Effective January 1, 2026, AB 361 extends “best value” procurement, a pilot program for the Los Angeles Unified School District (LAUSD), to all school districts. This extension makes best value procurement an option for any school district public project, as defined in Public Contract Code section 22002, over $1 million, until December 31, 2030.
AB 361’s Requirements
This best value procurement allows a district to evaluate bids on a combination of price and bidder qualifications instead of solely on price. The district’s governing board awards the contract to the bidder with the lowest “best value score” or rejects all bids. The statute defines the best value score as the bidder’s price divided by the bidder’s qualification score.
In addition to the $1 million project threshold, in order to use best value procurement, a school district must adopt and publish procedures and required guidelines for evaluating the bidders’ qualifications to ensure it conducts selections in a fair and impartial manner. This includes a requirement that the identity of the bidders and the cost or price information will not be revealed in the scoring of qualifications. Districts must establish a procedure with weighted criteria to prequalify bidders based on financial condition, relative experience, demonstrated management competency, labor compliance, safety record, and perhaps subcontractors’ qualifications. Contractors must provide an enforceable commitment that the contractor and its subcontractors at every tier will use a skilled and trained workforce to perform all work on the project unless the district has entered into a qualifying project labor agreement. Other requirements include payment and performance bonds for contractors and possibly subcontractors.
Comparison to Other Best Value Delivery Methods
AB 361 does not replace the lease-leaseback (LLB) or design-build (D-B) delivery methods, and there are critical differences. Although AB 361 is described as best value procurement, best value is not determined in the same way as LLB and D-B procurement, where best value is usually determined by the highest score instead of the lowest fraction.
Furthermore, unlike LLB or D-B, there is no early contractor involvement. With AB 361, districts still cannot enter into a contract before Division of the State Architect approval of the plans and specifications. Also, the AB 361 price is a lump sum bid. There is no negotiation of the contract price after open book review of subcontractor bids.
Final Thoughts
AB 361 provides California school districts another option to deliver on their construction projects. The adoption of best value may prove to be a useful option; however, as a new statute there are still questions about interpretation and implementation, despite the experience of LAUSD’s pilot program.
If your district is considering whether to utilize AB 361’s best value procurement, or would like assistance with procurement documents or training staff on evaluation processes, our team would be happy to provide guidance tailored to your district.
