AB 361 Allows Best Value Construction Contracting For All Schools in California

On October 1, 2025, Governor Newsom signed Assembly Bill 361 (Chapter 144, Statutes of 2025), dramatically expanding the “best value” contracting authority that was previously limited to the Los Angeles Unified School District (LAUSD). Effective January 1, 2026, most California K-12 school districts will be authorized to use a Best Value selection process for certain construction projects — a significant shift from traditional methods of procurement.

Under prior law, Public Contract Code Article 3.2 (commencing with § 20119.1) established a pilot program allowing only LAUSD to award contracts for construction projects exceeding $1 million based on “best value” rather than the lowest responsible bidder. That authority was set to sunset in 2025.

Key Changes Under AB 361

• Best value authority now extends to all school districts (not just LAUSD) for projects exceeding $1 million.
• The statewide authorization runs through December 31, 2030.
• Contractors will need to use a “skilled and trained workforce” unless a Project Labor Agreement applies.
• In using best value procurement, districts may consider objective criteria such as technical expertise, safety record, and life-cycle cost benefits, rather than price alone.
• Districts using this authority must submit an independent evaluation of their best value projects to the Legislature by January 1, 2030.
• LAUSD Authority Continued: LAUSD’s pilot provisions are now permanent and no longer sunset.

Practical Impact

This legislation gives K-12 districts greater flexibility to select contractors based on overall value, experience, and quality, aligning their procurement options more closely with those of community college districts and state agencies. Districts should work with counsel to update board policies, administrative regulations, RFPs, and contract templates to incorporate best value language and evaluation procedures before the new law takes effect on January 1.

F3 Law is available to consult with its client school districts in California to discuss policy updates, training, and continuing obligations under these laws. Please contact the authors listed below or the F3 attorney with whom you normally consult for more information.