LEGAL ISSUES


A Look at the New Public Works Claims Resolution Statute


By Garret D. Murai Wendel, Rosen, Black & Dean LLP


I


f you’re a public entity or contractor involved in public works construction, you should be aware of


a new law, AB 626, which took effect on the first of this year and establishes a new mandatory claims resolution process for disputes on public works projects. Here’s what you need to know:


What is the new law and where is it codified?


AB 626 added new Public Contract


Code section 9204 that – according to the bill’s author, Assembly member David Chiu of San Francisco – estab- lishes “a claim resolution process applicable to any claim by a contractor in connection with a public works project.” Te statute defines “claim” as: (1)


“[a] time extension, including, without limitation, for relief from damages or penalties for delay assessed by a public entity under a contract for a public works project”; (2) “payment by the public entity of money or damages arising from work done by, or on behalf of, the contractor pursuant to the contract for a public works project and payment for which is not otherwise expressly provided or to which the claimant is not otherwise entitled”; and (3) “payment of an amount that is disputed by the public entity.” Te statute defines “public works


project” as “the erection, construction, alteration, repair or improvement of any public structure, building, road, or other public improvement of any kind.”


What does the new law provide?


Te new law provides for a


mandatory three-step claim resolution process involving a contractor’s submission of a claim and the public entity’s response, informal resolution through a meet and confer process, and, finally, mediation or other non-binding dispute resolution process.


Does the new law apply to all public entities?


Te new law applies to most, but


not all, California public entities. Except as otherwise provided, the new law applies to state agencies, departments, offices, divisions, bureaus, boards and commissions; the California State University and the University of California; and local cities, charter cities, counties, charter counties, city and counties, charter cities and counties, districts, special districts, public authorities, political subdivisions, public corporations, and nonprofit transit corporations wholly owned by a public agency and formed to carry out the purposes of the public agency. Public entities to which the new


law does not apply are:


 Te Department of Water Resources


 Te Department of Transportation


 Te Department of Parks and Recreation


 Te Department of Corrections and Rehabilitation


 Te Military Department


 Te Department of General Services


 Te High-Speed Rail Authority 16 May/June 2017


Does the new law apply to all public works contracts after January 1, 2017?


No. While the new law took effect


on January 1, 2017, it only applies to public works contracts entered into on or after January 1, 2017. Also, unless extended or repealed, the new law only remains in effect until January 1, 2020.


Can public entities waive or modify the requirements of the new law in their contract documents?


“No” to the first part, and “yes” to


the second, with limitations. Public entities cannot waive the requirements of the new law and, if they do so, such waiver shall be deemed void and contrary to public policy. In addition, the text of the new law or summary of the new law must be set forth in the public entity’s plans and specifications. However, public entities may prescribe reasonable change order, claim and dispute resolution procedures, and requirements in addition to those provided under the new law, so long as they do not conflict with or otherwise impair the timeframes and procedures set forth in the new law.


What if a public entity fails to comply with the deadlines set forth under the new law?


Failure by a public entity to comply


with the deadlines set forth under the new law shall result in a claim being deemed denied in whole. A claim that is denied by reason of a public entity’s failure to respond to a claim shall not constitute an adverse finding with regard to the merits of the claim or the


Continued on page 17 California Constructor


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