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Bonded Subcontracts to be Limited to 5% Retention on LAUSD Projects

As a pilot program, effective January 1, 2016 and ending January 1, 2021, the state legislature has added and the Governor has approved Section 20119 to the Public Contract Code to allow the Los Angeles Unified School District to use best value procurement for construction projects over $1 million.

As part of the program, withheld retention under a subcontract or a sub-subcontract with the best value contractor, entered into under the best value program, shall not exceed 5% if the subcontractor or sub subcontractor posts a performance and payment bond issued by an admitted surety.

However, if the best value contractor gives written notice to a subcontractor that if that subcontractor is unable or refuses to furnish a bond to the best value contractor then the 5% limitation does not apply and the retention can be whatever the best value contractor decides.

Furthermore, the revised section provides that the best value contractor shall be prequalified or shortlisted if it provides, among others, a commitment to the governing board that it and its subcontractors at every tier will use a skilled and trained workforce to perform all the work on the project that falls within the apprenticeable occupation in the building and construction trades.

For further details about best value contracting with the LAUSD and the bonding and other requirements, read this link to assembly Bill 1185. California Assembly Bill 1185.