BILL ANALYSIS �
SB 1509
Page 1
SENATE THIRD READING
SB 1509 (Simitian)
As Amended August 20, 2012
Majority vote
SENATE VOTE :32-4
EDUCATION 6-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Norby, |Ayes:|Gatto, Harkey, |
| |Buchanan, Grove, | |Blumenfield, Bradford, |
| |Halderman, Wagner | |Charles Calderon, Campos, |
| | | |Davis, Donnelly, Fuentes, |
| | | |Hall, Hill, Cedillo, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Extends the sunsets authorizing kindergarten through
grade 12 (K-12) and California Community Colleges (CCC)
districts to utilize design-build contracts for the design and
construction of education facilities, from January 1, 2014, to
January 1, 2020. Expresses the intent of the Legislature that
design-build procurement does not replace or eliminate
competitive bidding. Specifies that the request for proposal
shall not include a design-build-operate contract for
educational facilities.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are no direct costs, as use of the design-build
process is voluntary, and should result in potential savings.
COMMENTS : Under current law, K-12 school districts are required
to competitively bid any public works contract over $15,000 and
award the contract to the lowest responsible bidder. Current
law also allows contracts for architectural services to be
awarded on the basis of demonstrated competence and professional
qualifications to be performed at a fair and reasonable price
(not necessarily the lowest bidder). Under this process, a
school district would first hire an architect to design a school
facility and then issue a bid for the construction phase,
awarding the contract to the lowest bidder. This process is
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commonly called "design-bid-build." AB 1402 (Simitian),
Chapter 421, Statutes of 2001, established a process called
"design-build" that enables a school district to issue a bid for
both the design and construction of projects over $10 million
and authorizes school districts to consider factors other than
cost. AB 1402 had an initial sunset of January 1, 2007, and
required the Legislative Analyst's Office (LAO) to submit a
report with information on the experiences of districts that
used the design-build process and make recommendations to the
Legislature. The sunset was extended to January 1, 2010, in
2006 (AB 127 (Nunez), Chapter 35, Statutes of 2006).
The author introduced another bill in 2002, AB 1000 (Simitian),
Chapter 637, Statutes of 2002, authorizing three CCC districts
to utilize design-build contracts for projects over $10 million
with a sunset of January 1, 2008. SB 614 (Simitian), Chapter
471, Statutes of 2007, reduced the threshold for eligible K-12
and CCC projects from $10 million to $2.5 million, extended the
authority to all CCC districts, and extended the sunset dates
for both K-12 and CCCs to January 1, 2014. This bill extends
both sunsets to January 1, 2020.
Under a design-build process, a K-12, CCC district, or other
public or private agency issues a bid for both design and
construction of a facility. A general contractor may
collaborate with an architect/engineer to submit a proposal, or
a general contractor may submit the proposal and subcontract
with an architect/engineer. Prior to using a design-build
process for a project, a school district must make written
findings that using the design-build method for the project will
meet at least one of the following objectives: reduce
comparable project costs, expedite the project's completions, or
provide features not achievable through the traditional
design-bid-build process. The school district must also
establish a process to prequalify design-build entities using a
standard questionnaire developed by the Department of Industrial
Relations. The questionnaire requires contractors to provide
detailed information regarding the company and its financial
status, including whether the company has been in bankruptcy or
involved in a civil lawsuit, licensing information, prior
contracting experience (whether the contractor has completed
other public works projects), whether the contractor has been
involved or has been found to have violated any federal, state
or local laws, and whether the contractor has violated any labor
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and health and safety laws, including prevailing wage.
Rather than selecting the contractor based solely on the lowest
offer, the K-12 or CCC district may use criteria in addition to
cost, which may include qualification, experience, proposed
design approach, life cycle costs, project features and project
functions. Based on the criteria selected by a governing board,
the proposals are scored and awarded to the bidder whose
proposal is considered to be the best value to the school
district. Design build contracting can expedite the
construction of a project, avoid conflicts between
architects/engineers and contractors, and according to
experiences from school and CCC districts, reduce costs by
reducing change orders once construction begins. Under a
design-bid-build process, the architect works independently on
the design of the facility. Once construction begins, any
problems identified by the contractor must be resolved,
frequently with the school district acting as the mediator.
Under design-build, the architect and contractor are working
together from the beginning of the project, thereby reducing
conflicts, delays, and additional costs during the construction
phase.
The design-build method does not exempt a school district from
complying with all requirements for receipt of state bond funds,
including compliance with the labor compliance program and the
requirement to retain an independent inspector. According to
data provided by the Office of Public School Construction, which
administers K-12 state education bond funds, 17 school districts
have employed the design-build method, submitting applications
for 29 projects. Of these projects, two were completed in 2008,
two completed in 2009, and four completed in 2011. Nineteen
projects are either going through the funding process or have
already started construction but are not finished. Two
applications were returned to the districts because one
application was for a duplicate project and the other contained
insufficient documentation.
In addition to K-12 school and CCC districts, a number of
design-build authorizations have been given to various cities
and counties, state building projects, and transit districts.
It is unclear whether all design-build authorizations contain
the same requirements and process.
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In February 2005, the LAO issued a report titled Design-Build:
An Alternative Construction System in which it reported its
consolidated findings on design-build across several public
works sectors. The LAO report was based on reports provided by
entities authorized to use design-build contracting and had
difficulty finding conclusive evidence as to the benefits of the
design-build method. However, the LAO reported that the
entities that experimented with design-build were generally
pleased with the process and outcomes. The LAO concluded that
design-build is a useful alternative delivery method, but made
the following recommendations:
1)The state should adopt a single statute applying to all public
entities (state and local governments and education
institutions).
2)Design-build should be available as an option and not a
replacement for design-bid-build.
3)Contracts for most of the project costs should be objectively
awarded based on competitive bidding.
4)No cost threshold should be imposed on the authority to use
design-build.
5)Access for small and newly established contractors should be
assured by requiring that design build contracts be awarded to
contractors with experience and qualifications that are
consistent with the needs of the project, rather than limited
to the biggest and longest-established firms. (The LAO made
this recommendation due to considerations of qualification and
experience in awarding design-build contracts, which may
disadvantage small, newly established contractors, who do not
have the range of experience of more established firms).
6)The authority should only be granted to construct buildings
and directly related infrastructure given the more complex
issues associated with transportation, public transit, and
water resources facilities.
The Los Angeles Unified School District states, "In our
experience we have found there are a number of inherent flaws
with the design-bid-build process. The biggest flaw is the lack
of communication, coordination and planning between the design
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professional and contractor at the onset of the project. This
creates contract disputes, increased change order requests, and
exposes the owner to unnecessary liability and litigation. The
design-build method addresses this flaw by partnering with
contractor and design professional at the beginning of the
project. Each provides input and perspective which ensures the
project is built in the most efficient manner. The design-build
method has proven to the District to save time and money as a
result of fewer change orders, fewer contract disputes, provides
the owner with a single point of accountability, and ultimately
provides a better quality product."
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0005129