You Passed Your Bond Now What? a Part 3: Multi-Prime and Design-Build Project Delivery Methods and Project Labor Agreements

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1 You Passed Your Bond Now What? a Part 3: Multi-Prime and Design-Build Project Delivery Methods and Project Labor Agreements January 25, 2017 Presented By: Deidree Sakai Cameron Ward SAN FRANCISCO LONG BEACH SAN DIEGO NOVATO CHICO SACRAMENTO SAN LUIS OBISPO This training is provided for educational, compliance and loss-prevention purposes only, and absent the express prior agreement of DWK, does not create or establish an attorney-client relationship. The training is not itself intended to convey or constitute legal advice for particular 1 issues or circumstances. Contact a DWK attorney for answers to specific questions. Overview Lesser-Used Delivery Methods Multi-Prime Construction Management/Multi-Prime Construction Manager at Risk Design-Build Project Labor Agreements 2 1

2 Lesser-Used Delivery Methods Construction Management Multi-Prime Construction Manager at Risk 3 Multiple Prime Contracting District Architect Construction Manager (Opt.) Trade Contractors =Owner Team 4 2

3 Multi-Prime: a twist on the traditional approach Instead of using one General Contractor, District contracts directly with multiple trades. District controls selection of contractors, scheduling, pricing. District responsible for coordination issues. A construction manager can be used to assist with coordinating the multiple trades. 5 Construction Management Multi-Prime: Procurement Trade Contractors Competitive bidding process for contracts exceeding bid threshold. (Public Contract Code et seq.) Construction Manager Selection based on demonstrated competence and professional qualifications necessary for the satisfactory performance of the services required. (Government Code 4525 et seq.) 6 3

4 Construction Manager at Risk: Procurement Trade Contractors Competitive bidding process for contracts exceeding bid threshold. (Public Contract Code et seq.) Construction Manager Competitive bidding process for contracts exceeding bid threshold. (Public Contract Code et seq.) City of Inglewood-Los Angeles County Civic Center Authority v. Superior Court (1972) 7 Cal.3d City of Inglewood-Los Angeles Count Civic Center Authority v. Superior Court A contract for the management of construction services including the guarantee of an outside price based on subcontract bids must be competitively bid Rationale: the other duties and obligations make the contract, and services sought thereunder, more akin to those of a general contractor rather than a construction manager 8 4

5 DSA Interpretation of Regulations (IR A-3) A Construction Manager Multiple Prime (CMMP) may manage multiple prime contractor contracts separately awarded by the district, and coordinate and schedule the work of the various trade and prime contractors. The work of the multiple contractors in aggregate achieves the final product shown on DSA-approved plans and specifications. A Construction Manager at Risk (CMAR) may act as an agent in administering and advising the district during the pre-design, design, and contractor bidding and award phases and then assume the risk of completion, schedule, and cost by becoming the contractor. When that construction manager assumes the risks of completion, schedules or cost, he/she becomes the CMAR, and may no longer act as agent to the district. He/she must be appropriately licensed as a contractor. 9 CMMP Scope When CMMP Does Not Perform Construction Tasks: Perform services in the areas of coordination of the work of the various contractors. Negotiate scopes of services and ensure contract adherence of the work of design professionals, contractors, inspectors and laboratories. Monitor and administer the progress of design, construction, and construction change documents. Recommend the approval of progress payments for the contractors. Prepare, advertise, bid and negotiate prime contracts between the owner and a construction contractor (owner must directly hire contractor). Select the project inspector, special inspector and testing laboratory (owner must directly hire inspectors and laboratory). Facilitate communications. Advise the owner on various aspects of the construction process. 10 5

6 CMMP - Scope When CMMP Performs Construction Tasks: All work performed as construction tasks shall be reported in the final construction cost on the form DSA 168 and shall be subject to the rules and requirements of Title 24, CCR with the exception of verified reports. CMMP may not participate in selection of the project inspector, special inspector and testing laboratory to avoid conflict of interest. 11 CMAR Scope A CMAR assumes the risk of project completion, schedule, and cost by becoming the contractor, including all of the obligations of the contractor in Title 24, CCR CMAR shall not participate in selecting, negotiating contracts, and administering contracts of designers, project inspectors, special inspectors and laboratories. CMAR does not have signature authority to sign DSA administrative forms on behalf of the district. CMAR signs a final verified report form DSA 6-C at completion of the contract of construction and all costs from the assumption of risk of project completion as the contractor shall be included in the fee and reported on the form DSA

7 Lesser-Used Delivery Methods Design-Build 13 Design-Build Bridging or Criteria Architect Owner Design Build Entity (Architect + Contractor) Subconsultants Trade Contractors =Owner Team 14 7

8 Design-Build District identifies the finished product it wants and contracts with a Design-Build Entity (DBE) who will create the design and build it. Typically, District has less involvement in/control of project. Projects in excess of $1 million. Significant Amendment effective July 1, 2016; Sunsets on January 1, Design-Build: Procurement Education Code, et seq. Performance specifications and plans prepared by a licensed design professional setting forth the scope and estimated price of the project (bridging or criteria documents). Bridging architect cannot be part of design-build entity. 16 8

9 Design-Build: Procurement Request for qualifications to prequalify/short-list includes: Identification of the basic scope and needs of the project or contract, the expected cost range, the methodology that will be used by the school district to evaluate proposals, the procedure for final selection of the design-build entity. Significant factors that the school district reasonably expects to consider in evaluating qualifications, including technical design and construction expertise, acceptable safety record, and all other nonprice-related factors. Standard template request for statements of qualifications prepared by the school district. Enforceable commitment to use Skilled and Trained Workforce at every tier. 17 Design-Build: Procurement Request for Proposals to prequalified/short-listed entities includes: Identification of the basic scope and needs of the project or contract, the estimated cost of the project, the methodology that will be used by the school district to evaluate proposals, whether the contract will be awarded on the basis of low bid or best value. Significant factors that the school district reasonably expects to consider in evaluating proposals. The relative importance assigned to each of the factors identified. 18 9

10 Design-Build: Procurement/Best Value When Best Value is used: Competitive proposals shall be evaluated by using only the criteria and selection procedures specifically identified in the RFP. District may hold discussions or negotiations with responsive proposers using the process articulated in the RFP. When the evaluation is complete, the responsive proposers shall be ranked based on a determination of value provided. Award of the contract shall be made to the responsible DBE whose proposal is determined to have offered the best value to the public. Upon issuance of a contract award, district shall publicly announce its award, identifying the DBE, along with a statement regarding the basis of the award. 19 Design-Build: Subcontractors Subcontractors afforded protections of Subletting and Subcontracting Fair Practices Act. Subcontractors may be included in design-build entity statement of qualifications and proposal. Following award of contract, subcontracts more than 0.5% of contract price awarded either on a best value basis or lowest responsible bidder

11 DSA Interpretation of Regulations (IR A-33) Designers are contracted and paid by the DB team; however, designers must perform their duties in accordance Title 24, CCR to fulfill the requirements of the Field Act. DB builder shall not provide direction that results in the designers, project inspectors, special inspectors or laboratories being unable to comply with CCR, Title 24, and to verify the construction is in accordance with the DSA-approved construction documents. DB builder shall not participate in selecting, negotiating and administering contracts of project inspectors, special inspectors and laboratories. The project inspector, special inspectors and laboratories shall be employed directly by the district and shall work under the direction of the project design professional in general responsible charge and under the supervision of DSA. Designers shall participate in the selection, approval and supervision of the project inspectors and special inspectors. 21 Project Labor Agreements Are PLAs Right for Your District? 22 11

12 What is a PLA? Defined by Public Contract Code 2500: [a] pre-hire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects. Also known as a Project Stabilization Agreement, Community Workforce Agreement, etc. 23 Structure of a PLA PLA is signed by: District Local Building Trades Council Various Construction Trade Unions The PLA is included in the bid documents for the projects it covers Mandatory Agreement to be Bound Binds all contractors on covered projects 24 12

13 Key Provisions of a PLA All contractors on covered projects agree to abide by union agreements Guarantee of labor peace; no strikes/lockouts Grievance/Dispute resolution procedures Applicable only to specified projects Local hiring goals Evidence of compliance with statutory Skilled and Trained Workforce requirements for design-build, lease-leaseback, etc. 25 Proponents Say PLAs: Ensure an adequate supply of skilled craft personnel Ease compliance with skilled workforce requirements and reporting Provide quick and effective resolution of labor disputes Protect against labor work stoppages Benefit the local community that supports the District, through local hire requirements and union support Do not increase costs Protect non-union contractors by excluding smaller projects 26 13

14 Opponents Say: Harm/exclude non-union contractors Especially local contractors Precludes use of some key personnel Forces payment of union contributions by non-union workers Increase project costs through reduced competition Labor problems seldom occur on prevailing wage projects so PLA not needed 27 Skilled Workforce Compliance AB 1431 (2015) authorizes job order contracting by school districts that have entered into a PLA applicable to all projects in excess of $25,000. Exempts districts from monthly reporting of compliance with skilled workforce requirements for lease leaseback pursuant to AB 566 (2015) and SB 693 (2016), and for design build pursuant to AB 1358 (2015) and SB 693 (2016) According to State Labor Commissioner, exempts projects from State Wage Enforcement process 28 14

15 Key Terms PLAs generally require that all employees of all contractors on the owner s projects: Register with the appropriate trade union Be hired through union hall referral system Contribute to trade union s health, fringe, pension, apprenticeship, and other benefit plans Pay trade union s representation fee 29 Core Terms to Negotiate Which projects to include/exclude: Dollar value threshold Percentage of program budget Types of projects Local hire component Define local area ROP participants Core employees number allowed District participation in administration 30 15

16 Thank You! SAN FRANCISCO LONG BEACH SAN DIEGO NOVATO CHICO SACRAMENTO SAN LUIS OBISPO Deidree Y.M.K. Sakai Cameron C. Ward