BILL ANALYSIS �
SB 293
Page 1
Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 293 (Padilla) - As Amended: June 21, 2011
As Proposed to be Amended
SENATE VOTE : 36-0
SUBJECT : CONSTRUCTION CONTRACTS: PAYMENTS
KEY ISSUE : SHOULD THE RIGHTS OF OWNERS, GENERAL CONTRACTORS,
AND SUBCONTRACTORS BE ADJUSTED WITH RESPECT TO PUBLIC WORKS
PROJECTS AND CLARIFIED REGARDING LABORERS WITH RESPECT TO
PRIVATE WORKS?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This bill revises the rights and obligations of various parties
with regard to payments relating to construction contracts. It
would require general contractors to pay subcontractors more
quickly. On the other hand, it would reduce the amount of time
in which subcontractors could make certain claims against
contractors for nonpayment. At the same time, the bill
clarifies that laborers are not subject to specified procedures
for asserting claims against payment bonds regarding public and
private works of improvement. More controversially, the bill
reduces the amount of money that local public agencies can
withhold from a contractor prior to completion of the job.
These retention proceeds are currently required to be not less
than five percent. The widespread highly variable practice
among local public entities is to retain 10 percent. Under the
bill, retention could not exceed five percent. This provision
would sunset in 2016. The bill is supported by contractors and
subcontractors. It is opposed by many local public agencies who
argue that the ability to retain construction funds is an
important control to ensure that contractors perform their work
well, on time and on budget.
SUMMARY : Adjusts the rights and time periods governing payment
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and claims for payment between owners, contractors and
subcontractors by speeding the time period for contractors to
pay subcontractors, reducing the time by which a subcontractor
may make claims for nonpayment against a contractor on a public
works project, exempting laborers from preliminary notification
requirements and any deadline to enforce a claim for private
works of improvement, and prohibiting a public entity from
retaining more than 5 percent of a contract price until final
completion and acceptance of a project. Specifically, this
bill :
1)Decreases, from 10 to 7, the number of days by which a prime
contractor or subcontractor must pay a subcontractor after
receiving a progress payment, unless otherwise agreed to in
writing.
2)Requires a subcontractor to give written notice to the surety
and bond principal that he or she is enforcing a claim prior
to completion or recordation of the Notice of Completion (NOC)
of a project, commencing January 1, 2012, except as specified
if the 20-day public works preliminary notice was required by
any person that has no direct contractual relationship with
the contractor and who has not given notice as provided in
Section 3098, that person may enforce a claim by giving
written notice to the surety and bond principal, as provided
in Section 3227, within 15 days after recordation of a notice
of completion. If no notice of completion has been recorded,
the time for giving written notice to the surety and the bond
principal is extended to 75 days after completion of the work
of improvement. This exception does not apply in the event
that undisputed payments have been made to the subcontractor
in which there is a direct contractual relationship with the
general contractor to whom the claimant has provided materials
or services.
3)Exempts a laborer, as defined, from preliminary notice
requirements to a surety and bond principal and any deadline
to enforce a claim after the completion of a project for
private works of improvement.
4)Prohibits a public entity from retaining more than 5% of a
contract price until final completion and acceptance of a
project.
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5)Requires that retention proceeds between an original
contractor and a subcontractor, or between two subcontractors,
not exceed 5% of payment or contract price. Does not apply if
the contractor provides written notice to the subcontractor,
prior to or at the time that the bid is requested, that a bond
may be required and the subcontractor subsequently is unable
or refuses to furnish to the contractor a performance or
payment bond issued by an admitted surety insurer.
6)Prohibits progress payments on public works contracts from
being made in excess of 100% of the percentage of actual work
completed.
7)Authorizes a public entity to retain more than 5% of the
contract price in public works projects under the following
conditions:
a) For projects awarded by state departments, as defined,
the project is substantially complex and the department
includes this finding and the actual retention amount in
the bid documents;
b) For projects awarded by local entities, as specified,
the governing body of the local public entity has approved
a majority vote during a properly noticed and normally
scheduled public hearing prior to bid that the project is
substantially complex, and includes this finding and the
actual retention amount in the bid documents; and,
c) Retention proceeds between an original contractor and a
subcontractor, or between two subcontractors, shall not
exceed the specified retention percentage in the contract
between the public entity and the original contractor.
8)Sunsets these retention provisions on January 1, 2016.
9)Defines "public entity" to mean the state, including every
state agency, office, department, division, bureau, board, or
commission, the California State University, the University of
California, a city, county, city and county, including
chartered cities and chartered counties, district, special
district, public authority, political subdivision, public
corporation, or nonprofit transit corporation wholly owned by
a public agency and formed to carry out the purposes of the
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public agency.
EXISTING LAW :
1)Requires that, for private and public works of improvement and
in a public works contract, a prime contractor or
subcontractor pay to any subcontractor, no later than 10 days
after receipt of each progress payment, unless otherwise
agreed to in writing, the respective amount allowed the
contractor on account of the work performed by the
subcontractors, to the extent of each contractor's interest
therein, as prescribed. (Bus. and Profs. Code section
7108.5.)
2)Deems that willful and deliberate failure by a contractor to
pay money owed for materials and services rendered, when the
contractor has sufficient funds, constitutes cause for
disciplinary action by the Contractors' State License Board
(CSLB). (Bus. and Profs. Code section 7108.5.)
3)Requires, with regard to a contract entered into on or after
January 1, 1995, that in order to enforce a claim upon any
payment bond given in connection with a public work, a
claimant give the 20-day public works bond preliminary notice,
as provided. Further authorizes a claimant, if the 20-day
public works preliminary bond notice was not given as
prescribed by statute, to enforce a claim by giving written
notice to the surety and the bond principal, as provided,
within 15 days after recordation of a NOC, or if no NOC has
been recorded, within 75 days after completion of the work of
improvement. (Civil Code sections 3252 8612.)
4)Requires payments on contracts with progress payments to be
made as the awarding department prescribes; provides that
state and public agencies shall withhold at least 5% of the
contract price until final completion and acceptance of the
project; and that progress payments upon public contracts
shall not be made in excess of 95% of actual work completed,
except as follows:
a) At any time after 95% of the work has been completed on
a state project, the state may reduce the funds withheld to
an amount no less than 125% of the estimated value of the
work yet to be completed, as specified.
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b) Allows a public entity to withhold 150% of the value of
any disputed amount of work from the final payment; or,
c) At any time after 50% of a local government project is
completed and the legislative body finds that satisfactory
progress is being made, it may reduce or eliminate
withholding. (Public Contract Code section 7201.)
5)Requires a contractor in a public works contract to file a
performance bond with the public entity in specified amounts,
depending on the value of the contract. (Public Contract Code
section 10261.)
COMMENTS : The author explains the reason for the bill as
follows:
With California's economy and cash flow continuing to
tighten, it is important for contractors to keep close
controls on payments, moneys owed, as well as potential
disputes. The construction industry has come together to
resolve payment related issues that predominately occur in
the public works context. The solution presented is a
multi-prong approach that will reduce retention on public
works payments to no more than 5%, unless a surety bond is
requested and the subcontractor is unable to provide a
bond. Mandatory retention caps in public works are not a
new concept and have been used on federal public works
projects for some time.
In addition, the prompt payment statutes for public and
private works are often difficult to find for the small and
emerging contractor, so in an attempt to ease clarity in
the code it has been drafted to consolidate the statutes on
prompt payment.
Lastly, in private works, any person who provides
construction services or materials to a construction
project has the right to file a mechanic lien on the
property if they are not paid; however, prior to filing the
lien, a 20 day preliminary lien notice must be filed with
the owner identifying the subcontractor or material
supplier and notifying the owner of the potential mechanic
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lien in the event payments are not forthcoming for work
performed or materials provided. In public works, instead
of a mechanic lien against the property title, there are
"claims" that can be made against the surety bond, which
such bonds are required for all public works projects
meeting a minimum dollar threshold. The 20 day notice
applies in public works, but provides that if the notice is
not filed, the contractor is not penalized and can make a
claim up to 75 days after the notice of completion. This
area of the law has been revised to ? avoid general
contractors from being hit by "surprise" claims from second
and third tier subcontractors.
Background . This bill relates to payments made to individuals
hired to perform work on public and private construction
projects, and the cash flow between public entities and
homeowners, general contractors, subcontractors, and suppliers.
This bill also revises the terms and conditions, as well as the
timeframe in which those payments must be made. Below are the
primary components of the measure relating to payments discussed
below: progress payments, claims to the surety and bond
principal for both private and public works, and retention.
General Contractor Progress Payments to Subcontractors . This
bill reduces the time period a general contractor has to pay his
or her subcontractor after the general contractor has been paid
a progress payment from the owner. This time period is reduced
from 10 to 7 days. It is unclear what percentage of payments
occur in the last 3 days of this window, and whether the
reduction to 7 days will have any significant impact.
Subcontractor Bond Claims: Public Works . In public works
projects, instead of a lien claim, there are claims that can be
made against the surety and bond principal, referred to as a
bond claim. Subcontractors routinely file this preliminary
notice prior to the commencement of work and receiving payment
for services as a protective measure to inform the surety or
public entity that work will be performed for payment. If a
subcontractor files this 20-day preliminary notice and is not
paid after 10 days of supplying labor and materials, the
subcontractor can file a stop notice with the public entity to
withhold the disputed amount from the general contractor. The
public entity will only release the withheld amount to the
general contractor once a stop notice release is received from
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the claimant attesting that payment for service has been
rendered.
However, if a subcontractor does not file a 20-day preliminary
notice, provides labor and services, and is not paid, the
subcontractor is ineligible to file a stop notice with the
public entity. The subcontractor must wait until the project is
completed or until a NOC is filed to submit a claim to the
surety for payment of services. This means, that even if a
project is not completed until a year after an unpaid
subcontractor provides labor or materials, but the subcontractor
did not file a 20-day preliminary notice, that subcontractor
will have to wait a year before receiving payment through a
surety. In this case, the subcontractor can make a claim within
15 days after recordation of a NOC, or if no NOC has been
recorded, up to 75 days after the NOC.
Many public entities require that contractors carry a payment
bond to ensure that contractors pay all debt related to a
construction project.
Exemption For Laborers From Preliminary Notice Requirements .
This bill would clarify the exemption for public and private
works project laborers from the preliminary notice requirements
regarding payment bond claims. Under existing law, laborers are
exempt from the preliminary notice requirements on private and
public works projects. (Civ. Code Secs. 8200 and 9300.)
Existing law requires a preliminary notice to be served prior to
enforcement of a payment bond claim in accordance with Civil
Code Sections 8200 (private works) or 9300 (public works).
(Civ. Code Secs. 8612 and 9560.)
California State Council of Laborers, the sponsor of this bill,
states that confusion exists between contractors, project
owners, and laborers on the issue of preliminary notice
requirements. Because laborers are not expressly exempt from
the preliminary notice requirements under the payment bond
enforcement provisions, contractors and project owners are
denying payment bond claims submitted by laborers. Although SB
189, which this bill amends, is not operative until July 1,
2012, the statutes in effect through July 1, 2012 contain these
same ambiguities. (See Civ. Code Secs. 3097, 3098, 3242, and
3252.) The enforcement provisions require preliminary notice to
be served in accordance with the separate preliminary notice
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statutes, and these preliminary notice statutes are
cross-referenced within the enforcement provisions. This bill
would clarify existing law that laborers may enforce a claim
against a payment bond and are not required to serve a
preliminary notice before hand.
Reduction in Retention Proceeds By Public Agencies . Retention
proceeds represent a percentage of the amount of a contract that
is withheld from a progress payment by the public entity to the
original contractor, or the original contractor to one of its
subcontractors. By withholding a percentage of a contract, the
public entity or the original contractor maintains a degree of
financial control over a project. In general, the public entity
or the original contractor withholds at least five percent of
payment until the contract is completed to the satisfaction of
the public entity or original contractor. In practice, the most
common rule is said to be retention of 10 percent. Under this
bill, the amount public entities could retain would be no more
than five percent.
All California contractors working on a public works project are
required to possess performance bonds that cover up to 150% of
the cost of any disputed work.
Performance bonds can be one option a public entity uses to
guarantee from a third party that the project will get completed
if the contractor abandons or is terminated from the project.
If a contractor does not meet the contract obligations and the
public entity seeks to use the performance bonds, the bonding
company selects the replacement contractor to complete the
remainder of the contract obligations at the lowest cost.
ARGUMENTS IN SUPPORT : According to the Associated General
Contractors of California:
To ensure that cash flow is adequate at a time when
contractors' margins are shrinking and financing is
increasingly more difficult, establishing an appropriate
retention ceiling is very important. The public is
protected from default by bonding requirements.
Under current law, subcontractors are required to file a
20-day pre-lien notice to ensure that the owners and
general contractors are informed of who has lien claim
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rights. However, there is an unfair provision in the
current law that allows a subcontractor to file a claim
against the bond up to 75 days from the NOC. In large
public works contracts, there can be a multitude of
subcontractors and material suppliers. The general
contractor does not know all of the material suppliers and
second and lower subcontractors on the job that have the
legal authority to file a claim.
Current law places the general contractor in a situation of
paying out all payments to its principal subcontractors
only to find out after all the proceeds have been paid,
that an unknown subcontractor or material supplier was not
paid. If the subcontractor who should have paid their
subcontractor is judgment proof, it means the general
contractor will have to pay twice for the same services or
materials.
According to the Engineering & Utility Contractors Association
and several trade organizations, "SB 293 would require that
progress payments be made within seven days instead of the
current 10 day requirement. In addition, this bill also allows
subcontractors to access more capital by lowering retention
withholdings on public works to no more than 5% as opposed to
the current 10% limit. A retention withholding represents a
percentage of a contract withheld so the owner or general
contractor can maintain a degree of control over the project.
Lowering the retention rate will place less of a financial
burden on subcontractors by ensuring that their labor and
material fees are justifiably covered."
According to the Air Conditioning Sheet Metal Association, "This
bill modifies the timeline for which a surety bond claim can be
filed on public works projects and revises the timeline by which
prime contractors must pay their subcontractors once they have
received payment from an owner on a construction project. In
addition, this bill provides a cap on the amount of retention
that may be held against contractors on public works projects."
"While California's economy and cash flow continue to tighten,
it is important for contractors to keep close controls on
payments, money owed, as well as potential disputes. This
measure will resolve payment-related issues and help struggling
contractors with cash flow problems. The solution is a balanced
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approach that will expedite progress payments and ensure that
anyone who provides material and labor to a public works project
gets paid for work performed and approved when they provide
notice of that work prior to the job being completed."
ARGUMENTS IN OPPOSITION : According to California's Coalition
for Adequate School Housing:
Specifically, SB 293 repeals current statutory flexibility
for public agencies to negotiate the conditions for
retention proceeds in their contracts as provided for in
subdivision (b) of Section 7200 of the Public Contract
Code. Under current law, such proceeds "may not exceed the
percentage specified in the contract between the public
entity and the original contractor." School districts, in
good faith, negotiate contract provisions and typical
retention amounts are negotiated at approximately 10% of
the contract value. If a contractor and a public agency
wish to limit retention proceeds to five percent - as the
bill seeks to achieve - current law allows for it.
Retention is necessary for public agencies to ensure (1)
prompt completion of a project; (2) that contractors return
to a project to complete all contract requirements,
including small unprofitable punch-list items; (3) there
are sufficient funds for public agencies to correct
defective work if a contractor fails to do so; (4) to have
sufficient funds to honor Stop notice claims filed by
subcontractors and suppliers; and (5) to have sufficient
funds withheld in order to pay workers in the event
contractors have failed to properly pay prevailing wage as
determined by the Department of Industrial Relations as
required by state law. By prohibiting contract withholdings
from exceeding five percent, and removing the flexibility
to negotiate a good faith provision between a public agency
and a contractor, SB 293 significantly thwarts an agency's
ability to ensure that the provisions of their public works
contracts are fully executed.
Finally, contractors are currently provided the protection
intended by SB 293. Existing statute requires public
agencies to make timely payments of both progress payments
and final payments unless there is a legitimate dispute
over work. Additionally, contractors may opt to place all
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retention in a contractor-established escrow account and to
receive the interest from that account.
The California Special Districts Association and a coalition of
local public agencies write:
Current law requires retentions of at least five percent on
public works projects, with the flexibility for public
agencies to utilize the most appropriate retention,
case-by-case, to protect taxpayers, ratepayers and
Californians who depend upon core local services. SB 293
puts scarce resources for schools, hospitals, parks, fire
houses, and other public infrastructure at risk.
Contract retentions ensure that:
Public projects are delivered on time and on budget;
Contractors complete all contract requirements, including
small unprofitable punch-list items;
There are sufficient funds to correct defective work if a
contractor fails to do so; and
There are sufficient funds to pay workers in the event
contractors fail to pay prevailing wage properly and a
demand is made by the State that the public agency withhold
funds from the contractor.
When a contractor does not have the proper incentive to
complete a public works project, local agencies are left
without sufficient funds and would be forced to seek new
funding to complete the project. This compromises the
public agency to the benefit of the contractor.
A five percent retention cap imposes a one-size-fits-all
policy and removes flexibility to appropriately manage risk
on a project-by-project basis. Local agencies must accept
the lowest responsible bidder when awarding contracts. The
flexibility provided in existing law allows agencies to do
a project risk assessment and determine retention
provisions that are appropriate to the level of risk
assessed for a project. It is also important to note that
regional economies vary widely statewide; therefore, local
jurisdictions need the flexibility to appropriately
determine how to manage retention as part of each contract
to fit the needs of each party.
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The "substantially complex" exemption language is a step in
the wrong direction and will lead to dangerous unintended
consequences: It will raise project costs, change-order
costs, and insurance costs. By acknowledging up-front that
a job is "substantially complex", a public agency will
publicly certify an elevated degree of difficulty to
bidders, who will then be able to charge a new "higher
substantially complex" premium. This will also increase the
cost of bonds and insurance coverage, and impact the
relationship between the agency and contractor with regard
to change orders and other issues as the substantially
complex designation could be used against the public
agency.
It is a false premise that retention rates are based on the
complexity of projects. As Governor Gray Davis noted in his
veto message of Assembly Bill 806 (Keeley), a bill
identical to SB 293, "While the private sector can choose
contractors with whom they have experience and are familiar
with their reliability and the quality of work, public
entities must accept the low bidder. Because of this
requirement, public entities inherently face a higher level
of risk when contracting for construction projects."
Because local agencies are required to contract with the
lowest bidder, sometimes less qualified contractors may
under-bid more qualified contractors who are more likely to
create issues of costly change orders and project
abandonment. Ambiguity of the term "substantially complex"
will lead to increased litigation and bid process
challenges. On what basis should a department director, in
the case of the State, or a board of directors, in the case
of a public agency, make this determination? SB 293, as
amended, adds yet another foothold for legal claims and bid
process challenges which cause project delays and cost
taxpayers and ratepayers valuable resources.
Prohibiting retentions over five percent until 2016 would
implement a bad policy at the worst possible time. During
this difficult economic and budgetary time, public
agencies, taxpayers and ratepayers cannot afford failures
or disingenuous commitments on the part of general
contractors. Furthermore, in this climate, contractors
faced with difficult financial decisions are more likely to
abandon a project when he or she deems the remaining work
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to be unprofitable.
Supporters assert that this bill is in response to the
downturn in the economy; however, this is the ninth attempt
to enact this legislative proposal, the first of which
dates back to 1996. We do not believe that this legislation
is in response to the hard economic times, rather a
solution in search of a problem. Furthermore, local
agencies have been equally hurt from the downturn in the
economy, slashing budgets and staff, and operating in
extremely fiscally constrained environments.
Existing law affords contractors an interest-bearing escrow
account for all retention proceeds. Current law provides
contractors the ability to establish escrow accounts that
allow retention proceeds to gain interest payments for the
contractor while providing adequate assurance to the public
agency that the project will be completed. Additionally,
local agencies commonly reduce retention to 5 percent at
the half-way point of project completion, if adequate
progress is being made and the contractor is acting in good
faith. Perhaps a more appropriate provision than a five
percent retention cap would be to provide subcontractors
the ability to establish interest-bearing escrow accounts,
similar to those of contractors.
Over the last 15 years, legislation to limit retentions on
public projects to five percent has been introduced nine
times and vetoed no less than four times by three
Governors.
Our coalition has had many discussions in recent years
regarding similar proposals. However, we continue to
express concern over these measures because we have yet to
see specific examples where higher retention, typically 10
percent, is problematic. On the other hand, we have
specific examples from local agencies where a five percent
cap is grossly inadequate.
Related Pending Legislation . AB 1354 (Huber) prohibits a public
entity from retaining more than 5% of a contract price until
final completion and acceptance of a project. This bill is
pending in the Assembly Business, Professions and Consumer
Protection Committee.
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Related Prior Legislation . AB 2216 (Fuentes) of 2010, would
have reduced the time available to a claimant to give written
notice that he or she is enforcing a claim against a bond for a
public works project, and decreases the time period during which
a contractor must pay his or her subcontractors. This bill was
held on the Senate Floor.
AB 396 (Fuentes) of 2009, would have reduced the time available
for a claimant to make a claim against a bond by providing that
if a claimant has not provided a 20-day public work preliminary
bond notice as specified, the claimant may enforce a claim by
giving written notice to the surety and bond principal prior to
the completion of the project or recordation of a NOC. This
bill was held in the Assembly Appropriations Committee.
SB 629 (Liu) of 2009, would have prohibited retention proceeds
withheld from any payment made by an owner to the original
contract from exceeding 5% of the amount otherwise due under the
contract, applicable to all contracts entered into on or after
January 1, 2010. This bill was held on the Assembly Floor.
SB 802 (Leno) of 2009, would have prohibited a public entity
from retaining more than 5% of a contract price until final
completion and acceptance of a project. The Governor vetoed
this bill with the following message:
When a contractor fails to complete a public works project,
the public entity needs recourse to ensure that the project
gets completed. Public works contracts have a higher level
of risk as public entities usually have to accept the low
bidder. Though there are options available to the State to
go after a contractor who fails to complete the terms of a
public works contract, retaining portions of payment to the
contractor provides incentive for the contractor to
complete the project. While I am sympathetic with the
concerns of subcontractors, the State's responsibility is
to protect the taxpayer to make certain that public works
projects are completed correctly and within budget;
limiting the retention amount hampers the State's ability
to do that.
SB 593 (Margett), Chapter 341, Statutes of 2008, prohibits the
Department of Transportation from withholding retention proceeds
to its contractors when making progress payments for work
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performed on a public works project.
SB 619 (Migden) of 2007, would have prohibited state and local
government agencies from withholding from an original
contractor, or an original contractor from a subcontractor, more
than 5% of a payment on public works contract. This bill was
held on the Assembly Floor.
AB 806 (Keeley) of 1999, would have limited retention proceeds
on public works contracts to 5%, and prohibits the state,
including all state agencies and political subdivisions of the
state, contractors, and subcontractors from withholding more
than 5% of a scheduled payment on a public works contract. AB
806 was vetoed.
AB 2084 (Miller), Chapter 857, Statutes of 1998, provides that
the percentage of retention proceeds withheld by a contractor
from a subcontractor may not exceed the overall retention
percentage specified in the public works contract between the
contractor and the public agency builder.
AB 940 (Miller) of 1997, would have, among other things, limited
retention payments by public entities on public works to 5%.
This bill was vetoed.
AB 1949 (Conroy) of 1996, would have, among other things,
limited retention payments by public entities on public works to
5%. AB 1949 was vetoed.
Author's Amendments To Address Subcontractor Concerns. To
respond to the concerns of some subcontractor groups, the author
prudently proposes the following amendments:
In Section 2 of the bill:
Strike subparagraph (2) of subdivision (b)
Change subdivision (c) and (d) to (e) and (f)
respectively
Add: (c) Commencing January 1, 2012, and except as
provided in subdivision (b), if the 20-day public works
preliminary notice was required by any person that has no
direct contractual relationship with the contractor and who
has not given notice as provided in Section 3098, that
person may enforce a claim by giving written notice to the
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surety and bond principal, as provided in Section 3227,
within 15 days after recordation of a notice of completion.
If no notice of completion has been recorded, the time for
giving written notice to the surety and the bond principal
is extended to 75 days after completion of the work of
improvement.
Add: (d) Section (c), above, shall not apply in the
event that undisputed payments have been made to the
subcontractor in which there is a direct contractual
relationship with the general contractor to whom the
claimant has provided materials or services.
Because section 2 will sunset in July, 2012, amend both Section
3 and 4 (which become operative July 1, 2012) to carry forward
the change to section 2 above by reverting subsection (b) in
each section to its original form, as follows:
If preliminary notice was not given as provided in
Chapter 3 (commencing with Section 9300), a claimant may
enforce a claim by giving written notice to the surety and
bond principal within 15 days after recordation of a notice
of completion. If no notice of completion has been
recorded, the time for giving written notice to the surety
and the bond principal is extended to 75 days after
completion of the work of improvement.
Change subdivision (c) to (e) and (d) to (f)
Add: (c) Commencing July 1, 2012, and except as provided
in subdivision (b), if the 20-day public works preliminary
notice was required by any person that has no direct
contractual relationship with the contractor and who has
not given notice as provided in Section 3098, that person
may enforce a claim by giving written notice to the surety
and bond principal, as provided in Section 3227, within 15
days after recordation of a notice of completion If no
notice of completion has been recorded, the time for giving
written notice to the surety and the bond principal is
extended to 75 days after completion of the work of
improvement.
Add: (d) Section (c), above, shall not apply in the
event that undisputed payments have been made to the
subcontractor in which there is a direct contractual
relationship with the general contractor to whom the
claimant has provided materials or services.
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REGISTERED SUPPORT / OPPOSITION :
Support
California State Council of Laborers (sponsor)
Air Conditioning and Sheet Metal Association
Air-Conditioning & Refrigeration Contractors Association
Associated General Contractors
Building Industry Credit Association
California Chapters of the National Electrical Contractors
Association
California Landscape & Irrigation Council
California Legislative Conference of the Plumbing, Heating and
Piping Industry
Concrete Contractors Association
Engineering & Utility Contractors Association
Golden State Builders Exchanges
Sheet Metal Association
State Building and Construction Trades Council of California
Western Wall & Ceiling Contractors Association
Many Individuals
Opposition
Alameda County Flood Control and Water Conservation District
American Contractors Indemnity Corporation
Association of CA Construction Managers
Association of California Healthcare Districts
Association of California School Administrators
Association of California Water Agencies
California Association of Sanitation Agencies
California Association of School Business Officials
California School Boards Association
California Special Districts Association
California State Association of Counties
California State University
Coalition for Adequate School Housing
County Sanitation Districts of Los Angeles County
Community College Facility Coalition
Desert Water Agency
East Valley Water District
El Dorado Irrigation District
League of California Cities
SB 293
Page 18
Long Beach Unified School District
Union Roofing Contractors Association
Urban Counties Caucus
Riverside County School Superintendents' Association
Small School Districts Association
Three Valleys Municipal Water District
One individual
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334