Section 1896.10 - Substitution of a Small Business Subcontractor(a) After a contract has been awarded based in part on application of the non-small business subcontracting preference, the contractor must use the small business subcontractor(s) and/or supplier(s) specifically proposed in the bid to the state unless, in accordance with the provisions of the Subletting and Subcontracting Fair Practices Act (§4100 et seq., Public Contract Code), a substitution is requested in writing to the awarding department and the awarding department approves the substitution in writing prior to the commencement of any work by the substituted small business. The substitution request must include at least the following: (1) An explanation of the reason for the substitution.(2) The contractor must substitute a small business with another small business. However, if the small business substitution cannot occur, the contractor must include a written justification and the steps that were taken to try to acquire a new small business subcontractor and how that portion of the contract will be fulfilled.(3) A description of the work to be performed, identified both as a task(s) and as a dollar amount or percentage of the overall contract that the substituted business will perform. The substituted business(es), if approved, shall be required to perform a commercially useful function in the contract as defined in section 1896.15.(b) The request for substitution of a small business and the awarding department's approval or disapproval cannot be used as an excuse for noncompliance with any other provision of law, including but not limited to, the Subletting and Subcontracting Fair Practices Act or any other contract requirements relating to substitution of subcontractors.(c) A contractor may request substitution of its subcontractor(s)/supplier(s) by providing a written request to the awarding department in accordance with this section. The awarding department may consent to the substitution in any of the situations set forth in section 4107 of the Subletting and Subcontracting Fair Practices Act.(d) Prior to approval of the prime contractor's request for the substitution, the awarding department, or its duly authorized officer, shall give notice in writing to the listed subcontractor of the prime contractor's request to substitute and the reasons for the request to substitute. The notice shall be served by certified or registered mail to the last known address of the subcontractor. The listed subcontractor that has been so notified shall have five (5) working days after the receipt of the notice to submit written objections to the substitution to the awarding department. Failure to file these written objections shall constitute the listed subcontractor's consent to the substitution. If written objections are filed, the awarding department shall give notice in writing of at least five (5) working days to the listed subcontractor of a hearing by the awarding department on the prime contractor's request for substitution.(e) Failure of the contractor to subcontract with the small businesses listed on its bid to the state or follow the substitution rules may be grounds for the Department to apply such sanctions as Government Code sections 14842 and 14842.5 and the subsequent provisions of this subchapter permit. In the event such sanctions are imposed, the contractor shall be notified in writing and entitled to a hearing pursuant to sections 1896.18 and 1896.20.Cal. Code Regs. Tit. 2, § 1896.10
1. Amendment and renumbering of Section 1896.30 to Section 1896.10 filed 9-25-78; effective thirtieth day thereafter (Register 78, No. 39). For prior history, see Register 74, No. 16.
2. Editorial correction of NOTE filed 12-6-82 (Register 82, No. 50).
3. Repealer and new section filed 8-10-2004; operative 9-9-2004 (Register 2004, No. 33).
4. Amendment of section and NOTE filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
5. Amendment of subsections (a)(3), (c) and (e) 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 14837, 14842 and 14843, Government Code. Reference: Sections 14837, 14842 and 14842.5, Government Code; and Sections 4100, 4107 and 4107.5, Public Contract Code.
1. Amendment and renumbering of Section 1896.30 to Section 1896.10 filed 9-25-78; effective thirtieth day thereafter (Register 78, No. 39). For prior history, see Register 74, No. 16.
2. Editorial correction of NOTE filed 12-6-82 (Register 82, No. 50).
3. Repealer and new section filed 8-10-2004; operative 9-9-2004 (Register 2004, No. 33).
4. Amendment of section and Note filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
5. Amendment of subsections (a)(3), (c) and (e) filed 6-29-2023; operative 6/29/2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26).