Amended in Senate September 5, 2013

Amended in Senate September 3, 2013

Amended in Senate August 22, 2013

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 BillNo. 401


Introduced by Assembly Member Daly

(Coauthors: Assembly Members Cooley and Linder)

(Coauthor: Senator Correa)

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, and to add and repeal Section 91.2 of the Streets and Highways Code, relating to transportation, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 401, as amended, Daly. Transportation: design-build: highways.

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 would authorize the Department of Transportation to utilize design-build procurement for up to 10 projects on the state highway system, based on either best value or lowest responsible bid. The bill would authorize regional transportation agencies, as defined, to utilize design-build procurement for projects on or adjacent to the state highway system. The bill would also authorize those regional transportation agencies to utilize design-build procurement for projects on expressways that are not on the state highway system, as specified. 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. The bill would require the Department of Transportation to perform construction inspection services for projects on or interfacing with the state highway system, 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.

The bill would extend the use of design-build procurement to regional transportation agencies, as defined, and extend the period of time for which the Department of Transportation may use design-build procurement, subject to existing procedures. The bill would, by extension, impose the statement of qualifications requirement upon regional transportation agencies and the department, 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:

P3    1

SECTION 1.  

The Legislature finds and declares the following:

2(a) The Department of Transportation has statutory authority
3over the state highway system, including possession, control, and
4responsibility for improvements to and maintenance of that system.

5(b) The Department of Transportation is authorized to construct
6and maintain detours as may be necessary to facilitate movement
7of traffic where state highways are closed or obstructed by
8construction or otherwise.

9(c) The Department of Transportation and any county, city, or
10public entity are authorized to enter into a contract with respect to
11the sharing of the expense of the acquisition, construction,
12improvement, or maintenance of any state highway.

13(d) When an improvement to a portion of a state highway is
14completed by a local entity, the control of that portion of the state
15highway reverts to the state and the state is liable for its future
16maintenance and care.

17

SEC. 2.  

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

18(a) Authorize the Department of Transportation and regional
19transportation agencies to undertake improvements on highways
20and expressways using design-build procurement.

21(b) Reserve for the Department of Transportation the authority
22to perform construction inspection services.

23(c) Require the Department of Transportation to be responsible
24for ensuring that uniform safety standards are met on public works
25of improvement on the state highway system.

26

SEC. 3.  

Chapter 6.5 (commencing with Section 6820) is added
27to Part 1 of Division 2 of the Public Contract Code, to read:

28 

29Chapter  6.5. Transportation Design-Build Program
30

 

31

6820.  

For purposes of this chapter, the following definitions
32apply:

33(a) “Best value” means a value determined by objective criteria,
34including, but not limited to, price, features, functions, life-cycle
P4    1costs, and other criteria deemed appropriate by the transportation
2entity.

3(b) “Commission” means the California Transportation
4Commission.

5(c) “Design-build” means a procurement process in which both
6the design and construction of a project are procured from a single
7entity.

8(d) “Design-build entity” means a partnership, corporation, or
9other legal entity that is able to provide appropriately licensed
10contracting, architectural, and engineering services as needed
11pursuant to a design-build contract.

12(e) “Design-build team” means the design-build entity itself
13and the individuals and other entities identified by the design-build
14entity as members of its team.

15(f) “Department” means the Department of Transportation as
16established under Part 5 (commencing with Section 14000) of
17Division 3 of Title 2 of the Government Code.

18(g) “Expressway” means expressway as defined in Section 257
19of the Streets and Highways Code.

20(h) “Interfacing with the state highway system” means work
21performed within the state highway right-of-way, including
22airspace over or under that property, or work performed upon
23property acquired by the department for construction of a state
24highway, including airspace over or under that property.

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

26(1) A transportation planning agency described in Section 29532
27or 29532.1 of the Government Code.

28(2) A county transportation commission established under
29Section 130050, 130050.1, or 130050.2 of the Public Utilities
30Code.

31(3) Any other local or regional transportation entity that is
32designated by statute as a regional transportation agency.

33(4) A joint exercise of powers authority established pursuant to
34Chapter 5 (commencing with Section 6500) of Division 7 of Title
351 of the Government Code, with the consent of a transportation
36planning agency or a county transportation commission for the
37jurisdiction in which the transportation project will be developed.

38(5) A local transportation authority designated pursuant to
39Division 12.5 (commencing with Section 131000) or Division 19
40(commencing with Section 180000) of the Public Utilities Code.

P5    1(6) The Santa Clara Valley Transportation Authority established
2pursuant to Part 12 (commencing with Section 100000) of Division
310 of the Public Utilities Code.

4(j) “Transportation entity” means the department or a regional
5transportation agency.

6

6821.  

(a) The department may utilize the design-build method
7of procurement for up to 10 projects on the state highway system,
8based on either best value or lowest responsible bid.

9(b) A regional transportation agency may utilize the design-build
10method of procurement to design and construct projects on or
11adjacent to the state highway system, including related nonhighway
12portions of the project, based on either best value or lowest
13responsible bid. A regional transportation agency and the
14department shall enter into a cooperative agreement reflecting the
15roles and responsibilities assigned by law for a project on or
16interfacing with the state highway system authorized under this
17subdivision. The cooperative agreement shall also include the
18requirement to develop a mutually agreed upon issue resolution
19process with a primary objective to ensure the project stays on
20schedule and issues between the parties are resolved in a timely
21manner.

22(c) (1) A regional transportation agency may utilize the
23design-build method of procurement, based on either best value
24or lowest responsible bid, to design and construct projects on
25expressways that are not on the state highway system if the projects
26are developed in accordance with an expenditure plan approved
27by voters as of January 1, 2014.

28(2) The entity responsible for the maintenance of the local streets
29and roads within the jurisdiction of the expressway shall be
30responsible for the maintenance of the expressway.

31(d) A city, county, or city and county shall not utilize the
32design-build method of procurement under this chapter. A regional
33transportation agency shall not utilize the design-build method of
34procurement on behalf of a city, county, or city and county.

35(e) The design-build authorization in subdivisions (a) and (b)
36shall not include the authority to perform construction inspection
37services for projects on or interfacing with the state highway
38system, which shall be performed by the department consistent
39with Section 91.2 of the Streets and Highway Code.

P6    1(f) (1) Not later than the first day of July that occurs two years
2after a design-build contract is awarded, and each July 1 thereafter
3until a project is completed, the department or the regional
4transportation agency shall submit a report on the progress of the
5project and compliance with this section to the legislative policy
6committees having jurisdiction over transportation matters.

7(2) The requirement of submitting a report imposed under
8paragraph (1) is inoperative on the first day of July four years after
9the first report was submitted, pursuant to Section 10231.5 of the
10Government Code.

11(3) A report to be submitted pursuant to paragraph (1) shall be
12submitted in compliance with Section 9795 of the Government
13Code.

14

6822.  

The commission shall use the guidelines developed
15pursuant to subdivision (e) of Section 6803, as it read on December
1631, 2013, to provide a standard organizational conflict-of-interest
17policy, consistent with applicable law, regarding the ability of a
18person or entity, that performs services for the transportation entity
19relating to the solicitation of a design-build project, to submit a
20proposal as a design-build entity, or to join a design-build team.
21This conflict-of-interest policy shall apply to the transportation
22entity entering into design-build contracts authorized under this
23chapter.

24

6823.  

(a) For contracts for public works projects awarded prior
25to the effective date of the regulations adopted by the Department
26of Industrial Relations pursuant to subdivision (g) of Section 1771.5
27of the Labor Code, a transportation entity authorized to use the
28design-build method of procurement shall establish and enforce a
29labor compliance program containing the requirements outlined
30in Section 1771.5 of the Labor Code or shall contract with a third
31party to operate a labor compliance program containing the
32requirements outlined in Section 1771.5 of the Labor Code. This
33requirement shall not apply to projects where the transportation
34entity or design-build entity has entered into any collective
35bargaining agreement that binds all of the contractors performing
36work on the projects.

37(b) For contracts for public works projects awarded on or after
38the effective date of the regulations adopted by the Department of
39Industrial Relations pursuant to subdivision (g) of Section 1771.5
40of the Labor Code, the transportation entity shall reimburse the
P7    1Department of Industrial Relations for its reasonable and directly
2related costs of performing prevailing wage monitoring and
3enforcement on public works projects pursuant to rates established
4by the Department of Industrial Relations as set forth in subdivision
5(h) of Section 1771.5 of the Labor Code. All moneys collected
6pursuant to this subdivision shall be deposited in the State Public
7Works Enforcement Fund, created by Section 1771.3 of the Labor
8Code, and shall be used only for enforcement of prevailing wage
9requirements on those projects.

10(c) In lieu of reimbursing the Department of Industrial Relations
11for its reasonable and directly related costs of performing
12monitoring and enforcement on public works projects, the
13transportation entity may either (1) elect to continue operating an
14existing previously approved labor compliance program to monitor
15and enforce prevailing wage requirements on the project if it has
16not contracted with a third party to conduct its labor compliance
17program and requests and receives approval from the department
18to continue its existing program or (2) enter into a collective
19bargaining agreement that binds all of the contractors performing
20work on the project and that includes a mechanism for resolving
21disputes about the payment of wages.

22

6824.  

The procurement process for the design-build project
23shall progress as follows:

24(a) A transportation entity shall prepare a set of documents
25setting forth the scope and estimated price of a project. The
26documents may include, but need not be limited to, the size, type,
27and desired design character of the project, performance
28specifications covering the quality of materials, equipment,
29workmanship, preliminary plans, and any other information deemed
30necessary to describe adequately the transportation entity’s needs.
31The performance specifications and any plans shall be prepared
32by a design professional who is duly licensed and registered in
33California.

34(b) Based on the documents prepared as described in subdivision
35(a), the transportation entity shall prepare a request for proposals
36that invites interested parties to submit competitive sealed proposals
37in the manner prescribed by the transportation entity. The request
38for proposals shall include, but need not be limited to, the following
39elements:

P8    1(1) Identification of the basic scope and needs of the project or
2contract, the estimated cost of the project, the methodology that
3will be used by the transportation entity to evaluate proposals,
4whether the contract will be awarded on the basis of the lowest
5responsible bid or on best value, and any other information deemed
6necessary by the transportation entity to inform interested parties
7of the contracting opportunity.

8(2) Significant factors that the transportation entity reasonably
9expects to consider in evaluating proposals, including, but not
10limited to, cost or price and all nonprice-related factors.

11(3) The relative importance or the weight assigned to each of
12the factors identified in the request for proposals.

13(4) For transportation entities authorized to utilize best value
14as a selection method, the transportation entity reserves the right
15to request proposal revisions and hold discussions and negotiations
16with responsive bidders and shall so specify in the request for
17proposals and shall publish separately or incorporate into the
18request for proposals applicable rules and procedures to be
19observed by the transportation entity to ensure that any discussions
20or negotiations are conducted in good faith.

21(c) Based on the documents prepared under subdivision (a), the
22transportation entity shall prepare and issue a request for
23qualifications in order to prequalifybegin insert or short listend insert the design-build
24entities whose proposals shall be evaluated for final selection. The
25 request for qualifications shall include, but need not be limited to,
26the following elements:

27(1) Identification of the basic scope and needs of the project or
28contract, the expected cost range, the methodology that will be
29used by the transportation entity to evaluate proposals, the
30procedure for final selection of the design-build entity, and any
31other information deemed necessary by the transportation entity
32to inform interested parties of the contracting opportunity.

33(2) (A) Significant factors that the transportation entity
34reasonably expects to consider in evaluating qualifications,
35including technical design and construction expertise, skilled labor
36force availability, and all other nonprice-related factors.

37(B) For purposes of subparagraph (A), skilled labor force
38availability shall be determined by the existence of an agreement
39with a registered apprenticeship program, approved by the
40California Apprenticeship Council, that has graduated at least one
P9    1apprentice in each of the preceding five years. This graduation
2requirement shall not apply to programs providing apprenticeship
3training for any craft that was first deemed by the Department of
4Labor and the Department of Industrial Relations to be an
5apprenticeable craft within the five years prior to the effective date
6of this article.

7(3) A standard form request for statements of qualifications
8prepared by the transportation entity. In preparing the standard
9form, the transportation entity may consult with the construction
10industry, the building trades and surety industry, and other public
11agencies interested in using the authorization provided by this
12chapter. The standard form shall require information including,
13but not limited to, all of the following:

14(A) If the design-build entity is a partnership, limited
15partnership, joint venture, or other association, a listing of all of
16the partners, general partners, or association members known at
17the time of statement of qualification submission who will
18participate in the design-build contract.

19(B) Evidence that the members of the design-build entity have
20completed, or demonstrated the experience, competency, capability,
21and capacity to complete projects of similar size, scope, or
22complexity, and that proposed key personnel have sufficient
23experience and training to competently manage and complete the
24design and construction of the project, and a financial statement
25that assures the transportation entity that the design-build entity
26has the capacity to complete the project.

27(C) The licenses, registration, and credentials required to design
28and construct the project, including, but not limited to, information
29on the revocation or suspension of any license, credential, or
30registration.

31(D) Evidence that establishes that the design-build entity has
32the capacity to obtain all required payment and performance
33bonding, liability insurance, and errors and omissions insurance.

34(E) Information concerning workers’ compensation experience
35history and a worker safety program.

36(F) A full disclosure regarding all of the following that are
37applicable:

38(i) Any serious or willful violation of Part 1 (commencing with
39Section 6300) of Division 5 of the Labor Code or the federal
P10   1Occupational Safety and Health Act of 1970 (Public Law 91-596),
2settled against any member of the design-build entity.

3(ii) Any debarment, disqualification, or removal from a federal,
4state, or local government public works project.

5(iii) Any instance where the design-build entity, or its owners,
6officers, or managing employees submitted a bid on a public works
7project and were found to be nonresponsive or were found by an
8awarding body not to be a responsible bidder.

9(iv) Any instance where the design-build entity, or its owners,
10officers, or managing employees defaulted on a construction
11contract.

12(v) Any violations of the Contractors’ State License Law, as
13described in Chapter 9 (commencing with Section 7000) of
14Division 3 of the Business and Professions Code, including alleged
15violations of federal or state law regarding the payment of wages,
16benefits, apprenticeship requirements, or personal income tax
17withholding, or Federal Insurance Contribution Act (FICA)
18withholding requirements settled against any member of the
19design-build entity.

20(vi) Any bankruptcy or receivership of any member of the
21design-build entity, including, but not limited to, information
22concerning any work completed by a surety.

23(vii) Any settled adverse claims, disputes, or lawsuits between
24the owner of a public works project and any member of the
25design-build entity during the five years preceding submission of
26a bid under this article, in which the claim, settlement, or judgment
27exceeds fifty thousand dollars ($50,000). Information shall also
28be provided concerning any work completed by a surety during
29this five-year period.

30(G) If the proposed design-build entity is a partnership, limited
31partnership, joint-venture, or other association, a copy of the
32organizational documents or agreement committing to form the
33organization, and a statement that all general partners, joint venture
34members, or other association members agree to be fully liable for
35the performance under the design-build contract.

36(H) An acceptable safety record. A bidder’s safety record shall
37be deemed acceptable if its experience modification rate for the
38most recent three-year period is an average of 1.00 or less, and its
39average total recordable injury/illness rate and average lost work
40rate for the most recent three-year period does not exceed the
P11   1applicable statistical standards for its business category or if the
2bidder is a party to an alternative dispute resolution system as
3provided for in Section 3201.5 of the Labor Code.

4(4) The information required under this subdivision shall be
5verified under oath by the design-build entity and its members in
6 the manner in which civil pleadings in civil actions are verified.
7Information required under this subdivision that is not a public
8record under the California Public Records Act, as described in
9Chapter 3.5 (commencing with Section 6250) of Division 7 of
10Title 1 of the Government Code, shall not be open to public
11inspection.

12(d) For those projects utilizing low bid as the final selection
13method, the competitive bidding process shall result in lump-sum
14bids by the prequalified design-build entities. Awards shall be
15made to the lowest responsible bidder.

16(e) For those projects utilizing best value as a selection method,
17the design-build competition shall progress as follows:

18(1) Competitive proposals shall be evaluated by using only the
19criteria and selection procedures specifically identified in the
20request for proposals. However, the following minimum factors
21shall be weighted as deemed appropriate by the contracting
22transportation entity:

23(A) Price.

24(B) Technical design and construction expertise.

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

26(2) Pursuant to subdivision (b), the transportation entity may
27hold discussions or negotiations with responsive bidders using the
28process articulated in the transportation entity’s request for
29proposals.

30(3) When the evaluation is complete, the top three responsive
31bidders shall be ranked sequentially based on a determination of
32value provided.

33(4) The award of the contract shall be made to the responsible
34bidder whose proposal is determined by the transportation entity
35to have offered the best value to the public.

36(5) Notwithstanding any other provision of this code, upon
37issuance of a contract award, the transportation entity shall publicly
38announce its award, identifying the contractor to whom the award
39is made, along with a written decision supporting its contract award
40and stating the basis of the award. The notice of award shall also
P12   1include the transportation entity’s second- and third-ranked
2design-build entities.

3(6) The written decision supporting the transportation entity’s
4contract award, described in paragraph (5), and the contract file
5shall provide sufficient information to satisfy an external audit.

6

6825.  

(a) The design-build entity shall provide payment and
7performance bonds for the project in the form and in the amount
8required by the transportation entity, and issued by a California
9admitted surety. In no case shall the amount of the payment bond
10be less than the amount of the performance bond.

11(b) The design-build contract shall require errors and omissions
12insurance coverage for the design elements of the project.

13

6826.  

(a) The transportation entity, in each design-build request
14for proposals, may identify specific types of subcontractors that
15must be included in the design-build entity statement of
16qualifications and proposal. All construction subcontractors that
17are identified in the proposal shall be afforded all the protections
18of Chapter 4 (commencing with Section 4100) of Part 1 of Division
192.

20(b) In awarding subcontracts not listed in the request for
21proposals, the design-build entity shall do all of the following:

22(1) Provide public notice of availability of work to be
23subcontracted in accordance with the publication requirements
24applicable to the competitive bidding process of the transportation
25entity.

26(2) Provide a fixed date and time on which the subcontracted
27work will be awarded.

28(3) Establish reasonable qualification criteria and standards.

29(4) Provide that the subcontracted construction work shall be
30awarded either on a best value basis or to the lowest responsible
31bidder. For construction work awarded on a best value basis, the
32design-build entity shall evaluate all bids utilizing the factors
33described in paragraph (1) of subdivision (e) of Section 6824, and
34shall award the contract to the bidder determined by the
35design-build entity to have offered the best value.

36(c) Subcontractors awarded subcontracts under this chapter shall
37be afforded all the protections of Chapter 4 (commencing with
38Section 4100) of Part 1 of Division 2.

39

6827.  

Nothing in this chapter affects, expands, alters, or limits
40any rights or remedies otherwise available at law.

P13   1

6828.  

The provisions of this chapter are severable. If any
2provision of this chapter or its application is held invalid, that
3invalidity shall not affect other provisions or applications that can
4be given effect without the invalid provision or application.

5

6829.  

(a) This chapter shall remain in effect only until January
61, 2024, and as of that date is repealed, unless a later enacted
7statute, that is enacted before January 1, 2024, deletes or extends
8that date.

9(b) Notwithstanding subdivision (a), if any provision or
10application of Section 91.2 of the Streets and Highways Code is
11held invalid by a court of competent jurisdiction, this chapter shall
12be repealed one year from the date in which the department posts
13on its Internet Web site that Section 91.2 of the Streets and
14Highways Code has been held invalid.

15(c) The repeal of this chapter shall not affect an executed
16design-build contract or cooperative agreement entered into
17pursuant to this chapter prior to the date of its repeal, regardless
18of the stage of the project at the time of repeal.

19

SEC. 4.  

Section 91.2 is added to the Streets and Highways
20Code
, to read:

21

91.2.  

(a) The department shall perform construction inspection
22services for projects on or interfacing with the state highway system
23authorized pursuant to Chapter 6.5 (commencing with Section
246820) of Part 1 of Division 2 of the Public Contract Code. The
25department shall use department employees or consultants under
26contract with the department to perform the services described in
27this subdivision and subdivision (b), consistent with Article XXII
28of the California Constitution. Construction inspection services
29performed by the department for those projects include, but are
30not limited to, material source testing, certification testing,
31surveying, monitoring of environmental compliance, independent
32quality control testing and inspection, and quality assurance audits.
33The construction inspection duties and responsibilities of the
34department shall include a direct reporting relationship between
35the inspectors and senior department engineers responsible for all
36inspectors and construction inspection services. The senior
37department engineer responsible for construction inspection
38services shall be responsible for the acceptance or rejection of the
39work.

P14   1(b) Notwithstanding any other law, the department shall retain
2the authority to stop the contractor’s operation wholly or in part
3and take appropriate action when public safety is jeopardized on
4a project on or interfacing with the state highway system authorized
5pursuant to Chapter 6.5 (commencing with Section 6820) of Part
61 of Division 2 of the Public Contract Code. The department shall
7ensure that public safety and convenience is maintained whenever
8work is performed under an encroachment permit within the state
9highway right-of-way, including, but not limited to, work
10performed that includes lane closures, signing, work performed at
11night, detours, dust control, temporary pavement quality, crash
12cushions, temporary railings, pavement transitions, falsework,
13shoring, and delineation. The department shall regularly inspect
14the job sites for safety compliance and any possible deficiencies.
15If any deficiency is observed, a written notice shall be sent by the
16department to the regional transportation agency’s designated
17resident engineer to correct the deficiency. Once the deficiency is
18corrected, a written notice describing the resolution of the
19deficiency shall be sent to the department and documented.

20(c) The department shall use department employees or
21consultants under contract with the department to perform the
22services described in subdivisions (a) and (b), consistent with
23Article XXII of the California Constitution. Department employee
24and consultant resources necessary for the performance of those
25services, including personnel requirements, shall be included in
26the department’s capital outlay support program for workload
27purposes in the annual Budget Act.

28(d) “Construction inspection services” shall not include
29surveying work performed as part of a design-build contract.

30(e) This section shall remain in effect only until January 1, 2024,
31and as of that date is repealed, unless a later enacted statute, that
32is enacted before January 1, 2024, deletes or extends that date.

33(f) If any provision or application of this section is held invalid
34by a court of competent jurisdiction, the department shall post on
35its Internet Web site within 10 business days of the decision of
36 invalidity that this section has been held invalid.

37

SEC. 5.  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P15   1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



O

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