BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 195
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          Date of Hearing:   May 15, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                  AB 195 (Hall) - As Introduced:  January 28, 2013 

          Policy Committee:                              Local  
          GovernmentVote:7-1

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill extends counties' existing authority to use  
          design-build contracting from July 1, 2014 to July 1, 2020.

           FISCAL EFFECT  

          No direct state costs. Presumably counties will continue to use  
          design-build on those projects where this alternative  
          contracting method provides opportunities for cost and time  
          savings.

           COMMENTS  

           1)Background  . The traditional public works contracting method is  
            known as design-bid-build, whereby project design is done  
            under contract by an architectural/engineering firm, then upon  
            completion of the design phase, the construction phase is put  
            out to bid and the contract is awarded to the lowest  
            responsible bidder. 

            In the last 10-15 years, contracting agencies have selectively  
            used an alternative contracting method known as design/build,  
            whereby entities with both design and construction management  
            capabilities compete for a single contract for both project  
            phases, typically for a fixed price. The intent of the  
            design/build alternative is to reduce the contracting agency's  
            risk with regard to project costs and schedule, expedite  
            project completion, and minimize change orders and claims.

           2)Legislative History  . AB 2296 (Dutra)/Chapter 594 of 2000  
            authorized seven specified counties to use design-build until  








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            2006. SB 287 (Cox)/Chapter 376 of 2005, extended the sunset  
            until 2011 and authorized a total of 30 specified counties to  
            use design-build.  SB 416 (Ashburn)/Chapter 585 of 2007,  
            extended this authority to all counties. SB 879 (Cox)/Chapter  
            629 of 2010 extended the sunset to July 1, 2014.

            These authorizing statutes have required counties using their  
            design-build authority to report specified project-specific  
            information to the Legislative Analyst's Office (LAO), which  
            was required to report its assessment to the Legislature.

           3)Evaluation of Design-Build  . In January 2010, the LAO issued  
            its second evaluation report to the Legislature. In the  
            report, the 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 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."

            Current law requires counties using design-build to report to  
            the LAO by September 1, 2013, containing specified information  
            such as project costs, completion times, change orders, any  
            written protests, an assessment of the pre-qualification  
            process and the labor force compliance program, and other  
            elements.  The LAO is to report to the Legislature, by January  
            1, 2014, its evaluation of counties' use of design-build.

           4)Jumping the Gun  ? Given that the LAO's statutory report on  
            design-build is not due until January, it is not clear why  
            counties authority should be extended at this time for another  
            six years. Moreover, the bill calls for no future reporting by  
            counties and no further evaluation by LAO beyond the currently  
            required report.

           5)Recommended Amendment  . Staff recommends only a one-year  
            extension of the sunset at this time, to provide an  
            opportunity for the Legislature to review the LAO's evaluation  
            and to consider whether to modify and extend counties'  
            authority. Assuming the LAO's review of design-build continues  
            to be generally favorable, and given that this authority will  








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            have been in statute for 15 years, repealing of the sunset  
            would merit consideration next year.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081