BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1671|
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CONSENT
Bill No: AB 1671
Author: Huffman (D), et al.
Amended: 7/6/12 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM : 9-0, 6/12/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal,
Pavley, Rubio, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 72-0, 5/3/12 - See last page for vote
SUBJECT : Department of Transportation: retention
proceeds
SOURCE : American Fence Association, California Chapter
Associated General Contractors
California Fence Contractors' Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders' Association
Southern California Contractors Association
United Contractors
DIGEST : This bill extends the sunset date from January
1, 2014 to January 1, 2020 on the section of the law
prohibiting the Department of Transportation (Caltrans)
from withholding retention proceeds on progress payments to
contractors on non-federally funded contracts.
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ANALYSIS : Typically, on public works projects, public
agencies retain 5% of the proceeds of progress payments
made to construction contractors. This is a tool that the
contracting agency uses to ensure that contractors perform
to the terms of their contract. When the project is
completed to the satisfaction of the contracting agency,
the contracting agency releases the retentions to the
contractor. The prime contractor may extend the retention
fees to subcontractors.
Existing state law prohibits Caltrans from retaining fees
on progress payments on non-federally funded construction
contracts until January 1, 2014, and requires Caltrans to
notify the Legislature if the state's interest has been
compromised because of the lack of retention fees. The
state prohibition on retention fees conforms to existing
federal law prohibiting Caltrans from retaining fees on
federally funded construction contracts.
This bill:
1.Extends the prohibition on Caltrans retaining fees on
progress payments on non-federally fund construction
contracts until January 1, 2020.
2.Revises the State Contract Act to allow as acceptable
form of bidders security an electronic bidder's bond by
an admitted surety insurer submitted using an electronic
registry service approved by the department advertising
the contract, and a signed bidder's bond by an admitted
surety insurer received by the department advertising the
contract.
Background
Retention fees represent a percentage of the amount of a
contract that Caltrans withholds from a progress payment to
a contractor by Caltrans. This practice allows Caltrans to
maintain a degree of financial control over a project.
Usually the retention fee is five percent of a progress
payment. Because prime contractors are required to file
payment and performance bonds to guarantee both the
completion of the work and to ensure that all workers and
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subcontractors have been paid, the construction industry
argues retentions are unnecessary and may create cash flow
problems for some contractors.
Comments
AB 593 (Margett), Chapter 341, Statutes of 2008, prohibited
Caltrans from retaining fees on state funded construction
contracts until January 1, 2014. SB 1671 extends the sunset
date until January 1, 2020. This bill does not apply to
services contracts.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/8/12)
American Fence Association, California Chapter (co-source)
Associated General Contractors (co-source)
California Fence Contractors' Association (co-source)
Engineering Contractors' Association (co-source)
Flasher Barricade Association (co-source)
Marin Builders' Association (co-source)
Southern California Contractors Association (co-source)
United Contractors (co-source)
Air Conditioning and Refrigeration Contractors Association
Air Conditioning and Sheet Metal Association
American Subcontractors Association of California
Associated Builders and Contractors of California
Building Industry Credit Association
California Concrete Contractors Association
California Landscape and Irrigation Council
California Landscape Contractors Association
California Legislative Conference of the Plumbing, Heating
and Piping
Industry
California Precast Concrete Association
California State Association of Electrical Workers
California State Pipe Trades Council
Eberhard Roofing
Golden State Builders' Exchange
National Electrical Contractors Association, California
Chapters
State Building and Construction Trades Council, AFL-CIO
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Union Roofing Contractors Association
Western States Council of Sheet Metal Workers
ASSEMBLY FLOOR : 72-0, 5/3/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman,
Halderman, Harkey, Hayashi, Hill, Huber, Hueso, Huffman,
Jeffries, Knight, Lara, Logue, Bonnie Lowenthal, Ma,
Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel
P�rez, Portantino, Silva, Skinner, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Yamada, John A.
P�rez
NO VOTE RECORDED: Bonilla, Fletcher, Furutani, Hall, Roger
Hern�ndez, Jones, Smyth, Williams
JJA:n 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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