BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1005|
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THIRD READING
Bill No: SB 1005
Author: Cox (R)
Amended: 5/10/10
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 3-2, 4/19/10
AYES: Cox, Aanestad, Kehoe
NOES: DeSaulnier, Price
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Public contracts: health care districts:
design-build
SOURCE : Author
DIGEST : This bill authorizes, until January 1, 2016, a
health care district to use the design-build contracting
method for the construction of a hospital or health
facility building. This bill requires a hospital building
project utilizing the design-build process to be reviewed
and inspected in accordance with the standards and
requirements of the Alfred E. Alquist Hospital Facilities
Seismic Safety Act of 1983.
ANALYSIS : 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. By contrast, the
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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. State law allows all counties to use the
design-build method to construct projects worth more than
$2.5 million (SB 416 [Ashburn], Chapter 585, Statutes of
2007).
State law allows three special districts to construct
projects using counties' design-build procedures. The
Santa Clara Water District can use the counties'
design-build statute specifically for building and
upgrading its water treatment plant facilities (AB 674
[Dutra], Chapter 847, Statutes of 2001). Similarly, the
Orange County Sanitation District can use counties'
design-build procedures for the construction of projects in
excess of $6 million, including wastewater facilities (SB
645 [Correa], Chapter 473, Statutes of 2007). The Sonoma
Valley Health Care District can use counties' design-build
procedures to construct a hospital or health facility
building (SB 1699 [Wiggins], Chapter 415, Statutes of
2008).
The design-build statute for counties sunsets on January 1,
2011.
This bill authorizes a health care district to use the
design-build contracting method for the construction of a
hospital or health facility building.
This bill requires a hospital building project utilizing
the design-build process to be reviewed and inspected in
accordance with the standards and requirements of the
Alfred E. Alquist Hospital Facilities Seismic Safety Act of
1983.
This bill sunsets on January 1, 2016.
Comments
When it comes to public works projects, taxpayers want
local officials to hold down costs, but they also want to
be sure that their tax dollars are spent wisely. However,
the traditional process can be more time consuming and more
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expensive than the design-build contracting method. Faced
with looming seismic retrofit deadlines and soaring
construction costs, health care districts want to use
design-build contracts to gain more control over the
bidding process and the final outcomes of hospital
construction projects. This bill imitates the 2008 Wiggins
bill for the Sonoma Valley Health Care District by giving
all health care districts the option of using counties'
design-build contracting procedures.
A 2005 Legislative Analyst's Office (LAO) report questioned
whether design-build is the best construction delivery
process for specialized buildings like hospitals. The LAO
suggested that design-build is best suited for
"straightforward" design and construction projects, but not
for complex projects that require builders to accommodate
more unique design preferences. State engineers are
concerned that state law fails to ensure adequate plan
checks and inspections of projects build using the
design-build method.
Related legislation . SB 879 (Cox), 2009-10 Session, which
extends the 2011 sunset date to 2016 on the statute
authorizing counties to use design-build. The bill is on
the Senate Third Reading File.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/17/10)
American Institute of Architects California Council
Antelope Valley Health Care District
Association of California Healthcare Districts
California Chamber of Commerce
California Hospital Association
California Special Districts Association
CH2M HILL
Design-Build Institute of America, Western Pacific Region
Eastern Plumas Health Care District
Kaweah Delta Healthcare District
Oak Valley Hospital District
Regional Council of Rural Counties
San Bernardino Mountains Community Hospital District
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Southern Mono Healthcare District
OPPOSITION : (Verified 5/11/10)
American Federation of State, County and Municipal
Employees, AFL-CIO
Professional Engineers in California Government
ARGUMENTS IN SUPPORT : The California Chamber of Commerce
states they support "the expanded use of design-build and
other alternative project delivery methods by local
governments. While design-build is not appropriate in all
cases, for instances that do fit, it can get project
completed more quickly and at a lower cost than through
traditional design-bid-build contracting. The number of
change orders are lessened as is the potential for
disagreements and lawsuits among contractors, architects,
and the local government entity as the project is being
built. Essentially, design-build can put more construction
and engineering jobs on the ground faster, which is
integral to stimulating the state's economy and
rehabilitating the state's infrastructure network.
Healthcare districts that operate hospitals must meet
seismic retrofit deadlines yet many operative on bare
margins and cannot raise enough revenues. Having
design-build authority will allow healthcare district to
achieve these deadlines by lowering the cost of the
projects. While design-build opponents would argue this
would exclude public employees from working on the jobs,
hospital design and construction is handled mainly by
private companies, with the proper oversight and
certification by the state."
ARGUMENTS IN OPPOSITION : In their letter of opposition,
the Professional Engineers in California Government state
that "Hospitals are particularly complex buildings that
include complicated monitoring and life support functions.
They typically are designed to take into account the
specific needs of emergency medical personnel, doctors, and
support staff. The complexity of these structures argues
strenuously against design-build. Instead, these complex
structures should be completely designed and plan checked
for public safety and then competitively bid for
construction."
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AGB:mw 5/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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