California Law goes into Effect July 1, 2014 – Impact on Bonding

Effective today, July 1, 2014, a new law goes into effect that will require prime contractors, who are submitting a public works bid, to include the license number of listed subcontractors.  A contractor is already required to provide the name and location of the subcontractor, but now the new law also requires the license number.

To address concerns about this law leading to bid protests and non-responsive bidding, the prime contractor can submit the license numbers up to 24 hours after the bid. Why is this important and how does this impact bonding?  In public works, a contractor is required to provide a bid bond with its bid, then performance and payment bonds upon award. Winning bids in the public works arena is difficult enough; this law creates another administrative item that a prime contractor must remember.   The consequences could be losing out on a project, and the contractor’s agent losing out on issuing the performance and payment bonds.

As a public works contractor in California, make sure you are aware of upcoming legislation changes and amendments. At Surety 1 we take pride in keeping up to date on these changes and filtering this important information to our clients.