AB 778 adds a new duty to the Public Contract Code requiring any local agency that maintains an internet website to publish specified information about construction contract payments within 10 days of making the payment. The required data fields include the project, the payee, the payment date or date instructions were transmitted to make the payment, a payment application or identifying number, and the payment amount.
The bill exempts contracts under $25,000 and imposes a blunt enforcement consequence: a noncomplying local agency may not withhold retention proceeds from any remaining payment by a public entity (referencing subdivision (b) of Section 7201). It also triggers the state-mandated local program reimbursement process if the Commission on State Mandates finds state-mandated costs.
At a Glance
What It Does
Requires a local agency with a website to post five data fields about each construction contract payment within 10 days. Exempts contracts below $25,000 and ties noncompliance to a prohibition on withholding retention proceeds.
Who It Affects
Applies to local agencies statewide that operate an internet website and to the contractors, subcontractors, and vendors on public construction projects; it also implicates procurement and finance staff who must produce and publish the required data.
Why It Matters
The bill extends a transparency requirement that already exists for state agencies to local governments, creating new compliance work for often resource‑constrained local offices and changing enforcement leverage by linking posting compliance to retention mechanics.
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What This Bill Actually Does
AB 778 inserts Section 20104.60 into the Public Contract Code and makes local agencies that maintain an internet website responsible for publishing basic payment details for public construction work. The agency must publish the project identifier, the name of the contractor or company receiving payment, the date the payment was made or the date payment instructions were transmitted, a payment application number or other identifier, and the payment amount.
That posting obligation must be satisfied within 10 days after the payment occurs.
The bill carves out a financial threshold: it does not apply to construction contracts valued below $25,000. For contracts at or above that threshold, the posting requirement is mandatory.
As the bill frames enforcement, a local agency that fails to comply cannot withhold retention proceeds from any remaining payment by a public entity, as cross‑referenced to subdivision (b) of Section 7201. In practice, that links the transparency duty to a contractual finance mechanism—retention—that public entities typically use to ensure contract completion.AB 778 also addresses the fiscal relationship between state and local government: if the Commission on State Mandates determines the law imposes state‑mandated costs on local agencies or school districts, affected jurisdictions may seek reimbursement under the established claims process in Part 7 of Division 4 of Title 2 of the Government Code.
The statute therefore anticipates—and preserves—the procedural path for local entities to recover mandated costs rather than leaving the obligation unfunded.
The Five Things You Need to Know
The bill requires posting of five specific data elements (project, payee name, payment date or instruction date, payment application/ID, and amount) within 10 days of a construction payment.
The posting duty applies only to local agencies that maintain an internet website and does not cover construction contracts under $25,000.
If a local agency fails to post as required, the agency may not withhold retention proceeds from any remaining payment by a public entity, per the bill's cross-reference to Section 7201(b).
The bill mirrors an existing state‑level posting requirement but extends that transparency obligation to local governments.
Section 2 preserves the Commission on State Mandates process: if costs are found to be state‑mandated, reimbursement follows the statutory claims procedure under Government Code Part 7.
Section-by-Section Breakdown
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Mandatory 10‑day posting of construction payment details
This subsection sets the core duty: within 10 days of making a construction payment, a local agency that maintains an internet website must post five fields of information—project, payee name, payment date or instruction date, payment application or ID, and payment amount. Practically, agencies will need to integrate this posting step into payment workflows and ensure their public website (or a designated page) can publish and index these records quickly and reliably.
$25,000 threshold exemption
Subsection (b) excludes construction contracts valued below $25,000 from the posting requirement. That threshold narrows the universe of transactions that trigger the duty and will concentrate compliance on medium and large projects, but it leaves unclear how composite projects or change orders should be aggregated to determine whether the threshold is met.
Enforcement mechanic tied to retention withholding
Subsection (c) prohibits a noncomplying local agency from withholding any retention proceeds from remaining payments by a public entity, as described in subdivision (b) of Section 7201. This is an unusual enforcement design because it removes an agency's ordinary contractual leverage (retention) when the agency fails to post required payment information, rather than creating fines or administrative penalties. Agencies and contractors will need to assess how that rule interacts with existing contract terms and completion‑assurance practices.
State‑mandated cost reimbursement procedure
Section 2 directs that if the Commission on State Mandates finds this act creates state‑mandated local costs, reimbursement will be handled under the Government Code's Part 7 claims process. That preserves the statutory remedy for local governments and school districts to recover eligible costs but does not itself appropriate funds or specify timing for payments.
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Explore Government in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Subcontractors and smaller suppliers — public posting gives them a public record of payments, which can help prove payment history and support claims when upstream contractors delay or withhold funds.
- Local government auditors and fiscal transparency advocates — standardized, timely payment postings make it easier to spot irregularities, late payments, or patterns of delayed disbursements across projects.
- Journalists, watchdog groups, and the public — the requirement creates a consistent, searchable source of construction payment data that supports oversight of public spending and project administration.
Who Bears the Cost
- Local agencies with limited IT capacity — they must modify payment processes, maintain website pages or feeds, and ensure data accuracy and timeliness, creating staff time and potential procurement costs for web development.
- Procurement and finance officers — they will absorb operational burdens to capture and publish the five required data fields within a 10‑day window and to reconcile postings with accounting records.
- Contracting entities and payees — while the bill aims to increase visibility, contractors may face privacy or competitive concerns about public reporting of payment amounts and identifiers.
Key Issues
The Core Tension
The bill pits two legitimate goals against each other: greater public visibility into construction payments versus preserving local agencies' operational flexibility and contractual tools. Increasing transparency is straightforward in principle, but enforcing it by constraining retention shifts financial leverage away from agencies and imposes technical and administrative burdens that fall unevenly on resource‑constrained local governments.
The bill's apparent simplicity masks implementation complexity. First, the statute prescribes which fields to publish but leaves format, technical standards, and persistent identifiers undefined.
Agencies could meet the duty with a manual HTML table, a searchable database, or a machine‑readable feed; inconsistent approaches across jurisdictions will frustrate statewide data aggregation and third‑party monitoring. Second, the statute does not address data quality controls, correction procedures, or how to handle redaction requests when postings include commercially sensitive information.
Linking noncompliance to a prohibition on withholding retention proceeds creates a blunt penalty with practical consequences. Retention is a standard contractual tool to ensure project completion and remedy latent defects; stripping that tool from a noncomplying agency may protect contractors in some cases but could leave public entities exposed to unfinished or defective work.
Finally, although the bill preserves the Commission on State Mandates reimbursement pathway, the claims process is slow and uncertain; smaller jurisdictions may face up‑front costs and cash‑flow pressure before any reimbursement is resolved.
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