Texas 2019 - 86th Regular

Texas House Bill HB2135 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	~~86R22090~~ TSR-F
	1	+	86R5808 TSR-F
2	2		By: Shine H.B. No. 2135
3		-	Substitute the following for H.B. No. 2135:
4		-	By: Smithee C.S.H.B. No. 2135
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to retainage requirements for certain public works
10	8		construction projects.
11	9		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	10		SECTION 1. The heading to Subchapter B, Chapter 2252,
13	11		Government Code, is amended to read as follows:
14	12		SUBCHAPTER B. [INTEREST ON] RETAINED PUBLIC WORKS CONTRACT PAYMENTS
15		-	SECTION 2. Section 2252.031, Government Code, is amended by
16		-	amending Subdivision (5) and adding Subdivision (6) to read as
17		-	follows:
18		-	(5) "Retainage" means the percentage [part] of a
	13	+	SECTION 2. Section 2252.031, Government Code, is amended to
	14	+	read as follows:
	15	+	Sec. 2252.031. DEFINITIONS. In this subchapter:
	16	+	(1) "Beneficial use" means, following completion of
	17	+	all or a portion of work under a public works contract, the ability
	18	+	of a governmental entity to place a public works project that is the
	19	+	subject of the contract into operation for the project's intended
	20	+	purpose.
	21	+	(2) "Civil works project" has the meaning assigned by
	22	+	Section 2269.351.
	23	+	(3) "Governmental entity" means:
	24	+	(A) the state, a county, or a municipality;
	25	+	(B) a department, board, or agency of the state,
	26	+	a county, or a municipality;
	27	+	(C) a school district or a subdivision of a
	28	+	school district; or
	29	+	(D) any other governmental or quasi-governmental
	30	+	authority authorized by statute to make a public works contract.
	31	+	(4) [(2)] "Prime contractor" means a person or
	32	+	persons, firm, or corporation contracting with a governmental
	33	+	entity for a public work.
	34	+	(5) [(3)] "Public works" includes the construction,
	35	+	alteration, or repair of a public building or the construction or
	36	+	completion of a public work.
	37	+	(6) [(4)] "Public works contract payment" means a
	38	+	payment by a governmental entity for the value of labor, material,
	39	+	machinery, fixtures, tools, power, water, fuel, or lubricants used
	40	+	or consumed, ordered and delivered for use or consumption, or
	41	+	specially fabricated for use or consumption but not yet delivered,
	42	+	in the direct performance of a public works contract.
	43	+	(7) [(5)] "Retainage" means the percentage [part] of a
19	44		public works contract payment withheld by a governmental entity to
20	45		secure performance of the contract.
21		-	(6) "Warranty period" means the period of time
	46	+	(8) "Warranty period" means the period of time
22	47		specified in a contract during which certain terms applicable to
23	48		the warranting of work performed under the contract are in effect.
24	49		SECTION 3. Section 2252.032, Government Code, is amended to
25	50		read as follows:
26		-	Sec. 2252.032. RETAINAGE. (a) A governmental entity
27		-	shall:
	51	+	Sec. 2252.032. RETAINAGE. (a) A governmental entity shall:
28	52		(1) include in each public works contract a provision
29		-	that establishes the circumstances under which:
30		-	(A) the public works project that is the subject
31		-	of the contract is considered substantially complete; and
32		-	(B) the governmental entity may release all or a
33		-	portion of the retainage for:
34		-	(i) substantially completed portions of the
35		-	project; or
36		-	(ii) fully completed and accepted portions
37		-	of the project;
38		-	(2) maintain an accurate record of accounting for:
39		-	(A) [deposit in an interest-bearing account] the
40		-	retainage withheld on [of a public works contract that provides for
41		-	retainage of more than five percent of the] periodic contract
42		-	payments; and
43		-	(B) the retainage released to the prime
44		-	contractor for a public works contract [payment]; and
45		-	(3) for a public works contract described by
46		-	Subsection (c), [(2)] pay any remaining retainage described by
47		-	Subdivision (2)(A) and the interest earned on the retainage to the
48		-	prime contractor on completion of the contract.
	53	+	that establishes:
	54	+	(A) the circumstances under which a public works
	55	+	project, including a civil works project, is considered
	56	+	substantially complete; and
	57	+	(B) for a civil works project, the circumstances
	58	+	under which the governmental entity has beneficial use of the
	59	+	project;
	60	+	(2) deposit in an interest-bearing account the
	61	+	retainage of a [public works contract that provides for retainage
	62	+	of more than five percent of the] periodic contract payment of a
	63	+	public works contract; and
	64	+	(3) [(2)] pay the retainage remaining in the account
	65	+	described by Subdivision (2), including any interest earned on the
	66	+	retainage, to the prime contractor on completion of the contract.
49	67		(b) If the total value of a public works contract is $1
50	68		million or more, a governmental entity may not withhold retainage
51		-	in an amount that exceeds five percent of the contract price and the
52		-	rate of retainage may not exceed five percent for any item in a bid
53		-	schedule or schedule of values for the project, including materials
54		-	and equipment delivered on-site to be installed.
55		-	(c) For a competitively awarded contract with a value of $10
56		-	million or more, and for a contract that was awarded using a method
57		-	other than competitive bidding, a governmental entity and prime
58		-	contractor may agree to deposit in an interest-bearing account the
59		-	retainage withheld on periodic contract payments.
60		-	(d) If, for the purpose of fulfilling an obligation of a
61		-	prime contractor under a contract described by Subsection (b), the
62		-	prime contractor enters into a subcontract:
63		-	(1) the prime contractor may not withhold from a
64		-	subcontractor a greater percentage of retainage than the percentage
65		-	that may be withheld from the prime contractor by the governmental
66		-	entity under Subsection (b); and
67		-	(2) a subcontractor who enters into a contract with
68		-	another subcontractor to provide labor or materials under the
69		-	contract may not withhold from that subcontractor a greater
70		-	percentage of retainage than the percentage that may be withheld
71		-	from the subcontractor as determined under Subdivision (1).
72		-	(e) A governmental entity may not withhold retainage:
	69	+	in an amount that exceeds:
	70	+	(1) the greater of:
	71	+	(A) five percent of the contract price; or
	72	+	(B) the established rate of retainage for
	73	+	materials and equipment that are delivered on-site to be installed;
	74	+	and
	75	+	(2) if the public works contract is for a civil works
	76	+	project, two percent of the contract price, excluding interest
	77	+	earned on the retainage, after the governmental entity has
	78	+	beneficial use of the project.
	79	+	(c) A governmental entity may not withhold retainage:
73	80		(1) after completion of the contract by the prime
74	81		contractor, including during the warranty period; or
75	82		(2) for the purpose of requiring the prime contractor,
76	83		after completion of the contract, to perform work on manufactured
77	84		goods or systems that were:
78	85		(A) specified by the designer of record; and
79	86		(B) properly installed by the contractor.
80		-	(f) On application to a governmental entity for final
	87	+	(d) On application to a governmental entity for final
81	88		payment and release of retainage, the governmental entity may
82	89		withhold retainage if there is a bona fide dispute between the
83	90		governmental entity and the prime contractor and the reason for the
84	91		dispute is that labor, services, or materials provided by the prime
85	92		contractor or the prime contractor's subcontractors were not
86		-	provided in compliance with the contract. The prime contractor ~~may~~
87		-	be entitled to:
	93	+	provided in compliance with the contract. The prime contractor is
	94	+	entitled to:
88	95		(1) cure the noncompliance of the labor, services, or
89	96		materials that are the subject of the dispute; or
90	97		(2) offer the governmental entity a reasonable amount
91	98		of money as compensation for the noncompliant labor, services, or
92	99		materials that cannot be promptly cured.
	100	+	(e) This section does not prohibit a governmental entity
	101	+	from releasing portions of retainage for substantially complete or
	102	+	fully completed portions of work under a public works contract.
93	103		SECTION 4. The changes in law made by this Act apply only to
94	104		a contract to which Subchapter B, Chapter 2252, Government Code,
95	105		applies that is entered into on or after the effective date of this
96	106		Act. A contract to which Subchapter B, Chapter 2252, Government
97	107		Code, applies that is entered into before the effective date of this
98	108		Act is governed by the law in effect when the contract was entered
99	109		into, and the former law is continued in effect for that purpose.
100	110		SECTION 5. This Act takes effect immediately if it receives
101	111		a vote of two-thirds of all the members elected to each house, as
102	112		provided by Section 39, Article III, Texas Constitution. If this
103	113		Act does not receive the vote necessary for immediate effect, this
104	114		Act takes effect September 1, 2019.