BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1853|
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THIRD READING
Bill No: AB 1853
Author: De La Torre (D)
Amended: 8/31/10 in Senate
Vote: 21
ALL PRIOR VOTES NOT RELEVANT
SUBJECT : Corcoran District Hospital: design-build
SOURCE : Author
DIGEST : This is a new bill. This bill contains the
contents of SB 837 (Florez) which is in Assembly Rules
Committee. This bill authorizes the Corcoran District
Hospital, upon approval of the board of directors of the
hospital, to use a design-build procedure when assigning
contracts to the construction of a building or improvements
directly related to the construction of an outpatient
facility building at the hospital.
ANALYSIS :
Existing law:
1. Requires local officials, under the Local Agency Public
Construction Act, to invite bids for construction
projects and then award contracts to the lowest
responsible bidder under the traditional design-build
project delivery system.
CONTINUED
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2. Defines "design-build" as a procurement process in which
both the design and construction of a project are
procured from a single entity.
3. Defines "best-value" as a value determined by objective
criteria related to price, features, functions, and life
cycle costs.
4. Defines "project" as the construction of a building and
improvements directly related to the construction of a
building, and specifies that construction of other
infrastructure, including, but not limited to, streets
and highways, public rail transit, or water resources
facilities and infrastructure are not to be considered
"projects."
5. Authorizes counties to use the design-build method for
projects costing more than $2.5 million.
6. Authorizes cities to use the design-build method for
projects costing more than $1 million.
7. Authorizes the Sonoma Valley Health Care District to use
design-build contracting for the construction of
buildings and improvements in excess of $2.5 million
directly related to a hospital or health facility
building, which is required to be reviewed and inspected
according to the standards of the Alfred E. Alquist
Hospital Facilities Seismic Safety Act of 1983.
8. Authorizes the Orange County Sanitation District to use
design-build contracting for projects, including, but
not limited to, public wastewater facilities, in excess
of $6 million.
9. Authorizes the Santa Clara Valley Water District to use
design-build contracting for building contracts.
10.Authorizes redevelopment agencies to use design-build
contracting for 10 public improvement projects in excess
of $1 million subject to approval by the State Public
Works Board.
11.Requires local officials to prepare documents describing
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the project and its specifications; to prepare a
detailed request for proposals that invites competitive
bids; to establish a detailed procedure to pre-qualify
design-build entities; and to establish the procedures
to select the design-build entity.
12.Requires the legislative body to establish and enforce
labor compliance programs.
13.Requires local officials to collect specified types of
information when pre-qualifying design-build entities.
14.Requires a prospective design-build entity to list its
proposed mechanical subcontractors and licenses; report
past worker safety violations, contracting problems,
contract defaults, license violations, payroll
violations, and bankruptcies; and verify this
information under oath.
15.Requires local officials to 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 local officials set
the criteria.
16.Requires that price, expertise, life cycle costs,
skilled labor force availability, and safety records
account for at least 10 percent each of the total weight
of consideration of all best value factors.
17.Requires the local agency to rank the top three
responsive bidders; award the contract to the
responsible bidder whose proposal county or city
officials rank as "the most advantageous;" and identify
the second- and third-ranked bidders after it publicly
announces the award.
18.Requires that skilled labor force availability be
determined by the existence of an agreement with a
registered and approved apprenticeship program.
19.Requires the winning design-build entity to be bonded
and carry errors-and-omissions insurance to cover its
design and architectural services.
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20.Requires the entity to adhere to the local agency's
performance criteria and design standards and obtain the
local agency's written consent for any deviations from
these standards, and authorizes the local agency to hire
a design professional to ensure compliance.
21.Authorizes the winning design-build entity to use
subcontractors not listed in its original bid, but
requires the entity to award these subcontracts by
following a process set by the local agency, including
publishing notices and setting deadlines.
22.Permits the local agency to retain no more than five
percent of the contract if the local agency's bid
request required the design-build entity to carry a
performance and payment bond.
23.Requires any local agency that uses design-build
contracting to submit a report to the Legislative
Analyst's Office (LAO) containing specified information
that includes, but is not limited to, a description of
the Labor Force Compliance Program and an assessment of
the project impact of "skilled labor force
availability."
24.Repeals the authorization for counties, the Orange
County Sanitation District, the Santa Clara Valley Water
District, and the Sonoma Valley Health Care District to
use design-build contracts on January 1, 2011.
25.Repeals the authorization for cities and redevelopment
agencies to use design-build contracts on January 1,
2016.
This bill authorizes the Corcoran District Hospital, upon
approval of the board of directors of the hospital, to use
a design-build procedure when assigning contracts to the
construction of a building or improvements directly related
to the construction of an outpatient facility building at
the hospital.
Background
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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.
Private companies often use the design-build method for
construction projects. 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 result from the traditional
design-bid-build method of contracting, proponents argue
that officials can deliver public works faster and cheaper.
The design-build language in current law is based on a
compromise struck in 2000 among local officials, labor
groups, and contractors. Local officials wanted the
flexibility and potential cost savings offered by
design-build contracts. Labor unions wanted to ensure that
counties pre-qualify employers to protect workers'
interests. Contractors wanted to be sure they had fair
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access to county contracts. Further changes to the
language, consistent with the principles of the 2000
compromise were made by SB 287 (Cox), Chapter 376, Statutes
of 2005; SB 416 (Ashburn), Chapter 585, Statutes 2007,
which extended this authority to use design-build
contracting for the construction of buildings and directly
related improvements to all 58 counties in the state; AB
642 (Wolk), Chapter 314, Statues 2008, which extended this
authority to use design-build contracting for the
construction of buildings and directly related improvements
to all cities in the state; SB 1699 (Wiggins), Chapter 415,
Statutes of 2008, which extended this authority to use
design-build contracting for 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; and SB 4 X2 (Cogdill), Chapter 2,
Statutes of 2009-10, Second Extraordinary Session, which
extended this authority to use design-build contracting for
10 redevelopment projects in excess of $1 million subject
to approval by the State Public Works Board.
The LAO issued a report to the Legislature on February 3,
2005, titled "Design-Build: An Alternative Construction
System." After analyzing the claims of proponents and
opponents and reviewing the experience of counties that
were authorized to use design-build at the time, LAO
recommended "the Legislature grant design-build authority
only to buildings and directly related infrastructure.
There are more complex issues associated with other public
works projects such as transportation, public transit, and
water resources facilities. Evaluation of design-build as
a construction delivery option for these other
infrastructure facilities is beyond the scope of this
report."
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 state's seismic safety law. These districts are faced
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with escalating construction costs and are looking for the
most cost-efficient 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 is design-build contracting.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
SUPPORT : (Unable to verify at time of writing)
California Association of Sheet Metal and Air Conditioning
Contractors
Corcoran District Hospital
City of Corcoran
Corcoran Latino Roundtable
Kings County Board of Supervisors, District II
TSM:mw 8/31/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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