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Bills

AB 1885: Public contracts: retention proceeds.

  • Session Year: 2025-2026
  • House: Assembly
  • Latest Version Date: 2026-04-28

Current Status:

In Progress

(2026-04-29: Re-referred to Com. on APPR.)

Introduced

In Committee

First Chamber

In Committee

Second Chamber

Enacted

Version:
Existing law requires state agencies to include a provision in solicitations and contracts, if the estimated amount to be retained exceeds $10,000 and the retention continues for a period of 60 days beyond the completion of phased services, to permit, upon written request and the expense of the contractor, the payment of retentions earned directly to a state- or federally chartered bank in this state, as the escrow agent. Existing law also provides an escrow agreement form for a contractor and state agency to use for security deposits, and defines a state agency for purposes of these provisions.This bill would repeal those provisions, including the escrow agreement form, and instead prohibit a state agency, as defined, from withholding retention proceeds when making progress payments to a contractor, as defined, for work performed on a public works contract. The

Existing law, with respect to a contract relating to the construction of any public work of improvement, prohibits the retention proceeds withheld from any payment by a public entity from the original contractor, by the original contractor from any subcontractor, and by a subcontractor from any subcontractor from exceeding 5% of the payment, except as specified.

This bill, with respect to those contracts, would further limit specified state agencies, including the Department of Water Resources, the Department of Parks and Recreation, and the Department of Corrections and Rehabilitation, from withholding retention proceeds from a progress payment to a contractor in excess of 3.5% of the payment. The bill would require a state agency those state agencies to promptly notify the appropriate policy committees of the Legislature if the state agencys best interests are compromised because retention was not withheld on a state agency public works contract. of the 3.5% retention limitation imposed by the bill.

Existing law, except as specified, prohibits the percentage of the retention proceeds withheld in a contract between the original contractor and a subcontractor, and in a contract between a subcontractor and any subcontractor thereunder, from exceeding the percentage specified in the contract between the public entity and the original contractor.

This bill would provide that nothing in the bill alters, amends, or impairs the rights, duties, and obligations of an original contractor, its subcontractors, and all subcontractors thereunder relating to the construction of any public work of improvement pursuant to the above-described provision.

This bill would repeal its provisions on January 1, 2032.

Discussed in Hearing

Assembly Standing Committee on Governmental Organization10MIN
Apr 22, 2026

Assembly Standing Committee on Governmental Organization

View Older Hearings

News Coverage:

AB 1885: Public contracts: retention proceeds. | Digital Democracy