By: Richard Thomas, Director, State/Local Legislative Affairs
In legislative terms, 2023 emerged as a highly successful year for design-build, marked by a significant expansion of its authority, unprecedented funding for projects and the passage of a record number of Progressive Design-Build (PDB) bills in state legislatures. Across the nation, more than 160 design-build-related bills were introduced, reflecting a 25% increase from 2022, with an impressive 78% success rate. Notably, California, Illinois and Virginia stood out as legislative hotspots, collectively passing over 20 design-build bills.
California’s Landmark Achievements
In a groundbreaking move, California achieved a historic milestone by passing nine design-build bills, two of which were PDB bills. The first PDB bill, SB 706, sponsored by DBIA’s Western Pacific Region, extends PDB authority to all local governments in California. SB 706 was the culmination of more than five years of legislative effort and a top priority for DBIA-WPR in 2023; the bill secured Governor Gavin Newsom’s signature this fall.
The second PDB bill, SB 146, authorizes the Department of Water Resources (DWR) and the Department of Transportation (DOT) to utilize PDB for up to eight projects per department, exclusively for projects with estimates exceeding $25 million.
In a broader fiscal context, California’s budget bills, AB 221/SB 72, demonstrated a significant trend by earmarking funds specifically for design-build projects. This financial commitment underscores the state’s recognition of the importance of design-build methodologies. Additionally, California extended local design-build authority from 2025 to 2031 through the passage of AB 400.
Illinois’ Expanding Design-Build Authority
Design-build legislative activity in Illinois took center stage in 2023, marked by the passage of three significant bills. Foremost among them, SB 1570 represented a major milestone as it extended design-build authority to all Illinois municipalities — a pivotal expansion that DBIA has championed for over a decade. Complementing this, SB 89 extended design-build authority for the Public Building Commission in Illinois through 2025.
The transportation sector in Illinois witnessed substantial growth with the approval of HB 2878. This bill authorizes the Illinois Department of Transportation, Toll Authority and local governments to leverage Public-Private Partnerships (P3) and design-build as integral components of P3 transportation projects, providing them with enhanced tools to achieve optimal project outcomes.
Record Year for Progressive Design-Build
Expanding the scope nationwide, 2023 marked a historic year for PDB legislation, witnessing the passage of six bills across five states: California, Florida, Louisiana, Nebraska and Tennessee. These bills spanned various sectors, including transportation, aviation and water/wastewater. Some PDB bills were sector-specific, like Nebraska’s Water/Wastewater bill and Transportation/Aviation bills passed in the other four named states. Others were more general, such as California’s SB 706 and Florida’s SB 1305.
SB 1305 ushered in a new era by authorizing the Florida Department of Transportation (FDOT) to employ phased design-build on mega projects. This approach combines the design and construction phases into a single contract, with a design-builder selected early in a competitive process based on qualifications, becoming an integral part of the collaborative project development.
Tennessee embraced a comprehensive approach via SB 273, empowering the Department of Transportation (TDOT) to utilize design-build (including PDB) and Construction Manager At Risk (CMAR) on transportation projects. Unlike the bills in California and Florida, SB 273 imposes no restrictions on project number or size, providing flexibility for diverse project scopes.
Louisiana extended its design-build authority, including PDB, to all public airports through the passage of SB 167.
Growing Trend: Funding Earmarked for Design-Build Projects
A noticeable trend in recent years is the allocation of funds for design-build projects in state budget bills. Washington and California have been at the forefront, consistently earmarking funds for design-build projects in their budget and transportation funding bills. Washington’s legislative initiatives, such as HB 1125/SB 5162 and HB 1126/SB 5164, exemplify this commitment.
Minnesota seized the opportunity presented by a substantial surplus, making historic investments in infrastructure. The legislature’s passage of HF 670, a $2.6 billion bonding bill for state and local projects, and HF 2887, providing over $1.3 billion for transportation projects, underscored a forward-thinking approach. DBIA’s advocacy efforts played a pivotal role in ensuring the inclusion of design-build provisions in both bills.
Challenges in Virginia and Future Outlook
Projections that design-build will encompass nearly half of all U.S. construction spending by 2026 underscore the project delivery method’s vital role in the industry’s future. However, even in states where design-build is permitted, it is crucial to remain vigilant in protecting this authority. In Virginia, the introduction of SB 954 and HB 1957 this year posed a significant threat. These bills, if passed, would severely curtail design-build authority in the state, imposing strict limitations and an outright ban on projects under $52 million. Collaborative efforts by DBIA, industry partners and Owners groups successfully defeated these bills. Despite this victory, the recurrence of similar legislation being pre-filed for the 2024 session emphasizes the ongoing need to actively defend and advocate for design-build practices.
Looking Ahead to 2024
Reflecting on the triumphs of 2023 — the successful passage of bills expanding design-build authority and the defeat of those seeking to restrict it — DBIA is looking forward to a promising 2024 characterized by the ongoing industry trends we’ve witnessed in recent years. Notably, the expansion of design-build authority will persist, with a particular emphasis on the local level, encompassing cities and counties. PDB is also poised for continued growth, especially within the transportation and aviation sectors.
Recognizing the high turnover of legislators, DBIA and its Regions are committed to prioritizing the introduction of design-build to new lawmakers in 2024. As the landscape evolves, proactive efforts remain crucial for sustaining and advancing the principles of design-build.
