Public contracts: payment.
With the enactment of AB 2173, public entities retain the authority to withhold a higher percentage of retention proceeds, exceeding the standard 5% cap, based on approved findings of project complexity by relevant authorities prior to bidding. This measure is significant for public contracts, as it allows for greater financial security in the management of large or complicated construction operations. The bill ensures these provisions remain available indefinitely, which is seen as a way to adapt to the evolving complexities of public construction projects and economic conditions over time.
Assembly Bill No. 2173, championed by Assemblymember Petrie-Norris, amends Section 7201 and repeals Section 10261 of the California Public Contract Code. It aims to extend the regulations regarding retention proceeds from contractors on public work construction projects indefinitely. Under previous law, the ability to exceed a 5% retention rate had been scheduled to expire on January 1, 2023. This bill ensures that public entities can still impose higher retention rates for complex projects approved by department directors or other governing bodies, thereby permitting a potential higher financial safeguard for the completion of these projects.
Overall, the sentiment around AB 2173 was favorable, with legislative discussions emphasizing its necessity in safeguarding both public entities' interests and ensuring quality in public works. Supporters argued that this bill provides essential flexibility for contractors and public agencies in managing complex projects, while critics were minimal, primarily concerned with potential delays in payments to subcontractors. Nevertheless, the consensus leaned toward the bill enhancing the efficacy of public project management.
Notable points of contention were largely absent as the bill passed through the legislative process without significant opposition in the voting records. With a unanimous approval of 37-0 in the voting session on June 27, 2022, it appears there was broad support for the bill's provisions. However, concerns regarding project delays and the implications of extended retention rates for contractors were hinted at but not elaborated during discussions.