What Contractors and Owners Need to Know About Design-Build Requirements in North Carolina
NORTH CAROLINA — Whether you’re a government agency, general contractor, or private project owner, understanding design-build regulations in North Carolina is crucial to executing compliant and efficient construction projects. Legal experts say the delivery method shifts key responsibilities, carries licensing implications, and varies across public, private, and federal projects, as explained in this detailed legal analysis from Ward and Smith attorneys.
Design-Build Basics: What Sets It Apart
Unlike traditional design-bid-build contracts, where the designer reports to the owner, in a design-build setup, the designer works for the contractor. This means risk and liability for design defects shift to the general contractor, simplifying the process for owners and reducing disputes between builders and designers.
“Design-build allows more flexibility and streamlined communication,” said attorney Jason Strickland. “But that also means contractors assume more responsibility.”
Requirements for Public Projects in North Carolina
Under North Carolina General Statute 143-128.1A, public entities using design-build must clearly define criteria for choosing this method. These rules apply to all state-related entities like departments, counties, and commissions.
Key factors include:
- How well the project can be defined before bidding
- Time constraints for delivery
- The government agency’s ability to manage the project
- Commitment to using licensed and minority-owned businesses
- Comparisons to other methods like design-bid-build
The process begins with a Request for Qualifications (RFQ). If fewer than three qualified bidders apply, the agency must reissue or negotiate directly with the top-ranked bidder, as highlighted in guidance from construction attorney Alex Ferri.
Government agencies cannot ask for actual design work or price quotes in the RFQ stage — only qualifications and approaches.
Two Legal Approaches to Team Selection
Public owners must choose between two project team selection options:
- Master Builder Option:
- Includes licensed/unlicensed subcontractors
- Offers flexibility in self-performance and negotiations
- Construction Manager at Risk–Style Option:
- Requires competitive post-prequalification bidding
- Limits self-performance, following Article 8, Chapter 143 bidding rules
Importantly, contractors may not use in-house architects unless also licensed. Legal options include contracting with a dual-licensed firm or separate architect.
Federal Design-Build Rules Are Broader but Stricter
Design-build on federal projects involves two-phase selection procedures when:
- More than three qualified bids are expected
- Design is needed before cost estimation
- Proposal costs are substantial
The initial federal RFQ asks for qualifications and strategy only — cost and design proposals are deferred to phase two. Agencies then request detailed technical and cost submissions from selected finalists.
But rules may vary by agency. As Strickland emphasized, “Federal rules are agency-dependent. Always clarify the bid process.”
Private Design-Build in NC: More Freedom, Higher Stakes
In private projects, there’s no controlling statute — offering more contract flexibility. However, licensing laws still apply, and owners must carefully negotiate contract terms.
Contractors often use templates from the Design-Build Institute of America (DBIA) or the American Institute of Architects (AIA). DBIA forms tend to balance roles, while AIA forms are often more designer-favored.
Strickland advised:
“We see last-minute contract revisions favoring one side. Don’t assume the deal is final until you’ve reviewed the full draft.”
Licensing, Risk, and Compliance Still Required
Even without strict state oversight, unlicensed construction remains illegal. Only unlicensed subcontractors performing unlicensed work may be used. Electrical, plumbing, and similar trades still require licensure.
Contractors must also be cautious about pricing phases, especially in federal bids. If unclear, clarify whether the owner requires or prohibits pricing in early-stage submissions.
Have questions about licensing, subcontractors, or public bid compliance? Share your experience or ask your questions at SaludaStandard-Sentinel.com.
