SB 956: School facilities: design-build contracts.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-08-19
Current Status:
Passed
(2024-08-19: Chaptered by Secretary of State. Chapter 177, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
This bill removes a temporary rule and makes permanent school districts’ ability to use design‑build contracting for school facility projects. It allows districts to use design‑build (one contract for both design and construction) for projects over $1 million and to award those contracts by lowest bid or by “best value” (a mix of cost and quality).
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law, until January 1, 2025, authorizes a school district, with the approval of the governing board of the school district, to procure design-build contracts for projects in excess of $1,000,000, awarding the contract to either the low bid or the best value, as provided. Existing law requires specified information to be certified under penalty of perjury, as provided.
This bill would delete the provision making this authorization inoperative on January 1, 2025, thereby extending it indefinitely. By extending the operation of provisions of law expanding a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, until January 1, 2025, authorizes a school district, with the approval of the governing board of the school district, to procure design-build contracts for projects in excess of $1,000,000, awarding the contract to either the low bid or the best value, as provided. Existing law requires specified information to be certified under penalty of perjury, as provided.
This bill would delete the provision making this authorization inoperative on January 1, 2025, thereby extending it indefinitely. By extending the operation of provisions of law expanding a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, until January 1, 2025, authorizes a school district, with the approval of the governing board of the school district, to procure design-build contracts for public works projects in excess of $1,000,000, awarding the contract to either the low bid or the best value, as provided. Existing law requires specified information to be verified under penalty of perjury.
This bill would delete the provision making this authorization inoperative on January 1, 2025, thereby extending it indefinitely. By extending the operation of provisions of law expanding a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
|
Date
|
Status
|
|---|---|
| Aug 19, 2024 | Chaptered by Secretary of State. Chapter 177, Statutes of 2024. |
| Aug 19, 2024 | Approved by the Governor. |
| Aug 13, 2024 | Enrolled and presented to the Governor at 2 p.m. |
| Aug 8, 2024 | In Senate. Ordered to engrossing and enrolling. |
| Aug 8, 2024 | Read third time. Passed. (Ayes 72. Noes 0. Page 6249.) Ordered to the Senate. |
| Jul 3, 2024 | Read second time. Ordered to consent calendar. |
| Jul 2, 2024 | From committee: Do pass. Ordered to consent calendar. (Ayes 15. Noes 0.) (July 2). |
| Jun 13, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (June 12). Re-referred to Com. on APPR. |
| May 28, 2024 | Referred to Com. on ED. |
| May 21, 2024 | In Assembly. Read first time. Held at Desk. |
| May 20, 2024 | Read third time. Passed. (Ayes 32. Noes 5. Page 4010.) Ordered to the Assembly. |
| Apr 9, 2024 | Read second time. Ordered to third reading. |
| Apr 8, 2024 | From committee: Be ordered to second reading pursuant to Senate Rule 28.8. |
| Mar 28, 2024 | Set for hearing April 8. |
| Mar 20, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 0. Page 3377.) (March 20). Re-referred to Com. on APPR. |
| Mar 1, 2024 | Set for hearing March 20. |
| Feb 14, 2024 | Referred to Com. on ED. |
| Jan 23, 2024 | From printer. May be acted upon on or after February 22. |
| Jan 22, 2024 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 8, 2024 | SB 956 Cortese Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| Jul 2, 2024 | Do pass. To Consent Calendar. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 12, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Education |
Passed |
|
| May 20, 2024 | Senate 3rd Reading SB956 Cortese | Senate Floor |
Passed |
|
| Mar 20, 2024 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Education |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Alameda County Office Of Education | ** Support | |
| Associated General Contractors | ** Support | |
| Association Of California Construction Managers | ** Support | |
| Association Of California School Administrators | ** Support | |
| AXA | * Support | Jun 12, 2024 |
| California Association Of School Business Officials | ** Support | |
| California Association School of Business Officials | * Support | Jun 12, 2024 |
| California Retired Teachers Association | ** Support | |
| Coalition For Adequate School Housing | * Support | Jun 12, 2024 |
| Design Build Institute Of American Western Pacific Chapter | * Support | Jun 12, 2024 |
| Design-Build Institute of America Western Pacific Region | ** Support | |
| Kern County Superintendent of Schools Office | ** Support | |
| Los Angeles County Office Of Education | ** Support | |
| Los Angeles Unified School District | * Support | Jun 12, 2024 |
| San Diego Unified School District | * Support | Jun 14, 2024 |
Date of Hearing: July 2, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
SBPCA Bill Id:SB 956
Author:(Cortese) – As Introduced Ver:January 22, 2024
Policy Committee: | Education | Vote: | 7 - 0 |
|
| ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill removes the sunset on the authority of a school district to utilize design-build contracts for certain public works projects.
Specifically, this bill repeals current law that specifies a school district may utilize design-build until January 1, 2025, for public works projects in excess of $1 million with approval of the governing board of the school district, in addition to other requirements.
FISCAL EFFECT:
No state costs.
COMMENTS:
- Purpose. According to the author:
Throughout much of the 20th century, school districts were limited to using the design-bid-build method for constructing schools, which can lead to budget overruns and delays. With design-build, we streamline the process by bringing design and construction teams together from the start, allowing them to collaborate and lock in a guaranteed cost before construction even begins. Beyond saving millions of dollars in school construction expenses, the streamlined design-build process allows schools to be built quicker, giving students faster access to modern, safer learning spaces.
- Background. Current law authorizes school districts to use either the more traditional “design-bid-build” construction delivery method or the more recently authorized “design-build” construction delivery method pursuing public works projects.
In simple terms, with design-bid-build, an entity, such as a school district, first engages an architect or engineer to design a project. Thereafter, the school district contracts with a general contractor, who often subcontracts with third parties who build the project. With design-build, the school district first engages a general contractor, and the general contractor engages an architect or engineer to design the project and then subcontracts with a third party who builds the project. According to the Legislative Analyst’s Office, each method has its advantages and disadvantages. For example, design-bid build may result in a more objective contract award than design-build. On the other hand, design-build leads to greater price certainty than design-bid build and is oftentimes an overall quicker process.
AB 1402 (Simitian), Chapter 421, Statutes of 2001, established the authority for school districts to use the design-build method for certain projects and established an initial sunset date of January 1, 2007. The sunset has been extended several times, most recently by AB 1358 (Dababneh), Chapter 752, Statutes of 2015, to January 1, 2025.
This bill removes the sunset on the authority of a school district to utilize design-build contracts for specified public works projects.
Analysis Prepared by: Natasha Collins / APPR. / (916) 319-2081
Date of Hearing: June 12, 2024
ASSEMBLY COMMITTEE ON EDUCATION
Al Muratsuchi, Chair
SBPCA Bill Id:SB 956
Author:(Cortese) – As Introduced Ver:January 22, 2024
SENATE VOTE: 32-5
SUBJECT: School facilities: design-build contracts
SUMMARY: Removes the sunset on the authority of a school district to utilize design-build contracts for specified public works projects, awarding the contract to either the lowest bid or the best value.
EXISTING LAW:
- Includes legislative findings and declarations acknowledging the success of the design-build method in various agencies, noting benefits such as reduced costs, faster project completion, and innovative design features. States method is authorized for school districts to use but is not necessarily preferred over other procurement methods. (Education Code (EC) 17250.10)
- Defines “design-build” as a project delivery process in which both the design and construction of a project are procured from a single entity. Further defines a “design-build entity” as a corporation, limited liability company, partnership, joint venture, or other legal entity that is able to provide appropriately licensed contracting, architectural, and engineering services, as needed, pursuant to a design-build contract. (EC 17250.15)
- Authorizes school districts, with approval from their governing boards, to procure design-build contracts for projects exceeding one million dollars, with the flexibility to award contracts based on either the lowest bid or the best value. Requires each school district to develop guidelines for a standard organizational conflict-of-interest policy, ensuring compliance with applicable laws. (EC 17250.20)
- Specifies the design-build authority shall remain in effect until January 1, 2025. (EC 17250.55)
FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
Need for the bill. According to the author, “Throughout much of the 20th century, school districts were limited to using the design-bid-build method for constructing schools, which can lead to budget overruns and delays. With design-build, we streamline the process by bringing design and construction teams together from the start, allowing them to collaborate and lock in a guaranteed cost before construction even begins. Beyond saving millions of dollars in school construction expenses, the streamlined design-build process allows schools to be built quicker, giving students faster access to modern, safer learning spaces.”
Design-build. There are two primary construction delivery systems used in the public and private sectors, “design-bid-build” and “design-build.”
Current law requires school districts award construction contracts over $15,000 to the lowest responsible bidder. Current law also allows contracts for architectural services to be awarded on the basis of demonstrated competence and professional qualifications to be performed at a fair and reasonable price (not necessarily the lowest bidder). In effect, this means that public schools (and most public construction work) have been built using a “design-bid-build” methodology wherein a separate contract is awarded for the design work by an architect and another contract is awarded to the lowest responsible bidder for the construction.
In the 1990s, the state began the enactment of various legislation authorizing state and local entities to use a “design-build” system under specified circumstances. Under this approach, a single contract is awarded to a professional team, a “design-build” entity, to conduct both types of work. Rather than awarding such a contract to the lowest responsible bidder, it may be awarded on the basis of the experience and qualifications of the competitors, or on a determination that a particular competitor provides the best value to the project. AB 1402 (Simitian), Chapter 421, Statutes of 2001, established the authority for K-12 school districts to use the design-build delivery method for projects over $10 million, and established an initial sunset date of January 1, 2007. The sunset has been extended several times, most recently by AB 1358 (Dababneh), Chapter 752, Statutes of 2015, to January 1, 2025. AB 1358 made other changes including: aligning K-12 design-build statutory requirements with other state and local agency design-build requirements, adding skilled and trained workforce requirements, adding contractor prequalification requirements, and reducing the project cost threshold from $2.5 million to $1 million. This bill extends, in perpetuity, the authority of a school district to utilize design-build contracts for specified public works projects.
Legislative Analyst’s Office (LAO) reports related to design-build. According to a 2005 LAO report, Design-Build: An Alternative Construction System, the LAO recommended that the state adopt a single statute applying to all public entities, that design-build be available as an option and not a replacement for “design-bid-build” and that no cost threshold be imposed on the authority to use design-build. The LAO also noted that disadvantages of design-bid included a limited assurance of quality control since the building is not typically defined in detail at the time of entering into the contract and a more subjective process for awarding contracts and evaluating qualifications and experience, as well as limited access for small contractors without the range of experience of larger, long-established firms.
According to a 2010 LAO presentation, which included a summary of reports received from California counties that had completed construction projects using the design-build delivery method, although it was difficult to draw conclusions from the reports received about the effectiveness of design-build compared to other project delivery methods, there was no evidence to discourage the Legislature from granting design-build authority to local agencies on an ongoing basis. The LAO also recommended that the Legislature consider creating a uniform design-build statute.
The process for school districts using the design-build procurement. The procurement process for design-build projects involves several steps. First, the school district prepares comprehensive documents detailing the project's scope, estimated costs, and other relevant information, which are crafted by a licensed design professional. These documents exclude long-term operation contracts but may include operations during a training or transition period.
Next, the school district issues a request for qualifications to prequalify design-build entities for evaluation based on criteria such as technical expertise and safety records. Then, a request for proposals is prepared, inviting prequalified entities to submit competitive sealed proposals. For projects using the low bid method, contracts are awarded to the lowest responsible bidder. However, for projects utilizing the best value selection method, proposals are evaluated based on criteria outlined in the request for proposals, including technical expertise, life-cycle costs, and price. Discussions or negotiations may occur, and awards are granted to the design-build entity offering the best value.
The school district publicly announces contract awards and maintains records for external audits. Additionally, a commitment to using a skilled and trained workforce is mandated for all project work, unless certain exceptions are met, ensuring adherence to industry standards and regulations.
Related legislation. AB 1358 (Dababneh), Chapter 752, Statutes of 2015 recasts the provisions of the K-12 design-build delivery method, aligning with other state and local agency design-build statutory requirements. Adds skilled and trained workforce requirements, as well as contractor prequalification requirements. Reduced the project cost threshold from $2.5 million to $1 million and extended the design-build authorization sunset from January 1, 2020, to January 1, 2025.
SB 785 (Wolk), Chapter 931, Statutes of 2014, aligns the design-build process for the Department of General Services, the California Department of Corrections and Rehabilitation, and several local agencies.
SB 1509 (Simitian), Chapter 736, Statutes of 2012, extended the sunset for K-12 and CCC authorization to use design-build from January 1, 2014, to January 1, 2020.
SB 614 (Simitian), Chapter 471, Statutes of 2007, reduced the project cost threshold from $10 million to $2.5 million and extended the sunset date from January 1, 2010 to January 1, 2014.
AB 127 (Nunez), Chapter 35, Statutes of 2006, extended the sunset from January 1, 2007 to January 1, 2010.
AB 1402 (Simitian), Chapter 421, Statutes of 2001, established the authority for K-12 school districts to use the design-build delivery method for projects over $10 million. Established an initial sunset date of January 1, 2007.
Arguments in support. The Coalition for Adequate School Housing (CASH) (sponsor) writes, “Design-Build can have a variety of benefits for school construction projects. The delivery method can expedite project construction, which is especially important as schools work to build developmentally-appropriate classrooms for the new universal Transitional Kindergarten grade level. Design-Build can reduce the risk of cost increases resulting from change orders once construction begins by establishing a Guaranteed Maximum Price for each project. This is a particularly useful tool during times of high construction cost escalation, which schools have experienced in recent years. Additionally, Design-Build encourages collaboration between architects/engineers and contractors, and generates creative solutions to unique issues.”
REGISTERED SUPPORT / OPPOSITION:
Support
Alameda County Office of Education
Associated General Contractors of California
Association of California Construction Managers
Association of California School Administrators
California Association of School Business Officials (CASBO)
California Retired Teachers Association
California's Coalition for Adequate School Housing (CASH)
Design Build Institute of America Western Pacific Chapter
Kern County Superintendent of Schools Office
Los Angeles County Office of Education
Los Angeles Unified School District
San Diego Unified School District
Opposition
None on file
Analysis Prepared by: Marguerite Ries / ED. / (916) 319-2087
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 956 |
THIRD READING
Bill No: SB 956
Author: Cortese (D)
Introduced: 1/22/24
Vote: 21
SENATE EDUCATION COMMITTEE: 6-0, 3/20/24
AYES: Newman, Cortese, Glazer, Gonzalez, Smallwood-Cuevas, Wilk
NO VOTE RECORDED: Ochoa Bogh
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: School facilities: design-build contracts
SOURCE: Coalition for Adequate School Housing
DIGEST:
This bill extends in perpetuity the authority of a school district to utilize design-build contracts for specified public works projects, awarding the contract to either the low bid or the best value.
ANALYSIS:
Existing law:
- Includes legislative findings and declarations acknowledging the success of the design-build method in various agencies, noting benefits such as reduced costs, faster project completion, and innovative design features. This method is authorized for school districts to use but is not necessarily preferred over other procurement methods.
- Defines “design-build” as a project delivery process in which both the design and construction of a project are procured from a single entity. Further defines a “design-build entity” as a corporation, limited liability company, partnership, joint venture, or other legal entity that is able to provide appropriately licensed contracting, architectural, and engineering services, as needed, pursuant to a design-build contract.
- Authorizes school districts, with approval from their governing boards, to procure design-build contracts for projects exceeding one million dollars, with the flexibility to award contracts based on either the lowest bid or the best value. Additionally, each school district is mandated to develop guidelines for a standard organizational conflict-of-interest policy, ensuring compliance with applicable laws.
- Specifies the design-build authority shall remain in effect until January 1, 2025.
This bill extends in perpetuity the authority of a school district to utilize design-build contracts for specified public works projects, awarding the contract to either the low bid or the best value.
Comments
- Need for the bill. According to the author, “The statute that allows K-12 districts to use design-build contracts is set to expire on January 1, 2025. Districts use this valuable tool to expedite project construction, generate creative solutions to unique issues, and encourage collaboration between architects, engineers, and contractors.
“Unfortunately, schools hesitate to use this delivery method near legislative sunsets because the law could change by the time they start their bidding process. Given the successful utilization of this delivery method over the last two decades, it’s time to remove the sunset and make it permanent.”
- What is design-build? There are two primary construction delivery systems used in the public and private sectors, “design-bid-build” and “design-build.”
Current law requires that school districts award construction contracts over $15,000 to the lowest responsible bidder. Current law also allows contracts for architectural services to be awarded on the basis of demonstrated competence and professional qualifications to be performed at a fair and reasonable price (not necessarily lowest bidder). These laws have meant that schools (and most public construction work) have been built using a “design-bid-build” methodology wherein a separate contract is awarded for the design work by an architect and another contract is awarded to the lowest responsible bidder for the construction.
In the 1990s, the state began the enactment of various legislation authorizing state and local entities to use a “design-build” system under specified circumstances. Under this approach, a single contract is awarded to a professional team, a “design-build” entity, to conduct both types of work. Rather than awarding such a contract to the lowest responsible bidder, it may be awarded on the basis of the experience and qualifications of the competitors, or on a determination that a particular competitor provides the best value to the project. The legislative history for school districts being authorized to utilize design-build is as follows:
- AB 1402 (Simitian, Chapter 421, Statutes of 2001) – Established the authority for K-12 school districts to use the design-build delivery method for projects over $10 million. Initial sunset date of January 1, 2007.
- AB 127 (Nunez, Chapter 35, Statutes of 2006) – Extended the sunset from January 1, 2007 to January 1, 2010.
- SB 614 (Simitian, Chapter 471, Statutes of 2007) – Reduced the project cost threshold from $10 million to $2.5 million and extended the sunset date from January 1, 2010 to January 1, 2014.
- SB 1509 (Simitian, Chapter 736, Statutes of 2012) – Extended the sunset date from January 1, 2014 to January 1, 2020.
- AB 1358 (Dababneh, Chapter 752, Statutes of 2015) – Recast the provisions of the K-12 design-build delivery method, aligning with other state and local agency design-build statutory requirements. Added skilled and trained workforce requirements, as well as contractor prequalification requirements. Reduced the project cost threshold from $2.5 million to $1 million and extended the sunset from January 1, 2020 to January 1, 2025.
- What does the procurement process for school districts utilizing design-build look like? The procurement process for design-build projects involves several steps. First, the school district prepares comprehensive documents detailing the project's scope, estimated costs, and other relevant information, which are crafted by a licensed design professional. These documents exclude long-term operation contracts but may include operations during a training or transition period.
Next, the school district issues a request for qualifications to prequalify design-build entities for evaluation based on criteria such as technical expertise and safety records. Then, a request for proposals is prepared, inviting prequalified entities to submit competitive sealed proposals. For projects using the low bid method, contracts are awarded to the lowest responsible bidder. However, for projects utilizing the best value selection method, proposals are evaluated based on criteria outlined in the request for proposals, including technical expertise, life-cycle costs, and price. Discussions or negotiations may occur, and awards are granted to the design-build entity offering the best value.
The school district publicly announces contract awards and maintains records for external audits. Additionally, a commitment to using a skilled and trained workforce is mandated for all project work, unless certain exceptions are met, ensuring adherence to industry standards and regulations.
- Related Legislative Analyst’s Office (LAO) reports. In February 2005, the LAO issued a report on Design-Build: An Alternative Construction System in which it reported its consolidated findings on design-build across several public works sectors. Among other things, the LAO recommended that the state adopt a single statute applying to all public entities, design-build be available as an option and not a replacement for “design-bid-build” and that no cost threshold be imposed on the authority to use design-build. The LAO also noted that disadvantages of design-bid included a limited assurance of quality control since the building is not typically defined in detail at the time of entering into the contract, and a more subjective process for awarding contracts and evaluating qualifications and experience, as well as limited access for small contractors without the range of experience of larger, long-established firms.
In January 2010, the LAO presented a summary of reports received from California counties that had completed construction projects using the design-build delivery method, as required under the legislation extending design-build authority to county governments (Public Contract Code Section 20133). The LAO noted that although difficult to draw conclusions from the reports received about the effectiveness of design-build compared to other project delivery methods, there was no evidence to discourage the Legislature from granting design-build authority to local agencies on an ongoing basis. The LAO also recommended that the Legislature consider, among other things, creating a uniform design-build statute.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 4/10/24)
Coalition for Adequate School Housing (source)
Alameda County Office of Education
Associated General Contractors
Association of California Construction Managers
Association of California School Administrators
California Association of School Business Officials
California Retired Teachers Association
Design-Build Institute of America Western Pacific Region
Kern County Superintendent of Schools Office
Los Angeles County Office of Education
Los Angeles Unified School District
OPPOSITION: (Verified 4/10/24)
Prepared by: Ian Johnson / ED. / (916) 651-4105
4/10/24 13:44:18
**** END ****
SENATE COMMITTEE ON EDUCATION
Senator Josh Newman, Chair
2023 - 2024 Regular
Bill No: SB 956 Hearing Date: March 20, 2024
Author: | |||
Version: | January 22, 2024 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Ian Johnson | ||
Subject: School facilities: design-build contracts.
SUMMARY
This bill extends in perpetuity the authority of a school district to utilize design-build contracts for specified public works projects, awarding the contract to either the low bid or the best value.
BACKGROUND
Existing law:
- Includes legislative findings and declarations acknowledging the success of the design-build method in various agencies, noting benefits such as reduced costs, faster project completion, and innovative design features. This method is authorized for school districts to use but is not necessarily preferred over other procurement methods.
- Defines “design-build” as a project delivery process in which both the design and construction of a project are procured from a single entity. Further defines a “design-build entity” as a corporation, limited liability company, partnership, joint venture, or other legal entity that is able to provide appropriately licensed contracting, architectural, and engineering services, as needed, pursuant to a design-build contract.
- Authorizes school districts, with approval from their governing boards, to procure design-build contracts for projects exceeding one million dollars, with the flexibility to award contracts based on either the lowest bid or the best value. Additionally, each school district is mandated to develop guidelines for a standard organizational conflict-of-interest policy, ensuring compliance with applicable laws.
- Specifies the design-build authority shall remain in effect until January 1, 2025.
ANALYSIS
This bill extends in perpetuity the authority of a school district to utilize design-build contracts for specified public works projects, awarding the contract to either the low bid or the best value.
STAFF COMMENTS
- Need for the bill. According to the author, “The statute that allows K-12 districts to use design-build contracts is set to expire on January 1, 2025. Districts use this valuable tool to expedite project construction, generate creative solutions to unique issues, and encourage collaboration between architects, engineers, and contractors.
“Unfortunately, schools hesitate to use this delivery method near legislative sunsets because the law could change by the time they start their bidding process. Given the successful utilization of this delivery method over the last two decades, it’s time to remove the sunset and make it permanent.”
- What is design-build? There are two primary construction delivery systems used in the public and private sectors, “design-bid-build” and “design-build.”
Current law requires that school districts award construction contracts over $15,000 to the lowest responsible bidder. Current law also allows contracts for architectural services to be awarded on the basis of demonstrated competence and professional qualifications to be performed at a fair and reasonable price (not necessarily lowest bidder). These laws have meant that schools (and most public construction work) have been built using a “design-bid-build” methodology wherein a separate contract is awarded for the design work by an architect and another contract is awarded to the lowest responsible bidder for the construction.
In the 1990s, the state began the enactment of various legislation authorizing state and local entities to use a “design-build” system under specified circumstances. Under this approach, a single contract is awarded to a professional team, a “design-build” entity, to conduct both types of work. Rather than awarding such a contract to the lowest responsible bidder, it may be awarded on the basis of the experience and qualifications of the competitors, or on a determination that a particular competitor provides the best value to the project.
The legislative history for school districts being authorized to utilize design-build is as follows:
- AB 1402 (Simitian, 2001) – Established the authority for K-12 school districts to use the design-build delivery method for projects over $10 million. Initial sunset date of January 1, 2007.
- AB 127 (Nunez, 2006) – Extended the sunset from January 1, 2007 to January 1, 2010.
- SB 614 (Simitian, 2007) – Reduced the project cost threshold from $10 million to $2.5 million and extended the sunset date from January 1, 2010 to January 1, 2014.
- SB 1509 (Simitian, 2012) – Extended the sunset date from January 1, 2014 to January 1, 2020.
- AB 1358 (Dababneh, 2015) – recast the provisions of the K-12 design-build delivery method, aligning with other state and local agency design-build statutory requirements. Added skilled and trained workforce requirements, as well as contractor prequalification requirements. Reduced the project cost threshold from $2.5 million to $1 million and extended the sunset from January 1, 2020 to January 1, 2025.
- What does the procurement process for school districts utilizing design-build look like? The procurement process for design-build projects involves several steps. First, the school district prepares comprehensive documents detailing the project's scope, estimated costs, and other relevant information, which are crafted by a licensed design professional. These documents exclude long-term operation contracts but may include operations during a training or transition period.
Next, the school district issues a request for qualifications to prequalify design-build entities for evaluation based on criteria such as technical expertise and safety records. Then, a request for proposals is prepared, inviting prequalified entities to submit competitive sealed proposals. For projects using the low bid method, contracts are awarded to the lowest responsible bidder. However, for projects utilizing the best value selection method, proposals are evaluated based on criteria outlined in the request for proposals, including technical expertise, life-cycle costs, and price. Discussions or negotiations may occur, and awards are granted to the design-build entity offering the best value.
The school district publicly announces contract awards and maintains records for external audits. Additionally, a commitment to using a skilled and trained workforce is mandated for all project work, unless certain exceptions are met, ensuring adherence to industry standards and regulations.
- Related Legislative Analyst’s Office (LAO) reports. In February 2005, the LAO issued a report on Design-Build: An Alternative Construction System in which it reported its consolidated findings on design-build across several public works sectors. Among other things, the LAO recommended that the state adopt a single statute applying to all public entities, design-build be available as an option and not a replacement for “design-bid-build” and that no cost threshold be imposed on the authority to use design-build. The LAO also noted that disadvantages of design-bid included a limited assurance of quality control since the building is not typically defined in detail at the time of entering into the contract, and a more subjective process for awarding contracts and evaluating qualifications and experience, as well as limited access for small contractors without the range of experience of larger, long-established firms.
In January 2010, the LAO presented a summary of reports received from California counties that had completed construction projects using the design-build delivery method, as required under the legislation extending design-build authority to county governments (Public Contract Code Section 20133). The LAO noted that although difficult to draw conclusions from the reports received about the effectiveness of design-build compared to other project delivery methods, there was no evidence to discourage the Legislature from granting design-build authority to local agencies on an ongoing basis. The LAO also recommended that the Legislature consider, among other things, creating a uniform design-build statute.
- Arguments in support. The Coalition for Adequate School Housing, sponsor of this measure, writes, “Design-Build can have a variety of benefits for school construction projects. The delivery method can expedite project construction, which is especially important as schools work to build developmentally-appropriate classrooms for the new universal Transitional Kindergarten grade level. Design-Build can reduce the risk of cost increases resulting from change orders once construction begins by establishing a Guaranteed Maximum Price for each project. This is a particularly useful tool during times of high construction cost escalation, which schools have experienced in recent years. Additionally, Design-Build encourages collaboration between architects/engineers and contractors, and generates creative solutions to unique issues.”
SUPPORT
California's Coalition for Adequate School Housing (sponsor)
Alameda County Office of Education
Association of California School Administrators
California Retired Teachers Association
Kern County Superintendent of Schools Office
Los Angeles County Office of Education
Los Angeles Unified School District
OPPOSITION
None received
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Discussed in Hearing
Assembly Standing Committee on Education
Senate Floor
Senate Standing Committee on Education
Bill Author
Bill Co-Author(s):