CALIFORNIA: CA SB 616 continues to make its way through the legislative process.   Sponsored by Roderick Wright SB 616 the bill is titled "Public works: payment bonds".

Existing law requires a direct contractor that is awarded a public works contract involving expenditure greater than $25,000 to give a payment bond to, and approved by, the officer or public entity by when whom the contract was awarded. This bill would until January 1, 2017, exempt the Los Angeles Unified School District from this provision when the district enters into a public works contract in an amount less than $1,000,000 with a contractor that is a small business or micro business, as defined, that participates in the district's self-insurance program.

The bill would, in order for this exemption to apply, require the district to state in its call for bids that the self-insurance program is available to these small business and micro business contractors. The bill would require the district to establish guidelines and requirements for the small business or micro business to participate in the program, as specified. The bill would require the district to establish separate accounts for each project that participates in the program to cover the cost of the default or failure of a small business or micro business to make payments to subcontractors or material suppliers. By increasing the duties of local officials, this bill would create a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. We'll continue to watch the legislation.



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Wednesday, 20 November 2019

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