BILL ANALYSIS Ó
SB 785
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Date of Hearing: August 6, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 785 (Wolk) - As Amended: August 4, 2014
Policy Committee: Local
GovernmentVote:7 - 2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill repeals various provisions of existing law authorizing
the Department of General Services (DGS), the California
Department of Corrections and Rehabilitation (CDCR), and local
agencies (cities, counties and certain special districts) to use
the design-build procurement process, and recasts those
provisions in uniform statutes within the Public Contract Code.
The bill makes the new authorization permanent by deleting
existing sunset dates and establishes a uniform threshold of $1
million for projects to use design-build. This bill excludes
projects on the state highway system and school construction
projects.
In addition, the bill extends design-build authority to the
Marin Health Care District for construction at the Marin General
Hospital and to fire protection districts.
Recent amendments address concerns raised by the State Building
and Construction Trades Council and resolve conflicts with SB
854, a budget trailer bill enacted this year, and AB 1650
(Jones-Sawyer), which is pending in the Senate Appropriations
Committee.
FISCAL EFFECT
1)Unknown impact on (DGS and CDCR contracting 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 (GF and various special funds). To the extent
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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.
2)Unknown, but likely minor costs to DGS to ensure compliance
with labor requirements.
3)Minor savings (GF) to the Legislative Analyst's Office by
deleting reporting requirements.
COMMENTS
1)Purpose . According to supporters, primarily contractors and
local agencies, various and differing design-build statutes
have been enacted causing confusion, inconsistency,
inefficiency and wasted costs. Supporters maintain by
repealing existing statutes, and replacing them with two new
chapters in the Public Contract Code, SB 785 will help
streamline, consolidate and simplify design-build by bringing
these various statutes into a single 'boiler plate' for use by
state agencies, counties, cities, water municipalities,
transit operators and others.
2)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 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:
a) All counties can use the design-build method to
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construct buildings and related improvements and wastewater
treatment facilities that cost more than $2.5 million until
January 1, 2016 (SB 416, Ashburn, Chapter 585, Statutes of
2007).
b) All cities can use the design-build method to construct
buildings and related improvements worth more than $1
million until January 1, 2016 (AB 642, Wolk, Chapter 314,
Statutes of 2008).
c) 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, Chapter 314, Statutes of 2008).
d) Certain special districts may construct projects using
the design-build method.
e) 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."
1)Related Legislation . SB 1433 (Hill) of 2014 repeals the
sunset date on transit operators' authority to use
design-build for transit projects, expands the number of
entities eligible to exercise this authority, eliminates
minimum cost thresholds, and deletes reporting requirements.
AB 1433 is pending in this committee.
This bill and SB 1433 both authorize the use of design-build
by transit operators, but take different approaches. The bills
need to be reconciled so that only one approach will take
effect should both bills move forward.
2)Prior Legislation .
a) SB 1509 (Simitian), Chapter 736, Statutes of 2012,
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extended the authority for K-12 and California Community
College districts to use design-build for constructing
education facilities to January 1, 2020.
b) SBx2 4 (Cogdill), Chapter 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.
1)Recommended Amendment . In recasting the design-build
provisions, this bill deletes all existing sunsets on the
affected entities authority to use design-build, as well as
all local agency reporting requirements, effectively removing
all legislative oversight of the design-build process. At the
same time, the bill extends the authority to new local
agencies.
The LAO has reported on the use and effectiveness of the
design-build approach by some local agencies, most recently in
January of this year, but has lacked data to draw solid
conclusions, However, they have made suggestions and
recommendations for improvements, many of which are
incorporated into this bill. Eliminating the sunset was not
among the recommendations.
Staff recommeds adding a ten-year sunset in order to retain
legislative oversight in light of the new approach and
extended authority contained in this bill.
Analysis Prepared by : Jennifer Swenson / APPR. / (916)
319-2081