Texas 2021 - 87th Regular

Texas House Bill HB692 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 692
	1	+	By: Shine, et al. (Senate Sponsor - Creighton) H.B. No. 692
	2	+	(In the Senate - Received from the House May 12, 2021;
	3	+	May 13, 2021, read first time and referred to Committee on Business &
	4	+	Commerce; May 19, 2021, reported favorably by the following vote:
	5	+	Yeas 8, Nays 0; May 19, 2021, sent to printer.)
	6	+	Click here to see the committee vote
2	7
3	8
	9	+	A BILL TO BE ENTITLED
4	10		AN ACT
5	11		relating to retainage requirements for certain public works
6	12		construction projects.
7	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	14		SECTION 1. The heading to Subchapter B, Chapter 2252,
9	15		Government Code, is amended to read as follows:
10	16		SUBCHAPTER B. [INTEREST ON] RETAINED PUBLIC WORKS CONTRACT PAYMENTS
11	17		SECTION 2. Section 2252.031, Government Code, is amended by
12	18		amending Subdivision (5) and adding Subdivision (6) to read as
13	19		follows:
14	20		(5) "Retainage" means the percentage [part] of a
15	21		public works contract payment withheld by a governmental entity to
16	22		secure performance of the contract.
17	23		(6) "Warranty period" means the period of time
18	24		specified in a contract during which certain terms applicable to
19	25		the warranting of work performed under the contract are in effect.
20	26		SECTION 3. Section 2252.032, Government Code, is amended to
21	27		read as follows:
22	28		Sec. 2252.032. RETAINAGE. (a) A governmental entity
23	29		shall:
24	30		(1) include in each public works contract a provision
25	31		that establishes the circumstances under which:
26	32		(A) the public works project that is the subject
27	33		of the contract is considered substantially complete; and
28	34		(B) the governmental entity may release all or a
29	35		portion of the retainage for:
30	36		(i) substantially completed portions of the
31	37		project; or
32	38		(ii) fully completed and accepted portions
33	39		of the project;
34	40		(2) maintain an accurate record of accounting for:
35	41		(A) [deposit in an interest-bearing account] the
36	42		retainage withheld on [of a public works contract that provides for
37	43		retainage of more than five percent of the] periodic contract
38	44		payments; and
39	45		(B) the retainage released to the prime
40	46		contractor for a public works contract [payment]; and
41	47		(3) for a public works contract described by
42	48		Subsection (c), [(2)] pay any remaining retainage described by
43	49		Subdivision (2)(A) and the interest earned on the retainage to the
44	50		prime contractor on completion of the work required to be performed
45	51		under the contract.
46	52		(b) Except as provided by Subsection (i):
47	53		(1) if the total value of a public works contract is
48	54		less than $5 million, a governmental entity may not withhold
49	55		retainage in an amount that exceeds 10 percent of the contract price
50	56		and the rate of retainage may not exceed 10 percent for any item in a
51	57		bid schedule or schedule of values for the project, including
52	58		materials and equipment delivered on site to be installed;
53	59		(2) if the total value of a public works contract is $5
54	60		million or more, a governmental entity may not withhold retainage
55	61		in an amount that exceeds five percent of the contract price and the
56	62		rate of retainage may not exceed five percent for any item in a bid
57	63		schedule or schedule of values for the project, including materials
58	64		and equipment delivered on site to be installed; and
59	65		(3) if a public works contract relates to the
60	66		construction or maintenance of a dam, as that term is defined by
61	67		Section 423.0045, regardless of the total value of the contract, a
62	68		governmental entity may not withhold retainage in an amount that
63	69		exceeds 10 percent of the contract price and the rate of retainage
64	70		may not exceed 10 percent for any item in a bid schedule or schedule
65	71		of values for the project, including materials and equipment
66	72		delivered on site to be installed.
67	73		(c) For a competitively awarded contract with a value of $10
68	74		million or more, and for a contract that was awarded using a method
69	75		other than competitive bidding, a governmental entity and prime
70	76		contractor may agree to deposit in an interest-bearing account the
71	77		retainage withheld on periodic contract payments.
72	78		(d) If, for the purpose of fulfilling an obligation of a
73	79		prime contractor under a public works contract, the prime
74	80		contractor enters into a subcontract:
75	81		(1) the prime contractor may not withhold from a
76	82		subcontractor a greater percentage of retainage than the percentage
77	83		that may be withheld from the prime contractor by the governmental
78	84		entity under the contract; and
79	85		(2) a subcontractor who enters into a contract with
80	86		another subcontractor to provide labor or materials under the
81	87		contract may not withhold from that subcontractor a greater
82	88		percentage of retainage than the percentage that may be withheld
83	89		from the subcontractor as determined under Subdivision (1).
84	90		(e) A governmental entity may not withhold retainage:
85	91		(1) after completion of the work required to be
86	92		performed under the contract by the prime contractor, including
87	93		during the warranty period; or
88	94		(2) for the purpose of requiring the prime contractor,
89	95		after completion of the work required to be performed under the
90	96		contract, to perform work on manufactured goods or systems that
91	97		were:
92	98		(A) specified by the designer of record; and
93	99		(B) properly installed by the contractor.
94	100		(f) On application to a governmental entity for final
95	101		payment and release of retainage, the governmental entity may
96	102		withhold retainage if there is a bona fide dispute between the
97	103		governmental entity and the prime contractor and the reason for the
98	104		dispute is that labor, services, or materials provided by the prime
99	105		contractor, or by a person under the direction or control of the
100	106		prime contractor, failed to comply with the express terms of the
101	107		contract or if the surety on any outstanding surety bond executed
102	108		for the contract does not agree to the release of retainage. The
103	109		governmental entity must provide to the prime contractor written
104	110		notice of the basis on which the governmental entity is withholding
105	111		retainage under this subsection. If there is no bona fide dispute
106	112		between the governmental entity and the prime contractor and
107	113		neither party is in default under the contract, the prime
108	114		contractor is entitled to:
109	115		(1) cure any noncompliant labor, services, or
110	116		materials; or
111	117		(2) offer the governmental entity a reasonable amount
112	118		of money as compensation for any noncompliant labor, services, or
113	119		materials that cannot be promptly cured.
114	120		(g) A governmental entity is not required to accept a prime
115	121		contractor's offer of compensation under Subsection (f)(2).
116	122		(h) Subsection (f) may not be construed to limit either the
117	123		governmental entity's or prime contractor's right to pursue any
118	124		remedy available under the express terms of the public works
119	125		contract or other applicable law.
120	126		(i) For purposes of this subsection, a project is considered
121	127		formally approved if the project is the subject of a resolution
122	128		approving an application for financial assistance adopted by the
123	129		Texas Water Development Board before September 1, 2019, for any
124	130		part of the project's financing. Subsection (b) of this section
125	131		does not apply to a governmental entity that receives financial
126	132		assistance under Section 15.432 or 15.472, Water Code, for a
127	133		project that is formally approved by the Texas Water Development
128		-	Board or to a governmental entity that is a wholesale water supplier
129		-	that supplies water to customers in 10 or more counties and is
130		-	governed by Chapter 49, Water Code. A governmental entity
131		-	described by this subsection shall deposit in an interest-bearing
132		-	account the retainage withheld under a public works contract that
133		-	provides for retainage that exceeds five percent of the periodic
134		-	contract payments.
	134	+	Board. A governmental entity described by this subsection shall
	135	+	deposit in an interest-bearing account the retainage withheld under
	136	+	a public works contract that provides for retainage that exceeds
	137	+	five percent of the periodic contract payments.
135	138		(j) This section may not be construed as affecting a
136	139		governmental entity's ability to retain certain amounts due under a
137	140		contract as required by Chapter 2258.
138		-	SECTION 4. Section 2252.033, Government Code, is amended to
139		-	read as follows:
140		-	Sec. 2252.033. EXEMPTIONS. This subchapter does not apply
141		-	to:
142		-	(1) a public works contract executed before August 31,
143		-	1981;
144		-	(2) a public works contract in which the total
145		-	contract price estimate at the time of execution of the contract is
146		-	less than $400,000; or
147		-	(3) a public works contract made by the Texas
148		-	Department of Transportation under [Subchapter A,] Chapter 223,
149		-	Transportation Code.
150		-	SECTION 5. The changes in law made by this Act apply only to
	141	+	SECTION 4. The changes in law made by this Act apply only to
151	142		a contract to which Subchapter B, Chapter 2252, Government Code,
152	143		applies that is entered into on or after the effective date of this
153	144		Act. A contract to which Subchapter B, Chapter 2252, Government
154	145		Code, applies that is entered into before the effective date of this
155	146		Act is governed by the law in effect when the contract was entered
156	147		into, and the former law is continued in effect for that purpose.
157		-	SECTION 6. This Act takes effect immediately if it receives
	148	+	SECTION 5. This Act takes effect immediately if it receives
158	149		a vote of two-thirds of all the members elected to each house, as
159	150		provided by Section 39, Article III, Texas Constitution. If this
160	151		Act does not receive the vote necessary for immediate effect, this
161	152		Act takes effect September 1, 2021.
162		-	______________________________ ______________________________
163		-	President of the Senate Speaker of the House
164		-	I certify that H.B. No. 692 was passed by the House on May 11,
165		-	2021, by the following vote: Yeas 145, Nays 0, 1 present, not
166		-	voting; and that the House concurred in Senate amendments to H.B.
167		-	No. 692 on May 28, 2021, by the following vote: Yeas 145, Nays 0, 2
168		-	present, not voting.
169		-	______________________________
170		-	Chief Clerk of the House
171		-	I certify that H.B. No. 692 was passed by the Senate, with
172		-	amendments, on May 21, 2021, by the following vote: Yeas 31, Nays
173		-	0.
174		-	______________________________
175		-	Secretary of the Senate
176		-	APPROVED: __________________
177		-	Date
178		-	__________________
179		-	Governor
	153	+	* * * * *