Texas 2021 - 87th Regular

Texas Senate Bill SB1097 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R2030 CJC-F
2	2	By: Creighton S.B. No. 1097
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to retainage requirements for certain public works
8	8	construction projects.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. The heading to Subchapter B, Chapter 2252,
11	11	Government Code, is amended to read as follows:
12	12	SUBCHAPTER B. [INTEREST ON] RETAINED PUBLIC WORKS CONTRACT PAYMENTS
13	13	SECTION 2. Section 2252.031, Government Code, is amended by
14	14	amending Subdivision (5) and adding Subdivision (6) to read as
15	15	follows:
16	16	(5) "Retainage" means the percentage [part] of a
17	17	public works contract payment withheld by a governmental entity to
18	18	secure performance of the contract.
19	19	(6) "Warranty period" means the period of time
20	20	specified in a contract during which certain terms applicable to
21	21	the warranting of work performed under the contract are in effect.
22	22	SECTION 3. Section 2252.032, Government Code, is amended to
23	23	read as follows:
24	24	Sec. 2252.032. RETAINAGE. (a) A governmental entity
25	25	shall:
26	26	(1) include in each public works contract a provision
27	27	that establishes the circumstances under which:
28	28	(A) the public works project that is the subject
29	29	of the contract is considered substantially complete; and
30	30	(B) the governmental entity may release all or a
31	31	portion of the retainage for:
32	32	(i) substantially completed portions of the
33	33	project; or
34	34	(ii) fully completed and accepted portions
35	35	of the project;
36	36	(2) maintain an accurate record of accounting for:
37	37	(A) [deposit in an interest-bearing account] the
38	38	retainage withheld on [of a public works contract that provides for
39	39	retainage of more than five percent of the] periodic contract
40	40	payments; and
41	41	(B) the retainage released to the prime
42	42	contractor for a public works contract [payment]; and
43	43	(3) for a public works contract described by
44	44	Subsection (c), [(2)] pay any remaining retainage described by
45	45	Subdivision (2)(A) and the interest earned on the retainage to the
46	46	prime contractor on completion of the contract.
47	47	(b) Except as provided by Subsection (h), if the total value
48	48	of a public works contract is $1 million or more, a governmental
49	49	entity may not withhold retainage in an amount that exceeds five
50	50	percent of the contract price and the rate of retainage may not
51	51	exceed five percent for any item in a bid schedule or schedule of
52	52	values for the project, including materials and equipment delivered
53	53	on-site to be installed.
54	54	(c) For a competitively awarded contract with a value of $10
55	55	million or more, and for a contract that was awarded using a method
56	56	other than competitive bidding, a governmental entity and prime
57	57	contractor may agree to deposit in an interest-bearing account the
58	58	retainage withheld on periodic contract payments.
59	59	(d) If, for the purpose of fulfilling an obligation of a
60	60	prime contractor under a contract described by Subsection (b), the
61	61	prime contractor enters into a subcontract:
62	62	(1) the prime contractor may not withhold from a
63	63	subcontractor a greater percentage of retainage than the percentage
64	64	that may be withheld from the prime contractor by the governmental
65	65	entity under Subsection (b); and
66	66	(2) a subcontractor who enters into a contract with
67	67	another subcontractor to provide labor or materials under the
68	68	contract may not withhold from that subcontractor a greater
69	69	percentage of retainage than the percentage that may be withheld
70	70	from the subcontractor as determined under Subdivision (1).
71	71	(e) A governmental entity may not withhold retainage:
72	72	(1) after completion of the contract by the prime
73	73	contractor, including during the warranty period; or
74	74	(2) for the purpose of requiring the prime contractor,
75	75	after completion of the contract, to perform work on manufactured
76	76	goods or systems that were:
77	77	(A) specified by the designer of record; and
78	78	(B) properly installed by the contractor.
79	79	(f) On application to a governmental entity for final
80	80	payment and release of retainage, the governmental entity may
81	81	withhold retainage if there is a bona fide dispute between the
82	82	governmental entity and the prime contractor and the reason for the
83	83	dispute is that labor, services, or materials provided by the prime
84	84	contractor or the prime contractor's subcontractors were not
85	85	provided in compliance with the contract. If there is no such bona
86	86	fide dispute between the governmental entity and the prime
87	87	contractor and neither party is in default under the contract, the
88	88	prime contractor is entitled to:
89	89	(1) cure any noncompliant labor, services, or
90	90	materials; or
91	91	(2) offer the governmental entity a reasonable amount
92	92	of money as compensation for any noncompliant labor, services, or
93	93	materials that cannot be promptly cured.
94	94	(g) Subsection (f) may not be construed to limit a person
95	95	who is a party to a public works contract from pursuing another
96	96	remedy available to the person under other applicable law.
97	97	(h) Subsection (b) does not apply to a governmental entity
98	98	that receives financial assistance from a fund described by Section
99	99	15.432 or 15.472, Water Code, for a project formally approved for
100	100	that assistance by the Texas Water Development Board before
101	101	September 1, 2019. A governmental entity described by this
102	102	subsection shall deposit in an interest-bearing account the
103	103	retainage withheld under a public works contract that provides for
104	104	retainage that exceeds five percent of the periodic contract
105	105	payments.
106	106	SECTION 4. The changes in law made by this Act apply only to
107	107	a contract to which Subchapter B, Chapter 2252, Government Code,
108	108	applies that is entered into on or after the effective date of this
109	109	Act. A contract to which Subchapter B, Chapter 2252, Government
110	110	Code, applies that is entered into before the effective date of this
111	111	Act is governed by the law in effect when the contract was entered
112	112	into, and the former law is continued in effect for that purpose.
113	113	SECTION 5. This Act takes effect immediately if it receives
114	114	a vote of two-thirds of all the members elected to each house, as
115	115	provided by Section 39, Article III, Texas Constitution. If this
116	116	Act does not receive the vote necessary for immediate effect, this
117	117	Act takes effect September 1, 2021.