Contracts; payment clauses, right to payment of subcontractors.
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SB 550 — Contracts; payment clauses, right to payment of subcontractors.
Last action — Enacted, Chapter 727 (effective 1/1/23)
No card. One bill, free forever — alerts when it moves.
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✓Introduced
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✓In Committee
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✓Passed Senate
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✓Passed House of Delegates
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✓To Executive
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6Enacted
This bill has been enacted into law. Introduced January 12, 2022. Enacted.
Signed by Governor Glenn Youngkin (Republican) on April 27, 2022.
Prognosis
Where this bill stands today.
Odds of enactment
HighHow often bills like it became law.
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Enacted
Current position in the legislative process.
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1 sponsor
1 primary, 0 co-sponsors signed on.
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Cleared a recorded vote
Passed 12 recorded votes so far.
Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.
Summary
Contracts; payment clauses to be included in certain contracts; right to payment of subcontractors. Requires construction contracts awarded by state or local government agencies as well as certain private construction contracts in which there is at least one general contractor and one subcontractor to include a payment clause that obligates the contractors to be individually liable for the entire amount owed to any subcontractor with which it contracts. The bill provides that a contractor shall not be liable for amounts otherwise reducible due to the subcontractor's noncompliance with the terms of the contract; however, the contractor must notify the subcontractor in writing of the contractor's intent to withhold all or a part of the subcontractor's payment with the reason for such nonpayment. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor. The bill also requires a payment clause to be included in any construction contract between an owner and a general contractor that requires (i) the owner to pay the general contractor within 45 days of receipt of an invoice following satisfactory completion of the contracted-for work, and (ii) a higher-tier contractor to pay a lower-tier subcontractor within the earlier of 45 days of satisfactory completion of the work for which the subcontractor has invoiced or seven days after receipt of amounts paid by the owner to the general contractor for work performed. Lastly, the bill provides that the Department of General Services shall convene the Public Body Procurement Workgroup to review whether the issue of nonpayment between general contractors and subcontractors necessitates legislative corrective action and report its findings and legislative recommendations to the General Assembly on or before December 1, 2022.
Bill Text
What changed in the latest version
130 added · 123 removedPlain-language change summary
The recent amendment to Bill SB 550 modifies the payment clauses required in contracts awarded by state and local agencies in Virginia. The key change is a more explicit requirement for contractors to inform subcontractors in writing if they plan to withhold payments, along with a clear reason for any nonpayment. This adjustment aims to enhance transparency and protect subcontractors' rights, ensuring they are fairly compensated for their work without unnecessary delays or confusion. By reinforcing these communication requirements, the amendment promotes accountability in the contracting process.
RECONVENED SESSION REENROLLED VIRGINIA ACTS OF ASSEMBLY --–– 2022 RECONVENED SESSION CHAPTER 727R An Act to amend and reenact §§ 2.2-4354 and 11-4.6 of the Code of Virginia, relating to contracts;
E N [S 550] Approved AprilR 27,O 20221. Be it enacted by the General Assembly of Virginia:
1.
L Any contract awarded by any state agency, or any contract awarded by any agency of local L government in accordance with § 2.2-4352, shall include:
E 1.
Such contractor shall not be liable forfDr However,amounts inotherwise thereducible eventdue thatto the contractorsubcontractor's withholdsnoncompliance allwith orthe aterms part of the amountcontract. promised to theract.
A payment clause that obligates the contractor to take one of the two following actions withinwSthin seven days after receipt of amounts paid to the contractor by the state agency or local governmentgovernm5nt for workwora. performed by the subcontractor under that contract:
a.
or R b.
3.amounts owed by the contractor that remain unpaid after seven days following receipt by the contractor of payment from the state agency or agency of local government for work performed by the subcontractor under that contract, except for amounts withheld as allowed in subdivision 1 2.
An interest clause that obligates the contractor to pay interest to the subcontractor on all amounts owed by the contractor that remain unpaid after seven days following receipt by the contractor of payment from the state agency or agency of local government for work performed by the subcontractor under that contract, except for amounts withheld as allowed in subdivision 1 2.
4.
An interest rate clause stating, "Unless otherwise provided under the terms of this contract, interest shall accrue at the rate of one percent per month." Any such contract awarded shall further require the contractor to include in each of its subcontracts a provision requiring each subcontractor to include or otherwise be subject to the same payment and intA contractor's obligation to pay an interest requirementscharge withto respecta subcontractor pursuant to eachthe lower-tierpayment subcontractor.clause in this section shall not be construed to be an obligation of the state agency or agency of local government.
A contractor's obligation to pay an interest charge to a subcontractor pursuant to the payment clause in this section shall not be construed to be an obligation of the state agency or agency of local government.
"Construction contract" means a contract between a general contractor and a subcontractor relating to the construction, alteration, repair, or maintenance of a building, structure, or appurtenance thereto,thereto,o including moving, demolition, and excavation connected therewith, or any provision contained in any contract relating to the construction of projects other than buildings.
B.a provision that requires the owner to pay such general contractor within 60 days of the receipt of ane invoice following satisfactory completion of the portion of the work for which the general contractor has of 3 invoiced.
In any construction contract between an owner and a general contractor, the parties shall include a provision that requires the owner to pay such general contractor within 60 days of the receipt of an invoice following satisfactory completion of the portion of the work for which the general contractor has invoiced.
of 3 However, in the event that an owner withholds all or a part of the amount invoiced by the general contractor under the terms of the contract, the owner shall notify the general contractor, in writing and with reasonable specificity, of his intention to withhold all or part of the general contractor's payment with the reason for nonpayment.
That the Department of General Services shall convene the Public Body Procurement of 3 Workgroup (the Workgroup) to review whether the issue of nonpayment between general contractorsreport andits subcontractorsfindings necessitatesand any legislative correctiverecommendations action.to the General Assembly on or beforell 3.
TheThat Workgroupthe provisions of the first enactment of this act shall reportbecome itseffective findingson andJanuary any1, legislative2023, recommendationsand shall apply to theconstruction Generalcontracts Assemblyexecuted on or beforeafter DecemberJanuary 1, 2022.2023.
3.E N R O L L E D B R 2
That the provisions of the first enactment of this act shall become effective on January 1, 2023, of 3 and shall apply to construction contracts executed on or after January 1, 2023.
View plain text versions (6)
- SB550ER2 View text pdf April 27, 2022
- CHAP0727 View text Current pdf April 27, 2022
- Substitute Governor's substitute printed 22108193D-S2 pdf April 11, 2022
- SB550ER View text pdf March 10, 2022
- SB550H2 View text pdf March 03, 2022
- Committee Substitute Committee substitute printed 22107080D-H1 pdf February 24, 2022
Action History
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Enacted, Chapter 727 (effective 1/1/23)
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Signed by Speaker as reenrolled
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Signed by President as reenrolled
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Reenrolled bill text (SB550ER2)
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Reenrolled
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Governor's recommendation adopted
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VOTE: Adoption (95-Y 4-N)
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House concurred in Governor's recommendation (95-Y 4-N)
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Senate concurred in Governor's recommendation (40-Y 0-N)
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Governor's substitute printed 22108193D-S2
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Governor's recommendation received by Senate
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Governor's Action Deadline 11:59 p.m., April 11, 2022
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Enrolled Bill Communicated to Governor on March 22, 2022
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Signed by Speaker
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Signed by President
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Impact statement from DPB (SB550ER)
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Enrolled
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Impact statement from DPB (SB550H2)
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Title replaced 22107429D-H2
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House substitute agreed to by Senate (29-Y 10-N)
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VOTE: Passage (91-Y 9-N)
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Passed House with substitute (91-Y 9-N)
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Engrossed by House - floor substitute SB550H2
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Substitute by Delegate Wiley agreed to 22107429D-H2
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Appropriations committee amendments out of order due to rejection of General Laws
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Committee on General Laws substitute rejected 22107080D-H1
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Read third time
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Floor substitute printed 22107429D-H2 (Wiley)
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Passed by for the day
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Read second time
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Reported from Appropriations with amendment(s) (22-Y 0-N)
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House committee, floor amendments and substitutes offered
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Committee substitute printed 22107080D-H1
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Referred to Committee on Appropriations
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Reported from General Laws with substitute (17-Y 5-N)
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House committee, floor amendments and substitutes offered
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Referred to Committee on General Laws
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Read first time
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Placed on Calendar
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Passed Senate (25-Y 15-N)
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Reconsideration of passage agreed to by Senate (40-Y 0-N)
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Read third time and passed Senate (23-Y 17-N)
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Engrossed by Senate - committee substitute SB550S1
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Committee substitute agreed to 22104655D-S1
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Reading of substitute waived
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Read second time
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Constitutional reading dispensed (40-Y 0-N)
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Reported from Finance and Appropriations (11-Y 4-N)
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Impact statement from DPB (SB550S1)
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Rereferred to Finance and Appropriations
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Committee substitute printed 22104655D-S1
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Reported from General Laws and Technology with substitute (10-Y 4-N 1-A)
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Senate committee, floor amendments and substitutes offered
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Senate committee, floor amendments and substitutes offered
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Impact statement from DPB (SB550)
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Referred to Committee on General Laws and Technology
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Prefiled and ordered printed; offered 01/12/22 22102233D
Sponsors
- John J. Bell · Primary
Sponsorship breakdown
Export CSV (upgrade) →1 sponsors · 0 co-sponsors · 147 not signed on · 31 voted No
Sponsors (1)
Co-sponsors (0)
None.
Not signed on (147)
147 members have not signed on to this bill.
Show all 147 →"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.
Votes
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 94 | 4 | 0 | 1 |
| Total | 94 | 4 | 0 | 1 |
| % of votes cast | 95% | 4% | 0% | 1% |
How each member voted (99)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 40 | 0 | 0 | 0 |
| Total | 40 | 0 | 0 | 0 |
| % of votes cast | 100% | 0% | 0% | 0% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 29 | 10 | 0 | 1 |
| Total | 29 | 10 | 0 | 1 |
| % of votes cast | 73% | 25% | 0% | 3% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 90 | 9 | 0 | 0 |
| Total | 90 | 9 | 0 | 0 |
| % of votes cast | 91% | 9% | 0% | 0% |
How each member voted (99)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 22 | 0 | 0 | 0 |
| Total | 22 | 0 | 0 | 0 |
| % of votes cast | 100% | 0% | 0% | 0% |
How each member voted (22)
| Member | Party | Vote |
|---|---|---|
| Betsy B. Carr | — | Yea |
| Bulova, David L. | — | Yea |
| C.E. Cliff Hayes, Jr. | — | Yea |
| Coyner, Carrie E. | — | Yea |
| David A. Reid | — | Yea |
| Davis, Glenn R. | — | Yea |
| Delores L. McQuinn | — | Yea |
| Emily M. Jordan | — | Yea |
| Fariss, C. Matthew | — | Yea |
| James W. Morefield | — | Yea |
| Knight, Barry D. | — | Yea |
| Luke E. Torian | — | Yea |
| M. Keith Hodges | — | Yea |
| Marshall, Daniel W., III | — | Yea |
| Paul E. Krizek | — | Yea |
| Plum, Kenneth R. | — | Yea |
| Robert S. Bloxom, Jr. | — | Yea |
| Sam Rasoul | — | Yea |
| Scott A. Wyatt | — | Yea |
| Sickles, Mark D. | — | Yea |
| Terry L. Austin | — | Yea |
| Wampler, William C., III | — | Yea |
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 17 | 5 | 0 | 0 |
| Total | 17 | 5 | 0 | 0 |
| % of votes cast | 77% | 23% | 0% | 0% |
How each member voted (22)
| Member | Party | Vote |
|---|---|---|
| Adams, Dawn M. | — | Yea |
| Betsy B. Carr | — | Yea |
| Bulova, David L. | — | Yea |
| Campbell, Jeffrey L. | — | Yea |
| Chris S. Runion | — | Yea |
| Coyner, Carrie E. | — | Yea |
| Danica A. Roem | — | Yea |
| Emily M. Jordan | — | Yea |
| Fowler, Hyland F."Buddy," Jr. | — | Yea |
| James A. "Jay" Leftwich | — | Yea |
| James W. Morefield | — | Nay |
| Jenkins, Clinton L. | — | Nay |
| Knight, Barry D. | — | Nay |
| Luke E. Torian | — | Yea |
| Marcia S. "Cia" Price | — | Yea |
| Murphy, Kathleen | — | Yea |
| Paul E. Krizek | — | Yea |
| Robinson, Roxann L. | — | Yea |
| Schuyler T. VanValkenburg | — | Yea |
| Thomas C. Wright, Jr. | — | Nay |
| Wampler, William C., III | — | Yea |
| Wendell S. Walker | — | Nay |
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 25 | 15 | 0 | 0 |
| Total | 25 | 15 | 0 | 0 |
| % of votes cast | 63% | 38% | 0% | 0% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 40 | 0 | 0 | 0 |
| Total | 40 | 0 | 0 | 0 |
| % of votes cast | 100% | 0% | 0% | 0% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 23 | 17 | 0 | 0 |
| Total | 23 | 17 | 0 | 0 |
| % of votes cast | 58% | 43% | 0% | 0% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 40 | 0 | 0 | 0 |
| Total | 40 | 0 | 0 | 0 |
| % of votes cast | 100% | 0% | 0% | 0% |
How each member voted (40)
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 11 | 4 | 0 | 0 |
| Total | 11 | 4 | 0 | 0 |
| % of votes cast | 73% | 27% | 0% | 0% |
How each member voted (15)
| Member | Party | Vote |
|---|---|---|
| McClellan, Jennifer L. | — | Yea |
| Barker, George L. | — | Yea |
| David W. Marsden | — | Yea |
| Ebbin, Adam P. | — | Yea |
| Edwards, John S. | — | Yea |
| Hanger, Emmett W., Jr. | — | Nay |
| Howell, Janet D. | — | Yea |
| L. Louise Lucas | — | Yea |
| Mamie E. Locke | — | Yea |
| Newman, Stephen D. | — | Nay |
| Petersen, J. Chapman | — | Yea |
| R. Creigh Deeds | — | Yea |
| Ruff, Frank M., Jr. | — | Nay |
| Saslaw, Richard L. | — | Yea |
| Vogel, Jill Holtzman | — | Nay |
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 10 | 4 | 0 | 1 |
| Total | 10 | 4 | 0 | 1 |
| % of votes cast | 67% | 27% | 0% | 7% |
How each member voted (15)
| Member | Party | Vote |
|---|---|---|
| Barker, George L. | — | Yea |
| Bell, John J. | — | Yea |
| Bryce E. Reeves | — | Nay |
| Dunnavant, Siobhan S. | — | Yea |
| Ebbin, Adam P. | — | Yea |
| Hashmi, Ghazala F. | — | Yea |
| Jennifer B. Boysko | — | Yea |
| Jeremy S. McPike | — | Yea |
| Kiggans, Jennifer A. | — | Yea |
| Mamie E. Locke | — | Yea |
| Mason, T. Montgomery "Monty" | — | Not Voting |
| Richard H. Stuart | — | Nay |
| Ruff, Frank M., Jr. | — | Nay |
| Todd E. Pillion | — | Yea |
| Vogel, Jill Holtzman | — | Nay |
Subjects
Frequently asked questions
- What does SB 550 do?
- Contracts; payment clauses to be included in certain contracts; right to payment of subcontractors. Requires construction contracts awarded by state or local government agencies as well as certain private construction contracts in which there is at least one general contractor and one subcontractor to include a payment clause that obligates the contractors to be individually liable for the entire amount owed to any subcontractor with which it contracts. The bill provides that a contractor shall not be liable for amounts otherwise reducible due to the subcontractor's noncompliance with the terms of the contract; however, the contractor must notify the subcontractor in writing of the contractor's intent to withhold all or a part of the subcontractor's payment with the reason for such nonpayment. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor. The bill also requires a payment clause to be included in any construction contract between an owner and a general contractor that requires (i) the owner to pay the general contractor within 45 days of receipt of an invoice following satisfactory completion of the contracted-for work, and (ii) a higher-tier contractor to pay a lower-tier subcontractor within the earlier of 45 days of satisfactory completion of the work for which the subcontractor has invoiced or seven days after receipt of amounts paid by the owner to the general contractor for work performed. Lastly, the bill provides that the Department of General Services shall convene the Public Body Procurement Workgroup to review whether the issue of nonpayment between general contractors and subcontractors necessitates legislative corrective action and report its findings and legislative recommendations to the General Assembly on or before December 1, 2022.
- Who sponsors SB 550?
- SB 550 is sponsored by Bell, John J..
- What is the current status of SB 550?
- This bill has been enacted into law. Introduced January 12, 2022. Enacted.
- Where can I track SB 550?
- Track SB 550 free on One Click Politics — get push/email alerts when it moves.
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