State Finance and Procurement - Retention Proceeds
If passed, SB921 would amend Article – State Finance and Procurement, specifically Section 13-225, to clarify the regulations concerning retention money. The new provisions are expected to stipulate that primary procurement units, such as the Maryland Transportation Authority, have the authority to withhold from payments based on reasonable assessments necessary to protect state interests. However, this withholding cannot exceed the percentages defined in the contracts, thus offering a structured approach to retention.
Senate Bill 921 addresses the handling of retention proceeds in state procurement contracts. The bill mandates that retention proceeds retained by a unit or a contractor under these contracts must be paid within 90 days after the date of substantial completion. This legislation aims to ensure timely payments to contractors and subcontractors, which is a significant concern in the construction industry where cash flow is essential for business sustainability. The bill revises existing laws in this area and is targeted at improving the financial dynamics in public contract-related work.
Notable points of contention surrounding SB921 may arise during discussions over the balance of contractor protection versus state control over financial practices in procurement. Supporters might argue that the changes provide much-needed clarity and expedite payment processes, enhancing cash flow for businesses engaged in state contracts. Conversely, critics could raise concerns about the effectiveness of these measures in practice and question whether they adequately safeguard the state's financial interests without imposing undue burdens on contractors and subcontractors.