BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 785|
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THIRD READING
Bill No: SB 785
Author: Wolk (D)
Amended: 5/2/13
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 4/9/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De León, Galgiani, Hernandez, Lieu
NO VOTE RECORDED: Padilla
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 5/1/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : 5-0, 5/20/13
AYES: De León, Walters, Gaines, Hill, Steinberg
NO VOTE RECORDED: Lara, Padilla
SUBJECT : Design-build construction project delivery
SOURCE : Author
DIGEST : This bill repeals existing law authorizing the
Department of General Services (DGS), the Department of
Corrections and Rehabilitation (CDCR), and local agencies to use
the design-build procurement process, and enacts uniform
provisions authorizing DGS, CDCR, and local agencies to utilize
the design-build procurement process for specified public works
projects.
ANALYSIS : Existing law authorizes DGS, the CDCR, and various
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local agencies to use the design-build procurement process for
specified public works under different laws.
This bill repeals existing law authorizing DGS, CDCR, and local
agencies to use the design-build procurement process, and enacts
uniform provisions authorizing DGS, CDCR and local agencies to
utilize the design-build procurement process for specified
public works projects. Specifically, this bill:
1. Defines "design-build" as a project delivery process in which
both the design and construction of a project are procured
from a single entity.
2. Authorizes DGS, CDCR, cities and counties, special districts
operating wastewater, water recycling, or solid waste
management facilities to procure design-build public works
contracts, in excess of $1 million, using either a low bid or
best value process; and defines specific types of "projects"
that cities, counties, and special districts can build using
the design-build method.
3. Specifically excludes state highway system construction
projects.
4. Defines "best value" as the 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, selection of the best
proposal for a fixed price established by the procuring
agency, or a tradeoff between price and other specified
factors.
5. Defines "construction subcontract" as a 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 connection with the project, or a subcontractor
that 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.
6. Requires the awarding authority to develop guidelines for a
standard organizational conflict-of-interest policy in
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connection with design-build projects.
7. Requires the awarding authority to reimburse the Department
of Industrial Relations (DIR) for its costs of performing
prevailing wage monitoring and enforcement on public works
projects. Alternatively, allows the agency to continue
operating an existing previously approved labor compliance
program to monitor and enforce prevailing wage requirements
on the project under specified circumstances.
8. Outlines a standardized design-build procurement process in
which the awarding authority may prepare a list of qualified
or short-listed entities, based on specified criteria. Once
a list of qualified or short-listed entities is complete, the
awarding authority may prepare a request for proposals (RFP)
that invites prequalified or short-listed entities to submit
competitive sealed proposals in the manner prescribed by the
awarding authority.
A. Low bid: On projects utilizing low bid as the
selection method, the competitive bidding process involves
lump-sum bids by the prequalified or short-listed
design-build entities. Awards are made to the
design-build entity that is the lowest responsible bidder.
B. Best value: For those projects utilizing best value as
a selection method, proposals are to be evaluated using
only the criteria and selection procedures specifically
identified in the RFP.
9. Authorizes the awarding authority to reserve the right to
request revisions and conduct negotiations with responsive
proposers, if the authority specifies in the RFP how it will
ensure that negotiations are conducted in good faith. The
authority may hold discussions or negotiations with
responsive proposers using the process specified in the RFP.
Responsive proposers are ranked based on value provided. The
contract must be awarded to the responsible design-build
entity whose proposal is determined by the authority to have
offered the best value to the public. Upon issuance of a
contract award, the awarding authority 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
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award.
10.Requires the design-build entity to provide payment and
performance bonds for the project in the form and in the
amount required by the awarding authority. The amount of the
payment bond shall not be less than the amount of the
performance bond.
11.Requires the design-build contract to provide errors and
omissions insurance coverage for the design elements of the
project.
12.Requires the awarding authority to develop a standard form of
payment and performance bond for its design-build projects.
13.Specifies that agencies may identify specific types of
subcontractors that must be included in the design-build
entity statement of qualifications and proposal.
14.Provides that the retention proceeds withheld by the agency
from the design-build entity shall not exceed 5%, if a
performance and payment bond, issued by an admitted surety
insurer, is required in the solicitation of bids. Also
applies the 5% limit to contracts with subcontractors and
specifies conditions under which the 5% limit can be
exceeded.
15.Deletes existing laws requiring design-build reporting to the
Legislative Analyst.
16.Provides that the provisions of this bill do not affect,
expand, alter or limit any rights or remedies otherwise
available at law.
Background
For most of the last century state and local officials have been
required to invite bids for construction projects and then award
contracts to the lowest responsible bidder. This
design-bid-build method is the traditional approach to public
works construction. The state used this approach almost
exclusively to build its roads and freeways, public buildings,
prisons, universities, hospitals, and water infrastructure.
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Exclusions . This bill pertains only to DGS, CDCR, and most
local agencies. It specifically excludes projects on the state
highway system and school construction projects from its scope
and applicability. In 2009, SB 4X2 (Cogdill, Chapter 2,
Statutes of 2009-10, 2nd Extraordinary Session) was enacted as
part of a budget agreement, which authorized design-build
contracting for up to 15 transportation projects. The
California Transportation Commission recently approved the final
Department of Transportation (Caltrans) project authorized in
the pilot program. Reportedly, Caltrans will allow the
authority to sunset before seeking additional authorization from
the Legislature.
Comments
According to the author's office, this bill is intended to
consolidate existing local and state design-build statutes and
eliminate inconsistencies in statutory language by adopting
authority of general application to identified agencies and
repeal superseded sections. The author's office notes that the
Legislative Analyst has recommended enactment of a uniform
design-build contracting statute.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Unknown impact on DGS and 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 DIR related to
DIR's monitoring and enforcement of prevailing wage
requirements (State Public Works Enforcement Fund). All DIR
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costs are reimbursed by DGS and CDCR, as applicable.
Minor savings to the Legislative Analyst's Office by
deleting reporting requirements (General Fund).
SUPPORT : (Verified 5/22/13)
Associated General Contractors of California
California Special Districts Association
California State Association of Counties
California State Council of Laborers
Counties of Lassen, Los Angeles, Orange, and San Bernardino
Design-Build Institute of America, Western Pacific Region
East Valley Water District
Infrastructure Delivery Council
OPPOSITION : (Verified 5/22/13)
Air Conditioning Trade Association
Associated Builders and Contractors of California
Plumbing-Heating-Cooling Contractors Association of California
Professional Engineers in California Government
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : Supporters note that this bill rewrites
design-build statutes to eliminate inconsistencies in existing
law and provide agencies with a general authorization to develop
projects using design-build. They support this bill because it
consolidates the various statutes into a single "boilerplate"
for use by state agencies, counties, cities, water
municipalities, transit operators and others.
ARGUMENTS IN OPPOSITION : Although generally supportive of
statutory streamlining, opponents object to the perpetuation of
provisions that "favor a special interest group" and serve no
valid public policy. Specifically, they object to re-enactment
in this bill of so-called safety language. According to the
opponents, there is no evidence that the existence of a workers'
compensation alternative dispute resolution system equates to
the existence of a safe workplace.
Opponents disfavor provisions in this bill requiring that
apprentices be affiliated with programs that have graduated
apprentices for the preceding five years. Also, they object to
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provisions in this bill that give deference to project labor
agreements.
Other opponents object to design-build contracting on principle,
suggesting that the design-build process eliminates competitive
bidding, allows the private contractor or consortium to inspect
and sign off on their own work, and has greatly increased
project delivery costs on some projects.
MW:k 5/22/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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