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					            Practice Overview:
Business and Land Use Group (Construction)
                                         1
              Group Members

Stephen Morrell
Holly Ackley
David Bergquist
Michael Cole
Glen Fichman
Cheryl Marshall
David Robinson
Paul Townsend
                              2
           Construction Attorneys
Provide all transactional legal services to
the University's construction program
(except for certain unnamed campuses that
require second and third outside counsel
opinions)
The Oakland and San Francisco based
attorneys are also responsible for all
construction litigation (some of which is
done in house; most of which is performed
by outside counsel managed by the
Oakland-based attorneys).
                                              3
             Value of University Construction
             Program by Campus (FY 08-09)
Campus           Budget at End of 08-09   Percentage of Budget
Berkeley                 $1,118,722,000                12.18%
Davis                   $1,121,177,000                 12.21%
Irvine                    $474,246,200                  5.17%
Los Angeles             $1,640,300,000                 17.86%
Merced                    $185,939,000                  2.03%
Riverside                 $338,961,000                  3.69%
San Diego               $1,208,438,000                 13.16%
San Francisco           $2,272,502,469                 24.75%
Santa Barbara             $261,799,820                  2.85%
Santa Cruz                $557,667,000                  6.07%
DANR                        $2,050,000                  0.02%
TOTAL                   $9,181,802,489                100.00%

                                                                 4
                   Administration of
               Construction Program

Entire program is subject to policies and
 procedures of Associate Vice
 President – Facilities Administration
 at the Office of the President in
 Oakland.

OP also issues standard form contracts



                                            5
                   Administration of
               Construction Program

Each campus, hospital or other facility
 administers its own projects, usually
 under a campus architect
Campuses implement program by
 awarding contracts to architects,
 construction managers & contractors
 so that (theoretically) projects are
 constructed on time and within budget

                                          6
         OP Construction Legal Services
             (all Construction Attorneys)
SGR: Legislation
Advice on policies and procedures
(competitive bidding, bonding
requirements, etc.)
Draft and modify all construction related
contracts (architects, soils engineers,
construction)
Training seminars
Quarterly Newsletter & Practice Guides
Advisors to hearing officers on bid protests
                                               7
                Campus Construction
                     Legal Services
Single attorney from Oakland assigned to
each campus (but key clients know all
construction attorneys)
Contracts-negotiations and drafting
Competitive Bidding (Bid Protests)
Contract Administration (Claims)
Dispute resolution-mediation, arbitration,
litigation (outside counsel)
OSHA (Not-Garvin)
                                             8
         David Robinson


 OP Facilities Admin
 UC Los Angeles
 UC Los Angeles
Medical Center
 UC Santa Barbara      Actual UC Santa Cruz Construction Project (2009)


 UC Santa Cruz

                                                                  9
          External Regulation of UC
                      Construction

Specific exception for bidding added to
Article IX, Section 9 (by initiative)
  ―…subject only to […] and such competitive
  bidding procedures as may be made applicable
  to the university by statute for the letting of
  construction contracts, sales of real property,
  and purchasing of materials, goods, and
  services.‖
  Non-construction competitive bidding
  addressed in Public Contract Code sections
  10507-10510, 10511-10513.
                                                    10
                         External Regulation

UC Construction Competitive Bidding Statutes are found in Public
Contract Code sections 10500-10506

Requires bidding for construction projects with a value in excess of
$50K, formal advertising for project over $100K

This regulation has the practical effect of forcing UC to accomplish
construction in a manner consistent with the economic interest of
groups which yield influence in Sacramento

For example, UC is required to ―outsource‖ all construction work
with a value in excess of $50K, even though UC could accomplish
that work as less expense with its own employees (the ―Stull Act‖ or
―force account‖ limitations) – numerous attempts at legislation to
increase the threshold have failed



                                                                       11
             External Regulation

UC also complies with other statutory
schemes related to construction,
including those applying to
subcontractor substitution, payment of
prevailing wages, and competition in
the specification of construction
materials (some are observed by
policy even though UC is facially or
arguably exempt)
                                         12
              External Regulation

Construction design services enjoy a
specific exception from Public
Contract Code section 10515, a.k.a.
the ―follow on contracting ban,‖ a.k.a.
the ―Bowen bill.‖
UC can use serial contractors to
obtain consulting services related to
construction, including architectural,
construction management, and
environmental services                    13
             External Regulation
But those services must be competed
pursuant to the process set forth in
Public Contract Code sections
10510.4 through 10510.9 in order for
the exemption from the follow-on
contracting ban to apply
Requires an annual announcement
for small contracts and competitive
selection based upon quality (not low
price) for contracts over $100K
                                        14
     External Regulation: What Is
                      Regulated?
UC must bid the erection,
construction, alteration, repair or
improvement of any structure,
building, road or other improvement
($50K+)
Not required to bid ―maintenance‖
The difference between maintenance
and repair often requires legal
analysis
                                      15
                Internal Regulation

  UC publishes a Facilities Manual
  setting forth rules governing its
  construction administration practices
  Addresses ―grey areas‖ in statutes
  and policy requirements
  Document is very extensive, but
  clearly written and ―user friendly‖
http://www.ucop.edu/facil/fmc/facilman/
                                          16
               Internal Regulation
The Facilities Manual also includes
the UC form contracts that campuses
must use

The Facilities Manual has traditionally
been a vital and useful tool for
campuses, but is endangered
because substantially all of the
resources devoted to its maintenance
were eliminated during OP
restructuring                             17
 External Regulation: Article IX, section 9
exception
Stull Act/Bowen bill (follow on contracting
ban)
When something is/is not subject to
competitive bidding
If subject to competitive bidding,
construction vs. non-construction
competitive bidding
Maintenance vs. repair
Policy vs. legal issues (Facilities Manual)
                                              18
         David Bergquist

 UC San Francisco
 UC San Francisco Medical Center

$2,272,502,469 or 24.75% of entire UC
  program




                                        19
           Research University (literally)
Very aggressive with new delivery models,
  contract provisions, bidding procedures
  and state of the art construction concepts

Awards in 2009:
  — California Construction: Outstanding
   Architectural Design (Diller Project)
  — California Construction: Best Higher
   Education/Research Building
  — Building Institute Conference Board:
   Honor Award (1 entity awarded per year)
                                               20
       Delivery Models

Helen Diller Cancer Center (Lump
Sum)
162,000 sq. ft.
$93 Million




                                   21
        Delivery Models

Cardiovascular Research Building
(CM at Risk)
— 232,000 sq. ft.
— 176 Million




                                   22
         Delivery Models

  Center for Integrative Medicine –
  Stem Cell (CIRM) (Design- Build)
- 68,926 sq. ft.
-$61 Million




                                      23
           Delivery Models

  Medical Center at Mission Bay (CM at
  Risk Cost Plus GMP with Design
  Assist MEP Delivery)*
-633,000 sq. ft. (Hospital)
-212,000 sq. ft. (Outpatient Building)
- 42,000 sq. ft. (Energy Center)
- $900 Million
*See enlarged view, next slide
                                         24
Medical Center at Mission Bay




                                25
      Delivery Models


Parnassus MSB Wet Lab Renovation
-20,000 sq. ft.
-$5 million




                                   26
        Delivery Models

Neurosciences (Lease/Leaseback –
Developer Delivery)
— 237,000 sq. ft.
— $73 Million




                                   27
          Design Contracts
Professional Services Agreement
    - Early Project Development Phases
Executive Design Professional Agreement
    - Project Design
Construction Managements Agreements
Modification to core clauses (not including scope of
work) requires OP/ OGC approval
Project Based vs Blanket (Durational Contracts)
Must comply with all applicable codes, regulations and
system-wide or campus-wide guidelines

                                                         28
        Construction Contracts
Brief Form
Mini Form
Job Order Contracts
Long Form Contract
Multi-Prime Contract
Design Build Form
CM at Risk Form
Cost Plus Fixed Fee Form
Developer Contracts (Lease/Leaseback
and Developer Turnkey)                 29
       Contract Clauses are added on system-
       wide and project basis with OP/OGC
       approval
Contractor Friendly General Conditions
HIPAA and H1N1 clauses
Lean Construction
Continuous Cost Modeling
Incentive Clauses
Building Industry Modeling



                                          30
         Incentives as Integrated Project
         Delivery (―IPD‖)
Have not been able to justify 3 party contracts
legally
Contractor and Subcontractors and Design
Professionals bid hourly rates and overhead
Incentives established at percentage of estimated
cost and schedule milestones (functions as profit)
Design Professional, Construction Manager and
Contractor and certain subcontractors are only
paid incentives when and if they meet certain
milestones in schedule, price and quality
Percentage of incentives go to individuals
                                                     31
Building Industry Modeling (―BIM)




                                32
Competitive Building/Selection Procedures:
What is Best Value?
(PCC§10506.4 – 10506.9) (Report
due 1/1/2010 on Pilot Program)
5 bases
(1) "Demonstrated management
competency"
(2) "Relevant experience‖
(3) "Financial condition"
(4) "Labor compliance‖
(5) "Safety record―                    33
     Competitive Building/Selection Procedures

Prequalification
Lump Sum
Unit Prices
Compensable Delay
Alternates




                                           34
         Holly Ackley

UC Merced
UC Riverside
UC San Diego
UC San Diego Medical Center
Stop Notices, etc.




                              35
               What We Do All Day
                   ……Part Three

Contract Administration Advice

Bid Protests/Subcontractor
substitution hearings

Claims work before litigation

Stop notices
                                    36
       Contract Administration Advice

Contract Development After Bidding
  Design Agreement Modifications
  Construction Agreement Modifications
  Interpreting Contract Provisions
  Change Order Language
  Conflicts re Scope/Aesthetics
  Time Extensions/Compensable Delays
OGC in-house counsel
                                         37
                                              Bid Protests

Bid Protests
  Anyone can protest selection of an apparent
  low bidder
  Campus generally accepts or rejects protest
  with counsel advice (material v. immaterial)
  Protesting party or affected bidder can appeal
  the campus’s decision
  Appeals are handled by hearing officer paid for
  by UC – final decision
  Appeal to final decision is via a writ in a court of
  law
  OGC in-house counsel only

                                                         38
                               Substitution Hearings

Substitution Hearing
  GC requests substitution of a subcontractor
  (statutory basis)
  Campus notifies substituted sub
  Sub may demand a hearing
  Appeals are handled by hearing officer paid for
  by UC – final decision
  OGC typically appears at hearing
  Appeal to final decision is via a writ in a court of
  law – OGC typically responds
  OGC in-house counsel only

                                                         39
        Claims Work Before Litigation
Construction Disputes:
  Change Order Request (Contract Time and
  Contract Sum)
  Scope Issues
  Delays/Suspension
  Claim
Design Disputes
  Delays/Suspension
  Scope Issues
  Defective Work
Mediation Prior to Litigation

                                            40
                       Stop Notices

Public sector way to ―lien‖ a work of
improvement
UC holds funds or interpleads
pursuant to stop notices pending
resolution between GC and sub
….and sometimes UC…
Mediation
OGC in-house counsel
                                        41
          Steve Morrell

 UC Berkeley
 UC Davis
 UC Davis
Medical Center
 UC Irvine
 UC Irvine
Medical Center

                          42
Litigation/Arbitration/Mediation

How we oversee outside counsel




                                   43
We are proud to present you the winners
of our contest:

       SAFETY AT WORK



                                      44
17th place
             The delivery man at Oxford




                                      45
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16th place
             The grinder at Stanford




                                  47
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15th place
             The mason at Holy Names




                                       49
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14th place
        The welder at University of Illinois




                                           51
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13th place

    The luggage handlers at Sacramento State




                                               53
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12th place

     The painters at University of Washington




                                                55
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11th place
     The shipyard mechanics at Rhodes College




                                            57
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10th place
    The air conditioner installer at Trinity College




                                                       59
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9th place
 The construction site worker at University of Michigan




                                                      61
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8th place
  The expert in biological weapons at Cornell University




                                                      63
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 7th place
The WMD warehouse manager at University of San Francisco




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6th place
    The car mechanics at Princeton University




                                                67
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5th place
     The electrician at Swarthmore College




                                             69
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4th place
      The erection team at Michigan State




                                            71
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3rd place
   The power cable installers at Emory University




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2nd place

       The aircraft mechanic at Harvard




                                          75
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And the winner is …
The maintenance team at Brigham Young!




                                         77
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And finally, a special
prize to :
      The shooting gallery assistant
      at University of California



                                       79
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posted:4/17/2011
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