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Correction of Subcontractor Listing Errors and Substitution of Subcontractors Listed by Mistake in Bidding on a California Public Works Construction Contract, per Public Contract Code Sec. 4107.5

Occasionally, in submitting competitive bids at the last minute on a public construction project, clerical or other errors are made in the required listing of subcontractors under section 4104 of the California Subletting and Subcontracting Fair Practices Act, sometimes referred to as the Subcontractor Listing Law, in the Public Contract Code.

The Fair Practices Act also itself creates an means for the Contractor to obtain the public agency’s consent to correct this error, rather than creating grounds for a bidder to withdraw its bid:

“The prime contractor as a condition to assert a claim of inadvertent clerical error in the listing of a subcontractor shall within two working days after the time of the prime bid opening by the awarding authority give written notice to the awarding authority and copies of that notice to both the subcontractor he or she claims to have listed in error and the intended subcontractor who had bid to the prime contractor prior to bid opening.

“Any listed subcontractor who has been notified by the prime contractor in accordance with this section as to an inadvertent clerical error shall be allowed six working days from the time of the prime bid opening within which to submit to the awarding authority and to the prime contractor written objection to the prime contractor's claim of inadvertent clerical error. Failure of the listed subcontractor to file the written notice within the six working days shall be primary evidence of his or her agreement that an inadvertent clerical error was made...” (Emphasis added)

Cal Pub Contract Code § 4107.5

While these requirements and deadlines seem very strict and tight, the courts have still allowed substitutions made not in strict compliance with them, where the prime contractor has “substantially complied” with the requirements, and could have obtained no unfair advantage or done any bid shopping or bid peddling under the circumstance.

“'Substantial compliance, as the phrase is used in the decisions, means actual compliance in respect to the substance essential to every reasonable objective of the statute.' [Citation.] Where there is compliance as to all matters of substance technical deviations are not to be given the stature of noncompliance. [Citation.] Substance prevails over form. When the plaintiff embarks [on a course of substantial compliance], every reasonable objective of [the statute at issue] has been satisfied." ( Southern Pac. Transportation Co. v. State Bd. of Equalization (1985) 175 Cal.App.3d 438, 442 [221 Cal.Rptr. 12].)

“The central purpose of the Act is to protect both the public and subcontractors from the practices of bid shopping and bid peddling in connection with public works projects. (§ 4101; Southern Cal. Acoustics Co. v. C. V. Holder, Inc., supra, 71 Cal.2d at pp. 725-726; Bay Cities Paving & Grading, Inc. v. Hensel Phelps Constr. Co. (1976) 56 Cal.App.3d 361, 365 [128 Cal.Rptr. 632]; R. M. Sherman Co. v. W. R. Thomason, Inc. (1987) 191 Cal.App.3d 559, 567 [236 Cal.Rptr. 577].) The two-day written notice provision of section 4107.5 fosters this purpose by forcing the prime contractor to assert its error in short order, and on the record, thus minimizing the time in which that contractor can shop for lower bids and limiting the room for deceptive maneuver...”

Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal. App. 4th 655, 668; Titan Electric Corp. v. Los Angeles Unified School Dist. (2008) 160 Cal. App. 4th 188, 205

“[T]the doctrine of substantial compliance applies to the two-day written notice requirement of section 4107.5 and that MPA substantially complied with that requirement.”

Cal-Air Conditioning, Inc. v. Auburn Union School Dist., supra, 21 Cal. App. 4th 655, 670.

Pub. Cont. Code § 4107.5 may be used where one sub was listed instead of another.

But there is NOTHING in the statue itself or case law which so limits § 4107.5 to this one narrow situation.

The statute in fact is much broader than what is claimed by the protester, and in fact refers to: “a claim of inadvertent clerical error in the listing of a subcontractor”. Pub Contract Code § 4107.5

Consequently, ANY “inadvertent clerical error” in the listing of a subcontractor may be remedied by this statute.

Because bidders do not have the opportunity to make copies of bids changed at the last minute, a prime contractor might not become aware of this “inadvertent clerical error” until much later, so it would have been impossible to seek relief within two days of the bid opening.

However, once it learns of the error the bidder should immediately submit a proper request for correction under this statute, and thus has “substantially comply” with the statutory requirement. Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal. App. 4th 655, 668; Titan Electric Corp. v. Los Angeles Unified School Dist. (2008) 160 Cal. App. 4th 188, 205.

In the Titan Electric Corp. case the substitution was upheld even though the substitution request was not made or approved by the District until after the work had already been performed!

“[T]the doctrine of substantial compliance applies to the two-day written notice requirement of section 4107.5 and that MPA substantially complied with that requirement.”

Cal-Air Conditioning, Inc. v. Auburn Union School Dist., supra, 21 Cal. App. 4th 655, 670.

Further, as to this specific type of “inadvertent clerical error”, as a matter of law the bids could not be withdrawn since by statute Pub. Cont. Code § 4107.5 would allow the College to correct this error in lieu of being required to grant approval of withdrawal of the bid, and would allow the District to require the bidder to correct this error in this manner rather than by seeking to withdraw its bid.

N.B. The contents of this Article do not constitute legal advice or create an attorney-client relationship, and you may not rely on it without seeking legal advice regarding your particular situation and contract from a competent government construction contracts attorney. Please also note that contracts very, and statutes and case law are frequently changing, and thus these materials may become outdated or incorrect.

For further information on this topic and how the current law may apply to your particular project and issues, Contact Us via email, phone (415)788-1881 or visit our website at www.wolfflaw.com for other contract information.

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