S.B. 85
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SENATE BILL NO. 85–SENATOR DALY
PREFILED JANUARY 26, 2023
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Referred to Committee on Growth and Infrastructure
SUMMARY—Revises provisions relating to retention payments
under certain highway contracts. (BDR 35-665)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State: No.
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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.
AN ACT relating to highways; revising provisions governing the
amount of money that the Director of the Department of
Transportation must retain under certain highway
contracts; revising provisions governing the disbursement
of money by a contractor to a subcontractor or supplier;
and providing other matters properly relating thereto.
Legislative Counsel’s Digest:
Existing law authorizes the Director of the Department of Transportation, 1
subject to certain exceptions, to make monthly payments to a contractor who 2
satisfactorily performs any highway improvement or construction in full as the 3
work is completed by the contractor. The payments must not exceed 97.5 percent of 4
the contract price. The Director is required to retain the remaining 2.5 percent of 5
the contract price until certain conditions are met. The Department is required to 6
perform a final inspection of the work completed under a contract for a project of 7
highway improvement or construction. If an inspection discloses that the work was 8
completed satisfactorily, the Department is required to reduce the amount of the 9
contract price retained to not more than $50,000 until the entire contract is 10
completed satisfactorily and accepted by the Director. (NRS 408.383) Section 1 of 11
this bill changes the percentage of the contract price which must be retained by the 12
Director to 5 percent, but not more than $50,000. Section 1 eliminates the 13
requirement that if a final inspection discloses that the work was completed 14
satisfactorily, the Director reduce the amount of the contract price retained by the 15
Department to not more than $50,000, with any remaining amount to be retained 16
until the contract is completed satisfactorily and accepted by the Director. Section 1 17
requires instead that if a final inspection discloses the work was completed 18
satisfactorily, the Director shall pay the remaining amount of the contract price 19
retained by the Department not later than 30 days after the final inspection. 20
Existing law requires a contractor to disburse money paid to the contractor 21
under a contract for a project of highway improvement or construction to his or her 22
subcontractors and suppliers within a certain amount of time and provides that, if a 23
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contractor withholds more than 2.5 percent from such a required payment, the 24
subcontractor or supplier may contact the Director to resolve such a dispute 25
between the contractor and the subcontractor or supplier. (NRS 408.383) Section 1 26
provides that a subcontractor or supplier may contact the Director to resolve such a 27
dispute if the contractor withholds more than 5 percent of a required payment. 28
Section 2 of this bill prohibits the retroactive application of the amendatory 29
provisions of this bill to contracts made or awarded by the Department before the 30
effective date of this bill. 31
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. NRS 408.383 is hereby amended to read as follows: 1
408.383 1. Except as otherwise provided in subsections 2, 12 2
and 13, the Director may pay at the end of each calendar month, or 3
as soon thereafter as practicable, to any contractor satisfactorily 4
performing any highway improvement or construction as the work 5
progresses in full for the work as completed but not more than 6
[97.5] 95 percent of the entire contract price. The progress estimates 7
must be based upon materials in place, or on the job site, or at a 8
location approved by the Director, and invoiced, and labor expended 9
thereon. The remaining [2.5] 5 percent , but not more than $50,000, 10
must be retained until the remaining money is disposed of in the 11
manner provided in subsection 3 or 4, as applicable. 12
2. If the work in progress is being performed on a satisfactory 13
basis, the Director may reduce the percentage retained if the 14
Director finds that sufficient reasons exist for additional payment 15
and has obtained written approval from every surety furnishing 16
bonds for the work. Any remaining money must be retained until 17
such money is disposed of in the manner provided in subsection 3 or 18
4, as applicable. 19
3. Upon receiving notice from the contractor of the completion 20
of all work under a contract for a project of highway improvement 21
or construction, the Department shall perform a final inspection of 22
such work. If the final inspection discloses that any work, in whole 23
or in part, is unsatisfactory, the Department will provide the 24
contractor with notice of the deficiencies in such work that require 25
correction before the work will be considered completed 26
satisfactorily. Upon receiving notice from the contractor that any 27
such unsatisfactory work has been corrected, the Department shall 28
conduct another final inspection. If a final inspection discloses that 29
all work under a contract for a project of highway improvement or 30
construction has been completed satisfactorily, the Director shall 31
[reduce] pay any money being retained pursuant to subsection 1 [to 32
not more than $50,000,] not later than 30 days after such final 33
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inspection. [Any remaining money must be retained until the entire 1
contract is completed satisfactorily and accepted by the Director.] 2
4. If it becomes necessary for the Department to take over the 3
completion of any highway contract or contracts, all of the amounts 4
owing the contractor, including the withheld percentage, must first 5
be applied toward the cost of completion of the contract or 6
contracts. Any balance remaining in the retained percentage after 7
completion by the Department is payable to the contractor or the 8
contractor’s creditors. 9
5. Such retained percentage as may be due any contractor is 10
due and payable at the expiration of the 30-day period as provided 11
in NRS 408.363 for filing of creditors’ claims, and this retained 12
percentage is due and payable to the contractor at that time without 13
regard to creditors’ claims filed with the Department. 14
6. The contractor under any contract made or awarded by the 15
Department, including any contract for the construction, 16
improvement, maintenance or repair of any road or highway or the 17
appurtenances thereto, may, from time to time, withdraw the whole 18
or any portion of the sums otherwise due to the contractor under the 19
contract which are retained by the Department, pursuant to the terms 20
of the contract, if the contractor deposits with the Director: 21
(a) United States treasury bonds, United States treasury notes, 22
United States treasury certificates of indebtedness or United States 23
treasury bills; 24
(b) Bonds or notes of the State of Nevada; or 25
(c) General obligation bonds of any political subdivision of the 26
State of Nevada. 27
Certificates of deposit must be of a market value not exceeding 28
par, at the time of deposit, but at least equal in value to the amount 29
so withdrawn from payments retained under the contract. 30
7. The Director has the power to enter into a contract or 31
agreement with any national bank, state bank, credit union, trust 32
company or safe deposit company located in the State of Nevada, 33
designated by the contractor after notice to the owner and surety, to 34
provide for the custodial care and servicing of any obligations 35
deposited with the Director pursuant to this section. Such services 36
include the safekeeping of the obligations and the rendering of all 37
services required to effectuate the purposes of this section. 38
8. The Director or any national bank, state bank, credit union, 39
trust company or safe deposit company located in the State of 40
Nevada, designated by the contractor to serve as custodian for the 41
obligations pursuant to subsection 7, shall collect all interest or 42
income when due on the obligations so deposited and shall pay 43
them, when and as collected, to the contractor who deposited the 44
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obligation. If the deposit is in the form of coupon bonds, the 1
Director shall deliver each coupon as it matures to the contractor. 2
9. Any amount deducted by the State of Nevada, or pursuant to 3
the terms of a contract, from the retained payments otherwise due to 4
the contractor thereunder, must be deducted first from that portion 5
of the retained payments for which no obligation has been 6
substituted, then from the proceeds of any deposited obligation. In 7
the latter case, the contractor is entitled to receive the interest, 8
coupons or income only from those obligations which remain on 9
deposit after that amount has been deducted. 10
10. A contractor shall disburse money paid to the contractor 11
pursuant to this section, including any interest that the contractor 12
receives, to his or her subcontractors and suppliers within 15 days 13
after receipt of the money in the proportion that the value of the 14
work performed by each subcontractor or the materials furnished by 15
each supplier bears to the total amount of the contract between the 16
principal contractor and the Department. 17
11. Money payable to a subcontractor or supplier accrues 18
interest at a rate equal to the lowest daily prime rate at the three 19
largest banks in the United States on the date the subcontract or 20
order for supplies was executed plus 2 percent, from 15 days after 21
the money was received by the principal contractor until the date of 22
payment. 23
12. If a contractor withholds more than [2.5] 5 percent of a 24
payment required by subsection 10, the subcontractor or supplier 25
may inform the Director in writing of the amount due. The Director 26
shall attempt to resolve the dispute between the contractor and the 27
subcontractor or supplier within 20 working days after the date that 28
the Director receives notice of the amount due. If the dispute is not 29
resolved within 20 working days after the date that the Director 30
receives notice of the amount due, the contractor shall deposit the 31
disputed amount in an escrow account that bears interest. The 32
contractor, subcontractor or supplier may pursue any legal or 33
equitable remedy to resolve the dispute over the amount due. The 34
Director may not be made a party to any legal or equitable action 35
brought by the contractor, subcontractor or supplier. 36
13. If the Director awards to a railroad company a contract for 37
a project for the construction, reconstruction, improvement or 38
maintenance of a highway and the project is located on property that 39
is owned by or under the control of the railroad company, the 40
Director may agree in the contract not to retain any portion of the 41
contract price. 42
Sec. 2. The amendatory provisions of section 1 of this act do 43
not apply to any highway contract that is made or awarded by the 44
Department of Transportation before the effective date of this act. 45
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Sec. 3. This act becomes effective upon passage and approval. 1
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