California Code, Public Contract Code - PCC § 10762

In all projects for road, street, and bridge work where federal funds are involved and where a bidder is required to be and has been prequalified pursuant to Sections 10760 and 10761, no bid submitted or contract thereafter awarded shall be invalidated by the failure of the bidder or contractor to be properly licensed in accordance with the laws of this state, nor shall any such contractor be denied payment under any such contract because of such failure;  provided, however, that the first payment for work or material under such contract shall not be made by the Controller unless and until the Registrar of Contractors certifies to him that the records of the Contractors' State License Board indicate that such contractor was or became properly licensed between the time of bid opening and the making of the certification.  Any bidder or contractor not so licensed shall be subject to all legal penalties imposed by such laws, including, but not limited to, any appropriate disciplinary action by the Contractors' State License Board, and the trustees shall include a statement to that effect in the standard form of prequalification questionnaire and financial statement.