Resolution of Public Contract Claims

California’s Public Contract Code, in Division 2, Part 2, Chapter 1, Article 7.1, provides rules for the resolution of contract claims under the State Contract Act.

Section 10240 provides that the remedy for the resolution of claims arising under contracts made under the provisions of this chapter is arbitration pursuant to this chapter.

Section 10240.1 allows the claimant to initiate arbitration not later than 90 days after the date of service in person or by mail on the claimant of the final written decision by the department on the claim. This limitation does not apply to any claim founded on any cost audit, latent defect, warranty, or guarantee under the contract.

Section 10240.2 states that a failure by the claimant to pursue diligently and exhaust, as to the claim, the required administrative procedures set forth in the contract under which the claim arose serves as a bar to arbitration until there has been compliance.

Section 10240.3 requires the arbitration to be conducted by a single arbitrator selected by the parties from the certified list created by the Public Works Contract Arbitration Committee. If the parties cannot agree on the arbitrator, either party may petition the superior court to appoint one from the panel of arbitrators certified by the Public Works Contract Arbitration Committee.

Section 10240.4 states that no decision made by a department is conclusive on any issue in the arbitration.

Section 10240.5 requires the California Departments of General Services, Transportation, and Water Resources to jointly adopt and revise regulations to implement this article.

Section 10240.6 defines the term “claim.” Section 10240.7 defines the term “Public Works Contract Arbitration Committee.”

Section 10240.8 requires the arbitration decision to be decided in accordance with the law of this state, supported by substantial evidence and, in writing, contain the basis for the decision, findings of fact, and conclusions of law.

Section 10240.9 states that a party to the contract may join in the arbitration as a party, any supplier, subcontractor, design professional, surety, or other person who has so agreed and if the joinder is necessary to prevent a substantial risk of the party otherwise being subjected to inconsistent obligations or decisions.

Section 10240.10 provides nothing in this section is to construe the prevention of the parties to the contract, after the claim has arisen, from mutually agreeing in writing to waive the provisions of this article and to have the claim litigated in a court of competent jurisdiction.

Section 10240.11 specifies that the procedure governing the arbitrations must be consistent with specified provisions of the CCP.

Section 10240.12 allows a party, within the applicable time periods and upon the grounds specified in this section and the CCP, to petition the court to confirm, correct, or vacate the award rendered by the arbitrator, with specified exceptions.

Section 10240.13 requires the cost of conducting the arbitration to be borne equally by the parties, with specified exceptions. Interest may be recovered as part of the award as in a civil action. If a party has made an offer of settlement and the award is less favorable than the offer, then the party who has received the offer shall not recover any interest accruing from and after the date on which the offer was made, nor costs of suit.

In addition, reasonable attorney fees may be recovered under two specifies instances.