BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                   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  








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            "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  








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          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).









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           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









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          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


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