BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 785 (Wolk) - Design-build contracting.
Amended: May 2, 2013 Policy Vote: GO 10-0; G&F 7-0
Urgency: No Mandate: Yes
Hearing Date: May 20, 2013 Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 785 would repeal various provisions of state
law authorizing certain state and local entities to the use of
the design-build contracting method, and recast those provisions
in uniform statutes within the Public Contract Code.
Fiscal Impact:
Unknown impact on Department of General Services (DGS) and
Department of Corrections and Rehabilitation (CDCR)
contacting costs as a result of revising the thresholds for
which a design-build contract may be used, and authorizing
the awarding of contracts on a "best value" rather than
"lowest responsible bidder" basis for more projects (General
Fund). To the extent that more contracts are awarded on a
"best value" basis and contracts are awarded to bidders who
may not have the lowest bid price, overall contracting costs
may increase. On the other hand, overall contracting costs
may be lower to the extent that efficiencies are gained by
using the design-build method on more projects.
Unknown, likely neutral fiscal impacts on the Department of
Industrial Relations related to the department's monitoring
and enforcement of prevailing wage requirements (State
Public Works Enforcement Fund). All DIR costs are
reimbursed by DGS and CDCR, as applicable.
Minor savings to the Legislative Analyst's Office (LAO) by
deleting reporting requirements (General Fund).
Background: Existing law requires public entities to comply with
certain procedures in soliciting and evaluating bids and
awarding contracts for the construction of public works. The
traditional approach to public contracting is referred to as the
design-bid-build method, which requires public officials to
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invite bids for construction projects, based on a completed set
of engineering plans, then award the construction bid to the
lowest bidder. By contrast, the design-build method allows
public officials to procure both design and construction
services from a single entity before the development of complete
plans and specifications. Design-build contracts may be awarded
on the basis of "best value" or "lowest responsible bidder," as
specified in existing law.
Existing law authorizes local agencies to use design-build as
follows:
All counties can use the design-build method to
construct buildings and related improvements and wastewater
treatment facilities that cost more than $2.5 million until
January 1, 2014 (SB 416, Ashburn, Chap 585/2007).
All cities can use the design-build method to construct
buildings and related improvements worth more than $1
million until January 1, 2014 (AB 642, Wolk, Chap
314/2008).
A pilot program also permits cities, counties, and
special districts to use the design-build method to
construct 20 local wastewater treatment facilities, local
solid waste facilities, or local water recycling facilities
(AB 642, Wolk, Chap 314/2008).
Certain special districts may construct projects using
the design-build method.
Existing law also authorizes DGS and CDCR to use the
design-build method to construct specified structures, including
state office buildings and prison facilities (SBx2 4, Cogdill,
2009). DGS and CDCR may award contracts for projects with a
budget of at least $10 million on a "best value" basis, using
criteria such as proposed design approach, life-cycle costs,
project features, and functions, while contracts for projects
with a budget of at least $250,000 may be awarded to the "lowest
responsible bidder."
Proposed Law: SB 785 would repeal existing statutes authorizing
DGS, CDCR, and local agencies to use the design-build
procurement process, and would enact uniform provisions
authorizing those entities to use the design-build procurement
process for specified public works projects. Among other
things, the bill would authorize DGS, CDCR, cities, counties,
and special districts operating wastewater, water recycling, or
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solid waste management facilities to procure design-build public
works projects in excess of $1 million using either low bid or
best value. Projects on the state highway system are explicitly
excluded from this bill.
Related Legislation: SB 1509 (Simitian), Chap 736/2012, extended
the authority for K-12 and California Community College
districts to use design-build for constructing education
facilities to January 1, 2020.
SBx2 4 (Cogdill), Chap 2 of the 2009-10 Second Extraordinary
Session, authorized the Department of Transportation to use
design-build to construct up to 15 transportation projects, and
authorized design-build contracting for up to five state office
facilities, prison facilities, or court facilities.
Staff Comments: With respect to state contracts awarded by DGS
and CDCR, the primary differences between current law and this
bill are the threshold for using design-build procurement and
the method used to award the contract. As noted above, existing
law authorizes a design-build contract to be awarded using best
value criteria if the total project costs are at least $10
million, while a design-build contract may be awarded on the
basis of the lowest responsible bidder if the project has a
budget of at least $250,000. SB 785 would authorize a
design-build contract to be awarded on either a best value or
low bid basis for any project in excess of $1 million. The
overall impact on contracting costs, based on a strict
interpretation of price, as a result of these changes is
indeterminable. There could be increased costs if contracts are
awarded to other than the lowest bidder, while efficiencies may
be gained overall by increasing the use of design-build
procurement.