The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Community Affairs
BILL: CS/SB 346
INTRODUCER: Community Affairs Committee and Senator DiCeglie
SUBJECT: Public Construction
DATE: March 17, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Hunter Ryon CA Fav/CS
2. GO
3. RC
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 346 requires each contract for construction services between a local government entity
and a contractor to include the estimated cost of each item necessary to complete the work.
Payment of the contract balance, subject to certain exceptions, must be made within 20 days after
providing such a list.
The bill limits the ability of local governments to withhold certain amounts under the contract
only to those subject to good faith disputes in writing or claims against public surety bonds. The
deadline for a state entity to submit a payment request to the CFO is shortened to 14 days after
its receipt. Payment by a local government for undisputed portions of an invoice or payment
request must be made according to the terms of the contract or 20 days after receiving the
request, whichever is sooner. A local government must commence proceedings to resolve a
disputed invoice or payment request within 30 days after receipt and must render its final
decision within 45 days from receipt.
The bill revises the definition of “public works project” to prohibit the imposition of certain
requirements on contractors for certain public construction projects that exceed $350,000, in
which either state or local funds are used.
The bill takes effect July 1, 2023.
REVISED: BILL: CS/SB 346 Page 2
II. Present Situation:
Payments for Public Construction Contracts
Contracts between local governments and private contractors for construction of public projects
are subject to prompt payment requirements. The Local Government Prompt Payment Act
1
provides for timely payment by local governmental entities
2
to construction contractors.
3
If
payment need not be approved by an agent of the local government, payment is due 20 business
days after the payment request or invoice is submitted.
4
If agent approval is required, payment is
due 25 business days after proper receipt.
5
A local government must identify its agent, employee,
facility, or office, to which the contractor may submit a payment request.
6
A contractor’s
submitting a payment request to the identified agent, employee, facility, or office of the local
government shall be stamped as received and begins the time period for payment or rejection of a
payment request.
7
If a payment request does not meet the contract requirements, the local
government must reject the request in writing within 20 business days after the date on which the
payment request is stamped as received. The rejection must specify the deficiency and the action
necessary to make the proper request.
8
If a payment request is rejected and the contractor submits a request correcting the deficiency,
the corrected payment request or invoice must be paid or rejected on the later of 10 business days
after the date of receipt, or if the local governmental entity is required by ordinance, charter, or
other law to approve or reject the corrected payment request or invoice, the first business day
after the next regularly scheduled meeting of the local government held after the corrected
payment request or invoice is received.
9
If a dispute between the local government and the contractor cannot be resolved by the above
procedure, the dispute must be resolved using the dispute resolution procedure or applicable
ordinance provided in the contract.
10
Absent a prescribed procedure, the dispute must be
determined pursuant to a dispute resolution procedure established by the local government.
11
If a local government disputes a portion of a payment request or an invoice, the undisputed
portion must be paid timely.
12
A contractor receiving payment from a local government for labor,
services, or materials furnished by subcontractors and suppliers hired by the contractor must
remit payment due to those subcontractors and suppliers within 10 days after the receiving
payment. A subcontractor receiving payment from a contractor for amounts due to
1
Section 218.70, F.S.
2
A county or municipal government, school board, school district, authority, special taxing district, other political subdivision, or any
office, board, bureau, commission, department, branch, division, or institution thereof. Section 218.72(5), F.S.
3
Section 218.71, F.S. A contractor is one who contracts directly with a local government to provide construction services. Section
218.72(3), F.S.
4
Section 218.735(1)(b), F.S.
5
Section 218.735(1)(a), F.S.
6
Section 218.735, F.S. This requirement must be included in the contract or provided by the local governmental in a separate written
notice, as required under the contract, no later than 10 days after the contract award or notice to proceed.
7
Section 218.735(1)(b), F.S.
8
Section 218.735(2), F.S.
9
Section 218.735(3), F.S.
10
Section 218.735(4), F.S.
11
Section 218.76(2), F.S.
12
Section 218.735(5), F.S. BILL: CS/SB 346 Page 3
subcontractors and suppliers hired by the subcontractor must remit payment due to those
subcontractors and suppliers within 7 days after receiving payment.
13
Each contract for construction services between a local government and a contractor must
provide for the development of a single list of items required to render complete, satisfactory,
and acceptable the construction services purchased by the local governmental entity.
14
The
contract must specify the process and a reasonable time for developing the list, including the
responsibilities of the local government and the contractor in developing and reviewing the list.
15
For construction projects with an estimated cost less than $10 million, the list must be developed
within 30 calendar days after reaching substantial completion of construction as defined in the
contract or, if not so defined, upon reaching beneficial occupancy or use.
16
For projects with an
estimated cost of $10 million or more, the list must be developed within 30 calendar days, or, if
extended by contract, up to 60 calendar days after reaching substantial completion of
construction as defined in the contract or, if not so defined, upon reaching beneficial occupancy
or use.
17
The contract must also specify a date for the delivery of the list of items, not to exceed 5 days
after the list is developed and reviewed. If the project relates to more than one building or
structure, or involves a multi-phased project, the contract must provide for the development of
the list of items pertaining to all the construction services purchased under the contract for each
building, structure, or phase of the project within the time limitations.
18
The final contract completion date must be at least 30 days after the delivery of the list of items.
If the list is not provided to the contractor by the agreed upon date for delivery, the contract time
for completion must be extended by the number of days the local government exceeded the list
delivery date. Damages may not be assessed against a contractor for failing to complete a project
within the time required by the contract unless the contractor failed to complete the project
within the contract period as extended.
19
The failure to include any corrective work or pending
items not yet completed on the list does not alter the responsibility of the contractor to complete
all the construction services purchased pursuant to the contract.
20
Upon completing all items on the list, the contractor may submit a payment request for all
remaining retainage withheld by the local government. If a good faith dispute exists as to
whether one or more items identified on the list have been properly completed, the local
government may continue to withhold up to 150 percent of the total costs to complete such
items.
21
All items requiring correction to complete the contract and that are identified after
preparation and delivery of the list remain the obligation of the contractor as defined by the
contract.
22
Warranty items or items not included in the list may not affect the final payment of
13
Section 218.735(6), F.S.
14
Section 218.735(7), F.S.
15
Section 218.735(7)(a), F.S.
16
Section 218.735(7)(a)1., F.S.
17
Section 218.735(7)(a)2., F.S.
18
Section 218.735(7)(b), F.S.
19
Section 218.735(7)(c), F.S.
20
Section 218.735(7)(d), F.S.
21
Section 218.735(7)(e), F.S.
22
Section 218.735(7)(f), F.S. BILL: CS/SB 346 Page 4
retainage nor payment as provided in contracts between the contractor and its subcontractors and
suppliers.
23
Retainage may not be held by a local government or a contractor to secure payment
of insurance premiums and the final payment of retainage may not be delayed pending a final
audit by the local government’s or contractor’s insurance provider.
24
If a local government fails to develop the list in a timely manner, the contractor may submit a
payment request for all remaining retainage withheld by the local government and payment of
any remaining undisputed contract amounts, less any amount withheld under the contract for
incomplete or uncorrected work, which must be paid within 20 business days after receipt of a
request. If the local government provides the contractor written notice specifying the failure to
meet contract requirements in developing the list of items, the local government need not pay or
process any payment request for retainage if the contractor failed to cooperate in developing the
list or performing its contractual responsibilities.
25
If an improper payment request is submitted by a vendor, within 10 days after receiving the
request the local government must notify the vendor, in writing, that the payment request is
improper and indicate what corrective action is required.
26
If a dispute arises between a vendor and a local government concerning a payment request, the
dispute is adjudicated under the dispute resolution procedure established the local governmental
entity. Proceedings to resolve the dispute must begin within 45 days after the date the payment
request was received and the local government must render its final decision within 60 days after
the date the payment request was received. If the dispute is resolved in favor of the local
government, interest begins to accrue 15 days after the final decision. If the dispute is resolved in
favor of the vendor, interest accrual relates back to the original date the payment became due.
27
State government public construction contracts are subject to the Florida Prompt Payment Act.
28
If a public entity
29
disputes a portion of a payment request, the undisputed portion must be timely
paid.
30
Under procedures established by the public entity, each payment request is marked as received
on the date it is delivered to the agent, employee, designated facility or office of the public entity.
If the terms under which a purchase is made allow for partial deliveries and a payment request is
submitted for a partial delivery, the time for such payment must be calculated from the time of
the partial delivery and the submission of the payment request. A public entity must submit a
payment request to the Chief Financial Officer for payment no more than 20 days after receipt.
31
23
Section 218.735(7)(g), F.S.
24
Section 218.735(7)(h), F.S.
25
Section 218.735(7)(i), F.S.
26
Section 218.76(1), F.S.
27
Section 218.76(2)(a), F.S.
28
Section 255.0705, F.S. This act expressly excludes local governments as defined in s. 218.72, F.S. Section 255.072(5), F.S.
29
The state, or any office, board, bureau, commission, department, branch, division, or institution thereof. Section 255.072(5), F.S.
30
Section 255.073(2), F.S.
31
Section 255.074, F.S. BILL: CS/SB 346 Page 5
Prohibited Governmental Actions Related to Public Works Projects
Except as required by federal or state law, the state or any political subdivision
32
that contracts
for a public works project
33
may not:
Prevent a certified, licensed, or registered contractor, subcontractor, or material supplier or
carrier, from participating in the bidding process based on the geographic location of the
company headquarters or offices of the contractor, subcontractor, or material supplier or
carrier submitting a bid on a public works project or the residences of employees of such
contractor, subcontractor, or material supplier or carrier;
Require a contractor, subcontractor, or material supplier or carrier engaged in the project to:
o Pay employees a predetermined amount of wages or prescribe any wage rate;
o Provide employees a specified type, amount, or rate of employee benefits;
o Control, limit, or expand staffing; or
o Recruit, train, or hire employees from a designated, restricted, or single source.
Prohibit any contractor, subcontractor, or material supplier or carrier from submitting a bid
on the project if such individual is able to perform the work described and is qualified,
licensed, or certified as required by state law.
34
The foregoing governmental actions are prohibited only for projects that:
Exceed $1 million in value;
Are paid for with any state-appropriated funds; and
Are to construct, maintain, repair, renovate, remodel, or improve any building, road, street,
sewer, storm drain, water system, site development, irrigation system, reclamation project,
gas or electrical distribution system, gas or electrical substation, or other facility, project, or
portion thereof that is owned in whole or in part by any political subdivision.
35
Under current law, a political subdivision, for instance, may impose the otherwise prohibited
requirements on contractors for projects that are paid for entirely with local funds or, if state
funds are used, for projects up to $1 million.
III. Effect of Proposed Changes:
Prompt Pay for Public Construction
The bill amends the requirements for construction service contracts between local government
and contractors for public construction projects. The local government’s list of items required to
32
“Political subdivision” means a separate agency or unit of local government created or established by law or ordinance and
the officers thereof. The term includes, but is not limited to, a county; a city, town, or other municipality; or a department,
commission, authority, school district, taxing district, water management district, board, public corporation, institution of
higher education, or other public agency or body thereof authorized to expend public funds for construction, maintenance,
repair, or improvement of public works. See s. 255.0992(1)(a), F.S.
33
“Public works project” means an activity exceeding $1 million in value that is paid for with any state-appropriated funds
and which consists of the construction, maintenance, repair, renovation, remodeling, or improvement of a building, road,
street, sewer, storm drain, water system, site development, irrigation system, reclamation project, gas or electrical distribution
system, gas or electrical substation, or other facility, project, or portion thereof that is owned in whole or in part by any
political subdivision. See s. 255.0992(1)(b), F.S.
34
Section 255.0992, F.S.
35
Section 255.0992(1)(b), F.S. BILL: CS/SB 346 Page 6
render complete, satisfactory, and acceptable the construction services required under the
contract must include a dollar valuation reasonably determined by the contractor as a portion of
the contract value to complete the items on the list. The bill amends the deadline for developing
the list of items required for construction contracts with an estimated cost of $10 million or
more, removing the option to extend the deadline beyond 30 days. The bill also adds a new
requirement specifying the date for delivering the list of items. The local government must pay
the contractor the remaining balance of the contract within 20 days after developing the list,
including remaining retainage withheld, less an amount that equals the estimated cost to
complete the items on the list. For state government entities, similar language for timely payment
under construction contracts are incorporated for project closeout and payment of retainage.
The bill requires that if a local government has provided written notice to the contractor
specifying the failure to meet contract requirements in the development of the list of items to be
completed, the local government must pay the contractor the remaining balance of the contract,
less an amount equal to 150 percent of the estimated cost to complete the items that the local
governmental entity intended to include on the list.
The bill removes the authority of a local government to withhold any amounts for payment or
release that are subject to a claim or demand by the local government or contractor, limiting
withholding only for good faith disputes in writing pursuant to the contract or certain bond
claims. The bill conforms the language for timely payment for purchases of construction services
with public construction retainage.
The bill reduces the time a dispute proceeding must be commenced by a local government to 30
days after the date the payment request was received by the local governmental entity. The time
to for the local government to make a final determination on such a dispute is reduced to 45 days
after the date the payment request was received by the local government.
The bill amends the requirement for payment of undisputed portions of construction contractor
payment requests, requiring payment as required under the contract or 20 days after receipt of the
request, whichever is earlier.
The bill amends the time a public entity must submit a payment request to the Chief Financial
Officer for payment from 20 days after receipt of the payment request to 14 days.
Public Works Projects
The bill amends the definition of “public works project” in s. 255.0992, F.S., to reduce the
project threshold from $1 million to $350,000, for which the governmental actions identified in
s. 255.0992(2)(b)-(c), F.S., are prohibited. The bill also applies those prohibited governmental
actions to public works projects paid for with local funds.
With this change, political subdivisions,
36
cannot, for example, exclude certain contractors from
bidding on a public works project or impose certain wage and employment conditions on
36
“Political subdivision” means a separate agency or unit of local government created or established by law or ordinance and
the officers thereof. The term includes, but is not limited to, a county; a city, town, or other municipality; or a department,
commission, authority, school district, taxing district, water management district, board, public corporation, institution of BILL: CS/SB 346 Page 7
contractors if the value of the project exceeds $350,000 and is paid for with any local or state-
appropriated funds.
The bill takes effect on July 1, 2023.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill may have a positive financial impact on building contractors to the extent
payments of undisputed amounts under contracts are paid more promptly.
The change to the definition of “public works project” may result in a shift in the award
of certain construction contracts among locally-based and out of town contractors.
Preventing political subdivisions from imposing certain predetermined wage, benefit, and
staffing requirements for certain public works projects may have a positive fiscal impact
on contractors and a potential negative fiscal impact on contractor employees.
higher education, or other public agency or body thereof authorized to expend public funds for construction, maintenance,
repair, or improvement of public works. See s. 255.0992(1)(a), F.S. BILL: CS/SB 346 Page 8
C. Government Sector Impact:
The bill may have a negative fiscal impact on local governments to the extent they must
settle construction contracts under shorter deadlines.
The change to the definition of “public works project” may increase competition and
lower costs for local public construction projects exceeding $350,000.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 166.033, 218.735,
218.76, 255.073, 255.074, 255.077, 255.078, and 255.0992.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Community Affairs on March 15, 2023:
The CS removes section 1 of the bill relating to issuing development permits and orders.
As it pertains to the prompt pay provisions, the CS requires that the estimated costs to
complete all items on a construction list must be “a dollar valuation, reasonably
determined by the contractor as a portion of the contract value.” The bill as filed required
estimated costs to be calculated “using reasonable market rates.”
The CS restores the ability for political subdivisions to impose the governmental actions
identified in s. 255.0992(2)(b)-(c), F.S., for public works projects, but only for those
projects that do not exceed $350,000.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.