Proposed Legislation Threatens Design-Build and P3s in California

A last-minute amendment to California Assembly Bill 294, if passed, would wreak havoc on Caltrans and local agency plans to use design-build for state highway projects (Public Contract Code section 6800 et seq.) and to enter into public-private partnerships (P3s) for highway projects (Streets and Highways Code section 143).

The language added to the bill would preclude local agencies from hiring consultants to work on the projects, stating that all work must be done through Caltrans employees or consultants under contract with Caltrans.  Project consultants are often hired well in advance of the decision to use design-build or P3s for the project--which means that this bill would create significant inefficiency by requiring new consultants to be brought on board once that decision is made.

Given the existing sunsets for P3 projects (January 1, 2017) and design-build projects (January 1, 2014), this bill could make public-private partnerships and design-build a hollow tool for California highway projects.

This appears to be an attempt by the Professional Engineers in California Government (PECG) to do an end-run around a recent California appellate court ruling regarding the Presidio Parkway P3 agreement.  Although the legislation would not affect contracts that have already been awarded, such as the Presidio Parkway agreement, the bill would impact future P3 projects under Section 143 and future design-build projects under Section 6800, possibly including some projects that are already in the procurement process.  In the Presidio Parkway case, PECG sought a determination that the agreement was invalid because engineering consultants under contract with the San Francisco County Transportation Authority performed services on the project while section 143 allegedly requires the consultants to be under Caltrans direct contract and supervision.  Caltrans and the SFCTA have pursued the project for many years under a series of cooperative agreements.

The bill, authored by Assemblyman Portantino, was originally short-titled "Design-sequencing contracts" and is now called "Transportation projects: procurement."  It would appear more appropriate to call it "Increased inefficiency in government."

The legislative session closes at the end of next week (September 9), and September 2 is the last day to amend existing bills.  It seems likely this bill will make it to the floor.  The authors of this blog urge readers to contact their legislators and ask them to oppose the bill.

  • Partner

    In nearly 40 years with the Firm, Fred Kessler has gained national recognition as a guiding force for public agencies in the field of transportation public-private partnerships (P3s).  Clients benefit from his vast experience with ...

  • Partner

    Co-founder of Nossaman’s Infrastructure Group, Nancy Smith is nationally known for her expertise in use of design-build, public-private partnerships (P3s) and other innovative contracting methodologies for public ...

Nossaman LLP’s 30-plus infrastructure attorneys offer clients, colleagues, strategic partners, and industry media a wealth of practical experience, insider insight, and thoughtful analysis here on Infra Insight. We blog about what we know best, from industry-leading procurements to local and national policy developments that affect the market and our clients.

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