AB 1705, as introduced, Williams. Public contracts: payment
Existing law authorizes the retention proceeds withheld from any payment by an awarding entity, as described, from the original contractor, by the original contractor from any subcontractor, and by a subcontractor from any subcontractor to exceed 5% on specific projects where the director of the department has made, or the governing body of the public entity or designated official of the public entity has approved, a finding prior to the bid that the project is substantially complex and requires a higher retention, as specified.
This bill would indicate the intent of the Legislature to define the term “substantially complex” for purposes of these provisions.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 7201 of the Public Contract Code is
2amended to read:
(a) (1) This section shall apply with respect to all
4contracts entered into on or after January 1, 2012, between a public
5entity and an original contractor, between an original contractor
P2 1and a subcontractor, and between all subcontractors thereunder,
2relating to the construction of any public work of improvement.
3(2) Under no circumstances shall any provision of this section
4be construed to limit the ability of any public entity to withhold
5150 percent of the value of any disputed amount of work from the
6final payment, as provided for in subdivision (c) of Section 7107.
7In the event of a good faith dispute, nothing in this section shall
8be construed to require a public entity to pay for work that is not
9approved or accepted in accordance with
the proper plans or
10specifications.
11(3) For purposes of this section, “public entity” means the state,
12including every state agency, office, department, division, bureau,
13board, or commission, the California State University, the
14University of California, a city, county, city and county, including
15charter cities and charter counties, district, special district, public
16authority, political subdivision, public corporation, or nonprofit
17transit corporation wholly owned by a public agency and formed
18to carry out the purposes of the public agency.
19(b) (1) The retention proceeds withheld from any payment by
20a public entity from the original contractor, by the original
21contractor from any subcontractor, and by a subcontractor from
22any subcontractor thereunder shall not exceed 5 percent of the
23payment. In no event shall the total retention proceeds withheld
24exceed 5
percent of the contract price. In a contract between the
25original contractor and a subcontractor, and in a contract between
26a subcontractor and any subcontractor thereunder, the percentage
27of the retention proceeds withheld shall not exceed the percentage
28specified in the contract between the public entity and the original
29contractor.
30(2) This subdivision shall not apply if the contractor provides
31written notice to the subcontractor, pursuant to subdivision (c) of
32Section 4108, prior to, or at, the time that the bid is requested, that
33bonds shall be required, and the subcontractor subsequently is
34unable or refuses to furnish to the contractor a performance and
35payment bond issued by an admitted surety insurer.
36(3) Notwithstanding any other provision of this subdivision, the
37retention proceeds withheld from any payment by an awarding
38entity set forth in paragraphs (1) to (5), inclusive, of subdivision
39(a) of Section 10106, from the original contractor,
by the original
40contractor from any subcontractor, and by a subcontractor from
P3 1any subcontractor thereunder, may exceed 5 percent on specific
2projects where the director of the department has made a finding
3prior to the bid that the project is substantially complexbegin insert, as defined,end insert
4 and therefore requires a higher retention amount than 5 percent
5and the department includes both this finding and the actual
6retention amount in the bid documents. In a contract between the
7original contractor and a subcontractor, and in a contract between
8a subcontractor and any subcontractor thereunder, the percentage
9of the retention proceeds withheld shall not exceed the percentage
10specified in the contract between the department and the original
11contractor.
12(4) Notwithstanding any other provision of this subdivision, the
13retention proceeds withheld from any payment by the awarding
14entity of a
city, county, city and county, including charter cities
15and charter counties, district, special district, public authority,
16political subdivision, public corporation, or nonprofit transit
17corporation wholly owned by a public agency and formed to carry
18out the purposes of the public agency, from the original contractor,
19by the original contractor from any subcontractor, and by a
20subcontractor from any subcontractor thereunder, may exceed 5
21percent on specific projects where the governing body of the public
22entity or designee, including, but not limited to, a general manager
23or other director of an appropriate department, has approved a
24finding during a properly noticed and normally scheduled public
25hearing and prior to bid that the project is substantially complexbegin insert,
26as defined,end insert and therefore requires a higher retention amount than
275 percent and the awarding entity includes both this finding and
28the
actual retention amount in the bid documents. In a contract
29between the original contractor and a subcontractor, and in a
30contract between a subcontractor and any subcontractor thereunder,
31the percentage of the retention proceeds withheld shall not exceed
32the percentage specified in the contract between the department
33and the original contractor.
34(5) As used in this subdivision, “substantially complex” means
35______.
36(c) A party identified in subdivision (a) shall not require any
37other party to waive any provision of this section.
38(d) This section shall remain in effect only until January 1, 2016,
39and as of that date is repealed, unless a later enacted statute, that
40is enacted before January 1, 2016, deletes or extends that date.
Section 10261 of the Public Contract Code, as amended
2by Section 6 of Chapter 700 of the Statutes of 2011, is amended
3to read:
(a) Payments upon contracts shall be made as the
5department prescribes upon estimates made and approved by the
6department, but progress payments shall not be made in excess of
7100 percent of the percentage of actual work completed plus a like
8percentage of the value of material delivered on the ground or
9stored subject to or under the control of the state, and unused,
10except as otherwise provided in this section. The department shall
11withhold not more than 5 percent of the contract price until final
12completion and acceptance of the project. However, at any time
13after 95 percent of the work has been completed, the department
14may reduce the funds withheld to an amount not less than 125
15percent of the estimated value of the work yet to be completed, as
16determined by the department, if the reduction has been approved,
17in writing, by
the surety on the performance bond and by the surety
18on the payment bond. The Controller shall draw his or her warrants
19upon estimates so made and approved by the department and the
20Treasurer shall pay them. The funds may be released by electronic
21transfer if that procedure is requested by the contractor, in writing,
22and if the public entity has, in place at the time of the request, the
23mechanism for the transfer.
24(b) begin insert(1)end insertbegin insert end insert Notwithstanding this section, when the director of the
25department has made a finding prior to the bid that a specified
26project is substantially complexbegin insert, as defined,end insert and therefore
requires
27a higher retention amount than 5 percent, and the department
28includes both this finding and the actual retention amount in the
29bid documents, then payments upon contracts by the department
30shall be made as the department prescribes upon estimates made
31and approved by the department. However, progress payments
32shall not be made in excess of 95 percent of the percentage of
33actual work completed, plus a like percentage of the value of
34material delivered on the ground or stored, subject to, or under the
35control of the state, and unused, except as otherwise provided in
36this section. At any time after 95 percent of the work has been
37completed, the department may reduce the funds withheld to an
38amount not less than 125 percent of the estimated value of the
39work yet to be completed, as determined by the department, if the
40reduction has been approved, in writing, by the surety on the
P5 1performance bond and by the surety on the payment bond. The
2Controller shall draw his or her warrants upon estimates so made
3
and approved by the department and the Treasurer shall pay them
4with funds appropriated therefor. The funds may be released by
5electronic transfer if that procedure is requested by the contractor,
6in writing, and if the public entity has, in place at the time of the
7request, the mechanism for the transfer.
8(2) As used in this subdivision, “substantially complex” means
9______.
10(c) This section shall remain in effect only until January 1, 2016,
11and as of that date is repealed, unless a later enacted statute, that
12is enacted before January 1, 2016, deletes or extends that date.
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