California Legislature—2013–14 Regular Session

Assembly Bill No. 195

Introduced by Assembly Member Hall

January 28, 2013

An act to amend Section 20133 of the Public Contract Code, relating to public contracts, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 195, as introduced, Hall. Counties: construction projects: design-build.

Existing law, until July 1, 2014, authorizes counties to use alternative procedures, known as design-build, for bidding on specified types of construction projects in the county in excess of $2,500,000, in accordance with specified procedures. These procedures include a requirement for contracts awarded after a certain date that a county board of supervisors pay a fee into the State Public Works Enforcement Fund, which funds are continuously appropriated for the Department of Industrial Relations’ enforcement of prevailing wage requirements on public works projects. These procedures also require specified information to be verified under oath.

This bill would extend these provisions until July 1, 2020. Because the additionally authorized projects would require payment of fees into the State Public Works Enforcement Fund, a continuously appropriated fund, it would make an appropriation. Also, because the bill would authorize additional contracts to be awarded under these provisions, which would be subject to the requirement that certain information be verified under oath, it would impose a state-mandated local program by expanding the scope of an existing crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 20133 of the Public Contract Code is
amended to read:

20133.  

(a) A county, with approval of the board of supervisors,
may utilize an alternative procedure for bidding on construction
projects in the county in excess of two million five hundred
thousand dollars ($2,500,000) and may award the project using
either the lowest responsible bidder or by best value.

(b) (1) It is the intent of the Legislature to enable counties to
utilize design-build for buildings and county sanitation wastewater
treatment facilities. It is not the intent of the Legislature to
authorize this procedure for other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructures.

(2) The Legislature also finds and declares that utilizing a
design-build contract requires a clear understanding of the roles
and responsibilities of each participant in the design-build process.

(3) (A) For contracts for public works projects awarded prior
to the effective date of regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, if the board of supervisors elects to proceed
under this section, the board of supervisors shall establish and
enforce a labor compliance program containing the requirements
outlined in Section 1771.5 of the Labor Code, or it shall contract
with a third party to operate a labor compliance program containing
the requirements outlined in Section 1771.5 of the Labor Code.
This requirement shall not apply to any projects where the county
or the design-build entity has entered into a collective bargaining
agreement that binds all of the contractors performing work on the
projects.

(B) For contracts for public works projects awarded on or after
the effective date of regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, the board of supervisors shall reimburse the
department for its reasonable and directly related costs of
performing prevailing wage monitoring and enforcement on public
works projects pursuant to rates established by the department as
set forth in subdivision (h) of Section 1771.5 of the Labor Code.
All moneys collected pursuant to this paragraph shall be deposited
in the State Public Works Enforcement Fund created by Section
1771.3 of the Labor Code, and shall be used only for enforcement
of prevailing wage requirements on those projects.

(C) In lieu of reimbursing the Department of Industrial Relations
for its reasonable and directly related costs of performing
monitoring and enforcement on public works projects, the board
of supervisors may elect to continue operating an existing
previously approved labor compliance program to monitor and
enforce prevailing wage requirements on the project if it has either
not contracted with a third party to conduct its labor compliance
program and requests and receives approval from the department
to continue its existing program or it enters into a collective
bargaining agreement that binds all of the contractors performing
work on the project and that includes a mechanism for resolving
disputes about the payment of wages.

(c) As used in this section:

(1) “Best value” means a value determined by objective criteria
related to price, features, functions, and life-cycle costs.

(2) “Design-build” means a procurement process in which both
the design and construction of a project are procured from a single
entity.

(3) “Design-build entity” means a partnership, corporation, or
other legal entity that is able to provide appropriately licensed
contracting, architectural, and engineering services as needed
pursuant to a design-build contract.

(4) “Project” means the construction of a building and
improvements directly related to the construction of a building,
and county sanitation wastewater treatment facilities, but does not
include the construction of other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructure.

(d) Design-build projects shall progress in a four-step process,
as follows:

(1) (A) The county shall prepare a set of documents setting
forth the scope of the project. The documents may include, but are
not limited to, the size, type, and desired design character of the
public improvement, performance specifications covering the
quality of materials, equipment, and workmanship, preliminary
plans or building layouts, or any other information deemed
necessary to describe adequately the county’s needs. The
performance specifications and any plans shall be prepared by a
design professional who is duly licensed and registered in
California.

(B) Any architect or engineer retained by the county to assist
in the development of the project specific documents shall not be
eligible to participate in the preparation of a bid with any
design-build entity for that project.

(2) (A) Based on the documents prepared in paragraph (1), the
county shall prepare a request for proposals that invites interested
parties to submit competitive sealed proposals in the manner
prescribed by the county. The request for proposals shall include,
but is not limited to, the following elements:

(i) Identification of the basic scope and needs of the project or
contract, the expected cost range, and other information deemed
necessary by the county to inform interested parties of the
contracting opportunity, to include the methodology that will be
used by the county to evaluate proposals and specifically if the
contract will be awarded to the lowest responsible bidder.

(ii) Significant objective factors that the county reasonably
expects to consider in evaluating proposals, including cost or price
and all nonprice related factors.

(iii) The relative importance of weight assigned to each of the
factors identified in the request for proposals.

(B) With respect to clause (iii) of subparagraph (A), if a
nonweighted system is used, the agency shall specifically disclose
whether all evaluation factors other than cost or price when
combined are:

(i) Significantly more important than cost or price.

(ii) Approximately equal in importance to cost or price.

(iii) Significantly less important than cost or price.

(C) If the county chooses to reserve the right to hold discussions
or negotiations with responsive bidders, it shall so specify in the
request for proposal and shall publish separately or incorporate
into the request for proposal applicable rules and procedures to be
observed by the county to ensure that any discussions or
negotiations are conducted in good faith.

(3) (A)  The county shall establish a procedure to prequalify
design-build entities using a standard questionnaire developed by
the county. In preparing the questionnaire, the county shall consult
with the construction industry, including representatives of the
building trades and surety industry. This questionnaire shall require
information including, but not limited to, all of the following:

(i) If the design-build entity is a partnership, limited partnership,
or other association, a listing of all of the partners, general partners,
or association members known at the time of bid submission who
will participate in the design-build contract, including, but not
limited to, mechanical subcontractors.

(ii) Evidence that the members of the design-build entity have
completed, or demonstrated the experience, competency, capability,
and capacity to complete, projects of similar size, scope, or
complexity, and that proposed key personnel have sufficient
experience and training to competently manage and complete the
design and construction of the project, as well as a financial
statement that assures the county that the design-build entity has
the capacity to complete the project.

(iii) The licenses, registration, and credentials required to design
and construct the project, including information on the revocation
or suspension of any license, credential, or registration.

(iv) Evidence that establishes that the design-build entity has
the capacity to obtain all required payment and performance
bonding, liability insurance, and errors and omissions insurance.

(v) Any prior serious or willful violation of the California
Occupational Safety and Health Act of 1973, contained in Part 1
(commencing with Section 6300) of Division 5 of the Labor Code,
or the federal Occupational Safety and Health Act of 1970 (Public
Law 91-596), settled against any member of the design-build entity,
and information concerning workers’ compensation experience
history and worker safety program.

(vi) Information concerning any debarment, disqualification,
or removal from a federal, state, or local government public works
project. Any instance in which an entity, its owners, officers, or
managing employees submitted a bid on a public works project
and were found to be nonresponsive, or were found by an awarding
body not to be a responsible bidder.

(vii) Any instance in which the entity, or its owners, officers,
or managing employees, defaulted on a construction contract.

(viii) Any violations of the Contractors’ State License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), excluding alleged violations of
federal or state law including the payment of wages, benefits,
apprenticeship requirements, or personal income tax withholding,
or of Federal Insurance Contributions Act (FICA; 26 U.S.C. Sec.
3101 et seq.) withholding requirements settled against any member
of the design-build entity.

(ix) Information concerning the bankruptcy or receivership of
any member of the design-build entity, including information
concerning any work completed by a surety.

(x) Information concerning all settled adverse claims, disputes,
or lawsuits between the owner of a public works project and any
member of the design-build entity during the five years preceding
submission of a bid pursuant to this section, in which the claim,
settlement, or judgment exceeds fifty thousand dollars ($50,000).
Information shall also be provided concerning any work completed
by a surety during this period.

(xi) In the case of a partnership or an association that is not a
legal entity, a copy of the agreement creating the partnership or
association and specifying that all partners or association members
agree to be fully liable for the performance under the design-build
contract.

(xii) (I) Any instance in which the entity, or any of its members,
owners, officers, or managing employees was, during the five years
preceding submission of a bid pursuant to this section, determined
by a court of competent jurisdiction to have submitted, or legally
admitted for purposes of a criminal plea to have submitted either
of the following:

(ia) Any claim to any public agency or official in violation of
the federal False Claims Act (31 U.S.C. Sec. 3729 et seq.).

(ib) Any claim to any public official in violation of the
California False Claims Act (Article 9 (commencing with Section
12650) of Chapter 6 of Part 2 of Division 3 of the Government
Code).

(II) Information provided pursuant to this subdivision shall
include the name and number of any case filed, the court in which
it was filed, and the date on which it was filed. The entity may
also provide further information regarding any such instance,
including any mitigating or extenuating circumstances that the
entity wishes the county to consider.

(B) The information required pursuant to this subdivision shall
be verified under oath by the entity and its members in the manner
in which civil pleadings in civil actions are verified. Information
that is not a public record pursuant to the California Public Records
Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code) shall not be open to public
inspection.

(4) The county shall establish a procedure for final selection of
the design-build entity. Selection shall be based on either of the
following criteria:

(A) A competitive bidding process resulting in lump-sum bids
by the prequalified design-build entities. Awards shall be made to
the lowest responsible bidder.

(B) A county may use a design-build competition based upon
best value and other criteria set forth in paragraph (2). The
design-build competition shall include the following elements:

(i) Competitive proposals shall be evaluated by using only the
criteria and selection procedures specifically identified in the
request for proposal. However, the following minimum factors
shall each represent at least 10 percent of the total weight of
consideration given to all criteria factors: price, technical design,
and construction expertise, life cycle costs over 15 years or more,
skilled labor force availability, and acceptable safety record.

(ii) Once the evaluation is complete, the top three responsive
bidders shall be ranked sequentially from the most advantageous
to the least.

(iii) The award of the contract shall be made to the responsible
bidder whose proposal is determined, in writing, to be the most
advantageous.

(iv) Notwithstanding any provision of this code, upon issuance
of a contract award, the county shall publicly announce its award,
identifying the contractor to whom the award is made, along with
a written decision supporting its contract award and stating the
basis of the award. The notice of award shall also include the
county’s second and third ranked design-build entities.

(v) For purposes of this paragraph, “skilled labor force
availability” shall be determined by the existence of an agreement
with a registered apprenticeship program, approved by the
California Apprenticeship Council, which has graduated
apprentices in each of the preceding five years. This graduation
requirement shall not apply to programs providing apprenticeship
training for any craft that has been deemed by the Department of
Labor and the Department of Industrial Relations to be an
apprenticeable craft in the five years prior to enactment of this act.

(vi) For purposes of this paragraph, a bidder’s “safety record”
shall be deemed “acceptable” if its experience modification rate
for the most recent three-year period is an average of 1.00 or less,
and its average total recordable injury/illness rate and average lost
work rate for the most recent three-year period does not exceed
the applicable statistical standards for its business category or if
the bidder is a party to an alternative dispute resolution system as
provided for in Section 3201.5 of the Labor Code.

(e) (1) Any design-build entity that is selected to design and
build a project pursuant to this section shall possess or obtain
sufficient bonding to cover the contract amount for nondesign
services, and errors and omission insurance coverage sufficient to
cover all design and architectural services provided in the contract.
This section does not prohibit a general or engineering contractor
from being designated the lead entity on a design-build entity for
the purposes of purchasing necessary bonding to cover the activities
of the design-build entity.

(2) Any payment or performance bond written for the purposes
of this section shall be written using a bond form developed by
the county.

(f) All subcontractors that were not listed by the design-build
entity in accordance with clause (i) of subparagraph (A) of
paragraph (3) of subdivision (d) shall be awarded by the
design-build entity in accordance with the design-build process
set forth by the county in the design-build package. All
subcontractors bidding on contracts pursuant to this section shall
be afforded the protections contained in Chapter 4 (commencing
with Section 4100) of Part 1. The design-build entity shall do both
of the following:

(1) Provide public notice of the availability of work to be
subcontracted in accordance with the publication requirements
applicable to the competitive bidding process of the county.

(2) Provide a fixed date and time on which the subcontracted
work will be awarded in accordance with the procedure established
pursuant to this section.

(g) Lists of subcontractors, bidders, and bid awards relating to
the project shall be submitted by the design-build entity to the
awarding body within 14 days of the award. These documents are
deemed to be public records and shall be available for public
inspection pursuant to this chapter and Article 1 (commencing
with Section 6250) of Chapter 3.5 of Division 7 of the Government
Code.

(h) The minimum performance criteria and design standards
established pursuant to paragraph (1) of subdivision (d) shall be
adhered to by the design-build entity. Any deviations from those
standards may only be allowed by written consent of the county.

(i) The county may retain the services of a design professional
or construction project manager, or both, throughout the course of
the project in order to ensure compliance with this section.

(j) Contracts awarded pursuant to this section shall be valid until
the project is completed.

(k) Nothing in this section is intended to affect, expand, alter,
or limit any rights or remedies otherwise available at law.

(l) (1) If the county elects to award a project pursuant to this
section, retention proceeds withheld by the county from the
design-build entity shall not exceed 5 percent if a performance and
payment bond, issued by an admitted surety insurer, is required in
the solicitation of bids.

(2) In a contract between the design-build entity and the
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the county and the design-build entity. If the design-build
entity provides written notice to any subcontractor who is not a
member of the design-build entity, prior to or at the time the bid
is requested, that a bond may be required and the subcontractor
subsequently is unable or refuses to furnish a bond to the
design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the county and the design-build entity from any
payment made by the design-build entity to the subcontractor.

(m) Each county that elects to proceed under this section and
uses the design-build method on a public works project shall submit
to the Legislative Analyst’s Office before September 1, 2013, a
report containing a description of each public works project
procured through the design-build process and completed after
November 1, 2009, and before August 1, 2013. The report shall
include, but shall not be limited to, all of the following information:

(1) The type of project.

(2) The gross square footage of the project.

(3) The design-build entity that was awarded the project.

(4) The estimated and actual length of time to complete the
project.

(5) The estimated and actual project costs.

(6) Whether the project was met or altered.

(7) The number and amount of project change orders.

(8) A description of any written protests concerning any aspect
of the solicitation, bid, proposal, or award of the design-build
project, including the resolution of the protests.

(9) An assessment of the prequalification process and criteria.

(10) An assessment of the effect of retaining 5 percent retention
on the project.

(11) A description of the Labor Force Compliance Program and
an assessment of the project impact, where required.

(12) A description of the method used to award the contract. If
best value was the method, the report shall describe the factors
used to evaluate the bid, including the weighting of each factor
and an assessment of the effectiveness of the methodology.

(13) An assessment of the project impact of “skilled labor force
availability.”

(14) An assessment of the design-build dollar limits on county
projects. This assessment shall include projects where the county
wanted to use design-build and was precluded by the dollar
limitation. This assessment shall also include projects where the
best value method was not used due to dollar limitations.

(15) An assessment of the most appropriate uses for the
design-build approach.

(n) Any county that elects not to use the authority granted by
this section may submit a report to the Legislative Analyst’s Office
explaining why the county elected not to use the design-build
method.

(o) On or before January 1, 2014, the Legislative Analyst shall
report to the Legislature on the use of the design-build method by
counties pursuant to this section, including the information listed
in subdivision (m) and (p). The report may include
recommendations for modifying or extending this section.

(p) The Legislative Analyst shall complete a fact-based analysis
of the use of the design-build method by counties pursuant to this
section, utilizing the information provided pursuant to subdivision
(m) and any independent information provided by the public or
interested parties. The Legislative Analyst shall select a
representative sample of projects under this section and review
available public records and reports, media reports, and related
information in its analysis. The Legislative Analyst shall compile
the information required to be analyzed pursuant to this subdivision
into a report, which shall be provided to the Legislature. The report
shall include conclusions describing the actual cost of projects
procured pursuant to this section, whether the project schedule
was met or altered, and whether projects needed or used project
change orders.

(q) Except as provided in this section, this act shall not be
construed to affect the application of any other law.

(r) This section shall remain in effect only until July 1, begin delete 2014 end delete
begin insert 2020 end insert , and as of that date is repealed, unless a later enacted statute,
that is enacted before July 1, begin delete 2014 end delete begin insert 2020 end insert , deletes or extends that
date.

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.