Pub. Contract Code, § 20873

If the work is not done with diligence as in this article provided, the legislative body may, by resolution entered upon its minutes, prescribe such terms and conditions as it may see fit and proper before permitting the person to continue with the work. If the person shall, after three days’ notice of the adoption of the resolution, fail to comply with the terms and conditions so prescribed, the legislative body may, at any time thereafter, declare the person to have forfeited its privilege of performing such work under its own direction. Whereupon the street superintendent shall advertise for bids for the performance of the work, or such portion thereof as may remain uncompleted, and the contract therefor shall be awarded and entered into in the manner provided for in this article for the awarding and execution of contracts where the person has not elected to make the improvements under its own direction.