New Statutes Affect Local Agency Public Works Projects

Lozano Smith Client News Brief
November 2015
Number 72

New legislation will impact public works projects for local public agencies, including cities, school districts, and counties. In light of these changes, public agencies will want to closely review their public works bidding and construction documents to ensure they are updated in accordance with these new laws.

Liquidated Damages - Government Code section 53069.85 currently allows liquidated damage provisions in local agency public works contracts to compensate the owner for costs caused by contractor delay in lieu of actual delay damages. Most public works contracts include a liquidated damages clause, which typically states a dollar amount that will be assessed for each day of delay. The dollar amount is calculated by the public agency before entering the contract based on estimated actual delay damages and the likely inconvenience to the public of any delay. If no liquidated damages provision is included in a contract, the owner would still be able to recover actual delay damages incurred.

Effective January 1, 2016, Public Contract Code (PCC) section 7203, added by Assembly Bill (AB) 552, will require liquidated damages provisions in every local agency public works contract, and recovery of actual delay damages will be barred. The legislation also restricts the owner from charging liquidated damages after the filing of a notice of completion or, in the absence of such notice, the public agency's acceptance of the public work as complete.

Prevailing Wages - For public works projects awarded on or after July 1, 2016, Labor Code section 1720.9 (created by AB 219) adds hauling and delivery of ready-mixed concrete to the definition of "public works" for purposes of prevailing wages. "Hauling and delivery" means the duties of the ready mixer driver, including the return trip to the factory or plant.

Prequalification and Lease-Leaseback (school districts only) - For details about AB 566 that affects mandatory prequalification and lease-leaseback projects as of January 1, 2016, please see see Client News Brief No. 51, September 2015, on the Lozano Smith website.

If you have any questions about these or other public works issues, or if you have any interest in Lozano Smith's form construction contract documents that are updated annually to conform to changes in the law and the construction industry, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.
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As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.