AB 2272
State contracting: subcontractors: prompt payment.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Appropriations
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- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill changes how state contracts are paid to ensure subcontractors and suppliers are paid promptly. Starting January 1, 2027, prime contractors who receive payments from the state must pay their subcontractors, suppliers, and vendors within 45 days. For payments made before January 1, 2027, but not yet paid to subcontractors, prime contractors have until February 15, 2027, to remit those funds. The Department of General Services will monitor compliance and can penalize non-compliant prime contractors by restricting their ability to bid on future state contracts.
Key provisions
- Prime contractors must pay subcontractors, suppliers, and vendors within 45 days of receiving state payment (starting January 1, 2027).
- A grace period exists for payments made before January 1, 2027, with a deadline of February 15, 2027, to remit those funds.
- The Department of General Services will monitor compliance with payment deadlines.
- Non-compliant prime contractors will receive demerits, impacting future contract eligibility.
- Penalties include a six-month ban for five consecutive failures and a one-year ban for ten consecutive failures.
- The Department of General Services can review and rescind existing contracts for repeated non-compliance.
- Subcontractors can request payment status information from the state agency.
- Prime contractors must confirm payments to subcontractors upon request from the state agency.
Who is affected
- State contracting agencies
- Prime contractors
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AB2272:v98#DOCUMENT
Bill Start
| Amended IN Assembly April 16, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 2272
| Introduced by Assembly Member Caloza |
| February 19, 2026 |
An act to amend Section 927.10 of the Government Code, relating to state contracting.
LEGISLATIVE COUNSEL'S DIGEST
AB 2272, as amended, Caloza. State contracting: subcontractors: prompt payment.
Existing law, the California Prompt Payment Act, requires a state agency that acquires property or services pursuant to a contract with a business to make payment to the person or business on the date required by the contract and as specified, or be subject to a late payment penalty.
Existing penalty. Existing law requires state agencies to encourage claimants to promptly pay their subcontractors and suppliers, especially those that are small businesses.
This bill would recast those provisions to instead require prime contractors to pay, for payments by the state to prime contractors made on or after January 1, 2027, their subcontractors, suppliers, and other vendors within 45 days of receiving payment from the state. For payments made by the state to prime contractors made prior to January 1, 2027, but that have not been remitted to subcontractors, suppliers, and other vendors as of January 1, 2027, the bill would require prime contractors to remit payment by February 15, 2027.
This bill would require the Department of General Services to monitor compliance with this requirement, as specified. The bill would impose a demerit system, in which noncompliant prime contractors lose eligibility for state contracts for a specified period of time, as described. For contracts entered into or renewed with the state on or after January 1, 2027, the bill would authorize the department to review and rescind a prime contractor’s existing contracts if the prime contractor repeatedly fails to comply. The bill would require the department to adopt rules and regulations to administer these provisions, and would make conforming changes.
This bill would authorize a subcontractor or supplier performing work under a state contract to request payment status information from the awarding state agency regarding invoices submitted by the prime contractor, and would require a prime contractor to provide confirmation to the awarding agency, upon the agency’s request, regarding payments made to subcontractors.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 927.10 of the Government Code is amended to read:
927.10.
(a) State agencies shall encourage claimants to promptly pay their subcontractors and suppliers, especially those that are small businesses. In furtherance of this policy, state agencies shall utilize expedited payment processes to enable faster payment by prime contractors to their subcontractors and suppliers, and shall promptly respond to any subcontractor or supplier inquiries regarding the status of payments made to prime contractors.
(b) A subcontractor or supplier performing work under a state contract may request payment status information from the awarding state agency regarding invoices submitted by the prime contractor.(c) A prime contractor shall provide confirmation to the awarding agency, upon the agency’s request, regarding payments made to subcontractors.
SECTION 1.Section 927.10 of the Government Code is amended to read:
927.10.
(a)(1)For all payments made by the state to prime contractors on or after January 1, 2027, prime contractors shall pay their subcontractors, suppliers, and other vendors within 45 days of receiving payment from the state.
(2)For payments made from the state to prime contractors prior to January 1, 2027, but that have not been remitted to subcontractors, suppliers, and other vendors as of January 1, 2027, prime contractors shall remit such payment by February 15, 2027.
(b)State agencies shall utilize expedited payment processes to enable faster payment by prime contractors to their subcontractors, suppliers, and other vendors, and shall promptly respond to any subcontractor, supplier, or vendor inquiries regarding the status of payments made to prime contractors.
(c)(1)The Department of General Services shall monitor compliance with subdivision (a).
(2)Prime contractors that fail to comply with subdivision (a) shall receive a demerit, which shall negatively affect the claimant’s eligibility for all subsequent bids for contracts, other contract requests, and contract renewals with the state. At minimum, the following penalties shall apply:
(A)Prime contractors that fail to comply with subdivision (a) for five payments within a three-year period shall be prohibited from renewing or entering into contracts with the state for six months.
(B)Prime contractors that fail to comply with subdivision (a) for 10 payments within a three-year period shall be prohibited from renewing or entering into contracts with the state for one year.
(3)For contracts entered into or renewed with the state on or after January 1, 2027, the Department of General Services may review and rescind a prime contractor’s existing contracts if the prime contractor repeatedly fails to comply with subdivision (a).
(d)The Department of General Services shall adopt any rules and regulations to administer this section, including, but not limited to, a demerit tracking system and coordination with state agencies for penalty enforcement.