Amended in Senate July 9, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1358

Introduced by Assembly Member Dababneh

February 27, 2015

An act to begin delete repeal, add, and repeal end delete begin insert add Section 17250.55 to, and to amend, repeal, and end insert begin insert add end insert Chapter 2.5 (commencing with Section 17250.10) of Part 10.5 of Division 1 of Title 1 begin delete of end delete begin insert of, end insert the Education Code, begin insert and to repeal Section 4 of Chapter 421 of the Statutes of 2001, end insert relating to school facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 1358, as amended, Dababneh. School facilities: design-build contracts.

Existing law authorizes the governing board of a school district, until January 1, 2020, begin insert and end insert upon a determination by the governing board of the school district that it is in the best interest of the school district, to enter into a design-build contract for both the design and construction of a school facility if that expenditure exceeds $2,500,000, as provided.

This bill would begin delete repeal end delete begin insert make end insert those provisions begin delete and end delete begin insert inoperative on July 1, 2016, and as of that date end insert would instead authorize, until January 1, 2025, a school district, with the approval of the governing board of the school district, to procure design-build contracts for public works projects in excess of $1,000,000, awarding the contract to either the low bid or the best value, as provided. The bill would require specified information to be verified under penalty of perjury. By expanding the crime of perjury, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Chapter 2.5 (commencing with Section 17250.10)
of Part 10.5 of Division 1 of Title 1 of the Education Code is
repealed.

end delete

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 17250.55 is added to the end insert begin insert Education Code end insert begin insert ,
to read: end insert

begin insert

begin insert 17250.55. end insert   

This chapter shall become inoperative on July 1,
2016, and, as of January 1, 2017, is repealed, unless a later
enacted statute, that becomes operative on or before January 1,
2017, deletes or extends the dates on which it becomes inoperative
and is repealed.

end insert

SEC. 2.  

Chapter 2.5 (commencing with Section 17250.10) is
added to Part 10.5 of Division 1 of Title 1 of the Education Code,
to read:

 

Chapter  2.5. Design-Build Contracts

 

17250.10.  

(a) The Legislature finds and declares that the
design-build method of project delivery, using a best value
procurement methodology, has been authorized for various
agencies that have reported benefits from those projects, including
reduced project costs, expedited project completion, and design
features that are not achievable through the traditional
design-bid-build method.

(b) It is the intent of the Legislature that:

(1) This chapter provide general authorization for school districts
to use the design-build method for projects.

(2) This chapter shall not be deemed to express a preference for
the design-build method over other procurement methodologies.

17250.15.  

For purposes of this chapter, the following
definitions apply:

(a) (1) “Best value” means a value determined by evaluation
of objective criteria that may include, but are not limited to, price,
features, functions, life-cycle costs, experience, and past
performance.

(2) A best value determination may involve the selection of the
lowest cost proposal meeting the interests of the school district
and the objectives of the project, selection of the best proposal for
a stipulated sum established by the procuring school district, or a
tradeoff between price and other factors.

(b) “Construction subcontract” means a subcontract awarded
by the design-build entity to a subcontractor that will perform work
or labor or will render service to the design-build entity in or about
the construction of the work or improvement, or a subcontractor
licensed by the state which, under subcontract to the design-build
entity, 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.

(c) “Design-build” means a project delivery process in which
both the design and construction of a project are procured from a
single entity.

(d) “Design-build entity” means a corporation, limited liability
company, partnership, joint venture, or other legal entity that is
able to provide appropriately licensed contracting, architectural,
and engineering services, as needed, pursuant to a design-build
contract.

(e) (1) “Design-build team” means the design-build entity and
the individuals or other entities identified by the design-build entity
as members of its team.

(2) Members shall include the general contractor and, if utilized
in the design of the project, all electrical, mechanical, and plumbing
contractors.

(f) “Project” means the construction of any school facility.

17250.20.  

(a) A school district, with approval of its governing
board, may procure design-build contracts for projects in excess
of one million dollars ($1,000,000), awarding the contract to either
the low bid or the best value.

(b) The school district shall develop guidelines for a standard
organizational conflict-of-interest policy, consistent with applicable
law, regarding the ability of a person or entity that performs
services for the school district relating to the solicitation of a
design-build project, to submit a proposal as a design-build entity,
or to join a design-build team. This conflict-of-interest policy shall
apply to each school district entering into design-build contracts
authorized under this chapter.

begin insert

(c) This chapter shall apply to bid requests issued on or after
July 1, 2016.

end insert

17250.25.  

The procurement process for design-build projects
shall progress as follows:

(a) (1) The school district shall prepare a set of documents
setting forth the scope and estimated price of the project. The
documents may include, but are not limited to, the size, type, and
desired design character of the project, performance specifications
covering the quality of materials, equipment, workmanship,
preliminary plans or building layouts, or any other information
deemed necessary to describe adequately the school district’s
needs. The performance specifications and any plans shall be
prepared by a design professional who is duly licensed and
registered in California.

(2) The documents shall not include a design-build-operate
contract for a project. The documents, however, may include
operations during a training or transition period, but shall not
include long-term operations for a project.

(b) The school district shall prepare and issue a request for
qualifications in order to prequalify, or develop a short-list of, the
design-build entities whose proposals shall be evaluated for final
selection. The request for qualifications shall include, but is not
limited to, all of the following elements:

(1) Identification of the basic scope and needs of the project or
contract, the expected cost range, the methodology that will be
used by the school district to evaluate proposals, the procedure for
final selection of the design-build entity, and any other information
deemed necessary by the school district to inform interested parties
of the contracting opportunity.

(2) Significant factors that the school district reasonably expects
to consider in evaluating qualifications, including technical design
and construction expertise, acceptable safety record, and all other
nonprice-related factors.

(3) A standard template request for statements of qualifications
prepared by the school district. In preparing the standard template,
the school district may consult with the construction industry, the
building trades and surety industry, and other school districts
interested in using the authorization provided by this chapter. The
template shall require the following information:

(A) If the design-build entity is a privately held corporation,
limited liability company, partnership, or joint venture, a listing
of all of the shareholders, partners, or members known at the time
of statement of qualification submission who will perform work
on the project.

(B) Evidence that the members of the design-build team have
completed, or demonstrated the experience, competency, capability,
and capacity to complete, projects of similar size, scope, or
complexity, and that the proposed key personnel have sufficient
experience and training to competently manage and complete the
design and construction of the project, and a financial statement
that ensures that the design-build entity has the capacity to
complete the project.

(C) The licenses, registration, and credentials required to design
and construct the project, including, but not limited to, information
on the revocation or suspension of any license, credential, or
registration.

(D) Evidence that establishes that the design-build entity has
the capacity to obtain all required payment and performance
bonding, liability insurance, and errors and omissions insurance.

(E) Information concerning workers’ compensation experience
history and a worker safety program.

(F) If the proposed design-build entity is a corporation, limited
liability company, partnership, joint venture, or other legal entity,
a copy of the organizational documents or agreement committing
to form the organization.

(G) An acceptable safety record. A proposer’s safety record
shall be deemed acceptable if its experience modification rate for
the most recent three-year period is an average of 1.00 or less, and
its average total recordable injury or illness rate and average lost
work rate for the most recent three-year period does not exceed
the applicable statistical standards for its business category, or if
the proposer is a party to an alternative dispute resolution system,
as provided for in Section 3201.5 of the Labor Code.

(4) (A) The information required under this subdivision shall
be certified under penalty of perjury by the design-build entity and
its general partners or joint venture members.

(B) Information required under this subdivision that is not
otherwise a public record under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code) shall not be open to public
inspection.

(c) A design-build entity shall not be prequalified or shortlisted
unless the entity provides an enforceable commitment to the school
district that the entity and its subcontractors at every tier will use
a skilled and trained workforce to perform all work on the project
or contract that falls within an apprenticeable occupation in the
building and construction trades.

(1) For purposes of this subdivision:

(A) “Apprenticeable occupation” means an occupation for which
the Chief of the Division of Apprenticeship Standards had approved
an apprenticeship program pursuant to Section 3075 of the Labor
Code before January 1, 2014.

(B) “Skilled and trained workforce” means a workforce that
meets all of the following conditions:

(i) All the workers are either skilled journeypersons or
apprentices registered in an apprenticeship program approved by
the Chief of the Division of Apprenticeship Standards.

(ii) (I) As of begin delete January end delete begin insert July end insert 1, 2016, at least 20 percent of the
skilled journeypersons employed to perform work on the contract
or project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(II) As of begin delete January end delete begin insert July end insert 1, 2017, at least 30 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(III) As of begin delete January end delete begin insert July end insert 1, 2018, at least 40 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(IV) As of begin delete January end delete begin insert July end insert 1, 2019, at least 50 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(V) As of begin delete January end delete begin insert July end insert 1, 2020, at least 60 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(iii) For an apprenticeable occupation in which no apprenticeship
program had been approved by the Chief of the Division of
Apprenticeship Standards before January 1, 1995, up to one-half
of the graduation percentage requirements of clause (ii) may be
satisfied by skilled journeypersons who commenced working in
the apprenticeable occupation prior to the chief’s approval of an
apprenticeship program for that occupation in the county in which
the project is located.

(C) “Skilled journeyperson” means a worker who either:

(i) Graduated from an apprenticeship program for the applicable
occupation that was approved by the Chief of the Division of
Apprenticeship Standards or located outside California and
approved for federal purposes pursuant to the apprenticeship
regulations adopted by the federal Secretary of Labor.

(ii) Has at least as many hours of on-the-job experience in the
applicable occupation as would be required to graduate from an
apprenticeship program for the applicable occupation that is
approved by the chief.

(2) An entity’s commitment that a skilled and trained workforce
will be used to perform the project or contract may be established
by any of the following:

(A) The entity’s agreement with the school district that the entity
and its subcontractors at every tier will comply with the
requirements of this subdivision and that the entity will provide
the school district with evidence, on a monthly basis while the
project or contract is being performed, that the entity and its
subcontractors are complying with the requirements of this
subdivision.

(B) If the school district has entered into a project labor
agreement that will bind all contractors and subcontractors
performing work on the project or contract and that includes the
requirements of this subdivision, the entity’s agreement that it will
become a party to that project labor agreement.

(C) Evidence that the entity has entered into a project labor
agreement that includes the requirements of this subdivision and
that will bind the entity and all its subcontractors at every tier
performing the project or contract.

(d) Based on the documents prepared as described in subdivision
(a), the school district shall prepare a request for proposals that
invites prequalified or short-listed entities to submit competitive
sealed proposals in the manner prescribed by the school district.
The request for proposals shall include, but need not be limited
to, the following elements:

(1) Identification of the basic scope and needs of the project or
contract, the estimated cost of the project, the methodology that
will be used by the school district to evaluate proposals, whether
the contract will be awarded on the basis of low bid or best value,
and any other information deemed necessary by the school district
to inform interested parties of the contracting opportunity.

(2) Significant factors that the school district reasonably expects
to consider in evaluating proposals, including, but not limited to,
cost or price and all nonprice-related factors.

(3) The relative importance or the weight assigned to each of
the factors identified in the request for proposals.

(4) Where a best value selection method is used, the school
district may reserve the right to request proposal revisions and
hold discussions and negotiations with responsive proposers, in
which case the school district shall so specify in the request for
proposals and shall publish separately or incorporate into the
request for proposals applicable procedures to be observed by the
school district to ensure that any discussions or negotiations are
conducted in good faith.

(e) For those projects utilizing low bid as the final selection
method, the competitive bidding process shall result in lump-sum
bids by the prequalified or short-listed design-build entities, and
awards shall be made to the design-build entity that is the lowest
responsible bidder.

(f) For those projects utilizing best value as a selection method,
the design-build competition shall progress as follows:

(1) Competitive proposals shall be evaluated by using only the
criteria and selection procedures specifically identified in the
request for proposals. The following minimum factors, however,
shall be weighted as deemed appropriate by the school district:

(A) Price, unless a stipulated sum is specified.

(B) Technical design and construction expertise.

(C) Life-cycle costs over 15 or more years.

(2) Pursuant to subdivision (d), the school district may hold
discussions or negotiations with responsive proposers using the
process articulated in the school district’s request for proposals.

(3) When the evaluation is complete, the responsive proposers
shall be ranked based on a determination of value provided,
provided that no more than three proposers are required to be
ranked.

(4) The award of the contract shall be made to the responsible
design-build entity whose proposal is determined by the school
district to have offered the best value to the public.

(5) Notwithstanding any other provision of law, upon issuance
of a contract award, the school district shall publicly announce its
award, identifying the design-build entity to which the award is
made, along with a statement regarding the basis of the award.

(6) The statement regarding the school district’s contract award,
described in paragraph (5), and the contract file shall provide
sufficient information to satisfy an external audit.

17250.30.  

(a) The design-build entity shall provide payment
and performance bonds for the project in the form and in the
amount required by the school district, and issued by a California
admitted surety. The amount of the payment bond shall not be less
than the amount of the performance bond.

(b) The design-build contract shall require errors and omissions
insurance coverage for the design elements of the project.

(c) The school district shall develop a standard form of payment
and performance bond for its design-build projects.

17250.35.  

The school district, in each design-build request for
proposals, may identify specific types of subcontractors that must
be included in the design-build entity statement of qualifications
and proposal. All construction subcontractors that are identified
in the proposal shall be afforded all the protections of Chapter 4
(commencing with Section 4100) of Part 1 of Division 2 of the
Public Contract Code.

(a) Following award of the design-build contract, the
design-build entity shall proceed as follows in awarding
construction subcontracts with a value exceeding one-half of 1
percent of the contract price allocable to construction work:

(1) Provide public notice of availability of work to be
subcontracted in accordance with the publication requirements
applicable to the competitive bidding process of the school district,
including a fixed date and time on which qualifications statements,
bids, or proposals will be due.

(2) Establish reasonable qualification criteria and standards.

(3) Award the subcontract either on a best value basis or to the
lowest responsible bidder. The process may include prequalification
or short-listing. The foregoing process does not apply to
construction subcontractors listed in the original proposal.
Subcontractors awarded construction subcontracts under this
subdivision shall be afforded all the protections of Chapter 4
(commencing with Section 4100) of Part 1 of Division 2 of the
Public Contract Code.

17250.40.  

(a) If the school district elects to award a project
pursuant to this chapter, retention proceeds withheld by the school
district from the design-build entity shall not exceed 5 percent.

(b) In a contract between the design-build entity and a
subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld may not exceed the percentage specified in the contract
between the school district agency and the design-build entity. If
the design-build entity provides written notice to any subcontractor
that is not a member of the design-build entity, prior to or at the
time the bid is requested, that a bond may be required and the
subcontractor subsequently is unable or refuses to furnish a bond
to the design-build entity, then the design-build entity may withhold
retention proceeds in excess of the percentage specified in the
contract between the school district and the design-build entity
from any payment made by the design-build entity to the
subcontractor.

17250.45.  

Nothing in this chapter affects, expands, alters, or
limits any rights or remedies otherwise available at law.

begin insert

begin insert 17250.50. end insert   

This chapter shall become operative on July 1, 2016.

end insert

begin delete 17250.50. end delete
begin insert 17250.55. end insert   

This chapter shall remain in effect only until January
1, 2025, and as of that date is repealed, unless a later enacted
statute, that takes effect before January 1, 2025, deletes or extends
that date.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 4 of Chapter 421 of the Statutes of 2001, as
amended by Section 5 of Chapter 736 of the Statutes of 2012, is
repealed. end insert

begin delete

Sec. 4.  

This act shall remain in effect only until January 1,
2020, and as of that date is repealed, unless a later enacted statute,
that is enacted before January 1, 2020, deletes or extends that date.

end delete

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.