North Carolina Department of Justice
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STATE OF NORTH CAROLINA
DEPARTMENT OF JUSTICE
ROY COOPER REPLY TO:
ATTORNEY GENERAL Robert O. Crawford, III
Transportation Section
June 19, 2001

Jerry T. Carter Executive Director

N.C. Board of Examiners for Engineers and Surveyors 310 West Millbrook Road Raleigh, NC 27609

Re: Advisory Opinion: Application of North Carolina’s “Mini-Brooks Act” (N.C.G.S. § 143-64.31) to Subcontracted Professional Services and “Design-Build” Contracts

Dear Mr. Carter:

We are responding to your letter dated January 17, 2001, requesting an opinion as to whether the qualifications-based selection process for architectural, engineering, and surveying services required by N.C.G.S. § 143-64.31 applies to subcontracted professional services. You have also inquired as to the applicability of this provision to publicly awarded “design-build” contracts.

BACKGROUND

The provisions of the United States Code sometimes referred to as the “Brooks Act” provide in part that:

The Congress hereby declares it to be the policy of the Federal Government to publicly announce all requirements for architectural and engineering services, and to negotiate contracts for architectural and engineering services on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices.

40 U.S.C. § 542. Thus, under the Brooks Act, federal architectural, engineering and surveying contracts must be awarded on a “qualifications” basis rather than on a “low bid” basis.

In 1987, the North Carolina General Assembly adopted a similar policy in legislation entitled “An Act to Provide a Model Code for Procurement of Architectural and Engineering Services by State and Local Government.” Session Law 1987, c. 102. This Act is commonly referred to as the “State Brooks Act” or the “Mini-Brooks Act.” The statute, as subsequently amended, provides:

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RALEIGH, NC 27699-1505

It is the public policy of this State and all public subdivisions and Local Governmental Units thereof, except in cases of special emergency involving the health and safety of the people or their property, to announce all requirements for architectural, engineering, and surveying services, to select firms qualified to provide such services on the basis of demonstrated competence and qualification for the type of professional services required without regard to fee other than unit price information at this stage, and thereafter to negotiate a contract for architectural, engineering, or surveying services at a fair and reasonable fee with the best qualified firm. If a contract cannot be negotiated with the best qualified firm, negotiations with that firm shall be terminated and initiated with the next best qualified firm. (Emphasis added)

N.C.G.S. § 143-64.31. Like its federal counterpart, this provision mandates a “qualifications-based” method of awarding public architectural, engineering, and surveying contracts.

The state statute includes exemptions for particular projects:

Units of local government or the North Carolina Department of Transportation may in writing exempt particular projects from the provisions of this Article in the case of:

(a)
Proposed projects where an estimated professional fee is in an amount less than thirty thousand dollars ($30,000), or
(b)
Other particular projects exempted in the sole discretion of the Department of Transportation or the unit of local government, stating the reasons therefor and the circumstances attendant thereto.

N.C.G.S. § 143-64.32. There is an additional exemption for State Capital Improvement projects under the jurisdiction of the State Building Commission where the estimated expenditure of public money is less than $100,000. N.C.G.S. § 143-64.34. (Another exemption for a UNC capital improvement project has been repealed effective July 1, 2001).

The North Carolina Department of Transportation also has a general exemption from the Mini-Brooks Act. N.C.G.S. § 136-28.1 states as follows:

(f) Notwithstanding any other provision of law, the Department of Transportation may solicit proposals under rules and regulations adopted by the Department of Transportation for all contracts for professional engineering services and other kinds of professional or specialized services necessary in connection with highway construction, maintenance, or repair. In order to promote engineering and design quality and ensure maximum competition by professional firms of all sizes, the Department may establish fiscal guidelines and limitations necessary to promote cost-efficiencies in overhead, salary, and expense reimbursement rates. The right to reject any and all proposals is reserved to the Board of Transportation.

Although this provision authorizes the Department to utilize alternative methods of contracting for professional services, we are advised that the Department’s current process generally involves a qualifications-based methodology.

PROJECT DELIVERY SYSTEMS

The traditional and predominant public project delivery system in North Carolina may be characterized as “design-bid-build.” In this system, the design and construction of public projects are contracted separately. See Chapter 143, Article 8 and 8B; Chapter 136, Article 2. The professional design services contractor is selected on the basis of qualifications and then a fee is negotiated. The owner subsequently contracts for construction services through a low-bid competitive process. In some instances the design services contractor or the construction contractor may find it necessary to procure other professional services on a subcontract basis.

A common alternative project delivery system frequently utilized in the private sector is referred to as “design-build.” Design-build is a system under which a single entity is contractually responsible for both the design and construction of a project. Potential benefits of design-build to the owner are lower project costs, expedited delivery, construction efficiency, increased design options, and reduced administrative burdens. Design-build contracts may also require the procurement of subcontracted professional services. Public entities in North Carolina, however, can construct projects on a design-build basis only with specific legislative authority.

The North Carolina General Assembly has expressly or impliedly authorized design-build contracts in a number of circumstances:

C In 1991, the legislature instructed the State Budget Office, in order to expedite the delivery of prison facilities, to consider alternative delivery systems such as design-build. (Session Laws 1991, c. 689, s. 239(f), as amended by Session Laws 1991 (Reg. Sess., 1992), c. 1044, s. 41(b)).

C In 1991, the legislature also authorized DOT to enter into a design-build-warrant contract to develop, with Federal Highway Administration participation, a Congestion Avoidance and Reduction for Autos and Trucks (CARAT) system of traffic management in the Charlotte-Mecklenburg urban areas. (Session Laws 1991, ch. 900, s. 94) ( Session Laws from 1993, 1995, and 1997 contained similar provisions).

C In 1993, the legislature provided for an appropriation to the Department of Transportation for the replacement of the Beaufort and Morehead Railroad wooden trestle over the Newport River on a design-build basis. (Session Laws 1993, c. 561, s. 68, as amended by Session Laws 1995,

c. 324, s. 18.28, and Session Laws 1996, Second Extra Session, c. 18, s. 19.6).

C In 1996, the legislature authorized the State Building Commission to approve alternative contracting methods under certain circumstances without defining acceptable alternatives.

N.C.G.S. § 143-135.26(9).

C In 1998, the legislature gave DOT general design-build authority for a limited number of projects:

Notwithstanding any other provision of law, the Board of Transportation may award up to three contracts annually for construction of transportation projects on a design-build basis. These contracts may be awarded after a determination by the Department of Transportation that delivery of the projects must be expedited and that it is not in the public interest to comply with normal design and construction contracting procedures. Prior to the award of a design-build contract, the Secretary of Transportation shall report to the Joint Legislative Transportation Oversight Committee and to the Joint Legislative Commission on Governmental Operations on the nature and scope of the project and the reasons an award on a design-build basis will best serve the public interest.

N.C.G.S. § 136-28.1(j).

These exceptions to the normal statutory process reflect a clear legislative sanction of the design-build concept. We are not, however, aware of any legislation which has addressed the appropriate application of the Mini-Brooks Act to subcontracts or to projects authorized to be constructed on a design-build basis.

QUESTIONS

1. Does N.C.G.S. § 143-64.31 apply to a private firm in the procurement of subcontract services it may require to perform a portion of a public contract?

As previously noted, N.C.G.S. § 143-64.31 does not address the application of the qualifications-based procurement requirement to subcontracts. David Tuttle, your in-house legal counsel has suggested two scenarios under which the issue of subcontracts may arise. The first would involve a competitively bid public construction contract which included architectural, engineering, or surveying services. The second could occur if a professional services contractor awarded a public contract elected to procure subcontract architectural, engineering or surveying services through a competitive low-bid process.

The “primary rule of statutory construction is that the intent of the legislature controls the interpretation of the statute.” Stevenson v. Durham, 281 N.C. 300, 303, 188 S.E.2d 281, 283 (1972). That interest is ascertained by “consider[ing] the language of the statute, the spirit of the act, and what the act seeks to accomplish.” Id. Furthermore, it is well-established that in interpreting a statute we must first look to its plain meaning. Where the language of a statute is clear and unambiguous, the courts must construe the statute using its plain meaning. Utilities Comm. v. Edmisten, Attorney General, 291 N.C. 451, 232 S.E.2d 184 (1977).

We find no evidence that the General Assembly intended the public policy expressed in the Mini-Brooks Act to extend beyond contracts awarded by the “. . . state and all public subdivisions and Local Government Units thereof . . .”. The legislation itself was entitled “An Act to Provide a Model Code for Procurement of Architectural and Engineering Services by State and Local Government”.

( Emphasis added) Any intent by the legislature to regulate contractual relationships between private, professional contractors must, in our view, be clearly stated in the legislation. It is therefore our opinion that N.C.G.S. § 143-64.31 is applicable only to the procurement of architectural, engineering or surveying services by state or local government entities and does not extend to subcontract services procured by private firms.

2. Do legislatively established exemptions allowing public “design-build” contracts also exempt such projects from N.C.G.S. § 143-64.31?

Most state and local design and construction contracts are required to be awarded in accordance with the standard design-bid-build procedures in Chapter 136 or 143 of the General Statutes. The legislature has authorized limited exceptions to these procedures as set forth above. The legislation authorizing these exceptions, however, has provided minimal guidance as to the applicability of

N.C.G.S. § 143-64.31 to projects constructed on a design-build basis. For instance, the provisions authorizing the construction of prison facilities and the CARAT project on a design-build basis include specific exemptions from numerous statutory requirements, yet fail to reference the Mini-Brooks Act. On the other hand, the Department of Transportation’s general authority to award three design-build contracts per year is authorized “notwithstanding any other provision of law.” Alternative contracting methods approved by the State Building Commission cannot include a waiver of the competitive bidding requirements of N.C.G.S. § 143-129 or the minimum number of bids required by N.C.G.S. § 143-132. The Newport River Trestle was simply authorized on a “design-build basis.”

In order to respond to your question we must again attempt to ascertain the legislative intent by”consider[ing] the language of the statute, the spirit of the act, and what the act seeks to accomplish.” Stevenson v. Durham, 281 N.C. 300, 303, 188 S.E.2d 281, 283 (1972). And if a strict literal interpretation of language in a statute contravenes the manifest purpose of the legislature, reason and purpose should control. Taylor v City of Lenoir, 129 N.C. App. 174, 497 S.E.2d 715 (1998). Furthermore, where a generally applicable statute conflicts with a more specific, special statute, the special statute is viewed as an exception to the provisions of the general statute. Taylor v. Robinson, 131 N.C. App. 337, 508 S.E.2d 289 (1998).

With these principles in mind, we believe that legislative exemptions authorizing public “design-build” contracts are not intended to require strict compliance with N.C.G.S. § 143-64.31. The normal design-build process involves evaluation of technical proposals and award to the lowest bidder from among the proposals deemed technically satisfactory. Thus, the design-build process, by its very nature cannot be effectively implemented under a strict qualifications-based procurement requirement. As such, it is our opinion that exemptions for design-build projects should be presumed to supersede strict qualifications-based selection methods unless specifically stated otherwise in the authorizing legislation.

CONCLUSION

We are of the opinion that the qualifications-based selection process required by N.C.G.S. § 143-64.31 for the procurement of architectural, engineering, and surveying services applies only to procurements by state and local government entities and has no application to the procurement of subcontracted professional services. In addition, it is our opinion that the procurement of architectural, engineering or surveying services required in connection with a project authorized to be constructed on a design-build basis is not required to be conducted through a strict qualifications-based selection process unless the authorizing legislation specifically imposes such a requirement.

We trust this advisory opinion will be helpful. Please call Robert Crawford if you would like to discuss this matter further.

Sincerely,

Reginald L. Watkins Senior Deputy Attorney General Civil Division

Robert O. Crawford, III Special Deputy Attorney General Transportation Section

cc: David S. Tuttle, Board Counsel

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