BILL ANALYSIS Ó
AB 401
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CONCURRENCE IN SENATE AMENDMENTS
AB 401 (Daly)
As Amended September 6, 2013
Majority vote
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|ASSEMBLY: |68-3 |(May 24, 2013) |SENATE: |32-2 |(September 10, |
| | | | | |2013) |
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Original Committee Reference: TRANS.
SUMMARY : Authorizes the use of design-build procurements for
highways and expressways, under certain conditions.
The Senate amendments delete the entire contents of the bill as
passed by the Assembly, related to design-build authority for the
Orange County Transportation Authority. As amended in the Senate,
this bill:
1)Sets forth legislative findings and declarations regarding the
California Department of Transportation's (Caltrans')
responsibilities over the state highway system.
2)Sets forth legislative intent that: Caltrans and regional
transportation agencies should be authorized to use design-build
procurements; the authority to perform construction inspection
services should be reserved for Caltrans; and Caltrans is to
ensure that uniform safety standards are met on state highway
projects.
3)Defines key terms, most notably "regional transportation agency"
to include any of the following:
a) A statutorily created regional transportation planning
agency (RPTA);
b) A local transportation commission, for counties not included
in a statutorily created RPTA;
c) A county transportation commission in counties within the
jurisdiction of the Southern California Association of
Governments;
d) A joint powers authority, with the consent of a
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transportation planning agency or county transportation
commission;
e) A local transportation authority; and,
f) The Santa Clara Valley Transportation Authority.
4)Grants Caltrans the authority to use design-build for up to 10
projects on the state highway system; contracts may be awarded
either on best value or lowest responsible bid.
5)Grants regional transportation agencies authority to use
design-build on or adjacent to the state highway system, also
based on either best value or lowest responsible bid.
6)Requires regional transportation agencies and Caltrans to enter
into cooperative agreements reflecting the roles and
responsibilities assigned by law for a project on, or interfacing
with, a state highway; also requires that the cooperative
agreements include an issue resolution process to facilitate
timely project completion.
7)Grants regional transportation agencies authority to use
design-build on expressways that are not on the state highway
system, under certain conditions; specifically provides that the
entity responsible for maintenance of the local streets and roads
within the jurisdiction of an expressway is to be responsible for
maintenance of the expressway.
8)Excludes, specifically, cities, counties, and a city and county
from using the design-build authority granted by this bill and
prohibits a regional transportation agency from using its
design-build authority on behalf of a city, county, or city and
county.
9)Excludes, specifically, from the design-build authority for state
highways the authority to perform construction inspection
services; this authority will be retained by Caltrans.
10)Requires Caltrans or the regional transportation agency to report
to the Legislature on progress and compliance with the provisions
of this bill for each design-build project undertaken.
11)Imposes requirements related to conflict-of-interest policies,
labor compliance programs, prevailing wages, payment and
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performance bonds, and subcontracting and subletting.
12)Sets forth the process by which design-build projects are to be
procured.
13)Declares that this bill's provisions are severable and protects
going contracts in the event that the statutes authorizing
design-build are repealed (e.g., after the sunset date or because
they were held invalid by the courts).
14)Sunsets provisions that authorize the use of design-build on
January 1, 2024.
15)Provides that Caltrans is to perform construction inspection
services on all design-build projects on or interfacing with the
state highway system, including specific tasks, such as material
source testing, surveying (except surveying work performed as part
of a design-build contract), independent quality control testing
and inspection, and quality assurance audits.
16)Prescribes a direct reporting relationship between project
inspectors and senior Caltrans engineers responsible for all
inspectors and construction inspection services.
17)Explicitly states that the senior Caltrans engineer responsible
for construction inspection services is responsible for acceptance
or rejection of work on the project.
18)Provides, notwithstanding any other provision of law, that
Caltrans will retain the authority to stop the contractor's
operations on the project in the event public safety is
jeopardized.
19)Directs Caltrans to ensure that public safety and convenience is
maintained for work performed under an encroachment permit within
state highway rights-of-way.
20)Prescribes the process by which Caltrans is to document project
deficiencies and to direct remedies.
21)Provides that Caltrans may use employees or consultants it
contracts with to perform prescribed services, consistent with
Article 22 of the State Constitution; requires that resources
necessary to perform the services are reflected in the Caltrans
capital outlay support program budget.
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EXISTING LAW :
1)Sets forth provisions governing public works contracting. These
provisions generally prohibit public agencies from contracting
with the same firm for both the design and the construction phases
of a project.
2)Requires, generally, public works construction contracts to be
awarded to the lowest responsible bidder.
3)Establishes the Design-Build Demonstration Program that provides
for a limited use of design-build contracts for transportation;
sets forth criteria and procedures governing the program,
including:
a) Authorizes local transportation entities, if authorized by
the California Transportation Commission (CTC), to use
design-build for up to five projects that may be for local
street or road, bridge tunnel, or public transit projects
within the jurisdiction of the entity;
b) Authorizes Caltrans, if authorized by the CTC, to use
design-build on up to 10 state highway, bridge, or tunnel
projects;
c) Limits the total number of projects authorized in the
demonstration program to 15; and,
d) Sunsets the demonstration program on January 1, 2014.
4)Authorizes transit agencies, until January 1, 2015, to use
design-build for their projects.
5)Provides, within the State Constitution, that all government
agencies must be allowed to contract with qualified private
entities for architectural and engineering services for all public
works of improvement; specifically provides that the choice and
authority to contract extends to all phases of project
development, including permitting and environmental studies,
rights-of-way services, design phase services and construction
phase services.
FISCAL EFFECT : According to the Senate Appropriations Committee:
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1)Unknown fiscal impacts, but potentially overall project cost
savings, related to the use of design-build on transportation
projects.
2)Caltrans could incur costs to hire, train, and transfer
construction inspection staff among its 12 districts, to the
extent that design-build projects occur in a district that has a
shortage of available staff. In addition, if a district is
overstaffed when a project concludes, these positions would either
be reduced or shifted to other districts. Staff notes, however,
that shortages could be addressed by increased contracting for
inspection services.
3)Unknown costs to Caltrans to the extent that resources identified
in the annual Budget Act are lower than actual costs related to
inspection services on RTPA projects.
4)Unknown costs to the Department of Industrial Relations to monitor
and enforce prevailing wage requirements for design-build
projects. These costs would be reimbursed in arrears by the
transportation entity.
COMMENTS : For decades, the traditional process for procuring public
works projects has been the design-bid-build process. This process
relies on: 1) a design entity preparing complete project design
specifications and estimates; 2) the project owner putting the
complete package out to bid for construction; and, 3) awarding the
construction contract to the lowest responsible bidder. The
design-bid-build process was developed to protect taxpayers from
extravagance, corruption, and other improper practices by public
officials as well as to secure a fair and reasonable price for
public works construction by injecting competition amongst bidders
into the process.
Although design-bid-build generally results in the lowest cost
construction contract, it is not without its drawbacks, including:
1)Projects generally take longer to complete because designs must be
entirely completed, permits obtained, and right-of-way acquired
before the construction contract can be bid and awarded.
2)Designs prepared for a competitive low-bid procurement are
developed to allow for a broad range of construction approaches.
As a result, low-bid designs do not always equate to the most
efficient design possible, depending on a particular contractor's
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particular strengths or capabilities.
3)Because the project designer does not have the benefit of
consulting with the entity that will ultimately be responsible for
construction of the project, there may be significant issues that
the designer does not anticipate, particularly constructability
issues. This can result in change orders that ultimately drive up
the price of the contract.
4)Low-bid is not always the least expensive option, once change
orders and contractor claims are factored into the overall project
costs.
In the early 1990s, public works agencies grew frustrated with
design-bid-build and began experimenting with more innovative
project delivery methods, namely design-build. Design-build is an
alternate method for procuring design and construction services that
provides for the delivery of public works projects from a single
entity. Design-build combines project design, permit, and
construction schedules in order to streamline the traditional
design-bid-build environment.
Design-build differs from design-bid-build in some key areas,
including:
1)Shorter overall elapsed project delivery time because construction
can begin before final design is complete.
2)Project costs and schedule risks are more heavily borne by the
design-build contractor.
3)Construction claims and change orders are minimized.
4)Designs can be developed to take advantage of particular
contractor's strengths and abilities, thereby reducing the need to
"over-design" for generic use as in design-bid-build.
5)Project specifications are typically based on definitive
performance criteria (which may or may not be well established by
the project owner) rather than established specifications.
6)Contracts are awarded based on best-value analyses rather than
low-bid.
Design-build contracts are not without their drawbacks as well. For
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example, with a design-build project, the project owner must give up
a good deal of control over the details of the project design.
Additionally, design-build contractors are typically selected using
qualifications-based selection criteria or best value analysis.
These approaches are more subjective than a low-bid approach,
potentially subjecting the public works owner to greater contract
challenges and higher costs.
Existing law allows selected state agencies and local governments to
use design-build but does not generally allow agencies to use
design-build for highways. In 2009, however, the Legislature passed
and the Governor signed SB 4 X2 (Cogdill), Chapter 2, Statutes of
2009-10 Second Extraordinary Session, that authorizes, among other
things, the Design-Build Demonstration Program. This program
provides for limited use of design-build for transportation-10 for
projects on the state highway system and five for projects on local
streets. SB 4 X2 sets forth processes and procedures by which
design-build projects are approved under the demonstration project,
which sunsets January 1, 2014.
To date, CTC has authorized 10 state highway projects. No approvals
to use design-build on local streets have been requested.
In theory, it would behoove the Legislature to evaluate the results
of the Design-Build Demonstration Program prior to granting
additional authorization to use design-build for transportation.
However, experiences to date for those limited transportation
projects authorized to use design-build here in California, as well
as others from around the nation, suggest that design-build has the
potential to expedite project delivery. All things considered, the
prospect of creating new jobs probably outweighs the risk of
proceeding with this design-build authority prior to knowing the
final results of the original Design-Build Demonstration Program.
Although the previous version of this bill also dealt with
design-build, it related to a single project in Orange County. As
amended by the Senate, this bill is significantly broader in scope
now than was previously heard in any policy committee in the
Assembly.
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093
FN: 0002661
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