BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1290|
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THIRD READING
Bill No: AB 1290
Author: Dahle (R)
Amended: 5/18/15 in Assembly
Vote: 27 - Urgency
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/10/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
ASSEMBLY FLOOR: 75-0, 5/22/15 - See last page for vote
SUBJECT: Health care districts: public contracts:
design-build
SOURCE: Author
DIGEST: This bill allows the Mayers Memorial Hospital District
(MMHD) to use design-build contracting.
ANALYSIS:
Existing law:
1)Allows, until January 1, 2025, all counties and cities to 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).
AB 1290
Page 2
2)Allows some special districts to construct projects using the
design-build method, including three local health care
districts:
a) 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, Chapter 415, Statutes of 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.
b) 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).
c) 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.
This bill:
1)Allows the MMHD'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 MMHD.
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Page 3
2)Specifies that the MMHD must use the design-build procedure
that current law establishes for local agencies and provides
that statutory references to a "local agency" means the MMHD
and its board of directors.
3)Requires that a hospital building project using the
design-build process authorized by this 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.
4)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.
Background
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
AB 1290
Page 4
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
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.
MMHD serves a rural northern California area that includes
portions of four counties: Lassen, Modoc, Shasta and Siskiyou.
MMHD's hospital, 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.
Comments
Purpose of the bill. When it comes to public works projects,
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 MMHD 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 MMHD 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 MMHD will meet its retrofit deadline.
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Page 5
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 Health Care 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified6/19/15)
Association of California Healthcare Districts
Mayers Memorial Hospital District
Shasta County Board of Supervisors
OPPOSITION: (Verified6/19/15)
None received
ASSEMBLY FLOOR: 75-0, 5/22/15
AYES: Achadjian, Travis Allen, Baker, Bigelow, Bloom, Bonilla,
AB 1290
Page 6
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Wilk, Williams,
Wood, Atkins
NO VOTE RECORDED: Alejo, O'Donnell, Olsen, Waldron, Weber
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
6/19/15 14:31:32
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