SB 598 adds Chapter 4.9 to the Public Contract Code to let qualified local agencies use the Construction Manager/General Contractor (CM/GC) project delivery method for regional recycled water projects or other water infrastructure projects designed to alleviate shortages caused by drought, climate change, or similar environmental factors. The chapter defines key terms, requires selection under existing CM/GC procedures, caps the program at 15 capital outlay projects per agency, and allows award on a ‘‘best value’’ basis or to the lowest responsible bidder.
The authorization is temporary: the chapter sunsets and becomes inoperative on January 1, 2031, but contracts awarded before that date remain valid to completion. The act also includes a provision about state reimbursement for local costs tied to any change in crimes or infractions; the bill directs that no state reimbursement is required under the California Constitution.
For local procurement teams and contractors, SB 598 changes which delivery method is available, how proposals may be evaluated, and introduces new compliance and contract‑administration considerations.
At a Glance
What It Does
Creates a limited CM/GC program for local agencies to use on recycled water and other drought‑relief water infrastructure projects, requires agencies to follow existing CM/GC selection procedures (Sections 21568.5–21568.10), caps use at 15 capital outlay projects per local agency, and permits awards on a best value or lowest responsible bidder basis. The chapter sunsets January 1, 2031, but contracts awarded before that date survive to completion.
Who It Affects
Cities, counties, city & counties, and special districts that provide water services; licensed contractors able to act as construction managers; design firms working on preconstruction teams; procurement, legal, and project finance staff at local agencies; and contractors competing for public water infrastructure work.
Why It Matters
The bill expands where CM/GC can be used beyond agencies previously authorized, introduces best‑value selection language into water procurement, and creates a fixed, temporary window for pilot‑style use of CM/GC on drought‑resilience projects—shifting when contractor expertise must be brought into design and changing how risk and cost certainty are managed.
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What This Bill Actually Does
SB 598 adds a short, focused chapter to the Public Contract Code to let qualifying local water agencies choose the Construction Manager/General Contractor (CM/GC) method for specified water projects. The statute starts by defining the core terms: what ‘‘best value’’ means for evaluation, who counts as a ‘‘construction manager,’’ what ‘‘preconstruction services’’ are, and what projects qualify.
The eligible projects are narrowly drawn to recycled water facilities or infrastructure designed specifically to alleviate water shortages caused by drought, climate change, or similar environmental factors.
To use CM/GC, a local agency needs approval from its governing body and must follow the selection and procurement steps already laid out in Sections 21568.5 through 21568.10 of the Public Contract Code. The law limits each local agency to no more than 15 capital outlay projects under this chapter and requires that contracts awarded under it be awarded either on a best value basis or to the lowest responsible bidder.
The chapter allows the construction services contract to be executed at the time of the preconstruction contract or later, and contemplates design and construction occurring in sequential or overlapping phases.The authorization is time‑limited: the chapter is set to be inoperative after January 1, 2031. There is an express survival clause: if a contract is awarded under the chapter before it becomes inoperative, that contract continues until completion even if the referenced Sections 21568.5–21568.10 later become inoperative.
Finally, the bill includes a statement about state reimbursement procedures, indicating that the Legislature does not require state reimbursement to local agencies for costs the act may impose because of changes related to crimes or infractions.
The Five Things You Need to Know
The statute defines ‘‘best value’’ to mean an evaluation using objective criteria such as price, features, functions, life‑cycle costs, experience, and past performance—and expressly allows best value selections to yield the lowest cost proposal that meets the agency’s stated interests.
A ‘‘construction manager’’ must be a licensed contractor under Chapter 9 of Division 3 of the Business and Professions Code and must be able to provide licensed contracting and engineering services as needed under the CM/GC contract.
The program is capped: each local agency may use the chapter for no more than 15 capital outlay projects.
The chapter sunsets on January 1, 2031; however, any contract awarded under the chapter before that date remains in force until completion, including later contract changes or terminations.
Local agencies must adopt the method via governing‑body approval and carry out procurement under the procedures set in Sections 21568.5–21568.10; awards under this chapter must be on a best‑value basis or to the lowest responsible bidder.
Section-by-Section Breakdown
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Definitions for the CM/GC program
This section lays out the statutory vocabulary that will control implementation. It gives an operational definition of ‘‘best value’’ tied to objective criteria (including life‑cycle costs and past performance), specifies that a construction manager must be a licensed contractor capable of providing contracting and engineering services, and narrows ‘‘project’’ to recycled water or water infrastructure expressly intended to relieve shortages from drought or climate change. For practitioners, these definitions set the boundaries for eligible projects, the pool of proposers, and what evaluation criteria an agency can rely on when drafting RFQs/RFPs.
Authorization, approval, selection approach, and project cap
Subsection (a) authorizes local agencies—after governing body approval—to use CM/GC for qualifying water projects and requires them to follow the procedures already codified in Sections 21568.5–21568.10. Subsection (b) imposes a numerical cap of 15 capital outlay projects per agency, creating a portfolio constraint that agencies must track administratively. Subsection (c) prescribes how awards must be made—either by a best value determination (using the definition in Section 22199.5) or to the lowest responsible bidder—giving agencies two, but not unlimited, procurement pathways and forcing tradeoffs among cost, qualifications, and comprehensive evaluation frameworks.
Sunset and contract survival
Subsection (d)(1) sets the chapter to become inoperative on January 1, 2031, creating a finite pilot window. Subsection (d)(2) protects continuity by stating that contracts awarded under the chapter before it becomes inoperative remain in full effect until they finish, even if Sections 21568.5–21568.10 later become inoperative. Practically, this reduces interruptive legal risk for ongoing projects but creates a bifurcated enforcement landscape where some projects proceed under the chapter while future projects would be governed by different rules.
State reimbursement statement
This is a procedural/constitutional item stating that the act does not require the state to reimburse local agencies for costs that arise because the bill affects criminal definitions or penalties. The clause signals that any local costs tied to enforcement or criminal‑law changes will not trigger the usual state reimbursement obligation under Article XIII B, Section 6. For treasury and counsel teams, this is a budgetary note: localities should assume they bear any new costs created by the act.
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Who Benefits
- Local water agencies (cities, counties, city & counties, and special districts): Gain another delivery method that brings contractor involvement into design early, which can reduce constructability issues, accelerate schedules, and improve cost forecasting on complex recycled water and drought‑response projects.
- Construction manager/general contractor firms and integrated design‑build teams: Obtain access to public water projects that explicitly require licensed contractors able to provide engineering and contracting services, opening a new market for firms with preconstruction expertise.
- Project owners and ratepayers in drought‑stressed regions: Could see faster deployment of recycled water and resilience projects if CM/GC reduces design rework and change orders, improving short‑term supply reliability during acute water shortages.
Who Bears the Cost
- Local agencies’ procurement and legal teams: Must develop or revise RFQs/RFPs, evaluation frameworks, and oversight systems to administer best‑value procurements, track the 15‑project cap, and comply with the referenced Sections 21568.5–21568.10 procedures.
- Smaller or purely price‑focused contractors: Risk being disadvantaged by best‑value evaluations that emphasize experience, life‑cycle cost, and past performance, potentially shrinking the competitive field for some capital projects.
- Contractors and designers participating in preconstruction: Face increased contractual and potential civil/criminal exposure where existing CM/GC procedural requirements call for verified submissions or attestations (the bill signals local costs related to crimes/infractions will not be state‑reimbursed).
Key Issues
The Core Tension
The bill balances faster, more collaborative project delivery that can reduce cost and schedule risk against the public‑procurement imperative for open competition and clear, auditable decisionmaking: CM/GC concentrates selection discretion and early contractor influence—helpful for complex water projects but risky for fairness, competition, and post‑award accountability.
SB 598 tries to thread two competing goals: speed and constructability on one hand, and public procurement transparency and competition on the other. The statutory definition of ‘‘best value’’ gives agencies broad discretion to weigh life‑cycle costs, features, and past performance—but the law does not prescribe a standardized scoring methodology or minimum transparency requirements for how those factors must be weighted or disclosed.
That gap creates implementation risk: agencies that do not codify clear evaluation criteria invite protests, bid challenges, and litigation from disappointed bidders.
The 15‑project cap and the sunset date produce operational tradeoffs. The cap forces agencies to prioritize which projects get access to CM/GC, potentially leading to political or equity disputes if some communities are left behind.
The sunset limits long‑term planning: agencies financing multi‑phase capital programs will need to reconcile project timelines with the inoperative date or rely on the survival clause, which can create a patchwork of contracting rules across an agency’s portfolio. Finally, the bill relies on cross‑references to Sections 21568.5–21568.10 for procurement mechanics; if those sections are amended or invalidated, agencies will confront legal uncertainty about selection, verification, and oversight practices.
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