BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1457|
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THIRD READING
Bill No: SB 1457
Author: Cogdill (R)
Amended: 5/25/10
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 5-3, 4/13/10 (FAIL)
AYES: Wright, Calderon, Denham, Florez, Price
NOES: Oropeza, Padilla, Yee
NO VOTE RECORDED: Harman, Negrete McLeod, Wyland
SENATE GOVERNMENTAL ORG. COMMITTEE : 6-2, 4/22/10
AYES: Wright, Calderon, Denham, Florez, Price, Wyland
NOES: Padilla, Yee
NO VOTE RECORDED: Harman, Negrete McLeod, Oropeza
SENATE APPROPRIATIONS COMMITTEE : 6-3, 5/17/10
AYES: Kehoe, Cox, Alquist, Denham, Walters, Wolk
NOES: Corbett, Leno, Yee
NO VOTE RECORDED: Price, Wyland
SUBJECT : State facilities: alternative project delivery
methods
SOURCE : Department of General Services
DIGEST : This bill authorizes the Department of General
Services to undertake public works of improvement by using
the job order contracting, which is defined as a
competitively bid, fixed priced, indefinite quantity
procurement contract issued by a department to a job order
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contractor for a definite project or work, as compiled from
a catalog of construction tasks to be performed pursuant to
a job order contract.
ANALYSIS : Existing law establishes procedures governing
design-bid-build methods of procurement, but permits the
Director of the Department of General Services (DGS), when
authorized by the Legislature, to use the design-build
procurement process for state office facilities, other
buildings, structures, and related facilities. Existing
law further requires the director, prior to contracting for
the procurement of state office facilities and other state
buildings and structures, to prepare a program setting
forth the scope of the project and to establish a
competitive prequalification process, as provided.
Existing law provides various procedures, including
competitive bidding, for different types of contracts
involving state and local public entities, including school
districts.
Existing law authorizes the Regents of the University of
California to use job order contracting and construction
manager at risk contracting. The Trustees of the
California State University, the Los Angeles Unified School
District, and various cities (San Diego and Los Angeles)
and counties (Sacramento, Contra Costa and Ventura) are
authorized to use job order contracting.
This bill:
1. Makes legislative findings and declares that the job
order contract methods can be an attractive option to
state entities in comparison to the existing
design-bid-build process and that it's in the state's
best interest to construct state facilities in a
cost-efficient manner that represents best overall value
to taxpayers and provides the greatest benefit to the
economy of California.
2. Grants DGS the authority to undertake public works of
improvement using the job order contract as defined.
Also, provides that each job order under a job order
contract shall not exceed the total cost limit
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established by the Director of Finance.
3. Requires the director of DGS, whenever a public works
appropriation is made to determine if a job contract is
appropriate for that project. Requires the Director to
consider the following criteria: (1) the nature of the
project; (2) the project delivery schedules; (3) overall
project cost, including life cycle costs during the
operational phase following construction; (4) the
ability to achieve design, construction, or operational
features not achievable through the design-bid-build
method; (5) minimizing change orders; and, (6) other
criteria determined by the director to be critical to
the project based on specific facility program.
4. Stipulates that contracts entered into for a job order
contract shall not be exempt from the provisions of the
Labor Code and shall provide for the filing of separate
performance and payment bonds by the contractor. The
payment bond shall secure the payment of the claims of
laborers, mechanics, or material and persons employed on
the work under the contract.
5. Requires the contract to contain a provision regarding
the time when the whole work or any specified portion of
the work contemplated shall be completed, and shall
provide that for each day completion is delayed beyond
the specified time, the contractor shall forfeit and pay
to the state a specified sum of money to be deducted
from any payments due or to become due to the
contractor.
6. Limits a job order contract to a term of two years with
an option to extend that term for one additional.
7. Requires DGS to establish policies and procedures to
implement the provisions of this bill.
8. Defines "job order contract" as a competitively bid,
fixed priced, indefinite quantity procurement contract
issued by a department to a job order contractor for a
definite project or work, as compiled from a catalog of
construction tasks to be performed pursuant to a job
order contract.
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9. Excludes contracts with architects, engineering land
surveying, and construction project management firms.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Job order contract General/
authorization Special*
Contract administrationEstimated $8 to $23 savings per
project**
bid under job order contracting
Job order work Unknown savings
* Service Revolving Fund
** Based on project cap of $250
SUPPORT : (Verified 5/24/10)
Department of General Services (source)
Department of Finance
OPPOSITION : (Verified 5/24/10)
American Federation of State, County and Municipal
Employees, AFL-CIO
Association of California State Supervisors
California State Employees Association
California State Employees Association Retirees, Inc.
California State University Employees Union
ARGUMENTS IN SUPPORT : According to the author's office,
DGS, the sponsor of this bill, is currently limited
primarily to one delivery method, known as
"design-bid-build," for construction projects. The
author's office contends that design-bid-build is not the
best delivery method for all types of public works projects
as it is a cumbersome process, especially for smaller
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projects. The author's office points out that DGS manages
a variety of projects including basic infrastructure,
public service facilities, emergency services facilities,
advanced health care facilities, state-of-the-art
laboratories, basic office space, tenant improvements,
maintenance and repair. By limiting DGS' ability to
utilize other construction project delivery methods, the
State is not receiving the best product or the best value
on numerous projects. This bill is designed to authorize
DGS to utilize two different alternative construction
methods for project delivery known as "job order
contracting" and "construction management at risk."
According to DGS, job order contracting would allow it to
award contracts for multiple renovation, repair or minor
construction projects that is based on a firm fixed price
for labor, material and contingencies, but is indefinite as
to the number of projects to be completed under the fixed
term contract. DGS claims that the reduction in
procurement, administration, and staff costs would be
substantial due to multiple small projects bundled under
one contract.
With respect to construction management at risk, DGS claims
that this particular public works delivery process would
enable DGS to hire design services and construction
services independently, similar to design-bid-build.
However, under construction management at risk, a
construction manager and specialists are brought into the
design process to provide advice on constructability, cost
containment, schedule, and building and construction
technology. With this method, DGS would retain control of
the architect and engineers and establish quality and
functional requirements early in the design process. DGS
also states that it would have control over the quality
assurance during construction with state inspectors.
The author's office emphasizes that in order to provide the
best tools for constructing public works projects
efficiently and within budget and with available
technology, independent of size or scope, DGS requires
legislative authority to utilize job order contracting and
construction management at risk. The author's office
believes that this bill not only would allow DGS to use the
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appropriate delivery method on a construction project
ensuring that it is cost effective and delivered on-time,
but it also would help the State with job creation as it
would put public money into the local economy in the
timeliest and most efficient manner and in the case of job
order contracting, many times, would employ smaller local
subcontractors to perform the work.
ARGUMENTS IN OPPOSITION : AFSCME is in opposition to this
legislation, because like that of design-build, the
proposed contracting methods do not properly serve the best
interest of the California taxpayer. AFSCME believes the
most cost-effective way to ensure that public safety,
specific building codes, and inspections are met and held
to high standards is to use the existing model of
competitive bidding, public oversight and public
inspection.
TSM:nl 5/26/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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