Amended in Senate September 6, 2013

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 Bill No. 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:

SECTION 1.  

The Legislature finds and declares the following:

(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.

(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.

(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.

(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.

SEC. 2.  

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

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

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

(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.

SEC. 3.  

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. Transportation 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.

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

(h) “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.

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

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

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

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

(4) A joint exercise of powers authority established pursuant to
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.

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

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

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

6821.  

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

(b) A regional transportation agency may utilize the design-build
method of procurement to design and construct projects on or
adjacent to the state highway system, including related nonhighway
portions of the project, 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.

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

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

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

(e) 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.

(f) (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 a project is completed, the department or the regional
transportation agency 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 either (1) elect to continue operating an
existing previously approved labor compliance program to monitor
and enforce prevailing wage requirements on the project if it has
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 (2) enter 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) A transportation entity shall prepare a set of documents
setting forth the scope and estimated price of a 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 or begin delete short list end delete begin insert short-list end insert 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 begin insert or short- end insert begin insert listed end insert 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.  

(a) This chapter 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.

(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.

SEC. 4.  

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

91.2.  

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

(e) 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.

(f) 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.

SEC. 5.  

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.