Sunday, May 18, 2014

Public Agencies Seek to Avoid SB 293, AB 1705 (Williams) to the Rescue?

A few years ago, I wrote about SB293, Retention Cap on Public Projects (capping retention at 5%).  This bill was passed, however it seems that an exemption within the law exists providing for a higher retention amount to be withheld if the project was deemed “substantially complex”.   The problem that has arisen is that agencies are deeming many projects “substantially complex” even though the projects may be of a more routine and ordinary nature.  The current law does not require the agency to provide proof or substantiation as to why they deem the project “substantially complex” and this has seemingly led to abuse to avoid the 5% cap on retention.  AB 1705 (Williams) seeks to change that and require public entities to explain why they deem a project to be “substantially complex” and include those reasons in the bid documents.

The following is from the American Subcontractors Association and provides more detail:

AB 1705 requires the agencies to explain what makes a project "SC" and to also notify bidders that in so doing, the 5% cap is removed and more money may be retained. ASAC is very pleased to have CalSMACNA and NECA as co-sponsors to the bill which is supported by several other subcontractor organizations.

            AB 2471 deals with change order payments and just passed its first hearing where ASAC testified in support; it now goes to the Appropriations Committee for a hearing. It requires state and local public entities to promptly issue change orders when extra work is required of the contractor or subcontractor.

            The bill says if a public entity fails to issue a change order within 60 days the original contractor may bill for this work that has already been performed, and the public entity shall be liable for that work. And, interest from the time the amount was due would accrue at 10%, however that rate might be reduced to the current prevailing rate in an upcoming amendment to the bill. Numerous trades support the bill while numerous public entities oppose it citing difficulties in getting paperwork and payments processed in such a short time period.

Lastly, the CA State License Board (CSLB) is proposing these changes in law:

1.  Limit  advertisements placed by unlicensed contractors.  The law currently requires that a person declare in their advertisement that "he or she is not licensed."  CSLB is proposing that unlicensed contractors only be allowed to advertise for work under $500.

2.  Currently, law mandates CSLB to "initiate disciplinary action against the licensee within 30 days of notification" by the Division of Labor Standards Enforcement (DLSE).  The proposed amendment:  (A) removes the mandate in order to give CSLB the flexibility to pursue only those cases where the misconduct is egregious and/or the risk to public harm is great, and

(B) removes the Section's unachievable requirement that disciplinary action be initiated "within 30 days of notification."  Factors outside of CSLB's control make compliance with this deadline impossible, even under the best of circumstances.