Proposed Design Build/PPP Legislation Introduced in NC Assembly

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 A bill was filed in the NC State House that would allow for design-build and public private partnerships in North Carolina. The bill would not affect NC Department of Transportation projects.  The bill, H857, would require local and state governments to seek at least five design-build proposals and evaluate the three most highly qualified respondents. The PPP legislation would not allow the developer to self-perform the work except in limited circumstances. It would also require the developer to finance at least half of the project.

The legislation comes at a time when, this year alone, a dozen or so local bills have been introduced across the state to allow for design-build on local public construction work, a trend that has occurred routinely in the Legislature in recent years as public owners lean more toward the alternative delivery method. The NC Department of Transportation currently has legislation in place allowing for unlimited design-build.

In addition, PPP legislation this year passed the Senate allowing for OnslowCounty to use that delivery method on one project. The action came after Carolinas AGC spent several days negotiating on the bill in an effort to provide for a level playing field for the construction industry.

S75, sponsored by Senate Majority Leader Harry Brown, R-Onslow, now is in House Government and has language that calls for public advertising, competitive bidding, mandatory bonding and only applies to one human services building project, which will most likely be accompanied by a parking area construction project that is to be competitively bid via single-prime contracting – all positions which CAGC pushed for before the bill moved.

In approaching CAGC about H857, Rep. Arp said that with design-build being used extensively by the federal government and surrounding states, including South Carolina, it is time in North Carolina to try to craft design-build, PPP legislation that is as acceptable as possible to both the design and construction industry in the state. By shaping such legislation, rather than continually having to react to local bills, it would be better to play offensive instead of defensive ball and not, as one lawmaker put it, have to “die a death of a thousand cuts.”

Unlike at risk-construction management, which involves separate contracts with the owner/designer and owner/construction manager, the design-build method only has one contract with the owner and design-build team. Some of the provisions that CAGC supports in H857 and actively sought for in the ongoing negotiations include:

* On PPPs, not allow for unsolicited bids, a proposal that has been pushed by some PPP advocates in the NC General Assembly for nearly a decade, based on existing legislation in Virginia. CAGC to date has been able to turn away those efforts. In addition, on PPPs, the developer, similar to language on at-risk construction management, generally cannot self-perform the work.

* Require on both design-build and PPPs bonding to protect all construction parties. The PPP payment bond would expressly protect general contractors and the designers as well.

* Publicly advertise and seek competition in seeking design-build or PPP proposals.

* In design-build, the owner must evaluate the design-builder(s) based on their responses to a request for qualifications. In that response, the design-builder must either identify the contractor, designer and licensed subcontractors that it proposed to use or outline its strategy for subcontractor selection.

Meantime, CAGC continues its efforts to try to remove from the bill language that would ostensibly allow designers – not general contractors – to take the lead on the design-build projects, an option which CAGC maintains is not allowed by North Carolina law.  Read More.

CAGC favors open, competitive bidding on public work whenever possible. Currently, on non-DOT work, public delivery methods include single prime-bidding, multi-prime bidding, dual bidding with single-prime and multi-prime, and at-risk construction management. In addition, on local and state government projects, public owners may continue to seek special permission from the NC State Building Commission for design-build and other alternative delivery systems on a case-by-case basis. As previously mentioned, design-build has been authorized by special legislation for local governments routinely in recent sessions of the NC General Assembly.  Read More.