BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
879 (Cox)
Hearing Date: 05/10/2010 Amended: 04/26/2010
Consultant: Mark McKenzie Policy Vote: L Gov 3-2
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BILL SUMMARY: SB 879 would make the following changes to the
authority for cities and counties to use the design-build
procurement method for contracting:
Extend the authority for counties to use design-build for five
years, require an additional report of information to the
Legislative Analyst's Office (LAO), and require the LAO to
report to the Legislature. The reporting requirements and
sunset date for the county authority would align with the
existing sunset and reporting requirements for cities'
authority to use of design-build.
Lower the cost threshold for county design-build projects from
$2.5 million to $1 million.
Require prospective design-build entities to disclose detailed
information if a court found that the firm submitted a claim
that violated federal or state False Claims Acts.
Require a successful design-build entity to submit lists of
subcontractors, bidders, and bid awards within 14 days of the
awarding of the contract. These documents would be public
records and available for public inspection.
Make several other changes to make the county and city
authority and requirements consistent.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
DIR: LCP oversight minor costs, covered by fees Special*
LAO report minor costs to add county
design-buildGeneral
information to existing city design-build
report
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* State Public Works Enforcement Fund (a continuously
appropriated fund)
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STAFF COMMENTS:
Existing law requires public entities 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 award the construction bid to the
lowest bidder. Current law authorizes all cities and counties
to utilize the design-build method, by which a public entity can
procure both design and construction services from a single
company before the development of complete plans and
specifications. County design-build authority expires on
January 1, 2011, while cities' authority sunsets on January 1,
2016. The LAO recently reported on counties' experience with
the design-build method. A report on cities' use of
design-build is due to the Legislature on January 1, 2015.
Page 2
SB 879 (Cox)
Existing law requires cities and counties that elect to use
design-build to pay a fee into the State Public Works
Enforcement Fund to pay for the Department of Industrial
Relations' (DIR) enforcement of prevailing wage requirements on
public works projects through labor compliance programs (LCPs).
By extending the sunset on county design-build authority for
five years, this bill would extend the terms of a continuously
appropriated special fund, thereby making an appropriation.
Costs for DIR to administer LCPs for counties that use
design-build would be minor and fully covered by the fees.
SB 879 would require counties that use design-build pursuant to
the extended authority provided in this bill to report specified
information on their use of design-build to the LAO by December
1, 2014. The LAO would compile that information and report to
the Legislature by January 1, 2015. The authority for counties
to use design-build would sunset on January 1, 2016. Staff
notes that current law imposes the same reporting requirements
and timelines on cities and the LAO with respect to cities' use
of design-build. Costs to compile additional county information
and include it in the same LAO report would be minor.
The LAO recently issued a report on county governments'
experience with constructing projects with the design-build
delivery method. The report included information provided by
counties on 15 design-build projects from nine counties; only
five of the projects were completed at the time the reports were
submitted. The LAO indicated that it was difficult to draw
conclusions from the small sampling of reports received about
the effectiveness of design-build compared to other delivery
methods, but there was no evidence to discourage the Legislature
from continuing authority for local agencies to use
design-build. The LAO recommends that extended authorization
for use of the design-build statutes should include a uniform
and consistent statute providing the same authority and
limitations to all local agencies, and recommends that project
cost should constitute a larger factor in awarding the contract.
While SB 879 makes the county and city design-build authority
consistent, the bill does not include any changes to the
design-build statutes that make price a more important
consideration in the award of the contract.