Amended in Assembly May 23, 2014

Amended in Assembly April 24, 2014

Amended in Assembly April 7, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2471

Introduced by Assembly Member Frazier

February 21, 2014

An act to add Section 7204 to the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

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 begin delete in end delete begin insert to end insert the work in a public works contract awarded to the lowest bidder, to issue a change order promptly, and begin delete in end delete no begin delete event end delete later than 60 days after the extra work is performed begin insert and reasonable documentation has been submitted, except as specified end insert . The bill would, if this requirement is not met, make the public entity liable to the original contractor for the begin insert extra end insert work that has already been performed. 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 1.  

Section 7204 is added to the Public Contract
Code, to read:

7204.  

(a) (1)  begin delete A end delete begin insert Except as otherwise provided in paragraph
(2), a end insert public entity, when authorized to order changes or additions
to the work in a public works contract awarded to the lowest bidder,
shall, for extra work required of the original contractor, issue a
change order promptly, and in no event later than 60 days after
the extra work is performed begin insert and the original contractor has
submitted reasonable documentation to support the request for a
change order end insert . For purposes of this section, extra work includes
extra work performed by the original contractor, a subcontractor,
or a lower tier subcontractor. begin insert Extra work also includes work or
requirements that differ from those under the public works contract
with the public entity before the amendment of the contract by the
change order. end insert

begin insert (2) end insert begin insert   end insert begin insert (A) end insert begin insert   end insert begin insert When a change order is subject to approval by the
governing body of a public entity, but the governing body is not
scheduled to meet in the 60 days following the performance of
extra work, and reasonable documentation to support the request
for a change order for extra work has been submitted, the public
entity shall have three days following the next scheduled meeting
of the governing body to issue a change order for extra work
performed. end insert

begin insert

(B) When a change order for extra work by a school district or
community college district is subject to approval by the Division
of the State Architect, the school district or community college
district shall submit the change order to the division no later than
30 days following receipt of reasonable documentation to support
the change order for extra work. The Division of the State Architect
shall respond to the request for the change order no later than 30
days from receipt of the documentation.

end insert begin insert

(3) Nothing in this section shall be construed to prohibit a public
entity from issuing a change order in less than 60 days following
the performance of extra work, prior to the work being performed,
or during the course of the work being performed.

end insert begin delete

(2)

end delete

begin insert (4) end insert  An original contractor may present to the public entity a
request for a change order for extra work performed by a
subcontractor or a lower tier subcontractor. A subcontractor may
request in writing that an original contractor present a change order
request for extra work, directed by the public entity, that was
performed by the subcontractor or by a lower tier subcontractor
on behalf of the subcontractor. begin insert This subcontractor shall furnish
reasonable documentation to support the change order. end insert Within
45 days of receipt of this written request, the original contractor
shall notify the subcontractor in writing as to whether the original
contractor presented the request to the public entity and, if the
original contractor did not present the request, provide the
subcontractor with a statement of the reasons for not doing so.

(b) Upon the failure of the public entity to begin delete promptly end delete issue a
change order begin insert within the time limits prescribed in subdivision (a) end insert ,
the original contractor may bill for the begin insert extra end insert work that has already
been performed, and the public entity shall be liable for that begin insert extra end insert
work.

(c) If there is a dispute concerning the need for a change order
for extra work, the public entity shall pay a reasonable amount for
the portion of the extra work that is not in dispute.

(d) When the dispute concerning the extra work relates only to
the amount that the original contractor shall be paid, the public
entity shall promptly pay the reasonable value of the work or the
amount that the public entity does not dispute, whichever is greater.

(e) The public entity, and the original contractor, may reserve
their respective rights as to any amount paid or unpaid that remains
in dispute.

(f) Prejudgment interest shall accrue on any amount for which
the public entity fails to issue a change order or fails to pay in
accordance with this section at begin delete the legal rate described in
subdivision (a) of Section 685.010 of the Code of Civil Procedure. end delete
begin insert 7 percent per annum. end insert

(g) In addition to any other remedies that may be available to
it, an original contractor may enforce this section through a writ
of mandate.

(h) The public entity shall not require the original contractor to
waive any provision of this section.

(i) For purposes of this section, “public entity” means the state,
including a state agency, department, office, division, bureau,
board, or commission, the California State University, the
University of California, a city, begin insert including a charter city, end insert county,
begin insert including a charter county, end insert city and county, including a charter
begin insert city and end insert county, 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 public agency.