Section 1896.73 - Substitution of a DVBE Subcontractor(a) Any substitution of a DVBE subcontractor shall be by another DVBE subcontractor. The substitution shall be to perform work stated in the original bid and can occur only if approved by OSDS in writing prior to the commencement of any work by another DVBE subcontractor. The substitution shall maintain, at minimum, the level of DVBE participation stated in the original bid.(b) The contractor shall concurrently by certified mail notify in writing both the original DVBE and the proposed replacement DVBE, along with the awarding department, of the intended substitution and the reasons for the substitution. The awarding agency will provide written notice of the DVBE substitution request to both the original and proposed replacement, including instructions for objecting to the substitution.(c) The contractor shall provide the awarding department a copy of the written notice issued to the original DVBE, specifying the situation or situations justifying replacement, with proof of delivery. In the absence of a proof of delivery, the applicable certified mail receipt will be sufficient proof of attempted delivery for documentation purposes.(d) The DVBE subject to replacement shall have up to five business days from receipt of the notice to express their consent or opposition to the substitution. The DVBE's reply shall be sent simultaneously by certified mail to the contractor and awarding department. In the absence of a consent or opposition reply, the returned and unopened certified mail from the contractor will be sufficient documentation.(e) When a written opposition to a substitution is filed, the DVBE subject to substitution is entitled to a hearing, to be conducted by the awarding department. The hearing notice shall be issued by the awarding department within five business days from the awarding department's receipt of the written opposition and shall provide the DVBE subject to replacement a minimum of five business days' notice prior to the hearing. All essential hearing time and place details will be provided to the applicable DVBE, including the reasons for the hearing, the name of the person hearing the issue, and applicable accessibility information.(f) Upon the awarding department's determination that there are legitimate reasons for a DVBE subcontractor replacement, the awarding department shall submit a substitution request to the OSDS:(1) The request must satisfy the criteria subdivision (g) specifies.(2) The substitution request shall be accompanied by any hearing decision, including the name and certification number of the business being substituted and the name and certification number of the proposed replacement along with the contract number, contract amount, amount of the original DVBE commitment, the amount of the new DVBE commitment, the justification for the substitution, and the date written objection was received, if applicable.(3) If a DVBE cannot be identified as a replacement, the contractor shall document the absence of DVBEs as subdivisions (f)(3)(A) through (E) set forth and include the applicable contract modifications section 1896.76 requires under such circumstances. (A) Confirmation of the absence of DVBEs to perform the work specified obtained from SB/DVBE Advocates from the awarding department and the Department of Veterans Affairs.(B) Results of a search of the OSDS statewide directory database for DVBEs in that line of business.(C) Evidence of communication with DVBE community organizations nearest the worksite regarding the absence of DVBEs, if relevant.(D) Documentation of communication with DVBEs describing the work to be performed, its percentage of the overall contract, the corresponding dollar amount, and their responses to the request.(E) Email documentation of steps (A) through (D) is acceptable. In such instances, proof of non-delivery shall be the printed "undeliverable" messages received when emails are returned to the sender's inbox.(g) OSDS will respond to substitution requests within three (3) business days. Consent to replacement of another DVBE subcontractor shall be in any of the following situations consistent with, or conforming to the public works substitution provisions of Public Contract Code section 4107, and in accordance with the replacement authority granted DGS by Military and Veterans Code section 999.5, subdivision (g): (1) When the listed DVBE subcontractor, after reasonable opportunity, fails or refuses to execute the contract within the scope and price specified.(2) When the listed DVBE subcontractor becomes insolvent or bankrupt or ceases to exist.(3) When the listed DVBE subcontractor fails or refuses to perform as subcontractually obligated.(4) When the listed DVBE subcontractor fails or refuses to meet the bond requirements of the contractor.(5) When the prime contractor demonstrates to the awarding department that the intended DVBE subcontractor named on the listing was incorrect due to an inadvertent clerical error. In the case of public works contracts, compliance with Public Contract Code section 4107.5 is required.(6) When the listed subcontractor is not licensed as required by any state of California regulatory authority.(7) When the awarding department, or its duly authorized officer, determines that the work performed by the listed DVBE subcontractor is substantially unsatisfactory because the subcontractor:(A) Did not perform in accordance with the plans and specifications; or,(B) Has delayed or disrupted the progress of the work.(8) When the listed subcontractor is ineligible to work on a public works project.(9) When the awarding authority determines that a listed subcontractor is not a responsible subcontractor.(h) The DVBE subcontractor replacement process shall not be used as an excuse for noncompliance with any provision of law. This includes, but is not limited to, the Subletting and Subcontracting Fair Practices Act provisions of the Public Contract Code or any contract requirements relating to substitution of subcontractors.(i) Contractors who proceed with work without OSDS's approval of a substitution decision may be subject to contract termination, and/or the recovery of damages and penalties under the statutory provisions, including those outlined in Military and Veterans Code section 999.9, Public Contract Code section 10115.10, or Public Contract Code section 4110(applies to public works only).Cal. Code Regs. Tit. 2, § 1896.73
1. New section filed 2-14-2013; operative 4-1-2013 (Register 2013, No. 7). For prior history, see Register 94, No. 4.
2. Amendment of subsections (a), (b)(3), (b)(3)(D) and (f) and amendment of NOTE filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
3. Amendment of section heading, section and NOTE filed 11-29-2018; operative 1-1-2019 (Register 2018, No. 48).
4. Amendment of subsections (a), (f)(3), (g), (g)(5) and (i) and amendment of NOTE filed 6-29-2023; operative 6-29-2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26). Note: Authority cited: Sections 14600 and 14839, Government Code; and Section 999.5, Military and Veterans Code. Reference: Sections 999, 999.5, 999.55, 999.7 and 999.9, Military and Veterans Code; and Sections 4107, 4107.5, 4110, 10115.1, 10115.2, 10115.10, 10230 and 10295, Public Contract Code.
1. New section filed 2-14-2013; operative 4-1-2013 (Register 2013, No. 7). For prior history, see Register 94, No. 4.
2. Amendment of subsections (a), (b)(3), (b)(3)(D) and (f) and amendment of Note filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
3. Amendment of section heading, section and Note filed 11-29-2018; operative 1/1/2019 (Register 2018, No. 48).
4. Amendment of subsections (a), (f)(3), (g), (g)(5) and (i) and amendment of Note filed 6-29-2023; operative 6/29/2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26).