BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1549|
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UNFINISHED BUSINESS
Bill No: SB 1549
Author: Vargas (D)
Amended: 8/13/12
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 9-0, 4/17/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal,
Pavley, Rubio, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/24/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
SENATE FLOOR : 38-0, 5/31/12
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De Le�n, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Hancock, Harman,
Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio,
Simitian, Steinberg, Vargas, Walters, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Runner, Strickland
ASSEMBLY FLOOR : 45-24, 8/21/12 - See last page for vote
SUBJECT : Transportation projects: alternative project
delivery methods
SOURCE : San Diego Association of Governments
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DIGEST : This bill authorizes the San Diego Association
of Governments (SANDAG) to use specified alternative
project delivery methods for an unlimited number of transit
projects.
Assembly Amendments (1) delete the provision allowing the
contract for construction services to be entered into at
the same time as the contract for preconstruction services;
(2) delete the option for SANDAG to operate a labor
compliance program approved by the Department of Industrial
Relations (DIR) to monitor and enforce prevailing wage
requirements on the project if it requests and receives
approval from the DIR to use its own labor compliance
program; (3) delete the requirement that construction not
commence on any phase, package, or element until SANDAG and
the construction manager agree in writing on either a fixed
price or guaranteed maximum price that SANDAG will pay for
the construction to be commenced and the construction
schedule for the project; (4) delete the provisions
clarifying that Department of Transportation (Caltrans) is
responsible for pre-construction project development
services and construction inspection services when projects
are constructed on state highways; (5) delete the provision
requiring SANDAG to award all construction manager/general
contractor (CMGC) projects according to the procedures
authorized in existing law for design-build contracts,
including awarding contracts using the best value selection
methodology; and (6) delete provision requiring
design-sequencing projects be awarded pursuant to existing
requirements in the Public Contract Code.
ANALYSIS : Existing law establishes the Design-Build
Demonstration Program, which authorizes local entities to
use the design-build method of procurement for up to five
projects and Caltrans to use IT for up to 10 projects,
subject to the California Transportation Commission (CTC)
approval. The design-build projects must be in one of the
following: State Transportation Improvement Program,
Traffic Congestion Relief Program, Proposition 1B, and the
State Highway Operations and Protection Program. In
addition, regional transportation planning agencies and
Caltrans may enter into an unlimited number of public
private partnerships for transportation projects until
January 1, 2017. Finally, state law allows use of the
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best value selection method for procuring design-build
services.
This bill:
1. Authorizes SANDAG to use alternative project delivery
methods, specifically design sequencing and the CMGC
method, as defined, for public transit projects within
its jurisdiction.
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 DIR 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
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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 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.
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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";
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."
1. Declares that the provisions of this bill are
severable.
2. 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.
3. 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.
Comments
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Purpose of this bill . SANDAG is the regional
transportation planning agency under state for San Diego
County and under federal law is the metropolitan planning
organization for the region. SANDAG also manages a local,
voter approved half-percent transportation sales tax.
SANDAG has a broad scope of authority. Central to all its
activities is the $214 billion regional transportation plan
that it intends to implement between now and 2050. SANDAG
believes that the authorization provided will provide it
with additional tools for constructing transportation
projects in San Diego County.
Alternative project delivery methods . The traditional
project delivery process is the design-bid-build. This
method requires the public agency to design a project and
put the plans out to bid to general contractors. The
agency awards the contract to the lowest, responsible
bidder. Design-bid-build procurement results in project
risks being largely borne by the agency that designs the
project. If plans are inadequate or there are
unanticipated construction issues, the agency bears the
financial burden through the issuance of change orders or
having to resolve construction claims by contractors.
In the last several years, public agencies have been
adopting alternative project delivery methods. The
principle reason for this is the desire to shift
construction risk from the agency/owner to the project
contractor. The most widely used alternative project
delivery technique is design-build. This method requires
the public agency to prepare plans to 30% completion and
then put them out to bid to teams of engineers and general
contractors. The teams bid a fixed cost for the project.
The bids are evaluated using the best value methodology,
which includes evaluating a bid on the basis of
qualifications of the firm, proposed approach to design,
experience, and other factors. The design-contractor team
completes the project and commences construction. Because
the team finishes the design work, it carries most of the
risk associated with the adequacy of plans. Often
construction can commence on a phase of the project before
the entire project is designed, reducing the construction
time.
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Design-sequencing . 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 commencing construction. When the
contractor bids, the first phase of the project is
completed and the remaining phases must be at 30%
completion according to Caltrans guidelines. The award is
made to the lowest, responsible bidder. There is little
risk transfer from the public agency to the contractor
because the public agency is responsible for design. The
benefit of design-sequencing is assumed to be time savings.
State law has authorized design-sequencing but Caltrans'
authority lapsed in 2010. This bill authorizes Caltrans to
resume design-sequencing procurement for projects in San
Diego County.
CMGC . 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 owner design a more constructible project.
The agency selects the construction manager on the basis of
qualifications, past experience, or a best-value basis.
According to the Federal Highway Administration, when
design reaches approximately 60 to 90% completion, the
agency and the construction manager negotiate a 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 is that the public agency does not sacrifice control
over the design of the project and during the construction
phase the contractor is very familiar with the project
design resulting in less disputes over design issues.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
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According to the Senate Appropriations Committee, potential
for increased transit project costs (Public Transportation
Account, State Transit Assistance Account, or Local Funds)
to the extent that the alternative project delivery method
chosen by SANDAG results in a higher overall project cost
than the traditional design-bid-build method. If an
alternative delivery method is chosen, SANDAG must make a
written finding in a public meeting that the alternative
method would provide a benefit that may be deemed to have a
greater value than project cost alone, such as expedited
project delivery or other features not achievable through
design-bid-build. The overall value of a project may be
measured by criteria other than cost.
SUPPORT : (Verified 8/28/12)
San Diego Association of Governments (source)
Associated General Contractors of California
Metropolitan Transit System
North County Transit District
Riverside County Transportation Commission
OPPOSITION : (Verified 8/28/12)
Professional Engineers in California Government
ASSEMBLY FLOOR : 45-24, 8/21/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Charles Calderon, Campos, Carter, Cedillo, Chesbro,
Davis, Feuer, Fletcher, Fong, Fuentes, Furutani,
Galgiani, Gordon, Hall, Hayashi, Hill, Huber, Hueso,
Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Perea, V. Manuel P�rez, Portantino,
Solorio, Torres, Wieckowski, Williams, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Gatto, Grove, Hagman, Halderman,
Harkey, Jones, Knight, Logue, Mansoor, Morrell, Nielsen,
Norby, Olsen, Silva, Skinner, Smyth, Wagner
NO VOTE RECORDED: Butler, Dickinson, Eng, Gorell, Roger
Hern�ndez, Miller, Nestande, Pan, Swanson, Valadao,
Yamada
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JJA:k 8/28/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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