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, among other things, provide that a public works contract entered into on or after January 1, 2016, that contains a clause expressly requiring a contractor to be responsible for delay damages, as defined, is not enforceable unless the delay damages have been liquidated to a set amount and identified in the public works contract.begin insert Under the bill, these provisions would not apply to specified state agencies.end insert 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:
(a) The Legislature finds and declares that, as a
2matter of public policy, it is in the best interest of California
3taxpayers to ensure uniformity in the bidding and contracting
4process for public works construction projects within the State of
5California.
6(b) The Legislature further finds and declares that contractually
7imposing undefined and unlimited risk associated with delays in
8completion of public works on to public works construction
9contractors increases public works construction costs.
10(c) It is therefore in the best interest of California taxpayers and
11public
works construction contractors for the Legislature to
12establish clear guidelines for imposing delay damages in a public
13works contract.
Section 7203 is added to the Public Contract Code, to
15read:
(a) A public works contract entered into on or after
17January 1, 2016, that contains a clause that expressly requires a
18contractor to be responsible for delay damages is not enforceable
19unless the delay damages have been liquidated to a set amount and
20identified in the public works contract.
21(b) “Delay damages” as used in this section, means damages
22incurred by the public agency for each day after the date on which
23the work was to be completed by the contractor pursuant to the
24public works contract. Delay damages shall not include damages
25incurred by a public agency after the filing of a notice of
26completion or, in the absence of a notice of completion, the
27acceptance
by the public agency of the public work as complete.
28(c) “Public agency” shall include the state, the Regents of the
29University of California, a city, charter city, county, charter county,
30district, public authority, municipal utility, and any other political
31subdivision or public corporation of the state.
32(d) This section shall not be construed to limit a right or remedy
33that the public agency has to enforce the express terms of the public
34works contract, except for a clause that expressly requires a
35contractor to be liable for delay damages.
36(e) This section shall not be construed to preclude a public
37agency from including more than one clause for delay damages
38for specified portions of work when the delay damages have been
P3 1liquidated
to a set amount for each individual clause and identified
2in the public works contract.
3(f) This section shall not apply to departments identified in
4Section 10106.
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