BILL NUMBER: AB 649 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Members Nestande and Portantino
FEBRUARY 25, 2009
An act to add Article 1.6 (commencing with Section 10507.1) to
Chapter 2.1 of Part 2 of Division 2 of the Public Contract Code,
relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 649, as introduced, Nestande. Contracts: University of
California.
Existing law authorizes the Regents of the University of
California to enter into contracts for the erection, construction,
alteration, repair, or improvement of a university structure, as
specified.
This bill would provide for specified procedures when a
contractor, as defined, files a change order with the Regents of the
University of California pursuant to an existing contract. The bill
also would provide for specified procedures allowing arbitration
between the Regents of the University of California and contractors.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 1.6 (commencing with Section 10507.1) is added
to Chapter 2.1 of Part 2 of Division 2 of the Public Contract Code,
to read:
Article 1.6. Approval of Contracts
10507.1. (a) Notwithstanding any other law, this article applies
to all public works contracts awarded under this chapter by the
Regents of the University of California to a contractor.
(b) For purposes of this article:
(1) "Claim" means a demand for monetary compensation or damages
arising under or relating to the performance of a public works
contract.
(2) "Contractor" means a contractor within the meaning of Chapter
9 (commencing with Section 7000) of Division 3 of the Business and
Professions Code.
(3) "Prime contractor" means the contractor who contracts directly
with the Regents of the University of California.
(4) "Subcontractor" means a contractor who contracts directly with
the prime contractor.
(5) "Public works contract" means a public works contract as
defined by Section 1101.
(6) "University" means the Regents of the University of
California.
(c) The provisions of this article, or a summary thereof, shall be
set forth in the plans or specifications for any public works that
may give rise to a claim under this article.
(d) This article applies only to contracts entered into on or
after January 1, 2010.
10507.2. (a) The university may, without affecting the validity
of the public works contract, order changes, modifications,
deletions, and extra work pursuant to a written proposed change
order.
(b) Within 20 days of the issuance of the change order request,
the contractor shall provide to the university, in writing, the price
of the change, with supporting documentation.
(1) If the university agrees to the proposed price, it shall issue
to the contractor a written change order within 10 days. The change
order shall be incorporated into, and become part of, the public
works contract.
(2) If the university does not agree to the proposed price, it may
issue a written change order with an alternative price, with
supporting documentation, within 10 days. If the parties cannot reach
agreement upon the amount to be charged or credited, they shall
proceed to arbitration as provided in this article.
(3) If the university fails to approve or reject the scope and
pricing within 30 days after receipt thereof, there shall exist a
rebuttable presumption that the university has approved the change
order.
(c) If there is a dispute concerning whether work to be performed
by the contractor is outside the scope of work required by the public
works base contract, the contractor shall immediately notify the
university, in writing, of its position, with supporting
documentation. If the university rejects the contractor's claim for
extra work, the university shall, within 20 days, provide a written
response, with supporting documentation relating to defenses to the
claim the university may have against the contractor. If the parties
cannot resolve their dispute by negotiation, they shall proceed to
arbitration as provided in this article.
(d) Payments to the contractor for extra work performed by the
contractor shall be made as the extra work progresses concurrently
with payments made under the payment schedule. The contractor may
stop work if any payment, including payment for extra work, is not
made to the contractor as provided in this article.
(e) Requests for extra work shall be made in writing.
(f) Failure to adhere to the provisions of this article does not
preclude recovery of compensation for work performed by the
contractor based on quasi-contract, quantum meruit, restitution, or a
similar remedy designed to prevent unjust enrichment.
10507.3. The following procedures are established for all claims
arising under public works contracts made under the provisions of
this chapter.
(a) If the university fails to respond within the time prescribed
for change orders, or if the contractor disputes the university's
written response to a claim for extra work, or if the parties are
otherwise unable to resolve any claim arising under a public works
contract, the contractor may notify the university and demand an
informal conference to settle the issues in controversy. Upon a
demand by the contractor, the university shall schedule an informal
conference within 30 days of the contractor's written demand for
settlement of the issues in controversy.
(b) If any claim remains unresolved following the informal
conference, or if the informal conference does not proceed within 30
days of the contractor's written demand, the contractor may
immediately initiate arbitration proceedings. The contractor shall
not be required to exhaust any administrative procedure or to pursue
any contractual dispute resolution procedure contained in the public
works contract, or otherwise, as a condition precedent to initiating
arbitration.
(c) Unless otherwise agreed to by the parties, all of the
following apply:
(1) For claims of less than fifty thousand dollars ($50,000), the
arbitration shall be conducted by a single arbitrator selected by the
parties. If the parties cannot agree on the arbitrator, either party
may petition the superior court to appoint an arbitrator.
(2) For claims in excess of fifty thousand dollars ($50,000), the
arbitration shall be conducted by a three-member arbitration panel
composed of one representative chosen by each of the parties and one
representative chosen jointly.
(d) Except as provided in this chapter, the procedure governing
the arbitrations shall be as set forth in Title 9 (commencing with
Section 1280) of Part 3 of the Code of Civil Procedure. For claims in
excess of fifty thousand dollars ($50,000), the provisions of
Section 1283.05 of the Code of Civil Procedure, except subdivision
(e) of that section, apply to the conduct of discovery for any
arbitration conducted pursuant to this section.
(e) Unless the parties to the contract otherwise agree, the
arbitration decision shall be decided under, and in accordance with,
the laws of this state, shall be supported by substantial evidence,
and shall set forth, in writing, the basis for the decision, findings
of fact, and conclusions of law.
(f) The cost of conducting the arbitration shall be borne equally
by the parties, except that the arbitrator shall award to the
prevailing party reasonable attorneys' fees and costs.
(g) Interest may be recovered as part of the award as in a civil
action. The arbitrator shall have the same authority as a court in
awarding interest and the commencement of the arbitration is
equivalent to the filing of an action under subdivision (b) of
Section 3287 of the Civil Code for the purpose of an award of
interest.
(h) A party may petition, within the applicable time periods and
upon the grounds specified in this section and in Article 1
(commencing with Section 1285) of Chapter 4 of Title 9 of Part 3 of
the Code of Civil Procedure, the court to confirm, correct, or vacate
the award rendered by the arbitrator.