BILL ANALYSIS
AB 405
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Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 405 (Caballero) - As Amended: April 13, 2009
Policy Committee: Local
GovernmentVote:4-2
Urgency: No State Mandated Local Program:
Yes Reimbursable:No
SUMMARY
This bill authorizes health care districts, upon approval of
their board of directors, to use a design-build procedure when
assigning contracts for the construction of a hospital or health
facility building.
FISCAL EFFECT
1)Minor, probably absorbable, costs to the Department of
Industrial Relations, which is responsible for enforcing
prevailing wage and related labor compliance programs
associated with design-build contracts. Incremental costs are
likely to be small to the extent that construction projects
supported by bond funds are already subject to labor
compliance programs.
2)Design-build contracts require that certain information be
provided by the contractor under oath. Thus, expansion of such
contracting may result in additional local enforcement costs.
The bill states that any such mandated costs are not
state-reimbursable, since the only mandate is for a crime or
infraction.
3)Potential fiscal benefits to health care districts, to the
extent that use of design - build contracting results in
faster project and/or greater certainty about costs.
COMMENTS
1)Rationale . This bill is sponsored by the Association of
California Healthcare Districts, which asserts that it is
AB 405
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needed to reduce costs and timeframes associated with
construction of hospitals required to meet seismic safety
standards by 2013. They further claim that the standard
design-bid-build process leads to unnecessary delays and cost
over-runs, that districts are already struggling with budget
shortfalls, and that other hospitals in California, public and
private, are able to utilize the design-build process.
2)Opponents, including the Professional Engineers in California
Government assert that the Legislature just approved a pilot
project for the design-build construction of a hospital by the
Sonoma Valley Healthcare District and, given that the project
has yet to begin, it is not appropriate to extend design-build
authority to all healthcare districts.
2)Background . The local Agency Public Construction Act requires
local agencies to comply with certain procedures in soliciting
and evaluating bids and awarding contracts for the
construction of public works. The traditional approach to
public contracting is referred to as the design-bid-build
method, which requires local officials to invite bids for
construction projects, based on a completed set of engineering
plans, then to award the construction bid to the lowest
responsible bidder. An alternative approach is the
design-build method, where both the design and construction
are procured from the same entity.
The LAO issued a report in 2005 on counties' experiences with
the design-build process. Among other things, the report found
that design build can provide local agencies with a useful
alternative to the more traditional design-bid-build process.
It also found that the Legislature should adopt an inclusive,
uniform statute related to design build authority, and that
because of complexities with transit and wastewater projects,
design-build be initially limited to building related
projects.
3)Recent Expansion of Design-Build Authorization . The state has
enacted numerous bills over the past decade expanding
authority for local governments to use this alternative
process. For example, SB 416 (Ashburn), Chapter 585, Statutes
2007, extended design-build authority to the construction of
buildings and directly related improvements to all 58 counties
in the state. AB 642 (Wolk), Chapter 314, Statues 2008,
extended design-build authority to the construction of
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buildings and directly related improvements to all cities in
the state. SB 1699 (Wiggins), Chapter 415, Statutes 2008,
extended design-build authority to the construction of
buildings and improvements in excess of $2.5 million directly
related to a Sonoma Valley Health Care District hospital or
health facility building.
The 2009-10 budget package expanded design-build authorization
at the state for (1) five state facilities within the
jurisdiction of Department of Corrections and Rehabilitation,
Department of General Services and Judicial Council; (2) 10
redevelopment agency projects in excess of $1 million; (3)
five local transportation projects (regional transportation
agencies or transportation projects); and, (4) 10 state
transportation projects.
As a result of these and related changes, design-build
contracting for building and related construction is currently
authorized for all cities and counties in the state, and more
targeted authorizations in numerous other areas of state and
local government.
4)Related legislation . AB 958 (Eng), passed out of this
committee on May 13, permits the Metropolitan Water District
of Southern California to utilize design-build for
installation of new solar energy systems in excess of $1
million. The bill also contains significant labor protections,
including the requirement that subsequent maintenance of the
solar system be performed by employees of the water district.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081