EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0553*
SENATE BILL 553
P2 2lr2644
HB 327/21 – HGO
By: Senator Patterson
Introduced and read first time: January 31, 2022
Assigned to: Budget and Taxation
A BILL ENTITLED
AN ACT concerning 1
State Finance and Procurement – Retention Proceeds 2
FOR the purpose of requiring that certain retention proceeds retained by a unit or a certain 3
contractor under a State procurement contract be paid within a certain period of time 4
after the date of substantial completion; and generally relating to the payment of 5
retention proceeds under a State procurement contract. 6
BY repealing and reenacting, with amendments, 7
Article – State Finance and Procurement 8
Section 13–225 9
Annotated Code of Maryland 10
(2021 Replacement Volume) 11
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 12
That the Laws of Maryland read as follows: 13
Article – State Finance and Procurement 14
13–225. 15
(a) (1) In this section the following words have the meanings indicated. 16
(2) “Payment security” has the meaning stated in § 17–101 of this article. 17
(3) “Performance security” has the meaning stated in § 17–101 of this 18
article. 19
(b) (1) If a contractor has furnished 100% payment security and 100% 20
performance security in accordance with Title 17, Subtitle 1 of this article under a State 21
procurement contract for construction, the percentage specified in the contract for 22
retainage may not exceed 5% of the total amount. 23 2 SENATE BILL 553
(2) In addition to retainage, a primary procurement unit and the Maryland 1
Transportation Authority may withhold from payments otherwise due a contractor any 2
amount that the unit reasonably believes necessary to protect the State’s interest. 3
(3) Retainage withheld by a primary procurement unit and the Maryland 4
Transportation Authority may be deposited in an interest–bearing escrow account in 5
accordance with § 15–108 of this article. 6
(c) (1) A contractor may not retain a percentage of payments due a 7
subcontractor that exceeds the percentage of payments retained by the primary 8
procurement unit or the Maryland Transportation Authority. 9
(2) Paragraph (1) of this subsection may not be construed to prohibit a 10
contractor from withholding any amount in addition to retainage if the contractor 11
determines that a subcontractor’s performance under the subcontract provides reasonable 12
grounds for withholding the additional amount. 13
(d) (1) A subcontractor may not retain a percentage of payments due a lower 14
tier subcontractor that exceeds the percentage of payments retained from the 15
subcontractor. 16
(2) Paragraph (1) of this subsection may not be construed to prohibit a 17
subcontractor from withholding any amount in addition to retainage if the subcontractor 18
determines that a lower tier subcontractor’s performance under the subcontract provides 19
reasonable grounds for withholding the additional amount. 20
(e) UNDISPUTED RETENTION PROCEEDS RETAINED BY A UNIT OR A 21
CONTRACTOR UNDER THI S SECTION SHALL BE P AID WITHIN 90 DAYS AFTER THE 22
DATE OF SUBSTA NTIAL COMPLETION , AS DEFINED BY THE AP PLICABLE CONTRACT 23
OR SUBCONTRACT . 24
(F) If retainage has been placed in escrow under § 15–108 of this article, each 25
payment of retainage shall include a pro rata portion of interest earned. 26
[(f)] (G) This section may not be construed to limit the application of the 27
provisions of Title 17, Subtitle 1 of this article. 28
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June 29
1, 2022. 30