State Contract Act Requirements

California’s Public Contract Code, in Division 2, Part 2, Chapter 1, Article 7, provides contract requirements under the State Contract Act.

Section 10220 specifies that every contract awarded under this part is required to be submitted to the Attorney General. Such a contract is not binding on the state until the appropriate attorney finds it to be in accordance with the requirements of this chapter, and endorses it. In addition, a certified copy of each contract is to be filed with the Controller, but the failure so to file does not invalidate it.

Section 10221 requires every contract to provide for the filing of separate performance and payment bonds by the contractor in the form of bonds executed by an admitted surety insurer and not deposits in lieu of bond, subject to the approval of the department.

Section 10222 requires each bond to be equal at least one-half of the contract price, except as otherwise provided. However, for projects with a contract price greater than $250 million dollars, the Department of Transportation must has the discretion to specify that the payment bond  equals not less than one-half of the contract price or $500 million dollars, whichever is less.

Section 10223 requires the payment bond to secure the payment of the claims of laborers, mechanics or materialmen employed on the work under the contract and must contain all other provisions required by law.

Section 10224 requires the performance bond to guarantee the faithful performance of the contract by the contractor.

Section 10225 prohibits any payment from being made upon the contract to the contractor or any assignee of the contractor until any order by the director that a sufficient surety be substituted on the bond or that a new, additional, or supplemental bond be given, is satisfied. In addition, no cancellation of or withdrawal of a surety from a bond is effective unless approved by the director.

Section 10226 requires every contract to contain a provision in regard to the time when the whole or any specified portion of the work contemplated is to be completed, and must provide that for each day completion is delayed beyond the specified time, the contractor forfeits and pays to the state a specified sum of money, to be deducted from any payments due or to become due to the contractor.

Section 10227 requires every contract to provide that the department may make changes in the plans and specifications pursuant to this part.

Section 10230 requires every contract for which disabled veteran business enterprise participation is included in the bid, to contain a provision requiring the contractor to comply with rules, regulations, ordinances, and statutes that apply to the California Disabled Veteran Business Enterprise Program.

Section 10231 requires every contract to contain a provision requiring each contractor to comply with all air pollution control rules, regulations, ordinances, and statutes which apply to any work performed pursuant to the contract.

Section 10232 requires every contract to contain a statement by which the contractor swears under penalty of perjury that no more than one final, unappealable finding of contempt of court by a federal court has been issued against the contractor within the immediately preceding two-year period because of the contractor’s failure to comply with an order of a federal court which orders the contractor to comply with an order of the National Labor Relations Board.