AB 533 adds Section 32132.6 to the Health and Safety Code to authorize any health care district that owns or operates a hospital or clinic to use the design‑build procurement process found in Chapter 4 (commencing with Section 22160) of Part 3 of Division 2 of the Public Contract Code, once the district’s board approves use of the procedure. The bill also directs that references to “local agency” in that Chapter be read to mean the health care district and requires that hospital projects using design‑build be reviewed and inspected under the Alfred E.
Alquist Hospital Facilities Seismic Safety Act of 1983.
For compliance officers and procurement counsel, the change matters because a statutory path that was previously available only to a handful of named districts becomes available to all health care districts across California. That expands the universe of projects that can rely on a single, integrated design‑and‑build contract and shifts procurement choices, risk allocation, and oversight responsibilities at the district level.
The bill’s enactment note also treats certain verification and penalty mechanics as creating a state‑mandated local program with no state reimbursement required under the Constitution.
At a Glance
What It Does
Permits any health care district that owns or operates a hospital or clinic to adopt the design‑build contracting procedure from Public Contract Code Chapter 4 when the district board approves it. It maps statutory references to “local agency” in that Chapter to the health care district and mandates Alquist Act seismic review for qualifying hospital projects.
Who It Affects
Health care district boards, district procurement and construction staff, design‑build teams (contractor‑led teams), architects and engineers competing under the design‑build model, and regulators enforcing seismic safety standards.
Why It Matters
The bill broadens access to an alternative procurement model that bundles design and construction under one contract, which can accelerate delivery and change risk allocation, while embedding state seismic oversight and subjecting districts to the procedural safeguards and verification requirements of the Public Contract Code.
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What This Bill Actually Does
AB 533 authorizes health care districts statewide to use the design‑build contracting approach for hospital and directly related health facility construction, but only after the district’s board of directors approves doing so. Rather than creating a bespoke procurement regime, the bill imports the design‑build framework that already exists in Chapter 4 of the Public Contract Code; where that Chapter refers to a “local agency,” AB 533 makes clear the term includes a health care district that owns or operates a hospital or clinic.
That importation matters because Chapter 4 contains the operative mechanics for how design‑build procurements run: the selection process, the documentation designers and builders must submit, and the verification and certification steps often required of bidders and proposers. By tying health care districts to those mechanics, the bill makes districts subject to the same procedural structure—qualification and proposal evaluation, submission attestations, and contract award rules—that other public agencies follow when they use design‑build.The bill also ensures projects done under design‑build remain subject to hospital seismic safety oversight: any hospital building project using this procurement path must be reviewed and inspected in accordance with the Alfred E.
Alquist Hospital Facilities Seismic Safety Act of 1983. Finally, AB 533 expressly states it does not alter the application of other laws, while the enactment language notes that the state will not reimburse local agencies for costs that stem solely from changes related to criminal definitions or penalties tied to procurement verifications.
The Five Things You Need to Know
Section 32132.6(a) lets any health care district use the design‑build procedure in Public Contract Code Chapter 4 for hospital or directly related facility construction, after board approval.
Section 32132.6(b) makes every reference to “local agency” in Chapter 4 of the Public Contract Code read as referring to the health care district and its board where context permits.
Section 32132.6(c) requires hospital building projects procured via design‑build to be reviewed and inspected under the Alfred E. Alquist Hospital Facilities Seismic Safety Act of 1983.
Section 32132.6(d) clarifies the new authority does not change how other laws apply to health care districts.
Section 2 declares no state reimbursement is required because the bill’s only local costs arise from creating or changing a crime, infraction, or penalty related to procurement verifications.
Section-by-Section Breakdown
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Board‑authorized use of design‑build for hospital projects
This subsection gives any health care district conditional authority to assign contracts under the design‑build procedure in Public Contract Code Chapter 4, but only when the district’s board of directors approves using that method. Practically, districts must adopt a board resolution or similar approval before invoking the design‑build pathway, which places procurement decision‑making at the board level rather than leaving it implicit in staff practice.
Treating health care districts as the ‘local agency’ in the Public Contract Code
Rather than drafting new procurement rules, the bill folds health care districts into the existing design‑build statute by redefining references to “local agency” within Chapter 4 to mean a health care district that owns or operates a hospital or clinic. That mapping imports the Chapter’s selection, submission, and verification mechanics to districts, so counsel should review the Chapter for qualification criteria, required certifications, and procedural timing that will now apply to district procurements.
Seismic‑safety review remains mandatory
Any hospital building project procured under the new design‑build authority must comply with Alquist Act review and inspection requirements. This provision preserves state seismic oversight responsibilities and means that even when a district uses a single design‑build contract, the project must meet the specialized standards—permitting, plan review, and inspection—established for hospital facilities.
No change to other laws; reimbursement statement
Subdivision (d) says the addition of Section 32132.6 does not alter the application of other statutes, limiting the bill’s footprint to procurement authority. The separate enactment clause states the state owes no reimbursement to local agencies because any local costs derive from changes to criminal or penalty definitions tied to procurement verifications—an accounting statement that affects fiscal-feasibility discussions but does not alter substantive procurement duties.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Health care district boards — gain a statutory procurement option that lets them authorize a single contract for design and construction, potentially shortening delivery timelines and simplifying contract management.
- Design‑build firms and integrated contractor‑designer teams — access an expanded market as every district becomes eligible to procure through the design‑build route, increasing potential project opportunities.
- Patients and local communities — stand to benefit indirectly if districts use design‑build to accelerate replacement or expansion of hospital facilities, improving facility availability and services sooner than under longer procurement models.
Who Bears the Cost
- Health care district procurement and compliance staff — must learn and apply Public Contract Code Chapter 4 procedures, handle new verification steps, and manage design‑build contract oversight and risk allocations.
- Architects and construction firms that prefer design‑bid‑build — may face reduced bidding opportunities in districts that shift to design‑build and must adapt proposals to a different competitive structure.
- Smaller health care districts with limited in‑house capacity — could incur higher advisory and oversight costs to run compliant design‑build procurements and ensure Alquist Act compliance.
Key Issues
The Core Tension
The central dilemma is speed and simplicity versus public accountability and competitive access: design‑build can deliver hospital projects faster and with clearer single‑party responsibility, but it reduces the separation between design and construction that promotes competitive bidding, cost transparency, and independent design oversight—forcing districts to trade some procurement checks for faster delivery.
The bill imports an existing procurement regime rather than creating tailored rules for health care districts, which simplifies drafting but raises implementation questions. Design‑build changes the default project governance: it combines design and construction under one contract and typically transfers more schedule and design‑error risk to the contractor.
That can speed delivery and provide a single point of responsibility, but it also concentrates decision‑making and reduces the separate checks that a traditional design‑bid‑build process creates. Districts with limited procurement experience may underprepare for those shifted responsibilities.
The statutory mapping of “local agency” to health care districts is convenient but can create ambiguity elsewhere. Many California statutes and court decisions use the term “local agency” with context‑specific duties and exceptions; adopting that label for Chapter 4 purposes could produce interpretive disputes about which other procurement or reporting obligations apply.
Finally, the bill’s enactment language about no state reimbursement—framed around criminal penalty mechanics and verification steps in the Public Contract Code—signals a fiscal characterization that may not match on‑the‑ground compliance costs for districts. The statute leaves unresolved whether smaller districts will face a disproportionate administrative burden and how enforcement of verification provisions will play out in practice.
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