According to California regulations, when preparing a bid for a public works project, what percentage is typically required for the bid bond, and what must be included in the contractor's cost estimation to account for prevailing wage requirements?
Correct Answer
A) 10% bid bond; prevailing wages must be calculated using California Department of Industrial Relations rates
California public works projects typically require a 10% bid bond. Labor costs must include prevailing wages as determined by the California Department of Industrial Relations, not federal Davis-Bacon rates. This significantly impacts cost estimation for public projects in California.
Why This Is the Correct Answer
California public works law requires a 10% bid bond to ensure the bidder will enter the contract if awarded. Labor costs must use prevailing wage rates set by the California Department of Industrial Relations (DIR), not federal Davis-Bacon or any other standard, because California has its own independent prevailing wage system under the Labor Code.
Why the Other Options Are Wrong
Option B: 5% bid bond; prevailing wages must be calculated using Davis-Bacon rates
5% is not the standard California bid bond requirement (10% is). Davis-Bacon rates apply to federally funded projects under federal law, not to California-only public works contracts.
Option C: 20% bid bond; prevailing wages must be calculated using federal minimum wage standards
20% overbonds the bid and is not required. Federal minimum wage standards are completely inapplicable to California public works prevailing wage determinations.
Option D: 15% bid bond; prevailing wages must be calculated using local union rates
15% is not the California standard. Local union rates may influence but do not legally define prevailing wages; the DIR publishes the official rates used for compliance.
Memory Technique
Remember '10% = CA bid bond' with the phrase: 'Ten percent ties the bid to the table.' For wages, think DIR = 'Determine It in-state Rates' — California sets its own rates, not the feds.
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