BILL ANALYSIS Ó AB 195 Page 1 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 AB 195 Page 2 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 AB 195 Page 3 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