Wednesday, October 5, 2011

Retention Cap on Public Projects (SB 293) and Indemnification from Damages Caused by Others (SB 474)

The American Subcontractors Association (ASA) sent an email out recently providing guidance to contractors interested in these two issues.  The first, the subject of SB 293, caps retention on public projects at 5% and provides for quicker payment.  The second, addressed by SB 474, limits liability on projects by properly allocating damages and related costs to those contractors who actually caused those damages.

The ASA did a very nice job in providing contractors with template letters to use in order to help contractors have their voices heard.  I will copy the instructions and template letters below for use by contractors with a vested interest in these issues.

 
Would you like 5% Retention in public projects?  

IF SO... HELP MAKE SURE THAT Senate Bill 293 is signed into law by the Governor.

YOUR company needs to be listed in support because dozens of public agencies are opposing it right now!  

Here's what to do:
1.      Copy and paste the sample letter below onto your letterhead
2.      MAIL it to the Governor TODAY
3.      FAX it to his staff TODAY at (916) 558- 3177
4.      FAX it to ASAC's office at (530) 662- 2865 (We will put you on the support list.)
5.      SHARE this email with other GC's and Subcontractors TODAY (all support the bill)




LETTER Supporting 5% Cap On RETENTION on Public Works:

On Your Letterhead: 

           
     

The Honorable Jerry Brown
Governor
State of California
State Capitol
Sacramento, CA 95814

Dear Governor Brown,

Our company supports SB 293 which caps retention in public works projects at 5%, provides for speedier payments, and protects payment rights of sub-tier subcontractors.

Timely and adequate cash flow is absolutely essential in construction. If more than 5% is withheld from my earned payments I cannot timely purchase materials, nor can I pay some of my employees' salaries or benefits.

When this occurs, jobs are lost and projects are delayed... at additional taxpayer expense!

The CA Department of Transportation has utilized zero retention (0%) since January 2009 pursuant to Senate Bill 593 (Margett).   According to DOT, its construction projects have NOT ENCOUNTERED ANY PROBLEMS related to 0% retention. This proves that reduced retention works! The Federal government also uses zero retention on projects it funds!

This bill is good for business and our employees. I ask that you sign SB 293.

Thank you.

Sincerely,



  
SB 474
Needs Your Letter to the Governor
TODAY!
  

 Would you like NOT to be liable for damages caused by other contractors?  

IF SO...  HELP MAKE SURE THAT Senate Bill 474 is signed into law by the Governor. 

 YOUR company needs to be listed in support because general contractors are opposing it right now!   

 Here's what to do:
1.             Copy and paste the sample letter below to your letterhead
2.             MAIL it to the Governor TODAY
3.             FAX it to his staff TODAY at (916) 558- 3177
4.             FAX it to ASAC's office at (530) 662- 2865 (We will put you on the support list.)
5.             SHARE this email with other Subcontractors TODAY



LETTER Supporting INDEMNIFICATION Reform:

On Your Letterhead: 


           
The Honorable Jerry Brown
Governor
State of California
State Capitol
Sacramento, CA 95814

Dear Governor Brown,

Our company asks that you sign SB 474 (Evans) into law. The bill rightly apportions liability for damages and defense costs to those who actually caused the damages.  
   
I know of cases where just the defense costs were four times the estimated damage; having to pay these costs (and fees) when one
hasn't caused the damage is simply not right. Our State's existing law actually serves as a tool to force us or our insurers to pay for everything (unless another contractor is completely...100%... responsible for causing the damage).     

A few years ago, the statutes were amended to remedy this problem in home building construction. SB 474 similarly applies to commercial projects and certain public works.

Comparative negligence is an equitable tenet in law that has been upheld in court decisions for centuries in other states and countries, yet California's statutes have harmed subcontractors like me because they don't parallel that policy.

This is a long overdue proposal deserving of your support and signature. Please sign SB 474.

Sincerely,

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