The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 5:24 p.m., on Thursday, March 25, 1999, in Room 2144 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to Room 4401, in the Grant Sawyer State Office Building, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Ann O'Connell, Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

COMMITTEE MEMBERS ABSENT:

Senator William J. Raggio, Vice Chairman

STAFF MEMBERS PRESENT:

Angela Culbert, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell opened the meeting asking for background information from two witnesses with experience in design-build projects.

Marvin Perala, Vice President and Director, Northwest Operations, Sverdrup Civil Inc., indicated he had many years of experience in design-build projects and noted involvement on the Interstate 15 (I-15) freeway project in Salt Lake City. He listed benefits of the design-build process including single-source responsibility, reduced cost, schedule improvement, schedule reduction, and change order elimination. He indicated selection for the I-15 project was detailed and based on price and qualifications for best value to the Utah public. The schedule planned for a traditional project on I-15 was estimated at 8 to 12 years, but, he noted, due to the design-build process, the project will be completed in approximately 4 years with the initial cost guaranteed by the design builder. It is a single bid, he explained, and the only changes can be change orders initiated by the client. He stressed the benefits of the synergy between the client, the contractor, and the designers involved in design-build projects, noting there is single-point responsibility and opportunities for control as a result of required warrantees. He stressed through the design-build process, one can provide continuity and assurance of quality.

Mr. Perala said the benefits are to the motoring public through cost value throughout the life of the project. He pointed out long-term benefits involved in design-build, noting Utah is determined to use design build on future projects that are schedule or cost driven. While design build is not for every project, he maintained, there are a number of opportunities where it makes the best sense for overall benefit.

Greg Winkler, Director, Project Development, Sverdrup Civil Inc., drew attention to the amount of construction in Las Vegas, pointing out the significant benefits of the design-build approach to the motoring public. He urged the committee to consider the allowance of design-build in the State of Nevada.

Noni Johnson, Executive Director, State Board of Professional Engineers and Land Surveyors, read from a prepared text (Exhibit C). She stated Senate Bill (S.B.) 409 was put together by building officials, contractors’ board, architects board, landscape architects, interior designers, engineers, and land surveyors. She expressed support on behalf of the professional engineers and land surveyors for the concept of reasonable uniformity and submission of design documents as a positive factor in the protection of public health, safety, and welfare. She noted the bill amends chapter 625 of Nevada Revised Statutes (NRS) regarding incomplete submission of plans. She said chapter 625 of NRS governs engineers and land surveyors, explaining this language is currently in the NRS 338.176 and Nevada Administrative Code (NAC) 625.550. She indicated this language is redundant as found in changes made to section 13, subsection 2 of the bill, and she expressed support for its deletion.

Continuing, Ms. Johnson indicated the board of engineers and land surveyors does not agree to adopt a set of standards for design document submission by regulation without the flexibility to develop its own language for the regulation. The primary purpose of S.B. 409, she pointed out, is to require those individuals who submit design documents to governmental agencies and who are not regulated with regard to their competence to perform that design, be held to an acceptable minimum standard. She drew the committee’s attention to a proposed amendment (Exhibit C) to section 3, subsection 1, paragraph (b), subparagraph (2) of the bill that would delete the word "uniform." She expressed support for an amendment (Exhibit C) to section 4, subsection 1 of the bill that would read "In cooperation with building officials ‘and each other.’" She proposed deleting the word "jointly" in section 4, subsection 1 of the bill as set forth in Exhibit C.

Chairman O’Connell questioned whether the bill had been reviewed before it was printed. Ms. Johnson indicated the bill was a joint effort, though all sections did not come out of the Legislative Counsel Bureau as expected, such as making the change to chapter 625 of NRS as well to chapter 623 of NRS. She said the final language was not seen until completion of drafting. She continued explaining that along with other proposed amendments (Exhibit C) the board wishes to delete the word "uniform" in section 4, subsection 1 of the bill to give the board the ability to write their own regulations in accordance with the professionals which they represent.

Chairman O’Connell questioned the original purpose of the bill. Ms. Johnson stated S.B. 409 would help county and city building officials in regards to design.

Chairman O’Connell clarified that the process currently in place is cumbersome and the intent was to streamline the process. She questioned whether the counties had requested the bill. Ms. Johnson stated S.B. 409 was not requested by the counties but was a joint effort through the building industry committee, which works on all issues effecting building and design.

Senator Neal pointed out they were dealing with a design document indicating all parties involved will be working in conjunction with one another on a particular project. He questioned whether the board of professional engineers and land surveyors was asking to develop their own rules and regulations in conjunction with the other individuals sharing the project.

Ms. Johnson clarified the engineers and land surveyors already have their own regulations just as each entity has statutes and regulations pertaining to their profession. She noted many projects would affect all of these different groups, and it was the intent of the proposal to help the building department with these projects.

Senator Neal stressed the necessity of all involved in a project to work together in some ways. He pointed out a design document would list the responsibilities of each party involved. He questioned the reason the board of engineers and land surveyors would find it necessary to develop their own rules and regulations in relationship to this process.

Ms. Johnson stated each professional is responsible to their board. She pointed out all engineers and land surveyors licensed in the State of Nevada are responsible to the Nevada board of engineers and land surveyors only.

Senator Neal questioned how the language would prevent the board from being responsible for the work done by engineers and land surveyors. Ms. Johnson clarified S.B. 409 would support chapter 278 of NRS and not chapter 625 of NRS.

Senator Neal pointed out the bill would amend various chapters dealing with the board, noting that once a design document is developed, the board would apply their own regulations and rules. Ms. Johnson stressed the design document does not in any way affect chapter 625 of NRS which is the statute and regulations for engineers and land surveyors. She said the engineers and land surveyors already have these requirements which is the reason for the amendment requesting chapter 625 of NRS be removed from the bill.

Senator Neal questioned whether the board of engineers and land surveyors has a rule in the form of the one proposed by the bill for developing a design document in conjunction with other parties involved in the project. He indicated S.B. 409 would not constrain the board from doing individual projects, but once they are working in relationship to others, then the design document is a necessity. He gave an example in which it would be necessary for engineers and land surveyors working in conjunction with others to meet specifications and standards of a project. Ms. Johnson agreed and clarified engineers and land surveyors are responsible to their own board under those laws and regulations. She restated opposition to keeping in the word "uniform" in the bill because then the engineer and land surveyor regulations would have to be rewritten to conform with statute. She said although they do not have a problem doing so, there would difficulty writing regulations for each of the laws representing different types of professions.

Senator Neal pointed out in the big project, all of the disciplines need to work with the others. Ms. Johnson agreed, but noted the board is only responsible for engineers and land surveyors. She said engineers and land surveyors have statutes and codes which an architect or other professionals would never have in their laws.

Senator Neal stated the purpose of legislation was to bring statutes and codes in to conformity. Ms. Johnson pointed out most of the proposed language is currently in the law, noting the board would like to be able to write the regulations according to their profession.

Ron L. Lynn, Lobbyist, Nevada Organization of Building Officials, stated every law regulated by a board has an ability for an exclusion or an exception. The contractors, he noted, have an exception that allows them to do some limited design work. He said when contractors do design work, they are not regulated by anybody. Everybody, he stated, has such a "loophole." S.B. 409 requires exceptions be done based on acceptable standards with the right of the discipline by the licensing board. He expressed interest in keeping the word "uniformity" in the proposal because building officials will be the arbiters in many cases. He said these officials establish standards for local jurisdictions and will eventually establish statewide standards for plan submittals so all requirements will be uniform. Currently, he noted, everybody is in cooperation. He said building officials work closely with architects, engineers, and contractors. He indicated the intent was not to restrict anyone from doing work, but to restrict the "exceptions" who do not do the work properly or provide the plans in a professional manner.

Senator Neal pointed out according to the proposal everyone has to work in cooperation with the building officials. He questioned whether Mr. Lynn agreed with the changes proposed by Ms. Johnson.

Mr. Lynn said most of the suggested changes can be found somewhere else in the body of the code, though he stated he was not against redundancy.

Senator Neal questioned whether it was truly redundancy being omitted. Mr. Lynn indicated sections 10 and 13 are in NRS sections specific to the professions affected. He indicated there was disagreement with the word "uniform." He said if this language is removed from S.B. 409, the uniform standards would be placed back on the building officials. He stated the building officials would be willing to accept the change.

Chairman O’Connell questioned whether Mr. Lynn was speaking for building officials networking in agreement with the measure or whether he was speaking for Clark County. Mr. Lynn indicated he was speaking on behalf of building officials networking with S.B. 409, as well as for Clark County. He said the measure was brought to the attention of the Nevada Organization of Building Officials during the past two quarterly meetings.

Senator Porter questioned whether Mr. Lynn had seen the changes suggested by Ms. Johnson and whether he was in concurrence with the changes. Mr. Lynn indicated he had seen the changes and was in concurrence with all but the change to the word "uniform."

Gloria Armendariz, Executive Director, State Board of Architecture, Interior Design and Residential Design, testified in support of S.B. 409.

Chairman O’Connell questioned whether Ms. Armendariz was in support of the suggested amendments as well. Ms. Armendariz stated section 10 of the bill amends the statute relating to architecture, interior design and residential design and it could be either deleted or retained. She said if section 10 remains in the bill, the language would be redundant but would not affect the board negatively.

Mr. Lynn emphasized S.B. 409 is not intended to restrict contractors from doing the design that they are able to do.

Dennis Haney, Attorney, State Contractors’ Board, advised the committee of the contractors’ board’s support of the bill.

Robert R. Barengo, Lobbyist, State Contractors’ Board, concurred with the support offered by Mr. Haney.

Kevin Weiske, Concern Citizen, representing Moody Weiske Contractors, expressed opposition to the proposal due to redundancy in statute. He drew attention to the 1997 Uniform Building Code (UBC) which has been adopted in the State of Nevada and contains the rules by which contractors build. The building code, he noted, sets forth fees for applications for building permits and for plans to be returned to the submitter due to lack of completion or incorrectness. If an entity is not profitable because they are reviewing plans a multitude of times due to lack of completion, then they are not using established rules by which to do business. He stressed it is not up to the business officials, according to section 108 of the Uniform Building Code, to review the plans and accept full drawings. He said it is up to designers to provide complete documents. He stated laws already exist to accomplish the proposals in S.B. 409.

Chairman O’Connell questioned whether Mr. Weiske agreed with previous testimony indicating there were "loopholes" in the law and that the bill would assure the "loopholes" were closed.

Mr. Weiske stated he agreed with the testimony to a certain degree. He said the "loopholes" that exist are the same for everyone. He noted if designers do not meet the life-safety issues for the design work of a project based upon the UBC and the ordinances adopted by the county or city, then they will be at fault at trying to get something through a "loophole." If a government entity is accepting drawings that are incomplete, he pointed out, it is not entirely the fault of the designer. He expressed agreement with the fact that there is no one to govern exceptions of contractors doing design work. He indicated money is the only governing factor because if fees were to be paid for wasting a building official’s time, those not skilled at design work would either not design or hire someone qualified.

Senator Neal proposed a situation in which a contractor hired an engineer to do the structural design of a building. If the contractor changed the design whereby the structural integrity of the building was compromised, the senator asked whether the contractor would be held responsible. Mr. Weiske indicated the contractor would be held responsible, stating contractors are not allowed to make changes and would be liable. He stressed the designer of record is responsible for the design and is the only one who can make a change to the design. He restated if a contractor pays a licensed engineer or architect to do a design, and the contractor makes a change to the design, the contractor is liable for the structure. He pointed out if the owner requests a change be made to the building, the contractor would have to have the engineer or architect who did the original design make the appropriate change so as not to compromise the project.

Senator Neal said previous testimony indicated this was not the case as a "loophole" exists which would allow these changes to happen without responsibility or liability.

Mr. Weiske concurred this is done in certain circumstances, but he considers it "cutting corners" rather than a "loophole." He said the "straight-up" contractors build per the plans. If a mistake is made, it is the contractor’s responsibility to make it right. He pointed out a contractor is not following the guidelines of the law if he intentionally changes a drawing without going to the designer of record to ask for the proper revisions to the documents and takes the documents back to the city officials for approval before making those changes.

Prompted by Senator Neal, Mr. Weiske indicated a design document is currently in use. Senator Neal questioned whether all people associated with the project have their duties and responsibilities defined in the design document. Mr. Weiske indicated this to be true. Senator Neal clarified if corners were being cut, the building officials can go back to the design document and bring about the necessary action to correct the problem. Mr. Weiske agreed.

Jesse C. Paulk, Lobbyist, Associated General Contractors, Las Vegas Chapter, presented the committee with an opposition paper to S.B. 409 (Exhibit D). He suggested Senator Neal’s questions regarding "loopholes" was not exactly what had been addressed by the building officials as "loopholes." He indicated the building officials were referring to the type of plans they may be receiving rather than changes made to the plans.

Mr. Paulk read from Exhibit D and expressed opposition to the bill based on the standard form and content of the design document with the cooperation of government entities, after the fact. Without the opportunity to review the standards, he stressed, it is unclear as to what "loophole" is attempting to be closed. He said there are contractors that try to "cut corners" on their drawings, and questioned what the standards for the drawing are going to be. He pointed out often requirements are changed for the better and questioned whether this would be affected by the proposed changes to close "loopholes." He stated he would like more explanation on "loopholes."

Mr. Lynn said the "loopholes" being discussed are those that govern the activities of individuals. He said fees can be charged, but everything in the waiting line to be reviewed by the building officials slows down the entire process. Design professionals who repeatedly submit deficient plans can be brought back to the appropriate board for discipline. He said if a contractor does not do their work correctly, they can be taken to the contractors’ board. He pointed out the "loopholes" attempting to be closed deal with enforcement of exceptions which allow one profession to do the work of another on a limited basis. He agreed standards set forth by S.B. 409 should be up-front and need to be developed. The standards to which have been referred, Mr. Lynn stated, are not upgrade changes as suggested by Mr. Paulk. He stressed they are standards of "competence submittal" so the calculations of "stress, strain analysis" and the computations for various load requirements will be present in a certain format with a certain methodology. This would ensure the plans are complete when they are brought to the building officials. He stressed building officials are not intending to stop the process as many of the contractors do an excellent job. S.B. 409, he noted, would allow the building officials to deal with the problems caused by those who do not do an excellent job systematically within the laws of the governing bodies appointed by the state.

Mr. Paulk stressed the intent of the standards, as testified to by Mr. Lynn, should be included in the bill to avoid confusion. Unless the standards are clarified, he stated, his expressed opposition would stand.

Chairman O’Connell questioned whether these concerns are addressed in the bills dealing with design-build. Mr. Paulk indicated the concerns are addressed in their proposals to be heard later in the meeting.

Senator Care questioned language in section 3, subsection 3 of the bill which would preclude civil action based on a deficiency in the document. Mr. Paulk indicated the language would pertain to the contractor with an exemption on his design.

Chairman O’Connell closed the hearing on S.B. 409. She next asked the committee to address S.B. 437 and S.B. 475 together, noting there was some technical errors in the bills due to the time constraints in drafting the legislation.

Steve G. Holloway, Lobbyist, Associated General Contractors, Las Vegas Chapter, indicated he was representing both the Associated General Contractors (AGC) in northern and southern Nevada. He stated meetings had been held regarding the two pieces of legislation, and he had been asked to outline the bills and explain points of agreement and disagreement. He presented the committee with a prepared bill summary (Exhibit E) and explained he had used the bill copy provided on the Internet, stating his referenced page numbers would be different, but the bill sections would be the same.

Chairman O’Connell asked for information regarding the initiation of the proposals. Reading from his prepared statement (Exhibit E), Mr. Holloway said at the close of the Sixty-ninth Session of the Nevada State Legislature, the AGC had been requested to work within the construction industry to include the public works agencies in developing a bill which would allow the agencies to utilize the design-build method of contracting. The design-build method, he noted, would be in addition to the traditional method called the design-bid-build method. He stated both are methods of procurement.

Mr. Holloway explained in law the public works agency negotiates with an engineer or architectural firm to do the design of a project. Once the project is designed to proper specifications, he noted, the agency is required by law to solicit bids for the construction of that project. The proposed legislation would add another means of procuring the design and construction of public works projects. He pointed out the measure would allow agencies to solicit bids from design-build teams, contractors with engineering staff, or contractors involved in a joint venture with architectural or engineering firms based on the requirements. The teams, he noted, would design and build the project.

Mr. Holloway read from the prepared text (Exhibit E), noting meetings had been held with construction industry associations and public works agencies with the compromise being S.B. 475. He explained S.B. 437 has much of the same language with 5 significant differences which have not been agreed upon. He pointed out the federal government and 30 states use design-build as an alternate method of construction. He stated statutes regarding design build are different in each state though they have four elements in common with standardized federal procedures; the design-build method may only be used on projects where it is anticipated it will provide significant savings in cost and time, the criteria for selecting the design-build team are set forth in the initial request for proposals (RFPs), the costs associated with the development of a final proposal require the list of bidders be quickly pared down to a short list of no more than 5 finalists, and the unsuccessful finalists are partially compensated for the nearly complete designs required. These elements are incorporated into S.B. 475 along with the "AIA/AGC Recommended Guidelines for Procurement of Design-Build Projects in the Public Sector" (Exhibit F).

Mr. Holloway gave a section-by-section analysis of S.B. 475 (Exhibit E). He noted section 2, subsection 1 of the bill clarifies existing requirements that a public works must competitively bid a project when the estimated cost exceeds $100,000. Section 2, subsection 2 of the bill sets forth the requirements to be met prior to a public body utilizing design-build methods. This section would limit design-build contracts to projects which exceed $30 million or $100 million if it is a water or sewage treatment plant.

Chairman O’Connell pointed out section 2, subsection 2, paragraph (b), subparagraph (1) of S.B. 475 states "design and construct the public work" while section 2, subsection 2, paragraph (b), subparagraph (1) of S.B. 437 reads "complete the public work." Mr. Holloway indicated this is one of the 5 major areas in which the two proposals differ. He explained the Legislative Counsel Bureau, Legal Division used the word, "complete" or "completion" in drafting, while "construct" or "construction" has been agreed upon by both of the sponsors of S.B. 437 and S.B. 475 to replace the language "complete" or "completion."

Mr. Holloway continued with his presentation (Exhibit E), stating the threshold amounts in section 2, subsection 2 of S.B. 475 exist because design-build projects have been proven cost-effective only on larger projects and the $30 million threshold reserves a share of the market for smaller contractors who are not bonded or staffed to compete for design-build contracts. He pointed out the threshold amounts were debated as S.B. 437 proposes public works agencies be limited to no more than 2 design-build projects per year. He said the proponents of S.B. 475 are willing to adopt the limit on the number of projects though they would like the dollar thresholds left in as well.

Chairman O’Connell questioned the reason for the project limit set forth in S.B. 437.

Warren B. Hardy II, Lobbyist, Associated Builders and Contractors of Southern Nevada, explained the proposed language was a result of the negotiations with the local government entities who were concerned about the dollar threshold. He said the project limit would give them an opportunity to utilize design-build on any project. He pointed out another portion of S.B. 437 provides for a study of the process to see how design-build impacts the open bid process. He reiterated this was a compromise with the local governments and agencies.

Mr. Holloway stated the threshold is one area on which the industry has not reached agreement. Reading from Exhibit E, he explained the remainder of section 2, subsection 2, paragraph (b) of S.B. 475, was borrowed from the Bureau of Reclamation regulations on design-build to ensure the method is used on only projects where cost and time savings are anticipated. He pointed out section 2, subsection 3 of the bill allows certain specific smaller jobs to be let as design-build contracts while section 3 requires the decision to use design-build method be ratified at a public hearing in compliance with the open-meeting law.

Continuing his summary (Exhibit E), Mr. Holloway indicated section 4 of S.B. 475 requires public works agencies to use the traditional method if the design-build method is not elected. He explained section 5 of the bill set forth the requirements for solicitation to bid a design-build project which conform to those used by the federal government, as well as other states. He pointed out this section sets forth the procedures in advertising to solicit bids, evaluating teams and proposals, and selecting a design-build team. It also proposes a time table for the selection process. He said the authors of both proposals are in agreement on these procedures, noting the time spent on the process would normally be spent negotiating the design of the project under the traditional method.

Mr. Holloway explained section 5, subsection 2, paragraph (i) of the bill provides for the partial reimbursement of proposal cost for unsuccessful finalists by the public works agency. Those completing the requirements of the second phase of the process will be paid a stipend as determined in amount by the initial solicitation. The money and time spent on design submissions, he noted, is far beyond the requirements for the traditional method. Prompted by Senator O’Connell, Mr. Holloway indicated the public works agency that requests the bid would pay the stipend, and he pointed out section 8, subsection 4, paragraph (c) of the bill sets a maximum limit on the amount of the stipend which is no more than 3 percent of the total amount to be paid to the design-build team. The stipend, he suggested, would attract quality teams to participate in the design-build procurement process.

Senator Titus questioned whether this was a common provision in the federal law regarding design-build projects. Mr. Holloway indicated this was the case in federal law and in other state statutes. He said it is also a recommended provision in the Institute of Architects/AGC guidelines.

Referring to his prepared text (Exhibit E), Mr. Holloway explained section 6 of S.B. 475 provides for the minimum qualifications of the design-build team and section 7 requires the list of bidders be quickly pared down to a short list of no more than 5 finalists. He pointed out section 7 is a point of disagreement as due to limitation concerns. He said by limiting the finalists to fewer than 3, an auction is created rather than a competitive bidding situation, noting this could create problems for the public entity.

Mr. Hardy stated, "My apologies to Steve [Mr. Holloway]; this is something we did talk about this afternoon and there is still some disagreement among the local government entities on this particular issue. Some agree, some are still uncertain; so this is an area we still need to work through in terms of that issue."

Continuing with his explanation (Exhibit E), Mr. Holloway drew the committee’s attention to section 8, subsections 1 and 2 of S.B. 475 which sets forth the criteria for a request for final proposal which must be provided to the finalists. Section 8, subsection 3 of the bill, he noted, would require the public works agency to select the most cost-effective, responsive final proposal, or reject all final proposals within 30 days of their submittal. He continued explaining, section 8, subsection 4 of the bill requires the responsible public body to review and ratify the selection at its next regularly scheduled meeting while section 8, subsection 5 summarizes the responsibilities of the team awarded a design-build contract. Section 9 allows the employment of a registered architect or licensed professional engineer to oversee the construction of a public work, he noted, which would codify existing practice. He said section 10, subsections 2, 3, and 4 of the bill would ensure the chosen design-build team is fully licensed and capable of performing the job. Subsection 5 of this section would include the word "responsive" in the definition of an eligible bidder to allow the public works agencies to reject any bidder who fails to comply with bid specifications. The changes to section10, subsection 7, he noted, define "prime contractor" while subsection 10 of section 10 defines "specialty contractor." Section 10, subsection 10, defines a "stand-alone underground utility project" which is excluded from the design-build method.

Referencing Exhibit E, Mr. Holloway told the committee section 13 would make the contractors’ board responsible for issuing certificates of eligibility for local bidder’s preference when a general contractor applies for his initial license or renewal.

Chairman O’Connell questioned whether the State Contractors’ Board has agreed to this provision. Mr. Holloway indicated the board had requirements which have been incorporated into the measure.

Senator Porter indicated he would not encourage the contractors’ board be put in this position as they are reorganizing and have faced serious challenges recently. He suggested another option be investigated.

Mr. Holloway continued, stating local bidder’s preference applying to the traditional method would also apply in the design-build process. He said section 13, subsection 3, paragraph (b) of S.B. 475 would allow bidder’s preference to be acquired by inheritance, gift, or transfer through an employee stock option plan. Section 13, subsection 4 of the bill credits the general contractor for taxes paid by a parent or affiliate if the affiliate or parent company is also a general contractor for the purpose of obtaining a certificate of eligibility for local bidder’s preference. These changes, he noted, will prevent out-of-state general contractors from circumventing requirements by purchasing a small, local subcontractor that has paid requisite taxes. He pointed out section 13, subsection 7 imposes a penalty on general contractors who submit false claims for local bidder’s preference and subsection 9 clarifies local bidder’s preference may be claimed by a joint venture only if all of the joint ventures qualify. He noted this provision has unanimous support of the construction industry, as well as public works agencies, and is expected to reduce the number of disputed claims. Mr. Holloway indicated the State Contractor’s Board requested the addition of section 13, subsections 10 and 11. Subsection 10, he noted, allows the board to adopt regulations and assess reasonable fees for the contractors for local bidder’s preference while subsection 11 sets forth the circumstances under which an objection to the granting of local bidder’s preference may be filed and replaces the responsibility for resolving disputes on the involved public works agency.

Reading from his testimony, Mr. Holloway directed the committee’s attention to section 15 through section 35 of S.B. 475 which would allow the State Public Works Department and the Nevada Department of Transportation to use the design-build method. He pointed out that section 36 would repeal statute which allowed the State Public Works Board to use the design-build method on discrete projects upon approval of the Legislature. He clarified if S.B. 475 is passed the State Public Works Board will no longer have to go before the Legislature for approval of the projects.

Upon questioning by Senator Titus, it was found the expansion of the Legislative Building was not a design-build project.

Mr. Holloway continued by explaining the differences between S.B. 475 and S.B. 437. He summarized from prepared text (Exhibit E) stating the difference between the word "complete" in S.B. 437 rather than "construct" as found in S.B. 475. He indicated it was agreed to use the word "construct" as "complete" could lead to unintended interpretations.

Mr. Holloway pointed out S.B. 437 substitutes a restriction of 2 contracts per year for the dollar threshold in S.B. 475. He commented the AGC would agree to add the restriction to complement the threshold. The authors of S.B. 437, he stated, propose to delete the threshold amount, which is a point of disagreement.

Mr. Holloway indicated S.B. 437 proposes language which would permit a public body to proceed if no more than two design-build teams bid on a design-build project. He stated the AGC objects to this amendment, disagreeing this would be a sufficient number of bidders to ensure the interests of the taxpayer are protected.

Mr. Holloway said S.B. 437 proposes to add a section to create an interim committee to study the use of the design-build method. He voiced the AGC would agree on the condition there also be an advisory committee to the interim committee where there are an equal number of representatives from industry and the public work agencies.

Chairman O’Connell questioned the reason a study would be necessary and asked for an explanation of the criteria for the study.

Dallas Coonrod, Lobbyist, Associated Builders and Contractors of Southern Nevada (ABC), said they believed design-build was an unproven process for the State of Nevada and a study along with a 4-year sunset provision would provide the necessary time to evaluate the design-build process and its fiscal impact. Upon the sunset of the proposal, he noted, it was intended that solid design-build legislation, based on factual data, would be drafted.

Chairman O’Connell indicated 30 other states use the design-build method and questioned whether there was a specific concern regarding this process. Mr. Coonrod stated no two design-build contracts are the same which creates difficulty working with public entities within the same time frame and parameters. Chairman O’Connell indicated interim studies are limited and she questioned the necessity of the study. Mr. Coonrod said the proposed study was part of a compromise and stressed the importance of the evaluation expressed by the concerned parties. He stressed design-build would deal with the expenditure of many tax dollars. Chairman O’Connell questioned whether it would be possible to do a staff study as opposed to an interim study where the database could be provided to the Legislature in report form. Mr. Coonrod indicated ABC would agree to the chairman’s suggestion.

Marta Golding Brown, Lobbyist, City of North Las Vegas, said discussions taken place with the Southern Nevada Strategic Planning Authority and the public entities indicate they would be willing to do it through an interlocal agreement if industry officials were willing as well.

Senator Neal said there was no definition of "design-build" or the "design-build process" in the proposed legislation. Mr. Holloway indicated there was definitions of "design-build teams" and a "design-build contract" in the measures. Senator Neal stressed neither of these defined "design-build" or "design-build process." He asked for an explanation of design-build. Mr. Holloway stated design-build is where a team does both the design and the construction of a public works project. The "process," he noted, is the process of soliciting the contract for the design-build team to do the design-build project.

Prompted by Senator Neal, Mr. Holloway noted on a current road work project, the design was accomplished and then the construction was bid on that project. He said this was the traditional process called design-bid-build by which the design was negotiated, and then the project was built. In design-build, he noted, architects and engineers in the public works agencies oversee that process. In the traditional project, he reiterated, the design is completed first through negotiations between the public works agencies and engineering firms. Once the design is complete, the public works agency bids the job to a prime contractor to construct the project in accordance with the designs. In the design-build project, he explained, the public works agencies solicit bids for both the design and construction to be done by a design-build team.

Referring to his prepared text (Exhibit E), Mr. Holloway drew attention to a sunset provision. He said the AGC reluctantly agrees to the amendment with the provision the sunset amendment apply only to the sections concerning to design-build. He added the AGC does not believe the sunset provision or the requested study necessary, but would compromise on these issues.

Mr. Coonrod stated the only item of conflict between the ABC and the AGC concerns the cap on the amount of design-build projects. He said ABC believes the cap would give public entities more flexibility to test the design-build process. He expressed agreement that normally the design-build procedure will be used on very large projects. He noted the threshold is not necessary as ABC represents small contractors, stating they might be impeding their ability to utilize the design-build process. He said they limited the number of projects in S.B. 437 rather than retaining the dollar threshold set forth in S.B. 475.

Mr. Holloway stated AGC would like the threshold, noting they represent the largest number of contractors, both small and large. He stressed 80 percent of the represented contractors are smaller and oppose design-build entirely. He said retention of the dollar threshold was the only way they would agree to supporting the legislation. He pointed out the concern that larger companies who are also members of the AGC would take all of the work as they are already prepared to move forward with design-build. The other reason for the dollar threshold, he explained, the public works agencies, based upon the experiences of other states and the federal government, will find design-build only lends itself to the larger, more complex projects.

Bryan Gresh, Lobbyist, Regional Transportation Commission of Clark County, and Southern Nevada Strategic Planning Authority (SNSPA), stated the Regional Transportation Commission (RTC) is pleased to have participated with the SNSPA on drafting the language in S.B. 437. He stressed it is an important tool that local entities can utilize to more quickly and cost-effectively complete the public works projects. He thanked the AGC for working with the SNSPA through the RTC, the Clark County Sanitation District and Clark County to craft the legislation. Mr. Gresh stated the bill represented a necessary and workable solution to extending design-build beyond the RTC’s Assembly Bill (A.B.) 333 of the Sixty-ninth Session, which was passed in the last legislative session.

Mr. Gresh drew attention to people testifying from Las Vegas. He introduced Virginia Valentine, Lobbyist, City Manager, Las Vegas; Michael Montandon, Mayor, North Las Vegas; Lobbyist, City of North Las Vegas, representing SNSPA; and Jim Gans, Director, Clark County Sanitation District.

As well as being the city manager of Las Vegas, Ms. Valentine indicated she was also a professional civil engineer. She testified in favor of S.B. 437 with some additional amendments.

Daniel C. Musgrove, Lobbyist, City of Las Vegas, distributed a legislative comment form from the City of Las Vegas (Exhibit G).

Ms. Valentine indicated the issue as to whether the agency would proceed with only two bidders upon the final selection process had been discussed, noting it had been agreed upon to concur with the AGC’s recommendations on this matter.

Ms. Valentine said as a professional engineer she has detected a contradiction in section 5 of the S.B. 437 as to whether or not the services are being selected on the basis of qualifications or on the lowest price. She pointed out section 5, subsection 2, paragraph (f) of S.B. 437 refers to criteria for the selection qualifications of the design-build team. Section 5, subsection 2, paragraph (g) of the bill, she noted, references the low bidders with respect to the bid preference. She indicated section 8 also mentions the low bidder; a selection based solely on the cost. She stated her understanding of design-bid differed from the definition given in previous testimony. Ms. Valentine explained in the traditional method a public body would hire an engineer and an architect who would prepare a set of plans and specifications. Then the project would be advertised and contractors would bid on the project. Based on the lowest price, a contractor would be given the contract award and in turn would build the project based on those plans and specifications. In design-build, she explained, an entity would have an engineering firm prepare approximately 30 percent of the plans and specifications. Engineers and contractors would then team together to submit a bid to complete the work. She pointed out this process allows the design of the project and the construction of the project to be conducted concurrently, thereby saving time.

Mr. Coonrod suggested the bills referred to the design-build team rather than the engineer and architectural design firm. He indicated when design firms are selected, the contractor is precluded from "bidding their work out," noting they are supposed to be selected based on their ability to perform. He pointed out there would be technical amendments to the bill in order to make S.B. 437 work.

Ms. Valentine expressed her concern with the lack of clarity in the bill. She stated the bill does not mention the preparation of plans or specifications, noting it would seem the professional services of engineering and architecture would be reduced to a line item in a bid. Instead of being selected on the basis of qualifications as required by chapter 625 of NRS, she suggested the selection would be made on the basis of price.

Mr. Holloway stated:

Ms. Valentine indicated the parties may just disagree on what the bill does, noting the measure does not include a provision mandating a "next to a final design" be completed prior to the bid phase. She stated if a "next to a final design" exists, it could potentially cause many people to spend a lot of money to prepare their proposal while requiring the agency reimburse these spendings up to 3 percent of the total cost. She pointed out the agencies may not get many bidders under these circumstances. Ms. Valentine relayed the concern that this process would not save any time as nothing has been eliminated on the design phase. She contended the time savings of design-build comes from doing some of the construction and some of the design concurrently instead of completing the design, and then doing the construction. She stressed her understanding of design-build and expressed disagreement with the bill’s intent.

Ms. Valentine expressed concern with section 12 of S.B. 437 and section 13 of S.B. 475. She drew attention to a provision which indicates that if a contractor had the wrong type of certificate for bid eligibility or there was a challenge to the certification, the public body would make that determination. Since public entities do not license contractors, she suggested this provision would be inappropriate. She opined the contractors’ board should determine the eligibility certificates, noting disputes in such matters are appropriately resolved by the contractors’ board and not the public entity.

Mr. Holloway clarified:

Ms. Valentine summarized concerns on behalf of the City of Las Vegas, stating the bill does not allow for bidding of architectural and engineering services. She said the public entities are not in as good of a position to adjudicate disputes over the eligibility certification.

Chairman O’Connell suggested those involved in the issue meet and attempt to find a solution to the differences expressed.

Mr. Holloway noted the parties were close together on the intent of the bill, though some of the language may be confusing the issue.

Chairman O’Connell requested final amendments to the bill be worked out and presented to the committee on March 29, 1999, at the regularly scheduled meeting.

Senator Neal observed the bill was bundling different specialties under one group called the design-build team. He questioned the feasibility of this method and compared it with health maintenance organizations.

Mr. Montandon indicated he was representing the legislative recommendations committee from the Southern Nevada Strategic Planning Authority. He expressed support for Chairman O’Connell’s suggestion of further discussions on the issue by the concerned parties. He said the measure is complex, and he noted, there has been much discussion in the past few days regarding the technical aspects of the proposal. He stated the SNSPA believes S.B. 437 to be a critical tool necessary to assist public works bodies in keeping up with the infrastructure in southern Nevada. Mr. Montandon explained it was a great compromise to address the concerns of contractors by limiting each entity to only two public works per year that could be done under a design-build process. He maintained placing a dollar limit on design-build processes eliminated a great deal of ability to use them, noting the size of the project does not definitely dictate whether design-build method is good for a project.

Mr. Gans expressed support for Mr. Montandon’s testimony. He agreed to participate in the discussions suggested by Chairman O’Connell.

Mr. Haney testified on behalf of the State Contractors’ Board, noting the board supported the general concept of the bill. He suggested the design team should have a contractor’s license, noting this provision could be added to section 5 of the bill. He expressed concern regarding the criteria for hiring a design team. All of the issues regarding bid preference, he voiced, should be moved out of the bill and dealt with separately. Ms. Valentine indicated Mr. Haney’s suggestion regarding bid-preference issues would help address her concerns.

Prompted by Chairman O’Connell, arrangements were made for a meeting in which the involved parties could further discuss the issues.

Rod Johson, Assistant Director, Operations Division, Nevada Department of Transportation, commented he had presented concerns to AGC, noting most of these have been addressed in previous testimony. He stated it was his understanding that in the preliminary phase of design-build the architects, the engineers, and the contractors are all selected based on qualifications. He drew the committee’s attention to section 5, subsection 2, paragraph (h) of the bills, indicating the confusion with the terms "bid" and "proposal." He pointed out it is confusing to use the term "bid" in reference to a dollar value. Normally, he maintained, the dollar value was brought out in the final bid, stating the finalists then come in with the refined plan and a dollar value bid; it is a competition. He stated the intent of this provision was unclear.

Mr. Holloway agreed this was the intent and indicated the AGC would be glad to work with the concerned parties to clear up the language.

Mr. Johnson suggested using the term "proposal" in areas where it calls for the bid in the preliminary phase. He pointed out both the terms "proposal" and "bid" are used in the bill thereby causing confusion. Mr. Holloway indicated he would review the bill for this change. Mr. Johnson noted the terms cause a problem with bid documents concerning design firms because they are supposed to be a negotiated issue, suggesting this is the intent despite confusing language.

Mr. Johnson continued, stating NDOT believes design-build would give them the opportunity, if the proper occasion arose, to use it as an extra tool to get work done. He expressed support for a design-build bill, but noted concerns with language in the presented legislation.

Senator Neal pointed out NDOT must follow certain federal guidelines and restrictions in terms of building highways. He questioned Mr. Johnson on the effects of the proposed legislation in terms of bidding on projects by minority contractors. Mr. Johnson responded it would not have a negative impact as NDOT, in the case of federal money expenditures, would have to require a percentage of the work be done following the current process.

Lisa A. Gianoli, Lobbyist, Washoe County, testified the Washoe County Board of Commissioners has taken a position in opposition to S.B. 437 and S.B. 475. She indicated the preference on behalf of the commissioners that Washoe County be left out of the legislation.

Mr. Holloway stated the bills do not require Washoe County to use the design-build process, noting the proposals would make design-build permissible. He stated approximately 80 percent of AGC contractors are unsure about design-build.

Ms. Gianoli explained the board of commissioners is aware the proposed legislation is optional, but noted their continued concerns.

Mr. Weiske, representing Moody Weiske Contractors, stated the AGC from northern Nevada would have two representatives at the proposed meeting.

Senator Titus stated testimony had been heard from the Mayor of North Las Vegas that design-build was a critical part of the interim planning committee’s recommendations, as the process is seen as important for speeding up infrastructure construction. Despite this, she pointed out, the number of projects are limited, as is the dollar amount. She indicated the legislation proposed design-build be further studied and include a sunset provision. She noted testimony reflected 80 percent of contractors do not think design-build is a good idea. The senator remarked that before she makes the decision to vote on the issue, she would like to hear more justification as to why design-build is a good idea.

Jim Galloway, Chairman, Board of Commissioners, Washoe County, indicated the board did not want design-build to apply to projects within Washoe County regardless of the involved entity. He insisted the board of commissioners did not object to other county’s involvement in design-build process. He stated the financial resources for Washoe County entities are finite and therefore did not want design-build projects in Washoe County during this trial period.

Jan Chastain, Concerned Citizen, provided a videotape containing information opposing S.B. 437 for the record (Exhibit H. Original is on file in the Research Library.). She testified:

William A. Molini, Lobbyist, Ducks Unlimited Incorporated, Western Region, presented an amendment to the committee (Exhibit I). He noted Ducks Unlimited is the largest wetland conservation organization in the world with 700,000 members in the United States and 4,000 members and 32 chapters in Nevada. He explained the intent of the organization is to be proactive in saving wetlands in the State of Nevada and particularly in being involved with the wetland restoration of the Las Vegas Wash. He indicated he had recently retired from the position of administrator of the Division of Wildlife, noting he had long-term experience with Ducks Unlimited, wherein they had essentially completed design-build projects for the Division of Wildlife. He noted Ducks Unlimited has completed the designs through their registered professional engineers who are experts in wetland restoration and wetland enhancement. He explained Ducks Unlimited is a nonprofit organization and often brings their own funding when helping with projects. He stated they are good at developing partnerships for funding and thereby cost-effective.

Mr. Molini referenced the proposed amendment (Exhibit I), and indicated he would be willing to work with the proponents of the legislation. He said the intent was to seek the ability for Ducks Unlimited to conduct limited design-build projects relative to wetlands and to be included in the exemption in section 2, subsection 3, of S.B. 437.

Chairman O’Connell suggested Mr. Molini review S.B. 217 for further information concerning wetland mitigation.

Kathie Fralick, representing Sierra Nevada Construction, stated she was one of the 80 percent of the small contractors concerned with the design-build concept. She indicated she is a small contractor who does many public works projects each year. In the current bidding process, she pointed out, the engineer and the owner develop the plans and the specifications for all contractors to bid the projects, noting this offers equality to contractors. She expressed concern if the number threshold is eliminated from the design-build bill, all of the public works agencies will opt for design-build projects and the small contractors will not be able to afford to bid public works projects. She indicated the design-build concept does not have to be eliminated, but she stressed the importance of maintaining a threshold number of projects available for the design-build process.

Edward R. Little, representing ProSites Management, distributed a prepared testimony to the committee (Exhibit J). He testified in favor of the concept of design-build and of S.B. 437 with amendments to clarify issues presented in previous testimony. He explained ProSites Management is a small group that has done design-build in the energy conservation field. He drew attention to the definition of ‘public work’ in section 2, subsection 2, paragraph (a), subparagraph (2) of S.B. 437 and S.B. 475, noting it effectively prohibits the use of design-build by public bodies for the vast majority of potential projects. He stated few of the projects in Nevada would exceed $30 million. He questioned the intent of the Legislature in enacting the enabling legislation.

Mr. Little commented in order for a public body to consider design-build, it must first find, in accordance with section 3, that the public benefits from design-build by either significantly lower cost, shorter completion time, or proper project coordination if it is a unique, highly technical or complex project. He stated if a municipal government determines that the public benefits, then there would be no purpose in imposing an artificially high-cost threshold. He expressed support for eliminating the threshold particularly if the limit of the number of projects is retained. He suggested limiting the number of design-build projects per entity is sufficient to address the concerns of many contractors who do not want to develop the capability or the teaming that would be required to participate in design-build. If the concern relates to the possibility of abuse of design-build, he commented, then a dollar cap is needed rather than a price threshold until there is some experience developed for state review. He maintained design-build has proven to be effective in other states, in federal agencies, and in the private sector. He stressed design-build is worth exploring due to the significant benefits involved. He indicated it would be acceptable to put a study element in the legislation which would sunset after 4 years, though he noted, it is not necessary to demonstrate the value of design-build. He restated if the intent was to create an enabling legislation instead of a special interest act for a narrow purpose, then it should be expanded so it contains neither a high nor low threshold. He maintained the other issues of concern had been previously addressed. He suggested the proposed meeting include people from the purchasing and contract-procurement departments of some of the major political entities, noting with the inclusion of these, the many technical issues, as well as the submission and selection procedures, could be addressed. He pointed out this would broaden support for the legislation.

James E. Keenan, Lobbyist, Public Purchasing Study Commission, indicated he was also representing Douglas County, and submitted a prepared statement in response to S.B. 437 (Exhibit K). He expressed both support and opposition for S.B. 437 and S.B. 475, stating design-build to be an excellent concept and a well-accepted purchasing procedure. He drew the committee’s attention to three definitions of design-build as found in one of the most popular purchasing text books used in universities.

Mr. Keenan stated for the record:

Chairman O’Connell asked Mr. Keenan to check with her office, noting they should have the amendments available by Tuesday, March 31, 1999.

Eric Raecke, Manager, State Public Works Board, Department of Administration, stated design-build is a great concept though indicated he had problems with the proposed legislation. He stated he would participate in the upcoming meeting, and he noted he had participated in one meeting 14 months ago but had not been contacted since or seen a final draft of the proposal until very recently. He explained the public works board does about $150 million worth of public work a year and stressed he would like to be included in the process. Mr. Raecke expressed concern for the limited scope of the bill, noting since he has been the manager of the public works board in the last 4 years and for 10 years before that. They have had three projects that would have been included within the limitations of the bills. He pointed out there was the Lovelock prison which bid for $58 million, Lied Library bidding at $41 million, and Cold Creek prison at $83 million. Design-build, with its current limitations, he remarked, would only have been used very few times.

After reviewing the time frame, Mr. Raecke noted with the inclusion of time taken by adding up the weeks of notifications, the hearings, the advertising proposals, and submittals, the process could take 5 months. He pointed out this would only put the process through schematic design phase. Mr. Raecke stated:

Mr. Raecke expressed support for Ms. Valentine’s testimony, stating if the State Contractors’ Board is going to adopt regulations, and if they are going to certify that a person is a preferential bidder, they should stand in and review the process if there is a protest. Currently, he noted, they are taking the money and putting the formal protest back on the public agency who then may have to go to court.

Mr. Raecke pointed out section 36 of S.B. 475 repeals NRS 341.161 and 341.171 which are both within the public works board statute. Mr. Raecke expressed disagreement with Mr. Holloway who indicated these were repealed as a favor to public works. He pointed out NRS 341.161 allows the State Public Works Board to select a contractor to assist an architect with design of a public work with the approval of the Legislature or the Interim Finance Committee (IFC). He drew attention to NRS 341.171, stating it allows the State Public Works Board "to let" to a contractor a single contract for design in construction. He explained this is the design-build provision with the approval of the Legislature or the IFC. He questioned the reason this power would be taken away while another which could not be used was given. He restated he has only built three projects in 10 years over $30 million, commenting the threshold is stifling. Mr. Raecke declared repealing the aforementioned sections in NRS takes away from the State Public Works Board as well as the Legislature if there is a project for $15 million that fits the design-build criteria. Mr. Raecke stated:

Senator Neal acknowledged, "I want you to know that those repealed sections did not go unnoticed. I had noticed that. And to hear you explain that 3 percent and the terms in which you couch that in …. It sounds like corporate welfare to me."

Max Hershenow, Lobbyist, American Institute of Architects–Nevada, testified in agreement that complex projects are best served by design-build and expressed support for the set threshold. He noted the AIA-AGC design-build guidelines had been previously mentioned. He pointed out design-build projects are complex and defined by the budget, stating design plays a very important part of the process in a $30 million job. The state, he explained, would normally contract with an architect for these projects in the traditional method, and would give the responsibility of the "three-legged stool" to architects. Mr. Hershenow stressed large state public works buildings need direction in terms of design, aesthetics, and management of design issues. He expressed concern that the prime contractor should tell the state whether or not they are going to hire an architect or engineer, contending a provision should be added to the bill to provide for the state having an architect on the team. He referenced an earlier statement regarding a pump house not needing an architect. He agreed with the statement, but stressed a $40 million prison and projects of those types undertaken by the state, do need design expertise. He indicated he would be present at the proposed meeting to discuss further design issues.

Mr. Holloway drew attention to a provision in the bill which provides the state can employ a licensed architect and a registered professional engineer to oversee the projects.

George F. Ogilvie III, representing various national and regional general contractors including Kewit Western, Ogden Constructors and Haydon Building Corporation, testified from Las Vegas. All of these organizations, he noted, have been involved in design-build projects across the country and are in favor of S.B. 475 as written. He indicated he would be unable to attend the aforementioned proposed meeting.

Mr. Ogilvie commented section 13 of S.B. 475 deals with bidders-preference revisions to NRS 338.147. He pointed out bidders preference is an issue of "fertile ground" for bid protests and protracted litigation, noting it is very expensive to the contractors, the various municipalities, and the awarding agencies. The statute, he stated, is flawed. If the intent is to maintain having a bidders-preference law in Nevada, he contended the statute is in need of amendment. He told the committee of his involvement in current litigation regarding the genesis of the transfer restriction contained in section 13, subsection 3 of the bill. He indicated this language needs to be clarified.

Mr. Ogilvie referred to the issue raised by Ms. Valentine concerning whether the contractors’ board was the appropriate body to arbitrate disputes between a bid protest based on bidders-preference issues. He contended there is an inherent conflict when presenting bidders-preferences issues to the contractors’ board. Currently, he explained, the contractors’ board is made up of long-time Nevada resident contractors arbitrating disputes over those entitled and not entitled to bidder’s preference. He stated this process "pits" the members of the contractors’ board against those who have recently moved to Nevada, thereby creating a conflict. Currently, he recognized, all bidders-preference protests are arbitrated by the awarding agency and then by a court of law. He suggested this is the best system since the awarding agency is an unbiased, independent third party. He stated the submission of the certification of eligibility by the contractors’ board has inherent problems. He stressed the current process of the awarding agency determining the eligibility for bidders’ preference is the preferred manner of resolving the conflict.

Mr. Ogilvie stated the language in section 13, subsection 4 of S.B. 475 includes language which indicates that any affiliate or parent corporation is entitled to use the payment of taxes by another parent or subsidiary corporation. He pointed out this language is beneficial to everyone involved. He indicated the current prohibition is artificial and should be removed. Mr. Ogilvie stated the retroactive versus the prospective effect of section 13 needs to be addressed, noting Mr. Holloway had advised him that it was the AGC’s intention section 13 and the revision of NRS 338.147 have prospective effect only. He expressed agreement that this is the reasonable interpretation of the amendment, stating there are a number of corporations and construction companies that have moved to Nevada in recent years and that have been guided by current laws in making substantial investments by purchasing in-state contracting companies and by establishing in-state operations. To have the prospect that those substantial investments are now at risk by a retroactive effect of the amendment, he stressed, is unreasonable and unfair.

Mr. Ogilvie indicated he had other suggested amendments which he would put in writing to be considered at the aforementioned meeting.

Senator Neal questioned whether there are cases pending involving design-build. Mr. Ogilvie stated there are no current cases regarding this issue as design-build is not an option in Nevada. He clarified the issue has not been litigated because the availability to proceed with a construction project in that manner has not existed.

Margaret Cavin, representing J and J Mechanical, testified 75 percent of their work comes from public works projects. She indicated she was one of the 80 percent of contractors mentioned that was not convinced design-build belonged in public works projects. She stressed the subsequent importance of the monetary thresholds as set forth in the proposal. Ms. Cavin pointed out design-build projects may cause smaller contractors to miss work opportunities as they do not have in-house designers. She requested the thresholds remain in the legislation if design-build is approved for public works projects.

Mr. Hershenow explained the statement had been made earlier in the hearing regarding the requirement for an architect to be on the design-build team. He called attention to this reference in section 9 of S.B. 475, reading, "A public body may employ a registered architect or licensed professional engineer as a consultant to assist the public body …." He pointed out this role would be that of a facilitator. His concern, he explained, regarded the language where an "architect or … engineer" is required on these very large projects, noting language changes would be preferred.

Mike Cate, representing Silver State Masonry, expressed concern with the threshold as a small contractor. He opined design-build would take away work from the smaller subcontractors, noting the current process makes obtaining work difficult. The bigger firms, he pointed out, bring in their own subcontractors for design projects.

With no further testimony, Chairman O’Connell closed the hearing on S.B. 437 and S.B. 475. Next, the committee addressed S.B. 474.

Chairman O’Connell indicated the contents of S.B. 474 were already contained in another piece of proposed legislation.

Mr. Raecke recommended the committee focus on S.B. 413 with possible further discussion on S.B. 474, if the necessity arises.

Chairman O’Connell adjourned the meeting at 7:50 p.m.

RESPECTFULLY SUBMITTED:

Angela Culbert,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: