With the enactment of Senate Bill 785, the State of California has taken a major step forward in authorizing state and local agencies to use design-build. Although many California agencies have the ability to use design-build without the need for specific enabling legislation, other agencies require specific design-build legislation in order to be able to use design-build effectively, either because they are precluded by law from using a best value selection process for design-build or do not have the ability to bundle design and construction into a single contract.
The new statute consolidates and amends existing laws allowing state and local agencies to use design-build, resolving various problems and inconsistencies with prior legislation. The bill grants authority to the following agencies (and repeals their existing design-build authorization):
1. State agencies: The Department of General Services and the Department of Corrections and Rehabilitation, for public works projects in excess of $1,000,000 (Public Contract Code 10187 et seq., article entitled “State Agency Design-Build Projects”).
2. Local agencies:
a) The following agencies, for public works projects in excess of $1,000,000 (Public Contract Code §22160 et seq., chapter entitled “Local Agency Design-Build Projects”):
(1) A city, county, or city and county.
(2) A special district that operates wastewater facilities, solid waste management facilities, water recycling facilities, or fire protection facilities.
(3) Any transit district, included transit district, municipal operator, included municipal operator, any consolidated agency, as described in Section 132353.1 of the Public Utilities Code, any joint powers authority formed to provide transit service, any county transportation commission created pursuant to Section 130050 of the Public Utilities Code, or any other local or regional agency, responsible for the construction of transit projects. (Existing authorization remains effective until 2017 for solicitations already underway as of January 1, 2015.)
b) Sonoma Valley Health Care District and the Marin Healthcare District, for hospital or health facility buildings and related improvements (Health and Safety Code §32132.5).
c) San Diego Unified Port District, for buildings and related improvements in excess of $1,000,000 (SB 785 § 15).
The legislation specifically states that it does not affect affect, expand, alter, or limit any rights or remedies otherwise available at law—making it clear that agencies using design-build based on other authority will not be affected by passage of SB 785.
Why SB 785 Was Needed. The first bills passed in California authorizing design-build project delivery were adopted in 1993, more than 20 years ago. Since then, the California legislature has passed numerous design-build statutes, many of which include limitations that have proved problematic in practice. Furthermore, each statute used different language, creating inconsistencies and inefficiencies for agencies and industry practitioners trying to effectively utilize the project delivery process.
History of SB 785. California Senate Bill 785 was introduced by Senators Wolk and Hill, with Assembly Member Levine as principal coauthor. It passed both houses in August 2014 and was signed by the Governor at the end of September. The new law will become effective on January 1, 2015, with a January 1, 2025 sunset. Certain of the existing California design-build statutes are not repealed by this bill and will therefore remain in effect, including the Transportation Design-Build Program (Public Contract Code §6820 et seq., which sunsets at the end of 2023) and enabling legislation for school districts and community colleges (Education Code §17250.10 et seq. and §81700 et seq., both of which sunset at the end of 2019).
Limitations under SB 785. Subject to specified limitations, the authority granted by SB 785 is generally available for all projects developed by the agencies identified in the law, other than projects on the state highway system. However, cities and counties may not use design-build authority under this law for “streets and highways, public rail transit, or water resources facilities and infrastructure,” and transit operators may not use it for “local street and road projects.” If the legislature wishes to expand the list of agencies authorized to use design-build in the future, the process will involve a simple amendment either to the definition of “department” in Section 10187.5(c) of the Public Contract Code or the definition of “local agency” in Section 22160(f).Continue Reading...