BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1433|
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UNFINISHED BUSINESS
Bill No: SB 1433
Author: Hill (D)
Amended: 8/22/14
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 4/22/14
AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,
Lara, Liu, Pavley, Roth
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : 6-0, 5/5/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Steinberg
NO VOTE RECORDED: Padilla
SENATE FLOOR : 35-0, 5/8/14
AYES: Anderson, Beall, Berryhill, Block, Cannella, Corbett,
Correa, De Le�n, DeSaulnier, Evans, Fuller, Galgiani, Hancock,
Hernandez, Hill, Hueso, Huff, Jackson, Lara, Leno, Lieu, Liu,
Mitchell, Monning, Morrell, Nielsen, Padilla, Pavley, Roth,
Steinberg, Torres, Vidak, Walters, Wolk, Wyland
NO VOTE RECORDED: Calderon, Gaines, Knight, Wright, Yee
ASSEMBLY FLOOR : Not available
SUBJECT : Design-build procurement for transit capital
projects
SOURCE : California Transit Association
DIGEST : This bill extends the sunset date on statutory
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authority for transit operators to use design-build (DB)
procurement for transit projects from January 1, 2015 to January
1, 2017.
Assembly Amendments extend the sunset date for two years on the
authority for transit operators to use DB rather than repeal the
sunset date entirely; and delete all other provisions from the
bill as it passed the Senate.
ANALYSIS : Generally, DB refers to a procurement process in
which both the design and construction of a project are procured
in a single contract from one entity. DB stands in contrast to
the traditional design-bid-build contracting method whereby work
on a project is divided into two separate phases: design and
construction. Under design-bid-build, the government agency is
responsible for the design of the project, either by designing
it itself or by contracting with a private entity to do so.
When designs are completed, the agency solicits bids from the
construction industry and hires the responsible low bidder to
build the project. DB combines these two phases into a single,
comprehensive contract.
Various sections of existing law authorize a number of different
state and local agencies, including transit operators, to
utilize the DB process for procuring capital projects. Further,
existing law prescribes the specific process transit operators
must follow when developing and constructing a transit project
through this procurement method. Existing law defines a transit
operator eligible to utilize DB as any transit district,
municipal operator, transit development board, or joint powers
authority formed to provide transit service. Existing law also
limits eligible capital projects for DB procurement to those
exceeding $25 million in cost. Finally, existing law requires
transit operators exercising DB procurement to report on the
outcome of the experience to the Legislative Analyst's Office
(LAO). Statutory authority specific to transit operators' use
of DB expires January 1, 2015.
This bill extends the sunset date on the statutory authority for
transit operators to use DB procurement for transit projects in
California from January 1, 2015 to January 1, 2017.
Background
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DB procurement is no longer a new concept . In 2000, the
Legislature passed and the Governor signed into law AB 958
(Scott, Chapter 541), which originally authorized transit
operators to use DB procurement. At the time, DB was relatively
new in California, and therefore that initial bill included
reporting requirements and a sunset date of January 1, 2005. AB
372 (Nation, Chapter 262, Statutes of 2006), extended the
original sunset date, and then in 2009, AB 729 (Evans, Chapter
466), extended the sunset date further to January 1, 2015.
Unlike in 2000, the state and many local and regional agencies
today have had significant experience with DB procurement. It
is now a widely understood method of procuring large capital
projects, and results from using DB for project delivery across
the state have largely been favorable. For example, in a recent
report, the LAO found that the DB projects reviewed for the
report were generally successful at staying on budget and
schedule. It seems reasonable to no longer include the sunset
date in existing law, and instead grant transit operators
unlimited access to DB procurement.
LAO reporting . As previously noted, the Legislature authorized
transit operators to use DB, when there was still some
uncertainty about the appropriateness of this procurement method
for transit projects. Therefore, the original legislation
included a requirement that any transit operator utilizing DB
under this authorization report its experience to the LAO.
Since enactment of the original authorization, LAO staff states
that they have received few, if any, reports from transit
operators. This bill eliminates the LAO reporting requirement
from existing law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee:
Unknown overall contracting costs or savings to transit
operators. By extending DB authority, any future transit
projects may be awarded on a "best value" rather than "lowest
responsible bidder" basis. Overall contracting costs may
increase, to the extent contracts are awarded to bidders who
may not have the lowest bid price. On the other hand, overall
contracting costs may be lower to the extent that efficiencies
are gained by using DB, such as expedited project delivery.
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Transit project funding could be from any combination of
local, federal, and state funds (Public Transportation Account
and potentially bond funds).
Likely minor fiscal impacts on Department of Industrial
Relations related to the department's monitoring and
enforcement of prevailing wage requirements, reimbursed by
transit operators (State Public Works Enforcement Fund). The
Assembly Appropriations Committee notes that by extending the
deposit of funds into this continuously appropriated fund,
this bill makes an appropriation.
SUPPORT : (Verified 8/28/14)
California Transit Association (source)
Orange County Transportation Authority
Peninsula Corridor Joint Powers Board
San Mateo County Transit District
San Mateo County Transportation Authority
Santa Clara Valley Transportation Authority
Ventura County Transportation Commission
ARGUMENTS IN SUPPORT : According to the author, because
specific statutory authority for transit operators to utilize DB
sunsets at the end of this year, this bill is necessary in order
to maintain an innovative and valuable tool transit operators
can use to deliver critical capital projects. In 2011, Santa
Clara Valley Transportation Authority awarded a $900 million DB
contract to extend the Bay Area Rapid Transit system toward San
Jose. According to bill proponents, this project is currently
10 months ahead of schedule and $100 million under budget.
Projects experiencing results similar to this suggest DB can be
a successful way to deliver important transportation
infrastructure within limited means. As transit operators
continue to wrestle with the challenge of revenue growth not
keeping pace with increasing costs, the author believes this
tool could help maintain transit ridership and presence in the
state.
JA:e 8/28/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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