CAGC Fights to Ensure North Carolina PPP Legislation Maintains a Level Playing Field

I recently read the below article in North Carolina Construction News.  The legislation is fairly interesting and seems to track recent similar Georgia legislation.  While the legislation was received well in the house, it'll be interesting to see whether it can actually pass.  North Carolina has attempted similar legislation for years to no avail.

Proposed Design Build/PPP Legislation Introduced in NC:

 Bob Kruhm, April 23, 2013

A bill was filed on April 11 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 bill was introduced by Rep. Dean Arp, R-Union, a Monroe engineer, who asked Carolinas AGC to provide extensive input on the issue before its introduction last week. ... 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.  [For example], 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 Onslow County to use that delivery method on one project. The action came after CAGC staff and Raleigh attorney Keith Coltrain of Wall Templeton spent several days negotiating on the bill in an effort to provide for a level playing field for the construction industry.
...

 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." ...

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. 

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. 

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.  

The House Bill H857 contains a usual litany of goals and needs, including the following:

• A need for high-performing public buildings within the State of North Carolina; 

• Public dissatisfaction with existing procurement methods

• Hectoring by local government entities for public-private partnerships and use of design-build contracting;

• A hope that an integrated approach for the design and construction with a single point of responsibility is more efficient;

• A desire for improved collaboration among design professionals, builders, and owners;

• A lack of funds;

• A belief that private developers can invest needed funds;

• A hope that PPP will bring confidence with the general public;

• A belief that open competition delivers the best value for taxpayers and public owners;

• A desire to create transparent, fair, and equitable contracting procedures for the use of public funds in government construction contracting; 

It will be interesting to see if the legislation, if it passes, can successfully reconcile all of these goals.