SB 1205
Public contracts: retention: architecture or engineering services.
Vote required
Majority
Fiscal committee
No
Appropriation
No
Current location
Appropriations
Take action
Record your position on this measure.
Sign in to record your position, submit testimony, or contact your legislator.
Sign in to take action- Introduced
- Passed Senate
- Passed Assembly
- To Governor
- Became Law
Bill overview
This bill changes the rules for how much money public entities can hold back (retain) from payments to architecture and engineering firms. Starting January 1, 2027, public entities can only retain a maximum of 5% of the payment for contracts with these firms, and the retained funds must be released within 60 days of the firm completing their services. The bill also clarifies definitions related to public entities and firms.
Key provisions
- Limits retention payments from architecture and engineering firms to 5% of the payment.
- Requires retention payments to be released within 60 days of service completion.
- Applies to contracts entered into on or after January 1, 2027.
- Defines ‘firm’ as an individual, firm, or legal entity licensed to practice architecture or engineering.
- Defines ‘public entity’ broadly, including state agencies, universities, and local governments.
- Applies to contracts under design-bid-build.
- Covers amendments to existing contracts.
- Prohibits retention of payment retention payments.
Who is affected
- Public entities (state, cities, counties, etc.)
- Architecture and engineering firms
- Contractors working with public entities
- Subcontractors working with architects and engineers
- Local governments
Notable changes
- Reduces the maximum allowable retention from potentially higher amounts to 5%.
Arguments in favor
Reasons to support this legislation.
No arguments in favor have been submitted.
Submit yoursArguments opposed
Reasons to oppose this legislation.
No arguments opposed have been submitted.
Submit yoursRead the latest version inline or switch to a previous version.
SB1205:v97#DOCUMENT
Bill Start
| Amended IN Senate April 09, 2026 |
| Amended IN Senate March 24, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Senate Bill
No. 1205
| Introduced by Senator Valladares |
| February 19, 2026 |
An act to add Section 7204 to the Public Contract Code, relating to public contracts.
LEGISLATIVE COUNSEL'S DIGEST
SB 1205, as amended, Valladares. Public contracts: retention: architecture or engineering services.
Existing law imposes various requirements regarding the formation, content, and enforcement of public works contracts. Existing law generally requires that retention proceeds withheld from payment by a public entity be released within 60 days after the date of completion of the work of improvement, except as specified in case of a dispute. Existing law limits the allowable amount of retention proceeds withheld in a contract between a public entity and the original contractor, a contract between the original contractor and a subcontractor, and a contract between subcontractors, as specified. Existing law defines “public entity” differently for these various purposes.
This bill would prohibit any retention of payment retention payments from exceeding 5% of the payment for all contracts, contracts under design-bid-build, and amendments thereto, entered into on or after January 1, 2027, directly between a public entity and an individual or legal entity permitted by law to practice the profession of architecture or engineering. The bill would require any retention withheld to be released no later than 60 days after completion of services under contract. The bill would define terms for its purposes, including “public entity.”
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 7204 is added to the Public Contract Code, to read:
7204.
(a) For all contracts, contracts under design-bid-build, and amendments thereto, entered into on or after January 1, 2027, directly between a public entity and a firm, any retention payments to the firm for services shall not be subject to retention. exceed 5 percent of the payment.
(b) Any retention withheld pursuant to subdivision (a) shall be released no later than 60 days upon completion of the firm’s services under contract, regardless of whether the project for which the services were provided has been completed.
(b)
(c) For purposes of this section, the following definitions shall apply:
(1) “Firm” means an individual, firm, partnership, corporation, association, or other legal entity permitted by law to practice the profession of architecture or engineering.
(2) “Public entity” means the state, including every state agency, office, department, division, bureau, board, or commission, the California State University, the University of California, a city, county, city and county, including charter cities and charter counties, district, special district, public authority, political subdivision, public corporation, or nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency.