BILL NUMBER: AB 2471 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 30, 2014
AMENDED IN ASSEMBLY MAY 23, 2014
AMENDED IN ASSEMBLY APRIL 24, 2014
AMENDED IN ASSEMBLY APRIL 7, 2014
INTRODUCED BY Assembly Member Frazier
( Coauthors: Senators
Cannella and Galgiani )
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 to the work in a public
works contract awarded to the lowest bidder, to issue a change order
promptly, and no later than 60 days after the extra work is
performed and reasonable documentation has been submitted, except as
specified complete and a specified agreement is
reached . The bill would, if this requirement is not met, make
the public entity liable to the original contractor for the
completed extra work that has already been performed
in accordance with any provisions for change order
work that may be contained in the public works contract . 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) Except as otherwise provided in paragraph (2), a
public entity, 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 ordered by
the duly authorized representative of the public entity, and subject
to any limitations on that authorization , issue a change order
for the authorized work promptly, and in no event later
than 60 days after the extra work is performed and the
original contractor has submitted reasonable documentation to support
the request for a change order. For purposes of this section, extra
work includes extra work performed by the original contractor, a
subcontractor, or a lower tier subcontractor. Extra work also
includes work or requirements that differ from those under the public
works contract with the public entity before the amendment of the
contract by the change order complete and an
agreement is reached concerning the merit, conditions,
costs, and time for performance. An original contractor shall respond
promptly to a request from the duly authorized representative of the
public entity for documentation to su pport a request for
a change order. Each public entity shall specify in the public works
contract the information that shall be required from the contractor
to support any requested change order .
(2) (A) When a change order is subject to approval by the
governing body of a public entity, but the governing body is not
scheduled to meet in the 60 days following the performance of extra
work, and reasonable documentation to support the request for a
change order for extra work has been submitted, the public entity
shall have three five days following
the next scheduled meeting of the governing body to issue a change
order for extra work performed.
(B) When a change order for extra work by a school district or
community college district is subject to approval by the Division of
the State Architect, the school district or community college
district shall submit the change order to the division no later than
30 days following receipt of reasonable documentation to support the
change order for extra work. The Division of the State Architect
shall respond to the request for the change order no later than 30
days from receipt of the documentation.
(3) Nothing in this section shall be construed to prohibit a
public entity from issuing a change order in less than 60 days
following the performance completion of
extra work, prior to the work being performed, or during the course
of the work being performed.
(4) 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. This subcontractor shall furnish
reasonable documentation to support the change order. 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 issue a change order
for authorized work within the time limits prescribed in
subdivision (a), the original contractor may bill for the
extra work that has already been performed, and the public entity
shall be liable for that extra work completed extra
work in accordance with any provisions for change order work that may
be contained in the public works contract .
(c) If there is a dispute concerning the need for a change order
for a portion of the extra work, the public entity shall
pay a reasonable amount promptly pay
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 on any amount for which the
public entity fails to issue a change order or fails to pay in
accordance with this section at 7 percent per annum. This
subdivision shall only apply to any amount that is not in dispute.
(g) In addition to any other remedies that may be available to it,
an original contractor may enforce this section through a
writ of mandate by way of mediation or other
alternative dispute resolution process .
(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, including a charter city, county, including a
charter county, city and county, including a charter city and
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.
(i) For purposes of this section:
(1) "Alternative dispute resolution process" means a process in
which parties meet with a neutral third party to assist them in
resolving their dispute outside of formal litigation.
(2) "Duly authorized representative of the public entity" means an
officer or employee of the public entity authorized to order extra
work.
(3) "Extra work" includes extra work performed by the original
contractor, a subcontractor, or a lower tier subcontractor. "Extra
work" also includes work or requirements that differ from those under
the public works contract with the public entity before the
amendment of the contract by the change order.
(4) "Mediation" means a process in which a neutral person or
persons facilitate communication between disputants to assist them in
reaching a mutually acceptable agreement.
(5) "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,
including a charter city, county, including a charter county, city
and county, including a charter city and 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.
(j) This section shall not prevent a public entity from
prohibiting a contractor from performing extra work until after the
public entity issues a change order.