BILL NUMBER: AB 2471	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 7, 2014

INTRODUCED BY   Assembly Member Frazier

                        FEBRUARY 21, 2014

   An act to add Section 7204 to the Public Contract Code, relating
to public contracts.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2471, as amended, Frazier. Public contracts: change orders.
   Existing law contains various provisions relating to contracts by
a public entity for the performance of public works of improvement,
including provisions for the payment of progress payments and the
disbursing and withholding of retention proceeds. Existing law, until
January 1, 2016, prohibits progress payments upon state contracts
from being made in excess of 100% of the percentage of actual work
completed, and authorizes the Department of General Services to
withhold not more than 5% of the contract price until final
completion and acceptance of the project, except as specified.
   This bill would require a public entity,  as defined,
when authorized to order changes or additions in the work in a public
works contract awarded to the lowest bidder, to issue a change order
promptly, and in no event later than 30 days after the changes or
additions are required. The bill  would require, 
 would,  if this requirement is not met,  make  the
public entity  to be  liable to the original
contractor for payment of the contractor's invoice for the change
order or additional work. The bill would require prejudgment interest
to accrue on any amount for which the public entity fails to issue a
change order promptly or make a payment due pursuant to this bill.
 The bill would also authorize an   original contractor
to present to the public entity a request for a change order for
extra work performed by a subcontractor, including a lower tier
subcontractor. It would also authorize a subcontractor to request
that an original contractor present a change order request for extra
work directed by the public entity that was performed by the
subcontractor or lower tier subcontractor. The bill   would
require the original contractor to notify the subcontractor as to
whether the original contractor presented the request to the public
entity, as specified. 
   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.  Section 7204 is added to the Public Contract Code, to
read:
   7204.  (a)  (1)    A public entity, 
including a charter city,  when authorized to order changes
or additions to the work in a public works contract awarded to the
lowest bidder, shall, for extra work required of the original
contractor, issue a change order promptly, and in no event later than
30 days after the extra work is required.  For purposes of this
section, extra work includes extra work performed by the original
contractor, a subcontractor, or a lower tier subcontractor. 

   (2) An original contractor may present to the public entity a
request for a change order for extra work performed by a
subcontractor or a lower tier subcontractor. A subcontractor may
request in writing that an original contractor present a change order
request for extra work, directed by the public entity, that was
performed by the subcontractor or by a lower tier subcontractor on
behalf of the subcontractor. Within 45 days of receipt of this
written request, the original contractor shall notify the
subcontractor in writing as to whether the original contractor
presented the request to the public entity and, if the original
contractor did not present the request, provide the subcontractor
with a statement of the reasons for not doing so. 
   (b) Upon the failure of the public entity to promptly issue a
change order, the original contractor may bill for the work, and the
 state or  public entity shall be liable for the
work.
   (c) If there is a dispute concerning the need for a change order
for extra work, the public entity shall pay a reasonable amount for
the portion of the extra work that is not in dispute.
   (d) When the dispute concerning the extra work relates only to the
amount that the original contractor shall be paid, the public entity
shall promptly pay the reasonable value of the work or the amount
that the public entity does not dispute, whichever is greater.
   (e) The public entity, and the original contractor, may reserve
their respective rights as to any amount paid  or unpaid 
that remains in dispute.
   (f) Prejudgment interest shall accrue  at the rate of 10
percent per annum  on any amount for which the public entity
fails to issue a change order or fails to pay in accordance with
this section  at the legal rate described in subdivision (a) of
Section 685.010 of the Code of Civil Procedure  .
   (g) In addition to any other remedies that may be available to it,
an original contractor may enforce this  provision 
 section  through a writ of mandate.
   (h) The public entity shall not require the original contractor to
waive any provision of this section. 
   (i) For purposes of this section, "public entity" means the state,
including a state agency, department, office, division, bureau,
board, or commission, the California State University, the University
of California, a city, county, city and county, including a charter
county, district, special district, public authority, political
subdivision, public corporation, or nonprofit transit corporation
wholly owned by a public agency and formed to carry out the purposes
of the public agency.