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<ns0:Id>20250AB__227299INT</ns0:Id>
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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>2272</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Caloza</ns0:AuthorText>
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<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Caloza</ns0:Name>
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<ns0:Title> An act to amend Section 927.10 of the Government Code, relating to state contracting. </ns0:Title>
<ns0:RelatingClause>state contracting</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>State contracting: subcontractors: prompt payment.</ns0:Subject>
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<html:p>Existing law, the California Prompt Payment Act, requires a state agency that acquires property or services pursuant to a contract with a business to make payment to the person or business on the date required by the contract and as specified, or be subject to a late payment penalty.</html:p>
<html:p>Existing law requires state agencies to encourage claimants to promptly pay their subcontractors and suppliers, especially those that are small businesses.</html:p>
<html:p>This bill would recast those provisions to instead require prime contractors to pay, for payments by the state to prime contractors made on or after January 1, 2027, their subcontractors, suppliers, and other vendors within 45 days of receiving payment from the state. For payments made by the state to prime contractors made prior to January 1, 2027, but that have not been
remitted to subcontractors, suppliers, and other vendors as of January 1, 2027, the bill would require prime contractors to remit payment by February 15, 2027.</html:p>
<html:p>This bill would require the Department of General Services to monitor compliance with this requirement, as specified. The bill would impose a demerit system, in which noncompliant prime contractors lose eligibility for state contracts for a specified period of time, as described. For contracts entered into or renewed with the state on or after January 1, 2027, the bill would authorize the department to review and rescind a prime contractor’s existing contracts if the prime contractor repeatedly fails to comply. The bill would require the department to adopt rules and regulations to administer these provisions, and would make conforming changes.</html:p>
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<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
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<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:type="locator" ns3:href="urn:caml:codes:GOV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'3.6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.5.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'927.10.'%5D)" ns3:label="fractionType: LAW_SECTION">
Section 927.10 of the
<ns0:DocName>Government Code</ns0:DocName>
is amended to read:
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<ns0:Num>927.10.</ns0:Num>
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(a)
<html:span class="EnSpace"/>
(1)
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For all payments made by the state to prime contractors on or after January 1, 2027, prime contractors shall pay their subcontractors, suppliers,
and other vendors within 45 days of receiving payment from the state.
</html:p>
<html:p>
(2)
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For payments made from the state to prime contractors prior to January 1, 2027, but that have not been remitted to subcontractors, suppliers, and other vendors as of January 1, 2027, prime contractors shall remit such payment by February 15, 2027.
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<html:p>
(b)
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State agencies shall utilize expedited payment processes to enable faster payment by prime contractors to their
subcontractors,
suppliers, and other vendors, and shall promptly respond to any subcontractor, supplier, or vendor inquiries regarding the status of payments made to prime contractors.
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<html:p>
(c)
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(1)
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The Department of General Services shall monitor compliance with subdivision (a).
</html:p>
<html:p>
(2)
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Prime contractors that fail to comply with subdivision (a) shall receive a demerit, which shall negatively affect the claimant’s eligibility for all subsequent bids for contracts, other contract requests, and contract renewals with the state. At minimum, the
following penalties shall apply:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Prime contractors that fail to comply with subdivision (a) for five payments within a three-year period shall be prohibited from renewing or entering into contracts with the state for six months.
</html:p>
<html:p>
(B)
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Prime contractors that fail to comply with subdivision (a) for 10 payments within a three-year period shall be prohibited from renewing or entering into contracts with the state for one year.
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<html:p>
(3)
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For contracts entered into or renewed with the state on or after January 1, 2027, the Department of General Services may review and rescind a prime contractor’s existing contracts if the prime contractor repeatedly fails to comply with subdivision (a).
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(d)
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The Department of General Services shall adopt any rules and regulations to administer this section, including, but not limited to, a demerit tracking system and coordination with state agencies for penalty
enforcement.
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