Public Agencies Must Modify Bid Forms to Require Subcontractor License Number

Governor Jerry Brown last week signed into law Assembly Bill 44 (AB 44), which amends Public Contract Code section 4104 to require a prime contractor to list a subcontractor’s contractor license number when bidding on public construction projects, beginning July 1, 2014. AB 44 requires public agencies to modify their public construction bid forms to require the license number in the subcontractor listing form.

AB 44 also provides that an inadvertent error in listing the subcontractor’s license number shall not be grounds for filing a bid protest, or grounds for considering the bid nonresponsive, if the corrected contractor’s license number is submitted to the public entity by the prime contractor within 24 hours after the bid opening – provided that the corrected license number corresponds to the submitted name and location of the subcontractor.

Current law under the Subletting and Subcontracting Fair Practices Act requires that any public entity taking bids for the construction of a public construction project must require prime contractors bidding on the project to list the name and business location of subcontractors providing labor or services greater than 0.5% of the prime contractor’s total bid amount. According to the comments to AB 44, the amended law is intended to better enable public entities to verify that the listed subcontractors hold active contractor licenses and are in good standing with the Contractors State License Board. Particularly in large urban areas, multiple contractors could have very similar names, making differentiation difficult and potentially complicating or delaying public entities’ review and award of contractors. In contrast, each contractor license number is unique.