New Law Requires Submission of Subcontractors’ License Numbers in Public Bids

By Mary A. Salamone, Atkinson, Andelson, Loya, Ruud & Romo

On September 9, 2013, Governor Jerry Brown signed into law Assembly Bill 44 (AB 44) which amends the Subletting and Subcontracting Fair Practices Act contained in Public Contract Code section 4100 etseq.  As a result, beginning July 1, 2014, AB 44 requires all prime contractors submitting bids on public construction projects in California to provide the subcontractor’s Contractors State License Board (CSLB) license numbers on their subcontractor designation forms.

Current law under the Subletting and Subcontracting Fair Practices Act requires that any public entity taking bids for the construction of a public construction project must require prime contractors bidding on the project to list the name and business location of subcontractors providing labor or services in excess of one-half of one percent of the prime contractor’s total bid.  Or, in the case of bids for the construction of streets or highways, including bridges, in excess of one-half of one percent of the prime contractor’s total bid or $10,000 — whichever is greater.

Beginning on July 1, 2014, prime contractors will now be required to include the CSLB license number in addition to the name and location of each subcontractor it is required to designate on the project.

According to the legislative comments to AB 44, the intended purpose is to alleviate delays in the awarding of public construction projects and to assist the California public entities in their efforts to verify that the listed subcontractors hold active contractor licenses and are in good standing with the CSLB.  Particularly in large metropolitan areas, multiple contractors could have similar names making differentiation difficult at times.  Further, to the extent a prime contractor identifies the subcontractor name in an abbreviated fashion, this new requirement will assist with the identification process, since each contractor license number is unique.

In addition, the amended section 4104 of the Public Contract Code states that an inadvertent error in the listing of a contractor license number would not constitute grounds for filing a bid protest or a basis for determining the responsiveness of the bid if the prime contractor corrects the error.  The prime contractor must do so by submitting the proper license number corresponding with the submitted name and the location of the subcontractor within 24 hours after the deadline established by the public agency for the receipt of bids.

In light of these upcoming changes to the Public Contract Code section 4104, public entities should amend their bid forms and provide space on subcontractor designation forms for the subcontractor license numbers. Prime contractors should also take extra precautions.  They should ensure that their listed subcontractors are licensed and in good standing with the CSLB and verify the accuracy of the subcontractors’ names, location, and license numbers before submitting the bid to ensure accuracy and completeness.

Prime contractors must remember that a failure to specify a subcontractor or specifying more than one subcontractor for the same portion of work to be performed in excess of one-half of one percent means that the prime contractor agrees it is qualified to perform that work and shall perform that portion itself.

Mary A. Salamone has been a construction attorney for over 25 years and is a partner in the law firm of Atkinson, Andelson, Loya, Ruud & Romo in Irvine, California.

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© 2013 Robert L. Bachman
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