News & Insights

North Carolina Legislature Clarifies Design Build Contracting Process For Public Projects

North Carolina’s Governor Roy Cooper signed Session Law 2022-1 early 2022, which amended and revised North Carolina statutes applicable to public construction projects within the state. Beginning March 1, 2022, the amendments and revisions went into effect, which serve to clarify and update the statutory provisions relevant to the design-build public contracting process.

Changes to North Carolina’s design-build contracting process are found in Section 2 of Session Law 2022-1. First, definitions are now provided for the following verbiage found in N.C. Gen. Stat. Ann. § 143-128.1A–1B (West): “design professionals,” “first-tier subcontractors,” “licensed contractors,” licensed subcontractors,” “unlicensed subcontractors,” “costs of the subcontractor work,” “general conditions” and “key personnel.”

Design professionals are defined as an architect who is duly licensed to practice architecture; a registered interior designer; a landscape architect; an engineer who has special training and is qualified to practice engineering; and a professional engineer that is duly licensed in North Carolina, among others under N.C. Gen. Stat. Ann. § 83A-1, 89A-1, and 89C-3.

Second, design-builders responding to requests for proposals are required to select their project team by one of two methods. The first method is to submit a list of the licensed contractors, licensed subcontractors, and design professions whom the design-builder proposes to use for the projects design and construction. However, the design-builder may elect to self-perform some or all of the work and can accept bids for selection of first-tier subcontractors.

The second method is very similar, but the design-builder submits a list of the licensed contractors and design professionals, along with an outline of the strategy for the open subcontractor selection process. Under this method, the design-builder may still elect to self-perform some of the work, but shall not enter into negotiated contracts with first-tier subcontractors.

Third, owners are now required to be notified of any changes in project team key personnel. Key personnel includes licensed contractors, licensed subcontractors, and design professionals.

Fourth, the new legislation modifies the requirements for design-criteria packages used in design-build bridge contracts. When preparing a design-criteria package, the public owner is prohibited from requiring the design-builder to include the costs of subcontractor work in the package.

Lastly, the requests-for-proposal public notice provision now requires the public owner to provide a list of general conditions. For example, general conditions may include: (1) on-site construction office and storage trailers; (2) electrical and other utility services during construction; (3) on-site construction superintendent, (4) construction supervisors, and clerical staff; (5) trash collection; (6) security; and (7) other temporary measures.  Unless specifically addressed in the contract, the general conditions are not to be construed to control the means and methods used by the design-builder or eliminate any discretion on whether to use a given item in the prosecution of the work. The list shall also have no bearing on the amounts the design-builder is to be compensated.

The design-build contract may allow for multiple phases, termination for convenience, and the setting of guaranteed maximum prices. Section 2 of Session Law 2022-1’s amendments and revisions should be carefully inspected by North Carolina design professionals, developers, and general contractors—especially when bidding or contracting for services on a public design-build project.