Amended in Senate July 16, 2015

Amended in Assembly April 27, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 552

Introduced by Assembly Member O'Donnell

February 23, 2015

An act to add Section 7203 to the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

AB 552, as amended, O'Donnell. Public works contracts: damages.

Existing law prescribes requirements for contracts between private parties and public entities, as defined.

This bill would provide that a public works contract entered into on or after January 1, 2016, that contains a clause begin insert expressly end insert requiring a contractor to be responsible for begin delete consequential damages end delete begin insert delay damages, as defined, end insert is not enforceable unless the begin delete consequential end delete begin insert delay end insert damages have been liquidated to a set amount and identified in the public works contract. The bill would also make findings and declarations related to public contracts.

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.  

(a) The Legislature finds and declares that, as a
matter of public policy, it is in the best interest of California
taxpayers to ensure uniformity in the bidding and contracting
process for public works construction projects within the State of
California.

(b) The Legislature further finds and declares that contractually
imposing undefined and unlimited risk begin insert associated with delays in
completion of public works end insert on to public works construction
contractors increases public works construction begin delete costs because
construction contractors must account for the undefined and
unlimited risk, which is generally uninsurable, in their bids. end delete begin insert costs. end insert

(c) It is therefore in the best interest of California taxpayers and
public works construction contractors for the Legislature to
establish clear guidelines for begin delete how liquidated damages and
consequential damages are expressed end delete begin insert imposing delay damages end insert in
a public works contract.

SEC. 2.  

Section 7203 is added to the Public Contract Code, to
read:

7203.  

(a) A public works contract entered into on or after
January 1, 2016, that contains a clause begin delete requiring end delete begin insert that expressly
requires end insert a contractor to be responsible for begin delete consequential end delete begin insert delay end insert
damages is not enforceable unless the begin delete consequential end delete begin insert delay end insert damages
have been liquidated to a set amount and identified in the public
works contract.

begin insert

(b) “Delay damages” as used in this section, means damages
incurred by the public agency for each day after the date on which
the work was to be completed by the contractor pursuant to the
public works contract. Delay damages shall not include damages
incurred by a public agency after the filing of a notice of
completion or, in the absence of a notice of completion, the
acceptance by the public agency of the public work as complete.

end insert begin delete

(b)

end delete

begin insert (c) end insert  “Public agency” shall include the state, the Regents of the
University of California, a city, charter city, county, charter county,
district, public authority, municipal utility, and any other political
subdivision or public corporation of the state.

begin insert

(d) This section shall not be construed to limit a right or remedy
that the public agency has to enforce the express terms of the public
works contract, except for delay damages.

end insert