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AB-902 School facilities: alternative design-build contracts.(2021-2022)

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Date Published: 01/13/2022 09:00 PM
AB902:v97#DOCUMENT

Amended  IN  Assembly  January 13, 2022
Amended  IN  Assembly  January 03, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 902


Introduced by Assembly Member O’Donnell

February 17, 2021


An act to add and repeal Chapter 2.6 (commencing with Section 17250.60) to Part 10.5 of Division 1 of Title 1 of the Education Code, relating to school facilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 902, as amended, O’Donnell. School facilities: alternative design-build contracts.
(1) Until January 1, 2025, existing law 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.
This bill would authorize, until January 1, 2029, a school district that has an average daily attendance of over 50,000 pupils, with the approval of the governing board of the school district, to procure alternative design-build contracts for public works projects in excess of $10,000,000, awarding the contract to either the low bid or the best value, as provided. The bill would define “alternative design-build” as a project delivery process in which both the design and construction of a project are procured from a single design-build entity based on its proposed design cost, general conditions, overhead, and profit as a component of the project price. The bill would require specified information to be verified under penalty of perjury. By expanding the crime of perjury, the bill would impose a state-mandated local program.
(2) 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 2.6 (commencing with Section 17250.60) is added to Part 10.5 of Division 1 of Title 1 of the Education Code, to read:
CHAPTER  2.6. Alternative Design-Build Contracts

17250.60.
 For purposes of this chapter, the following definitions apply:
(a) “Alternative design-build” means a project delivery process in which both the design and construction of a project are procured from a single design-build entity based on its proposed design cost, general conditions, overhead, and profit as a component of the project price.
(b) (1) “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.
(2) A best value determination may involve the selection of the lowest cost proposal meeting the interests of the school district and the objectives of the project, selection of the best proposal for a stipulated sum established by the procuring school district, or a tradeoff between price and other factors.
(c) “Construction subcontract” means a subcontract awarded by the design-build entity to a subcontractor that will perform work or labor or will render service to the design-build entity in or about the construction of the work or improvement, or a subcontractor licensed by the state which, under subcontract to the design-build entity, specially fabricates and installs a portion of the work or improvement according to detailed drawings contained in the plans and specifications produced by the design-build team.
(d) “Design-build entity” means 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 an alternative design-build contract.
(e) (1) “Design-build team” means the design-build entity and the individuals or other entities identified by the design-build entity as members of its team.
(2) Members shall include the general contractor and, if utilized in the design of the project, all electrical, mechanical, and plumbing contractors.
(f) “Project” means the construction of any school facility.

17250.61.
 (a) A school district, with approval of its governing board, may procure alternative design-build contracts for projects in excess of ten million dollars ($10,000,000), awarding the contract to either the low bid or the best value.
(b) The school district shall 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 school district relating to the solicitation of an alternative design-build project, to submit a proposal as a design-build entity, or to join a design-build team. This conflict-of-interest policy shall apply to each school district entering into alternative design-build contracts authorized under this chapter.

17250.62.
 The procurement process for alternative design-build projects shall progress as follows:
(a) (1) The school district shall prepare a set of documents setting forth the scope and estimated price of the project. The documents may include, but are not limited to, 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 school district’s needs. The performance specifications and any plans shall be prepared by a design professional who is duly licensed and registered in California.
(2) The documents shall not include a design-build-operate contract for a project. The documents, however, may include operations during a training or transition period, but shall not include long-term operations for a project.
(b) The school district shall prepare and issue a request for qualifications in order to prequalify, or develop a short list of, the design-build entities whose proposals shall be evaluated for final selection. The request for qualifications shall include, but is not limited to, all of the following elements:
(1) Identification of the basic scope and needs of the project or contract, the expected cost range, the methodology that will be used by the school district to evaluate proposals, the procedure for final selection of the design-build entity, and any other information deemed necessary by the school district to inform interested parties of the contracting opportunity.
(2) Significant factors that the school district reasonably expects to consider in evaluating qualifications, including technical design and construction expertise, acceptable safety record, and all other nonprice-related factors.
(3) A standard template request for statements of qualifications prepared by the school district. In preparing the standard template, the school district may consult with the construction industry, the building trades and surety industry, and other school districts interested in using the authorization provided by this chapter. The template shall require the following information:
(A) If the design-build entity is a privately held corporation, limited liability company, partnership, or joint venture, a listing of all of the shareholders, partners, or members known at the time of statement of qualification submission who will perform work on the project.
(B) Evidence that the members of the design-build team have completed, or demonstrated the experience, competency, capability, and capacity to complete, projects of similar size, scope, or complexity, and that the proposed key personnel have sufficient experience and training to competently manage and complete the design and construction of the project, and a financial statement that ensures that the design-build entity has the capacity to complete the project.
(C) The licenses, registration, and credentials required to design and construct the project, including, but not limited to, information on the revocation or suspension of any license, credential, or registration.
(D) Evidence that establishes that the design-build entity has the capacity to obtain all required payment and performance bonding, liability insurance, and errors and omissions insurance.
(E) Information concerning workers’ compensation experience history and a worker safety program.
(F) If the proposed design-build entity is a corporation, limited liability company, partnership, joint venture, or other legal entity, a copy of the organizational documents or agreement committing to form the organization.
(G) An acceptable safety record. A proposer’s safety record shall be deemed acceptable if its experience modification rate for the most recent three-year period is an average of 1.00 or less, and its average total recordable injury or illness rate and average lost work rate for the most recent three-year period does not exceed the applicable statistical standards for its business category, or if the proposer is a party to an alternative dispute resolution system, as provided for in Section 3201.5 of the Labor Code.
(4) (A) The information required under this subdivision shall be certified under penalty of perjury by the design-build entity and its general partners or joint venture members.
(B) Information required under this subdivision that is not otherwise a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) shall not be open to public inspection.
(c) (1) A design-build entity shall not be prequalified or shortlisted unless the entity provides an enforceable commitment to the school district that the entity and its subcontractors at every tier will use a skilled and trained workforce to perform all work on the project or contract that falls within an apprenticeable occupation in the building and construction trades, in accordance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code.
(2) This subdivision shall not apply if any of the following requirements are met:
(A) The school district has entered into a project labor agreement that will bind all contractors and subcontractors performing work on the project or contract to use a skilled and trained workforce, and the entity agrees to be bound by that project labor agreement.
(B) The project or contract is being performed under the extension or renewal of a project labor agreement that was entered into by the school district before January 1, 2023.
(C) The entity has entered into a project labor agreement that will bind the entity and all its subcontractors at every tier performing the project or contract to use a skilled and trained workforce.
(3) For purposes of this subdivision, “project labor agreement” has the same meaning as in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(d) Based on the documents prepared as described in subdivision (a), the school district shall prepare a request for proposals that invites prequalified or short-listed entities to submit competitive sealed proposals in the manner prescribed by the school district. The request for proposals shall include, but need not be limited to, the following elements:
(1) Identification of the basic scope and needs of the project or contract, the estimated cost of the project, the methodology that will be used by the school district to evaluate proposals, whether the contract will be awarded on the basis of low bid or best value, and any other information deemed necessary by the school district to inform interested parties of the contracting opportunity.
(2) Significant factors that the school district reasonably expects to consider in evaluating proposals, including, but not limited to, cost or price and all nonprice-related factors.
(3) The relative importance or the weight assigned to each of the factors identified in the request for proposals.
(4) Where a best value selection method is used, the school district may reserve the right to request proposal revisions and hold discussions and negotiations with responsive proposers, in which case the school district shall so specify in the request for proposals and shall publish separately or incorporate into the request for proposals applicable procedures to be observed by the school district to ensure that any discussions or negotiations are conducted in good faith.
(e) For those projects using low bid as the final selection method, the competitive bidding process shall result in lump-sum bids by the prequalified or short-listed design-build entities, and awards shall be made to the design-build entity that is the lowest responsible bidder.
(f) For those projects using best value as a selection method, the alternative design-build competition shall progress as follows:
(1) Competitive proposals shall be evaluated by using only the criteria and selection procedures specifically identified in the request for proposals. The following minimum factors, however, shall be weighted as deemed appropriate by the school district:
(A) The proposing design-build entity’s design cost, general conditions, overhead, and profit as a component of the project price, unless a stipulated sum is specified.
(B) Technical design and construction expertise.
(C) Life-cycle costs over 15 or more years.
(2) Pursuant to subdivision (d), the school district may hold discussions or negotiations with responsive proposers using the process articulated in the school district’s request for proposals.
(3) When the evaluation is complete, the responsive proposers shall be ranked based on a determination of value provided, provided that no more than three proposers are required to be ranked.
(4) The award of the contract shall be made to the responsible design-build entity whose proposal is determined by the school district to have offered the best value to the public.
(5) Notwithstanding any other law, upon issuance of a contract award, the school district shall publicly announce its award, identifying the design-build entity to which the award is made, along with a statement regarding the basis of the award. The contract awarded shall be subject to further negotiation and amendment up to the sum of the costs of construction subcontracts awarded pursuant to Section 17250.65.
(6) The statement regarding the school district’s contract award, described in paragraph (5), and the contract file shall provide sufficient information to satisfy an external audit.
(g) A contract awarded pursuant to this chapter shall be deemed a construction contract within the meaning of Section 17603, and subject to the requirements of Section 20118.4 of the Public Contract Code.

17250.63
 (a) For purposes of this section, the following definitions apply:
(1) “Project” means all construction, alteration, demolition, installation, repair, and maintenance work that is subject to a project labor agreement that meets the requirements of Section 2500 of the Public Contract Code.
(2) “School district” means a school district that operates a labor compliance program that received final approval from the Department of Industrial Relations before January 1, 1997.
(b) A school district entering into a contract awarded pursuant to this chapter for a project that is subject to the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) shall retain the discretion to do all of the following:
(1) Terminate the contract at any time before a final project design is submitted to the Division of the State Architect for approval.
(2) Modify the project design or feature in a manner the school district decides is necessary to comply with the California Environmental Quality Act, including, but not limited to, incorporation of mitigation measures identified in an environmental review document for the project to mitigate environmental impacts that the project may cause, or the adoption of alternatives to the project.
(3) Balance the benefits of the proposed project against any of the project’s significant environmental effects if the effects cannot be otherwise avoided or mitigated to a less than significant level.
(4) Disapprove the project design and not proceed with the project’s final design and construction.
(c) A contract awarded pursuant to this chapter by a school district for a project shall include terms specifying conditions set forth in subdivision (b) and shall condition the commencement of any activity beyond the design phase of the contract in compliance with applicable laws, including the California Environmental Quality Act.
(d) A design-build entity or its subcontractors performing work on a project for a school district shall not engage in any activity, including demolition, excavation, grading, or construction, under a contract awarded pursuant to this chapter beyond the design phase unless the school district issues a notice pursuant to subdivision (a) of Section 21152 of the Public Resources Code, as applicable, and issues a notice to proceed with the construction.
(e) For purposes of procuring and awarding an alternative design-build contract for a project pursuant to this chapter, a school district is deemed to have complied with the California Environmental Quality Act if the school district complies with subdivision (b) and a contract awarded pursuant to this chapter contains the terms and conditions described in subdivision (c).

17250.64.
 (a) The design-build entity shall provide payment and performance bonds for the project in the form and in the amount required by the school district, and issued by a California admitted surety. The amount of the payment bond shall not be less than the amount of the performance bond.
(b) The alternative design-build contract shall require errors and omissions insurance coverage for the design elements of the project.
(c) The school district shall develop a standard form of payment and performance bond for its alternative design-build projects.

17250.65.
 (a) The school district, in each alternative design-build request for proposals, may 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 shall be afforded all the protections of Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code.
(b) Following award of the alternative design-build contract, the design-build entity shall proceed as follows in awarding construction subcontracts with a value exceeding one-half of 1 percent of the contract price allocable to construction work:
(1) Provide public notice of availability of work to be subcontracted in accordance with the publication requirements applicable to the competitive bidding process of the school district, including a fixed date and time on which qualifications statements, bids, or proposals will be due.
(2) Establish reasonable qualification criteria and standards.
(3) Award the subcontract either on a best value basis or to the lowest responsible bidder. The process may include prequalification or short-listing. The foregoing process does not apply to construction subcontractors listed in the original proposal. proposal as part of the design-build team. Subcontractors awarded construction subcontracts under this subdivision shall be afforded all the protections of Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code.
(c) Construction subcontracts shall be subject to an open book evaluation by the school district. If the school district determines the sum of the costs of the construction subcontracts exceeds the anticipated value of the project to the school district, or if any individual subcontracts are unreasonable, the school district may require the design-build entity to repeat the process described in subdivision (b) for those subcontracts or cancel the alternative design-build contract with the school district.
(d) A licensed construction subcontractor that provides design services used on a project shall not be responsible for any liability arising from the subcontractor’s design if the construction subcontract is not performed by the subcontractor.

17250.66.
 (a) If the school district elects to award a project pursuant to this chapter, retention proceeds withheld by the school district from the design-build entity shall not exceed 5 percent.
(b) In a contract between the design-build entity and a subcontractor, and in a contract between a subcontractor and any subcontractor thereunder, the percentage of the retention proceeds withheld may not exceed the percentage specified in the contract between the school district agency and the design-build entity. If the design-build entity provides written notice to any subcontractor that is not a member of the design-build entity, before or at the time the bid is requested, that a bond may be required and the subcontractor subsequently is unable or refuses to furnish a bond to the design-build entity, then the design-build entity may withhold retention proceeds in excess of the percentage specified in the contract between the school district and the design-build entity from any payment made by the design-build entity to the subcontractor.

17250.67.
 (a) A school district that uses the alternative design-build procurement method pursuant to this chapter shall, no later than January 1, 2028, submit to the appropriate policy and fiscal committees of the Legislature a report on the use of the procurement method.
(b) The report shall include, but is not limited to, the following information:
(1) A description of the projects awarded using the alternative design-build procurement method.
(2) The contract award amounts.
(3) The design-build entities awarded the projects.
(4) A description of any written protests concerning any aspect of the solicitation, bid, or award of the contracts, including the resolution of the protests.
(5) A description of the prequalification process.
(6) If a project awarded under this article has been completed, an assessment of the project performance, including, but not limited to, a summary of any delays or cost increases.

17250.68.
 Nothing in this chapter affects, expands, alters, or limits any rights or remedies otherwise available at law.

17250.69.
 This chapter shall only apply to a school district with an average daily attendance of 50,000 or more pupils.

17250.70.
 This chapter shall remain in effect only until January 1, 2029, and as of that date is repealed.

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B 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 XIII B of the California Constitution.