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This year the Department of General Services sponsored design-build legislation based in part on a bill vetoed by Governor Davis, AB 424 (Wildman). This year’s legislation addressed the Governor’s concerns and at this writing (September 27, 2001) is expected to be signed. This outline addresses the major components of AB 1402 (Simitian).

At its essence, design-build is a procurement process which allows a single entity (the design-build entity) to provide both design and construction of a project. The benefits of this approach as compared to a traditional design-bid-build is to allow the design professional to be a part of the construction entity and to eliminate redundancy in the proposal and bidding procedures.

The legislature explicitly recognized the following benefits in allowing design build for public schools:

• Accelerated completion of projects
• Cost containment
• Reduction of complexity
• Reduced risk to school districts
• Shift liability and risk for cost containment and completion to the design-build entity.

AB 1402 creates a number of specific procedures for a school district to determine whether the use of design build is appropriate. But the actual criteria for a project’s eligibility is contained in section 17250.20, the “expenditure on contract for design and construction of a school facility exceeds $10 million.”

The intent language in AB 1402 provides that the bill is intended to provide “options for building and modernizing school facilities”.

DESIGN BUILD DETERMINATION.

AB 1402 requires that the school board evaluate the relative merits of both design-bid-build and design-build in a public hearing and make a written finding that the use of design-build on the specific project will accomplish one of the following objectives:

• reduce comparable project costs
• expedite the project’s completion
• provide features not otherwise achievable.

The school board must also review the guidelines to be developed by the Superintendent of Public Instruction and adopt a resolution approving the use of a design-build contract and make a determination that design-build contract is in the best interest of the district.

SELECTION PROCEDURES.

Prequalification. The district must adopt a prequalification procedure utilizing a standard questionnaire to be developed by the Director of the Department of Industrial Relations as outlined in Education Code Section 17250.25(b)(1). The 12 specific items of information required to be submitted must be submitted under oath.

Request For Proposal. The district is required to prepare a RFP describing the scope of the project. Any performance specifications and plans shall be prepared by a licensed design professional. The Governing Board is encouraged, but not required, to retain architect or engineer throughout the project to ensure compliance.

The new law requires that the RFP shall include:

1. all significant factors to be considered in evaluation including price and nonprice factors;
2. methodology and rating/weighting scheme to be used and whether numeric or qualitative values;
3. relative importance or weight of each factor; or
4. whether all factors other than price when combined are significantly more important than price, approximately equal to price or significantly less important than price;
5. identify if the board wishes to hold discussions or negotiations with responsive bidders, and publish what rules will apply to ensure fair and impartial negotiations

Selection of Design Build Team. The new law requires the district to utilize a final selection procedure that is either lowest responsible bid or a “best value” qualifications award utilizing criteria identified in the RFP. All responsive bidders must be ranked from most to least advantageous to the district. The school board shall issue a detailed written award decision sufficient to satisfy an external audit. Further, the school board shall publicly announce the selection, price, rating and ranking along with rationale for its selection. The new law prohibits any design firm or professional which assists in development of the RFP or criteria from participating in the award. AB 1402 provides limits on the use of the best value approach. The evaluation must be scored solely on the factors identified in the RFP and must utilize the following 5 factors which must collectively amount to at least 50% of the total weight.

• Price;
• Technical expertise;
• Life cycle costs over 15 years or more;
• Skilled labor force availability, which is defined in statute as the existence of an agreement with “a registered apprenticeship program” which has graduated apprentices in the past 5 years; and
• An acceptable safety record, which is defined in statute as either a 1.00 average for the past three years on the experience modification rate or the bidder is a party to an alternative dispute resolution system pursuant to Labor Code section 3201.5.

LABOR COMPLIANCE

AB 1402 requires the school district to establish a labor compliance program pursuant to Labor Code section 1771.5; contract to operate such program; or enter into a collective bargaining agreement that binds all contractors on the project.

ADHERENCE TO SPECIFICATIONS

AB 1402 requires that the Governing Board employ an inspector who is fully independent. Each contract shall provide that there is no construction or alteration without DGS approval. AB 1402 specifies that the Design-Build entity liable for building to specs in the absence of contrary language.

RETENTION PROCEEDS

Last year the governor vetoed design build legislation because of dissatisfaction with provisions for retention. AB 1402 requires that retention between district and Design-Build entity may be specified in the contract. Retention between Design-Build entity and the subcontractor may not exceed the percentage identified in the prime contract. Design-Build entity may withhold more if entity has informed a subcontractor that a bond may be required and the subcontractor fails to furnish the bond.

FUNDING AND LIABILITY PROVISIONS

The bill allows a single funding phase for design, construction and equipment which may be either concurrently with or separate from the phase which authorizes performance criteria and conceptual drawings. The design build entity must obtain bonding for nondesign and E and O insurance for design services. The bill provides that the General or Engineering contractor may obtain the required bonding. The Design Build Entity must utilize a bond form to be developed by the Department of General Services pursuant to the Government Code.

The district must submit to the LAO a project report within 60 days of completion. District cannot commence another Design-Build project if report is not submitted within 60 days. The LAO must submit an interim report on January 1, 2004 and a final report January 1, 2006. The reports shall contain specified information identified in the law for each project including: a description of the facility; identification of the company awarded the project; the estimated and actual times to complete and project costs; the relative merits of Design-Build and whether the districts pre-contract Design Build determinations were achieved; a description of bid protests and resolutions; and a description of any Labor Code violations and penalties assessed.