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By @Jeff Frey, Of Counsel, Atkinson, Andelson, Loya, Ruud & Romo

Do public contracting issues freak you out? Well, my friend, I feel you. Despite the Legislature’s goal to make the law “clearer and easier to find” (Pub. Contract Code § 100), the topic involves numerous statutes buried across the Civil Code, Labor Code, Public Contract Code, Government Code, and more. The following is a summary of important issues to consider when preparing and reviewing your next bid or contract.

Bidding

Many, but not all, special districts have competitive bidding requirements. Knowing your bidding rules is half the battle!

• If competitive bidding is required by law, the contract is usually awarded to the lowest responsible and responsive bidder, or all bids must be rejected.
  • Responsive bids are those that substantially conform to the bid specifications. Does the bid comply with all the requirements of bidding documents? Does the bid respond accurately and completely to bid rules and instructions? This analysis reviews the face of the bid without outside investigation/information.
  • Responsibility involves the determination of the bidder’s trustworthiness and quality of performance (Pub. Contract Code §1103). This involves outside investigation/information and requires the special district’s exercise of reasonable discretion. A determination of non-responsibility may trigger bidder due process rights involving an opportunity to be heard and produce evidence.
• Your bidding documents should include a bid protest process, which is developed by each special district. The law does not include a statutory deadline regarding protests. Make sure you allow enough time for protests to be reviewed and determined between bid opening and contract award!
• Consider a prequalification packet/questionnaire to eliminate unqualified contractors. This requires public works contractors to answer questions about their experience and finances. They must obtain a passing score before they can bid your projects.
• Understand alternative procurement rules and processes:
  • The California Uniform Public Construction Cost Accounting Act (“CUPCCAA”) allows special districts who opt in to use an alternative bidding process for construction projects. CUPCCAA requires no competitive bidding for projects under $60,000. Informal bidding is required for projects between $60,000 and $200,000. Finally, formal bidding is required for projects over $200,000.
  • Architectural, landscape architectural, environmental, engineering, land surveying, and construction project management services must be selected based on demonstrated competence/professional qualifications necessary for the services. This requires a fair, competitive selection process – typically a Request for Proposals.
  • Services for financial, economic, accounting, legal, or administrative matters typically do not require competitive bidding. However, we recommend issuing a Request for Proposals.
  • California Multiple Award Schedules (CMAS) and similar programs. The State offers equipment (who doesn’t want a helicopter?), materials, services, and more at prices deemed fair, reasonable, and competitive. The products/services were already bid, so a special district may be able to contract directly with the vendors via the State programs.

Contract Clauses

Every special district should have its own contracts for construction, services, and more. Realistically, that is not always the case. Understanding the following clauses or rules will strengthen your position and protect your special district.

• Indemnity. Indemnity is essentially a promise to reimburse another for a loss or liability. Special districts must read these clauses carefully because courts will analyze the plain language to determine the contracting parties’ intent. For third party contracts, are they asking for single-party indemnification? Always object! If a vendor/contractor wants indemnification, demand reciprocal language for your special district. Are they asking for reimbursement even when the vendor/contractor was negligent? Always object! Parties should be responsible for the harm they cause.
• Limitation of Liability. Vendors/contractors typically want to limit their liability to the amount to be paid for the goods/services. Always object! Harms often exceed the contract amount.
• Attorney’s fees. While ultimately a business decision, some lawyers recommend striking these clauses. First, these clauses encourage litigation, not compromise. Second, special districts pay lower hourly rates than private vendors/contractors. Upon a loss, you may receive a massive bill from the other side. Finally, please note that single-sided attorney’s fees clauses are prohibited and will be made applicable to both parties (Civ. Code § 1717).
• Insurance. Make sure you can comply with their insurance requirements. For the vendor’s/contractor’s policies, require that the special district, its governing body, and its employees are added as additional insureds. You should also seek a waiver of subrogation! This will transfer rights of recovery and prevent the insurance company from seeking to recover against your special district for contributory negligence.
• Bonds. Payment bonds for public construction contracts are required if contract amount exceeds $25,000! (Civ. Code § 9550.) Failure to obtain the bond exposes your special district to liability! Performance bonds are not required but are strongly recommended.
• Disputes/Claims. Every contract should include a dispute resolution process to streamline problems. For construction contracts, you must include certain rules (Pub. Contract Code § 9204). Ensure that you understand the process to prevent potential waiver of claims.
• Venue. Does the contract require you to litigate in New York, Montana, or Delaware? Always object! Ask for a local venue to save yourself time and money.

The foregoing is just a sample of issues and topics to consider. Special districts should work with legal counsel to either prepare form contracts or a comprehensive checklist to make the process easier for you and your special district.

Join me on June 29, 2026, at CSDA’s General Manager Leadership Summit for a deeper discussion on public contracting.

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