BILL NUMBER: AB 2471 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 4, 2014
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
complete and a specified agreement is reached.
performed and documentation has been submitted, as
specified. The bill would, if this requirement is not met, make
the public entity liable to the original contractor for the
completed extra work 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.
that this bill would require to be paid
that the public entity fails to pay. 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 by an authorized representative of
the public entity, and subject to any limitations on that
authorization, issue a change order for the
authorized extra work promptly, and in no event
later than 60 days after the extra work is complete and an
agreement is reached concerning the merit, conditions, costs, and
time for performance. performed and the original
contractor has submitted documentation setting forth the reasons and
providing sufficient support that a fair and equitable adjustment in
the contractor's compensation or time for performance, or both is
warranted. 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. An original contractor
shall respond promptly to a request from the duly
authorized representative of the public entity for documentation
to support a request for a necessary to
warrant the 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 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 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.
setting forth the reasons and providing sufficient
support to warrant that the change order be issued.
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 for extra work required
by an authorized representative of the public entity within the
time limits prescribed in subdivision (a), the original contractor
may bill for the completed extra work in
accordance with any provisions for change order work that may be
contained in the public works contract. that has
already been performed, and the public entity shall be liable for
fair and equitable adjustments in the compensation or time for
performance for the completed extra work.
(c) If there is a dispute concerning the need for a change order
for a portion of the extra work, the public entity shall promptly pay
for the portion of the extra work that is not in dispute.
(d)
(c) 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)
(d) The public entity, and the original contractor, may
reserve their respective rights as to any amount paid or unpaid that
remains in dispute.
(f)
(e) Prejudgment interest in accordance with
applicable law 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.
this section requires to be paid that the public entity fails to
pay.
(g) In addition to any other remedies that may be available to it,
an original contractor may enforce this section 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)
(f) 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
(1) "Authorized representative of
the public entity" means an officer or employee of the public entity
authorized to order extra work.
(3)
(2) "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)
(3) "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)
(g) 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.