BILL NUMBER: AB 2037	CHAPTERED  09/03/02

	CHAPTER  315
	FILED WITH SECRETARY OF STATE  SEPTEMBER 3, 2002
	APPROVED BY GOVERNOR  AUGUST 30, 2002
	PASSED THE ASSEMBLY  AUGUST 20, 2002
	PASSED THE SENATE  AUGUST 14, 2002
	AMENDED IN SENATE  JUNE 25, 2002
	AMENDED IN ASSEMBLY  MAY 6, 2002

INTRODUCED BY   Assembly Member Diaz

                        FEBRUARY 15, 2002

   An act to amend Section 9201 of the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2037, Diaz.  Public contracts:  claims.
   Existing law authorizes a public entity to compromise or otherwise
settle any third-party claim relating to a public works contract.
   This bill would impose a state-mandated local program by requiring
a public entity to include provisions in the contract for timely
notification of the contractor of a third-party claim.  This bill
would also provide that a public entity is entitled to recover
reasonable costs incurred by the public entity in providing the
notice.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 9201 of the Public Contract Code is amended to
read:
   9201.  (a) A public entity shall have full authority to compromise
or otherwise settle any claim relating to a contract at any time.
   (b) The public entity shall include provisions in a public works
contract for timely notification of the contractor of the receipt of
any third-party claim, relating to the contract.
   (c) The public entity shall be entitled to recover its reasonable
costs incurred in providing the notification required by subdivision
(b).
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.