use PLAs than are public
projects? nearly three-quarters (of the projects reviewed for the
report) were private sector agreements. In addition, 22 out of
23 private cogeneration electricity plants recently built or
under construction in California used PLAs.
"The legality of PLAs has been extensively tested in both federal
and state courts, and with respect to both private and public
construction projects. Their validity has been upheld in both
federal and state cases?
"PLAs involve some controversy, which fits within a 200 year-old
tradition of dispute about the role of trade unions in America.
In this case, the dispute comes especially from non-union
contractors, who object to PLA requirements that they get their
labor force from a union hiring hall and who argue that PLAs
increase construction costs. Construction firms and owners who
use PLAs judge that the cost savings from avoidance of labor
disputes and strikes during a construction project outweigh any
costs of complying with the PLA. They also value a PLA's role in
resolving disputes between the many kinds of unions involved in a
complex project over which union members should be doing
particular tasks. Dispute also occurs between construction firms
that use and value PLAs and those that do not."
On February 6, 2009, United States President Barack Obama issued
an Executive Order requiring the use of PLAs on Federal projects
of $25 million or more. According to the order, PLAs promote
efficient and timely completion of large-scale construction
projects and prevent many of the problems inherent in such
construction.
PLAs are not mandated under California law.
6)Recent Agency actions. The Agency's board of directors on July
28, 2014, voted to request that this bill be pulled, after
determining that its requirements will not assist the Agency in
meeting its objective of an expedited procurement process.
7)Related legislation. SB 268 (Gaines), Chapter 18, Statutes of
2014, allows the Last Frontier Health Care District to use the
design-build process when contracting for the construction of a
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building and improvements directly related to a hospital or
health facility building at the Modoc Medical Center.
SB 785 repeals existing law authorizing the Department of General
Services (DGS), the Department of Corrections and Rehabilitation
(CDCR), and local agencies to use the DB procurement process, and
enacts uniform provisions authorizing DGS, CDCR, and local
agencies to utilize the DB procurement process for specified
public works projects. SB 785 is pending in the Assembly.
SB 1433 (Hill) of the current legislative session, extends the
sunset date on transit operators' authority to use DB for transit
projects, from January 1, 2015, to January 1, 2017. SB 1433 is
pending in the Assembly.
8)Prior legislation. SB 829 (Rubio), Chapter 11, Statutes of 2012,
prohibited the use of state funds for any charter city public
works projects if the charter city has banned the consideration
of the use of PLAs.
SB 922 (Steinberg), Chapter 431, Statutes of 2011, required PLAs
for public works projects to include specified provisions, and
prohibited the use of state funds for public works projects of
charter cities that have ordinances banning the use of PLAs,
beginning January 1, 2015.
SB 908 (Denham) of 2003, would have allowed the Agency to use the
DB procedure authorized for counties to build an $11.5 million
seasonal diversion dam on the lower Salinas River. SB 908 was
held in the Senate Local Government Committee.
9)Arguments in support. The Monterey County Board of Supervisors,
in support, writes, "?capturing high Nacimiento River flows and
diverting those flows to San Antonio Reservior increases the
overall storage capacity and effectiveness of the reservoir
system. AB 155 provides the opportunity for expedited
construction in the wake of the California drought. The drought
has resulted in low reservoir levels, thus lowering drilling and
construction costs since these activities will not be conducted
underwater."
10)Arguments in opposition. The Western Electrical Contractors
Association, the Plumbing-Heating-Cooling Contractors Association
of California, the Associated Builders and Contractors - San
Diego Chapter, and the Air Conditioning Trade Association, in
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opposition, state, "Unfortunately, (this bill includes) a mandate
'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'? PLAs are very
controversial in the construction industry. For the first time,
(this) bill mandates that a local agency insist upon a PLA for a
local construction project - a decision heretofore left to the
local agency to decide."
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
FN: 0005504