Public WorksQuestion 620 of 163250% of test-takers get this one wrong

After bid opening on a public works project, the prime contractor wants to substitute a different subcontractor for one listed in the bid. Under Public Contract Code §4107, the substitution is generally permitted only if:

a.The listed sub agrees in writing and takes a kill fee
b.The prime notifies the agency and the new sub bids lower
c.The swap happens before the contract is even signed
d.A statutory ground applies and the sub may object to it

Explanation

Public Contract Code §4107(a) permits substitution only on a listed ground — the sub refuses to execute the subcontract, becomes insolvent, fails to perform, is not properly licensed, and so on — and only after the awarding body gives the listed subcontractor written notice and at least five working days to object and request a hearing. A lower price from a replacement is bid shopping, which the Act exists to stop, and notice alone does not authorise it. The listed sub's agreement is not required when a ground exists, and a payment for stepping aside is not one of the grounds. Signing day changes nothing: listing binds from bid opening.

Law Reference: Public Contract Code §4107(a)

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