BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1511|
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THIRD READING
Bill No: AB 1511
Author: Evans (D)
Amended: 8/15/05 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 9-0, 07/13/05
AYES: Kehoe, Cox, Ackerman, Kuehl, Machado, McClintock,
Perata, Soto, Torlakson
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 77-0, 5/16/05 - See last page for vote
SUBJECT : Design-build contracting
SOURCE : County of Napa
County of Solano
County of Sonoma
DIGEST : This bill extends the automatic termination date
in the statute that allows counties to use the design-build
method of contracting, from January 1, 2006 to January 1,
2011. This bill allows Del Norte, Humboldt, Los Angeles,
Mendocino, Napa, and Yolo counties to the list of counties
that can use the design-build contracting method. This
bill allows counties to use design-build contracting on
projects that cost more than $2.5 million. This bill
declares that it is not the Legislature's intent to
authorize the design-build process for transportation
facilities, including roads and bridges.
CONTINUED
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ANALYSIS : The Local Agency Public Construction Act
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. Counties must
obtain bids on projects over $4,000.
Since 1995, the Legislature has allowed seven counties to
experiment with the design-build method. Alameda, Contra
Costa, Sacramento, Santa Clara, Solano, Sonoma, and Tulare
counties can procure both design and construction services
from a single company before the development of complete
plans and specifications.
A recent review of design-build practices by the
Legislative Analyst Office (LAO) found that Alameda,
Sacramento, and Solano counties used the design-build
statute. Santa Clara County used design-build earlier.
Contra Costa, Sonoma, and Tulare counties did not use the
authorization. After reviewing the counties' experiences,
the LAO recommended that (1) the Legislature should adopt
an inclusive, uniform statute, (2) design-build should be
optional and not replace design-bid-build, (3) contracts
for most project costs should be based on competitive
bidding, (4) state law should ensure access for the
greatest number of contractors, (5) there should be no cost
limitations, and (6) design-build should apply only to
buildings.
The statutory authority for these counties to use the
design-build method sunsets on January 1, 2006. With the
sunset date approaching, these counties want the
Legislature to extend and expand the design-build statute.
In addition, about 20 more counties want the statutory
authority to use the design-build method.
Price thresholds . For projects worth less than $10
million, counties cannot use the design-build method. For
projects worth between $10 million and $20 million, the
seven counties can use the design-build method, but they
must award contracts to the lowest responsible bidders.
For projects worth over $20 million, the seven counties can
use the design-build method, they can award contracts
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either to the lowest responsible bidders, or based on best
value.
Method . County officials must follow a four-step
design-build method: (1) Prepare documents describing the
project and its specifications, (2) prepare a detailed
request for proposals, inviting competitive bids, (3)
establish a detailed procedure to pre-qualify design-build
entities, and (4) establish the procedures to select the
design-build entity.
County supervisors must establish and enforce labor
compliance programs.
When pre-qualifying design-build entities, counties must
collect at least 11 types of information. The entity must
list its proposed mechanical subcontractors and licenses.
The entity must also report past worker safety violations,
contracting problems, contract defaults, license
violations, payroll violations, and bankruptcies. The
entity must verify this information under oath. The bill
prohibits public inspection of information that is not
public under the Public Records Act.
Awarding contracts . County officials must select the
design-build entity by using either a competitive bidding
process in which the award goes to the lowest responsible
bidder, or a "best value competition" in which county
officials set the criteria.
At least 50 percent of the weight of these best value
factors must include price, expertise, life cycle costs,
labor availability, and safety records. The county must
rank the top three responsive bidders and the award goes to
the responsible bidder whose proposal county officials rank
as "the most advantageous." After the county publicly
announces the award, officials must also identify the
second and third ranked bidders.
Performance . The winning design-build entity must be
bonded and carry errors-and-omissions insurance to cover
its design and architectural services. The entity must
adhere to the county's performance criteria and design
standards. Deviations require the county's written
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consent. The county may hire a design professional to
ensure compliance.
The winning design-build entity can use subcontractors who
were not listed in its original bid. The entity must award
subcontracts by following a process set by the county,
including publishing notices and setting deadlines.
If the county's bid request required the design-build
entity to carry a performance and payment bond, the county
can retain only five percent of the contract.
Evaluation . By December 1, 2004, the counties had to
report to the LAO regarding their design-build experiences.
The LAO had to report to the Legislature by January 1,
2005.
This bill extends the automatic termination date in the
statute that allows counties to use the design-build method
of contracting, from January 1, 2006 to January 1, 2011.
This bill allows Del Norte, Humboldt, Los Angeles,
Mendocino, Napa, and Yolo counties to the list of counties
that can use the design-build contracting method.
This bill allows counties to use design-build contracting
on projects that cost more than $2.5 million.
This bill declares that it is not the Legislature's intent
to authorize the design-build process for transportation
facilities, including roads and bridges.
This bill defines a "project" as the construction of a
building and improvements directly related and necessary to
the construction of the building, but doesn't include the
construction of other facilities and infrastructure,
including streets, highways, public rail transit, and water
resources facilities and infrastructure.
This bill limits the definition of "best value" to criteria
related to price, features, functions, and life cycle
costs. This bill requires county officials to give 10
percent equal weight to five factors (price, technical
design and construction expertise, life cycle costs over 15
years or more, skilled labor force availability, and
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acceptable safety record) when they award contracts in a
best value competition.
The LAO must report to the Legislature by January 1, 2010,
on the use of the design-build method by counties between
November 1, 2004 and November 1, 2009.
Comments
Taxpayers want worthy civic structures, but they do not
like spending much money on dramatic architecture, fancy
materials, and bureaucratic delays. The traditional
design-bid-build approach to public works requires two
rounds of contracts--the first to pick the designer, the
second to select the builder. Learning from the private
sector, some local officials have used the design-build
contracting method which gives them more control over the
bidding process and the final product. Another 23 counties
want the same authority to use the design-build contracting
method that seven other counties already have.
The current law on design-build contracting for projects
over $20 million, allows counties to award contracts either
to the lowest responsible bidder or based on an open-ended
list of best value criteria. The vagueness in the current
law invites favoritism. County officials could insist that
the winning company be headquartered only in their county,
cleverly shouldering aside outsiders who do not have
political connections to local elected officials. This
bill avoids that temptation by limiting the best value
criteria to just the five factors that it specifically
names.
In April, the Senate Local Government Committee passed SB
287 (Cox) which extends and expands the authorization for
counties to use design-build contracting. Since then,
Senator Cox has amended his bill to add more counties,
lower the cost thresholds, redefine "best value" and
"project," and make related changes. On June 29, the
Assembly Local Government Committee passed the Cox bill,
with additional amendments. The Cox bill and the Evans
bill will be identical. Both bills will contain
double-jointing language and contingent enactment causes.
In other words, both the Evans bill and the Cox bill must
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be passed and signed by Governor Schwarzenegger to allow
either bill to be operative. Taken together, the Evans
bill and the Cox bill allow 30 counties to use design-build
contracting.
The LAO's recent report recommended limiting the use of the
design-build method just to buildings, cautioning
legislators about the complex issues associated with other
types of public works projects.
This bill responds by saying that it is not the
Legislature's intent to authorize design-build procedures
for transportation projects. The bill's definition of
"project" focuses on buildings and related improvements,
excluding "other facilities and infrastructure." Some
counties own and operate airports. This bill probably
allows a county to build an airport terminal and parking
garages because they are buildings and directly related
improvements. But a county cannot use the bill to build
the airport's runways and other aviation improvements.
Related legislation . AB 1329 (Wolk) allows cities in
Solano and Yolo counties to use design-build contracting.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/16/05)
County of Napa (co-source)
County of Solano (co-source)
County of Sonoma (co-source)
Associated General Contractors of California
Associated General Contractors-San Diego Chapter
California Association of Councils of Government
Counties of Alameda, Butte, Contra Costa, Del Norte,
Fresno, Humboldt, Madera, Mariposa, Mendocino, Merced,
Placer, San Diego, San Joaquin, San Luis Obispo, Santa
Clara, Shasta, Siskiyou, Stanislaus, Yolo, Yuba
Design-Build Institute of America.
OPPOSITION : (Verified 8/16/05)
CH2MHill
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La Raza Roundtable
ASSEMBLY FLOOR :
AYES: Aghazarian, Arambula, Baca, Bass, Benoit, Berg,
Bermudez, Blakeslee, Bogh, Calderon, Canciamilla, Chan,
Chavez, Chu, Cogdill, Cohn, Coto, Daucher, De La Torre,
DeVore, Dymally, Emmerson, Evans, Frommer, Garcia,
Goldberg, Hancock, Harman, Haynes, Jerome Horton, Shirley
Horton, Houston, Huff, Jones, Karnette, Keene, Klehs,
Koretz, La Malfa, La Suer, Laird, Leno, Leslie, Levine,
Lieber, Matthews, Maze, McCarthy, Montanez, Mountjoy,
Mullin, Nakanishi, Nation, Nava, Negrete McLeod, Niello,
Parra, Pavley, Plescia, Richman, Ridley-Thomas, Sharon
Runner, Ruskin, Saldana, Salinas, Spitzer, Strickland,
Torrico, Tran, Umberg, Vargas, Villines, Walters, Wolk,
Wyland, Yee, Nunez
NO VOTE RECORDED: Gordon, Liu, Oropeza
AGB:mel 8/16/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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