HB 101 — Public Construction

F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, Engrossed 1 2019 A bill to be entitled An act relating to public construction;

conforming a cross-reference;

removing provisions relating to retainage requirements after 50 percent completion of construction services;

conforming a provision to changes made by the act;

removing provisions relating to retainage requirements after 50 percent completion of construction services;

conforming a provision to changes made by the act;

amending s.

255.077, F.S.;

conforming a cross- reference;

SubsectionParagraph (8)(i) of sectionsubsection 218.735,(7) Floridaand Statutes,subsection isPage amended1 toof read:11 CODING:

218.735 Timely payment for purchases of construction services.— (8)(a) With regard to any contract for construction services, a local governmental entity may withhold from each progress payment made to the contractor an amount not exceeding 5 10 percent of the payment as retainage until 50-percent completion of such services.

Page 1 of 8 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, 2019Engrossed (b)1 After2019 50-percent(8) completion of thesection construction218.735, servicesFlorida purchasedStatutes, pursuantare toamended the contract, the local governmental entity must reduce to 2.5read: 5 percent the amount of retainage withheld from each subsequent progress payment made to the contractor.

For218.735 purposesTimely ofpayment thisfor subsection,purchases theof termconstruction "50-services.— percent(i) completion"If meansa the definition that is provided has the meaning set forth in the contract between the local governmental entity andfails theto contractorcomply or,with ifits notresponsibilities definedto indevelop the contract,list therequired pointunder atparagraph which(a) theor localparagraph governmental(b) entitywithin hasthe expendedtime 50limitations percentprovided ofin theparagraph total(a), cost of the constructioncontractor servicesmay purchasedsubmit asa identifiedpayment inrequest thefor contract together with all costsremaining associatedretainage withwithheld existingby changethe orderslocal andgovernmental otherentity additionspursuant or modifications to thethis constructionsection; services provided for in the contract.

and payment of any remaining undisputed contract amount, less any amount withheld pursuant to the contract for incomplete or uncorrected work, must be paid within 20 business days after receipt of a proper invoice or payment request.

If the local governmental entity has provided written notice to the contractor specifying the failure of the contractor to meet contract requirements in the development of the list of items to be completed, the local governmental entity need not pay or process any payment request for retainage if the contractor has, in whole or in part, failed to cooperate with the local governmental entity in the development of the list or to perform its contractual responsibilities, if any, with regard to the development of the list or if paragraph (8)(c) (8)(f) applies.

(8)(a) With regard to any contract for construction services, a local governmental entity may withhold from each progress payment made to the contractor an amount not exceeding Page 2 of 11 CODING:

Words stricken are deletions;

words underlined are additions.

hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB , Engrossed 1 2019 5 10 percent of the payment as retainage until 50-percent completion of such services.

(b) After 50-percent completion of the construction services purchased pursuant to the contract, the local governmental entity must reduce to 5 percent the amount of retainage withheld from each subsequent progress payment made to the contractor.

For purposes of this subsection, the term "50- percent completion" has the meaning set forth in the contract between the local governmental entity and the contractor or, if not defined in the contract, the point at which the local governmental entity has expended 50 percent of the total cost of the construction services purchased as identified in the contract together with all costs associated with existing change orders and other additions or modifications to the construction services provided for in the contract.

(c) After 50-percent completion of the construction services purchased pursuant to the contract, the contractor may elect to withhold retainage from payments to its subcontractors at a rate higher than 2.5 5 percent.

The specific amount to be withheld must be determined on a case-by-case basis and must be based on the contractor's assessment of the subcontractor's past Page 23 of 811 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, Engrossed 1 2019 withheld must be determined on a case-by-case basis and must be based on the contractor's assessment of the subcontractor's past performance, the likelihood that such performance will continue, and the contractor's ability to rely on other safeguards.

The contractor shall notify the subcontractor, in writing, of its determination to withhold more than 2.5 5 percent of the progress payment and the reasons for making that determination, and the contractor may not request the release of such retained funds from the local governmental entity.

(e)(b)(e) This section does not prohibit a local governmental entity from withholding retainage at a rate less than 5 10 percent of each progress payment, from incrementally reducing the rate of retainage pursuant to a schedule provided for in the contract, or from releasing at any point all or a portion of any Page 34 of 811 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, Engrossed 1 2019 the rate of retainage pursuant to a schedule provided for in the contract, or from releasing at any point all or a portion of any retainage withheld by the local governmental entity which is attributable to the labor, services, or materials supplied by the contractor or by one or more subcontractors or suppliers.

(f)(c)(f) This section does not require the local governmental entity to pay or release any amounts that are the subject of a good faith dispute, the subject of a claim brought pursuant to s.

(g)(d)(g) The time limitations set forth in this section for payment of payment requests apply to any payment request for retainage made pursuant to this section.

(h)(e)(h) Paragraph (a) does Paragraphs (a)-(d) do not apply to construction services purchased by a local governmental entity which are paid for, in whole or in part, with federal funds and are subject to federal grantor laws and regulations or requirements that are contrary to any provision of the Local Government Prompt Payment Act.

(i)(f)(i) This subsection does not apply to any construction services purchased by a local governmental entity if the total Page 45 of 811 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, Engrossed 1 2019 services purchased by a local governmental entity if the total cost of the construction services purchased as identified in the contract is $200,000 or less.

Procedures for retaining up to 5 10 percent of each request for payment submitted by a contractor and procedures for determining disbursements from the amount retained on a pro rata Page 56 of 811 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, Engrossed 1 2019 determining disbursements from the amount retained on a pro rata basis to laborers, materialmen, and subcontractors, as defined in s.

Subsections (5) through (9) of section 255.078, Florida Statutes, are renumbered as subsections (2) through (6), respectively, and subsections (1), (2), (3), and (5),(4) ofand sectionpresent 255.078,subsections Florida(5) Statutes,and (8) of that section are amendedamended, to read:

(2) After 50-percent completion of the construction services purchased pursuant to the contract, the public entity mustPage reduce7 to 2.5 5 percent the amount of retainage11 withheldCODING: from each subsequent progress payment made to the contractor.

For purposes of this section, the term "50-percent completion" Page 6 of 8 CODING:

hb0101-02-c2hb0101-03-e1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 101, 2019Engrossed means1 the2019 definitionmust thatreduce isto provided5 has the meaning set forth in the contract between the public entity and the contractor or, if not defined in the contract, the point at which the public entity has expended 50 percent of the totalamount cost of theretainage constructionwithheld servicesfrom purchasedeach assubsequent identifiedprogress inpayment themade contract together with all costs associated with existing change orders and other additions or modifications to the constructioncontractor. services provided for in the contract.

(3)For Afterpurposes 50-percentof completionthis section, the term "50-percent completion" has the meaning set forth in the contract between the public entity and the contractor or, if not defined in the contract, the point at which the public entity has expended 50 percent of the total cost of the construction services purchased pursuantas toidentified in the contract,contract thetogether contractorwith mayall electcosts toassociated withholdwith retainageexisting fromchange paymentsorders toand itsother subcontractorsadditions ator amodifications rateto higherthe thanconstruction 2.5services 5provided percent.for in the contract.