The following is NJASCU's advocacy position on design-build contracts and construction-manager-at-risk agreements for New Jersey public colleges and universities. NJASCU is seeking a change in the State College Contracts Law that would allow the state colleges and universities to enter into design-build contracts and construction-manager-at-risk agreements.
The State College Contracts Law (N.J.S.A. 18A:64-52 et seq.) restricts the ability of the state colleges and universities to enter into construction contracts that are innovative and cost-effective. Under current law (N.J.S.A. 18A:64-76.1), the institutions typically commission an architect or engineer to prepare drawings and specifications under a design contract. The institutions then select a construction contractor to build the facility. Costs can increase because of change orders derived from errors and omissions as the project moves from design to construction.
"Design-build" is a system of contracting under which a single entity performs both architectural/engineering services and construction under one contract.
"Construction-manager-at-risk" is a system of contracting under which a construction firm is selected as construction manager and general contractor at the beginning of the design phase.
Advantages of Design-Build
The design-build method would provide several advantages to the state colleges and universities. The design-build method would:
- allow institutions to have one point of contact for the entire project, saving time and money;
- assign risk and responsibility to a general contractor;
- clearly delineate responsibility in performance terms;
- permit projects with a guaranteed not-to-exceed price; and
- streamline and save costs on specialized projects, such as science labs and cogeneration facilities.
Advantages of Construction-Manager-at-Risk
As with the design-build method, the construction-manager-at-risk (CMAR) model would provide several advantages to the state colleges and universities. The CMAR firm would:
- work closely with the project's architect to examine alternate materials, systems, and equipment for cost, quality and availability;
- provide early coordination on constructability and engineering;
- foster collaboration and focus the entire design and construction team on the best solutions for the construction project; and
- coordinate all subcontractor bids and determine a guaranteed maximum price for construction.
Design-build and CMAR would preserve the requirement for competitive bidding. The state colleges and universities would select design-build or CMAR firms from a list of pre-qualified businesses, who would submit proposals. The state colleges and universities would award a design-build or CMAR contract to the bidder whose proposal, conforming to the bid specifications, would be the most advantageous to the institution, price and other factors considered.
Precedent in New Jersey and Other States
Design-build and CMAR are accepted contracting practices. In New Jersey, the New Jersey Building Authority (C.52:32-2.2.b, 52:32-2.3.b) and New Jersey Transit (C.27:25-11.c(2)) have the authority to enter design-build contracts under certain circumstances. The public research universities in New Jersey have the ability to enter design-build agreements as well.
Over the past decade, the federal government and many state governments have authorized the use of design-build contracts. According to the Design-Build Institute of America (http://www.dbia.org/pages/default.aspx), 26 states in the U.S. permit all agencies to enter design-build contracts for all types of design and construction, 15 states widely permit design-build contracts, five states allow design-build as a limited option (including New Jersey), and only four states do not specifically authorize design-build for public agencies.
Past Legislative Efforts
The state colleges and universities included a provision to allow design-build contracts in the 2004-2005 legislation that amended the State College Contracts Law. These bills were Senate Bill No. 1543, sponsored by Senator Wayne Bryant; and Assembly Bill No. 2641, sponsored by Assemblyman Lou Greenwald.
The Building Contractors Association of New Jersey opposed the design-build provision in this legislation. They argued for a requirement to award contracts to the lowest responsible bidder. The state colleges and universities believe that price should be an important consideration in awarding design-build contracts, but other factors should be considered as well, particularly under innovative design-build agreements.
Ultimately, the institutions worked with the bill sponsors to achieve the other important modifications to the State College Contracts Law provided by S-1543/A-2641, and the design-build provision was deleted. Governor Codey signed the legislation on January 12, 2006 (P.L. 2005, c.369).
In each legislative session since 2010-2011, Assemblymen Greenwald, Singleton, and Prieto have sponsored legislation that would allow local governments to enter design-build contracts. Senator Gordon has sponsored the Senate companion bills. In the 2016-2017 session, the bills are Assembly Bill No. 1730 and Senate Bill No. 693.
Red Tape Review Commission
The New Jersey Association of State Colleges and Universities testified before the Red Tape Review Commission on September 30, 2014 and September 10, 2015, and each time highlighted the benefits of amending the State College Contracts Law to allow design-build and construction-manager-at-risk construction contracts. At each hearing, the Red Tape Review Commission expressed its support for this initiative and encouraged NJASCU to pursue the issue with the legislature.
Legislation for State Colleges and Universities
Legislation to amend the State College Contracts Law to authorize design-build and CMAR contracts, Senate Bill No. 3234, was introduced at the end of the 2014-2015 legislative session by Senator Bucco. The bill can be found here.
At a time when the state colleges and universities are being asked to do more with less, the ability to enter contracts for design-build and CMAR projects would significantly benefit the institutions, their faculty, and their students. Much-needed facilities could be constructed quickly, efficiently, and economically.