BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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