Local Agency Design-Build Contracting

California’s Public Contract Code, in Division 2, Part 3, Chapter 4, provides for local agency design-build projects when engaged in public contracting.

Section 22160 contains legislative findings and declarations about the “reported benefits from such projects including reduced project costs, expedited project completion, and design features that are not achievable through the traditional design-bid-build method,” as well as two statements of legislative intent.

Section 22161 provides definitions for the following terms: “best value,” “construction subcontract,” “design-build,” “design-build entity,” “design-build team,” “local agency,” and “project.”

Section 22162 authorizes a local agency, with approval of its governing body, to procure design-build contracts for public works projects in excess of $1,000,000, awarding the contract either the low bid or the best value, provided that this article does not apply to any projects on the state highway system.

However, when a local agency awards a contract for the acquisition and installation of technology applications or surveillance equipment designed to enhance safety, disaster preparedness, and homeland security efforts, there is no cost threshold and the contract may be awarded to the lowest responsible bidder or by using the best value method.

In addition, the local agency is required to develop guidelines for a standard organizational conflict-of-interest policy, consistent with applicable law, regarding the ability of a person or entity, that performs services for the local agency relating to the solicitation of a design-build project, to submit a proposal as a design-build entity, or to join a design-build team. This conflict-of-interest policy applies to each local agency entering into design-build contracts authorized under this chapter.

Section 22162.4 states that, upon approval of its governing body, a city, county, or city and county may use the design-build contracting process described in this chapter to award contracts for construction of projects that are necessary in order to comply with construction-related accessibility standards.

Section 22164 requires the procurement process for the design-build projects to progress as specified. The local agency is required to prepare a set of documents setting forth the scope and estimated price of the project. The documents may include the size, type, and desired design character of the project, performance specifications covering the quality of materials, equipment, workmanship, preliminary plans or building layouts, or any other information deemed necessary to describe adequately the local agency’s needs. The performance specifications and any plans must be prepared by a design professional who is duly licensed and registered in California.

The documents do not include a design-build-operate contract for any project. The local agency has to prepare and issue a request for qualifications in order to prequalify or short-list the design-build entities whose proposals are evaluated for final selection. The request for qualifications must include a number of specified elements.

Section 22165 requires the design-build entity to provide payment and performance bonds for the project in the form and in the amount required by the local agency, and issued by a California admitted surety. The amount of the payment bond cannot be less than the amount of the performance bond. In addition, the design-build contract must require errors and omissions insurance coverage for the design elements of the project.

Section 22166 authorizes the local agency, in each design-build request for proposals, to identify specific types of subcontractors that must be included in the design-build entity statement of qualifications and proposal. All construction subcontractors that are identified in the proposal are to be afforded specified protections. Following award of the design-build contract, the design-build entity must proceed as specified in awarding construction subcontracts with a value exceeding one-half of 1 percent of the contract price allocable to construction work.

Section 22167 provides that, if the local agency elects to award a project pursuant to this article, retention proceeds withheld by the local agency from the design-build entity cannot exceed 5% if a performance and payment bond, issued by an admitted surety insurer, is required in the solicitation of bids.

Section 22168 provides that nothing in this article affects, expands, alters, or limits any rights or remedies otherwise available at law. Section 22169 specifies that this chapter remains in effect only until January 1, 2031, and as of that date is repealed.