BILL ANALYSIS Ó
SB 957
Page 1
Date of Hearing: June 29, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
SB
957 (Hueso) - As Amended April 14, 2016
SENATE VOTE: 38-0
SUBJECT: Health care districts: design-build process.
SUMMARY: Allows specified health care districts to use
design-build contracting for the construction of a hospital or
health facility buildings. Specifically, this bill:
1)Allows, until January 1, 2025, a health care district that
owns or operates a hospital or clinic 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)Provides that a health care district must use the design-build
procedure that current law establishes for local agencies, as
specified.
3)Requires a hospital building project using the design-build
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process authorized by this bill to be reviewed and inspected
in accordance with the standards and requirements of the
Alfred E. Alquist Hospital Facilities Seismic Safety Act
(Hospital Seismic Safety Act) of 1983.
4)Makes a number of findings and declarations, and states 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.
5)Provides that no reimbursement is required by this bill
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, or changes the
definition of a crime, as specified.
EXISTING LAW:
1)Requires, pursuant to the Local Agency Public Construction Act
(LAPC Act), local officials to invite bids for construction
projects and then award contracts to the lowest responsible
bidder under the traditional design-bid-build project delivery
system.
2)Authorizes, until January 1, 2025, cities, counties, and
specified special districts and transit agencies to use
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design-build for their public works contracts in excess of $1
million using either a low bid or best value process.
3)Provides for local health care districts, which govern certain
health care facilities. Each health care district has
specific duties and powers respecting the creation,
administration, and maintenance of the districts, including
the authority to purchase, receive, take, hold, lease, use,
and enjoy property of every kind and description of property
within and without the limits of the district.
4)Establishes, pursuant to the Hospital Seismic Safety Act,
timelines for hospital compliance with seismic safety
standards.
5)Authorizes the Sonoma Valley Health Care District, the Marin
Health Care District, the Last Frontier Health Care District,
and the Mayers Memorial Hospital District to use design-build
for the construction of a building or improvements directly
related to construction of a hospital or health facility.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
1)Bill Summary. This bill expands a limited authority for
several health care districts to use design-build to include
all health care districts that own or operate a hospital or
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clinic. The authority is limited to the construction of a
building or improvements directly related to the construction
of a hospital or health facility building, and would expire on
January 1, 2025. Districts must use the procedures outlined
in existing law that apply to local agencies' authority to use
design-build. A hospital building project using the
design-build process authorized by this bill must be reviewed
and inspected in accordance with the Hospital Seismic Safety
Act.
This bill is sponsored by the Association of California
Healthcare Districts and the State Building and Construction
Trades Council.
2)Author's Statement. According to the author, "Under the
design-build method, a single contract covers the design and
construction of a project with a single company or consortium
that acts as both the project designer and builder. The
design-build entity arranges all architectural, engineering,
and construction services, and is responsible for delivering
the project at a guaranteed price and schedule based upon
performance criteria set by the public agency. The
design-build method can be faster (and therefore, cheaper)
than the design-bid-build method.
"The traditional design-bid-build project approach requires:
the separate selection of the design consultant or contractor;
completion of design; advertising for bids; and selection of
the construction contractor. Typically, design-bid-build
projects incur many delays, costly change orders and longer
Office of Statewide Health Planning and Development review
times resulting in increased costs. Design-build avoids those
problems due to the fusion of design and construction
activities, thereby resulting in additional time savings and
lower project costs.
"Legislation passed in 2013, SB 785 (Wolk), amended [the]
Government Code relating to the design-build procurement
processes already in law and extends the sunset date for such
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authorization until 2025. The Legislature has already granted
the design build utilization method to four healthcare
districts. This bill will ensure that there is uniformity
among healthcare districts across all of California rather
than utilizing a piece-meal approach. Moreover, this will
effectively provide another tool for our healthcare districts
to utilize for project deliveries."
3)Background. The LAPC Act generally 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 approach to public
works construction.
Under the design-build method, a single contract covers the
design and construction of a project with a single company or
consortium that acts as both the project designer and builder.
The design-build entity arranges all architectural,
engineering, and construction services, and is responsible for
delivering the project at a guaranteed price and schedule
based upon performance criteria set by the public agency. The
design-build method can be set by the public agency. The
design-build method can be faster and, therefore, cheaper,
than the design-bid-build method, but it requires a higher
level of management sophistication since design and
construction may occur simultaneously.
Advocates for the design-build method of contracting for
public works contend that project schedule savings can be
realized because only a single request for proposals is needed
to select the project's designer and builder. The more
traditional design-bid-build project approach requires the
separate selection of the design consultant or contractor,
completion of design, and then advertising for bids and
selection of the construction contractor. Proponents add that
design-build allows the overlap of design and construction
activities, resulting in additional time savings and lower
project costs. By avoiding the delays and change orders that
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result from the traditional design-bid-build method of
contracting, proponents argue that design-build can deliver
public works faster and cheaper.
Detractors of design-build contend that it eliminates
competitive bidding, allows the private contractor or
consortium to inspect and sign off on their own work, and
increases project delivery costs.
4)Design-Build and Healthcare Districts. California currently
has 80 health care districts. Health care districts were
known as hospital districts prior to 1994. Health care
districts are formed to "establish, maintain, and operate
health care facilities," including, but not limited to,
hospitals. Health care districts are governed by elected
boards of directors. Health care districts throughout the
state need to retrofit existing buildings or build new
facilities in order to comply with the Hospital Seismic Safety
Act. These districts are faced with escalating construction
costs and are looking for the most cost-effective ways to meet
seismic standards and provide well-designed and built
state-of-the-art facilities to provide health care to the
people of the state. One of these methods is design-build
contracting.
The Legislature has authorized four health care districts to
use design-build (Sonoma Valley Health Care District, the Last
Frontier Health Care District, the Marin Healthcare District,
and the Mayers Memorial Hospital District) and has restricted
that authority to the construction of a building and
improvements directly related to a hospital or health facility
building. The provisions of this bill are consistent with the
limitations and requirements of these prior authorizations.
5)Previous Legislation. AB 1290 (Dahle), Chapter 34, Statutes
of 2015, allowed the Mayers Memorial Hospital District to use
the design-build contracting method for the construction of a
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building or improvements directly related to construction of a
hospital or health facility building at the District.
SB 268 (Gaines), Chapter 18, Statutes of 2014, allowed the
Last Frontier Health Care 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 Modoc Medical Center.
SB 785 (Wolk), Chapter 931, Statutes of 2014, repealed
existing law authorizing the Department of General Services
(DGS), the Department of Corrections and Rehabilitation
(CDCR), and local agencies to use the design-build procurement
process, and enacted uniform provisions authorizing DGS, CDCR,
and most local agencies to utilize the design-build
procurement process for specified public works projects. SB
785 did not allow the use of design-build for health care
districts generally, but did include a provision allowing the
Marin Healthcare District to use the design-build method
established for local agencies under SB 785 and required the
Sonoma Valley Health Care District to use the design-build
procedure outlined in SB 785, instead of its prior
design-build authority.
SB 1005 (Cox) of 2010 would have authorized the Tahoe Forest
Health Care District and a health care district authorized by
the Office of Statewide Health Planning and Development to use
a design-build procedure when assigning contracts for the
construction of a hospital or health facility building. SB
1005 was held in the Assembly Appropriations Committee.
SB 1699 (Wiggins), Chapter 415, Statutes of 2008, authorized
the use of design-build for the Sonoma Valley Health Care
District.
6)Arguments in Support. The Association of California
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Healthcare Districts, co-sponsor of this measure, writes, "The
Legislature has previously authorized four California
Healthcare Districts to utilize design-build for purposes of
building new facilities (Sonoma Valley Healthcare District,
Marin Healthcare District, Last Frontier Healthcare District,
and Mayers Memorial Hospital District) and other Healthcare
Districts are seeking similar authorization, especially as
seismic retrofit deadlines loom near. SB 957 will allow those
Districts that are seeking to expand and modernize their
facilities to provide needed services using the efficient and
cost-effective means of design-build. Districts can keep
costs down, expedite the design and construction process, and
save taxpayer dollars while meeting community health care
needs."
7)Arguments in Opposition. None on file.
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REGISTERED SUPPORT / OPPOSITION:
Support
Association of California Healthcare Districts [CO-SPONSOR]
State Building and Construction Trades Council [CO-SPONSOR]
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
Bear Valley Community Healthcare District
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California Chapters of the National Electrical Contractors
Association
California Hospital Association
California Labor Federation
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Special Districts Association
California State Association of Electrical Workers
California State Pipe Trades Council
District Hospital Leadership Forum
Economic Development Corporation of Mariposa County
Finishing Contractors Association of Southern California
International Union of Elevator Constructors
John C. Fremont Healthcare District
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Northern California Allied Trades
Petaluma Valley Hospital
Rural County Representatives of California
Santa Rosa Memorial Hospital
Sharp HealthCare
Southern Mono Healthcare District dba Mammoth Hospital
Tri-City Medical Center
United Contractors
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
Opposition
None on file
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Analysis Prepared by:Angela Mapp / L. GOV. / (916)
319-3958