- 82nd Session (2023)
Senate Bill No. 85–Senator Daly
CHAPTER..........
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,
subject to certain exceptions, to make monthly payments to a contractor who
satisfactorily performs any highway improvement or construction in full as the
work is completed by the contractor. The payments must not exceed 97.5 percent of
the contract price. The Director is required to retain the remaining 2.5 percent of
the contract price until certain conditions are met. The Department is required to
perform a final inspection of the work completed under a contract for a project of
highway improvement or construction. If an inspection discloses that the work was
completed satisfactorily, the Department is required to reduce the amount of the
contract price retained to not more than $50,000 until the entire contract is
completed satisfactorily and accepted by the Director. (NRS 408.383) Section 1 of
this bill changes the percentage of the contract price which must be retained by
the Director to 5 percent, but not more than $50,000. Section 1 eliminates: (1) the
requirement for the Department to perform a final inspection; and (2) the
requirement that if a final inspection discloses that the work was completed
satisfactorily, the Director reduce the amount of the contract price retained by the
Department to not more than $50,000, with any remaining amount to be retained
until the contract is completed satisfactorily and accepted by the Director. Section 1
requires instead that the amount of the contract price that is retained be retained
until the entire contract is completed satisfactorily and accepted by the Director.
Existing law requires a contractor to disburse money paid to the contractor
under a contract for a project of highway improvement or construction to his or her
subcontractors and suppliers within a certain amount of time and provides that, if a
contractor withholds more than 2.5 percent from such a required payment, the
subcontractor or supplier may contact the Director to resolve such a dispute
between the contractor and the subcontractor or supplier. (NRS 408.383) Section 1
provides that a subcontractor or supplier may contact the Director to resolve such a
dispute if the contractor withholds more than 5 percent of a required payment.
Section 2 of this bill prohibits the retroactive application of the amendatory
provisions of this bill to contracts made or awarded by the Department before the
effective date of this bill.
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- 82nd Session (2023)
EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.
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:
408.383 1. Except as otherwise provided in subsections 2, 11
and 12 , [and 13,] the Director may pay at the end of each calendar
month, or as soon thereafter as practicable, to any contractor
satisfactorily performing any highway improvement or construction
as the work progresses in full for the work as completed but not
more than [97.5] 95 percent of the entire contract price. The
progress estimates must be based upon materials in place, or on the
job site, or at a location approved by the Director, and invoiced, and
labor expended thereon. The remaining [2.5] 5 percent , but not
more than $50,000, must be retained until the remaining money is
disposed of in the manner provided in subsection 3 or [4,] upon
satisfactory completion of the entire contract and final acceptance
by the Director, as applicable.
2. If the work in progress is being performed on a satisfactory
basis, the Director may reduce the percentage retained if the
Director finds that sufficient reasons exist for additional payment
and has obtained written approval from every surety furnishing
bonds for the work. Any remaining money must be retained until
such money is disposed of in the manner provided in subsection 3 or
[4, as applicable.
3. Upon receiving notice from the contractor of the completion
of all work under a contract for a project of highway improvement
or construction, the Department shall perform a final inspection of
such work. If the final inspection discloses that any work, in whole
or in part, is unsatisfactory, the Department will provide the
contractor with notice of the deficiencies in such work that require
correction before the work will be considered completed
satisfactorily. Upon receiving notice from the contractor that any
such unsatisfactory work has been corrected, the Department shall
conduct another final inspection. If a final inspection discloses that
all work under a contract for a project of highway improvement or
construction has been completed satisfactorily, the Director shall
reduce any money being retained pursuant to subsection 1 to not
more than $50,000, not later than 30 days after such final inspection.
Any remaining money must be retained until] upon satisfactory
completion of the entire contract [is completed satisfactorily and
accepted] and final acceptance by the Director.
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- 82nd Session (2023)
[4.] 3. If it becomes necessary for the Department to take over
the completion of any highway contract or contracts, all of the
amounts owing the contractor, including the withheld percentage,
must first be applied toward the cost of completion of the contract or
contracts. Any balance remaining in the retained percentage after
completion by the Department is payable to the contractor or the
contractor’s creditors.
[5.] 4. Such retained percentage as may be due any contractor
is due and payable at the expiration of the 30-day period as provided
in NRS 408.363 for filing of creditors’ claims, and this retained
percentage is due and payable to the contractor at that time without
regard to creditors’ claims filed with the Department.
[6.] 5. The contractor under any contract made or awarded by
the Department, including any contract for the construction,
improvement, maintenance or repair of any road or highway or the
appurtenances thereto, may, from time to time, withdraw the whole
or any portion of the sums otherwise due to the contractor under the
contract which are retained by the Department, pursuant to the terms
of the contract, if the contractor deposits with the Director:
(a) United States treasury bonds, United States treasury notes,
United States treasury certificates of indebtedness or United States
treasury bills;
(b) Bonds or notes of the State of Nevada; or
(c) General obligation bonds of any political subdivision of the
State of Nevada.
Certificates of deposit must be of a market value not exceeding
par, at the time of deposit, but at least equal in value to the amount
so withdrawn from payments retained under the contract.
[7.] 6. The Director has the power to enter into a contract or
agreement with any national bank, state bank, credit union, trust
company or safe deposit company located in the State of Nevada,
designated by the contractor after notice to the owner and surety, to
provide for the custodial care and servicing of any obligations
deposited with the Director pursuant to this section. Such services
include the safekeeping of the obligations and the rendering of all
services required to effectuate the purposes of this section.
[8.] 7. The Director or any national bank, state bank, credit
union, trust company or safe deposit company located in the State of
Nevada, designated by the contractor to serve as custodian for the
obligations pursuant to subsection [7,] 6, shall collect all interest or
income when due on the obligations so deposited and shall pay
them, when and as collected, to the contractor who deposited the
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- 82nd Session (2023)
obligation. If the deposit is in the form of coupon bonds, the
Director shall deliver each coupon as it matures to the contractor.
[9.] 8. Any amount deducted by the State of Nevada, or
pursuant to the terms of a contract, from the retained payments
otherwise due to the contractor thereunder, must be deducted first
from that portion of the retained payments for which no obligation
has been substituted, then from the proceeds of any deposited
obligation. In the latter case, the contractor is entitled to receive the
interest, coupons or income only from those obligations which
remain on deposit after that amount has been deducted.
[10.] 9. A contractor shall disburse money paid to the
contractor pursuant to this section, including any interest that the
contractor receives, to his or her subcontractors and suppliers within
15 days after receipt of the money in the proportion that the value of
the work performed by each subcontractor or the materials furnished
by each supplier bears to the total amount of the contract between
the principal contractor and the Department.
[11.] 10. Money payable to a subcontractor or supplier accrues
interest at a rate equal to the lowest daily prime rate at the three
largest banks in the United States on the date the subcontract or
order for supplies was executed plus 2 percent, from 15 days after
the money was received by the principal contractor until the date of
payment.
[12.] 11. If a contractor withholds more than [2.5] 5 percent of
a payment required by subsection [10,] 9, the subcontractor or
supplier may inform the Director in writing of the amount due. The
Director shall attempt to resolve the dispute between the contractor
and the subcontractor or supplier within 20 working days after
the date that the Director receives notice of the amount due. If the
dispute is not resolved within 20 working days after the date that the
Director receives notice of the amount due, the contractor shall
deposit the disputed amount in an escrow account that bears interest.
The contractor, subcontractor or supplier may pursue any legal or
equitable remedy to resolve the dispute over the amount due. The
Director may not be made a party to any legal or equitable action
brought by the contractor, subcontractor or supplier.
[13.] 12. If the Director awards to a railroad company a
contract for a project for the construction, reconstruction,
improvement or maintenance of a highway and the project is located
on property that is owned by or under the control of the railroad
company, the Director may agree in the contract not to retain any
portion of the contract price.
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- 82nd Session (2023)
Sec. 2. The amendatory provisions of section 1 of this act do
not apply to any highway contract that is made or awarded by the
Department of Transportation before the effective date of this act.
Sec. 3. This act becomes effective upon passage and approval.
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