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  








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          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.








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