BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 879|
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UNFINISHED BUSINESS
Bill No: SB 879
Author: Cox (R)
Amended: 8/16/10
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 3-2, 4/19/10
AYES: Cox, Aanestad, Kehoe
NOES: DeSaulnier, Price
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/10/10
AYES: Kehoe, Cox, Alquist, Walters, Wolk, Wyland
NOES: Leno, Price, Yee
NO VOTE RECORDED: Corbett, Denham
SENATE FLOOR : 24-8, 6/1/10
AYES: Aanestad, Alquist, Ashburn, Cogdill, Correa, Cox,
Denham, Ducheny, Dutton, Florez, Harman, Hollingsworth,
Huff, Kehoe, Liu, Lowenthal, Price, Runner, Simitian,
Steinberg, Strickland, Wolk, Wright, Wyland
NOES: Calderon, Cedillo, Corbett, DeSaulnier, Hancock,
Leno, Pavley, Yee
NO VOTE RECORDED: Negrete McLeod, Oropeza, Padilla,
Romero, Walters, Wiggins, Vacancy, Vacancy
ASSEMBLY FLOOR : 62-6, 8/18/10 - See last page for vote
SUBJECT : Construction projects: alternative bidding
procedures:
design-build
SOURCE : Author
CONTINUED
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DIGEST : This bill extends the sunset for the use of
design-build by counties from January 1, 2011, to July 1,
2014, and aligns the design-build statutes for cities and
counties.
Assembly Amendments delete the language to lower the
threshold for counties from $2.5 million to $1 million,
change the reporting deadline from December 1, 2014 to
September 1, 2013 for each county that uses design-build
method to submit to the Legislative Analyst's Office (LAO),
reduce the extended sunset date from January 1, 2016 to
July 1, 2014, and add a requirement that the LAO submit a
report to the Legislature by January 1, 2014.
ANALYSIS : The Local Agency Public Construction (LAPC)
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. By
contrast, the design-build method allows local officials to
procure both design and construction services from a single
company before the development of complete plans and
specifications.
Counties can use the design-build method for projects worth
more than $2.5 million. The counties' authority sunsets on
January 1, 2011 (SB 416 [Ashburn], Chapter 585, Statutes of
2007). Cities can use the design-build method on projects
worth more than $1 million. The cities' design-build
statute sunsets on January 1, 2016 (AB 642 [Wolk], Chapter
314, Statutes of 2008).
This bill extends the sunset for the use of design-build by
counties from January 1, 2011, to July 1, 2014, and aligns
the design-build statutes for cities and counties.
Specifically, this bill:
1. Requires the design-build standard questionnaire issued
by cities or counties to include any instance in which
the entity, or any of its members, owners, officers, or
managing employees was, during the five years preceding
submission of a bid pursuant to this section, determined
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by a court of competent jurisdiction to have submitted,
or legally admitted for purposes of a criminal plea to
have submitted any claim in violation of the federal
False Claims Act or the state False Claims Act.
2. Requires for city and county design-build projects,
lists of subcontractors, bidders, and bid awards
relating to the project to be submitted by the
design-build entity to the awarding body within 14 days
of the award. These documents are deemed to be public
records and are required to be available for public
inspection pursuant to this chapter and the Public
Records Act.
3. Removes the requirement that certain specified minimum
factors be weighted equally when cities are evaluating
competitive proposals.
4. Requires each county that uses the design-build method
on a public works project to submit to the LAO before
September 1, 2013, a report containing a description of
each public works project procured through the
design-build process and completed after November 1,
2009, and before August 1, 2013.
5. Requires a county to also include in its report to the
LAO information on whether the project was met or
altered and the number and amount of the project change
orders.
6. Requires the LAO, by January 1, 2014, to do another
report to the Legislature on a fact based analysis on
the use of design-build at the county level.
7. Requires the LAO to complete a fact-based analysis on
the use of design-build method by counties, utilizing
the information provided and any independent information
provided by the public or interested parties.
8. Requires the LAO to select a representative sample of
projects and review available public records and
reports, media reports, and related information in its
analysis.
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9. Requires the LAO to compile the information to be
analyzed in a report which shall be submitted to the
Legislature.
10.Requires the report to include conclusions describing
the actual cost of projects procured through the
design-build method, whether the project schedule was
met or altered, and whether projects needed or used
project change orders.
11.Requires cities that elect to use design-build to report
to the LAO the estimated and actual length of time to
complete the project.
Comments
The LAPC 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
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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
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; and, 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. 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."
In January of this year the LAO issued a second report,
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this time updating the Legislature on the use of
design-build by counties in California, based on data
received from counties who utilized this methodology. In
the report, LAO states that "although it was difficult to
draw conclusions from the reports received about the
effectiveness of design-build compared to other project
delivery methods, we do not think that the reports provide
any evidence that would discourage the Legislature from
granting design-build authority to local agencies on an
ongoing basis. In doing so, however, we recommend the
Legislature consider some changes such as creating uniform
design-build statute, eliminating cost limitations, and
requiring project cost to be a larger factor in awarding
the design-build contract."
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee:
1. Unknown, probably minor costs to LAO to conduct review
and analyze public documents associated with sample of
design-build projects used by counties.
2. Minor and 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.
3. Potential fiscal benefits to counties, to the extent
that use of design-build contracting results in faster
project and/or greater certainty about costs.
SUPPORT : (Verified 8/18/10)
American Institute of Architects, California Council
California Chamber of Commerce
California Special Districts Association
California State Association of Counties
California State Sheriff's Association
CH2M HILL
Counties of Imperial, Orange, Sacramento, and San Diego
Design-Build Institute of America, Western Pacific Region
Greater Riverside Chamber of Commerce
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Regional Council of Rural Counties
Santa Clara Valley Water District
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Bill
Berryhill, Tom Berryhill, Block, Blumenfield, Buchanan,
Caballero, Carter, Chesbro, Conway, Cook, Coto, Davis, De
La Torre, De Leon, Eng, Feuer, Fletcher, Fuentes,
Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall, Harkey,
Hayashi, Hernandez, Hill, Huber, Huffman, Jones, Knight,
Lieu, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nestande, Niello, Nielsen, Norby, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Silva, Smyth,
Solorio, Audra Strickland, Torlakson, Torres, Torrico,
Tran, Villines, John A. Perez
NOES: Anderson, Bradford, DeVore, Gaines, Skinner, Swanson
NO VOTE RECORDED: Blakeslee, Brownley, Charles Calderon,
Evans, Fong, Fuller, Furutani, Jeffries, Logue, Nava,
Yamada, Vacancy
AGB:mw 8/18/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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