BILL ANALYSIS
SB 1005
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1005 (Cox) - As Amended: June 21, 2010
Policy Committee: Local
GovernmentVote:5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the Tahoe Forest Health Care District and a
health care district authorized by the Office of Statewide
Health Planning and Development to use a design-build procedure
when assigning contracts for the construction of a hospital or
health facility building. The bill sunsets on January 1, 2016.
FISCAL EFFECT
1)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.
2)Design-build contracts require that certain information be
provided by the contractor under oath. Thus, expansion of such
contracting may result in additional local enforcement costs.
The bill states that any such mandated costs are not
state-reimbursable, since the only mandate is for a crime or
infraction.
3)Potential fiscal benefits to the designated health care
districts, to the extent that use of design - build
contracting results in faster project and/or greater certainty
about costs.
COMMENTS
1)Rationale . This bill, sponsored by the Association of
California Healthcare Districts, is intended to reduce the
costs of complying with seismic safety requirements. District
SB 1005
Page 2
hospitals are the only hospitals, both private and public,
without this authority. Supporters believe that the design
build process, if used by district hospitals, will help hold
down the cost of seismic safety construction and expedite the
design and construction process which would save taxpayers
money.
2)Opponents . American Federation of State, County, and Municipal
Employees (AFSCME) states that design build is not suited for
constructing hospitals. They assert that the traditional
competitive bidding process is better designed to take into
account the very specific needs of emergency medical
personnel, doctors, and support staff.
3)Background - design build contracting . The local Agency Public
Construction Act requires local agencies 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 to award the construction bid
to the lowest responsible bidder. An alternative approach is
the design-build method, where both the design and
construction are procured from the same entity.
The state has enacted numerous bills over the past decade
expanding authority for local governments to use this
alternative process. For example, SB 416 (Ashburn), Chapter
585, Statutes 2007, extended design-build authority to the
construction of buildings and directly related improvements to
all 58 counties in the state through 2010. AB 642 (Wolk),
Chapter 314, Statues 2008, extended design-build authority to
the construction of buildings and directly related
improvements to all cities in the state. SB 1699 (Wiggins),
Chapter 415, Statutes 2008, extended design-build authority to
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 2009-10 budget package expanded design-build authorization
at the state level for (1) five state facilities within the
jurisdiction of Department of Corrections and Rehabilitation,
Department of General Services and Judicial Council; (2) 10
redevelopment agency projects in excess of $1 million; (3)
SB 1005
Page 3
five local transportation projects (regional transportation
agencies or transportation projects); and, (4) 10 state
transportation projects.
As a result of these and related changes, design-build
contracting for building and related construction is currently
authorized for all cities and counties in the state, and more
targeted authorizations for numerous other agencies of state
and local government.
In January 2009, the LAO issued a report 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."
4)Background - health care districts . California currently has
80 health care districts, operate hospitals and other health
care facilities. 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.
5)Related legislation . SB 879 (Cox), also before this committee,
extends design-build authority for counties from January 1,
2011 to January 1, 2015, and requires the LAO to conduct an
additional evaluation of the use of design build contracting.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081