State Finance and Procurement - Retention Proceeds
The bill seeks to amend the existing provisions under the Maryland Article on State Finance and Procurement. By allowing a maximum retainage of 5% of the contract amount if the contractor provides full payment and performance security, the bill is intended to strike a balance between protecting the state's interests while also fostering timely payments to contractors. This change is anticipated to enhance cash flow in the construction industry, indirectly promoting timely project completions and economic activity within the state.
House Bill 949 addresses the issue of retention proceeds within state procurement contracts, specifically concerning construction projects. The primary focus of the bill is to mandate that retention proceeds, which are funds withheld from contractors until the substantial completion of a project, must be paid within 90 days following the project’s completion. This requirement aims to ensure that contractors receive the funds they are owed promptly, potentially reducing the financial strain on construction businesses.
Discussion surrounding HB 949 is likely to revolve around concerns about the implementation and practical challenges of enforcing timely payments under state contracts. Critics may argue that while the legislation aims to expedite payments, it could lead to disputes over what constitutes 'substantial completion' and raise questions about the criteria under which retention proceeds can be withheld. Additionally, the balance of interests between state agencies and contractors may be a focal point in legislative debates.