Code Section Group

Public Contract Code - PCC

DIVISION 2. GENERAL PROVISIONS [1100 - 22355]

  ( Division 2 enacted by Stats. 1981, Ch. 306. )

PART 2. CONTRACTING BY STATE AGENCIES [10100 - 19150]

  ( Heading of Part 2 added by Stats. 1982, Ch. 1120, Sec. 6. )

CHAPTER 1. State Contract Act [10100 - 10285.5]

  ( Chapter 1 enacted by Stats. 1981, Ch. 306. )

ARTICLE 6.5. Progressive Design-Build Contracting [10198 - 10198.8]
  ( Article 6.5 added by Stats. 2021, Ch. 77, Sec. 26. )

10198.
  

For purposes of this article, the following definitions shall apply:

(a) “Best value” means a value determined by evaluation of objective criteria that relate to demonstrated competence and on the professional qualifications necessary for the satisfactory performance of the services required. Other factors such as price, features, functions, and life-cycle costs may be considered. If the qualifications-based selection process includes estimates of cost as a factor, a best value determination may involve the selection of the lowest cost proposal meeting the interests of the department and meeting the objectives of the project, or a tradeoff between price and other specified factors.

(b) “Construction subcontract” means each subcontract awarded by the design-build entity to a subcontractor that will perform work or labor or render service to the design-build entity in or about the construction of the work or improvement, or a subcontractor licensed by the State of California that, 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.

(c) “Department” means the Department of General Services.

(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 a design-build contract.

(e) “Design-build project” means a capital outlay project using the progressive design-build construction procurement process described in this article.

(f) “Design-build team” means the design-build entity itself and the individuals and other entities identified by the design-build entity as members of its team. Members shall include the general contractor and, if utilized in the design of the project, all electrical, mechanical, and plumbing contractors.

(g) “Director” means the Director of General Services or their designee.

(h) “Guaranteed maximum price” means the maximum payment amount agreed upon by the department and the design-build entity for the design-build entity to finish all remaining design, preconstruction, and construction activities sufficient to complete and close out the project.

(i) “Progressive design-build” means a project delivery process in which both the design and construction of a project are procured from a single entity that is selected through a qualifications-based selection at the earliest feasible stage of the project.

(j) “Qualifications-based selection” means the process by which the department solicits for services from the design-build entities.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.1.
  

(a) (1) Notwithstanding any other law, and subject to the limitation of paragraph (2), the director may procure progressive design-build contracts.

(2) The authority under this article shall apply to no more than three capital outlay projects, which shall be determined jointly by the department and the Department of Finance.

(b) The director 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 department 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 shall apply to each department entering into design-build contracts authorized under this article.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.2.
  

The procurement process for progressive design-build projects shall progress as follows:

(a) The department shall prepare and issue a request for qualifications in order to select a design-build entity to execute the project. The request for qualifications shall include, but is not limited to, the following elements:

(1) Documentation of the size, type, and desired design character of the project and any other information deemed necessary to describe adequately the department’s needs, including the expected cost range, the methodology that will be used by the department to evaluate the design-build entity’s qualifications, the procedure for final selection of the design-build entity, and any other information deemed necessary by the department to inform interested parties of the contracting opportunity.

(2) Significant factors that the department reasonably expects to consider in evaluating qualifications, including technical design and construction expertise, and all other nonprice-related factors. The department may require that a cost estimate, including the detailed basis for the estimate, be included in the design-build entities’ responses and consider those costs in evaluating the statements of qualifications.

(3) The relative importance or the weight assigned to each of the factors identified in the request for qualifications.

(4) A request for statements of qualifications with a template for the statement that is prepared by the department. The department shall require all of the following information in the statement and indicate, in the template, that the following information is required:

(A) If the design-build entity is a privately held corporation, limited liability company, partnership, or joint venture, a listing of all of the entity’s shareholders, partners, or members known at the time of the statement of qualification submission who will perform work on the project.

(B) Evidence that the members of the design-build team have completed, or have demonstrated the experience, competency, capability, and capacity to complete, projects of similar size, scope, or complexity, and that 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.

(5) 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) (1) A design-build entity shall not be evaluated for selection unless the entity provides an enforceable commitment to the director 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.

(2) This subdivision shall not apply if one or more of the following requirements are met:

(A) The department 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 department prior to January 1, 2022.

(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 meaning provided in paragraph (1) of subdivision (b) of Section 2500.

(c) At the close of the solicitation period, the department shall review the submissions. The department may evaluate submissions based solely upon the information provided in each design-build entities’ statement of qualifications. The department may also interview some or all of the design-build entities to further evaluate their qualifications for the project.

(d) Notwithstanding any other provision of this code, upon issuance of a contract award, the department 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 statement regarding the department’s contract award and the contract file shall provide sufficient information to satisfy an external audit.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.3.
  

(a) The design-build entity shall provide payment and performance bonds for the project in the form and in the amount required by the director, 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 design-build contract shall require errors and omissions insurance coverage for the design elements of the project.

(c) The department shall develop a standard form of payment and performance bond for its design-build projects.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.4.
  

(a) After selecting a design-build entity based upon qualifications, the department 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.

(b) (1) Subject to Section 13332.19 of the Government Code, upon agreement of the guaranteed maximum price for the project, the department, at its sole and absolute discretion, may amend its contract to direct the design-build entity to complete the remaining design, preconstruction, and construction activities sufficient to complete and close out the project, and may add funds not exceeding the guaranteed maximum price to the contract for these activities.

(2) 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 shall be the responsibility of the design-build entity. If the cost for these activities are less than the guaranteed maximum price, the design-build entity shall not be entitled to the difference between the cost and the guaranteed maximum price. These amounts shall revert to the fund from which the appropriation was made.

(c) If the department and the design-build entity do not reach agreement on a guaranteed maximum price, or the department otherwise elects not to amend the design-build entity’s contract to complete the remaining work, the department may solicit proposals to complete the project from firms that submitted statements of qualifications pursuant to Section 10198.2. The department may also, upon written determination that it is in the best interest of the state to do so, formally solicit proposals from other design-build entities. Subject to Section 13332.19 of the Government Code, contract award shall be made on a best value basis.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.5.
  

(a) The department, in each design-build request for qualifications, may identify specific types of subcontractors that shall be included in the design-build entity’s statement of qualifications. All construction subcontractors that are identified in the statement of qualifications shall be afforded the protections of Chapter 4 (commencing with Section 4100) of Part 1.

(b) Following award of the design-build contract, except for those construction subcontractors listed in the statement of qualifications, the design-build entity shall 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.

(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 department, 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.

(c) Subcontractors awarded construction subcontracts under this subdivision shall be afforded all the protections of Chapter 4 (commencing with Section 4100) of Part 1.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.6.
  

(a) If the department elects to award a project pursuant to this article, retention proceeds withheld by the department from the design-build entity shall not exceed 5 percent 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 shall not be subject to retention.

(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 shall not exceed the percentage specified in the contract between the department 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 department and the design-build entity from any payment made by the design-build entity to the subcontractor.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.7.
  

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

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

10198.8.
  

(a) The department shall submit to the Joint Legislative Budget Committee, on or before January 1, 2026, a report containing a description of each public works project procured by the department through the progressive design-build process described in this article that is completed after January 1, 2022, and before December 1, 2025.

(b) The report described in subdivision (a) shall include, but is not limited to, all of the following information:

(1) The type of project.

(2) The gross square footage of the project.

(3) The design-build entity that was awarded the project.

(4) The estimated and actual project costs.

(5) An assessment of the selection process and criteria required by this article.

(6) An assessment of the effects of the progressive design-build process described in this article on cost and schedule for the project.

(7) The number of specialty subcontractors listed by construction trade type, on each project, that provided design services, but did not meet the target price for their scope of work and therefore did not perform construction services on that project.

(8) Whether or not any portion of a design prepared by the specialty subcontractor that did not perform the construction work for that design was used by the department.

(9) In instances where the department determined that the guaranteed maximum price of any subcontract exceeded the anticipated target price for that portion of the project, which subcontracts were impacted and on what basis the department determined what the anticipated target price was.

(10) The number of specialty subcontractors listed by construction trade type, on each project, that meet the definition of a small business under subparagraphs (A) and (B) of paragraph (1) of subdivision (d) of Section 14837 of the Government Code.

(11) The number of specialty subcontractors listed by construction trade type, on each project, that meet the definition of a microbusiness under paragraph (2) of subdivision (d) of Section 14837 of the Government Code.

(c) The report submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.

(Added by Stats. 2021, Ch. 77, Sec. 26. (AB 137) Effective July 16, 2021.)

PCCPublic Contract Code - PCC6.5.