BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 918
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: gaines
VERSION: 4/22/14
Analysis by: Eric Thronson FISCAL: yes
Hearing date: April 29, 2014
SUBJECT:
Caltrans reform
DESCRIPTION:
This bill reforms and improves the California Department of
Transportation (Caltrans) by increasing transparency and
improving the opportunity for effective oversight.
ANALYSIS:
Existing law specifies that Caltrans has full possession and
control of the state highway system and any associated property.
This responsibility includes over 15,000 center-lane miles
within the 265 state highways in California. In addition,
existing law authorizes Caltrans to purchase or rent any
necessary vehicles, equipment, instruments, and supplies to
conduct its business.
Further, existing law restricts the destruction or disposal of
any record or document unless a state department director
determines that the record has no further administrative, legal,
or fiscal value. Caltrans has adopted guidelines directing
employees at what time certain documents can be disposed of in
relation to any project, but not all documents.
For projects procured through traditional procurement methods,
existing law requires that Caltrans prepare full, complete, and
accurate plans and specifications before entering into any
construction contract.
Finally, existing law requires Caltrans to develop budgeting,
accounting, fiscal control, and management information systems
to better inform the Legislature so that responsible legislative
oversight of the program and the budget of Caltrans is possible.
While the Legislature does not appropriate Caltrans' budget on
a by-project basis, existing law requires Caltrans to budget
SB 918 (GAINES) Page 2
responsibly and to accurately represent costs, including claims
costs by contractors, in a way that enables the Legislature to
exercise appropriate legislative oversight.
This bill requires that Caltrans:
1.Develop and implement an asset management program that will
efficiently and effectively catalog its assets to ensure the
most efficient usage and maintenance of those assets.
2.Retain all documents that are in any way related to the
design, construction, or administration of a construction
project until the final closeout, payment in full is complete,
and all outstanding claims have been resolved. If Caltrans
fails to retain a document, it is liable for any loss or
damage to any party resulting from the lost document and
subject to a $500 penalty for each occurrence.
3.Use state-of-the-art design software to prepare full,
complete, and accurate plans based on complete survey
information of the field conditions existing in the location
where construction of the project is to be performed.
4.Upon award of a contract, engage the contractor in a joint
post-bid constructability review seeking to resolve any issues
before construction begins.
5.Include outstanding claims in reported project budgets as well
as retain in reserve at least 60 percent of the claim's value
until the claim is resolved. This bill defines a claim as an
issue raised by a contractor through the notice of potential
claims procedures, an after-contract acceptance claim, or a
lien.
COMMENTS:
1.Purpose . According to the author, Caltrans is in need of
serious reform. In January, 2014, the Transportation Agency
released an external review of Caltrans by a management
consultant group called the State Smart Transportation
Initiative (SSTI) based at the University of Wisconsin,
Madison. SSTI draws on the expertise of multiple former
transportation industry experts, including former secretaries
of transportation from Pennsylvania, Massachusetts, and North
Carolina. The SSTI group found that over the past decades
Caltrans has not kept pace with changes in transportation
SB 918 (GAINES) Page 3
policy. SSTI made a number of recommendations in its report
to align resources and skills to realize Caltrans' new vision,
implement management systems to achieve success, and improve
communications with stakeholders. Other reviews of Caltrans
confirm the need for change as well. The author contends that
this bill, along with other efforts both by the administration
and through other legislation, will begin to build the modern,
responsive department of transportation the state once enjoyed
and once again deserves.
2.Why an asset management program ? Caltrans has a significant
amount of tangible assets, from the roadway system, to its
fleet of over 12,000 vehicles, to hundreds of properties and
offices. The author suggests that any private company would
commit significant resources to manage such a quantity of
tangible assets in the most effective manner possible. Recent
incidents have raised questions about how Caltrans manages its
assets. For example, a supervisor on the San
Francisco-Oakland Bay Bridge project took some surplus
materials and used them for personal uses on his private
property. This theft only became apparent through a larger
whistleblower investigation and, therefore, it is unclear
whether this is an isolated incident or an example of a more
significant problem in Caltrans.
The primary impetus for this portion of the bill, according to
the author, comes as a direct recommendation from the SSTI
report. It appears the administration's own consultant
believes that Caltrans needs to engage more formally in
developing this type of program. While Caltrans suggests it
is currently developing this type of program, the author
contends that a statutory requirement to do so should ensure
it will be completed. One issue with the bill is that it
currently does not include a date by when Caltrans should
develop the asset management program. The committee may wish
to put a deadline on when Caltrans should complete the
program.
3.Retaining documents is critical to improving transparency .
Both contractors and investigative reports suggest to this
committee that Caltrans does not always keep all records
related to a construction project or to potential litigation.
For several years, Caltrans has had in effect an "automatic
deletion" policy, whereby every 90 or 120 days employees
receive notification that the program will automatically
delete old emails if the employee does not proactively save
them. Further, some suggest obtaining access to Caltrans'
SB 918 (GAINES) Page 4
public records pursuant to the Public Records Act is commonly
costly, difficult, not in accordance with statutory time
constraints, and not in full compliance with the act.
Specific to individual records such as communications, emails,
and handwritten notes that relate to a construction project,
it appears Caltrans has no clear protocol for their retention.
Contractors claim that preservation of this documentation is
left to the discretion of individual employees, who may be
uncertain about what must be maintained, or hesitant to
preserve information that may later have a negative
consequence to the employee or Caltrans. Consequently,
important Caltrans documents relevant to construction projects
or claims are often lost.
Without being subject to a consequence either by the courts or
internally, Caltrans has little incentive to retain documents
properly. Routine deletion of project-related communications
is contrary to the state policy of transparency and the legal
requirement that state agencies preserve all potentially
relevant documents. This bill attempts to address this
problem, and in turn, increase Caltrans' transparency and
overall credibility. While, in the past, retention of all
documents related to each Caltrans project could have been a
costly and burdensome requirement, in today's world of
electronic file storage it seems reasonable to expect a
government entity to retain paperwork until those documents
are no longer relevant or of any value, as the State Records
Management Act currently requires.
4.Improving design and plans before problems arise . According
to some contractors, Caltrans does not always design
construction projects using accurate information about the
existing field conditions upon which the project will be
built. Further, Caltrans' current software (CAiCE) used for
design and constructability review allows for flawed design
and does not pin-point errors that Caltrans should address
before putting the final design out for bid. These problems
often result in the need for corrective measures during the
construction process, issuance of contract change orders, and
unanticipated costs to the state.
To resolve these issues, contractors suggest the changes to
Caltrans' design process contained in this bill. The bill
requires that Caltrans, prior to bid, have correct survey
information of existing conditions and create designs fully
and accurately without relying on CAiCE to 'fix' errors in the
SB 918 (GAINES) Page 5
designs. Further, the bill requires Caltrans to engage the
winning contractor in a joint post-bid constructability review
to identify any remaining issues and resolve them before they
are discovered mid-construction. These changes should reduce
surprise problems on the project site and disruption to the
work, ultimately saving the state time and money.
5.Claims costs should be counted for accurate budgeting
purposes . State law requires Caltrans to submit to the
legislature reports of its budget status. An outside review
suggests that Caltrans does not include reference to, or
dollar amounts of, outstanding, unresolved claims against
Caltrans. Improper budgets and reporting precludes adequate
planning, fails to keep Caltrans accountable for over-budget
projects or issues, and leads to insufficient budgeting and
funding for contractors' outstanding claims for payment. This
bill attempts to resolve this issue so that Caltrans properly
budgets for the full cost of a project, and so that the
Legislature receives a more accurate and honest assessment of
Caltrans' expenditures.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 23,
2014.)
SUPPORT: None received.
OPPOSED: None received.