BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 1290 |Hearing |6/10/15 |
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|Author: |Dahle |Tax Levy: |No |
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|Version: |5/18/15 |Fiscal: |No |
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|Consultant|Weinberger |
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DESIGN-BUILD CONTRACTING FOR THE MAYERS MEMORIAL HOSPITAL
DISTRICT (URGENCY)
Allows the Mayers Memorial Hospital District to use design-build
contracting.
Background and Existing Law
The Local Agency Public Construction Act 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, and most
widely-used, approach to public works construction. This
approach splits construction projects into two distinct phases:
design and construction. During the design phase, the local
agency prepares detailed project plans and specifications using
its own employees or by hiring outside architects and engineers.
Once project designs are complete, local officials invite bids
from the construction community and award the contract to the
lowest responsible bidder.
State law also allows some state and local officials to use the
design-build method to procure both design and construction
services from a single company before the development of
complete plans and specifications. Under design-build, a public
agency contracts with a single entity - which can be a single
firm, a consortium, or a joint venture - to design and construct
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a project. Before inviting bids, the agency prepares documents
that describe the basic concept of the project, as opposed to a
complete set of drawings and specifications of what will be
constructed. In the bidding phase, the agency typically
evaluates bids on a best-value basis, incorporating technical
factors, such as qualifications and design quality, in addition
to price.
Until January 1, 2025, all counties and cities can use the
design-build method to construct buildings and related
improvements and other specified types of public works that cost
more than $1 million (SB 785, Wolk, Chapter 931, Statutes of
2014). The Legislature also has authorized some special
districts to construct projects using the design-build method,
including three local health care districts:
The Sonoma Valley Healthcare District can 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 Sonoma Valley
Hospital (SB 1699, Wiggins, 2008). Following SB 1699's
enactment, the Sonoma Valley Health Care District's voters
approved a $35 million bond to finance earthquake safety
improvements to bring the hospital's emergency room into
compliance with the state's seismic safety standards for
hospitals. The District's upgraded facility, which was
constructed using design-build contracts, opened in 2013.
The Last Frontier Healthcare District can 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 Modoc Medical
Center (SB 268, Gaines, Chapter 18, Statutes of 2014).
In addition to extending design-build contracting
authority for cities and counties through 2024, last year's
Wolk bill also authorized 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.
The Mayers Memorial Hospital District (MMHD) serves a rural
northern California area that includes portions of four
counties: Lassen, Modoc, Shasta and Siskiyou. MMHD's hospital,
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located in Fall River Mills (Shasta County), is more than 50
years old and does not meet state seismic safety standards for
hospital buildings. To continue to provide hospital services to
the surrounding communities, MMHD must construct a new facility
by January, 2020. To speed the construction process and reduce
costs, MMHD officials want the Legislature to grant them the
same design-build contracting authority that state law grants to
the Sonoma, Marin, and Last Frontier healthcare districts.
Proposed Law
Assembly Bill 1290 allows the Mayers Memorial Hospital
District's board of directors, notwithstanding any other law, to
use the design-build procedure to construct a building or
improvements directly related to the construction of a hospital
or health facility building at the Mayers Memorial Hospital
District. AB 1290 specifies that the District must use the
design-build procedure that current law establishes for local
agencies and provides that statutory references to a "local
agency" means the Mayers Memorial Hospital District and its
board of directors.
AB 1290 requires that a hospital building project using the
design-build process authorized by the bill must be reviewed and
inspected in accordance with the standards and requirements of
the Alfred E. Alquist Hospital Facilities Seismic Safety Act of
1983.
The bill finds and declares the Legislature's intent that health
care districts use the design-build process solely for buildings
associated with hospitals and health care and not for other
infrastructure, including, streets, highways, public rail
transit, roads, bridges, and water resources facilities.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . When it comes to public works projects,
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taxpayers want local officials to hold down costs, but they also
want to be sure that their tax dollars are spent wisely. While
the traditional contracting process minimizes opportunities for
public officials to award construction contracts based on
subjective factors, it also can be more time consuming and more
expensive than the design-build method. Faced with a seismic
retrofit deadline, the Mayers Memorial Hospital District wants
to use design-build contracting to gain more control over the
bidding process and the final outcomes of its anticipated
hospital construction project. The District anticipates that the
design-build method will shorten the construction process and
reduce the project's overall costs, thereby benefitting
taxpayers and helping to ensure that the District will meet its
retrofit deadline.
2. Not so simple . Legislators have been cautious about allowing
local governments, and special districts in particular, to use
the design-build contracting method. A 2005 Legislative
Analyst's Office (LAO) report questioned whether design-build is
the best construction delivery process for specialized buildings
like hospitals. LAO suggested that design-build is best suited
for "straightforward" design and construction projects, but not
for complex projects that require builders to accommodate more
unique design preferences. A 2014 LAO report on how counties
have used design-build contracting finds that some counties
prefer using design-build for simple projects, while others
indicate that design-build is useful for specialty projects and
large, complex projects. Sonoma Valley Healthcare District is
the only local government to have used the design-build method
for hospital construction. Because hospitals are highly
specialized structures that must meet complex construction and
seismic standards, it remains unclear whether the design-build
contracting method is appropriate for constructing hospital
buildings.
3. Good for one, good for all ? If AB 1290 becomes law, Mayers
Memorial Hospital District would be the fourth healthcare
district to obtain design-build contracting authority. In light
of the fact that many of California's 80 healthcare districts
confront similar fiscal challenges and deadlines to comply with
seismic safety standards, it is likely that MMHD will not be the
last health care district to seek design-build contracting
authority. An early version of SB 1699 (Wiggins, 2008), before
it was amended to apply only to Sonoma Valley Healthcare
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District, would have granted design-build contracting authority
to all healthcare districts. Legislators may wish to consider
whether it makes sense to grant design-build authority to
healthcare districts on a case-by-case basis, or whether
legislation granting authority to all healthcare districts may
be justified.
4. Special legislation . The California Constitution prohibits
special legislation when a general law can apply (Article IV,
§16). AB 1290 contains findings and declarations explaining the
need for legislation that applies only to the Mayers Memorial
Hospital District.
5. Urgency . Regular statutes take effect on January 1
following their enactment; bills passed in 2015 take effect on
January 1, 2016. The California Constitution allows bills with
urgency clauses to take effect immediately if they're needed for
the public peace, health, and safety. AB 1290 contains an
urgency clause declaring that it is necessary for its provisions
to go into effect immediately to allow the District to comply
with health regulations, seismic requirements, and meet
increasing demand for health care services at the earliest
possible time.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 75-0
Support and
Opposition (6/4/15)
Support : Mayers Memorial Hospital District; Association of
California Healthcare Districts; Shasta County Board of
Supervisors.
Opposition : Unknown.
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