Public Works Agency
www.santa-ana.org/public-works/
Item # 30
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
January 21, 2025
TOPIC: Alternative Public Works Construction Delivery Method Conflict of Interest Policy
AGENDA TITLE
Resolution Establishing a Conflict-of-Interest Policy Covering Alternative Public Works Construction Delivery Methods Including Design-Build and Construction Manager At- Risk Projects (No Fiscal Impact)
RECOMMENDED ACTION
Adopt a Resolution establishing a conflict-of-interest policy covering alternative public works construction delivery methods including design-build and construction manager at-risk projects, as allowed for in the City Charter and Santa Ana Municipal Code Chapter 33.
RESOLUTION NO. 2025-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF SANTA ANA ESTABLISHING A CONFLICT-OF-INTEREST POLICY
COVERING DESIGN-BUILD AND CONSTRUCTION MANAGER AT RISK PROJECTS GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
As a Charter City, the City of Santa Ana may determine the most appropriate project delivery methods for Public Works Projects. Traditionally, the City utilizes the design- bid-build approach. This is a process wherein staff or a firm initially performs the design phase services. Subsequent to the completion of the design, the City bids out the construction portion of the project and awards the contract to the lowest responsible bidder. This design-bid-build process is appropriate for most of the City’s Public Works Projects, however complex and time-sensitive projects suffer from this approach as the proposer’s qualifications, technical abilities, and ingenuity of construction means and methods are not decisive factors. Alternative delivery methods such as Design-Build and Construction Manager At-Risk (CMAR) are currently permitted under the Santa Ana Municipal Code (SAMC) and are beneficial to the City’s ability to deliver quality public projects in an efficient manner. Adoption of the proposed Resolution will establish a conflict of interest policy for alternative project delivery methods to ensure that the procurement process is fair and yields competitive pricing from highly qualified firms.
There are several advantages in using alternative project delivery processes for certain
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projects. Some of the advantages include:
Enhanced design quality due to contractor involvement in the design process For design-build, a single point of accountability as the same firm is responsible for both the design and construction of the project
Fewer change orders
Fewer claims
Reduced delivery time as design and construction can overlap Higher-quality construction work
Greater cost certainty
Lower overall project delivery cost
Design Build
Design-Build services combine professional design and construction services into a single contract with one vendor or team of vendors. This method has been popular in the private-sector and federal government sectors for decades and has been used for many public agency contracts in California. Moreover, legislation passed in the year 2000 which allowed certain General Law Cities to use Design-Build, and subsequently the legislature expanded Design-Build authority to be available for all General Law Cities. In 2014, the laws allowing local agencies, including General Law Cities, to use Design-Build were consolidated and codified at Public Contract Code Section 221060 et seq. Various agencies, including a number of charter cities, have used a Design-Build variation known as Progressive Design-Build, which maximizes innovation by selecting the Design-Builder at the earliest feasible stage of the project. For Progressive Design- Build projects, certain pricing elements may be set based on the Design-Builder’s original proposal, but the price for construction work is negotiated after the design reaches an appropriate level. Additionally, California legislature has adopted statutes specifically allowing the use of Progressive Design-Build, including a law that passed in 2021, codified at Public Contract Code Section 10198 et seq.
Construction Manager at Risk
The CMAR method involves procurement of a construction manager to provide preconstruction services during the design phase of the project, including providing input on the design, conducting site investigations, and providing construction services during the construction phase of the project. Once the design reaches an appropriate level, the contractor prices the construction work, including obtaining competitive bids from subcontractors. Then, the agency conducts a cost evaluation and determines whether to proceed with construction. Although not yet authorized for use for General Law Cities, CMAR has been used by Charter Cities, and the legislature has specifically authorized its use by various state and local agencies, including laws codified at Public Contract Code Section 20146 et seq. and Public Utilities Code Section 100150 et seq.
As with the Design-Build laws, the CMAR statutes include provisions addressing compliance with the subcontractor listing law.
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Conflict of Interest Policy
One of the requirements to utilize Design-Build that applies to General Law Cities is that they develop and implement guidelines and a policy specifically related to conflicts of interest. While this requirement likely does not apply to Santa Ana as a Charter City, it is good public policy for alternative construction delivery methods. As such, a conflict-of- interest policy is proposed to be adopted by Resolution (Exhibit 1). The City’s Conflict- of-Interest policy pertaining to Public Works projects where Design-Build or CMAR is used includes restrictions to avoid situations where consultants working for the City or stakeholders may be biased or lack objectivity in performing their work; and to avoid situations where a team proposing for the Design-Build or CMAR contract has an unfair competitive advantage. The proposed Policy addresses the responsibilities of the City as well as contractors that may propose on City Design-Build and CMAR projects, including their subcontractors and suppliers.
Proposed Resolution
City Charter permits the City Council to allow use of alternative procurement processes by ordinance. The proposed Resolution would establish a Conflict-of-Interest policy covering Design-Build and CMAR processes. Nothing in the Resolution or Policy reduces or eliminates the requirement for contractors to pay prevailing wage on City projects or be subject to the City’s Community Workforce Agreement.
Adoption of this Resolution does not obligate the City to use alternative processes. The City would be able to use the Design-Build or CMAR method if staff determined that utilizing such process would be beneficial and likely result in reduced costs or a shortened construction period. Staff recommends adoption of the proposed resolution to ensure that the procurement process is fair and yields competitive pricing from highly qualified firms.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no fiscal impact associated with this action.
EXHIBIT(S)
1. Resolution Approving the Conflict-of-Interest Policy Covering Design-Build and Construction Manager at Risk Projects
Submitted By: Nabil Saba, P.E., Executive Director - Public Works Agency Approved By: Alvaro Nuñez, City Manager