BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 328
          Author:   Knight (R)
          Amended:  4/9/13
          Vote:     21


           SENATE GOVERNANCE & FINANCE COMMITTEE  :  6-0, 4/3/13
          AYES:  Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez
          NO VOTE RECORDED:  Liu

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Counties:  public works contracts

           SOURCE  :     County of San Bernardino


           DIGEST  :    This bill, until January 1, 2021, allows a county,  
          with the board of supervisors' approval, to use construction  
          manager at-risk construction contracts for erecting,  
          constructing, altering, repairing, or improving buildings owned  
          or leased by the county.  This bill provides that a county may  
          use a construction manager at-risk construction contract only  
          for projects in the county in excess of $1,000,000, and allows a  
          county to award the construction manager at-risk construction  
          contract using either the lowest responsible bidder or best  
          value method.

           ANALYSIS  :     

           Existing law allows local officials to contract with private  
          construction project management firms for professional  
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          management, and supervision services for construction projects.   
          Construction project management firms provide expertise and  
          experience in construction project design review and evaluation,  
          construction mobilization and supervision, bid evaluation,  
          project scheduling, cost benefit analysis, claims review and  
          negotiation, and general management and administration of a  
          construction project.  Local officials award contracts based on  
          demonstrated competence and qualifications.  Construction  
          project management services can be used with any project  
          delivery method.

          This bill defines "best value" as a value determined by  
          objective criteria related to the experience of the entity and  
          project personnel, project plan, financial strength of the  
          entity, safety record of the entity, and price.

          This bill defines "construction manager at-risk contract" as a  
          competitively
          procured contract by a county with an individual, partnership,  
          joint venture, corporation, or other recognized legal entity,  
          that is appropriately licensed in this state and that guarantees  
          the cost of a project and furnishes construction management  
          services, including, preparation and coordination of bid  
          packages, scheduling, cost control, value engineering,  
          evaluation, preconstruction services, and construction  
          administration.

          Subcontractors that are not listed by a construction manager  
          at-risk entity, as specified, shall be awarded by the  
          construction manager at-risk entity in accordance with the  
          process set forth by the county.  The construction manager  
          at-risk shall do both of the following:

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

          2.Provide a fixed date and time on which the subcontracted work  
            will be awarded in accordance with the procedure established  
            pursuant to this bill.

          This bill requires counties to submit a copy of every contract  
          they enter into, subject to this bill's provisions, to the  
          Controller's Office, in electronic format, to be posted on its  

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          Internet Web site.  This bill sunsets counties' ability to use  
          construction manager at-risk contracting on January 1, 2021.

           Comments
           
          According to the Senate Governance and Finance Committee  
          analysis, a method known as construction manager at-risk is  
          another approach to public works construction and delivery which  
          combines elements of the design-bid-build and design-build  
          methods, and uses construction project management services.  The  
          construction manager at-risk method allows the owner of a  
          project to retain a "construction manager," who provides  
          pre-construction services during the design period and later  
          becomes the general contractor during the construction process.   
          The owner has separate contracts for design and construction  
          services (the construction manager), similar to the  
          design-bid-build method.  The owner may establish the separate  
          contracts at the same time, however, thereby allowing the design  
          party and the construction manager to work together, similar to  
          the design-build method.  Before construction can begin on a  
          project, the owner and construction manager must agree on either  
          a fixed price or "guaranteed maximum price" for the project.   
          The construction manager is responsible for delivering the  
          project within the agreed upon price, thereby assuming the risk  
          for cost-overruns.  The California Administrative Office of the  
          Courts, University of California, California State University  
          System, school districts, and some cities have used the  
          construction manager at-risk method for building construction  
          projects.

          Under the construction manager at-risk method, project delivery  
          can occur in sequential or concurrent phases.  Projects that  
          have multiple components lend themselves to this method because  
          the design and construction of different aspects of the project  
          can occur at different times.  In effect, the overall project  
          can be broken into multiple components, which the construction  
          manager must bid to subcontractors.

          State law does not authorize counties to use the construction  
          manager at-risk method for county construction projects.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No


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           SUPPORT  :   (Verified  4/22/13)

          County of San Bernardino (source)
          County of Stanislaus
          Rural County Representatives of California
          Urban Counties Caucus



          AB:ej  4/23/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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