Procurement & Best-Value Selection

How a healthcare owner finds, qualifies, and selects a design-build entity — the procurement path from authority and budgeting through qualifications, proposals, best-value scoring, stipends, and award. Where sibling Articles cover what design-build is and how its contract and risk are structured, this Article covers the acquisition process the owner runs to put that entity under contract.

Procurement is the owner's one chance to shape the deal

In design-build (DB), the owner gives up day-to-day control over how design and construction are coordinated. The procurement phase is therefore the moment of maximum leverage: once a single entity is selected and the contract is signed, the owner's primary tools become the criteria, performance requirements, and selection method baked into the solicitation. A disciplined healthcare DB procurement does three things at once:

Defines the project tightly enough to be biddable — performance criteria, program, site constraints, regulatory targets, and budget — without over-designing it (which would defeat DB's purpose).
Selects on value, not just price — weighing qualifications, approach, key personnel, healthcare experience, and (often) a priced or partially priced proposal.
Allocates risk and sets the contract type — lump-sum (fixed price), guaranteed maximum price (GMP), or progressive — so the price the owner accepts is the price they understand.

For public healthcare owners (state university hospitals, county health systems, VA and military medical facilities), the available procurement methods are constrained by statute. For private and not-for-profit systems, the owner has wide latitude but typically borrows public best-value mechanics because they work.

Establish procurement authority before anything else

Whether the owner may use design-build at all, and on what terms, is the first gate.

Public owners are governed by state procurement code. Many states have enabling statutes that authorize design-build and best-value selection for public projects; some require a finding that DB is in the public interest, set thresholds, or mandate a two-step (qualifications-then-proposals) process. Federal projects (VA, DoD, GSA) follow the Federal Acquisition Regulation (FAR), including FAR Part 36's two-phase design-build selection procedures.
California public health facilities carry an extra layer: HCAI (the Department of Health Care Access and Information, formerly OSHPD) reviews and approves design and construction of hospitals and skilled-nursing facilities under the Alfred E. Alquist Hospital Facilities Seismic Safety Act. DB procurement on an HCAI-jurisdiction project must account for HCAI plan review and the increment-of-construction permitting model in the schedule and in the DB entity's deliverables.
Private/not-for-profit owners are bound mainly by their own governance, lender requirements, and any grant or tax-exempt bond conditions, not by procurement statute — but they still benefit from a structured, documented selection to satisfy boards and finance.

The owner should confirm the legal procurement method, any required public-interest findings, and disclosure/transparency obligations before drafting the solicitation, because these dictate the document structure.

Decide the contract type and pricing model up front

The pricing model the owner intends to award shapes how much design must be priced during procurement.

Pricing model	What the owner gets	Typical fit
Lump-sum / fixed price	A single firm price for the defined scope, set at award.	Scope-clear, well-defined projects (a defined bed tower shell, a repeatable clinic prototype) where performance criteria are mature enough to price competitively.
GMP (guaranteed maximum price)	A ceiling price established at a defined design milestone, with open-book costs and a shared-savings mechanism.	Most healthcare DB, where program complexity means the owner wants competitive selection now but price certainty after design advances.
Progressive design-build (PDB)	Selection primarily on qualifications/best value with minimal pricing, then a negotiated GMP after collaborative early design; an off-ramp if price is unacceptable.	Complex, hard-to-define, or fast-moving clinical scopes (renovations in occupied hospitals, infrastructure-heavy work) where defining a fixed scope to bid is impractical.

PDB has become a dominant healthcare approach precisely because clinical programs are difficult to specify fully in a solicitation. It lets the owner pick the team first and develop the price together, while preserving an exit if alignment fails. (Contract mechanics for each are detailed in the sibling Contract & Risk Article; here the point is that the choice drives the procurement document.)

Choose the selection method

Three families of DB selection are common; healthcare owners overwhelmingly favor the best-value variants.

Qualifications-based selection (QBS) — selection on qualifications alone, price negotiated after. Used for PDB and where statute permits. Strongest when scope is too undefined to price fairly.