BILL ANALYSIS �
SB 1549
Page 1
SENATE THIRD READING
SB 1549 (Vargas)
As Amended August 13, 2012
Majority vote
SENATE VOTE :38-0
LOCAL GOVERNMENT 9-0 TRANSPORTATION 12-0
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|Ayes:|Smyth, Alejo, Bradford, |Ayes:|Bonnie Lowenthal, |
| |Campos, Davis, Gordon, | |Achadjian, Blumenfield, |
| |Hueso, Knight, Norby | |Buchanan, Eng, Furutani, |
| | | |Galgiani, Logue, Miller, |
| | | |Norby, Portantino, |
| | | |Solorio |
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APPROPRIATIONS 12-4
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|Ayes:|Gatto, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Fuentes, Hall, Hill, | | |
| |Cedillo, Mitchell, | | |
| |Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, Norby, | | |
| |Wagner | | |
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SUMMARY : Authorizes the San Diego Association of Governments
(SANDAG) to use "design sequencing" and "Construction
Manager/General Contractor" alternative project delivery methods
for an unlimited number of transit projects. Specifically, this
bill :
1)Authorizes SANDAG to use alternative project delivery methods,
specifically design sequencing and the Construction
Manager/General Contractor (CMGC) method, as defined, for
public transit projects within its jurisdiction.
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2)Requires SANDAG, if it desires to enter into an alternative
project delivery method contract, to first evaluate the
traditional design-bid-build process of construction and the
alternative project delivery method in a public meeting, and
make a written finding that use of the alternative project
delivery method on the specific project under consideration
will reduce project costs, expedite the project's completion,
or provide features not achievable through the
design-bid-build method.
3)Requires SANDAG to comply with specified provisions of the
Labor Code pertaining to labor compliance programs, and to
reimburse the state Department of Industrial Relations for its
reasonable and directly-related costs of performing prevailing
wage monitoring and enforcement on public works projects.
4)Authorizes SANDAG, in lieu of complying with the labor
compliance program and reimbursement provisions described in
3) above, to enter into a collective bargaining agreement
binding all of the contractors performing work on the project
and that includes a mechanism for resolving disputes about the
payment of wages.
5)Requires SANDAG, when using the CMGC method and entering into
a contract with a construction manager for preconstruction
services, to include in the written contract a fee for those
services.
6)Prohibits SANDAG from requesting or obtaining a fixed price or
guaranteed maximum price for a CMGC construction contract or
entering into a CMGC construction contract until after it has
entered into a services contract with the construction
manager.
7)Requires a CMGC preconstruction contract to provide for the
subsequent negotiation for construction of all or any discrete
phase or phases of the project, and further provides for
ownership by SANDAG of the design plans and other
preconstruction services work product.
8)Requires a CMGC contract for construction services to be
awarded after plans are sufficiently developed and either a
fixed price or guaranteed maximum price has been negotiated,
although SANDAG may award the contract utilizing any other
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permitted procurement method if negotiations are not
successfully concluded.
9)Requires a construction manager to perform not less than 30%
of the work covered by the negotiated price of a CMGC
contract, with the remainder being performed by subcontractors
pursuant to existing law.
10)Requires all subcontractors bidding on design sequencing and
CMGC contracts to be afforded the protections of the
Subletting and Subcontracting Fair Practices Act within the
Public Contract Code.
11)Requires SANDAG, upon completion of projects using an
alternative delivery method, to prepare a progress report for
its governing body that shall include a description of the
project, the entity awarded the contract, the estimated and
actual costs of the project, the estimated and actual schedule
for project completion, a description of any written protests,
an assessment of the prequalification process, a description
of the bid evaluation method, a description of challenges or
unexpected problems, and recommendations.
12)Requires SANDAG to post completed progress reports on its
website.
13)Provides that nothing in this bill affects, expands, alters,
or limits any rights or remedies otherwise available at law.
14)Defines the following key terms:
a) "Alternative project delivery method" means "either
Construction Manager/General Contractor method or design
sequencing";
b) "Construction Manager/General Contractor method" or
"CMGC" means "a project delivery method using a best value
procurement process in which a construction manager is
procured to provide preconstruction services during the
design phase of the project and construction services
during the construction phase of the project. The
execution of the design and the construction of the project
may be in sequential phases or concurrent phases";
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c) "Construction manager" means "a partnership,
corporation, or other legal entity that is able to provide
appropriately licensed contracting and engineering services
as needed pursuant to a CMGC contract"; and,
d) "Design sequencing" means "a method of project delivery
that enables the sequencing of design activities to permit
each construction phase to commence when the design for
that phase is complete, instead of requiring design for the
entire project to be completed before commencing
construction."
15)Declares that the provisions of this bill are severable.
16)Makes findings and declarations relative to the need for and
benefits of alternative project delivery methods, such as
design sequencing and CMGC, and further declares that the bill
espouses no preference over other methods.
17)Makes findings and declarations that a special law is
necessary because of the unique need for alternative
contracting authority for local public transportation projects
under the jurisdiction of SANDAG.
18)Declares that no reimbursement is required because the only
costs that may be incurred by a local agency or school
district will be because this bill creates, eliminates, or
changes the penalty or definition of, a crime.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, "�c]osts for SANDAG to administer and report on the
alternative contracting method, including prevailing wage
monitoring and enforcement, will be absorbable and are not state
reimbursable. To the extent the use of either of these
alternative methods is successful, there should be significant
savings on those projects selected by SANDAG."
COMMENTS : This bill would authorize SANDAG to use two new
project delivery methods for transit projects: design sequencing
and CMGC. That authorization would require as a prerequisite
that SANDAG evaluate in a public meeting the proposed
alternative method against the traditional construction process
and adopt written findings that the use of an alternative
delivery method would provide lower costs, an accelerated
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project schedule, or features that are not achievable through
traditional project delivery. Each completed project must be
followed by a progress report to be posted on SANDAG's website.
There is no limit on the number of such projects SANDAG may
undertake, nor any sunset date on the authority. The measure is
sponsored by SANDAG.
SANDAG is the regional transportation planning agency for San
Diego County under state and federal law, and is the
metropolitan planning organization for the region. SANDAG has a
broad scope of authority, and manages a local voter approved %
transportation sales tax. SANDAG contends that the
authorization provided by this bill provides it with new tools
for constructing transportation projects in San Diego County.
In sponsoring this measure, SANDAG states that "SB 1549 will
provide SANDAG with additional project delivery tools for our
TransNet Early Action Program as well as the transit CIP
projects that we implement on behalf of our two public transit
operators."
This bill authorizes the use of two alternative project delivery
methods: design sequencing and CMGC.
Design sequencing is a method of contracting that enables the
sequencing of design activities to permit each project
construction phase to commence when design for that phase is
complete, rather than requiring design for the entire project to
be completed before starting construction. There is little risk
transfer from the public agency to the contractor because the
public agency remains responsible for design. The expected
benefit of the design sequencing methodology is a shorter total
construction time, with attendant cost savings. State law
previously authorized design sequencing for Caltrans, but the
authority lapsed in 2010. Final reports on its use on state
projects are pending.
The CMGC project delivery method allows an agency to engage a
construction manager during the design process to provide
assistance to the design team, including advice regarding
scheduling, pricing, phasing, and other input that helps the
agency design a more easily constructible project. The agency
then selects a construction manager on a best-value basis. As
the design approaches completion but before construction begins,
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the agency and the construction manager negotiate a fixed price
or guaranteed maximum price for the construction of the project
based on the defined scope and schedule. If this price is
acceptable to both parties, a contract is executed for
construction services, and the construction manager becomes the
general contractor. The benefits of this procurement method are
that the public agency does not sacrifice control over the
design of the project, and the contractor is very familiar with
the project design during the construction phase, resulting in
fewer disputes over design issues. The Legislature has not
previously authorized the use of the CMGC project delivery
methodology, although a bill that would do so �AB 2498 (Gordon)]
is currently pending in the Senate.
The Professional Engineers in California Government (PECG)
oppose this measure unless amended, stating "PECG does not
believe it is appropriate to provide region-specific
authorization on the State Highway System. Instead, PECG
believes there should be a statewide authorization for
design-sequencing?.As for the �CMGC] project delivery method
?PECG suggests limiting this new untested procurement
methodology to four projects statewide with a sunset of January
1, 2018?PECG is opposed to using the �CMGC] project delivery
method on local streets and roads."
Support arguments: The California Transit Association contends
that "�t]he design sequencing and �CMGC] project delivery
methods rely on existing design-bid-build and design-build
procurement methods, respectively, and have been successfully
used by both public and private sector entities in California
and other states for over a decade on projects that require a
quick startup?We believe this authorization will help SANDAG
reduce cost, time, and achieve other benefits in completing
public transit projects using alternative project delivery
methods."
Opposition arguments: According to PECG, the bill should be
amended to require statewide authorization for any design
sequencing authority, limit any CMGC authority to four projects
statewide with a 2018 sunset date, and prohibit the use of CMGC
on local streets and roads.
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958
SB 1549
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FN: 0005002