BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 957| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 957 Author: Hueso (D), et al. Amended: 4/14/16 Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 6-0, 4/13/16 AYES: Hertzberg, Beall, Hernandez, Lara, Moorlach, Pavley NO VOTE RECORDED: Nguyen SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 SUBJECT: Health care districts: design-build process SOURCE: Author DIGEST: This bill allows specified health care districts' boards of directors to use design-build contracting for the construction of hospital or health facility buildings. ANALYSIS: Existing law: 1)Requires, pursuant to the Local Agency Public Construction Act, that local officials must invite bids for construction projects and then award contracts to the lowest responsible bidder. 2)Allows some state and local officials to use the SB 957 Page 2 "design-build" method to procure both design and construction services from a single company before the development of complete plans and specifications. This bill: 1)Allows, until January 1, 2025, the board of directors of any health care district that owns or operates a hospital or clinic, 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. 2)Specifies that a health care district must use the design-build procedure that current law establishes for local agencies and provides that statutory references to a "local agency" means a health care district 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 facilities, including clinics and skilled nursing facilities, and not for other infrastructure, including streets, highways, public rail transit, roads, bridges, and water resources facilities. Background State law allows some state and local officials to use the SB 957 Page 3 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 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 four 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, 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. 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). SB 957 Page 4 The Marin 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 Marin General Hospital (SB 785, Wolk, Chapter 931, Statutes of 2014). The Mayers Memorial Hospital 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 Mayers Memorial Hospital District (AB 1290, Dahle, Chapter 34, Statutes of 2015). Comments Purpose of this 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. Health care districts, in particular, face unique pressures to hold down costs. They face market pressures to compete with other health care providers while complying with the Brown Act, the Public Records Act, the Political Reform Act, public contracting laws, and other statutory restrictions that are not imposed on their private sector competitors. The Legislature has already allowed four health care districts to use design-build contracting to construct new facilities. This bill grants the same design-build authority to all health care districts, allowing them to keep costs down, expedite the design and construction process, and save taxpayer dollars while fulfilling community health care needs. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes SB 957 Page 5 SUPPORT: (Verified5/2/16) Association of California Healthcare Districts American Council of Engineering Companies - California Beach Cities Health Care District California Labor Federation California Special District Association District Hospital Leadership Forum Economic Development Corporation of Mariposa County John C. Fremont Health Care District State Building and Construction Trades Council OPPOSITION: (Verified5/2/16) None received Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119 5/4/16 14:57:58 **** END ****