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LEGAL ISSUES


Bevy of Laws, Political Climate Affect California Contractors


By Chris A. McCandless AGC Legal Advisory Committee Chair B


y many metrics, California’s construction industry finally has experienced long-awaited growth,


a trend that many say is expected to continue through 2017 and beyond. A healthy construction industry,


however, depends on both private and public investment, and is affected by state and local government decisions, laws, and regulations. As lawyers, we counsel contractor clients on important changes and trends in the law, and we consider how legislative acts and policies impact contractors and their ability to successfully procure and perform work. As in years past, courts and government officials have given us a lot to consider in 2017. Additionally, this year, it is impossible to ignore how politically divided the nation has become and how that may impact contractors in California.


New Laws, Good and Bad, Impact Contractors


In 2017, contractors face a host of


new laws enacted by the Legislature affecting their operations. Some laws protect contractors. For example, Business and Professions Code section 7031 has been amended to provide greater protection for a contractor whose license inadvertently lapses. Before the amendment, a lapse in licensure while performing a contract, even for a short period, could have been catastrophic. With little exception, such a


licensure lapse could have barred the contractor from recovering any compensation for its work. Moreover, it could have resulted in a court order requiring the contractor to repay all


10 May/June 2017


compensation it had been paid to date for its work, even for work it performed while its license was fully operative. Te harshness of this law now


has been mitigated so that diligent contractors who attempt to comply with licensing renewal requirements can be excused from the effect of Section 7031, so long as they are found to have substantially complied with the licensing law.


Promoting Open Competition Other recent laws have been


enacted to promote fair and open competition among public contractors. Specifically, Assembly Bill 2316 became law in 2017, and amended Education Code, sections 17400 et seq., by eliminating a school district’s authority to enter into a lease-leaseback agreement without using a competitive solicitation process. As a result of AB 2316, school


districts may continue to use the lease- leaseback procurement method, but it now requires the use of a competitive selection process, based on objective criteria published in a solicitation. Tis new law also provides some limited protections for contractors that may be found to have entered into invalid lease-leaseback agreements in the past.


Thank You LAC! The California Constructor


gives special thanks to the AGC Legal Advisory Committee, whose members prepared articles on a host of legal issues that are impacting the construction industry and your business. Additional legal articles will follow in coming months.


When it comes to public


contracting, the California Legislature has longstanding policies reflected in Public Contract Code, section 100. Trough that section, the Legislature expressed policies “[t]o provide all qualified bidders with a fair oppor- tunity to enter the bidding process” and “[t]o eliminate favoritism, fraud, and corruption in the awarding of public contracts.” Tis year, however, these important policies are competing with, and may even conflict with other social or political policies advanced by some lawmakers. In response to the outcome of the


2016 national election and stated goals of the new administration, some state and local government officials have proposed laws that would negatively impact contractors involved in bidding or working on the proposed border wall between Mexico and the United States. Te strongest proposals seek to outright ban contractors who bid to perform work on the wall from bidding on public works within their jurisdiction.


Contractors Caught in Political Crosshairs


Proponents of such legislation say


that California should do everything possible to oppose the new admin- istration’s wall project, arguing it is expensive and ill-conceived, among other things. Opponents argue that these types of laws will diminish fair opportunities for qualified bidders and could diminish the integrity of competitive bidding because they preclude a contractor from bidding on or being awarded a public construction contract based on the contractor’s


Continued on page 12 California Constructor


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