Could a contractor's pre-July 15, 1991 irrevocable bid qualify as a fixed-price contract when accepted after the cutoff?

Plain-English summary

A contractor was treated as entering a fixed-price contract before July 15, 1991 when its bid became irrevocable before that date and was accepted before the bid became revocable. Acceptance could occur after July 15 without defeating the result.

The stated scenario involved a subcontractor's bid conditioned on the general contractor winning the project. The memorandum presented a staff synopsis derived from a modified portion of former Regulation 1521.5(c)(5), not a recorded final Board regulation or decision.

Common questions

Did acceptance have to occur before July 15, 1991?

No.

What timing did matter?

The bid had to become irrevocable before the cutoff and be accepted before revocability returned.

Was this a final Board rule?

The document was an internal staff memorandum and asked whether the regulation should be revived.

Citations and references

• California Revenue and Taxation Code section 6376.1 — historical fixed-price transition issue addressed
• Former California Code of Regulations, title 18, section 1521.5(c)(5) — source of the staff rule
• July 11, 1991 internal conferences — conditional irrevocable-bid scenario discussed; no separate conference record is reproduced in the official PDF
• Assistant Chief Counsel's request for a synopsis — identified as the reason for the memorandum; no actual bid, contract, acceptance, or final Board action is reproduced in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/190-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/190-2900.pdf

Original ruling text

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum

To:

Mr. Gary J. Jugum

From:

John L. Waid

Subject:

Contractor’s Bid as Fixed-Price Contracts (§ 6376.1)

190.2900
Date:

July 16, 1991

In one of our many conferences on July 11, 1991, we discussed the rule to be applied in the situation where a subcontractor submits an irrevocable bid for a contract which otherwise qualifies as a fixed-price contract under staff interpretations, but is subject to the condition that the bid is terminated if the general contractor to whom it was submitted does not win the contract for which the bid was made. You requested a synopsis of the rule which we will follow in such a situation. What follows is based on a portion of former Regulation 1521.5(c)(5), modified to take into account the above situation: “A contractor will be considered to have entered into a fixed-price contract prior to July 15, 1991, if prior to that date he submitted a bid which became irrevocable prior to that date and was accepted prior to becoming revocable, even if such acceptance occurs after July 15, 1991.” Former Regulation 1521.5 covered this area of fixed-price construction contracts under previous statutes. Should we propose that the Board revive this regulation?

JLW:es
3966I