BILL ANALYSIS Ó
SB 1433
Page 1
SENATE THIRD READING
SB 1433 (Hill)
As Amended August 22, 2014
Majority vote
SENATE VOTE :35-0
LOCAL GOVERNMENT 8-0 TRANSPORTATION 11-0
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|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Lowenthal, Linder, |
| |Bradford, Gordon, | |Achadjian, Bloom, Bonta, |
| |Melendez, Mullin, Rendon | |Daly, Frazier, Gatto, |
| | | |Nazarian, Patterson, |
| | | |Quirk-Silva |
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APPROPRIATIONS 15-2
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, Eggman, | | |
| |Gomez, Holden, Linder, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly, Jones | | |
| | | | |
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SUMMARY : Extends the repeal date on transit operators'
authority to use design-build (DB) for transit projects, from
January 1, 2015, to January 1, 2017.
EXISTING LAW :
1)Requires local officials, under the Local Agency Public
Construction Act (LAPC Act), to invite bids for construction
projects and then award contracts to the lowest responsible
bidder under the traditional design-bid-build project delivery
system.
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2)Authorizes, as an alternative to the LAPC Act, transit
operators to enter into a DB contract for both the design and
construction of a project, and prescribes the process to be
used by transit operators when developing and procuring a DB
project.
3)Sunsets the DB authority for transit operators on January 1,
2015.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Unknown overall contracting costs or savings to transit
operators. By extending DB authority, any future transit
projects may be awarded on a "best value" rather than "lowest
responsible bidder" basis. Overall contracting costs may
increase, to the extent contracts are awarded to bidders who
may not have the lowest bid price. On the other hand, overall
contracting costs may be lower to the extent that efficiencies
are gained by using DB, such as expedited project delivery.
Transit project funding could be from any combination of
local, federal, and state funds (Public Transportation Account
and potentially bond funds).
2)Likely minor fiscal impacts on Department of Industrial
Relations related to the department's monitoring and
enforcement of prevailing wage requirements, reimbursed by
transit operators (State Public Works Enforcement Fund).
Assembly Appropriations Committee notes that by extending the
deposit of funds into this continuously appropriated fund,
this bill makes an appropriation.
COMMENTS :
1)Purpose of this bill. This bill extends the repeal date on
transit operators' authority to use DB for transit projects,
from January 1, 2015, to January 1, 2017. This bill is
sponsored by the California Transit Association.
2)Author's statement. According to the author, "SB 1433 would
extend the sunset date on the design-build authority for
transit operators until 2017, thereby maintaining an
innovative and valuable tool transit operators can use to
deliver critical capital projects."
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3)Background. The LAPC Act generally requires local officials
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.
Under the DB method, a single contract covers the design and
construction of a project with a single company or consortium
that acts as both the project designer and builder. The DB
entity arranges all architectural, engineering, and
construction services, and is responsible for delivering the
project at a guaranteed price and schedule based upon
performance criteria set by the public agency. The DB method
can be set by the public agency. The DB method can be faster
and, therefore, cheaper, than the design-bid-build method, but
it requires a higher level of management sophistication since
design and construction may occur simultaneously.
Advocates for the DB method of contracting for public works
contend that project schedule savings can be realized because
only a single RFP is needed to select the project's designer
and builder. The more traditional design-bid-build project
approach requires the separate selection of the design
consultant or contractor, completion of design, and then
advertising for bids and selection of the construction
contractor. Proponents also note that DB allows the overlap
of design and construction activities, resulting in additional
time savings and lower project costs. By avoiding the delays
and change orders that result from the traditional
design-bid-build method of contracting, proponents argue that
DB can deliver public works faster and cheaper.
Detractors of DB contend that it eliminates competitive
bidding, allows the private contractor or consortium to
inspect and sign off on their own work, and increases project
delivery costs.
4)Transit operators' DB authority. AB 958 (Scott), Chapter 541,
Statutes of 2000, authorized transit operators to use DB
procurement until January 1, 2005. SB 1130 (Scott), Chapter
196, Statutes of 2004, extended the sunset date until January
1, 2007. AB 372 (Nation), Chapter 262, Statutes of 2006,
extended the sunset again, to January 1, 2011, and made other
modifications to the authority, including requiring a transit
operator to establish a labor compliance program for a DB
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contract if the transit operator does not already have such a
program. AB 729 (Evans), Chapter 466, Statutes of 2009,
extended the sunset date until January 1, 2015.
5)Legislative Analyst's Office (LAO) reports and
recommendations. The LAO issued a report to the Legislature
on February 3, 2005, titled Design-Build: An Alternative
Construction System, which reported on all DB authorities
granted to various types of government entities (not just
transit operators' authority). After analyzing the claims of
proponents and opponents and reviewing the experience of local
agencies that were authorized to use DB at the time, the LAO
recommended that, "the Legislature grant design-build
authority only to buildings and directly related
infrastructure. There are more complex issues associated with
other public works projects such as transportation, public
transit, and water resources facilities. Evaluation of
design-build as a construction delivery option for these other
infrastructure facilities is beyond the scope of this report."
In January of 2010 the LAO issued a second report, this time
updating the Legislature on the use of DB by counties in
California, based on data received from counties that utilized
this methodology. In the report, the LAO states that,
"although it was difficult to draw conclusions from the
reports received about the effectiveness of design-build
compared to other project delivery methods, we do not think
that the reports provide any evidence that would discourage
the Legislature from granting design-build authority to local
agencies on an ongoing basis. In doing so, however, we
recommend the Legislature consider some changes such as
creating a uniform design-build statute, eliminating cost
limitations, and requiring project cost to be a larger factor
in awarding the design-build contract."
6)Related legislation. SB 785 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. SB 785 is pending in the Assembly.
7)Arguments in support. Unknown.
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8)Arguments in opposition. Unknown.
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
FN: 0005367