Chapter 4. Subletting And Subcontracting of California Public Contract Code >> Division 2. >> Part 1. >> Chapter 4.
This chapter may be cited as the "Subletting and
Subcontracting Fair Practices Act."
The Legislature finds that the practices of bid shopping and
bid peddling in connection with the construction, alteration, and
repair of public improvements often result in poor quality of
material and workmanship to the detriment of the public, deprive the
public of the full benefits of fair competition among prime
contractors and subcontractors, and lead to insolvencies, loss of
wages to employees, and other evils.
Nothing in this chapter limits or diminishes any rights or
remedies, either legal or equitable, which:
(a) An original or substituted subcontractor may have against the
prime contractor, his or her successors or assigns.
(b) The state or any county, city, body politic, or public agency
may have against the prime contractor, his or her successors or
assigns, including the right to take over and complete the contract.
Any officer, department, board, or commission taking bids for
the construction of any public work or improvement shall provide in
the specifications prepared for the work or improvement or in the
general conditions under which bids will be received for the doing of
the work incident to the public work or improvement that any person
making a bid or offer to perform the work, shall, in his or her bid
or offer, set forth:
(a) (1) The name, the location of the place of business, and the
California contractor license number of each subcontractor who will
perform work or labor or render service to the prime contractor in or
about the construction of the work or improvement, or a
subcontractor licensed by the State of California who, under
subcontract to the prime contractor, specially fabricates and
installs a portion of the work or improvement according to detailed
drawings contained in the plans and specifications, in an amount in
excess of one-half of 1 percent of the prime contractor's total bid
or, in the case of bids or offers for the construction of streets or
highways, including bridges, in excess of one-half of 1 percent of
the prime contractor's total bid or ten thousand dollars ($10,000),
whichever is greater.
(2) An inadvertent error in listing the California contractor
license number provided pursuant to paragraph (1) shall not be
grounds for filing a bid protest or grounds for considering the bid
nonresponsive if the corrected contractor's license number is
submitted to the public entity by the prime contractor within 24
hours after the bid opening and provided the corrected contractor's
license number corresponds to the submitted name and location for
(3) (A) Subject to subparagraph (B), any information requested by
the officer, department, board, or commission concerning any
subcontractor who the prime contractor is required to list under this
subdivision, other than the subcontractor's name, location of
business, and California contractor license number, may be submitted
by the prime contractor up to 24 hours after the deadline established
by the officer, department, board, or commission for receipt of bids
by prime contractors.
(B) A state or local agency may implement subparagraph (A) at its
(b) The portion of the work that will be done by each
subcontractor under this act. The prime contractor shall list only
one subcontractor for each portion as is defined by the prime
contractor in his or her bid.
(c) This section shall become operative on July 1, 2014.
(a) The officer, department, board, or commission taking
bids for construction of any public work or improvement shall specify
in the bid invitation and public notice the place the bids of the
prime contractors are to be received and the time by which they shall
be received. The date and time shall be extended by no less than 72
hours if the officer, department, board, or commission issues any
material changes, additions, or deletions to the invitation later
than 72 hours prior to the bid closing. Any bids received after the
time specified in the notice or any extension due to material changes
shall be returned unopened.
(b) As used in this section, the term "material change" means a
change with a substantial cost impact on the total bid as determined
by the awarding agency.
(c) As used in this section, the term "bid invitation" shall
include any documents issued to prime contractors that contain
descriptions of the work to be bid or the content, form, or manner of
submission of bids by bidders.
Circumvention by a general contractor who bids as a prime
contractor of the requirement under Section 4104 for him or her to
list his or her subcontractors, by the device of listing another
contractor who will in turn sublet portions constituting the majority
of the work covered by the prime contract, shall be considered a
violation of this chapter and shall subject that prime contractor to
the penalties set forth in Sections 4110 and 4111.
If a prime contractor fails to specify a subcontractor or if
a prime contractor specifies more than one subcontractor for the same
portion of work to be performed under the contract in excess of
one-half of 1 percent of the prime contractor's total bid, the prime
contractor agrees that he or she is fully qualified to perform that
portion himself or herself, and that the prime contractor shall
perform that portion himself or herself.
If after award of contract, the prime contractor subcontracts,
except as provided for in Sections 4107 or 4109, any such portion of
the work, the prime contractor shall be subject to the penalties
named in Section 4111.
A prime contractor whose bid is accepted may not:
(a) Substitute a person as subcontractor in place of the
subcontractor listed in the original bid, except that the awarding
authority, or its duly authorized officer, may, except as otherwise
provided in Section 4107.5, consent to the substitution of another
person as a subcontractor in any of the following situations:
(1) When the subcontractor listed in the bid, after having had a
reasonable opportunity to do so, fails or refuses to execute a
written contract for the scope of work specified in the subcontractor'
s bid and at the price specified in the subcontractor's bid, when
that written contract, based upon the general terms, conditions,
plans, and specifications for the project involved or the terms of
that subcontractor's written bid, is presented to the subcontractor
by the prime contractor.
(2) When the listed subcontractor becomes insolvent or the subject
of an order for relief in bankruptcy.
(3) When the listed subcontractor fails or refuses to perform his
or her subcontract.
(4) When the listed subcontractor fails or refuses to meet the
bond requirements of the prime contractor as set forth in Section
(5) When the prime contractor demonstrates to the awarding
authority, or its duly authorized officer, subject to the further
provisions set forth in Section 4107.5, that the name of the
subcontractor was listed as the result of an inadvertent clerical
(6) When the listed subcontractor is not licensed pursuant to the
Contractors License Law.
(7) When the awarding authority, or its duly authorized officer,
determines that the work performed by the listed subcontractor is
substantially unsatisfactory and not in substantial accordance with
the plans and specifications, or that the subcontractor is
substantially delaying or disrupting the progress of the work.
(8) When the listed subcontractor is ineligible to work on a
public works project pursuant to Section 1777.1 or 1777.7 of the
(9) When the awarding authority determines that a listed
subcontractor is not a responsible contractor.
Prior to approval of the prime contractor's request for the
substitution, the awarding authority, or its duly authorized officer,
shall give notice in writing to the listed subcontractor of the
prime contractor's request to substitute and of the reasons for the
request. The notice shall be served by certified or registered mail
to the last known address of the subcontractor. The listed
subcontractor who has been so notified has five working days within
which to submit written objections to the substitution to the
awarding authority. Failure to file these written objections
constitutes the listed subcontractor's consent to the substitution.
If written objections are filed, the awarding authority shall give
notice in writing of at least five working days to the listed
subcontractor of a hearing by the awarding authority on the prime
contractor's request for substitution.
(b) Permit a subcontract to be voluntarily assigned or transferred
or allow it to be performed by anyone other than the original
subcontractor listed in the original bid, without the consent of the
awarding authority, or its duly authorized officer.
(c) Other than in the performance of "change orders" causing
changes or deviations from the original contract, sublet or
subcontract any portion of the work in excess of one-half of 1
percent of the prime contractor's total bid as to which his or her
original bid did not designate a subcontractor.
No subcontractor listed by a prime contractor under Section
4104 as furnishing and installing carpeting, shall voluntarily
sublet his or her subcontract with respect to any portion of the
labor to be performed unless he or she specified the subcontractor in
his or her bid for that subcontract to the prime contractor.
The prime contractor as a condition to assert a claim of
inadvertent clerical error in the listing of a subcontractor shall
within two working days after the time of the prime bid opening by
the awarding authority give written notice to the awarding authority
and copies of that notice to both the subcontractor he or she claims
to have listed in error and the intended subcontractor who had bid to
the prime contractor prior to bid opening.
Any listed subcontractor who has been notified by the prime
contractor in accordance with this section as to an inadvertent
clerical error shall be allowed six working days from the time of the
prime bid opening within which to submit to the awarding authority
and to the prime contractor written objection to the prime contractor'
s claim of inadvertent clerical error. Failure of the listed
subcontractor to file the written notice within the six working days
shall be primary evidence of his or her agreement that an inadvertent
clerical error was made.
The awarding authority shall, after a public hearing as provided
in Section 4107 and in the absence of compelling reasons to the
contrary, consent to the substitution of the intended subcontractor:
(a) If (1) the prime contractor, (2) the subcontractor listed in
error, and (3) the intended subcontractor each submit an affidavit to
the awarding authority along with such additional evidence as the
parties may wish to submit that an inadvertent clerical error was in
fact made, provided that the affidavits from each of the three
parties are filed within eight working days from the time of the
prime bid opening, or
(b) If the affidavits are filed by both the prime contractor and
the intended subcontractor within the specified time but the
subcontractor whom the prime contractor claims to have listed in
error does not submit within six working days, to the awarding
authority and to the prime contractor, written objection to the prime
contractor's claim of inadvertent clerical error as provided in this
If the affidavits are filed by both the prime contractor and the
intended subcontractor but the listed subcontractor has, within six
working days from the time of the prime bid opening, submitted to the
awarding authority and to the prime contractor written objection to
the prime contractor's claim of inadvertent clerical error, the
awarding authority shall investigate the claims of the parties and
shall hold a public hearing as provided in Section 4107 to determine
the validity of those claims. Any determination made shall be based
on the facts contained in the declarations submitted under penalty of
perjury by all three parties and supported by testimony under oath
and subject to cross-examination. The awarding authority may, on its
own motion or that of any other party, admit testimony of other
contractors, any bid registries or depositories, or any other party
in possession of facts which may have a bearing on the decision of
the awarding authority.
If a contractor who enters into a contract with a public
entity for investigation, removal or remedial action, or disposal
relative to the release or presence of a hazardous material or
hazardous waste fails to pay a subcontractor registered as a
hazardous waste hauler pursuant to Section 25163 of the Health and
Safety Code within 10 days after the investigation, removal or
remedial action, or disposal is completed, the subcontractor may
serve a stop notice upon the public entity in accordance with Chapter
4 (commencing with Section 9350) of Title 3 of Part 6 of Division 4
of the Civil Code.
(a) It shall be the responsibility of each subcontractor
submitting bids to a prime contractor to be prepared to submit a
faithful performance and payment bond or bonds if so requested by the
(b) In the event any subcontractor submitting a bid to a prime
contractor does not, upon the request of the prime contractor and at
the expense of the prime contractor at the established charge or
premium therefor, furnish to the prime contractor a bond or bonds
issued by an admitted surety wherein the prime contractor shall be
named the obligee, guaranteeing prompt and faithful performance of
the subcontract and the payment of all claims for labor and materials
furnished or used in and about the work to be done and performed
under the subcontract, the prime contractor may reject the bid and
make a substitution of another subcontractor subject to Section 4107.
(c) (1) The bond or bonds may be required under this section only
if the prime contractor in his or her written or published request
for subbids clearly specifies the amount and requirements of the bond
(2) If the expense of the bond or bonds required under this
section is to be borne by the subcontractor, that requirement shall
also be specified in the prime contractor's written or published
request for subbids.
(3) The prime contractor's failure to specify bond requirements,
in accordance with this subdivision, in the written or published
request for subbids shall preclude the prime contractor from imposing
bond requirements under this section.
Subletting or subcontracting of any portion of the work in
excess of one-half of 1 percent of the prime contractor's total bid
as to which no subcontractor was designated in the original bid shall
only be permitted in cases of public emergency or necessity, and
then only after a finding reduced to writing as a public record of
the awarding authority setting forth the facts constituting the
emergency or necessity.
A prime contractor violating any of the provisions of this
chapter violates his or her contract and the awarding authority may
exercise the option, in its own discretion, of (1) canceling his or
her contract or (2) assessing the prime contractor a penalty in an
amount of not more than 10 percent of the amount of the subcontract
involved, and this penalty shall be deposited in the fund out of
which the prime contract is awarded. In any proceedings under this
section the prime contractor shall be entitled to a public hearing
and to five days' notice of the time and place thereof.
Violation of this chapter by a licensee under Chapter 9
(commencing with Section 7000) of Division 3 of the Business and
Professions Code constitutes grounds for disciplinary action by the
Contractors State License Board, in addition to the penalties
prescribed in Section 4110.
The failure on the part of a contractor to comply with any
provision of this chapter does not constitute a defense to the
contractor in any action brought against the contractor by a
As used in this chapter, the word "subcontractor" shall mean
a contractor, within the meaning of the provisions of Chapter 9
(commencing with Section 7000) of Division 3 of the Business and
Professions Code, who contracts directly with the prime contractor.
"Prime contractor" shall mean the contractor who contracts
directly with the awarding authority.
The county board of supervisors, when it is the awarding
authority, may delegate its functions under Sections 4107 and 4110 to
any officer designated by the board.
The authorized officer shall make a written recommendation to the
board of supervisors. The board of supervisors may adopt the
recommendation without further notice or hearing, or may set the
matter for a de novo hearing before the board.