BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 195 (Hall) - Counties: design-build contracting authority. Amended: May 20, 2013 Policy Vote: G&F 6-0 Urgency: No Mandate: Yes Hearing Date: June 24, 2013 Consultant: Mark McKenzie This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 195 would extend the authority for counties to use the design-build contracting method until January 1, 2016. Fiscal Impact: Likely minor costs to the Department of Industrial Relations (DIR) to perform prevailing wage monitoring and enforcement, reimbursed by counties (State Public Works Enforcement Fund). Background: Existing law requires public entities to comply with certain procedures in soliciting and evaluating bids and awarding contracts for the construction of public works. The traditional approach to public contracting is referred to as the design-bid-build method, which requires public officials to invite bids for construction projects, based on a completed set of engineering plans, then award the construction bid to the lowest bidder. By contrast, the design-build method allows public officials to procure both design and construction services from a single entity before the development of complete plans and specifications. Design-build contracts may be awarded on the basis of "best value" or "lowest responsible bidder," as specified in existing law. In addition to statutory authority provided to other state and local entities, existing law authorizes counties to use the design-build method to construct buildings and related improvements and wastewater treatment facilities with project costs of over $2.5 million until January 1, 2014. The most recent legislation to extend county design-build authority (SB 879, Cox, Chap 629/2010) required each county that builds a project using the design-build method from November 1, 2009 until August 1, 2013 to submit a report to the Legislative AB 195 (Hall) Page 1 Analyst's Office (LAO) by September 1, 2013. The LAO is required to compile information and report specified information on county use of design-build contracting to the Legislature by January 1, 2014. A previous report issued by the LAO in January of 2010 included information provided by counties on 15 design-build projects from nine counties, but only five of the projects were completed at the time the reports were submitted. The LAO indicated that it was difficult to draw conclusions from the small sampling of reports received about the effectiveness of design-build compared to other delivery methods, but there was no evidence to discourage the Legislature from continuing authority for local agencies to use design-build at that time. The report recommended that extended authorization for use of the design-build statutes should include a uniform and consistent statute providing the same authority and limitations to all local agencies, and also recommended that project cost should constitute a larger factor in awarding design-build contracts. Proposed Law: AB 195 would extend the authority for counties to use the design-build contracting method from January 1, 2014 to January 1, 2016. Related Legislation: SB 785 (Wolk), which is currently on the Senate Floor Inactive File, would repeal existing statutes authorizing cities, counties, special districts and specified state entities to use the design-build procurement process, and instead enact a uniform statute that provides those entities with the authority to use design-build for specified public works projects in excess of $1 million using either low bid or best value. Staff Comments: Existing law requires counties that elect to use design-build to either pay a fee into the State Public Works Enforcement Fund to pay for DIR's enforcement of prevailing wage requirements on public works projects, or enforce prevailing wages through an approved labor compliance program. By extending the sunset on county design-build authority for two years, this bill would extend the terms of a continuously appropriated special fund, thereby making an appropriation. Costs for DIR to monitor and enforce prevailing wages for counties that use design-build would be minor and fully covered by the fees. AB 195 (Hall) Page 2