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 those state agencies to promptly notify the appropriate policy committees of the Legislature if the state agency's best interests are compromised because 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.

Statutes affected:
AB 1885: 6106.5 PCC
02/12/26 - Introduced: 6106.5 PCC
03/16/26 - Amended Assembly: 6106.5 PCC, 6106.5 PCC, 6106.5 PCC
04/28/26 - Amended Assembly: 6106.5 PCC
AB1885: 6106.5 PCC, 6106.5 PCC, 6106.5 PCC