BILL ANALYSIS �
Bill No: AB
44
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 44 Author: Buchanan
As Amended: May 6, 2013
Hearing Date: June 11, 2013
Consultant: Paul Donahue
SUBJECT
Subletting and subcontracting; bidding practices
DESCRIPTION
Requires a contractor to additionally include each
subcontractor's contractor license number in any bid or
offer submitted after July 1, 2014 for the construction of
any public work.
EXISTING LAW
1)Requires a prime contractor to list the name and business
location of each subcontractor performing work or
rendering service to the prime contractor in an amount
exceeding one-half of one percent of the contractor's
total bid.<1>
2)Requires a state agency or department, prior to awarding
a contract for work to be performed by a contractor, to
do either of the following:
a) Verify with the Contractors' State License Board
that the person seeking the contract is licensed in a
classification appropriate to the work to be
-----------------------
<1> Subletting and Subcontracting Fair Practices Act,
Public Contract Code � 4100 et seq.)
AB 44 (Buchanan) continued
PageB
undertaken;<2> or,
b) Require the person seeking the contract to present
his or her pocket license or certificate of
licensure and include a statement signed under penalty
of perjury declaring that the pocket license or
certificate of licensure presented is his or hers, is
current and valid, and is in a classification
appropriate to the work to be undertaken.<3>
3)Makes it a misdemeanor for any person to submit a bid to
a public agency in order to engage in the business or act
in the capacity of a contractor without having a license,
excepting those persons who are exempt from the licensing
laws or who are working on a public construction project
that is federally funded, as specified.
4)Requires every licensed contractor to provide his license
number on all construction contracts, subcontracts, calls
for bid, and all forms of advertising.<4>
BACKGROUND
1)Purpose of the bill : The author seeks to improve the
identification process for subcontractors on public
construction projects. The author states that, "under
current law, the Subcontracting and Subletting Fair
Practices Act requires an entity taking bids for the
construction of any public work or improvement to specify
in his or her bid, the name and location of the place of
business of each subcontractor who will perform the work
or render service to the prime contractor during the
project. The current requirement of listing the name and
location of the subcontractor is not always sufficient to
determine the exact identity of the subcontractor. In
large urban areas multiple contractors could have the
same or very similar names, making differentiating
between them difficult or impossible. Including the
subcontractor's license number will allow awarding bodies
to quickly and efficiently identify all the parties
included in a bid."
-------------------------
<2> Verification need only be made once every two years.
<3> Public Contract Code � 6100
<4> Bus. & Prof. Code � 7030.5.
AB 44 (Buchanan) continued
PageC
The State Building and Construction Trades Council says
that this bill will "assist the state's efforts to combat
the underground economy by ensuring that all businesses
are properly licensed before they submit bids for public
works projects. The lack of a contractor's license number
is a common signal of failure to adhere to California's
consumer protection laws and regulations."
2)Identification of subcontractors : Despite the fact that
existing law already requires prime contractors bidding
on state and local public construction projects to list
the name and business location of subcontractors that
will provide labor or services in an amount greater than
0.5% of the prime contractor's total bid amount, the
author cites instances in which use of abbreviations,
misspellings and errors have occurred.
When a public entity reviews bids submitted for public
construction projects, the entity must verify that the
prime contractor and subcontractors performing work for
payment on the project hold active contractor licenses in
good standing. Apparently, some public entities have had
problems definitively identifying subcontractors without
a license number associated with the name and business
address of the subcontractor.
3)Arguments in support : According to the Northern
California Carpenters Regional Council, the bill will
"bring much needed clarity to the public works bidding
process by requiring that prime contractors bidding on
public works projects list the name and contractor's
license number of subcontractors that will perform in
excess of one-half of one percent of the prime
contractor's total bid at the time of the bid. Requiring
the subcontractor's California contractor license number
be included in the bid will reduce the number of
substitutions and create a more fair and transparent
competitive bidding process."
4)Arguments in opposition : The opponents to the bill
contend that adding the subcontractor's license number to
the bid could easily result in bid protests or
unresponsive bids on something that is immaterial to the
bid itself. Currently, it is not universal practice by
public agencies to require contractor's license numbers
at the time of bid. It is very difficult for general
AB 44 (Buchanan) continued
PageD
contractors to verify license numbers at the time of the
bid, especially on major projects, which might have 30-40
subcontractors listed on the bid, and subcontractors are
often added late in the bid preparation process.
Opponents suggest an amendment to the bill that would
allow the general contractor who submits a bid to have
one business day after the bid deadline within which to
submit the subcontractor license numbers.
5)Possible alternative? The author and the committee may
wish to consider an amendment providing that an
inadvertent error by contractor in listing the
subcontractor's license number does not make the bid
unresponsive, nor does it constitute grounds on which to
protest the bid, provided the error is cured within a
reasonable time.
PRIOR/RELATED LEGISLATION
AB 2992 (Evans), 2005-2006 Session. Would have required the
California State University trustees to notify prospective
bidders that all subcontractors must submit answers to
questions contained in a questionnaire, and submit a
financial statement and document outlining the
subcontractor's experience performing public works
projects. (Vetoed)
AB 902 (Diaz), Chapter 180, Statutes of 2003. Authorizes an
awarding authority to consent to substituting a
subcontractor when the subcontractor listed in the bid
fails or refuses to execute a written contract for the
scope of the work specified in the subcontractor's bid and
at the price specified in the subcontractor's bid.
SUPPORT:
Berger Brothers, Inc.
The Brady Company
California Conference of Carpenters
California Legislative Conference, Plumbing, Heating and
Piping Industry
California Professional Association of Specialty
Contractors
California State Association of Electrical Workers
California State Council of Laborers
AB 44 (Buchanan) continued
PageE
California State Pipe Trades Council
Contractors State License Board
Millwright Employers Association
Modular Installers Association
National Electrical Contractors Association, Northern
California Chapter
Northern California Carpenters Regional Council
The Raymond Group
Rutherford Company, Inc.
State Building and Construction Trades Council of
California
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
OPPOSE:
American Fence Association, California Chapter
Associated General Contractors
California Fence Contractors' Association
Engineering Contractors' Association
Flasher Barricade Association
Golden State Builders Exchanges
Marin Builders Association
United Contractors
FISCAL COMMITTEE: Senate Appropriations Committee
**********