SB 246 — Public Construction

Florida Senate - 2019 CS for SB 246 By Senatorthe HooperCommittee 16-00384-19on 2019246__Governmental AOversight billand toAccountability; be entitled An act relating to public construction;

and Senator Hooper 585-02352-19 2019246c1 A bill to be entitled An act relating to public construction;

218.735, F.S.;

revising the amounts of retainage that local governmental entities and contractors may withhold from progress payments for any construction services contract;

amending s.

1215 Be It Enacted by the Legislature of the State of Florida:

1417 Section 1. Paragraph1. Subsection (f)(8) of subsection (1) of section 255.05,218.735, Florida Statutes, is amended to read:

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.

(b) After 50-percent completion of the construction services purchased pursuant to the contract, the local governmental entity must reduce to 2.5 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.

However, notwithstanding this subsection, a municipality having a population of 25,000 or fewer, or a county having a population of 100,000 or fewer, may withhold retainage in an amount not exceeding 5 10 percent of each progress payment made to the contractor until final completion and acceptance of the project by the local governmental entity.

(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 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.

(d) After 50-percent completion of the construction services purchased pursuant to the contract, the contractor may present to the local governmental entity a payment request for up to one-half of the retainage held by the local governmental entity.

The local governmental entity shall promptly make payment to the contractor, unless the local governmental entity has grounds, pursuant to paragraph (f), for withholding the payment of retainage.

If the local governmental entity makes payment of retainage to the contractor under this paragraph which is attributable to the labor, services, or materials supplied by one or more subcontractors or suppliers, the contractor shall timely remit payment of such retainage to those subcontractors and suppliers.

(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 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.

If a local governmental entity makes any payment of retainage to the contractor which is attributable to the labor, services, or materials supplied by one or more subcontractors or suppliers, the contractor shall timely remit payment of such retainage to those subcontractors and suppliers.

(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.

255.05, or otherwise the subject of a claim or demand by the local governmental entity or contractor.

(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) 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) This subsection does not apply to any construction 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.

Section 2. Paragraph (f) of subsection (1) of section 255.05, Florida Statutes, is amended to read:

44132 The state is not liable to any laborer, materialman, or subcontractor for any amounts greater than the pro rata share as determined under this section.

Section 2. Subsections3. Subsections (1), (2), (3), and (5) of section 255.078, Florida Statutes, are amended to read:

Section 3. This4. (1) This act does not apply to any contract for construction services which is entered into or is pending approval by a public entity, as defined in s.

Section(2) The 4. Thisamendments actmade shallto takess. effect July 1, 2019.

255.05 and 255.078, Florida Statutes, by this act do not apply to contracts executed under chapter 337, Florida Statutes.

Section 5. This act shall take effect July 1, 2019.