SECTIONS 4420-4422 - California Statutes

GOVERNMENT CODE

SECTION 4420-4422

4420. (a) No state or local governmental agency and no person
acting on behalf of any state or local governmental agency, except a
governmental agency created pursuant to agreement or compact with
another state, shall, with respect to any public building or
construction contract that is about to be or that has been
competitively bid, require the bidder to make application to, furnish
financial data to, or obtain or procure any surety bond or contract
of insurance specified in connection with the contract or specified
by any law, ordinance, or regulation from, a particular surety or
insurance company, agent, or broker.
(b) Notwithstanding subdivision (a), a state or local governmental
agency may use owner-controlled or wrap-up insurance with regard to
a construction or renovation program for which the total cost exceeds
fifty million dollars ($50,000,000) if the agency meets all of the
following conditions and certifies that it has made the following
determinations:
(1) Prospective bidders, including contractors and subcontractors,
meet minimum occupational safety and health qualifications
established to bid on the project. The evaluation of prospective
bidders shall be based on consideration of the following factors:
(A) Serious and willful violations of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code, by a contractor or
subcontractor during the past five-year period.
(B) The contractor's or subcontractor's workers' compensation
experience modification factor.
(C) A contractor's or subcontractor's injury prevention program
instituted pursuant to Section 3201.5 or 6401.7 of the Labor Code.
(2) The use of owner-controlled or wrap-up insurance will minimize
the expenditure of public funds on the project in conjunction with
the exercise of appropriate risk management.
(3) The program maintains completed operation coverage for a term
for which the Insurance Commissioner has determined that coverage is
reasonably commercially available, but in no event less than three
years.
(4) Bid specifications clearly specify for all bidders the
insurance coverage provided under the program and minimum safety
requirements that must be met.
(5) The program does not prohibit a contractor or subcontractor
from purchasing any additional insurance coverage that a contractor
or subcontractor believes is necessary to protect from any liability
arising out of the contract.
(6) The program does not include surety insurance.
(c) Safety requirements for a project subject to this section may
be developed jointly between the agency and the prime contractor. If
the agency requires a safety program different than the prime
contractor's usual and customary program, the program shall be
mutually agreed upon, taking into account the prime contractor's
experience, expertise, existing labor agreements relating to safety
issues, and any unique safety issues relating to the project.
(d) This section shall not affect any provision in a collective
bargaining agreement specified in Section 3201.5 of the Labor Code
that is submitted by the prime contractor with its construction bid.
(e) The use of owner-controlled or wrap-up insurance under this
chapter does not abrogate, limit, or otherwise affect any potential
liability that is otherwise available at law.
(f) For purposes of this section, the following terms have the
following meanings:
(1) "Owner-controlled or wrap-up insurance" means a series of
insurance policies issued to cover all of the contractors and
subcontractors on a given project for purposes of general liability
and workers' compensation.
(2) "State governmental agency" means any state office, officer,
department, division, bureau, board, commission, the University of
California, or the California State University.
(3) "Local governmental agency" means any city, county, city and
county, special district, authority, or other political subdivision
of or within the state.

4420.5. (a) Subdivision (b) of Section 4420 shall not apply to any
construction or renovation project undertaken by a school district.
(b) The district may use owner-controlled or wrap-up insurance
with regard to a construction or renovation project if the district
makes the following determinations:
(1) Prospective bidders, including contractors and subcontractors,
meet minimum occupational safety and health qualifications
established to bid on the project. The evaluation of prospective
bidders shall be based on consideration of the following factors:
(A) Serious and willful violations of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code, by a contractor or
subcontractor during the past five-year period.
(B) The contractor's or subcontractor's workers' compensation
experience modification factor.
(C) A contractor's or subcontractor's injury prevention program
instituted pursuant to Section 3201.5 or 6401.7 of the Labor Code.
(2) The use of owner-controlled or wrap-up insurance will maximize
the expenditure of public funds on the project in conjunction with
the exercise of appropriate risk management.
(c) For purposes of this section, "owner-controlled or wrap-up
insurance" means a series of insurance policies issued to cover all
of the contractors and subcontractors on a given project for purposes
of general liability and workers' compensation.
(d) Any use of owner-controlled or wrap-up insurance pursuant to
this section shall be subject to subparagraphs (B), (C), (D), and (E)
of paragraph (1) of subdivision (d) of Section 4420 and paragraphs
(2) and (3) of that subdivision.

4420.5. (a) Section 4420 does not apply to any construction or
renovation project undertaken by a school district or community
college district.
(b) The district may use owner-controlled or wrap-up insurance
with regard to a construction or renovation project if the district
makes the following determinations:
(1) Prospective bidders, including contractors and subcontractors,
meet minimum occupational safety and health qualifications
established to bid on the project. The evaluation of prospective
bidders shall be based on consideration of the following factors:
(A) Serious and willful violations of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code, by a contractor or
subcontractor during the past five-year period.
(B) The contractor's or subcontractor's workers' compensation
experience modification factor.
(C) A contractor's or subcontractor's injury prevention program
instituted pursuant to Section 3201.5 or 6401.7 of the Labor Code.
(2) The use of owner-controlled or wrap-up insurance will minimize
the expenditure of public funds on the project in conjunction with
the exercise of appropriate risk management.
(c) For purposes of this section, "owner-controlled or wrap-up
insurance" means a series of insurance policies issued to cover all
of the contractors and subcontractors on a given project for purposes
of general liability and workers' compensation.
(d) Any use of owner-controlled or wrap-up insurance pursuant to
this section shall be subject to paragraphs (3) to (6), inclusive, of
subdivision (b) of Section 4420 and subdivisions (c) and (d) of that
section.

4420.8. (a) Notwithstanding subdivision (b) of Section 4420,
commencing January 1, 1999, a state agency may utilize
owner-controlled or wrap-up insurance programs if all of the
following conditions are met:
(1) The total cost of the public works project is over one hundred
twenty-five million dollars ($125,000,000).
(2) The program maintains completed operation coverage for a term
for which the Insurance Commissioner has determined that coverage is
reasonably commercially available, but in no event less than three
years.
(3) Bid specifications clearly specify for all bidders the
insurance coverage provided under the program, and minimum safety
requirements that must be met.
(4) The program does not prohibit a contractor or subcontractor
from purchasing any additional insurance coverage that a contractor
or subcontractor believes is necessary to protect themselves from any
liability arising out of the contract.
(5) The program does not include surety insurance.
(b) Safety requirements for a public works project subject to this
subdivision may be developed jointly between a state agency and the
prime contractor. In the event that a state agency requires a safety
program different than the prime contractor's usual and customary
program, the program shall be mutually agreed upon, taking into
account the prime contractor's experience, expertise, existing labor
agreements relating to safety issues, and any unique safety issues
relating to the project.
(c) This subdivision shall not affect any provision in a
collective bargaining agreement specified in Section 3201.5 of the
Labor Code that is submitted by the prime contractor with its
construction bid.
(d) For purposes of this section, "owner-controlled or wrap-up
insurance" means a series of insurance policies issued to cover all
of the contractors and subcontractors on a given project for purposes
of general liability and workers' compensation.
(e) For purposes of this section, "public works project" means
construction being performed at one site or at a series of contiguous
sites separated only by a street, roadway, waterway, or railroad
right-of-way, or along a continuous system for the provision of water
and power.

4421. This chapter shall not prevent the exercise by such officer
or employee on behalf of the state or such public agency or public
authority of the right to approve the form, sufficiency, or manner of
execution of the surety bonds or contracts of insurance furnished by
the surety or insurance company selected by the bidder to underwrite
said bonds or contracts of insurance.

4422. All provisions in any invitation for bids, or in any of the
contract documents, in conflict with this chapter are hereby declared
to be contrary to the public policy of this state.