Administrative ProvisionsContract Clauses
Section § 7100
In California public works contracts, any clause that says a contractor gives up all claims against the public entity by accepting payment, or that requires a release of all claims to get paid, is not allowed and is considered void. However, it's okay for contracts to say the public entity won't pay until the contractor provides a release of claims related to the amounts already agreed upon. Contractors can exclude disputed claims from such a release.
Section § 7101
This law permits the state or any public entity to pay extra to contractors for cost-saving changes they propose during a public works project. The contractor can earn 50% of the net savings realized from these changes. If the project involves transportation and the changes significantly reduce traffic congestion, the contractor can earn 60% of the savings. However, contractors aren't obligated to implement these changes unless their proposal is formally accepted.
Section § 7102
This law ensures that in public construction contracts, contractors or subcontractors can recover damages if a delay, for which they're not responsible, is unreasonable and wasn't expected. Even if the contract states that an extension of time is the only remedy, it cannot prevent claiming damages.
No public agency can require changes to this rule, and any attempts to waive or alter it are invalid. However, contracts can still have clauses requiring notice of delays, arbitration, or setting liquidated damages for delays.
Section § 7103
This law states that any contractor who wins a contract from certain state entities for public work projects costing more than $25,000 must file a payment bond. This bond, worth at least the total contract amount, ensures payment for labor and materials. It must be submitted before work begins. State entities must mention this requirement in their bid requests. If the state waives the need for a new bond for contract extensions, the original bond remains valid. Architects, engineers, and surveyors are exempt from this bond requirement. The term 'state entity' includes most state offices but excludes the courts and University of California, and 'public work' covers most construction-related activities for state infrastructure.
Section § 7103.5
This law pertains to public works contracts, which are agreements for construction-related projects awarded through competitive bidding by state or local agencies. When contractors or subcontractors enter into such contracts, they agree to transfer any legal claims under antitrust laws (like the Clayton or Cartwright Acts) to the government entity awarding the contract. This transfer of rights happens automatically once final payment is made by the awarding body, without needing any additional paperwork or acknowledgment. The requirements for this assignment must be clearly included in the contract details.
Section § 7104
This law mandates that local public contracts for digging deeper than four feet must include a clause. First, contractors must inform the local entity if they encounter hazardous waste or unexpected conditions during excavation. Second, the local entity must investigate these claims. If verified, they can change the contract to reflect any cost or time changes for the contractor. Finally, if there's a dispute about the conditions' nature or impact, the contractor must continue work but can later resolve disagreements under contract or legal terms.
Section § 7105
California law states that public construction contracts shouldn't make contractors pay for damages caused by natural events, like earthquakes or tidal waves, unless the damage exceeds 5% of the contracted amount. This is only if the construction follows accepted standards and plans. However, public agencies can require contractors to get insurance to cover such damages if clearly specified in the contract.
The law defines which agencies are considered public and what counts as 'Acts of God'. Also, public agencies can modify construction contracts to comply with new environmental regulations. These contracts can be changed, with mutual consent, unless a law requires competitive bidding for the contract.
In such cases, changes must be allowed in the contract itself. Any changes related to payment or termination have to follow the terms outlined in the contract or relevant legal provisions.
Section § 7106
This law requires every bidder on a public works contract in California to include a sworn statement alongside their bid. This declaration, signed under penalty of perjury, confirms that the bid is genuine and not the result of collusion with other bidders. The bidder must affirm that they have not influenced any other party to submit a false bid or withheld any details to manipulate bid prices. If the bidder is a corporation or similar entity, the person signing must have the authority to do so. The declaration must specify the date and location of signing under penalty of perjury under California law.
BIDDER AND SUBMITTED WITH BID
Section § 7107
This law applies to construction contracts for public works from January 1, 1993, onwards. It regulates the release of retention money, which is a portion of payment withheld until work completion. Once the project finishes, the withheld money must be released within 60 days unless there's a dispute. If there's a dispute, up to 150% of the disputed amount can be held back. Completion is defined in several ways, such as the public agency using the work or acceptance by the agency. Contractors must pay subcontractors their share of retention within seven days of receiving it, unless a dispute exists. Late payments incur a 2% monthly charge, and winning parties in disputes can recover attorney fees and costs. State agencies have specific rules about retention related to work yet unfinished, and any effort to waive this law is invalid.
Section § 7108
This law mandates that any contract created by a public entity to provide train services must adhere to specific personnel rules outlined in another part of the labor laws. This ensures that all train service contracts comply with existing employment standards and regulations.
Section § 7109
This law section explains that if a public project is likely to suffer from graffiti, the governing body awarding the public works contract can take specific actions to address this issue. Graffiti is defined as any unauthorized markings on a structure. The public entity can incorporate antigraffiti measures in project plans, finance graffiti removal programs, or create programs to prevent graffiti altogether.
Section § 7110
This law emphasizes that anyone who signs a contract with a California state agency must respect and follow laws regarding child and family support obligations. They need to disclose necessary information and comply with orders about income adjustments for child support.
If a contract with a state agency is over $100,000, the contractor must acknowledge their understanding of this policy. They must also confirm that they are complying with earnings assignment orders for their employees and reporting new hires to the state's New Hire Registry.
Section § 7200
This law applies to contracts made on or after January 1, 1999, for construction projects involving public entities. It specifies how retention proceeds are managed in these contracts. Specifically, the amount withheld from subcontractors can't exceed what the public entity withholds from the original contractor. If performance and payment bonds are in the bid requirements, these rules don't apply if a subcontractor doesn't provide their own bond. No party can force others to waive these rules. Additionally, if a contractor opts to use securities instead of withholding retention, they can still withhold retentions from subcontractors who do not make the same choice.
Section § 7201
This law applies to public work contracts entered from January 1, 2012, onwards, involving public entities, contractors, and subcontractors. Public entities can withhold no more than 150% of disputed work value from final payment. Retention from payments to contractors and subcontractors can't exceed 5% unless specified otherwise due to project complexity.
'Public entity' covers various state and local government bodies and related corporations. Exceptions allow more than 5% retention if the project is deemed complex and proper procedures, including public notices and hearings, are followed. No party can be forced to waive this law's provisions.
Section § 7202
This law says that the Department of Transportation must pay contractors for work on transportation projects without holding back any of the payment amounts as 'retention'. However, it doesn't change the rights and responsibilities of contractors and subcontractors as previously defined. If there's a situation where not holding back retention negatively impacts the state's interests, the Department must quickly inform the relevant legislative committees.
Section § 7203
If a public works contract in California entered into after January 1, 2016, makes a contractor responsible for delay damages, those damages must be calculated to a specific amount and clearly outlined in the contract. "Delay damages" refer to costs incurred by a public agency due to the contractor's delay in finishing work by the agreed-upon date.
Such damages do not apply after the work is officially completed or accepted. A public agency refers to various governmental bodies including cities and state universities. This law doesn't restrict public agencies from enforcing other contract terms or setting different delay damage clauses for different project parts as long as each is specified and liquidated in the contract.
This rule doesn't apply to certain departments listed in another section (Section 10106).