AB 1705, as amended, Williams. Public contracts: payment.
Existingbegin delete lawend deletebegin insert law, until January 1, 2016,end insert 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 applicable department, as specified, 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 and the department or public entity includes both this finding and the actual retention amount in the bid documents.
Thisbegin delete bill,end deletebegin insert bill would extend the operation of these provisions until January 1, 2020, and,end insert instead of requiring that the finding and actual retention amount be included in the bid documents, would require that the bid documents include details explaining the basis for the finding in addition to the actual retention amount. The bill would also define projects that are not “substantially complex.”
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
6and a subcontractor, and between all subcontractors thereunder,
7relating to the construction of any public work of improvement.
8(2) Under no circumstances shall any provision of this section
9be construed to limit the ability of any public entity to withhold
10150 percent of the value of any disputed amount of work from the
11final payment, as provided for in subdivision (c) of Section 7107.
12In the event of a good faith dispute, nothing in this section shall
13be construed to require a public
entity to pay for work that is not
14approved or accepted in accordance with the proper plans or
15specifications.
16(3) For purposes of this section, “public entity” means the state,
17including every state agency, office, department, division, bureau,
18board, or commission, the California State University, the
19University of California, a city, county, city and county, including
20charter cities and charter counties, district, special district, public
21authority, political subdivision, public corporation, or nonprofit
22transit corporation wholly owned by a public agency and formed
23to carry out the purposes of the public agency.
24(b) (1) The retention proceeds withheld from any payment by
25a public entity from the original contractor, by the original
26contractor from any
subcontractor, and by a subcontractor from
27any subcontractor thereunder shall not exceed 5 percent of the
28payment. In no event shall the total retention proceeds withheld
29exceed 5 percent of the contract price. In a contract between the
30original contractor and a subcontractor, and in a contract between
31a subcontractor and any subcontractor thereunder, the percentage
32of the retention proceeds withheld shall not exceed the percentage
33specified in the contract between the public entity and the original
34contractor.
P3 1(2) This subdivision shall not apply if the contractor provides
2written notice to the subcontractor, pursuant to subdivision (c) of
3Section 4108, prior to, or at, the time that the bid is requested, that
4bonds shall be required, and the subcontractor subsequently is
5unable or refuses to furnish to the contractor a performance and
6
payment bond issued by an admitted surety insurer.
7(3) Notwithstanding any other provision of this subdivision, the
8retention proceeds withheld from any payment by an awarding
9entity set forth in paragraphs (1) to (5), inclusive, of subdivision
10(a) of Section 10106, from the original contractor, by the original
11contractor from any subcontractor, and by a subcontractor from
12any subcontractor thereunder, may exceed 5 percent on specific
13projects where the director of the department has made a finding
14prior to the bid that the project is substantially complex, as defined,
15and therefore requires a higher retention amount than 5 percent
16and the department includes in the bid documents details
explaining
17the basis for the finding and the actual retention amount. In a
18contract between the original contractor and a subcontractor, and
19in a contract between a subcontractor and any subcontractor
20thereunder, the percentage of the retention proceeds withheld shall
21not exceed the percentage specified in the contract between the
22department and the original contractor.
23(4) Notwithstanding any other provision of this subdivision, the
24retention proceeds withheld from any payment by the awarding
25entity of a city, county, city and county, including charter cities
26and charter counties, district, special district, public authority,
27political subdivision, public corporation, or nonprofit transit
28corporation wholly owned by a public agency and formed to carry
29out the purposes of the public agency, from the original contractor,
30by
the original contractor from any subcontractor, and by a
31subcontractor from any subcontractor thereunder, may exceed 5
32percent on specific projects where the governing body of the public
33entity or designee, including, but not limited to, a general manager
34or other director of an appropriate department, has approved a
35finding, on a project by project basis, during a properly noticed
36and normally scheduled public hearing and prior to bid that the
37project is substantially complex, as defined, and therefore requires
38a higher retention amount than 5 percent and the awarding entity
39includes in the bid documents details explaining the basis for the
40finding and the actual retention amount. In a contract between the
P4 1original contractor and a subcontractor, and in a contract between
2a subcontractor and any subcontractor thereunder, the percentage
3of the retention proceeds withheld shall not exceed the
percentage
4specified in the contract between the department and the original
5contractor.
6(5) As used in this subdivision, projects are not “substantially
7complex” if they arebegin delete either of the following:end deletebegin insert regularly, customarily,
8or routinely performed by the agency or by licensed contractors.end insert
9(A) Regularly, customarily, or routinely performed by the
10agency or by licensed contractors.
11(B) Maintenance projects.
end delete
12(c) A party identified in subdivision (a) shall not require any
13other party to waive any provision of this section.
14(d) This section shall remain in effect only until January 1,begin delete 2016,end delete
15begin insert
2020,end insert and as of that date is repealed, unless a later enacted statute,
16that is enacted before January 1,begin delete 2016,end deletebegin insert 2020,end insert deletes or extends
17that date.
Section 10261 of the Public Contract Code, as amended
19by Section 6 of Chapter 700 of the Statutes of 2011, is amended
20to read:
(a) Payments upon contracts shall be made as the
22department prescribes upon estimates made and approved by the
23department, but progress payments shall not be made in excess of
24100 percent of the percentage of actual work completed plus a like
25percentage of the value of material delivered on the ground or
26stored subject to or under the control of the state, and unused,
27except as otherwise provided in this section. The department shall
28withhold not more than 5 percent of the contract price until final
29completion and acceptance of the project. However, at any time
30after 95 percent of the work has been completed, the department
31may reduce the funds withheld to an amount not less than 125
32percent of the estimated value of the work yet to be
completed, as
33determined by the department, if the reduction has been approved,
34in writing, by the surety on the performance bond and by the surety
35on the payment bond. The Controller shall draw his or her warrants
36upon estimates so made and approved by the department and the
37Treasurer shall pay them. The funds may be released by electronic
38transfer if that procedure is requested by the contractor, in writing,
39and if the public entity has, in place at the time of the request, the
40mechanism for the transfer.
P5 1(b) (1) Notwithstanding this section, when the director of the
2department has made a finding prior to the bid that a specified
3project is substantially complex, as defined, and therefore requires
4a higher retention amount than 5 percent, and the department
5includes
in the bid documents details explaining the basis for the
6finding and the actual retention amount, then payments upon
7contracts by the department shall be made as the department
8prescribes upon estimates made and approved by the department.
9However, progress payments shall not be made in excess of 95
10percent of the percentage of actual work completed, plus a like
11percentage of the value of material delivered on the ground or
12stored, subject to, or under the control of the state, and unused,
13except as otherwise provided in this section. At any time after 95
14percent of the work has been completed, the department may reduce
15the funds withheld to an amount not less than 125 percent of the
16estimated value of the work yet to be completed, as determined
17by the department, if the reduction has been approved, in writing,
18by the surety on the performance bond and by the surety on the
19payment bond.
The Controller shall draw his or her warrants upon
20estimates so made and approved by the department and the
21Treasurer shall pay them with funds appropriated therefor. The
22funds may be released by electronic transfer if that procedure is
23requested by the contractor, in writing, and if the public entity has,
24in place at the time of the request, the mechanism for the transfer.
25(2) As used in this subdivision, projects are not “substantially
26complex” if they arebegin delete either of the following:end deletebegin insert regularly, customarily,
27or routinely performed by the agency or by licensed contractors.end insert
28(A) Regularly, customarily, or routinely performed by the
29agency or by licensed contractors.
30(B) Maintenance projects.
end delete
31(c) This section shall remain in effect only until January 1,begin delete 2016,end delete
32begin insert 2020,end insert and as of that date is repealed, unless a later enacted statute,
33that is enacted before January 1,begin delete 2016,end deletebegin insert 2020,end insert deletes or extends
34that date.
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