BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: AB 1358
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|Author: |Dababneh |
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|Version: |February 27, 2015 Hearing Date |
| | July 1, 2015 |
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|Urgency: |No |Fiscal: | Yes |
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|Consultant: |Kathleen Chavira |
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Subject: School facilities: design-build contracts
SUMMARY
This bill repeals the existing design-build authority for school
districts and re-establishes the authority to generally align
with that which exists for other state and local agencies,
establish extensive new skilled workforce requirements, reduce
the threshold for its use from $2.5 million to $1 million, and
to sunset this authority on January 1, 2025.
BACKGROUND
Existing law authorizes a school district governing board to
enter into a design-build contract for the design and
construction of a school facility for projects in excess of two
million five hundred thousand dollars ($2,500,000) if, after
evaluating traditional design-bid-build and design-build
processes in a public meeting, the governing board makes written
findings that use of the design-build process on a specific
project will either:
1)Reduce comparable project costs.
2)Expedite the project's completion.
3)Provide features not achievable through the traditional
design-bid-build method.
Existing law establishes specific procedures for the progression
of a K-12 school facility design-build project, outlines the
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specific elements to be included in a request for proposal
(including significant factors, subfactors, methodology, rating
and weighting schemes for evaluating proposals), and
establishes, among other things, pre-qualification, bonding, and
labor compliance program requirements.
(Education Code § 17250.10 - § 17250.50)
Existing law also provides parallel authority, procedures and
requirements for community college district governing boards to
conduct design-build projects.
(EC § 81700 - § 81708)
Existing law sunsets the authority of K-12 and community college
districts to use design-bid procurement on January 1, 2020.
ANALYSIS
This bill:
1)Deletes and revises the existing authority of a school district
to use a design-build procurement process for public works
projects.
2)Reduces the threshold for entering into a design-build contract
for K-12 school facility projects from $2.5 million to $1
million.
3)Establishes the authority, procedures, bond and subcontractor
requirements, performance criteria and design standards, to
enter into design-build contracts consistent with prior
statute except for the following changes:
a) Adds new definitions for "design-build team,"
"Construction subcontract," and "project."
b) Eliminates the requirement that a school district
governing board make specified written findings prior to
using the authority.
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c) Requires adoption of a conflict-of-interest
policy by the school district.
d) Implements a less prescriptive process for
issuing a request for proposal and grants districts greater
discretion to determine and assign weight to factors for
best value selection.
e) Eliminates the requirements for a project
inspector.
4)Requires that a design-build entity must meet specified skilled
and trained workforce requirements to be prequalified or
shortlisted for design-build contracts and establishes the
following skilled workforce requirements and related
definitions:
a) "Skilled journeyperson" as a worker who either
graduated from an applicable apprenticeship program which
met specified state or federal approval requirements, or
had at least as many hours of on-the-job experience in an
applicable occupation as would be required for graduation
from a state-approved apprenticeship program.
b) "Apprenticeable occupation" as an occupation for
which the Chief of the Division of Apprenticeship Standards
of the Department of Industrial Relations had approved an
apprenticeship program before January 1, 2014.
c) "Skilled and trained workforce" as a workforce in
which all the workers are skilled journeypersons or
apprentices registered in an apprenticeship program
approved by the Chief of the Division of Apprenticeship
Standards of the Department of Industrial Relations and
establishes the following phased-in implementation of the
proportion of skilled journeypersons and subcontractors,
employed at every tier, that must be approved
apprenticeship program graduates to meet the condition of
having a "skilled and trained workforce":
i) At least 20% by January 1, 2016.
ii) At least 30% by January 1, 2017.
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iii) At least 40% by January 1, 2018.
iv) At least 50% by January 1, 2019.
v) At least 60% by January 1, 2020.
d) Provides that, for an apprenticeable occupation
with no approved program prior to January 1, 1995, up to
one-half of the apprenticeship program graduate percentage
requirements may be met by skilled journeypersons who
commenced work in the occupation prior to the approval of
an applicable apprentice program in the county of the
project's location.
e) Prohibits the prequalification or shortlisting of
a best value entity absent an enforceable commitment to use
a skilled and trained workforce for all work on the
project/contract as applicable and provides that this
commitment may be established by:
i) An agreement between the entity and the school
district governing board to comply with these
requirements and the provision of monthly evidence
demonstrating such compliance during the performance of
the project/contract.
ii) A project labor agreement (PLA), entered into by
the school district governing board, that includes these
requirements and that binds all
contractors/subcontractors working on the
project/contract and agreement by the entity to become a
party to the PLA.
iii) Evidence that the entity has entered into a PLA
that includes these requirements and that binds the
entity and all its subcontractors at every tier
performing the project/contract.
5)Extends the sunset on the authority to use design-bid from
January 1, 2020 to January 1, 2025.
STAFF COMMENTS
1)Need for the bill. According to the author this bill aligns
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the statutes authorizing school districts to use design-build
with those recently adopted as applicable to the use of
design-build by cities, counties, transit and special
districts. According to the sponsor, requiring the use of a
skilled workforce ensures on-time project delivery, on or
under budget, and incentivizes the use of local workers who
are graduates of apprenticeship programs.
2)What is design-build? There are two primary construction
delivery systems used in the public and private sectors,
"design-bid-build" and "design-build."
Current law requires that school districts award construction
contracts over $15,000 to the lowest responsible bidder.
Current law also allows contracts for architectural services
to be awarded on the basis of demonstrated competence and
professional qualifications to be performed at a fair and
reasonable price (not necessarily lowest bidder). These laws
have meant that schools (and most public construction work)
have been built using a "design-bid-build" methodology wherein
a separate contract is awarded for the design work by an
architect and another contract is awarded to the lowest
responsible bidder for the construction.
In the 1990's, the state began the enactment of various
legislation authorizing state and local entities to use a
"design-build" system under specified circumstances. Under
this approach a single contract is awarded to a professional
team, a "design-build" entity, to conduct both types of work.
Rather than awarding such a contract to the lowest responsible
bidder, it may be awarded on the basis of the experience and
qualifications of the competitors, or on a determination that
a particular competitor provides the best value to the
project.
The authority for design-bid was first implemented for school
districts by AB 1402 (Simitian, Chapter 421, Statutes of
2001), and though originally set to sunset in 2007, was
extended to 2010 by AB 127 (Nunez, Chapter 35, Statutes of
2006), this authority is currently extended until 2020 as the
result of the enactment of SB 1509 (Simitian, Chapter 736,
Statutes of 2012).
3)Related Legislative Analyst's Office (LAO) reports. In
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February 2005, the LAO issued a report on Design-Build: An
Alternative Construction System in which it reported its
consolidated findings on design-build across several public
works sectors. Among other things, the LAO recommended that
the state adopt a single statute applying to all public
entities, design-build be available as an option and not a
replacement for "design-bid-build" and that no cost threshold
be imposed on the authority to use design-build. The LAO also
noted that disadvantages of design-bid included a limited
assurance of quality control since the building is not
typically defined in detail at the time of entering into the
contract, and a more subjective process for awarding contracts
and evaluating qualifications and experience, as well as
limited access for small contractors without the range of
experience of larger, long-established firms.
In January 2010, the LAO presented a summary of reports
received from California counties that had completed
construction projects using the design-build delivery method,
as required under the legislation extending design-build
authority to county governments (Public Contract Code Section
20133). The LAO noted that although difficult to draw
conclusions from the reports received about the effectiveness
of design-build compared to other project delivery methods,
there was no evidence to discourage the Legislature from
granting design-build authority to local agencies on an
ongoing basis. The LAO also recommended that the Legislature
consider, among other things, creating a uniform design-build
statute.
4)Uniform provisions for design-build authority. SB 785 (Wolk,
Chapter 931, Statutes of 2014) repealed existing law
authorizing the Department of General Services, the Department
of Corrections and Rehabilitation, and specified local
agencies to use the design-build procurement process and
enacted more uniform provisions authorizing these entities to
utilize this procurement process for public works projects.
SB 785 also added a sunset date of January 1, 2025, on these
design-bid authorizations. This bill generally establishes
these same provisions as applicable to school districts.
5)How is the new authority different? Generally, the basic
structure of the statute remains very similar as regards most
definitions, procedures, and bond and subcontractor
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requirements. Consistent with the provisions of SB 785 (Wolk,
2014), the threshold for entering into a design-build contract
for K-12 school facility projects is reduced to $1 million and
design-bid authority sunsets in 2025. Additionally, a school
district no longer has to make written findings of the
benefits of design-bid prior to its use, the process for
issuing a request for proposals sis less prescriptive, no
project inspector is required, and the requirements for use of
a skilled workforce are more extensive.
6)Apprenticeship programs. According to the Department of
Industrial Relations (DIR), apprenticeship programs combine
training on the job with related and supplemental instruction
at school. Each program operates under apprenticeship
training standards agreed to by labor and/or management in
accordance with State and Federal laws. The period of
training is from 1 to 6 years, depending upon the trade with
most programs being about 4 years. Apprentices attend classes
of related technical instruction, giving apprentices a
comprehensive understanding of the theoretical aspects of
their work. In most cases this means attending classes at
night 4 hours each week, for at least 108 hours a year.
Instruction includes such subjects as safety laws and
regulations, mathematics, drafting, blueprint reading and
other sciences connected with the trade.
In March 2015, the Legislative Analyst's Office reported that
there are more than 50,000 apprentices registered in 47
trades, with the vast majority in the construction trades and
public safety. The recently adopted 2015-16 State Budget
increased funding for Apprenticeship Programs by $29 million.
Notwithstanding this infusion of funds to support and expand
apprenticeship education programs, concerns have been raised
about the ability of school districts to meet the annual
targets within the timelines established. In response, the
author has proposed an amendment to delay implementation of
the bill's provisions to apply to bid requests issued on or
after July 1, 2016. Staff recommends the bill be so amended.
7)Similar legislation. The provisions of this bill relative to
a skilled workforce are very similar to recently adopted
provisions regarding the use of a design-build method for
awarding public works contracts by state and local agencies
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(SB 785, Chapter 931, Statutes of 2014), as well as contracts
for the construction, alteration, demolition, installation,
repair, or maintenance work at petroleum refineries (SB 54,
Chapter 795, Statutes of 2013). In addition, this Committee
has heard other bills this session which implement similar
skilled workforce requirements as elements of the authority to
use procurement methods other than design-bid-build. These
include:
a) AB 566 (O'Donnell) which, among other things,
establishes similar skilled workforce requirements for
lease/leaseback and lease to own procurement contracts. AB
566 was heard and passed by this Committee on June 10,
2015, by a vote of 6-2 and is currently awaiting action in
the Senate Appropriations Committee.
b) AB 1185 (Ridley-Thomas) establishes similar skilled
workforce requirements as a component of a pilot program to
authorize the Los Angeles Unified School District (LAUSD)
to use a best value procurement method, before December 31,
2020, for public projects that exceed $1 million. AB 1185
was heard and passed by this Committee on June 17, 2015, by
a vote of 6-2 and is currently awaiting action in the
Senate Appropriations Committee.
SUPPORT
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
California Labor Federation
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
Finishing Contractors Association of Southern California
National Electrical Contractors Association - California
Chapters
State Building and Construction Trades Council
United Contractors
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
OPPOSITION
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Air Conditioning Trade Association
Airtight Heating and Sheet Metal
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
California School Boards Association
Forcum/Mackey Construction Inc.
Fortuna Iron
National Right to Work Committee
O&M Industries
Plumbing-Hearing-Cooling Contractors Association of California
Western Electrical Contractors Association
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