BILL NUMBER: AB 453	CHAPTERED  10/09/03

	CHAPTER  678
	FILED WITH SECRETARY OF STATE  OCTOBER 9, 2003
	APPROVED BY GOVERNOR  OCTOBER 8, 2003
	PASSED THE ASSEMBLY  SEPTEMBER 9, 2003
	PASSED THE SENATE  SEPTEMBER 4, 2003
	AMENDED IN SENATE  SEPTEMBER 2, 2003
	AMENDED IN SENATE  AUGUST 27, 2003
	AMENDED IN SENATE  JULY 8, 2003
	AMENDED IN SENATE  JUNE 26, 2003

INTRODUCED BY   Assembly Member Yee

                        FEBRUARY 14, 2003

   An act to add Section 5110 to the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 453, Yee.  Public works contracts:  compensation of
contractors.
   Existing law sets forth the procedures governing the bidding,
awarding, and payment of public works contracts by public entities,
and the relief due bidders and contractors under those contracts.
   This bill would provide that when a project for the construction,
alteration, repair, or improvement of any structure, building, or
road, or other improvement of any kind is competitively bid and any
intended or actual award of the contract is challenged, the contract
may be entered into pending final decision on the challenge.  If the
contract is later determined to be invalid due to a defect or defects
in the competitive bidding process caused solely by the public
entity, this bill would entitle the contractor who entered into the
contract with the public entity to be paid the reasonable cost,
specifically excluding profit, of the labor, equipment, materials,
and services furnished by the contractor prior to the date of the
determination, subject to specified conditions.


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


  SECTION 1.  It is the intent of the Legislature in enacting this
act that a contractor subject to its provisions may be paid the
reasonable cost, specifically excluding profit, of labor, equipment,
materials, and services that were rendered under a contract that was
competitively bid, but subsequently determined to be invalid, in
order to avoid unjust enrichment of the public entity and an unlawful
taking of the contractor's property.
  SEC. 2.  Section 5110 is added to the Public Contract Code, to
read:
   5110.  (a) When a project for the construction, alteration,
repair, or improvement of any structure, building, or road, or other
improvement of any kind is competitively bid and any intended or
actual award of the contract is challenged, the contract may be
entered into pending final decision of the challenge, subject to the
requirements of this section.  If the contract is later determined to
be invalid due to a defect or defects in the competitive bidding
process caused solely by the public entity, the contractor who
entered into the contract with the public entity shall be entitled to
be paid the reasonable cost, specifically excluding profit, of the
labor, equipment, materials, and services furnished by the contractor
prior to the date of the determination that the contract is invalid
if all of the following conditions are met:
   (1) The contractor proceeded with construction, alteration,
repair, or improvement based upon a good faith belief that the
contract was valid.
   (2) The public entity has reasonably determined that the work
performed is satisfactory.
   (3) Contractor fraud did not occur in the obtaining or performance
of the contract.
   (4) The contract does not otherwise violate statutory or
constitutional limitations.
   (b) In no event shall payment to the contractor pursuant to this
section exceed either of the following:
   (1) The contractor's costs as included in its bid plus the cost of
any approved change orders.
   (2) The amount of the contract less profit at the point in time
the contract is determined to be invalid.
   (c) Notwithstanding subdivision (a), this section shall not affect
any protest and legal proceedings, whether contractual,
administrative, or judicial, to challenge the award of the public
works contract and enforce competitive bidding laws, nor affect any
rights under Section 337.1 or 337.15 of the Code of Civil Procedure.