Texas Senate Bill SB1097

Texas 2021 - 87th Regular

Caption

Relating to retainage requirements for certain public works construction projects.

Impact

The introduction of this bill has the potential to significantly alter existing practices concerning retainage in public works contracts. By capping the allowable retainage at five percent for contracts exceeding $1 million, SB1097 aims to reduce financial burdens on contractors. This is particularly beneficial for smaller and medium-sized contractors who might struggle with cash flow due to high retainage amounts. Furthermore, the bill mandates that records of retainage should be maintained accurately, thereby promoting accountability in public sector contracting.

Summary

SB1097 aims to amend the retainage requirements for certain public works construction projects in Texas. The bill introduces new definitions and stipulations regarding 'retainage', which is the amount withheld by a governmental entity from a contractor's payment to ensure compliance and completion of a project. Notably, if a public works contract is valued at $1 million or more, the governmental entity may not withhold more than five percent of the total contract price as retainage. This measure seeks to provide clarity and certainty for contractors in relation to what is being withheld from their payments.

Contention

While proponents of SB1097 argue that it offers necessary protections for contractors and promotes timely payment, there are concerns among certain stakeholders that the limitations on retainage could impact the ability of governmental entities to ensure contractor compliance. Opponents fear that a decrease in retainage as a means of holding contractors accountable could result in subpar work or delays in project completion, particularly if contractors feel less compelled to adhere to project specifications if fewer financial incentives exist to motivate quality performance. This tension between securing compliance and facilitating contractor cash flow is at the heart of the discussions surrounding this bill.