MD
Maryland Senate Bill SB183

Maryland 2024 Regular Session

Maryland Senate Bill SB183 Compare Versions

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1- WES MOORE, Governor Ch. 30
21
3-– 1 –
4-Chapter 30
5-(Senate Bill 183)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXIS TING LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *sb0183*
89
9-State Procurement – Prompt Payment of Suppliers
10+SENATE BILL 183
11+P2 4lr0757
12+ (PRE–FILED) CF HB 342
13+By: Senator Bailey
14+Requested: September 28, 2023
15+Introduced and read first time: January 10, 2024
16+Assigned to: Finance
17+Reassigned: Budget and Taxation, January 11, 2024
18+Committee Report: Favorable with amendments
19+Senate action: Adopted
20+Read second time: February 18, 2024
1021
11-FOR the purpose of providing that certain provisions requiring prompt payments for State
12-procurement contracts apply to payments owed by a contractor or subcontractor to a
13-supplier; and generally relating to the prompt payment of suppliers that have
14-supplied labor or materials for work done under State procurement contracts.
22+CHAPTER ______
1523
16-BY repealing and reenacting, with amendments,
17- Article – State Finance and Procurement
18-Section 15–226
19- Annotated Code of Maryland
20- (2021 Replacement Volume and 2023 Supplement)
24+AN ACT concerning 1
2125
22- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
23-That the Laws of Maryland read as follows:
26+State Procurement – Prompt Payment of Suppliers 2
2427
25-Article – State Finance and Procurement
28+FOR the purpose of providing that certain provisions requiring prompt payments for State 3
29+procurement contracts apply to payments owed by a contractor or subcontractor to a 4
30+supplier; and generally relating to the prompt payment of suppliers that have 5
31+supplied labor or materials for work done under State procurement contracts. 6
2632
27-15–226.
33+BY repealing and reenacting, with amendments, 7
34+ Article – State Finance and Procurement 8
35+Section 15–226 9
36+ Annotated Code of Maryland 10
37+ (2021 Replacement Volume and 2023 Supplement) 11
2838
29- (a) (1) In this section[, “undisputed] THE FOLLOWING WORDS HAVE THE
30-MEANINGS INDICATED .
39+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 12
40+That the Laws of Maryland read as follows: 13
3141
32- (2) “SUPPLIER” MEANS A PERSON THAT HAS SUPPLIED LABOR O R
33-MATERIALS TO A CONTR ACTOR OR SUBCONTRACTOR IN THE PROSECUTION O F
34-WORK PROVIDED FOR IN A STATE PROCUREMENT CON TRACT.
42+Article – State Finance and Procurement 14
3543
36- (3) “UNDISPUTED amount” means an amount owed by a contractor to a
37-subcontractor OR SUPPLIER for which there is no good faith dispute, including any
38-retainage withheld.
44+15–226. 15
3945
40- (b) It is the policy of the State that, for work under a State procurement contract:
46+ (a) (1) In this section[, “undisputed] THE FOLLOWING WORDS HAVE THE 16
47+MEANINGS INDICATED . 17
48+ 2 SENATE BILL 183
4149
42- (1) a contractor shall promptly pay to a subcontractor OR SUPPLIER any
43-undisputed amount to which the subcontractor OR SUPPLIER is entitled; and
4450
45- (2) a subcontractor shall promptly pay to a lower tier subcontractor OR
46-SUPPLIER any undisputed amount to which the lower tier subcontractor is entitled.
47- Ch. 30 2024 LAWS OF MARYLAND
51+ (2) “SUPPLIER” MEANS A PERSON THAT HAS SUPPLIED LABOR O R 1
52+MATERIALS TO A CONTR ACTOR OR SUBCONTRACTOR IN THE PROSECUTION O F 2
53+WORK PROVIDED FOR IN A STATE PROCUREMENT CON TRACT. 3
4854
49-– 2 –
50- (c) (1) A contractor shall pay a subcontractor OR SUPPLIER an undisputed
51-amount to which the subcontractor OR SUPPLIER is entitled within 10 days of receiving a
52-progress or final payment from the State.
55+ (3) “UNDISPUTED amount” means an amount owed by a contractor to a 4
56+subcontractor OR SUPPLIER for which there is no good faith dispute, including any 5
57+retainage withheld. 6
5358
54- (2) If a contractor withholds payment from a subcontractor OR SUPPLIER,
55-within the time period in which payment normally would be made, the contractor shall:
59+ (b) It is the policy of the State that, for work under a State procurement contract: 7
5660
57- (i) notify the subcontractor OR SUPPLIER in writing and state the
58-reason why payment is being withheld; and
61+ (1) a contractor shall promptly pay to a subcontractor OR SUPPLIER any 8
62+undisputed amount to which the subcontractor OR SUPPLIER is entitled; and 9
5963
60- (ii) provide a copy of the notice to the procurement officer.
64+ (2) a subcontractor shall promptly pay to a lower tier subcontractor OR 10
65+SUPPLIER any undisputed amount to which the lower tier subcontractor is entitled. 11
6166
62- (d) (1) If a subcontractor OR SUPPLIER does not receive a payment within the
63-required time period, the subcontractor OR SUPPLIER may give written notice of the
64-nonpayment to the procurement officer.
67+ (c) (1) A contractor shall pay a subcontractor OR SUPPLIER an undisputed 12
68+amount to which the subcontractor OR SUPPLIER is entitled within 10 days of receiving a 13
69+progress or final payment from the State. 14
6570
66- (2) The notice shall:
71+ (2) If a contractor withholds payment from a subcontractor OR SUPPLIER, 15
72+within the time period in which payment normally would be made, the contractor shall: 16
6773
68- (i) indicate the name of the contractor, the project under which the
69-dispute exists, and the amount in dispute;
74+ (i) notify the subcontractor OR SUPPLIER in writing and state the 17
75+reason why payment is being withheld; and 18
7076
71- (ii) provide an itemized description on which the amount is based;
72-and
77+ (ii) provide a copy of the notice to the procurement officer. 19
7378
74- (iii) if known, provide an explanation for any dispute concerning
75-payment by the contractor.
79+ (d) (1) If a subcontractor OR SUPPLIER does not receive a payment within the 20
80+required time period, the subcontractor OR SUPPLIER may give written notice of the 21
81+nonpayment to the procurement officer. 22
7682
77- (e) (1) Within 2 business days of receipt of written notice from a subcontractor
78-OR SUPPLIER , a representative of the unit designated by the procurement officer shall
79-verbally contact the contractor to ascertain whether the amount withheld is an undisputed
80-amount.
83+ (2) The notice shall: 23
8184
82- (2) If the representative of the unit decides that a part or all of the amount
83-withheld is an undisputed amount, the representative of the unit shall instruct the
84-contractor to pay the subcontractor OR SUPPLIER the undisputed amount within 3
85-business days.
85+ (i) indicate the name of the contractor, the project under which the 24
86+dispute exists, and the amount in dispute; 25
8687
87- (3) The representative of the unit shall verbally communicate to the
88-subcontractor OR SUPPLIER the results of discussions with the contractor.
88+ (ii) provide an itemized description on which the amount is based; 26
89+and 27
8990
90- (4) If the contractor is instructed to pay the subcontractor OR SUPPLIER
91-and the subcontractor OR SUPPLIER is not paid within the time instructed under
92-paragraph (2) of this subsection, the subcontractor OR SUPPLIER may report the
93-nonpayment in writing to the procurement officer.
94- WES MOORE, Governor Ch. 30
91+ (iii) if known, provide an explanation for any dispute concerning 28
92+payment by the contractor. 29
9593
96-– 3 –
97- (f) (1) If the subcontractor OR SUPPLIER notifies the procurement officer
98-under subsection (e)(4) of this section that payment has not been made, the representative
99-of the unit shall schedule a meeting to discuss the dispute with the unit’s project manager,
100-the contractor, and the subcontractor OR SUPPLIER:
94+ (e) (1) Within 2 business days of receipt of written notice from a subcontractor 30
95+OR SUPPLIER , a representative of the unit designated by the procurement officer shall 31 SENATE BILL 183 3
10196
102- (i) at a time and location designated by the representative of the
103-unit; but
10497
105- (ii) not later than 10 days after receiving notice from the
106-subcontractor OR SUPPLIER under subsection (e)(4) of this section.
98+verbally contact the contractor to ascertain whether the amount withheld is an undisputed 1
99+amount. 2
107100
108- (2) The purpose of the meeting is to establish why the contractor has not
109-paid the subcontractor OR SUPPLIER in the required time period.
101+ (2) If the representative of the unit decides that a part or all of the amount 3
102+withheld is an undisputed amount, the representative of the unit shall instruct the 4
103+contractor to pay the subcontractor OR SUPPLIER the undisputed amount within 3 5
104+business days. 6
110105
111- (3) The representative of the unit shall require the parties to provide at the
112-meeting any information that the representative believes necessary to evaluate the dispute.
106+ (3) The representative of the unit shall verbally communicate to the 7
107+subcontractor OR SUPPLIER the results of discussions with the contractor. 8
113108
114- (4) If the representative of the unit determines that the contractor is
115-delinquent in payment of an undisputed amount to the subcontractor OR SUPPLIER ,
116-further progress payments to the contractor may be withheld until the subcontractor OR
117-SUPPLIER is paid.
109+ (4) If the contractor is instructed to pay the subcontractor OR SUPPLIER 9
110+and the subcontractor OR SUPPLIER is not paid within the time instructed under 10
111+paragraph (2) of this subsection, the subcontractor OR SUPPLIER may report the 11
112+nonpayment in writing to the procurement officer. 12
118113
119- (5) If payment is not paid to the subcontractor OR SUPPLIER within 7 days
120-after the representative of the unit determines that the contractor is delinquent in paying
121-the subcontractor OR SUPPLIER under this subsection, the representative shall schedule
122-a second meeting to address the dispute:
114+ (f) (1) If the subcontractor OR SUPPLIER notifies the procurement officer 13
115+under subsection (e)(4) of this section that payment has not been made, the representative 14
116+of the unit shall schedule a meeting to discuss the dispute with the unit’s project manager, 15
117+the contractor, and the subcontractor OR SUPPLIER: 16
123118
124- (i) at a time and location designated by the representative of the
125-unit; but
119+ (i) at a time and location designated by the representative of the 17
120+unit; but 18
126121
127- (ii) not later than 5 days after the close of the 7–day period.
122+ (ii) not later than 10 days after receiving notice from the 19
123+subcontractor OR SUPPLIER under subsection (e)(4) of this section. 20
128124
129- (6) If, at the completion of the second meeting, the representative of the
130-unit determines that the contractor continues to be delinquent in payments owed to the
131-subcontractor OR SUPPLIER, the representative:
125+ (2) The purpose of the meeting is to establish why the contractor has not 21
126+paid the subcontractor OR SUPPLIER in the required time period. 22
132127
133- (i) shall order that further payments to the contractor not be
134-processed until payment to the subcontractor is verified;
128+ (3) The representative of the unit shall require the parties to provide at the 23
129+meeting any information that the representative believes necessary to evaluate the dispute. 24
135130
136- (ii) may order that work under the contract be suspended based on
137-the failure of the contractor to meet obligations under the contract; and
131+ (4) If the representative of the unit determines that the contractor is 25
132+delinquent in payment of an undisputed amount to the subcontractor OR SUPPLIER , 26
133+further progress payments to the contractor may be withheld until the subcontractor OR 27
134+SUPPLIER is paid. 28
138135
139- (iii) subject to paragraph (7) of this subsection, may require that the
140-contractor pay a penalty to the subcontractor OR SUPPLIER, in an amount not exceeding
141-$100 per day, from the date that payment was required under subsection (e)(2) of this
142-section. Ch. 30 2024 LAWS OF MARYLAND
136+ (5) If payment is not paid to the subcontractor OR SUPPLIER within 7 days 29
137+after the representative of the unit determines that the contractor is delinquent in paying 30
138+the subcontractor OR SUPPLIER under this subsection, the representative shall schedule 31
139+a second meeting to address the dispute: 32
143140
144-– 4 –
141+ (i) at a time and location designated by the representative of the 33
142+unit; but 34
143+ 4 SENATE BILL 183
145144
146- (7) A penalty may not be imposed under paragraph (6)(iii) of this
147-subsection for any period that the representative of the unit determines the subcontractor
148-OR SUPPLIER was not diligent in reporting nonpayment to the procurement officer.
149145
150- (g) (1) A contractor [or], a subcontractor, OR A SUPPLIER may appeal a
151-decision under subsection (f)(6) of this section to the procurement officer.
146+ (ii) not later than 5 days after the close of the 7–day period. 1
152147
153- (2) The contractor shall comply with the procurement officer’s decision.
148+ (6) If, at the completion of the second meeting, the representative of the 2
149+unit determines that the contractor continues to be delinquent in payments owed to the 3
150+subcontractor OR SUPPLIER, the representative: 4
154151
155- (h) An act, failure to act, or decision of a procurement officer or a representative
156-of a unit concerning a payment dispute between a contractor and subcontractor or
157-SUPPLIER, OR between subcontractors, OR BETWEEN A SUBCONT RACTOR AND
158-SUPPLIER under this section may not:
152+ (i) shall order that further payments to the contractor not be 5
153+processed until payment to the subcontractor is verified; 6
159154
160- (1) affect the rights of the contracting parties under any other provision of
161-law;
155+ (ii) may order that work under the contract be suspended based on 7
156+the failure of the contractor to meet obligations under the contract; and 8
162157
163- (2) be used as evidence on the merits of a dispute between the unit and the
164-contractor [or], the contractor and subcontractor , OR CONTRACTOR OR
165-SUBCONTRACTO R AND SUPPLIER in any other proceeding; or
158+ (iii) subject to paragraph (7) of this subsection, may require that the 9
159+contractor pay a penalty to the subcontractor OR SUPPLIER, in an amount not exceeding 10
160+$100 per day, from the date that payment was required under subsection (e)(2) of this 11
161+section. 12
166162
167- (3) result in liability against or prejudice the rights of the unit.
163+ (7) A penalty may not be imposed under paragraph (6)(iii) of this 13
164+subsection for any period that the representative of the unit determines the subcontractor 14
165+OR SUPPLIER was not diligent in reporting nonpayment to the procurement officer. 15
168166
169- (i) A decision of a procurement officer or a representative of the unit designated
170-by the procurement officer under this section is not subject to judicial review or the
171-provisions of Part III of this subtitle.
167+ (g) (1) A contractor [or], a subcontractor, OR A SUPPLIER may appeal a 16
168+decision under subsection (f)(6) of this section to the procurement officer. 17
172169
173- (j) (1) A unit shall include in each State procurement contract a provision:
170+ (2) The contractor shall comply with the procurement officer’s decision. 18
174171
175- (i) governing prompt payment to subcontractors; and
172+ (h) An act, failure to act, or decision of a procurement officer or a representative 19
173+of a unit concerning a payment dispute between a contractor and subcontractor or 20
174+SUPPLIER, OR between subcontractors, OR BETWEEN A SUBCONT RACTOR AND 21
175+SUPPLIER under this section may not: 22
176176
177- (ii) requiring inclusion of a similar provision in each subcontract at
178-any tier.
177+ (1) affect the rights of the contracting parties under any other provision of 23
178+law; 24
179179
180- (2) The contract provision shall establish procedures and remedies for the
181-resolution of payment disputes similar to the process and remedies prescribed in
182-subsections (c) through (g) of this section.
180+ (2) be used as evidence on the merits of a dispute between the unit and the 25
181+contractor [or], the contractor and subcontractor , OR CONTRACTOR OR 26
182+SUBCONTRACTOR AND SUPPLIER in any other proceeding; or 27
183183
184- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
185-October 1, 2024.
184+ (3) result in liability against or prejudice the rights of the unit. 28
186185
187-Approved by the Governor, April 9, 2024.
186+ (i) A decision of a procurement officer or a representative of the unit designated 29
187+by the procurement officer under this section is not subject to judicial review or the 30
188+provisions of Part III of this subtitle. 31
189+
190+ (j) (1) A unit shall include in each State procurement contract a provision: 32
191+ SENATE BILL 183 5
192+
193+
194+ (i) governing prompt payment to subcontractors; and 1
195+
196+ (ii) requiring inclusion of a similar provision in each subcontract at 2
197+any tier. 3
198+
199+ (2) The contract provision shall establish procedures and remedies for the 4
200+resolution of payment disputes similar to the process and remedies prescribed in 5
201+subsections (c) through (g) of this section. 6
202+
203+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall ta ke effect 7
204+October 1, 2024. 8
205+
206+
207+
208+
209+Approved:
210+________________________________________________________________________________
211+ Governor.
212+________________________________________________________________________________
213+ President of the Senate.
214+________________________________________________________________________________
215+ Speaker of the House of Delegates.