BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1347 (Chiu) - Public contracts: claims
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|Version: August 17, 2015 |Policy Vote: JUD. 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 27, 2015 |Consultant: Jolie Onodera |
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*********** ANALYSIS ADDENDUM - SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on August 27, 2015
Bill
Summary: AB 1347 would establish, until January 1, 2019, a
claims resolution process for public works contracts entered
into on or after January 1, 2016, by which a general contractor
may seek public agency review of the claim.
Fiscal
Impact:
Major costs potentially in the millions of dollars (General
Fund) to numerous state agencies engaged in significant public
works contracts for claims review and resolution, which will
result in additional administrative costs to review, evaluate,
and respond to claims within 45 days, and for mandated
mediation. State agencies are currently not subject to any
statutory timelines for claims review and resolution, and
unresolved claims are subject to arbitration. Caltrans, which
has over 600 ongoing contracts valued at over $10 billion,
AB 1347 (Chiu) Page 1 of
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expects it would need additional personnel at an annual cost
of approximately $11.5 million. Other agencies that would be
significantly impacted include but are not limited to the
Departments of General Services, Department of Water
Resources, the Department of Corrections and Rehabilitation,
the University of California, and the California State
University.
Potentially major state-reimbursable costs in the tens of
millions of dollars (General Fund) to local agencies engaged
in public works projects to the extent this new process
results in higher administrative costs, including any increase
in administrative costs incurred under the existing process
for resolution of claims under $375,000.
Additional costs to state and local agencies for additional
interest costs accrued on late payments under the timelines
prescribed in this bill.
Committee
Amendments: Sunset the provisions of the bill on January 1,
2019.
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