Local Agency Progressive Design-Build Contracts

The California Public Contract Code, in Division 2, Part 3, Chapter 4.1, provides for local agencies in this state to engage in progressive design-build public contracting.

Section 22170 contains definitions for the following terms: “best value,” “construction subcontract,” “design-build entity,” “design-build project,” “design-build team,” “guaranteed maximum price,” “local agency,” “progressive design-building,” and “qualifications-based selection.”

Section 22171 authorizes a local agency to procure progressive design-build contracts and use the progressive design-build contracting process described in this chapter for up to 15 public works projects in excess of $5,000,000 for each project.

Section 22171.5 requires a local agency entering into design-build contracts authorized under this chapter 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.

Section 22172 requires the procurement process for progressive design-build projects to progress as specified in this section. The local agency is required to prepare and issue a request for qualifications in order to select a design-build entity to execute the project, and that request has to include at least a dozen required elements.

Section 22172.1 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 22172.2 states that, after selecting a design-build entity based upon qualifications, the local agency may enter into a contract and direct the design-build entity to begin design and preconstruction activities sufficient to establish a guaranteed maximum price for the project.

Upon agreement of the guaranteed maximum price for the project, the local agency may amend its contract with the design build entity to contract for the remaining design, preconstruction, and construction activities sufficient to complete and close out the project, consistent with the guaranteed maximum price. In the event that there are unforeseen site conditions, the local agency may amend its contract with the design build entity accordingly and consistent with the guaranteed maximum price, to enable the entity to complete the remaining design, preconstruction, and construction activities sufficient to complete and close out the project.

If the cost for completing all remaining design, preconstruction, and construction activities sufficient to complete and close out the project exceed the guaranteed maximum price, the costs exceeding the guaranteed maximum price are the responsibility of the design-build entity. If the cost for these activities are less than the guaranteed maximum price, the design-build entity is not entitled to the difference between the cost and the guaranteed maximum price unless there is a prior written agreement concerning the sharing of these funds.

Section 22172.3 authorizes the local agency, in each design-build request for qualifications, to identify specific types of subcontractors that are to be included in the design-build entity’s statement of qualifications. All construction subcontractors that are identified in the statement of qualifications must be afforded specified protections.

Following award of the design-build contract, except for those construction subcontractors listed in the statement of qualifications, the design-build entity is required to proceed as listed in this subdivision in awarding construction subcontracts with a value exceeding one-half of 1 percent of the contract price allocable to construction work for projects with a contract value of greater than or equal to ten million $10,000,000.

Section 22172.4 provides that, if the local agency elects to award a project pursuant to this chapter, 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. Work performed to establish the guaranteed maximum price is not subject to retention.

Section 22172.5 requires no later than January 1, 2028 for a local agency that uses the progressive design-build process pursuant to this chapter shall to submit to the appropriate policy and fiscal committees of the Legislature a report on the use of the progressive design-build process. This report must include at least the ten specified items.

Section 22173 provides that nothing in this chapter affects, expands, alters, or limits any rights or remedies otherwise available at law. Section 22174 specifies that this chapter remains in effect only until January 1, 2029, and as of that date is repealed.