Amended in Assembly April 16, 2013

Amended in Assembly April 4, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 603

Introduced by Assembly Member Cooley

February 20, 2013

An act to begin delete amend Sections 6800, 6801, and 6803 of, to add the heading of Article 1 (commencing with Section 6800) to Chapter 6.5 of Part 1 of Division 2 of, to add Article 2 (commencing with Section 6815) to Chapter 6.5 of Part 1 of Division 2 of, and to repeal Section 6813 of, end delete begin insert add Chapter 6 (commencing with Section 6970) to Part 1 of Division 2 of end insert the Public Contract Code, relating to design-build begin insert , and making an appropriation therefor end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 603, as amended, Cooley. Public contracts: begin delete design-build. end delete begin insert design-build: Capitol Southeast Connector Project. end insert

begin 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.

end insert begin insert

This bill would authorize the Capitol Southeast Connector Joint Powers Authority to utilize design-build procurement for the Southeast Connector Project in Sacramento County, subject to authorization by the commission. 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.

end insert begin insert

This bill would make legislative findings and declarations as to the necessity of a special statute for Sacramento County.

end insert begin insert

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

end insert begin insert

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.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing law provides for a Design-Build Demonstration Program that allows for a local transportation entity to utilize the design-build method of procurement for a specified amount of projects for local and state projects. Existing law defines “local transportation entity” as a designated transportation authority, a consolidated agency, the Santa Clara Valley Transportation Authority, any other local or regional transportation entity that is designated as a regional transportation agency. Existing law subjects both local and state projects to specified procedural requirements to qualify as a design-build project. Existing law repeals these provisions on January 1, 2014.

end delete begin delete

This bill would include in the definition of a local transportation entity a joint powers authority. This bill would only apply the specified procedural requirements to the state design-build projects. This bill would delete the repeal date. This bill would also authorize the Capital Southeast Connector Joint Powers Authority to use design-build procurement, as specified. This bill makes findings regarding the need for special legislation.

end delete

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION end insert begin insert 1. end insert   

end insert

begin insert Chapter 6.7 (commencing with Section 6970) is
added to Part 1 of Division 2 of the end insert begin insert Public Contract Code end insert begin insert , to read: end insert

begin insert

 

Chapter   begin insert 6.7. end insert Capitol Southeast Connector Joint Powers
Authority Design

 

begin insert 6970. end insert   

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) “Transportation entity” means the Capitol Southeast
Connector Joint Powers Authority.

begin insert 6971. end insert   

The Capitol Southeast Connector Joint Powers Authority,
if authorized by the commission, may utilize design-build
procurement for the Southeast Connector Project in Sacramento
County.

begin insert 6972. end insert   

(a) 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 the project is completed, the transportation entity
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.

(b) The requirement of submitting a report imposed under
subdivision (a) 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.

(c) A report to be submitted pursuant to subdivision (a) shall
be submitted in compliance with Section 9795 of the Government
Code.

begin insert 6973. end insert   

The commission shall develop guidelines for 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 each transportation entity entering into
design-build contracts authorized under this chapter.

begin insert 6974. end insert   

(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 elect to continue operating an existing
previously approved labor compliance program to monitor and
enforce prevailing wage requirements on the project if it has either
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 it enters 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.

begin insert 6975. end insert   

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

(a) The transportation entity shall prepare a set of documents
setting forth the scope and estimated price of the 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.

begin insert 6976. end insert   

(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 element of the project.

begin insert 6977. end insert   

(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.

begin insert 6978. end insert   

This chapter shall not be construed to affect, expand,
alter, or limit any right or remedy otherwise available at law.

begin insert 6979. end insert   

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.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert begin insert

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 a
connecting roadway for the Cities of Elk Grove, Folsom, and
Rancho Cordova, and El Dorado and Sacramento Counties in a
cost-effective manner.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin 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.

end insert

begin delete

SECTION 1.  

The heading of Article 1 (commencing with
Section 6800) is added to Chapter 6.5 of Part 1 of Division 2 of
the Public Contract Code, to read:

 

Article 1.  General

 

SEC. 2.  

Section 6800 of the Public Contract Code is amended
to read:

6800.  

The Legislature hereby finds and declares all of the
following:

(a) The design-build method of procurement authorized under
this chapter should be evaluated for the purposes of exploring
whether the potential exists for reduced project costs, expedited
project completion, or design features that are not achievable
through the traditional design-bid-build method. This chapter shall
not be deemed to provide a preference for the design-build method
over other procurement methodologies.

(b) The Design-Build Demonstration Program allows for a
careful examination of the benefits and challenges of the
design-build contracting method on a limited number of projects.

(c) This article offers specified local agencies the opportunity
to seek approval by the commission for the utilization of the
design-build contracting method for up to five projects. According
to the 2012 annual report to the Legislature submitted by the
commission, none of the five available local projects have been
utilized for the design-build procurement method by local entities.

(d) For the Legislature to fully understand the potential that the
design-build contracting method presents through this Design-Build
Demonstration Program, it is appropriate to expand the definition
of a local transportation entity.

SEC. 3.  

Section 6801 of the Public Contract Code is amended
to read:

6801.  

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) “Local transportation entity” means a transportation authority
designated pursuant to Division 19 (commencing with Section
180000) of the Public Utilities Code, a consolidated agency created
pursuant to Chapter 3 (commencing with Section 132350) of
Division 12.7 of the Public Utilities Code, the Santa Clara Valley
Transportation Authority established under Part 12 (commencing
with Section 100000) of Division 10 of the Public Utilities Code,
any other local or regional transportation entity that is designated
by statute as a regional transportation agency, and a joint powers
authority formed 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.

(h) “Transportation entity” means the department or a local
transportation entity.

SEC. 4.  

Section 6803 of the Public Contract Code is amended
to read:

6803.  

(a) Only 15 design-build projects shall be authorized
under this chapter. The projects selected shall vary in size, type,
and geographical location.

(b) The commission shall determine whether a transportation
entity may award a design-build contract based on lowest
responsible bid or best value. The commission shall balance the
number of transportation entities that may use the low bid and best
value selection methods in order to ensure that the number of
design-build contracts awarded will enable the commission to
determine the costs and benefits of using each method.

(c) In order to be eligible for consideration as one of the 10
design-build projects authorized under subdivision (b) of Section
6802, the proposed project shall be subject to the existing process
under the state transportation improvement program (Chapter 2
(commencing with Section 14520) of Part 5.3 of Division 3 of
Title 2 of the Government Code), the Highway Safety, Traffic
Reduction, Air Quality, and Port Security Bond Act of 2006
(Chapter 12.49 (commencing with Section 8879.20) of Division
1 of Title 2 of the Government Code), the traffic congestion relief
program (Chapter 4.5 (commencing with Section 14556) of Part
5.3 of Division 3 of Title 2 of the Government Code), or the state
highway operations and protection program established pursuant
to Section 14526.5 of the Government Code.

(d) The commission shall establish a peer review committee to
conduct an evaluation of the 15 projects selected to utilize the
design-build method of procurement.

(e) The commission shall develop guidelines for 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 each transportation entity entering into design-build
contracts authorized under this chapter.

SEC. 5.  

Section 6813 of the Public Contract Code is repealed.

SEC. 6.  

Article 2 (commencing with Section 6815) is added to
Chapter 6.5 of Part 1 of Division 2 of the Public Contract Code,
to read:

 

Article 2.  Capital Southeast Connector Joint Powers Authority

 

6815.  

The Capital Southeast Connector Joint Powers Authority
may use the design-build method of procurement for transportation
projects, subject to the requirements for utilizing that method
pursuant to Article 1 (commencing with Section 6800). However,
Sections 6802 and 6803 shall not apply to contracts let by the
Capital Southeast Connector Joint Powers Authority when using
the design-build method of procurement.

SEC. 7.  

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 a
connecting roadway for the Cities of Elk Grove, Folsom, and
Rancho Cordova, and El Dorado and Sacramento Counties in a
cost-effective manner.

end delete