20250AB__227298AMD INTRODUCED 2026-02-19 AMENDED_ASSEMBLY 2026-04-16 2025 AB AMD Introduced by Assembly Member Caloza LEAD_AUTHOR ASSEMBLY Caloza

An act to amend

Section 927.10 of the Government Code, relating to state contracting. state contracting State contracting: subcontractors: prompt payment. 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. Existing law requires state agencies to encourage claimants to promptly pay their subcontractors and suppliers, especially those that are small businesses.

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 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.</xhtml:p><xhtml: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.</xhtml:p>"?> This bill would authorize a subcontractor or supplier performing work under a state contract to request payment status information from the awarding state agency regarding invoices submitted by the prime contractor, and would require a prime contractor to provide confirmation to the awarding agency, upon the agency’s request, regarding payments made to subcontractors.

MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION

Section 927.10 of the Government Code is amended to read: 927.10. (

a) State agencies shall encourage claimants to promptly pay their subcontractors and suppliers, especially those that are small businesses. In furtherance of this policy, state agencies shall utilize expedited payment processes to enable faster payment by prime contractors to their subcontractors and suppliers, and shall promptly respond to any subcontractor or supplier inquiries regarding the status of payments made to prime contractors. (

b) A subcontractor or supplier performing work under a state contract may request payment status information from the awarding state agency regarding invoices submitted by the prime contractor. (

c) A prime contractor shall provide confirmation to the awarding agency, upon the agency’s request, regarding payments made to subcontractors. <caml:Num>SECTION 1.</caml:Num><caml:ActionLine action="IS_AMENDED" xlink: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)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section 927.10 of the <caml:DocName>Government Code</caml:DocName> is amended to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_F16178D7-5FA6-47FA-97C4-51F85652CB4C"><caml:Num>927.10.</caml:Num><caml:LawSectionVersion id="id_1D129F4A-9C90-4B1E-A67D-80C3B70D4437"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>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 days of receiving payment from the state.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>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.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>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.</xhtml:p><xhtml:p>(c)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>The Department of General Services shall monitor compliance with subdivision (a).</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>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:</xhtml:p><xhtml:p>(A)<xhtml: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.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Prime contractors that fail to comply with subdivision (

a) for payments within a three-year period shall be prohibited from renewing or entering into contracts with the state for one year.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>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).</xhtml:p><xhtml:p>(d)<xhtml:span class="EnSpace"/>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.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection>"?>