BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1347 (Chiu) - Public contracts: claims ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: August 17, 2015 |Policy Vote: JUD. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 27, 2015 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- *********** 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 ? 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. -- END --