AB 2471, as amended, Frazier. Public contracts: change orders.
Existing law contains various provisions relating to contracts by a public entity for the performance of public works of improvement, including provisions for the payment of progress payments and the disbursing and withholding of retention proceeds. Existing law, until January 1, 2016, prohibits progress payments upon state contracts from being made in excess of 100% of the percentage of actual work completed, and authorizes the Department of General Services to withhold not more than 5% of the contract price until final completion and acceptance of the project, except as specified.
This bill would require a public entity,begin insert as defined,end insert when authorized to order changes or additions in the work in a public works contract awarded to the
lowest bidder, to issue a change order promptly, and in no event later than 30 days after the changes or additions are required. The billbegin delete would require,end deletebegin insert would,end insert if this requirement is not met,begin insert makeend insert the public entitybegin delete to beend delete liable to the original contractor for payment of the contractor’s invoice for the change order or additional work. The bill would require prejudgment interest to accrue on any amount for which the public entity fails to issue a change order promptly or make a payment due pursuant to this bill. begin insertThe bill would also authorize an
original contractor to present to the public entity a request for a change order for extra work performed by a subcontractor, including a lower tier subcontractor. It would also authorize a subcontractor to request that an original contractor present a change order request for extra work directed by the public entity that was performed by the subcontractor or lower tier subcontractor. The bill would require the original contractor to notify the subcontractor as to whether the original contractor presented the request to the public entity, as specified.end insert
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 7204 is added to the Public Contract
2Code, to read:
(a) begin insert(1)end insertbegin insert end insertA public entity,begin delete including a charter city,end delete when
4authorized to order changes or additions to the work in a public
5works contract awarded to the lowest bidder, shall, for extra work
6required of the original contractor, issue a change order promptly,
7and in no event later than 30 days after the extra work is required.
8begin insert For purposes of this section, extra work includes extra work
9performed by the original contractor, a subcontractor, or a lower
10tier subcontractor.end insert
11(2) An original contractor may present to the public entity a
12request for a change order for extra work performed by a
13subcontractor or a lower tier subcontractor. A subcontractor may
14request in writing that an original contractor present a change
15order request for extra work, directed by the public entity, that
16was performed by the subcontractor or by a lower tier
17subcontractor on behalf of the subcontractor. Within 45 days of
18receipt of this written request, the original contractor shall notify
19the subcontractor in writing as to whether the original contractor
20presented the request to the public entity and, if the original
21contractor did not present the request, provide the subcontractor
22with a statement of the reasons for not doing so.
23(b) Upon the failure of the public entity to promptly issue a
24change order, the original contractor may bill
for the work, and
25thebegin delete state orend delete public entity shall be liable for the work.
P3 1(c) If there is a dispute concerning the need for a change order
2for extra work, the public entity shall pay a reasonable amount for
3the portion of the extra work that is not in dispute.
4(d) When the dispute concerning the extra work relates only to
5the amount that the original contractor shall be paid, the public
6entity shall promptly pay the reasonable value of the work or the
7amount that the public entity does not dispute, whichever is greater.
8(e) The public entity, and the original contractor, may reserve
9their respective rights as to any amount paidbegin insert
or unpaidend insert that remains
10in dispute.
11(f) Prejudgment interest shall accruebegin delete at the rate of 10 percent on any amount for which the public entity fails to issue
12per annumend delete
13a change order or fails to pay in accordance with this sectionbegin insert at
14the legal rate described in subdivision (a) of Section 685.010 of
15the Code of Civil Procedureend insert.
16(g) In addition to any other remedies that may be available to
17it, an original contractor may enforce thisbegin delete provisionend deletebegin insert
sectionend insert through
18a writ of mandate.
19(h) The public entity shall not require the original contractor to
20waive any provision of this section.
21(i) For purposes of this section, “public entity” means the state,
22including a state agency, department, office, division, bureau,
23board, or commission, the California State University, the
24University of California, a city, county, city and county, including
25a charter county, district, special district, public authority, political
26subdivision, public corporation, or nonprofit transit corporation
27wholly owned by a public agency and formed to carry out the
28purposes of the public agency.
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