Section 6106.5 Of Chapter 6. Awarding Of Contracts From California Public Contract Code >> Division 2. >> Part 1. >> Chapter 6.
6106.5
. (a) "State agency," as used in this section, means those
departments defined in Section 10106 of the Public Contract Code.
(b) "Contractor," as used in this section, means "firm,"
"architectural, landscape architectural, engineering, environmental,
and land surveying services," "construction project management," and
"environmental services" as defined in Section 4525 of the Government
Code.
(c) State agencies shall include a provision in solicitations and
in contracts, if the estimated amount to be retained exceeds ten
thousand dollars ($10,000), and the retention continues for a period
of 60 days beyond the completion of phased services, to permit, upon
written request and the expense of the contractor, the payment of
retentions earned directly to a state- or federally chartered bank in
this state, as the escrow agent. The contractor may direct the
investment of the payments into securities, pursuant to subdivision
(d), and the contractor shall receive the interest earned on the
investments. Upon satisfactory completion of the contract, the
contractor shall receive from the escrow agent all securities,
interest, and payments received by the escrow agent from the owner,
pursuant to the terms of this section. State agencies, relative to
contracts entered into prior to the enactment of this section, upon
written request of the contractor, and subject to the approval of the
state agency, may utilize the provisions of this section.
(d) Securities eligible for investment under this section shall
include those listed in Section 16430 of the Government Code,
interest-bearing demand deposit accounts, or any other investment
mutually agreed to by the contractor and the state agency.
(e) (1) Any contractor who elects to receive interest on moneys
withheld in retention by a state agency shall, at the request of any
subcontractor, make that option available to the subcontractor
regarding any moneys withheld in retention by the contractor from the
subcontractor. If the contractor elects to receive interest on any
moneys withheld in retention by a state agency, then the
subcontractor shall receive the identical rate of interest received
by the contractor on any retention moneys withheld from the
subcontractor by the contractor, less any actual pro rata costs
associated with administering and calculating that interest. In the
event that the interest rate is a fluctuating rate, the rate for the
subcontractor shall be determined by calculating the interest rate
paid during the time that retentions were withheld from the
subcontractor. If the contractor elects to substitute securities in
lieu of retention, then, by mutual consent of the contractor and
subcontractor, the subcontractor may substitute securities in
exchange for the release of moneys held in retention by the
contractor.
(2) This subdivision shall apply only to those subcontractors
performing more than 5 percent of the contractor's total fee.
(3) No contractor shall require any subcontractor to waive any
provision of this section.
(f) An escrow agreement used pursuant to this section shall be
null, void, and unenforceable unless it is substantially similar to
the following form: