Can a Virginia locality limit a design-build construction selection to five qualified offerors?

Plain-English summary

In February 2012, the Virginia Beach City Attorney asked whether the city could limit a design-build construction procurement to five fully qualified offerors at the prequalification stage. The question was prompted by the General Assembly's 2011 elimination of the Design-Build/Construction Management Review Board (DBCMRB), which had previously reviewed and approved locality use of competitive negotiation for design-build contracts. With the Board gone, localities now had to follow procedures consistent with standards set by the Division of Engineering and Buildings (DEB) of the Department of General Services.

The AG said yes. The chain of statutes:

• § 2.2-4303(D)(3) authorizes localities with populations over 100,000, which the AG noted include Virginia Beach, to use competitive negotiation for design-build construction.
• § 2.2-4308 requires those localities to follow procedures consistent with the non-professional services competitive negotiation procedures in § 2.2-4301, and further requires "a two-step competitive negotiation process consistent with standards established by the Division of Engineering and Buildings . . . for state agencies."
• § 2.2-4306, governing the state's design-build procurement, says that in step one, "no more than five offerors deemed most suitable for the project shall be selected by the Commonwealth and requested to submit proposals."

The Dillon Rule limits Virginia localities to powers expressly granted, necessarily or fairly implied from expressly granted powers, and those essential and indispensable. There was no express authorization for a locality to cap offerors at five. But § 2.2-4308 directs localities to be "consistent with" DEB standards, and DEB itself caps at five. Given the state's five-qualified-offeror limit, the AG concluded a locality procedure that mirrors it would be consistent with the DEB standard, so a locality may select no more than five offerors with whom to negotiate.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Virginia's preferred public construction procurement method is competitive sealed bidding. Design-build is an alternative method that combines design and construction into a single contract, allowing for collaboration between architect/engineer and contractor. § 2.2-4303(D)(3) authorizes localities over 100,000 in population to procure design-build construction via competitive negotiation.

Before 2011, the Design-Build/Construction Management Review Board approved locality design-build procedures. The 2011 legislation (ch. 594) abolished the Board and shifted the "consistency" benchmark to the Division of Engineering and Buildings (DEB). DEB's two-step process under § 2.2-4306 selects no more than five offerors at step one, then negotiates with those at step two.

The general locality competitive negotiation procedure under § 2.2-4301 calls for selecting "two or more offerors deemed to be fully qualified and best suited," then negotiating with each. § 2.2-4308 maps the locality procedure to the § 2.2-4301 procedure but layers in the DEB "two-step" requirement on top.

Common questions

Q: Can a Virginia locality cap design-build prequalification at five offerors?
A: Per this opinion, yes, at least for localities over 100,000 authorized under § 2.2-4303(D)(3). § 2.2-4308 requires locality procedures to be "consistent with" DEB standards, and DEB itself caps at five offerors under § 2.2-4306.

Q: Does the Dillon Rule cause a problem here?
A: The AG worked around it. The Dillon Rule denies localities powers not expressly granted, but the procedural alignment with DEB is what § 2.2-4308 directs. Adopting the same five-offeror cap as DEB is treated as implied by the statute's "consistent with" command.

Q: What changed when the Design-Build/Construction Management Review Board was abolished in 2011?
A: Localities no longer needed Board approval to use competitive negotiation for design-build, but they did have to align their procedures with DEB standards. The five-offeror question arose because localities had to figure out independently how to match DEB.

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2012/11-126_Stiles.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

February 10, 2012

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

Mark D. Stiles, Esquire
City Attorney, City of Virginia Beach
Municipal Center Building 1
2401 Courthouse Drive
Virginia Beach, Virginia 23456-9004

Dear Mr. Stiles:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the Virginia Public Procurement Act, as amended by the Virginia General Assembly in Chapter 594 of the 2011 Acts of Assembly, permits localities to adopt design-build construction project procedures that limit prequalification to no more than five offerors deemed fully qualified and best suited for the project.

Response

It is my opinion that the Public Procurement Act allows localities to adopt design-build procedures that limit the locality to the selection of no more than five offerors deemed fully qualified and best suited for the project.

Background

The General Assembly in 2011 enacted legislation that eliminated the Design-Build/Construction Management Review Board (the "Board"). Prior to its elimination, the Board, among its other responsibilities, granted approval to localities to use competitive negotiations for the procurement of design-build or construction management contracts. The Board ensured such negotiations proceeded in accord with the Board's regulations for a two-step competitive negotiation process. In light of the Board's elimination, the 2011 legislation made additional changes so that procedures adopted by localities for design-build construction projects now must include a two-step competitive negotiation process that is consistent with standards established by the Division of Engineering and Buildings ("DEB") of the Department of General Services.

Applicable Law and Discussion

The Virginia Public Procurement Act establishes that the competitive sealed bid process is the preferred method of construction procurement for localities to follow. Nonetheless, as currently enacted, § 2.2-4303(D)(3) authorizes localities with populations in excess of 100,000, which include the City of Virginia Beach, to use competitive negotiation when procuring a contractor for design-build construction projects. Specifically, the statute provides that such procurements shall be in compliance with the design-build requirements found in § 2.2-4308 and with the two-step competitive negotiation process established in § 2.2-4301.

Section 2.2-4308, which governs the procurement of design-build contracts by localities, requires that a locality adopt "procedures governing the selection, evaluation and award of design-build . . . contracts [that are] consistent with those described . . . for the procurement of nonprofessional services through competitive negotiation[,]" which are set forth in § 2.2-4301. Pursuant to § 2.2-4301, "[s]election shall be made of two or more offerors deemed to be fully qualified and best suited among those submitting proposals. . . . After negotiations have been conducted with each offeror so selected, the public body shall select the offeror which, in its opinion, has made the best proposal, and shall award the contract to that offeror." Thus, the first step of competitive negotiation involves narrowing the number of offerors deemed to be fully qualified and best suited for the project. The second step involves negotiating with the group selected in the first step and selecting a contractor.

Also relative to your inquiry, § 2.2-4308 further provides, in pertinent part:

Design-build projects shall include a two-step competitive negotiation process consistent with standards established by the Division of Engineering and Buildings of the Department of General Services for state agencies.

DEB's procedures are governed by § 2.2-4306, which provides that the Commonwealth's

Procurement of construction by the design-build method shall be a two-step competitive negotiation process. In the first step, offerors shall be requested to submit their qualifications. Based on the information submitted and any other relevant information which the Commonwealth may obtain, no more than five offerors deemed most suitable for the project shall be selected by the Commonwealth and requested to submit proposals.

Under the Dillon Rule, a locality has "only those powers that are expressly granted, those that are necessarily or fairly implied from expressly granted powers, and those that are essential and indispensable." Although the General Assembly has not expressly granted localities the specific authority to limit the number of offerors deemed qualified and best suited, the above-cited provisions establish that local government bodies are to adopt procedures consistent with those maintained by DEB. Clearly, given the state's five-qualified-offeror selection limitation, a procedure adopted by a locality that mirrors that requirement would be consistent with the DEB standard. I therefore conclude that a locality may establish a requirement to select no more than five offerors deemed most suitable for the project with whom it may then negotiate to select a contractor to be awarded design-build contract.

Conclusion

Accordingly, it is my opinion that the Public Procurement Act allows localities to adopt design-build procedures that limit the locality to the selection of no more than five offerors deemed fully qualified and best suited for the project.

With kindest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General