Chapter 2.5Design-Build Contracts

Section § 17250.10

Explanation

This section explains that the design-build method, which allows combining project design and construction services into a single contract based on value rather than just cost, is beneficial for projects. The legislature wants to extend this method to school districts, aiming for cost savings and faster completion. However, they're neutral about preferring it over other methods and just want to give schools another option.

(a)CA Education Code § 17250.10(a) The Legislature finds and declares that the design-build method of project delivery, using a best value procurement methodology, has been authorized for various agencies that have reported benefits from those projects, including reduced project costs, expedited project completion, and design features that are not achievable through the traditional design-bid-build method.
(b)CA Education Code § 17250.10(b) It is the intent of the Legislature that:
(1)CA Education Code § 17250.10(b)(1) This chapter provide general authorization for school districts to use the design-build method for projects.
(2)CA Education Code § 17250.10(b)(2) This chapter shall not be deemed to express a preference for the design-build method over other procurement methodologies.
design-build method best value procurement school district projects project delivery benefits construction cost savings expedited project completion design features traditional design-bid-build procurement methodology general authorization school construction project efficiency legislative intent project delivery method educational infrastructure
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.15

Explanation

This section is about the terms used when a school district hires a single company to handle both the design and construction of a project. "Best value" means choosing what gives the most benefit considering factors like cost and past performance. A "construction subcontract" is a smaller contract made by the main contractor for specific parts of the job. "Design-build" is when both design and construction tasks are managed by one company. A "design-build entity" is that single company, which might be a corporation or partnership. The "design-build team" includes the main contractor and possibly other specialty contractors like those for electrical or plumbing. Finally, "project" refers to building any kind of school facility.

For purposes of this chapter, the following definitions apply:
(a)Copy CA Education Code § 17250.15(a)
(1)Copy CA Education Code § 17250.15(a)(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)CA Education Code § 17250.15(a)(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.
(b)CA Education Code § 17250.15(b) “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.
(c)CA Education Code § 17250.15(c) “Design-build” means a project delivery process in which both the design and construction of a project are procured from a single entity.
(d)CA Education Code § 17250.15(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)Copy CA Education Code § 17250.15(e)
(1)Copy CA Education Code § 17250.15(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)CA Education Code § 17250.15(e)(2) Members shall include the general contractor and, if utilized in the design of the project, all electrical, mechanical, and plumbing contractors.
(f)CA Education Code § 17250.15(f) “Project” means the construction of any school facility.
best value objective criteria design-build design-build entity construction subcontract school district project delivery design-build team licensed contracting architectural services engineering services general contractor mechanical contractors plumbing contractors school facility construction
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.20

Explanation

This law section allows California school districts to use a 'design-build' approach for projects over $1 million. The design-build method involves hiring a single entity to handle both the design and construction. The school districts must decide whether to award contracts based on the lowest bid or the best value. They also need to have rules in place to prevent conflicts of interest, especially involving anyone connected with both the project's procurement and construction. This process applies to requests for proposals issued starting July 1, 2016.

(a)CA Education Code § 17250.20(a) A school district, with approval of its governing board, may procure design-build contracts for projects in excess of one million dollars ($1,000,000), awarding the contract to either the low bid or the best value.
(b)CA Education Code § 17250.20(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 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 school district entering into design-build contracts authorized under this chapter.
(c)CA Education Code § 17250.20(c) This chapter shall apply to bid requests issued on or after July 1, 2016.
design-build contracts school district projects organizational conflict of interest best value bidding low bid contracts guidelines procurement policies single entity solicitation process construction projects over one million governing board approval entity proposal restrictions bid requests project guidelines proposal submission rules
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.25

Explanation

This law outlines how school districts in California should handle design-build construction projects. First, they must create documents detailing the project scope and estimated costs, and these should not include long-term operating plans. Next, they ask for qualifications to shortlist potential companies, focusing on factors like experience, safety, and finances. Companies must commit to using trained workers unless alternative agreements are in place. Then, a request for proposals (RFP) is made, indicating whether the contract will go to the lowest bidder or the best value. The proposal evaluation criteria must be shared, and any contract awards must be announced with reasons for selection.

The procurement process for design-build projects shall progress as follows:
(a)Copy CA Education Code § 17250.25(a)
(1)Copy CA Education Code § 17250.25(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)CA Education Code § 17250.25(a)(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)CA Education Code § 17250.25(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)CA Education Code § 17250.25(b)(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)CA Education Code § 17250.25(b)(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)CA Education Code § 17250.25(b)(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)CA Education Code § 17250.25(b)(3)(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)CA Education Code § 17250.25(b)(3)(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)CA Education Code § 17250.25(b)(3)(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)CA Education Code § 17250.25(b)(3)(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)CA Education Code § 17250.25(b)(3)(E) Information concerning workers’ compensation experience history and a worker safety program.
(F)CA Education Code § 17250.25(b)(3)(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)CA Education Code § 17250.25(b)(3)(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)Copy CA Education Code § 17250.25(b)(4)
(A)Copy CA Education Code § 17250.25(b)(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)CA Education Code § 17250.25(b)(4)(A)(B) Information required under this subdivision that is not otherwise a public record under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code) shall not be open to public inspection.
(c)Copy CA Education Code § 17250.25(c)
(1)Copy CA Education Code § 17250.25(c)(1) A design-build entity shall not be prequalified or short-listed 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)CA Education Code § 17250.25(c)(2) This subdivision shall not apply if any of the following requirements are met:
(A)CA Education Code § 17250.25(c)(2)(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)CA Education Code § 17250.25(c)(2)(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 prior to January 1, 2017.
(C)CA Education Code § 17250.25(c)(2)(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)CA Education Code § 17250.25(c)(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)CA Education Code § 17250.25(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)CA Education Code § 17250.25(d)(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)CA Education Code § 17250.25(d)(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)CA Education Code § 17250.25(d)(3) The relative importance or the weight assigned to each of the factors identified in the request for proposals.
(4)CA Education Code § 17250.25(d)(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)CA Education Code § 17250.25(e) For those projects utilizing 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)CA Education Code § 17250.25(f) For those projects utilizing best value as a selection method, the design-build competition shall progress as follows:
(1)CA Education Code § 17250.25(f)(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)CA Education Code § 17250.25(f)(1)(A) Price, unless a stipulated sum is specified.
(B)CA Education Code § 17250.25(f)(1)(B) Technical design and construction expertise.
(C)CA Education Code § 17250.25(f)(1)(C) Life-cycle costs over 15 or more years.
(2)CA Education Code § 17250.25(f)(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)CA Education Code § 17250.25(f)(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)CA Education Code § 17250.25(f)(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)CA Education Code § 17250.25(f)(5) Notwithstanding any other provision of 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.
(6)CA Education Code § 17250.25(f)(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.
design-build projects school district procurement request for qualifications competitive sealed proposals project scope performance specifications prequalified entities best value selection low bid selection skilled workforce commitment project labor agreement proposal evaluation criteria bonding and insurance contract award announcement safety record requirements
(Amended by Stats. 2021, Ch. 615, Sec. 61. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

Section § 17250.27

Explanation

This law section explains the rules for school districts in California when they're working on construction projects. It allows a school district to change or even cancel a project if it's not meeting environmental quality standards. They can modify designs to reduce environmental harm and weigh the project's benefits against potential problems. Contracts must include these terms, and work beyond the design phase can't start until the project complies with environmental laws. Additionally, school districts need to officially notify contractors before they proceed with construction.

(a)CA Education Code § 17250.27(a) For purposes of this section, the following definitions apply:
(1)CA Education Code § 17250.27(a)(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)CA Education Code § 17250.27(a)(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)CA Education Code § 17250.27(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)CA Education Code § 17250.27(b)(1) Terminate the contract at any time before a final project design is submitted to the Division of the State Architect for approval.
(2)CA Education Code § 17250.27(b)(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)CA Education Code § 17250.27(b)(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)CA Education Code § 17250.27(b)(4) Disapprove the project design and not proceed with the project’s final design and construction.
(c)CA Education Code § 17250.27(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)CA Education Code § 17250.27(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)CA Education Code § 17250.27(e) For purposes of procuring and awarding a 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).
project labor agreement environmental compliance design-build contract California Environmental Quality Act mitigation measures project termination final project design environmental impact design phase notice to proceed Project design modifications labor compliance program Department of Industrial Relations approval school district construction design-build entity
(Added by Stats. 2019, Ch. 275, Sec. 1. (SB 743) Effective January 1, 2020.)

Section § 17250.30

Explanation

This law section requires that any design-build company working on a school district project must provide financial guarantees, known as payment and performance bonds, from a California-approved company. The payment bond can't be less than the performance bond. It also mandates that the contract includes insurance for any design mistakes. Additionally, the school district needs to create a standard bond form specifically for these projects.

(a)CA Education Code § 17250.30(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)CA Education Code § 17250.30(b) The design-build contract shall require errors and omissions insurance coverage for the design elements of the project.
(c)CA Education Code § 17250.30(c) The school district shall develop a standard form of payment and performance bond for its design-build projects.
design-build entity payment bond performance bond California admitted surety errors and omissions insurance design elements standard bond form school district projects financial guarantees design-build contract
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.35

Explanation

This section of the Education Code explains how school districts in California can manage subcontractor selection when using a design-build project delivery method. Specifically, it says that in the proposals for such projects, certain types of subcontractors must be identified upfront. After a design-build contract is awarded, subcontractors for work exceeding a small fraction of the overall contract must be selected through a public notice and either through a 'best value' method or by choosing the lowest responsible bid. The process excludes subcontractors named in the original proposal and must follow certain legal protections.

(a)CA Education Code § 17250.35(a) The school district, in each 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)CA Education Code § 17250.35(b) Following award of the 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)CA Education Code § 17250.35(b)(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)CA Education Code § 17250.35(b)(2) Establish reasonable qualification criteria and standards.
(3)CA Education Code § 17250.35(b)(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. 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.
design-build contracts school district construction subcontractor selection public notice requirements best value method lowest responsible bidder subcontractor protections competitive bidding process statement of qualifications public contract code
(Amended (as added by Stats. 2015, Ch. 752, Sec. 2) by Stats. 2016, Ch. 86, Sec. 56. (SB 1171) Effective January 1, 2017.)

Section § 17250.40

Explanation

This law section is about how much money a school district can hold back from a contractor when they award a building project to them. The district can't hold back more than 5% of payment from the main contractor, and this same limit applies to any subcontracts. However, if a subcontractor was told beforehand that they'd need to provide a bond and can't do so, the main contractor may keep more than 5% from that subcontractor.

(a)CA Education Code § 17250.40(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)CA Education Code § 17250.40(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, prior to 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.
school district construction design-build entity retention proceeds withheld payment subcontractor bond requirement project award process 5 percent retention limit contractor payment terms construction contract regulations project bid notifications bond furnishing requirement
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.45

Explanation

This law section clarifies that the chapter it's part of doesn't change any legal rights or solutions you might already have under other laws.

Nothing in this chapter affects, expands, alters, or limits any rights or remedies otherwise available at law.
rights remedies legal solutions law clarification legal rights preservation existing legal framework unchanged legal remedies law limitations alteration of remedies legal expansion chapter impact rights unaffected
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Section operative July 1, 2016, pursuant to Section 17250.50.)

Section § 17250.50

Explanation
This law section states that the rules or provisions contained in this chapter started to take effect beginning on July 1, 2016.
This chapter shall become operative on July 1, 2016.
operative date July 1 2016 effective date implementation activation start date enforcement date beginning commencement timeline applicability date inception date chapter provision start rule commencement statute effectuation
(Repealed (in Sec. 1) and added by Stats. 2015, Ch. 752, Sec. 2. (AB 1358) Effective January 1, 2016. Note: Delayed operative date applies to Chapter 2.5, commencing with Section 17250.10.)

Section § 17250.52

Explanation

Starting from January 1, 2023, any project that uses an alternative design-build contract must follow the rules set out in Chapter 2.6, which begins with Section 17250.60.

Beginning January 1, 2023, a project using an alternative design-build contract, as defined in Section 17250.60, entered into on or after January 1, 2023, shall be governed by Chapter 2.6 (commencing with Section 17250.60).
alternative design-build contract project governance Chapter 2.6 Section 17250.60 January 1 2023 contract rules project regulations design-build procedures construction projects contract commencement
(Added by Stats. 2022, Ch. 571, Sec. 13. (AB 185) Effective September 27, 2022.)