BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
2390 (Buchanan)
Hearing Date: 8/2/2010 Amended: 8/2/2010
Consultant: Bob Franzoia Policy Vote: B,P&ED 5-1 GO 7-1
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BILL SUMMARY: AB 2390 would revise public works bidding
practices by specifying that public entities shall require the
contractor to possess (1) the correct classification of
contractor's license at the time the contractor makes a bid or
offer to perform the work and (2) current workers' compensation
insurance at the same time. In addition, this bill would
require the contractor whose bid was accepted to provide to the
awarding authority, within five business days of the notice of
the award, each subcontractor's name and business location, the
current valid license number issued by the state, and proof of
current workers' compensation insurance of each subcontractor
that was listed in the contractor's bid.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Expanded contracting Estimated $200 to $500 annually General/
requirements Special/
Bond
Increased state liability Unknown, potentially major
costs annually General/
Special/
Bond
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
As noted in a 2008-09 University of California (UC) capital
outlay report, UC had 291 active projects totaling $9.2 billion.
Bid protests increased 40 percent in 2008-09 due to the
competitive nature of contracting and the economy. Generally,
one bid protest results in legal and administrative costs of
$25,000. Even a one percent increase in bid protests would
result in significant General Fund costs.
Caltrans estimates that given the large number of contract it
manages annually (666 and 608 in 2008-09 and 2009-10
respectively), each with numerous contractors and
subcontractors, six staff would be needed. This projects a
workload of about 100 contracts per staff and two days per
contract to collect, review, and file the information that would
be submitted by subcontractors. Department of General Services,
the other major state contracting entity, has lesser costs.
Staff notes that if the awarding entity accepted an invalid or
fraudulent certificate, the awarding entity, which could a state
entity, may be deemed liable in the event of any injuries and
compensation claims. In essence, this bill shifts, perhaps
inadvertently, the legal exposure for ensuring that all
subcontractors carry adequate workers' compensation insurance
from the contractor to the state contracting entity.