Jennifer Dauer will be speaking about the Public Contract Code section 9204 claims process at the Associated General Contractors of California Legal Advisory Committee retreat on October 7, 2018.
Effective January 1, 2017, a detailed claims process applies to public works (construction) contracts in the State of California. Previously, a claims process was mandated for claims under $375,000. Public Contract Code section 9204 now requires local public entities and some state agencies to review all construction claims under a specified claims process, including mediating claims that are not resolved through the mandated process for review of the claim by the public entity. Although section 9204 largely tracks the prior claims process, it does contain some differences that can cause problems for unwary contractors and public entities.
Given differences between the two processes, public entities cannot simply remove the $375,000 limitation from the summary of prior requirements to be compliant. For example, the newer process requires mediation prior to bringing an administrative claim under the Government Code, where the older process did not provide for mediation until after litigation was filed. Also, because the purpose of section 9204 is to ensure timely payment for all completed construction work performed on a public works project that is not in dispute, contractors may bring claims earlier. An earlier claim that is not resolved will trigger deadlines to file a lawsuit against a public entity, which may result in multiple actions and/or litigation while a contract is ongoing. Knowledge of the updated requirements is critical to preserving and properly resolving any potential public works claim.
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