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, as defined, 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 thanbegin delete 30end deletebegin insert
60end insert days after thebegin delete changes or additions are required.end deletebegin insert extra work is performed.end insert The bill would, if this requirement is not met, make the public entity liable to the original contractor forbegin delete payment of the contractor’s invoice for the change order or additional work.end deletebegin insert the work that has already been performed.end insert 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. The 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.
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) (1) A public entity, when authorized to order changes
4or additions to the work in a public works contract awarded to the
5lowest bidder, shall, for extra work required of the original
6contractor, issue a change order promptly, and in no event later
7thanbegin delete 30end deletebegin insert 60end insert days after the extra work isbegin delete required.end deletebegin insert performed.end insert For
8purposes of this section, extra work includes extra work performed
9
by the original contractor, a subcontractor, or a lower tier
10subcontractor.
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 order
15request for extra work, directed by the public entity, that was
16performed by the subcontractor or by a lower tier subcontractor
17on behalf of the subcontractor. Within 45 days of receipt of this
18written request, the original contractor shall notify the
19subcontractor 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 thebegin delete work,end deletebegin insert work
P3 1that has already been performed,end insert and the public entity shall be
2liable forbegin delete theend deletebegin insert thatend insert work.
3(c) If there is a dispute concerning the need for a change order
4for extra work, the public entity shall pay a reasonable amount for
5the portion of the extra work that is not in dispute.
6(d) When the dispute concerning the extra work relates only to
7the amount that the original contractor shall be paid, the public
8entity shall promptly pay the reasonable value of the work or the
9amount that the public entity does not dispute, whichever is greater.
10(e) The public entity, and the original contractor, may reserve
11their respective rights as to any amount paid or unpaid that remains
12in dispute.
13(f) Prejudgment interest shall accrue on any amount for which
14the public entity fails to issue a change order or fails to pay in
15accordance with this section at the legal rate described in
16subdivision (a) of Section 685.010 of the Code of Civil Procedure.
17(g) In addition to any other remedies that may be
available to
18it, an original contractor may enforce this section through a writ
19of mandate.
20(h) The public entity shall not require the original contractor to
21waive any provision of this section.
22(i) For purposes of this section, “public entity” means the state,
23including a state agency, department, office, division, bureau,
24board, or commission, the California State University, the
25University of California, a city, county, city and county, including
26a charter county, district, special district, public authority, political
27subdivision, public corporation, or nonprofit transit corporation
28wholly owned by a public agency and formed to carry out the
29purposes of the public agency.
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