Amended in Senate January 14, 2014

Amended in Senate May 2, 2013

Amended in Senate April 23, 2013

Amended in Senate April 1, 2013

Senate Bill No. 785

Introduced by Senator Wolk

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(Principal coauthor: Assembly Member Levine)

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February 22, 2013

An act to repeal Sections 14661 and 14661.1 of the Government Code, to amend Section 32132.5 of the Health and Safety Code, and to add Article 6 (commencing with Section 10186) to Chapter 1 of Part 2 of Division 2 of, to add Chapter 4 (commencing with Section 22160) to Part 3 of Division 2 of, to repeal Sections 20133, 20175.2, 20193, 20209, 20301.5, and 20688.6 of, and to repeal Article 22 (commencing with Section 20360) of Chapter 1 of Part 3 of Division 2 of, the Public Contract Code, relating to design-build.

LEGISLATIVE COUNSEL’S DIGEST

SB 785, as amended, Wolk. Design-build.

Existing law authorizes the Department of General Services, the Department of Corrections and Rehabilitation, and various local agencies to use the design-build procurement process for specified public works under different laws.

This bill would repeal those authorizations, and enact provisions that would authorize the Department of General Services, the Department of Corrections and Rehabilitation, and those local agencies, as defined, to use the design-build procurement process for specified public works. begin insert The bill would authorize the Marin Healthcare District to use the design-build process when contracting for the construction of a building and improvements directly related to a hospital or health facility building at the Marin General Hospital. end insert The bill would require moneys that are collected under these provisions to be deposited into the State Public Works Enforcement Fund, subject to appropriation by the Legislature. The bill would require specified information to be verified under penalty of perjury. By expanding the crime of perjury, the bill would impose a state-mandated local program.

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This bill would make legislative findings and declarations as to the necessity of a special statute for the Marin Healthcare District.

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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: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

It is the intent of the Legislature to consolidate
existing design-build statutes and eliminate inconsistencies in
statutory language by adopting authority of general application to
identified agencies and repealing superseded sections.

SEC. 2.  

Section 14661 of the Government Code is repealed.

SEC. 3.  

Section 14661.1 of the Government Code is repealed.

SEC. 4.  

Section 32132.5 of the Health and Safety Code is
amended to read:

32132.5.  

(a) Notwithstanding Section 32132 or any other law,
upon approval by the board of directors of the Sonoma Valley
Health Care District begin insert or the Marin Healthcare District, as
applicable end insert , the design-build procedure described in Chapter 4
(commencing with Section 22160) of Part 3 of Division 2 of the
Public Contract Code may be used to assign contracts for the
construction of a building or improvements directly related to
construction of a hospital or health facility building at the Sonoma
Valley Hospital begin insert or the Marin General Hospital end insert .

(b) For purposes of this section, all references in Chapter 4
(commencing with Section 22160) of Part 3 of Division 2 of the
Public Contract Code to begin delete “county” and “governing body” end delete begin insert “local
agency end insert begin insert ” end insert shall mean the Sonoma Valley Health Care District begin insert and
the Marin Healthcare District end insert .

(c) A hospital building project utilizing the design-build process
authorized by subdivision (a) shall be reviewed and inspected in
accordance with the standards and requirements of the Alfred E.
Alquist Hospital Facilities Seismic Safety Act of 1983 (Chapter 1
(commencing with Section 129675) of Part 7 of Division 107).

SEC. 5.  

Article 6 (commencing with Section 10186) is added
to Chapter 1 of Part 2 of Division 2 of the Public Contract Code,
to read:

 

Article 6.  State Agency Design-Build Projects

 

10186.  

(a) The Legislature finds and declares that the
design-build method of project delivery, using a best value
procurement methodology, has been authorized for various
agencies that have reported benefits from such projects including
reduced project costs, expedited project completion, and design
features that are not achievable through the traditional
design-bid-build method.

(b) It is the intent of the Legislature that the following occur:

(1) This article provides general authorization for certain state
agencies to use design-build for projects, excluding projects on
the state highway system.

(2) This article shall not be deemed to provide a preference for
the design-build method over other procurement methodologies.

10187.  

For purposes of this article, the following definitions
apply:

(a) “Best value” means a value determined by evaluation of
objective criteria related to price, features, functions, life-cycle
costs, experience, and past performance. A best value determination
may entail selection of the lowest priced technically acceptable
proposals or selection of the best proposal for a fixed price
established by the procuring agency, or it may consist of a tradeoff
between price and other specified factors.

(b) “Construction subcontract” means each subcontract awarded
by the design-build entity to a subcontractor that will perform work
or labor or render service to the design-build entity in or about the
construction of the work or improvement, or a subcontractor
licensed by the State of California that, under subcontract to the
design-build entity, specially fabricates and installs a portion of
the work or improvement according to detailed drawings contained
in the plans and specifications produced by the design-build team.

(c) “Department” means the Department of General Services
and the Department of Corrections and Rehabilitation.

(d) “Design-build” means a project delivery process in which
both the design and construction of a project are procured from a
single entity.

(e) “Design-build entity” means a corporation, limited liability
company, partnership, joint venture, or other legal entity that is
able to provide appropriately licensed contracting, architectural,
and engineering services as needed pursuant to a design-build
contract.

(f) “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. Members shall include the general
contractor and, if utilized in the design of the project, all electrical,
mechanical, and plumbing contractors.

(g) “Director” means, with respect to procurements undertaken
by the Department of General Services, the Director of General
Services or, with respect to procurements undertaken by the
Department of Corrections and Rehabilitation, the secretary of that
department.

10188.  

(a) Notwithstanding any other law, the director,
following notification to the State Public Works Board, may
procure design-build contracts for public works projects in excess
of one million dollars ($1,000,000), awarding the contract using
either the low bid or best value, provided that this article shall not
apply to any projects on the state highway system.

(b) The director 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 department 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 department entering into design-build contracts
authorized under this article.

10189.  

(a) 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 department 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 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, subject to appropriation by the Legislature, be used only
for enforcement of prevailing wage requirements on those projects.

(b) 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
department 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.

10190.  

The director shall notify the State Public Works Board
regarding the method to be used for selecting the design-build
entity, prior to advertising the design-build project.

10191.  

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

(a) (1) The director 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 or building layouts, or any other information deemed
necessary to describe adequately the department’s needs. The
performance specifications and any plans shall be prepared by a
design professional who is duly licensed and registered in
California.

(2) The documents shall not include a design-build-operate
contract for any project.

(b) Based on the documents prepared under subdivision (a), the
director shall prepare and issue a request for qualifications in order
to prequalify or short-list 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 department to evaluate proposals, the procedure for
final selection of the design-build entity, and any other information
deemed necessary by the director to inform interested parties of
the contracting opportunity.

(2) (A) Significant factors that the department 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 deemed satisfied 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 federal
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 template request for statements of qualifications
prepared by the department. In preparing the standard template,
the department may consult with the construction industry, the
building trades and surety industry, and other agencies interested
in using the authorization provided by this article. The template
shall require the following information:

(A) If the design-build entity is a privately held corporation,
limited liability company, partnership, or joint venture, a listing
of all of the shareholders, partners, or members known at the time
of statement of qualification submission who will perform work
on the project.

(B) Evidence that the members of the design-build team 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 ensures 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) If the proposed design-build entity is a corporation, limited
liability company, partnership, joint venture, or other legal entity,
a copy of the organizational documents or agreement committing
to form the organization.

(G) An acceptable safety record. A proposer’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 or 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 proposer is a party to an alternative dispute resolution system
as provided for in Section 3201.5 of the Labor Code.

(4) (A) The information required under this subdivision shall
be certified under penalty of perjury by the design-build entity and
its general partners or joint venture members.

(B) Information required under this subdivision that is not
otherwise a public record under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code) shall not be open to public
inspection.

(c) Based on the documents prepared as described in subdivision
(a), the director shall prepare a request for proposals that invites
prequalified or short-listed entities to submit competitive sealed
proposals in the manner prescribed by the department. 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 department to evaluate proposals, whether the
contract will be awarded on the basis of low bid or best value, and
any other information deemed necessary by the department to
inform interested parties of the contracting opportunity.

(2) Significant factors that the department 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) Where a best value selection method is used, the department
may reserve the right to request proposal revisions and hold
discussions and negotiations with responsive proposers, in which
case the department shall so specify in the request for proposals
and shall publish separately or incorporate into the request for
proposals applicable procedures to be observed by the department
to ensure that any discussions or negotiations are conducted in
good faith.

(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 or short-listed design-build entities, and
awards shall be made to the design-build entity that is 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.

(2) Pursuant to subdivision (c), the department may hold
discussions or negotiations with responsive proposers using the
process articulated in the department’s request for proposals.

(3) When the evaluation is complete, the responsive proposers
shall be ranked based on a determination of value provided,
provided that no more than three proposers are required to be
ranked.

(4) The award of the contract shall be made to the responsible
design-build entity whose proposal is determined by the director
to have offered the best value to the public.

(5) Notwithstanding any other provision of this code, upon
issuance of a contract award, the director shall publicly announce
its award, identifying the design-build entity to which the award
is made, along with a written decision supporting its contract award
and stating the basis of the award.

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

10192.  

(a) The design-build entity shall provide payment and
performance bonds for the project in the form and in the amount
required by the director, and issued by a California admitted surety.
The amount of the payment bond shall not 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.

(c) The department shall develop a standard form of payment
and performance bond for its design-build projects.

10193.  

(a) The department, 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.

(b) Following award of the design-build contract, the
design-build entity shall proceed as follows in awarding
construction subcontracts with a value exceeding one-half of 1
percent of the contract price allocable to construction work:

(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 department,
including a fixed date and time on which qualifications statements,
bids, or proposals will be due.

(2) Establish reasonable qualification criteria and standards.

(3) Award the subcontract either on a best value basis or to the
lowest responsible bidder. The process may include prequalification
or short-listing. The foregoing process does not apply to
construction subcontractors listed in the original proposal.
Subcontractors awarded construction subcontracts under this
subdivision shall be afforded all the protections of Chapter 4
(commencing with Section 4100) of Part 1.

10194.  

(a) If the department elects to award a project pursuant
to this article, retention proceeds withheld by the department from
the design-build entity shall not exceed 5 percent if a performance
and payment bond, issued by an admitted surety insurer, is required
in the solicitation of bids.

(b) In a contract between the design-build entity and a
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the department and the design-build entity. If the
design-build entity provides written notice to any subcontractor
that is not a member of the design-build entity, prior to or at the
time the bid is requested, that a bond may be required and the
subcontractor subsequently is unable or refuses to furnish a bond
to the design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the department and the design-build entity from
any payment made by the design-build entity to the subcontractor.

10195.  

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

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SEC. 6.  

Section 20133 of the Public Contract Code is repealed.

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begin insert SEC. end insert begin insert 6. end insert   

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begin insert Section 20133 of the end insert begin insert Public Contract Code end insert begin insert is repealed. end insert

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20133.  

(a) A county, with approval of the board of supervisors,
may utilize an alternative procedure for bidding on construction
projects in the county in excess of two million five hundred
thousand dollars ($2,500,000) and may award the project using
either the lowest responsible bidder or by best value.

(b) (1) It is the intent of the Legislature to enable counties to
utilize design-build for buildings and county sanitation wastewater
treatment facilities. It is not the intent of the Legislature to
authorize this procedure for other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructures.

(2) The Legislature also finds and declares that utilizing a
design-build contract requires a clear understanding of the roles
and responsibilities of each participant in the design-build process.

(3) (A) For contracts for public works projects awarded prior
to the effective date of regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, if the board of supervisors elects to proceed
under this section, the board of supervisors shall establish and
enforce a labor compliance program containing the requirements
outlined in Section 1771.5 of the Labor Code, or it 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 any projects where the county
or the design-build entity has entered into a 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 regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5
of the Labor Code, the board of supervisors shall reimburse the
department 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 as
set forth in subdivision (h) of Section 1771.5 of the Labor Code.
All moneys collected pursuant to this paragraph 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 board
of supervisors 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.

(c) As used in this section:

(1) “Best value” means a value determined by objective criteria
related to price, features, functions, and life-cycle costs.

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

(3) “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.

(4) “Project” means the construction of a building and
improvements directly related to the construction of a building,
and county sanitation wastewater treatment facilities, but does not
include the construction of other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructure.

(d) Design-build projects shall progress in a four-step process,
as follows:

(1) (A) The county shall prepare a set of documents setting
forth the scope of the project. The documents may include, but are
not limited to, the size, type, and desired design character of the
public improvement, performance specifications covering the
quality of materials, equipment, and workmanship, preliminary
plans or building layouts, or any other information deemed
necessary to describe adequately the county’s needs. The
performance specifications and any plans shall be prepared by a
design professional who is duly licensed and registered in
California.

(B) Any architect or engineer retained by the county to assist
in the development of the project-specific documents shall not be
eligible to participate in the preparation of a bid with any
design-build entity for that project.

(2) (A) Based on the documents prepared in paragraph (1), the
county shall prepare a request for proposals that invites interested
parties to submit competitive sealed proposals in the manner
prescribed by the county. The request for proposals shall include,
but is not limited to, the following elements:

(i) Identification of the basic scope and needs of the project or
contract, the expected cost range, and other information deemed
necessary by the county to inform interested parties of the
contracting opportunity, to include the methodology that will be
used by the county to evaluate proposals and specifically if the
contract will be awarded to the lowest responsible bidder.

(ii) Significant objective factors that the county reasonably
expects to consider in evaluating proposals, including cost or price
and all nonprice-related factors.

(iii) The relative importance of weight assigned to each of the
factors identified in the request for proposals.

(B) With respect to clause (iii) of subparagraph (A), if a
nonweighted system is used, the agency shall specifically disclose
whether all evaluation factors other than cost or price when
combined are:

(i) Significantly more important than cost or price.

(ii) Approximately equal in importance to cost or price.

(iii) Significantly less important than cost or price.

(C) If the county chooses to reserve the right to hold discussions
or negotiations with responsive bidders, it shall so specify in the
request for proposal and shall publish separately or incorporate
into the request for proposal applicable rules and procedures to be
observed by the county to ensure that any discussions or
negotiations are conducted in good faith.

(3) (A)  The county shall establish a procedure to prequalify
design-build entities using a standard questionnaire developed by
the county. In preparing the questionnaire, the county shall consult
with the construction industry, including representatives of the
building trades and surety industry. This questionnaire shall require
information, including, but not limited to, all of the following:

(i) If the design-build entity is a partnership, limited partnership,
or other association, a listing of all of the partners, general partners,
or association members known at the time of bid submission who
will participate in the design-build contract, including, but not
limited to, mechanical subcontractors.

(ii) 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, as well as a financial
statement that assures the county that the design-build entity has
the capacity to complete the project.

(iii) The licenses, registration, and credentials required to design
and construct the project, including information on the revocation
or suspension of any license, credential, or registration.

(iv) 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.

(v) Any prior serious or willful violation of the California
Occupational Safety and Health Act of 1973, contained in 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,
and information concerning workers’ compensation experience
history and worker safety program.

(vi) Information concerning any debarment, disqualification,
or removal from a federal, state, or local government public works
project. Any instance in which an entity, 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.

(vii) Any instance in which the entity, or its owners, officers,
or managing employees, defaulted on a construction contract.

(viii) Any violations of the Contractors’ State License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), excluding alleged violations of
federal or state law including the payment of wages, benefits,
apprenticeship requirements, or personal income tax withholding,
or of Federal Insurance Contributions Act (FICA; 26 U.S.C. Sec.
3101 et seq.) withholding requirements settled against any member
of the design-build entity.

(ix) Information concerning the bankruptcy or receivership of
any member of the design-build entity, including information
concerning any work completed by a surety.

(x) Information concerning all 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 pursuant to this section, 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 period.

(xi) In the case of a partnership or an association that is not a
legal entity, a copy of the agreement creating the partnership or
association and specifying that all partners or association members
agree to be fully liable for the performance under the design-build
contract.

(xii) (I) Any instance in which the entity, or any of its members,
owners, officers, or managing employees was, during the five years
preceding submission of a bid pursuant to this section, determined
by a court of competent jurisdiction to have submitted, or legally
admitted for purposes of a criminal plea to have submitted either
of the following:

(ia) Any claim to any public agency or official in violation of
the federal False Claims Act (31 U.S.C. Sec. 3729 et seq.).

(ib) Any claim to any public official in violation of the
California False Claims Act (Article 9 (commencing with Section
12650) of Chapter 6 of Part 2 of Division 3 of the Government
Code).

(II) Information provided pursuant to this subdivision shall
include the name and number of any case filed, the court in which
it was filed, and the date on which it was filed. The entity may
also provide further information regarding any such instance,
including any mitigating or extenuating circumstances that the
entity wishes the county to consider.

(B) The information required pursuant to this subdivision shall
be verified under oath by the entity and its members in the manner
in which civil pleadings in civil actions are verified. Information
that is not a public record pursuant to the California Public Records
Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code) shall not be open to public
inspection.

(4) The county shall establish a procedure for final selection of
the design-build entity. Selection shall be based on either of the
following criteria:

(A) A competitive bidding process resulting in lump-sum bids
by the prequalified design-build entities. Awards shall be made to
the lowest responsible bidder.

(B) A county may use a design-build competition based upon
best value and other criteria set forth in paragraph (2). The
design-build competition shall include the following elements:

(i) Competitive proposals shall be evaluated by using only the
criteria and selection procedures specifically identified in the
request for proposal. However, the following minimum factors
shall each represent at least 10 percent of the total weight of
consideration given to all criteria factors: price, technical design,
and construction expertise, life-cycle costs over 15 years or more,
skilled labor force availability, and acceptable safety record.

(ii) Once the evaluation is complete, the top three responsive
bidders shall be ranked sequentially from the most advantageous
to the least.

(iii) The award of the contract shall be made to the responsible
bidder whose proposal is determined, in writing, to be the most
advantageous.

(iv) Notwithstanding any provision of this code, upon issuance
of a contract award, the county 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
county’s second and third ranked design-build entities.

(v) For purposes of this paragraph, “skilled labor force
availability” shall be determined by the existence of an agreement
with a registered apprenticeship program, approved by the
California Apprenticeship Council, which has graduated
apprentices in each of the preceding five years. This graduation
requirement shall not apply to programs providing apprenticeship
training for any craft that has been deemed by the Department of
Labor and the Department of Industrial Relations to be an
apprenticeable craft in the five years prior to enactment of this act.

(vi) For purposes of this paragraph, 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.

(e) (1) Any design-build entity that is selected to design and
build a project pursuant to this section shall possess or obtain
sufficient bonding to cover the contract amount for nondesign
services, and errors and omission insurance coverage sufficient to
cover all design and architectural services provided in the contract.
This section does not prohibit a general or engineering contractor
from being designated the lead entity on a design-build entity for
the purposes of purchasing necessary bonding to cover the activities
of the design-build entity.

(2) Any payment or performance bond written for the purposes
of this section shall be written using a bond form developed by
the county.

(f) All subcontractors that were not listed by the design-build
entity in accordance with clause (i) of subparagraph (A) of
paragraph (3) of subdivision (d) shall be awarded by the
design-build entity in accordance with the design-build process
set forth by the county in the design-build package. All
subcontractors bidding on contracts pursuant to this section shall
be afforded the protections contained in Chapter 4 (commencing
with Section 4100) of Part 1. The design-build entity 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 section.

(g) Lists of subcontractors, bidders, and bid awards relating to
the project shall be submitted by the design-build entity to the
awarding body within 14 days of the award. These documents are
deemed to be public records and shall be available for public
inspection pursuant to this chapter and Article 1 (commencing
with Section 6250) of Chapter 3.5 of Division 7 of the Government
Code.

(h) The minimum performance criteria and design standards
established pursuant to paragraph (1) of subdivision (d) shall be
adhered to by the design-build entity. Any deviations from those
standards may only be allowed by written consent of the county.

(i) The county may retain the services of a design professional
or construction project manager, or both, throughout the course of
the project in order to ensure compliance with this section.

(j) Contracts awarded pursuant to this section shall be valid until
the project is completed.

(k) Nothing in this section is intended to affect, expand, alter,
or limit any rights or remedies otherwise available at law.

(l) (1) If the county elects to award a project pursuant to this
section, retention proceeds withheld by the county from the
design-build entity shall not exceed 5 percent if a performance and
payment bond, issued by an admitted surety insurer, is required in
the solicitation of bids.

(2) In a contract between the design-build entity and the
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the county and the design-build entity. If the design-build
entity provides written notice to any subcontractor who is not a
member of the design-build entity, prior to or at the time the bid
is requested, that a bond may be required and the subcontractor
subsequently is unable or refuses to furnish a bond to the
design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the county and the design-build entity from any
payment made by the design-build entity to the subcontractor.

(m) Each county that elects to proceed under this section and
uses the design-build method on a public works project shall submit
to the Legislative Analyst’s Office before September 1, 2013, a
report containing a description of each public works project
procured through the design-build process and completed after
November 1, 2009, and before August 1, 2013. The report shall
include, but shall not be limited to, all of the following information:

(1) The type of project.

(2) The gross square footage of the project.

(3) The design-build entity that was awarded the project.

(4) The estimated and actual length of time to complete the
project.

(5) The estimated and actual project costs.

(6) Whether the project was met or altered.

(7) The number and amount of project change orders.

(8) A description of any written protests concerning any aspect
of the solicitation, bid, proposal, or award of the design-build
project, including the resolution of the protests.

(9) An assessment of the prequalification process and criteria.

(10) An assessment of the effect of retaining 5 percent retention
on the project.

(11) A description of the Labor Force Compliance Program and
an assessment of the project impact, where required.

(12) A description of the method used to award the contract. If
best value was the method, the report shall describe the factors
used to evaluate the bid, including the weighting of each factor
and an assessment of the effectiveness of the methodology.

(13) An assessment of the project impact of “skilled labor force
availability.”

(14) An assessment of the design-build dollar limits on county
projects. This assessment shall include projects where the county
wanted to use design-build and was precluded by the dollar
limitation. This assessment shall also include projects where the
best value method was not used due to dollar limitations.

(15) An assessment of the most appropriate uses for the
design-build approach.

(n) Any county that elects not to use the authority granted by
this section may submit a report to the Legislative Analyst’s Office
explaining why the county elected not to use the design-build
method.

(o) On or before January 1, 2014, the Legislative Analyst shall
report to the Legislature on the use of the design-build method by
counties pursuant to this section, including the information listed
in subdivisions (m) and (p). The report may include
recommendations for modifying or extending this section.

(p) The Legislative Analyst shall complete a fact-based analysis
of the use of the design-build method by counties pursuant to this
section, utilizing the information provided pursuant to subdivision
(m) and any independent information provided by the public or
interested parties. The Legislative Analyst shall select a
representative sample of projects under this section and review
available public records and reports, media reports, and related
information in its analysis. The Legislative Analyst shall compile
the information required to be analyzed pursuant to this subdivision
into a report, which shall be provided to the Legislature. The report
shall include conclusions describing the actual cost of projects
procured pursuant to this section, whether the project schedule
was met or altered, and whether projects needed or used project
change orders.

(q) Except as provided in this section, this act shall not be
construed to affect the application of any other law.

(r) This section shall remain in effect only until July 1, 2016,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2016, deletes or extends that date.

end delete

SEC. 7.  

Section 20175.2 of the Public Contract Code is
repealed.

SEC. 8.  

Section 20193 of the Public Contract Code is repealed.

SEC. 9.  

Section 20209 of the Public Contract Code is repealed.

SEC. 10.  

Section 20301.5 of the Public Contract Code is
repealed.

SEC. 11.  

Article 22 (commencing with Section 20360) of
Chapter 1 of Part 3 of Division 2 of the Public Contract Code is
repealed.

SEC. 12.  

Section 20688.6 of the Public Contract Code is
repealed.

SEC. 13.  

Chapter 4 (commencing with Section 22160) is added
to Part 3 of Division 2 of the Public Contract Code, to read:

 

Chapter  4. Local Agency Design-Build Projects

 

22160.  

(a) The Legislature finds and declares that the
design-build method of project delivery, using a best value
procurement methodology, has been authorized for various
agencies that have reported benefits from such projects including
reduced project costs, expedited project completion, and design
features that are not achievable through the traditional
design-bid-build method.

(b) It is the intent of the Legislature that the following occur:

(1) This chapter provides general authorization for local agencies
to use design-build for projects, excluding projects on the state
highway system.

(2) This chapter shall not be deemed to provide a preference
for the design-build method over other procurement methodologies.

22161.  

For purposes of this chapter, the following definitions
apply:

(a) “Best value” means a value determined by evaluation of
objective criteria related to price, features, functions, life-cycle
costs, experience, and past performance. A best value determination
may entail selection of the lowest priced technically acceptable
proposal or selection of the best proposal for a fixed price
established by the procuring agency, or it may consist of a tradeoff
between price and other specified factors.

(b) “Construction subcontract” means each subcontract awarded
by the design-build entity to a subcontractor that will perform work
or labor or render service to the design-build entity in or about the
construction of the work or improvement, or a subcontractor
licensed by the State of California that, under subcontract to the
design-build entity, specially fabricates and installs a portion of
the work or improvement according to detailed drawings contained
in the plans and specifications produced by the design-build team.

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

(d) “Design-build entity” means a corporation, limited liability
company, partnership, joint venture, 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. Members shall include the general
contractor and, if utilized in the design of the project, all electrical,
mechanical, and plumbing contractors.

(f) “Local agency” means the following:

(1) A city, county, or city and county.

(2) A special district that operates wastewater facilities, solid
waste management facilities, or water recycling facilities.

(3) Any transit district, included transit district, municipal
operator, included municipal operator, or transit development
board, as defined in Section 99210 of the Public Utilities Code, or
a consolidated agency, as defined in Section 132353.1 of the Public
Utilities Code, or any joint powers authority formed to provide
transit service.

(g) (1) For a local agency defined in paragraph (1) of
subdivision (f), “project” means the construction of a building and
improvements directly related to the construction of a building,
and county sanitation wastewater treatment facilities, but does not
include the construction of other infrastructure, including, but not
limited to, streets and highways, public rail transit, or water
resources facilities and infrastructure. For a local agency defined
in paragraph (1) of subdivision (f) that operates wastewater
facilities, solid waste management facilities, or water recycling
facilities, “project” also means the construction of regional and
local wastewater treatment facilities, regional and local solid waste
facilities, or regional and local water recycling facilities.

(2) For a local agency defined in paragraph (2) of subdivision
(f), “project” means the construction of regional and local
wastewater treatment facilities, regional and local solid waste
facilities, or regional and local water recycling facilities.

(3) For a local agency defined in paragraph (3) of subdivision
(f), “project” means a transit capital project.

22162.  

(a) Notwithstanding any other law, a local agency,
with approval of its governing body, may procure design-build
contracts for public works projects in excess of one million dollars
($1,000,000), awarding the contract either the low bid or the best
value, provided that this article shall not apply to any projects on
the state highway system.

(b) The local agency 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 local agency 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 local agency entering into design-build contracts
authorized under this article.

22163.  

(a) 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 local agency shall reimburse
the department 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 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, subject to appropriation by
the Legislature, be used only for enforcement of prevailing wage
requirements on those projects.

(b) 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 local
agency 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.

22164.  

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

(a) (1) The local agency 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 or building layouts, or any other information deemed
necessary to describe adequately the local agency’s needs. The
performance specifications and any plans shall be prepared by a
design professional who is duly licensed and registered in
California.

(2) The documents shall not include a design-build-operate
contract for any project.

(b) Based on the documents prepared under subdivision (a), the
local agency shall prepare and issue a request for qualifications in
order to prequalify or short-list 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 local agency to evaluate proposals, the procedure for
final selection of the design-build entity, and any other information
deemed necessary by the local agency to inform interested parties
of the contracting opportunity.

(2) (A) Significant factors that the local agency 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 deemed satisfied 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 federal
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 template request for statements of qualifications
prepared by the local agency. In preparing the standard template,
the local agency may consult with the construction industry, the
building trades and surety industry, and other local agencies
interested in using the authorization provided by this article. The
template shall require the following information:

(A) If the design-build entity is a privately held corporation,
limited liability company, partnership, or joint venture, a listing
of all of the shareholders, partners, or members known at the time
of statement of qualification submission who will perform work
on the project.

(B) Evidence that the members of the design-build team 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 ensures 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) If the proposed design-build entity is a corporation, limited
liability company, partnership, joint venture, or other legal entity,
a copy of the organizational documents or agreement committing
to form the organization.

(G) An acceptable safety record. A proposer’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 or 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 proposer is a party to an alternative dispute resolution system
as provided for in Section 3201.5 of the Labor Code.

(4) (A) The information required under this subdivision shall
be certified under penalty of perjury by the design-build entity and
its general partners or joint venture members.

(B) Information required under this subdivision that is not
otherwise a public record under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code) shall not be open to public
inspection.

(c) Based on the documents prepared as described in subdivision
(a), the local agency shall prepare a request for proposals that
invites prequalified or short-listed entities to submit competitive
sealed proposals in the manner prescribed by the local agency.
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 local agency to evaluate proposals, whether
the contract will be awarded on the basis of low bid or best value,
and any other information deemed necessary by the local agency
to inform interested parties of the contracting opportunity.

(2) Significant factors that the local agency 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) Where a best value selection method is used, the local agency
may reserve the right to request proposal revisions and hold
discussions and negotiations with responsive proposers, in which
case the local agency shall so specify in the request for proposals
and shall publish separately or incorporate into the request for
proposals applicable procedures to be observed by the local agency
to ensure that any discussions or negotiations are conducted in
good faith.

(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 or short-listed design-build entities, and
awards shall be made to the design-build entity that is 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.

(2) Pursuant to subdivision (c), the local agency may hold
discussions or negotiations with responsive proposers using the
process articulated in the local agency’s request for proposals.

(3) When the evaluation is complete, the responsive proposers
shall be ranked based on a determination of value provided,
provided that no more than three proposers are required to be
ranked.

(4) The award of the contract shall be made to the responsible
design-build entity whose proposal is determined by the local
agency to have offered the best value to the public.

(5) Notwithstanding any other provision of this code, upon
issuance of a contract award, the local agency shall publicly
announce its award, identifying the design-build entity to which
the award is made, along with a written decision supporting its
contract award and stating the basis of the award.

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

22165.  

(a) The design-build entity shall provide payment and
performance bonds for the project in the form and in the amount
required by the local agency, and issued by a California admitted
surety. The amount of the payment bond shall not 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.

(c) The local agency shall develop a standard form of payment
and performance bond for its design-build projects.

22166.  

(a) The local agency, 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.

(b) Following award of the design-build contract, the
design-build entity shall proceed as follows in awarding
construction subcontracts with a value exceeding one-half of 1
percent of the contract price allocable to construction work:

(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 local agency,
including a fixed date and time on which qualifications statements,
bids, or proposals will be due.

(2) Establish reasonable qualification criteria and standards.

(3) Award the subcontract either on a best value basis or to the
lowest responsible bidder. The process may include prequalification
or short-listing. The foregoing process does not apply to
construction subcontractors listed in the original proposal.
Subcontractors awarded construction subcontracts under this
subdivision shall be afforded all the protections of Chapter 4
(commencing with Section 4100) of Part 1.

22167.  

(a) If the local agency elects to award a project pursuant
to this article, retention proceeds withheld by the local agency
from the design-build entity shall not exceed 5 percent if a
performance and payment bond, issued by an admitted surety
insurer, is required in the solicitation of bids.

(b) In a contract between the design-build entity and a
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the local agency and the design-build entity. If the
design-build entity provides written notice to any subcontractor
that is not a member of the design-build entity, prior to or at the
time the bid is requested, that a bond may be required and the
subcontractor subsequently is unable or refuses to furnish a bond
to the design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the local agency and the design-build entity from
any payment made by the design-build entity to the subcontractor.

22168.  

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

begin insert

begin insert SEC. 14. end insert   

end insert begin insert

Due to the unique circumstances of the Marin
Healthcare District, the Legislature hereby finds and declares that
a general statute cannot be made applicable within the meaning
of Section 16 of Article IV of the California Constitution. Therefore,
the special legislation contained in Section 4 of this act is
applicable only to the Marin Healthcare District.

end insert

begin delete SEC. 14. end delete
begin insert SEC. 15. end 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.