Article 8. Modifications; Performance; Payment of California Public Contract Code >> Division 2. >> Part 2. >> Chapter 2.5. >> Article 8.

The trustees may increase or decrease quantities of work to be done under a unit basis contract during the progress of the work.

The trustees may cause the insertion of provisions in any contract for the performance of such extra work and the furnishing of materials therefor by the contractor as the trustees require for the proper completion or construction of the whole work contemplated, if the bidders have equal opportunity of knowing the proposed terms for the extra work.

The trustees may grant such extensions of time for completion as they deem for the best interests of the state.

If the trustees deem that a contractor has failed to supply an adequate working force, or material of proper quality, or has failed in any other respect to prosecute the work with the diligence and force specified by the contract, the trustees may:
  (a) After written notice of at least five days to the contractor, specifying the defaults to be remedied, provide any such labor or materials and deduct the cost from any money due or to become due to the contractor under the contract; or
  (b) If the trustees consider that the failure is sufficient ground for such action, they may give written notice of at least five days to the contractor and the contractor's sureties, that if the defaults are not remedied the contractor's control over the work will be terminated.

If the defaults are not remedied within the time specified in the notice, the contractor's control shall terminate as of the expiration of that time.

Upon such termination, the trustees may take possession of and use all or any part of the contractor's materials, tools, equipment, and appliances upon the premises to complete the contract. Thereupon, the trustees may permit the surety to complete or cause the contract work to be completed, or they may direct that all or any part of the work be completed by day's labor or by employment of other contractors on informal contracts, or both.

Such informal contracts may be awarded only after a proposal form has been prepared, a copy is served upon the contractor whose control has been terminated, and upon his or her surety, and three days allowed thereafter so that he or she may cause others to bid. Any person who is prequalified therefor under Article 4 (commencing with Section 10760) of this chapter may bid on informal contracts.

The provisions of this chapter, except as to prequalifications, are not applicable to the award of informal contracts.

If the control of a contractor is terminated or he or she abandons the work, and the work is performed by day's labor or informal contract as provided in Section 10845, he or she is not entitled to receive any portion of the amount to be paid under the contract until it is fully completed. After completion, if the unpaid balance exceeds the sum of the amount expended by the state in finishing the work, plus all damages sustained or to be sustained by the state, the excess not otherwise required by law to be retained shall be paid to the contractor, but if such sum exceeds the unpaid balance, the contractor and his or her surety are liable to the state for the excess. If the surety completes the contract work, as provided in Section 10845, such surety shall be subrogated to money due under the contract and to money which shall become due in the course of completion by the surety, to the extent provided by law.

On the completion of the contract, the original contractor is entitled to the return of all his or her unused materials, and his or her equipment, tools, and appliances, except that he or she shall have no claim on account of usual and ordinary depreciation, loss, and wear and tear.

The notices required by this article may be served on the contractor or on his or her agent having charge of the work, personally, or by registered mail addressed to the contractor or his or her agent, or, if neither can be located or their addresses are unknown, by posting in a conspicuous place upon the premises of the project.

Payments upon contracts shall be made as the trustees prescribe upon estimates made and approved by the trustees, but progress payments shall not be made in excess of 95 percent of the percentage of actual work completed plus a like percentage of the value of material delivered on the ground or stored subject to or under the control of the state, and unused. The trustees shall withhold not less than 5 percent of the contract price until final completion and acceptance of the project. The Controller shall draw warrants upon estimates so made and approved by the trustees and the Treasurer shall pay them.

At the request and expense of the contractor, and with the approval of the trustees, any amount withheld pursuant to Section 10851 may be deposited with the Treasurer as the escrow agent, who shall pay such moneys to the contractor upon the placing of securities eligible for the investment of state funds under Section 16430 of the Government Code or bank certificates of deposit into such escrow account by the contractor. "Approval of the trustees," as used in this section, means that the trustees may, in their discretion, allow or deny the request of the contractor to avail itself of the provisions of this section and that the trustees may, in their discretion, allow the request of the contractor upon the satisfaction of conditions which may be specified by the trustees. The contractor shall be beneficial owner of any securities in an escrow account pursuant to this section and shall receive any interest thereon. Any escrow agreement entered into pursuant to this section shall contain as a minimum, the following provisions:
  (a) The amount of securities to be deposited; such amount shall not be less than the amount which would otherwise be withheld pursuant to Section 10851;
  (b) The terms and conditions of conversion to cash in case of the default of the contractor; and
  (c) The termination of the escrow upon completion of the contract.

(a) If the trustees fail to make a progress payment on a contract within 39 days after receipt of an undisputed and properly submitted payment request from a contractor on a construction contract, the trustees shall pay interest to the contractor equivalent to the legal rate set forth in subdivision (a) of Section 685.010 of the Code of Civil Procedure. If the payment is not made within 39 days of receipt of the contractor's request, and the Controller has processed the payment within 14 days of the receipt of the request, the trustees shall pay interest to the contractor equivalent to the legal rate as provided in subdivision (a) of Section 685.010 of the Code of Civil Procedure. If the payment is not made within 39 days of receipt of the contractor's request, and the trustees have processed the payment within 25 days after the receipt of the request, the Controller shall pay interest equivalent to the legal rate as provided in subdivision (a) of Section 685.010 of the Code of Civil Procedure.
  (b) Upon receipt of a payment request, the trustees shall act in accordance with the following:
  (1) Each payment request shall be reviewed by the trustees as soon as practicable after receipt for the purpose of determining that the payment request is a proper payment request.
  (2) Any payment request determined not to be a proper request suitable for payment shall be returned to the contractor as soon as practicable, but not later than seven days after receipt. A request returned pursuant to this paragraph shall be accompanied by a document setting forth in writing the reasons why the payment request is not proper.
  (3) Upon request from the trustees, the Controller may elect to expedite each payment request and may charge the trustees an appropriate amount, as determined by the Controller, for costs incurred in expediting the payment request.
  (c) The number of days available to the trustees to make a payment without incurring interest shall be reduced by the number of days by which the trustees exceed the seven-day return requirement set forth in paragraph (2) of subdivision (b).
  (d) A properly submitted payment request shall be defined as the date upon which the trustees receive a payment request, certified in accordance with the contract, at the address identified in the contract.
  (e) For purposes of this section:
  (1) A "progress payment" includes all payments due contractors, except that portion of the final payment withheld pursuant to Section 10851.
  (2) A payment request shall be considered properly executed if funds are available for payment of the payment request and payment is not delayed due to an audit inquiry by the Controller.