Starting July 1, 2016, new laws governing the design-build method for K-12 school districts will go into effect. Design-build is a project delivery method that combines the design and construction functions and vests the responsibility for such functions with one entity: the design-builder. Under present law, school districts are only authorized to use design-build for construction projects exceeding $2.5 million. Current law also requires districts to make specific written findings that the use of the design-build method will accomplish certain statutory objectives and to establish a process to prequalify design-build entities using a questionnaire developed by the Department of Industrial Relations.

The new laws, codified in Education Code sections 17250.10, et seq., and brought about by Assembly Bill 1358, apply to any bid request issued on or after on July 1, 2016. (Ed. Code, §§ 17250.20 subd. (c), 17250.50.) Most significantly, the new laws lower the dollar amount threshold for projects from $2.5 million to $1 million, substantially expanding the scope of projects eligible to be awarded through the design-build delivery method. (Id.; Ed. Code, § 17250.20 subd. (a).) The new laws also seek to streamline the procurement process design-build projects. For example, a district's governing board is no longer required to make written findings regarding the benefits of using the design-build method. Nor is the district required to prequalify design bidders using a questionnaire developed by the Department of Industrial Relations. Instead, under the new law, design-build entities cannot be prequalified unless they provide an "enforceable commitment" to use a skilled and trained workforce, at every tier, to perform all work on the project. Moreover, the design-build entity must certify the information required for a design-build project "under penalty of perjury," emphasizing the criminal nature of falsifying information under the statute.

Under the new laws, school districts are allowed to award a design-build contract "to either the low bid or the best value." (Ed. Code, § 17250.20 subd. (a).) "Best value" means "a value determined by evaluation of objective criteria that may include, but are not limited to, price, features, functions, life-cycle costs, experience, and past performance." A "best value" determination may involve the selection of the lowest cost proposal meeting the school's interests, or the selection of the best proposal for a stipulated sum established by the school district, or "a tradeoff between price and other factors." (Id., Ed. Code, § 17250.15.)

The new laws also set forth elements that must be considered in the selection process. Section 17250.25 continues to prohibit "design-build-operate" contracts and adds that documents setting forth the scope and estimated price for the project can include operations during a training or transition period, but cannot include "long-term" operations for the project.

The news laws require districts to develop guidelines for a conflict-of-interest policy, regarding the ability of a person or entity that performs services for the district, relating to the solicitation of the design-build project, the submission of a proposal as a design-build entity, or the joinder of a design-build team. (Ed. Code, § 17250.20(b).)

The new design-build laws will remain in effect until January 1, 2025. School districts are encouraged to review their processes for prequalifying and selecting design-build project contractors, against the new laws, to ensure they request and obtain required information, and to ensure they qualify only those contractors who meet new minimum requirements.

(AB 1358 adds Section 17250.55 to, and amends, repeals and adds Chapter 2.5 – commencing with Section 17250.10 – of Part 10.5 of Division 1 of Title 1 of, the Education Code, and repeals Section 4 of Chapter 421 of the Statutes of 2001, relating to school facilities.)