BILL ANALYSIS
AB 2355
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Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2355 (Smyth) - As Amended: April 5, 2010
SUBJECT : Public works: design-build.
SUMMARY : Repeals the design-build project limit for the
Department of General Services (DGS) and requires DGS to submit
a report of design-build projects. Specifically, this bill :
1)Repeals legislation limiting DGS to seven design-build
contracts.
2)Requires DGS to submit to the Joint Legislative Budget
Committee by January 1, 2015, a report describing each
design-build public works project completed after January 1,
2010, and before December 1, 2014. Requires the report to
include, but not be limited to, the following information:
a) The type of project;
b) The gross square footage of the project;
c) The design-build entity that was awarded the project;
d) The estimated and actual project costs;
e) An assessment of the prequalification process and
criteria;
f) An assessment of the effect of retaining 5% retention on
the project; and,
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g) A description of the method used to award the contract,
and if the best value method was used, the report shall
describe the factors and weights used to evaluate the bid
and provide an assessment of the effectiveness of the
methodology.
3)Sunsets the reporting requirements above on January 1, 2019.
4)Requires DGS to summarize the reporting requirements in a
document not to exceed one page and to provide the report as a
print and electronic copy.
5)States that this bill is not intended to void or terminate
design-build contracts already executed by DGS prior to this
bill's enactment, including, but not limited to, the new
veterans' homes in Fresno and Shasta Counties.
EXISTING LAW :
1)Allows DGS to enter into a total of seven design-build
contracts only, and specifically includes the Fresno and
Shasta veterans' homes within this authority.
2)Requires the Legislature to approve the use of the
design-build construction process for a specific project
before DGS may contract and process state office facilities
and buildings using design-build construction.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office,
"Design-build is a construction delivery method that allows the
owner to contract with a single entity to provide both design
and construction services. The owner benefits in the following
ways, by: managing a single entity; shifting a majority of the
project liability to the design-build entity; and, facilitating
collaboration with the design and construction community.
"AB 2355 would eliminate DGS' current design-build project
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limit. Since DGS requires legislative authorization to build
any major construction project and to utilize design-build on
these projects, it is prudent to remove the project cap, since
the Legislature ultimately still must decide when a project may
or may not be built with design-build as the delivery method."
Background . "Design-build" is a system of contracting under
which one entity performs both the architectural and engineering
and construction work under a single contract. It is intended
to allow projects to be designed and constructed in a
cost-efficient manner.
A "design build entity" is one that is able to provide
appropriately licensed, contracting, architectural, and
engineering services as needed pursuant to a design-build
contract.
A public entity that uses design-build on a project is generally
required to award a contract to the responsible bidder who
provides the best value based solely on criteria factors and
source selection procedures that a public entity identifies in
its request for proposal. The following minimum factors
generally must each represent at least 10% of the total weight
of consideration given to all criteria factors: price,
technical design and construction expertise, life cycle costs
over 15 years or more, skilled labor force availability, and
acceptable safety record.
Support . According to the sponsor, DGS, "Once DGS has reached
its project limit, it will lose its design-build authority for
additional projects, including future [consolidation of]
headquarters and other large capital outlay projects without
further legislative authorization. Even with explicit
legislative authority for limited projects when DGS may utilize
design-build, DGS requires additional legislative authorization,
to utilize the design-build method on any specific major capital
outlay project."
According to the Associated Builders and Contractors (ABC) of
California, "AB 2355 would remove the current statutory limit of
seven major design-build projects currently allotted to DGS.
ABC of California believes this is a reasonable update to the
current design-build statute since DGS will still require
legislative authorization to build any major public works
project, regardless of whether or not design-build is utilized."
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Oppose . According to the Professional Engineers in California
Government, "There is ample evidence that design-build has been
a failure for California taxpayers. Design-build contracting
eliminates competitive bidding, allows the private contractor or
consortium to inspect and sign off on their own work, and in
every instance in California has greatly increased project
delivery costs. To date, for example, four design-build highway
projects in California have wasted a combined $2.2 billion in
transportation funds without expediting delivery.
Historically, public inspectors have ensured that construction
and seismic standards are met, that projects meet safety
requirements and that the materials used will stand the test of
time. In short, the inspector's role is to ensure that
taxpayers get what they pay for and public safety and the public
interest are protected. This crucial function should not be
performed by a private inspector whose primary obligation is to
the success and profitability of his company or business
partners - not public safety and project quality."
Previous Legislation . SBX2 4 (Cogdill), Chapter 2, Statutes of
2009, authorizes DGS, the Department of Corrections and
Rehabilitation and the Judicial Council to use design-build
contracting for state office buildings, prison facilities, and
court facilities, respectively, for up to five total projects
approved by the Department of Finance.
SB 630 (Aanestad), Chapter 154, Statutes of 2007, allows DGS to
enter into a total of seven design-build contracts only, and
specifically includes the Fresno and Shasta veterans' homes
within this authority.
SB 776 (Johannessen), Chapter 252, Statutes of 1998, permits
DGS, when authorized by the Legislature, to use the design-build
construction procurement process for state office facilities and
other buildings, until the completion of at five design-build
projects, each with a value of $10 million or more, or until
January 1, 2006, whichever occurs later.
REGISTERED SUPPORT / OPPOSITION :
Support
Department of General Services (DGS) (sponsor)
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Associated Builders and Contractors of California
Opposition
American Federation of State, County and Municipal Employees
California State Employees Association (CSEA)
Professional Engineers in California Government
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301