Alternative Delivery Methods in the Post-Davis World Phil Henderson - - PowerPoint PPT Presentation

Alternative Delivery Methods in the Post-Davis World

Phil Henderson Orbach Huff Suarez & Henderson phenderson@ohshlaw.com

April 2017 CASBO 2017 Annual Conference

Alan Reising Long Beach Unified School District areising@lbschools.net

California School District Procurement Generally

Bid Limits. California school districts must formally and publicly bid contracts for construction projects

• ver $15,000, unless there is an exception. (Public

Contract Code (“PCC”) § 20111.) Design-Bid-Build (DBB)

General Contractor (GC) Construction Manager / Multiple Prime (CM/MP)

Design-Build and Lease-Leaseback are Both Exceptions (Alternatives) to DBB.

Design-Build (DB): Education Code § 17250.10 Lease-Leaseback (LLB): Education Code § 17406

Design-Bid-Build

District Architect Subcontractor Contractor Subcontractor Subcontractor

Design-Bid-Build Structure (GC)

Architect Trade Contractor Trade Contractor Trade Contractor District

Design-Bid-Build Structure (CM/MP)

Construction Manager Trade Contractor Trade Contractor

Design-Build

Recent Design-Build Developments Design-Build has been around for years but has, until recently, had less popularity with California school districts.

Had a very complicated multi-step selection process that was recently replaced with a new streamlined process. Threshold design & construction value lowered to $1,000,000 as of July 1, 2016.

District Program Architect Design Subconsultants Design-Build Entity (Contractor + Architect Construction Subcontractors

Design-Build Structure

Preliminary Items

Determine if a design-build method is suited for the project. Ensure the design and construction costs are greater than $1 Million. Hire design professional to prepare performance specifications and (if needed) plans – design criteria.

Determine what should be included. This is the best opportunity to convey the district’s design needs and expectations. For the District, this is a critical phase of the project and can take time.

RFQ is used to establish list of design-build entities whose proposals will be evaluated for final selection.

Should include:

Project details and overview. District must also include methodology used in evaluating proposals and procedure for final selection. The significant factors in making the final design-build entity selection. If District is seeking state funding, should also include statutory prequalification.

Request for Qualifications (RFQ)

Request for Proposals (RFP)

After RFQ responses have been received:

Determine which design-build entities meet prequalification criteria. Hold a pre-proposal conference to answer questions and provide design clarifications. Prepare and issue the RFP, likely with design professional assistance. Include a set of the design criteria documents Issue the RFP to prequalified DB entities.

Preparation of RFP

Must include basic scope and needs of project, including:

Estimated cost. Proposal evaluation methodology.

Whether the contract will be awarded on basis

• f low bid or best value, if it will be a best value

award, the best value criteria must be included.

District can weight the criteria as it sees fit. District should specify if planning to short-list design-build entities.

RFP, cont’d

If using best value method to make award (as opposed to low bid):

Responses must be ranked based upon a determination of value provided.

No more than three responses required to be ranked.

Establish a review committee with a diverse group of stakeholders if the “best value” method is used.

School board issues decision supporting the contract award, stating in detail the basis for the award.

The basis must be sufficient to withstand an external audit. It is not required that the statement be in writing, but it is recommended.

DB Entity Selection

Lease-Leaseback

District Architect Trade Contractor LLB Contractor Trade Contractor Trade Contractor

Lease-Leaseback Structure

Lease-Leaseback (LLB) Statutory Authority

LLB was enacted at a time when there was a shortage of money for school construction (PRIOR Education Code § 17406 (a)):

“Notwithstanding Section 17417… a school district, without advertising for bids, may let … real property that belongs to the district if the [lease] requires the lessee … to construct … a building or buildings for the use of the school district.”

A couple of years ago, multiple LLB contracts were challenged, principally by one attorney.

LLB – Basic Structure

District leases real property to a builder for $1. (Site Lease) Builder constructs facility, then leases the facility back to the district. This is the “leaseback” component. (Facility Lease) District payments for construction costs:

Tenant improvement payments during construction. Lease payments after construction.

The construction terms and conditions are part of an exhibit to the Facility Lease (e.g., “General Construction Provisions”). District makes lease payments for period of time. Title to the new facility vests in the District as lease payments are made.

AB 2316 New Requirements for LLB

Became effective January 1, 2017. Was supported by trade unions, CASBO, CASH, and

• thers.

LLBs must now be advertised in newspaper and in a trade paper. District can require a “lump sum” or a proposed fee for preconstruction and for the construction. The LLB contract can include “preconstruction services”

• r “preliminary services,” even if plans are not DSA-

approved.

Contract shall be awarded based on “competitive solicitation process” to contractor providing the best value (or low bid, if District chooses to), based on RFQ & RFP. (Ed. Code § 17406 (a)(2).)

District must adopt and publish the procedures and guidelines for evaluating the best value. District can either do one RFQ/P or separate RFQ and then an RFP.

If it is not a lump sum (where the subs are prequalified too), the contractor must select subcontractors, “in accordance with the publication requirements applicable to the competitive bidding process of the school district.” (Ed. Code § 17406 (a)(4)(B)(i).)

AB 2316 New Requirements for LLB

LLB: Suggested Process Per AB 2316 Changes

Board Action. District Board adopts the procedures and guidelines regarding criteria for best value evaluation. (Ed. Code § 17406(a)(2).)

• RFQ. District issues an RFQ to solicit contractors based on the Board-

adopted criteria.

• Advertisement. District publishes notice of RFQ in newspaper and in

trade paper.

• Prequalification. The RFQ includes a prequalification questionnaire

(either the District’s existing form, a new specific firm, or a 3rd-party process (e.g., QualityBidders).

• Contract. RFQ includes the form of LLB contract.

LLB: Suggested Process Per AB 2316 Changes

Evaluation of RFQ. The District evaluates the RFQ responses based on the evaluation criteria and form that was part of the RFQ.

• RFP. The District issues an RFP that asks qualified contractors to price

the project.

• Award. The District awards the contract to the contractor with the

lowest proposal. Important

The above process is only one option of many that are permitted under the new statute. District’s can combine the RFQ and RFP steps, it can create a pool for multiple projects, it can award a contract on a lump sum price or on pricing factors, etc. District should consider various options and confer with its consultants and legal counsel prior to initiating one process.

Skilled Workforce Labor Requirements Applicable to DB & LLB, but not to DBB

Contractor must provide an “enforceable commitment” to use a “skilled and trained workforce” to perform all work falling within an “apprenticeable occupation” in the building trades. Contractor must submit monthly reports to district demonstrating compliance.

District cannot pay the contractor unless report is received, and may include option to cure failure of some subcontractor(s) to attain the required percentage of these workers. Districts with a PLA that addresses workforce requirements consistent with statutory requirements need not require monthly reports.

Alternative Delivery Methods in the Post-Davis World

Phil Henderson Orbach Huff Suarez & Henderson phenderson@ohshlaw.com

April 2017 CASBO 2017 Annual Conference

Alan Reising Long Beach Unified School District areising@lbschools.net