(Reprinted with amendments adopted on April 18, 2023)
FIRST REPRINT S.B. 85
- *SB85_R1*
SENATE BILL NO. 85–SENATOR DALY
PREFILED JANUARY 26, 2023
____________
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.
~
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 12
the Director to 5 percent, but not more than $50,000. Section 1 eliminates: (1) the 13
requirement for the Department to perform a final inspection; and (2) the 14
requirement that if a final inspection discloses that the work was completed 15
satisfactorily, the Director reduce the amount of the contract price retained by the 16
Department to not more than $50,000, with any remaining amount to be retained 17
until the contract is completed satisfactorily and accepted by the Director. Section 1 18
requires instead that the amount of the contract price that is retained be retained 19
until the entire contract is completed satisfactorily and accepted by the Director. 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
– 2 –
- *SB85_R1*
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, 11 2
and 12 , [and 13,] the Director may pay at the end of each calendar 3
month, or as soon thereafter as practicable, to any contractor 4
satisfactorily performing any highway improvement or construction 5
as the work progresses in full for the work as completed but not 6
more than [97.5] 95 percent of the entire contract price. The 7
progress estimates must be based upon materials in place, or on the 8
job site, or at a location approved by the Director, and invoiced, and 9
labor expended thereon. The remaining [2.5] 5 percent , but not 10
more than $50,000, must be retained until the remaining money is 11
disposed of in the manner provided in subsection 3 or [4,] upon 12
satisfactory completion of the entire contract and final acceptance 13
by the Director, as applicable. 14
2. If the work in progress is being performed on a satisfactory 15
basis, the Director may reduce the percentage retained if the 16
Director finds that sufficient reasons exist for additional payment 17
and has obtained written approval from every surety furnishing 18
bonds for the work. Any remaining money must be retained until 19
such money is disposed of in the manner provided in subsection 3 or 20
[4, as applicable. 21
3. Upon receiving notice from the contractor of the completion 22
of all work under a contract for a project of highway improvement 23
or construction, the Department shall perform a final inspection of 24
such work. If the final inspection discloses that any work, in whole 25
or in part, is unsatisfactory, the Department will provide the 26
contractor with notice of the deficiencies in such work that require 27
correction before the work will be considered completed 28
satisfactorily. Upon receiving notice from the contractor that any 29
such unsatisfactory work has been corrected, the Department shall 30
conduct another final inspection. If a final inspection discloses that 31
all work under a contract for a project of highway improvement or 32
construction has been completed satisfactorily, the Director shall 33
reduce any money being retained pursuant to subsection 1 to not 34
– 3 –
- *SB85_R1*
more than $50,000, not later than 30 days after such final inspection. 1
Any remaining money must be retained until] upon satisfactory 2
completion of the entire contract [is completed satisfactorily and 3
accepted] and final acceptance by the Director. 4
[4.] 3. If it becomes necessary for the Department to take over 5
the completion of any highway contract or contracts, all of the 6
amounts owing the contractor, including the withheld percentage, 7
must first be applied toward the cost of completion of the contract or 8
contracts. Any balance remaining in the retained percentage after 9
completion by the Department is payable to the contractor or the 10
contractor’s creditors. 11
[5.] 4. Such retained percentage as may be due any contractor 12
is due and payable at the expiration of the 30-day period as provided 13
in NRS 408.363 for filing of creditors’ claims, and this retained 14
percentage is due and payable to the contractor at that time without 15
regard to creditors’ claims filed with the Department. 16
[6.] 5. The contractor under any contract made or awarded by 17
the Department, including any contract for the construction, 18
improvement, maintenance or repair of any road or highway or the 19
appurtenances thereto, may, from time to time, withdraw the whole 20
or any portion of the sums otherwise due to the contractor under the 21
contract which are retained by the Department, pursuant to the terms 22
of the contract, if the contractor deposits with the Director: 23
(a) United States treasury bonds, United States treasury notes, 24
United States treasury certificates of indebtedness or United States 25
treasury bills; 26
(b) Bonds or notes of the State of Nevada; or 27
(c) General obligation bonds of any political subdivision of the 28
State of Nevada. 29
Certificates of deposit must be of a market value not exceeding 30
par, at the time of deposit, but at least equal in value to the amount 31
so withdrawn from payments retained under the contract. 32
[7.] 6. The Director has the power to enter into a contract or 33
agreement with any national bank, state bank, credit union, trust 34
company or safe deposit company located in the State of Nevada, 35
designated by the contractor after notice to the owner and surety, to 36
provide for the custodial care and servicing of any obligations 37
deposited with the Director pursuant to this section. Such services 38
include the safekeeping of the obligations and the rendering of all 39
services required to effectuate the purposes of this section. 40
[8.] 7. The Director or any national bank, state bank, credit 41
union, trust company or safe deposit company located in the State of 42
Nevada, designated by the contractor to serve as custodian for the 43
obligations pursuant to subsection [7,] 6, shall collect all interest or 44
income when due on the obligations so deposited and shall pay 45
– 4 –
- *SB85_R1*
them, when and as collected, to the contractor who deposited the 1
obligation. If the deposit is in the form of coupon bonds, the 2
Director shall deliver each coupon as it matures to the contractor. 3
[9.] 8. Any amount deducted by the State of Nevada, or 4
pursuant to the terms of a contract, from the retained payments 5
otherwise due to the contractor thereunder, must be deducted first 6
from that portion of the retained payments for which no obligation 7
has been substituted, then from the proceeds of any deposited 8
obligation. In the latter case, the contractor is entitled to receive the 9
interest, coupons or income only from those obligations which 10
remain on deposit after that amount has been deducted. 11
[10.] 9. A contractor shall disburse money paid to the 12
contractor pursuant to this section, including any interest that the 13
contractor receives, to his or her subcontractors and suppliers within 14
15 days after receipt of the money in the proportion that the value of 15
the work performed by each subcontractor or the materials furnished 16
by each supplier bears to the total amount of the contract between 17
the principal contractor and the Department. 18
[11.] 10. Money payable to a subcontractor or supplier accrues 19
interest at a rate equal to the lowest daily prime rate at the three 20
largest banks in the United States on the date the subcontract or 21
order for supplies was executed plus 2 percent, from 15 days after 22
the money was received by the principal contractor until the date of 23
payment. 24
[12.] 11. If a contractor withholds more than [2.5] 5 percent of 25
a payment required by subsection [10,] 9, the subcontractor or 26
supplier may inform the Director in writing of the amount due. The 27
Director shall attempt to resolve the dispute between the contractor 28
and the subcontractor or supplier within 20 working days after 29
the date that the Director receives notice of the amount due. If the 30
dispute is not resolved within 20 working days after the date that the 31
Director receives notice of the amount due, the contractor shall 32
deposit the disputed amount in an escrow account that bears interest. 33
The contractor, subcontractor or supplier may pursue any legal or 34
equitable remedy to resolve the dispute over the amount due. The 35
Director may not be made a party to any legal or equitable action 36
brought by the contractor, subcontractor or supplier. 37
[13.] 12. If the Director awards to a railroad company a 38
contract for a project for the construction, reconstruction, 39
improvement or maintenance of a highway and the project is located 40
on property that is owned by or under the control of the railroad 41
company, the Director may agree in the contract not to retain any 42
portion of the contract price. 43
– 5 –
- *SB85_R1*
Sec. 2. The amendatory provisions of section 1 of this act do 1
not apply to any highway contract that is made or awarded by the 2
Department of Transportation before the effective date of this act. 3
Sec. 3. This act becomes effective upon passage and approval. 4
H