BILL ANALYSIS �
AB 294
Page 1
GOVERNOR'S VETO
AB 294 (Portantino)
As Amended August 23, 2012
2/3 vote
-----------------------------------------------------------------
|ASSEMBLY: |79-0 |(May 31, 2011) |SENATE: |35-0 |(August 28, |
| | | | | |2012) |
-----------------------------------------------------------------
-----------------------------------------------------------------
|ASSEMBLY: |79-0 |(August 29, | | | |
| | |2012) | | | |
-----------------------------------------------------------------
Original Committee Reference: TRANS.
SUMMARY : Reenacts authorization, until January 1, 2017, for the
California Department of Transportation (Caltrans) to enter into
design-sequencing contracts, under certain conditions; clarifies
that Caltrans employees or its consultants are to perform
specific tasks associated with design-sequencing, design-build,
or public-private partnership contracts for projects on the
state highway system.
The Senate amendments:
1)Eliminate the requirement that Caltrans submit a status report
on design-sequencing and instead direct the department to post
the report data on the Internet.
2)Postpone, from 2015 until 2017, the sunset date for the
authority to enter into design-sequencing contracts.
EXISTING LAW :
1)Does not provide Caltrans any current authority to let
design-sequencing contracts.
2)Requires, generally, Caltrans to award construction contracts
AB 294
Page 2
based on a process referred to as "design-bid-build." This
process requires Caltrans, before it enters into any contract
for construction of a project, to prepare or cause to be
prepared full, complete, and accurate plans, specifications,
and estimates of cost, "giving such directions as will enable
any competent mechanic or other builder to carry them out."
3)Until January 1, 2010:
a) Defined "design-sequencing" as a method of contracting
that enables the sequencing of design activities to permit
each construction phase to commence when design for that
phase is complete, instead of requiring the design for the
entire project to be completed before commencing
construction;
b) Authorized Caltrans to use the design-sequencing
contract method on a pilot basis-up to 12 projects in each
of Phase I and Phase II of the pilot program; and,
c) Required Caltrans to prepare an annual status report on
the progress of design-sequencing contracts; also, required
a final report of the pilot program, detailing the positive
and negative aspects of design-sequencing.
4)Provides, in the State Constitution as amended by the voters
in 2000 (Proposition 35), that all governmental entities in
California are allowed to contract with qualified private
entities for architectural and engineering services for all
public works of improvement.
5)Establishes a design-build demonstration program whereby
Caltrans is authorized to undertake up to 10 state highway
projects using a design-build procurement method, as
prescribed.
6)Requires, for design-build projects on the state highway,
Caltrans to be responsible for the performance of project
development services, project documentation, and construction
inspection services; specifically provides that this work may
be done either by Caltrans employees or by consultants.
AB 294
Page 3
7)Authorizes, until 2017, Caltrans to enter into public-private
partnership projects; for these projects on the state highway
system, requires Caltrans to be responsible for the
performance of project development services, project
documentation, and construction inspection services;
specifically provides that this work may be done either by
Caltrans employees or by consultants.
AS PASSED BY THE ASSEMBLY , provisions re-enacting
design-sequencing authority were substantially similar to
those passed by the Senate.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential significant cost savings from expediting
project completion using design-sequencing.
COMMENTS : This bill reenacts, for a limited-time,
design-sequencing authority for Caltrans that expired January 1,
2010.
Design-sequencing was first authorized in 1999 by AB 405 (Knox),
Chapter 378, Statutes of 1999, which established the original
design-sequencing pilot program within Caltrans for up to six
projects. The intent of AB 405 (Knox) was to offer an
alternative means to accelerate project delivery over
traditional means of contracting for highway improvements.
Under the traditional means, construction of any portion of the
project cannot commence until Caltrans has developed complete
plans and specifications for the project, placed the contract
out for bid, and awarded the contract. AB 405 (Knox) sought to
test a form of contracting referred to as "design-sequencing"
that would speed completion of a project by allowing
construction on one phase of the project to be started while
other phases of the project were still under design. As part of
the pilot program, Caltrans was to report to the Legislature on
the effectiveness of the program.
Of the 12 design-sequencing projects authorized as Phase I of
the pilot program, Caltrans initiated 10 projects before the end
of that phase. SB 1210 (Torlakson), Chapter 795, Statutes of
AB 294
Page 4
2004, created Phase II of the pilot program and authorized an
additional 12 design-sequencing projects between January 2005
and January 2010. Of those, Caltrans initiated 11 projects.
Caltrans asserts that design-sequencing has the potential to
accelerate project delivery (or avoid project delays) with
minimal risks. Caltrans has argued that more needs to be
learned regarding design-sequence contracts to develop the
appropriate procedures, engineering mind set, and agency culture
needed to effectively implement this approach and to determine
the types of projects that would most benefit from use of this
approach.
In interim reports of the design-sequencing pilot program,
Caltrans reports mixed results in the initial design-sequencing
projects when compared to projects in the control group.
However, according to Caltrans staff, findings from some of the
more recent projects are more positive, due largely to the
refined criteria Caltrans is using to select appropriate
design-sequencing projects. In fact, in its 2010 status of the
previous design-sequencing program, Caltrans states, "The
Department envisions design-sequencing as a valuable project
delivery tool that can reduce project completion time when
properly used on appropriately selected projects."
In light of Caltrans' overall experience to date with
design-sequencing, this bill will provide the department with
interim authority to use a project delivery tool that has
minimal risks and the potential to increase efficiency, reduce
costs, and help California take advantage of transportation
funds should they become available.
Provisions related to ensuring that Caltrans employees or
consultants actually perform (and not just be responsible for
performing) specific tasks for state highway projects undertaken
using design-sequencing, public-private partnership, or
design-build authority emanate from a recent court case. The
case was filed by Professional Engineers in California
Government (PECG) against Caltrans and challenged the
department's use of a public-private partnership contract for
the Presidio Parkway project. Essentially, PECG argued that,
AB 294
Page 5
because pre-development services on the project had not been
done by Caltrans employees or consultants, the project was not a
viable project under authorizing statutes which require Caltrans
to be responsible for these tasks. The court disagreed. It
ruled that a specific reading of the law requires Caltrans to be
the "responsible agency" for these tasks and that Caltrans'
responsibilities for oversight met that pre-requisite.
This bill would clarify that for projects on the state highway
system that use these alternative procurement methods, Caltrans
employees or Caltrans consultants are to perform the
pre-development services, document preparation, and construction
inspection.
Provisions related to Caltrans performing pre-development
services, document preparation, and construction inspection
services have not been heard in an Assembly policy committee.
GOVERNOR'S VETO MESSAGE :
"This bill authorizes Caltrans to use design-sequencing as the
contracting method for eight new construction projects.
"Caltrans has already constructed nearly 20 projects using
design-sequencing contracts and is currently evaluating whether
the state saved money. To be sure we get the most from our
construction dollars, we should let Caltrans complete its
evaluation before authorizing more contracts."
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093
FN: 0005948