Amended in Senate August 12, 2013

Amended in Assembly May 20, 2013

Amended in Assembly May 2, 2013

Amended in Assembly April 22, 2013

Amended in Assembly April 3, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 401

Introduced by Assembly Member Daly

(Coauthor: Assembly Member Linder)

February 15, 2013

An act to add and repeal Chapter 6.5 (commencing with Section 6820) of Part 1 of Division 2 of the Public Contract Code, begin insert and to amend Section 143 of, and to add and repeal Section 91.2 of, the Streets and Highway Code, end insert relating to begin delete highways end delete begin insert transportation end insert , and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 401, as amended, Daly. begin delete Public contracts: design-build: State Highway Route 405. end delete begin insert Transportation: design-build: streets and highways. end insert

Existing law, until January 1, 2014, authorizes certain state and local transportation entities, if authorized by the California Transportation Commission, to use a design-build process for contracts on transportation projects, as specified. Existing law establishes a procedure for submitting bids that includes a requirement that design-build entities provide a statement of qualifications submitted to the transportation entity that is verified under oath, subject to penalty of perjury.

This bill begin delete , until January 1, 2018, end delete would authorize the begin delete Orange County Transportation Authority end delete begin insert Department of Transportation end insert to utilize design-build procurement for begin delete the Interstate 405 Improvement Project end delete begin insert up to 10 projects end insert on the state highway system, based on either best value or lowest responsible bid. begin insert The bill would authorize regional transportation agencies, as defined, to utilize design-build procurement for projects on streets, roads, or the state highway system. The bill would repeal these provisions on January 1, 2024, or one year from the date that the Department of Transportation posts on its Internet Web site that the provisions related to the construction inspection services of these projects are invalid. The bill would provide that these design-build authorizations do not include construction inspection services for projects on or interfacing with the state highway system. end insert The bill would require the Department of Transportation to perform construction inspection services for begin delete the project end delete begin insert projects on or interfacing with the state highway system end insert , as specified. The bill would require a transportation entity, as defined, awarding a contract for a public works project pursuant to these provisions, to reimburse the Department of Industrial Relations for costs of performing prevailing wage monitoring and enforcement of the public works project and would require moneys collected to be deposited into the State Public Works Enforcement Fund, a continuously appropriated fund. By depositing money in a continuously appropriated fund, the bill would make an appropriation.

begin delete

The bill would make findings and declarations as to the necessity of a special statute for Orange County.

end delete

Because the bill would extend the use of design-build procurement to begin delete the authority, end delete begin insert regional transportation entities, end insert subject to existing procedures, the bill would, by extension, impose the statement of qualifications requirement upon begin delete the authority, end delete begin insert regional transportation entities, end insert subject to penalty of perjury, thereby creating a new crime and imposing a state-mandated local program.

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:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

The Legislature finds and declares the following:

end insert begin insert

(a) The Department of Transportation has statutory authority
over the state highway system, including possession, control, and
responsibility for improvements to and maintenance of that system.

end insert begin insert

(b) The Department of Transportation is authorized to construct
and maintain detours as may be necessary to facilitate movement
of traffic where state highways are closed or obstructed by
construction or otherwise.

end insert begin insert

(c) The Department of Transportation and any county, city, or
public entity are authorized to enter into a contract with respect
to the sharing of the expense of the acquisition, construction,
improvement, or maintenance of any state highway.

end insert begin insert

(d) When an improvement to a portion of a state highway is
completed by a local entity, the control of that portion of the state
highway reverts to the state and the state is liable for its future
maintenance and care.

end insert

begin insert

begin insert SEC. end insert begin insert 2. end insert   

end insert begin insert

It is the intent of the Legislature to do the following:

end insert begin insert

(a) Authorize the Department of Transportation and regional
transportation agencies to undertake improvements on streets and
highways using design-build procurement.

end insert begin insert

(b) Reserve for the Department of Transportation the authority
to perform construction inspection services.

end insert begin insert

(c) Require the Department of Transportation to be responsible
for ensuring that uniform safety standards are met on public works
of improvement on the state highway system.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 3. end insert   

Chapter 6.5 (commencing with Section 6820) is added
to Part 1 of Division 2 of the Public Contract Code, to read:

 

Chapter  6.5. begin delete Orange County end delete Transportation begin delete Authority end delete
Design-Build Program

 

6820.  

For purposes of this chapter, the following definitions
apply:

(a) “Best value” means a value determined by objective criteria,
including, but not limited to, price, features, functions, life-cycle
costs, and other criteria deemed appropriate by the transportation
entity.

(b) “Commission” means the California Transportation
Commission.

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

(d) “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.

(e) “Design-build team” means the design-build entity itself
and the individuals and other entities identified by the design-build
entity as members of its team.

(f) “Department” means the Department of Transportation as
established under Part 5 (commencing with Section 14000) of
Division 3 of Title 2 of the Government Code.

begin insert

(g) “Interfacing with the state highway system” means work
performed within the state highway right-of-way, including
airspace over or under that property, or work performed upon
property acquired by the department for construction of a state
highway, including airspace over or under that property.

end insert begin insert

(h) “Regional transportation agency” means a regional
transportation agency as defined in paragraph (4) of subdivision
(a) of Section 143 of the Streets and Highways Code.

end insert begin delete

(g)

end delete

begin insert (i) end insert  “Transportation entity” means the begin delete Orange County
Transportation Authority end delete begin insert department or a regional transportation
agency end insert .

6821.  

(a) The begin delete Orange County Transportation Authority end delete
begin insert department end insert may utilize begin insert the end insert design-build begin insert method of end insert procurement
for begin delete the Interstate 405 Improvement Project end delete begin insert up to 10 projects end insert on
the state highway system, based on either best value or lowest
responsible bid.

begin delete

(b) Notwithstanding any other provision of this chapter, the
department shall perform construction inspection services for the
project authorized pursuant to this section. Department construction
inspection services for the project authorized pursuant to this
section include, but are not limited to, surveying, material source
testing, certification testing, monitoring of environmental
compliance, independent quality control testing and inspection,
and quality assurance audits. The department construction
inspection duties and responsibilities shall include a direct reporting
relationship between the inspectors and senior department
engineers responsible for all inspectors and construction inspection
services. The senior department engineer responsible for
construction inspection services shall be responsible for the
acceptance or rejection of the work.

(c) Notwithstanding any other law, the department shall retain
the authority to stop the contractor’s operation wholly or in part
and take appropriate action when public safety is jeopardized. The
department shall ensure that public safety and convenience is
maintained whenever work is performed under an encroachment
permit within the state highway right-of-way, including, but not
limited to, work performed that includes lane closures, signing,
work performed at night, detours, dust control, temporary pavement
quality, crash cushions, temporary railings, pavement transitions,
falsework, shoring, and delineation. The department shall regularly
inspect the job sites for safety compliance and any possible
deficiencies. If any deficiency is observed, a written notice shall
be sent by the department to the Orange County Transportation
Authority’s designated resident engineer to correct the deficiency.
Once the deficiency is corrected, a written notice describing the
resolution of the deficiency shall be sent to the department and
documented.

(d) The department shall use department employees or
consultants under contract with the department to perform the
services described in subdivisions (b) and (c), consistent with
Article XXII of the California Constitution. Department employee
and consultant resources necessary for the performance of those
services, including personnel requirements, shall be included in
the department’s capital outlay support program for workload
purposes in the annual Budget Act.

(e)

end delete begin insert

(b) A regional transportation agency may utilize the design-build
method of procurement to design and construct projects on streets,
roads, or the state highway system, based on either best value or
lowest responsible bid. A regional transportation agency and the
department shall enter into a cooperative agreement reflecting the
roles and responsibilities assigned by law for a project on or
interfacing with the state highway system authorized under this
subdivision. The cooperative agreement shall also include the
requirement to develop a mutually agreed upon issue resolution
process with a primary objective to ensure the project stays on
schedule and issues between the parties are resolved in a timely
manner.

end insert begin insert

(c) The design-build authorization in subdivisions (a) and (b)
shall not include the authority to perform construction inspection
services for projects on or interfacing with the state highway
system, which shall be performed by the department consistent
with Section 91.2 of the Streets and Highway Code.

end insert

begin insert (d) end insert  (1) Not later than the first day of July that occurs two years
after a design-build contract is awarded, and each July 1 thereafter
until begin delete the end delete begin insert a end insert project is completed, the begin delete Orange County Transportation
Authority end delete begin insert department or the regional transportation agency end insert shall
submit a report on the progress of the project and compliance with
this section to the legislative policy committees having jurisdiction
over transportation matters.

(2) The requirement of submitting a report imposed under
paragraph (1) is inoperative on the first day of July four years after
the first report was submitted, pursuant to Section 10231.5 of the
Government Code.

(3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government
Code.

6822.  

The commission shall use the guidelines developed
pursuant to subdivision (e) of Section 6803, as it read on December
31, 2013, to provide a standard organizational conflict-of-interest
policy, consistent with applicable law, regarding the ability of a
person or entity, that performs services for the transportation entity
relating to the solicitation of a design-build project, to submit a
proposal as a design-build entity, or to join a design-build team.
This conflict-of-interest policy shall apply to the transportation
entity entering into design-build contracts authorized under this
chapter.

6823.  

(a) For contracts for public works projects awarded prior
to the effective date of the regulations adopted by the Department
of Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, a transportation entity authorized to use the
design-build method of procurement shall establish and enforce a
labor compliance program containing the requirements outlined
in Section 1771.5 of the Labor Code or 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 projects where the transportation
entity or design-build entity has entered into any 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 the regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, the transportation entity shall reimburse the
Department of Industrial Relations 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 of Industrial Relations as set forth in subdivision
(h) of Section 1771.5 of the Labor Code. All moneys collected
pursuant to this subdivision 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
transportation entity may begin insert either (1) end insert elect to continue operating an
existing previously approved labor compliance program to monitor
and enforce prevailing wage requirements on the project if it has
begin delete either end delete 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 begin delete it enters end delete begin insert (2) enter end insert
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.

6824.  

The procurement process for the design-build project
shall progress as follows:

(a)  begin delete The end delete begin insert A end insert transportation entity shall prepare a set of documents
setting forth the scope and estimated price of begin delete the end delete begin insert a end insert project. The
documents may include, but need not be limited to, the size, type,
and desired design character of the project, performance
specifications covering the quality of materials, equipment,
workmanship, preliminary plans, and any other information deemed
necessary to describe adequately the transportation entity’s needs.
The performance specifications and any plans shall be prepared
by a design professional who is duly licensed and registered in
California.

(b) Based on the documents prepared as described in subdivision
(a), the transportation entity shall prepare a request for proposals
that invites interested parties to submit competitive sealed proposals
in the manner prescribed by the transportation entity. The request
for proposals shall include, but need not be limited to, the following
elements:

(1) Identification of the basic scope and needs of the project or
contract, the estimated cost of the project, the methodology that
will be used by the transportation entity to evaluate proposals,
whether the contract will be awarded on the basis of the lowest
responsible bid or on best value, and any other information deemed
necessary by the transportation entity to inform interested parties
of the contracting opportunity.

(2) Significant factors that the transportation entity reasonably
expects to consider in evaluating proposals, including, but not
limited to, cost or price and all nonprice-related factors.

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

(4) For transportation entities authorized to utilize best value
as a selection method, the transportation entity reserves the right
to request proposal revisions and hold discussions and negotiations
with responsive bidders and shall so specify in the request for
proposals and shall publish separately or incorporate into the
request for proposals applicable rules and procedures to be
observed by the transportation entity to ensure that any discussions
or negotiations are conducted in good faith.

(c) Based on the documents prepared under subdivision (a), the
transportation entity shall prepare and issue a request for
qualifications in order to prequalify the design-build entities whose
proposals shall be evaluated for final selection. The request for
qualifications shall include, but need not be limited to, the
following elements:

(1) Identification of the basic scope and needs of the project or
contract, the expected cost range, the methodology that will be
used by the transportation entity to evaluate proposals, the
procedure for final selection of the design-build entity, and any
other information deemed necessary by the transportation entity
to inform interested parties of the contracting opportunity.

(2) (A) Significant factors that the transportation entity
reasonably expects to consider in evaluating qualifications,
including technical design and construction expertise, skilled labor
force availability, and all other nonprice-related factors.

(B) For purposes of subparagraph (A), skilled labor force
availability shall be determined by the existence of an agreement
with a registered apprenticeship program, approved by the
California Apprenticeship Council, that has graduated at least one
apprentice in each of the preceding five years. This graduation
requirement shall not apply to programs providing apprenticeship
training for any craft that was first deemed by the Department of
Labor and the Department of Industrial Relations to be an
apprenticeable craft within the five years prior to the effective date
of this article.

(3) A standard form request for statements of qualifications
prepared by the transportation entity. In preparing the standard
form, the transportation entity may consult with the construction
industry, the building trades and surety industry, and other public
agencies interested in using the authorization provided by this
chapter. The standard form shall require information including,
but not limited to, all of the following:

(A) If the design-build entity is a partnership, limited
partnership, joint venture, or other association, a listing of all of
the partners, general partners, or association members known at
the time of statement of qualification submission who will
participate in the design-build contract.

(B) 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, and a financial statement
that assures the transportation entity that the design-build entity
has the capacity to complete the project.

(C) The licenses, registration, and credentials required to design
and construct the project, including, but not limited to, information
on the revocation or suspension of any license, credential, or
registration.

(D) 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.

(E) Information concerning workers’ compensation experience
history and a worker safety program.

(F) A full disclosure regarding all of the following that are
applicable:

(i) Any serious or willful violation of 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.

(ii) Any debarment, disqualification, or removal from a federal,
state, or local government public works project.

(iii) Any instance where the design-build entity, or 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.

(iv) Any instance where the design-build entity, or its owners,
officers, or managing employees defaulted on a construction
contract.

(v) Any violations of the Contractors’ State License Law, as
described in Chapter 9 (commencing with Section 7000) of
Division 3 of the Business and Professions Code, including alleged
violations of federal or state law regarding the payment of wages,
benefits, apprenticeship requirements, or personal income tax
withholding, or Federal Insurance Contribution Act (FICA)
withholding requirements settled against any member of the
design-build entity.

(vi) Any bankruptcy or receivership of any member of the
design-build entity, including, but not limited to, information
concerning any work completed by a surety.

(vii) Any 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 under this article, 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 five-year period.

(G) If the proposed design-build entity is a partnership, limited
partnership, joint-venture, or other association, a copy of the
organizational documents or agreement committing to form the
organization, and a statement that all general partners, joint venture
members, or other association members agree to be fully liable for
the performance under the design-build contract.

(H) An acceptable safety record. 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.

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

(d) For those projects utilizing low bid as the final selection
method, the competitive bidding process shall result in lump-sum
bids by the prequalified design-build entities. Awards shall be
made to the lowest responsible bidder.

(e) For those projects utilizing best value as a selection method,
the design-build competition shall progress as follows:

(1) Competitive proposals shall be evaluated by using only the
criteria and selection procedures specifically identified in the
request for proposals. However, the following minimum factors
shall be weighted as deemed appropriate by the contracting
transportation entity:

(A) Price.

(B) Technical design and construction expertise.

(C) Life-cycle costs over 15 years or more.

(2) Pursuant to subdivision (b), the transportation entity may
hold discussions or negotiations with responsive bidders using the
process articulated in the transportation entity’s request for
proposals.

(3) When the evaluation is complete, the top three responsive
bidders shall be ranked sequentially based on a determination of
value provided.

(4) The award of the contract shall be made to the responsible
bidder whose proposal is determined by the transportation entity
to have offered the best value to the public.

(5) Notwithstanding any other provision of this code, upon
issuance of a contract award, the transportation entity 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 transportation entity’s second- and third-ranked
design-build entities.

(6) The written decision supporting the transportation entity’s
contract award, described in paragraph (5), and the contract file
shall provide sufficient information to satisfy an external audit.

6825.  

(a) The design-build entity shall provide payment and
performance bonds for the project in the form and in the amount
required by the transportation entity, and issued by a California
admitted surety. In no case shall the amount of the payment bond
be less than the amount of the performance bond.

(b) The design-build contract shall require errors and omissions
insurance coverage for the design elements of the project.

6826.  

(a) The transportation entity, in each design-build request
for proposals, may identify specific types of subcontractors that
must be included in the design-build entity statement of
qualifications and proposal. All construction subcontractors that
are identified in the proposal shall be afforded all the protections
of Chapter 4 (commencing with Section 4100) of Part 1 of Division
2.

(b) In awarding subcontracts not listed in the request for
proposals, the design-build entity shall do all of the following:

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

(2) Provide a fixed date and time on which the subcontracted
work will be awarded.

(3) Establish reasonable qualification criteria and standards.

(4) Provide that the subcontracted construction work shall be
awarded either on a best value basis or to the lowest responsible
bidder. For construction work awarded on a best value basis, the
design-build entity shall evaluate all bids utilizing the factors
described in paragraph (1) of subdivision (e) of Section 6824, and
shall award the contract to the bidder determined by the
design-build entity to have offered the best value.

(c) Subcontractors awarded subcontracts under this chapter shall
be afforded all the protections of Chapter 4 (commencing with
Section 4100) of Part 1 of Division 2.

6827.  

Nothing in this chapter affects, expands, alters, or limits
any rights or remedies otherwise available at law.

6828.  

The provisions of this chapter are severable. If any
provision of this chapter or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.

6829.  

begin insert (a) end insert begin insert   end insert This chapter shall remain in effect only until January
1, begin delete 2018 end delete begin insert 2024 end insert , and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, begin delete 2018 end delete begin insert 2024 end insert , deletes or
extends that date.

begin insert

(b) Notwithstanding subdivision (a), if any provision or
application of Section 91.2 of the Streets and Highways Code is
held invalid by a court of competent jurisdiction, this chapter shall
be repealed one year from the date in which the department posts
on its Internet Web site that Section 91.2 of the Streets and
Highways Code has been held invalid.

(c) The repeal of this chapter shall not affect an executed
design-build contract or cooperative agreement entered into
pursuant to this chapter prior to the date of its repeal, regardless
of the stage of the project at the time of repeal.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 91.2 is added to the end insert begin insert Streets and Highways
Code end insert begin insert , to read: end insert

begin insert

begin insert 91.2. end insert   

(a) The department shall perform construction inspection
services for projects on or interfacing with the state highway system
authorized pursuant to Chapter 6.5 (commencing with Section
6820) of Part 1 of Division 2 of the Public Contract Code. The
department shall use department employees or consultants under
contract with the department to perform the services described in
this subdivision and subdivision (b), consistent with Article XXII
of the California Constitution. Construction inspection services
performed by the department for those projects, include, but are
not limited to, material source testing, certification testing,
surveying, monitoring of environmental compliance, independent
quality control testing and inspection, and quality assurance audits.
The construction inspection duties and responsibilities of the
department shall include a direct reporting relationship between
the inspectors and senior department engineers responsible for
all inspectors and construction inspection services. The senior
department engineer responsible for construction inspection
services shall be responsible for the acceptance or rejection of the
work.

(b) Notwithstanding any other law, the department shall retain
the authority to stop the contractor’s operation wholly or in part
and take appropriate action when public safety is jeopardized on
a project on or interfacing with the state highway system authorized
pursuant to Chapter 6.5 (commencing with Section 6820) of Part
1 of Division of the Public Contract Code. The department shall
ensure that public safety and convenience is maintained whenever
work is performed under an encroachment permit within the state
highway right-of-way, including, but not limited to, work performed
that includes lane closures, signing, work performed at night,
detours, dust control, temporary pavement quality, crash cushions,
temporary railings, pavement transitions, falsework, shoring, and
delineation. The department shall regularly inspect the job sites
for safety compliance and any possible deficiencies. If any
deficiency is observed, a written notice shall be sent by the
department to the regional transportation agency’s designated
resident engineer to correct the deficiency. Once the deficiency is
corrected, a written notice describing the resolution of the
deficiency shall be sent to the department and documented.

(c) The department shall use department employees or
consultants under contract with the department to perform the
services described in subdivisions (a) and (b), consistent with
Article XXII of the California Constitution. Department employee
and consultant resources necessary for the performance of those
services, including personnel requirements, shall be included in
the department’s capital outlay support program for workload
purposes in the annual Budget Act.

(d) This section shall remain in effect only until January 1, 2024,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2024, deletes or extends that date.

(e) If any provision or application of this section is held invalid
by a court of competent jurisdiction, the department shall post on
its Internet Web site within 10 business days of the decision of
invalidity that this section has been held invalid.

end insert

begin delete

SEC. 2.  

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the unique need to build and improve
highways located in the County of Orange in a cost-effective
manner.

end delete

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 143 of the end insert begin insert Streets and Highways Code end insert begin insert is
amended to read: end insert

143.  

(a) (1) “Best value” means a value determined by
objective criteria, including, but not limited to, price, features,
functions, life-cycle costs, and other criteria deemed appropriate
by the department or the regional transportation agency.

(2) “Contracting entity or lessee” means a public or private
entity, or consortia thereof, that has entered into a comprehensive
development lease agreement with the department or a regional
transportation agency for a transportation project pursuant to this
section.

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

(4) “Regional transportation agency” means any of the
following:

(A) A transportation planning agency as defined in Section
29532 or 29532.1 of the Government Code.

(B) A county transportation commission as defined in Section
130050, 130050.1, or 130050.2 of the Public Utilities Code.

(C) Any other local or regional transportation entity that is
designated by statute as a regional transportation agency.

(D) A joint exercise of powers authority as defined in Chapter
5 (commencing with Section 6500) of Division 7 of Title 1 of the
Government Code, with the consent of a transportation planning
agency or a county transportation commission for the jurisdiction
in which the transportation project will be developed.

begin insert

(E) A local transportation authority designated pursuant to
Division 19 (commencing with Section 180000) of the Public
Utilities Code.

end insert begin insert

(F) The Santa Clara Valley Transportation Authority established
pursuant to Part 12 (commencing with Section 100000) of Division
10 of the Public Utilities Code.

end insert

(5) “Public Infrastructure Advisory Commission” means a unit
or auxiliary organization established by the Business,
Transportation and Housing Agency that advises the department
and regional transportation agencies in developing transportation
projects through performance-based infrastructure partnerships.

(6) “Transportation project” means one or more of the following:
planning, design, development, finance, construction,
reconstruction, rehabilitation, improvement, acquisition, lease,
operation, or maintenance of highway, public street, rail, or related
facilities supplemental to existing facilities currently owned and
operated by the department or regional transportation agencies
that is consistent with the requirements of subdivision (c).

(b) (1) The Public Infrastructure Advisory Commission shall
do all of the following:

(A) Identify transportation project opportunities throughout the
state.

(B) Research and document similar transportation projects
throughout the state, nationally, and internationally, and further
identify and evaluate lessons learned from these projects.

(C) Assemble and make available to the department or regional
transportation agencies a library of information, precedent,
research, and analysis concerning infrastructure partnerships and
related types of public-private transactions for public infrastructure.

(D) Advise the department and regional transportation agencies,
upon request, regarding infrastructure partnership suitability and
best practices.

(E) Provide, upon request, procurement-related services to the
department and regional transportation agencies for infrastructure
partnership.

(2) The Public Infrastructure Advisory Commission may charge
a fee to the department and regional transportation agencies for
the services described in subparagraphs (D) and (E) of paragraph
(1), the details of which shall be articulated in an agreement entered
into between the Public Infrastructure Advisory Commission and
the department or the regional transportation agency.

(c) (1) Notwithstanding any other provision of law, only the
department, in cooperation with regional transportation agencies,
and regional transportation agencies, may solicit proposals, accept
unsolicited proposals, negotiate, and enter into comprehensive
development lease agreements with public or private entities, or
consortia thereof, for transportation projects.

(2) Projects proposed pursuant to this section and associated
lease agreements shall be submitted to the California Transportation
Commission. The commission, at a regularly scheduled public
hearing, shall select the candidate projects from projects nominated
by the department or a regional transportation agency after
reviewing the nominations for consistency with paragraphs (3)
and (4). Approved projects may proceed with the process described
in paragraph (5).

(3) The projects authorized pursuant to this section shall be
primarily designed to achieve the following performance
objectives:

(A) Improve mobility by improving travel times or reducing
the number of vehicle hours of delay in the affected corridor.

(B) Improve the operation or safety of the affected corridor.

(C) Provide quantifiable air quality benefits for the region in
which the project is located.

(4) In addition to meeting the requirements of paragraph (3),
the projects authorized pursuant to this section shall address a
known forecast demand, as determined by the department or
regional transportation agency.

(5) At least 60 days prior to executing a final lease agreement
authorized pursuant to this section, the department or regional
transportation agency shall submit the agreement to the Legislature
and the Public Infrastructure Advisory Commission for review.
Prior to submitting a lease agreement to the Legislature and the
Public Infrastructure Advisory Commission, the department or
regional transportation agency shall conduct at least one public
hearing at a location at or near the proposed facility for purposes
of receiving public comment on the lease agreement. Public
comments made during this hearing shall be submitted to the
Legislature and the Public Infrastructure Advisory Commission
with the lease agreement. The Secretary of Business, Transportation
and Housing or the chairperson of the Senate or Assembly fiscal
committees or policy committees with jurisdiction over
transportation matters may, by written notification to the
department or regional transportation agency, provide any
comments about the proposed agreement within the 60-day period
prior to the execution of the final agreement. The department or
regional transportation agency shall consider those comments prior
to executing a final agreement and shall retain the discretion for
executing the final lease agreement.

(d) For the purpose of facilitating those projects, the agreements
between the parties may include provisions for the lease of
rights-of-way in, and airspace over or under, highways, public
streets, rail, or related facilities for the granting of necessary
easements, and for the issuance of permits or other authorizations
to enable the construction of transportation projects. Facilities
subject to an agreement under this section shall, at all times, be
owned by the department or the regional transportation agency,
as appropriate. For department projects, the commission shall
certify the department’s determination of the useful life of the
project in establishing the lease agreement terms. In consideration
therefor, the agreement shall provide for complete reversion of the
leased facility, together with the right to collect tolls and user fees,
to the department or regional transportation agency, at the
expiration of the lease at no charge to the department or regional
transportation agency. At the time of the reversion, the facility
shall be delivered to the department or regional transportation
agency, as applicable, in a condition that meets the performance
and maintenance standards established by the department or
regional transportation agency and that is free of any encumbrance,
lien, or other claims.

(e) Agreements between the department or regional
transportation agency and the contracting entity or lessee shall
authorize the contracting entity or lessee to use a design-build
method of procurement for transportation projects, subject to the
requirements for utilizing such a method contained in Chapter 6.5
(commencing with Section 6800) of Part 1 of Division 2 of the
Public Contract Code, other than Sections 6802, 6803, and 6813
of that code, if those provisions are enacted by the Legislature
during the 2009-10 Regular Session, or a 2009-10 extraordinary
session.

(f) (1) (A) Notwithstanding any other provision of this chapter,
for projects on the state highway system, the department is the
responsible agency for the performance of project development
services, including performance specifications, preliminary
engineering, prebid services, the preparation of project reports and
environmental documents, and construction inspection services.
The department is also the responsible agency for the preparation
of documents that may include, but need not be limited to, the size,
type, and desired design character of the project, performance
specifications covering the quality of materials, equipment, and
workmanship, preliminary plans, and any other information deemed
necessary to describe adequately the needs of the department or
regional transportation agency.

(B) The department may use department employees or
consultants to perform the services described in subparagraph (A),
consistent with Article XXII of the California Constitution.
Department resources, including personnel requirements, necessary
for the performance of those services shall be included in the
department’s capital outlay support program for workload purposes
in the annual Budget Act.

(2) The department or a regional transportation agency may
exercise any power possessed by it with respect to transportation
projects to facilitate the transportation projects pursuant to this
section. The department, regional transportation agency, and other
state or local agencies may provide services to the contracting
entity or lessee for which the public entity is reimbursed, including,
but not limited to, planning, environmental planning, environmental
certification, environmental review, preliminary design, design,
right-of-way acquisition, construction, maintenance, and policing
of these transportation projects. The department or regional
transportation agency, as applicable, shall regularly inspect the
facility and require the contracting entity or lessee to maintain and
operate the facility according to adopted standards. Except as may
otherwise be set forth in the lease agreement, the contracting entity
or lessee shall be responsible for all costs due to development,
maintenance, repair, rehabilitation, and reconstruction, and
operating costs.

(g) (1) In selecting private entities with which to enter into
these agreements, notwithstanding any other provision of law, the
department and regional transportation agencies may utilize, but
are not limited to utilizing, one or more of the following
procurement approaches:

(A) Solicitations of proposals for defined projects and calls for
project proposals within defined parameters.

(B) Prequalification and short-listing of proposers prior to final
evaluation of proposals.

(C) Final evaluation of proposals based on qualifications and
best value. The California Transportation Commission shall
develop and adopt criteria for making that evaluation prior to
evaluation of a proposal.

(D) Negotiations with proposers prior to award.

(E) Acceptance of unsolicited proposals, with issuance of
requests for competing proposals. Neither the department nor a
regional transportation agency may award a contract to an
unsolicited bidder without receiving at least one other responsible
bid.

(2) When evaluating a proposal submitted by the contracting
entity or lessee, the department or the regional transportation
agency may award a contract on the basis of the lowest bid or best
value.

(h) The contracting entity or lessee shall have the following
qualifications:

(1) Evidence that the members of the contracting entity or lessee
have completed, or have demonstrated the experience, competency,
capability, and capacity to complete, a project 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, and a financial
statement that ensures that the contracting entity or lessee has the
capacity to complete the project.

(2) The licenses, registration, and credentials required to design
and construct the project, including, but not limited to, information
on the revocation or suspension of any license, credential, or
registration.

(3) Evidence that establishes that members of the contracting
entity or lessee have the capacity to obtain all required payment
and performance bonding, liability insurance, and errors and
omissions insurance.

(4) Evidence that the contracting entity or lessee has workers’
compensation experience, history, and a worker safety program
of members of the contracting entity or lessee that is acceptable
to the department or regional transportation agency.

(5) A full disclosure regarding all of the following with respect
to each member of the contracting entity or lessee during the past
five years:

(A) Any serious or willful violation of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code or the federal
Occupational Safety and Health Act of 1970 (P.L. 91-596).

(B) Any instance where members of the contracting entity or
lessee were debarred, disqualified, or removed from a federal,
state, or local government public works project.

(C) Any instance where members of the contracting entity or
lessee, or 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.

(D) Any instance where members of the contracting entity or
lessee, or its owners, officers, or managing employees defaulted
on a construction contract.

(E) Any violations of the Contractors’ State License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), including, but not limited to,
alleged violations of federal or state law regarding the payment of
wages, benefits, apprenticeship requirements, or personal income
tax withholding, or Federal Insurance Contributions Act (FICA)
withholding requirements.

(F) Any bankruptcy or receivership of any member of the
contracting entity or lessee, including, but not limited to,
information concerning any work completed by a surety.

(G) Any settled adverse claims, disputes, or lawsuits between
the owner of a public works project and any member of the
contracting entity or lessee during the five years preceding
submission of a bid under this article, 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 five-year period.

(H) If the contracting entity or lessee is a partnership, joint
venture, or an association that is not a legal entity, a copy of the
agreement creating the partnership or association that specifies
that all general partners, joint venturers, or association members
agree to be fully liable for the performance under the agreement.

(i) No agreement entered into pursuant to this section shall
infringe on the authority of the department or a regional
transportation agency to develop, maintain, repair, rehabilitate,
operate, or lease any transportation project. Lease agreements may
provide for reasonable compensation to the contracting entity or
lessee for the adverse effects on toll revenue or user fee revenue
due to the development, operation, or lease of supplemental
transportation projects with the exception of any of the following:

(1) Projects identified in regional transportation plans prepared
pursuant to Section 65080 of the Government Code.

(2) Safety projects.

(3) Improvement projects that will result in incidental capacity
increases.

(4) Additional high-occupancy vehicle lanes or the conversion
of existing lanes to high-occupancy vehicle lanes.

(5) Projects located outside the boundaries of a public-private
partnership project, to be defined by the lease agreement.

However, compensation to a contracting entity or lessee shall
only be made after a demonstrable reduction in use of the facility
resulting in reduced toll or user fee revenues, and may not exceed
the difference between the reduction in those revenues and the
amount necessary to cover the costs of debt service, including
principal and interest on any debt incurred for the development,
operation, maintenance, or rehabilitation of the facility.

(j) (1) Agreements entered into pursuant to this section shall
authorize the contracting entity or lessee to impose tolls and user
fees for use of a facility constructed by it, and shall require that
over the term of the lease the toll revenues and user fees be applied
to payment of the capital outlay costs for the project, the costs
associated with operations, toll and user fee collection,
administration of the facility, reimbursement to the department or
other governmental entity for the costs of services to develop and
maintain the project, police services, and a reasonable return on
investment. The agreement shall require that, notwithstanding
Sections 164, 188, and 188.1, any excess toll or user fee revenue
either be applied to any indebtedness incurred by the contracting
entity or lessee with respect to the project, improvements to the
project, or be paid into the State Highway Account, or for all three
purposes, except that any excess toll revenue under a lease
agreement with a regional transportation agency may be paid to
the regional transportation agency for use in improving public
transportation in and near the project boundaries.

(2) Lease agreements shall establish specific toll or user fee
rates. Any proposed increase in those rates not otherwise
established or identified in the lease agreement during the term of
the agreement shall first be approved by the department or regional
transportation agency, as appropriate, after at least one public
hearing conducted at a location near the proposed or existing
facility.

(3) The collection of tolls and user fees for the use of these
facilities may be extended by the commission or regional
transportation agency at the expiration of the lease agreement.
However, those tolls or user fees shall not be used for any purpose
other than for the improvement, continued operation, or
maintenance of the facility.

(k) Agreements entered into pursuant to this section shall include
indemnity, defense, and hold harmless provisions agreed to by the
department or regional transportation agency and the contracting
entity or lessee, including provisions for indemnifying the State
of California or the regional transportation agency against any
claims or losses resulting or accruing from the performance of the
contracting entity or lessee.

(l) The plans and specifications for each transportation project
on the state highway system developed, maintained, repaired,
rehabilitated, reconstructed, or operated pursuant to this section
shall comply with the department’s standards for state
transportation projects. The lease agreement shall include
performance standards, including, but not limited to, levels of
service. The agreement shall require facilities on the state highway
system to meet all requirements for noise mitigation, landscaping,
pollution control, and safety that otherwise would apply if the
department were designing, building, and operating the facility.
If a facility is on the state highway system, the facility leased
pursuant to this section shall, during the term of the lease, be
deemed to be a part of the state highway system for purposes of
identification, maintenance, enforcement of traffic laws, and for
the purposes of Division 3.6 (commencing with Section 810) of
Title 1 of the Government Code.

(m) Failure to comply with the lease agreement in any significant
manner shall constitute a default under the agreement and the
department or the regional transportation agency, as appropriate,
shall have the option to initiate processes to revert the facility to
the public agency.

(n) The assignment authorized by subdivision (c) of Section
130240 of the Public Utilities Code is consistent with this section.

(o) A lease to a private entity pursuant to this section is deemed
to be public property for a public purpose and exempt from
leasehold, real property, and ad valorem taxation, except for the
use, if any, of that property for ancillary commercial purposes.

(p) Nothing in this section is intended to infringe on the authority
to develop high-occupancy toll lanes pursuant to Section 149.4,
149.5, or 149.6.

(q) Nothing in this section shall be construed to allow the
conversion of any existing nontoll or nonuser-fee lanes into tolled
or user fee lanes with the exception of a high-occupancy vehicle
lane that may be operated as a high-occupancy toll lane for vehicles
not otherwise meeting the requirements for use of that lane.

(r) The lease agreement shall require the contracting entity or
lessee to provide any information or data requested by the
California Transportation Commission or the Legislative Analyst.
The commission, in cooperation with the Legislative Analyst, shall
annually prepare a report on the progress of each project and
ultimately on the operation of the resulting facility. The report
shall include, but not be limited to, a review of the performance
standards, a financial analysis, and any concerns or
recommendations for changes in the program authorized by this
section.

(s) Notwithstanding any other provision of this section, no lease
agreement may be entered into pursuant to the section that affects,
alters, or supersedes the Memorandum of Understanding (MOU),
dated November 26, 2008, entered into by the Golden Gate Bridge
Highway and Transportation District, the Metropolitan
Transportation Commission, and the San Francisco County
Transportation Authority, relating to the financing of the U.S.
Highway 101/Doyle Drive reconstruction project located in the
City and County of San Francisco.

(t) No lease agreements may be entered into under this section
on or after January 1, 2017.

begin delete SEC. 3. end delete
begin insert SEC. 6. end insert   

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.