UNOFFICIAL COPY 24 RS HB 777/GA
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AN ACT relating to government contracts and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 45A.030 is amended to read as follows: 3
As used in this code, unless the context requires otherwise: 4
(1) "Business" means any corporation, partnership, individual, sole proprietorship, joint 5
stock company, joint venture, or any other legal entity through which business is 6
conducted; 7
(2) "Change order" means a written order signed by the purchasing officer, directing 8
the contractor to make changes that the changes clause of the contract authorizes 9
the purchasing officer to order without the consent of the contractor; 10
(3) "Chief purchasing officer" means the secretary of the Finance and Administration 11
Cabinet, who shall be responsible for all procurement of the Commonwealth except 12
as provided by KRS Chapters 150, 175, 175B, 176, 177, and 180; 13
(4) "Construction" means the process of building, altering, repairing, improving, or 14
demolishing any public structures or buildings, or other public improvements of any 15
kind to any public real property. It does not include the routine maintenance of 16
existing structures, buildings, or real property; 17
(5) "Construction manager-agency" means services to assist the purchasing agency 18
manage construction that are procured through a contract that is qualifications-19
based; 20
(6) "Construction management-at-risk" means a project delivery method in which the 21
purchasing officer enters into a single contract with an offeror that assumes the risk 22
for construction at a contracted guaranteed maximum price as a general contractor, 23
and provides consultation and collaboration regarding the construction during and 24
after design of a capital project. The contract shall be subject to the bonding 25
requirements of KRS 45A.190; 26
(7) "Construction manager-general contractor" means a project delivery method in 27 UNOFFICIAL COPY 24 RS HB 777/GA
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which the purchasing officer enters into a single contract with an offeror to provide 1
preconstruction and construction services. During the preconstruction phase, the 2
successful offeror provides design consulting services. During the construction 3
phase, the successful offeror acts as general contractor by: 4
(a) Contracting with subcontractors; and 5
(b) Providing for management and construction at a fixed price with a completion 6
deadline; 7
(8) "Contract" means all types of state agreements, including memorandums of 8
agreement, grants and orders, for the acquisition, purchase, or disposal of supplies, 9
services, construction, or any other item. It includes: awards; contracts of a fixed-10
price, cost, cost-plus-a-fixed-fee, contingency fee, or incentive type; contracts 11
providing for the issuance of job or task orders; leases; letter contracts; purchase 12
orders; public-private partnership agreements; program administration contracts; 13
personal service contracts; and insurance contracts except as provided in KRS 14
45A.022. It includes supplemental agreements with respect to any of the foregoing; 15
(9) "Contract modification" means any written alteration in the specifications, delivery 16
point, rate of delivery, contract period, price, quantity, or other contract provisions 17
of any existing contract, whether accomplished by unilateral action in accordance 18
with a contract provision or by mutual action of the parties to the contract. It 19
includes bilateral actions, such as supplemental agreements, and unilateral actions, 20
such as change orders, administrative changes, notices of termination, and notices 21
of the exercise of a contract option; 22
(10) "Contractor" means any person having a contract with a governmental body; 23
(11) "Data" means recorded information, regardless of form or characteristic; 24
(12) "Design-bid-build" means a project delivery method in which the purchasing officer 25
sequentially awards separate contracts, the first for architectural, engineering, or 26
engineering-related services to design the project and the second for construction of 27 UNOFFICIAL COPY 24 RS HB 777/GA
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the capital project according to the design. The contract shall be subject to the 1
bonding requirements of KRS 45A.185; 2
(13) "Design-build" means a project delivery method in which the purchasing officer 3
enters into a single contract for design and construction of a capital project. The 4
contract shall be subject to the bonding requirements of KRS 45A.190; 5
(14) "Designee" means a duly authorized representative of a person holding a superior 6
position; 7
(15) "Document" means any physical embodiment of information or ideas, regardless of 8
form or characteristic, including electronic versions thereof; 9
(16) "Employee" means an individual drawing a salary from a governmental body, 10
whether elected or not, and any nonsalaried individual performing personal services 11
for any governmental body; 12
(17) "Governmental body" means any department, commission, council, board, bureau, 13
committee, institution, legislative body, agency, government corporation, or other 14
establishment of the executive or legislative branch of the state government; 15
(18) "Meeting" means all gatherings of every kind, including video teleconferences; 16
(19) "Negotiation" means contracting by either the method set forth in KRS 45A.085, 17
45A.090, or 45A.095; 18
(20) "Person" means any business, individual, organization, or group of individuals; 19
(21) "Private partner" means any entity that is a partner in a public-private partnership 20
other than: 21
(a) The Commonwealth of Kentucky, or any agency or department thereof; 22
(b) The federal government; 23
(c) Any other state government; or 24
(d) Any agency of a state, federal, or local government; 25
(22) "Procurement" means the purchasing, buying, renting, leasing, or otherwise 26
obtaining of any supplies, services, or construction. It includes all functions that 27 UNOFFICIAL COPY 24 RS HB 777/GA
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pertain to the procurement of any supply, service, or construction item, including 1
description of requirements, selection and solicitation of sources, preparation and 2
award of contract, and all phases of contract administration; 3
(23) "Public-private partnership" means a project delivery method for construction or 4
financing of capital projects, as defined in KRS 45.750, or procurement of services, 5
pursuant to a written public-private partnership agreement entered into pursuant to 6
KRS 45A.077 and administrative regulations promulgated thereunder, between: 7
(a) At least one (1) private partner; and 8
(b) The Commonwealth of Kentucky, or any agency or department thereof; 9
(24) "Purchase request" or "purchase requisition" means that document whereby a using 10
agency requests that a contract be obtained for a specified need, and may include, 11
but is not limited to, the technical description of the requested item, delivery 12
schedule, transportation, criteria for evaluation of solicitees, suggested sources of 13
supply, and information supplied for the making of any written determination and 14
finding required by KRS 45A.025; 15
(25) "Purchasing agency" means any governmental body that is authorized by this code 16
or its implementing administrative regulations or by way of delegation from the 17
chief purchasing officer to contract on its own behalf rather than through the central 18
contracting authority of the chief purchasing officer; 19
(26) "Purchasing officer" means any person authorized by a governmental body in 20
accordance with procedures prescribed by administrative regulations to enter into 21
and administer contracts and make written determinations and findings with respect 22
thereto. The term includes an authorized representative acting within the limits of 23
authority; 24
(27) "Services" means the rendering by a contractor of its time and effort rather than the 25
furnishing of a specific end product, other than reports that are merely incidental to 26
the required performance of services; 27 UNOFFICIAL COPY 24 RS HB 777/GA
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(28) "Supplemental agreement" means any contract modification that is accomplished 1
by the mutual action of the parties; 2
(29) "Supplies" means all property, including but not limited to leases of real property, 3
printing, and insurance, except land or a permanent interest in land; 4
(30) "Using agency" means any governmental body of the state that utilizes any 5
supplies, services, or construction purchased under this code; 6
(31) "Video teleconference" means one (1) meeting, occurring in two (2) or more 7
locations, where individuals can see and hear each other by means of video and 8
audio equipment; and 9
(32) "Writing" or "written" means letters, words, or numbers, or their equivalent, set 10
down by handwriting, typewriting, printing, photostating, photographing, magnetic 11
impulse, mechanical or electronic recording, or other form of data compilation. 12
Section 2. KRS 45A.035 is amended to read as follows: 13
(1) The secretary of the Finance and Administration Cabinet shall have power and 14
authority over, and may, except as otherwise expressly provided in this code, adopt 15
regulations pursuant to KRS Chapter 13A and consistent with this code governing 16
the purchasing, management, and control of any and all supplies, services, and 17
construction, and other items required to be purchased by the Commonwealth. The 18
secretary shall consider and decide matters of policy with regard to state 19
procurement. The secretary shall have the power of review with respect to the 20
implementation of administrative regulations and policy determinations. 21
(2) Administrative regulations shall be promulgated[adopted] governing the following: 22
(a) Conditions and procedures for delegations of purchasing authority; 23
(b) Prequalification, suspension, debarment, and reinstatement of prospective 24
bidders; 25
(c) Small purchase procedures; 26
(d) Conditions and procedures for the purchase of items for resale; 27 UNOFFICIAL COPY 24 RS HB 777/GA
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(e) Conditions and procedures for the purchase of agricultural products in 1
accordance with KRS 45A.645; 2
(f) Conditions and procedures for the use of source selection methods authorized 3
by this code, including emergency purchases; 4
(g) Opening and rejection of bids or offers, consideration of alternate bids, and 5
waiver of informalities in offers; 6
(h) Confidentiality of technical data and trade secrets information submitted by 7
actual or prospective bidders or offerors; 8
(i) Partial, progressive, and multiple awards; 9
(j) Supervision of storerooms and inventories, including determination of 10
appropriate stock levels and the management, transfer, sale, or other disposal 11
of state-owned property; 12
(k) Definitions and classes of contractual services and procedures for acquiring 13
them; 14
(l) An appeals process to resolve disputes arising from specifications requiring 15
items deemed to be equivalent or a sole brand as specified in KRS 45A.170; 16
[and] 17
(m) Use of reverse auctions as defined in KRS 45A.070; and 18
(n) Policies and procedures governing timely payments, reimbursement, and 19
dispute resolution for contract payments in violation of KRS 45.453 and 20
Section 3 of this Act. 21
The secretary may adopt such other regulations as deemed advisable to carry out 22
the purposes of this code. 23
SECTION 3. A NEW SECTION OF KRS CHAPTER 45A IS CREATED TO 24
READ AS FOLLOWS: 25
(1) For any contract awarded under this chapter, all payments shall be timely made 26
pursuant to KRS 45.451 and 45.453, the terms of the contract, and as required in 27 UNOFFICIAL COPY 24 RS HB 777/GA
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this section. 1
(2) All contracts shall include provisions for: 2
(a) Negotiated terms for timely payments; 3
(b) Penalties for payment not received: 4
1. Within thirty (30) business days after the person or contractor has 5
submitted a timely and properly completed request for payment; or 6
2. In accordance with the payment terms of the contract; and 7
(c) A payment dispute and resolution process. 8
(3) If the purchasing agency fails to remit payment to the person or contractor within 9
thirty (30) business days following the receipt of a timely and properly completed 10
request for payment, or in accordance with the payment terms of the contract, the 11
purchasing agency shall pay a penalty to the contractor or person, as follows: 12
(a) In accordance with KRS 45.454, beginning on the thirty-first business day 13
after the receipt of the request for payment or failure of the purchasing 14
agency to remit payment in accordance with the terms of the contract, a 15
penalty of one percent (1%) per month or twelve percent (12%) per annum 16
of the unpaid amount for each thirty (30) days or fraction thereof that the 17
payment is outstanding; 18
(b) Twenty-five (25) business days following the submission of a timely and 19
properly completed request for payment or failure of remittance of the 20
payment in accordance with the terms of the contract, the person or 21
contractor shall notify the purchasing agency if the payment has not been 22
received. The notice for requirement of timely payment shall include the 23
date on which interest shall be anticipated to accrue; 24
(c) If a payment has not been made within thirty (30) business days, and the 25
person or contractor must utilize a loan, line of credit, revolving credit or 26
other financial instrument in order to fulfill the obligations and continue 27 UNOFFICIAL COPY 24 RS HB 777/GA
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performance of the contract, the interest and costs of credit borne by the 1
person or contractor shall be eligible for reimbursement until the date 2
payment has been issued; and 3
(d) Notwithstanding KRS 45.458, the interest penalty and reimbursement 4
payments shall not be deducted and modifications shall not made to the 5
budget of the contract, the total award of the contract, funds encumbered or 6
obligated for the contract, or total amount available to fulfill the contract 7
agreement as awarded by the purchasing agency. 8
(4) The secretary shall promulgate administrative regulations in accordance with 9
KRS Chapter 13A no later than December 31, 2024, to implement this section. 10
(5) (a) Beginning on July 1, 2024, the Finance and Administration Cabinet shall 11
submit a written report every six (6) months to the Legislative Research 12
Commission, the Interim Joint Committee on Appropriations and Revenue, 13
or House and Senate Standing Committees on Appropriations and Revenue 14
of any penalties and reimbursements paid by the Commonwealth of 15
Kentucky due to payments that are not timely made subject to the negotiated 16
terms of a contract in accordance with Sections 1 to 3 of this Act or 17
pursuant to KRS 45.454. 18
(b) The report shall include the amount of penalties and amount of 19
reimbursements paid to include but not limited to: 20
1. Cabinet; 21
2. Agency; 22
3. Procurement category or class; 23
4. Contract procurement type; and 24
5. Vendor commodity by business type. 25
Section 4. Whereas the timely payment to organizations and businesses that are 26
entering into contracts with the Commonwealth to provide essential goods and services to 27 UNOFFICIAL COPY 24 RS HB 777/GA
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the citizens of the Commonwealth is important for economic growth, an emergency is 1
declared to exist, and this Act takes effect upon its passage and approval by the Governor 2
or upon its otherwise becoming a law. 3