AB 22 — Revises provisions governing certain highway contracts. (BDR 35-239)

(ReprintedAssembly withBill amendmentsNo. adopted on April 17, 2019) FIRST REPRINT A.B.

2222–Committee ASSEMBLYon BILLGrowth NOand .Infrastructure CHAPTER..........

22–COMMITTEE ON GROWTH AND INFRASTRUCTURE (O N BEHALF OF THE DEPARTMENT OF T RANSPORTATION ) PREFILED N OVEMBER 16, 2018 ____________ Referred to Committee on Growth and Infrastructure SUMMARY—Revises provisions governing certain highway contracts.

(BDR 35-239) FISCAL NOTE:

Effect on Local Government:

No.

Effect on the State:

No.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

Existing law authorizes the Director of the Department of Transportation, subject to certain exceptions, to make monthly payments to a contractor who,who satisfactorily performs any highway improvement or construction in full as the work is completed by the contractor.

The payments must not exceed 95 percent of contract price until the entire contract price.is completed satisfactorily and accepted bye the Director.

The Director is required to retain the remaining 5 percent of the contract price until the entire contract is completed satisfactorily and accepted by the Director.

(NRS 408.383) Section 1 of this bill repeals the $50,000 limitation on the retained amount and reduces the percentage of the contract price which must be retained by the Director to 2.5 percent.

If the inspection discloses that the work was completed satisfactorily, section 1 requires the Department to reduce the amount of the contract price to be retained byuntil the Departmententire tocontract notis morecompleted thansatisfactorily $50,000,and withaccepted anyby remaining amount the Director.

If the final inspection reveals that the work is not satisfactory, section 1 requires the Department to provide the contractor with notice of the deficiencies in such work that require correction.

- *AB22_R1* – 2 – Existing law requires a contractor to disburse money paid to the contractor under a contract for a project of highway improvement or construction to his or her subcontractors and suppliers within a certain amount of time and provides that, if a contractor withholds more than 10 percent from such a required payment, the subcontractor or supplier may contact the Directorcontractor toand resolve the dispute between that a subcontractor or suppliersupplier. may contact the Director to resolve such a dispute if the contractor withholds more than 2.5 percent of a required payment.

(NRS 408.383) Section 1 provides that a subcontractor or supplier may contact the Director to resolve such a dispute if the contractor withholds more than 2.5 percent of a required payment.

THEEXPLANATION PEOPLE– OFMatter THEin STATEbolded OFitalics NEVADA,is REPRESENTEDnew; IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

matter between brackets [omitted material] is material to be omitted.

- 80th Session (2019) – 2 – THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Except as otherwise provided in subsections 2, [11] 12 and [12,] 13, the Director may pay at the end of each calendar month, or as soon thereafter as practicable, to any contractor satisfactorily performing any highway improvement or construction as the work progresses in full for the work as completed but not more than [95] 97.5 percent of the entire contract price.

Upon receiving notice from the contractor of the completion of all work under a contract for a project of highway improvement or construction, the Department shall perform aaghway final inspection of such work.

Upon receiving notice from the contractor that any such unsatisfactory work has been corrected, - *AB22_R1* – 3 – the Department shall conduct another final inspection.

If a final inspection discloses that all work under a contract for a project of highway improvement or construction has been completed satisfactorily, the Director shall reduce any money being retained pursuant to subsection 1 to not more than $50,000, not later than 30 days after such final inspection.

If it becomes necessary for the Department to take over the completion of any highway contract or contracts, all of the amounts - 80th Session (2019) – 3 – owing the contractor, including the withheld percentage, must first be applied toward the cost of completion of the contract or contracts.

Such retained percentage as may be due any contractor is due and payable at the expiration of the 30-day period as provided in NRS 408.363 for filing of creditors’ claims, and this retained percentage is due and payable to the contractor at that time without regardreg[5.] to6. creditors’ claims filed with the Department.

[5.]The 6.contractor under any contract made or awarded by the Department, including any contract for the construction, improvement, maintenance or repair of any road or highway or the appurtenances thereto, may, from time to time, withdraw the whole or any portion of the sums otherwise due to the contractor under the contract which are retained by the Department, pursuant to the terms of the contract, if the contractor deposits with the Director:

The contractor under any contract made or awarded by the Department, including any contract for the construction, improvement, maintenance or repair of any road or highway or the or any portion of the sums otherwise due to the contractor under the contract which are retained by the Department, pursuant to the terms of (a) United States treasury bonds, United States treasury notes, United States treasury certificates of indebtedness or United States treasury bills;

The Director has the power to enter into a contract or agreement with any national bank, state bank, credit union, trust company or safe deposit company located in the State of Nevada, designated by the contractor after notice to the owner and surety, to provide for the custodial care and servicing of any obligationsobligationsty, to deposited with the Director pursuant to this section.

- *AB22_R1* – 4 – [7.] 8.

- 80th Session (2019) – 4 – [8.] 9.

A contractor shall disburse money paid to the contractor pursuant to this section, including any interest that the contractor receives, to his or her subcontractors and suppliers within 15 days after receipt of the money in the proportion that the value of the work performed by each subcontractor or the materials furnished by each supplier bears to the total amount of the contract between the principal contractor and the Department.

interest[10.] at11. a rate equal to the lowest daily prime rate at the three largest banks in the United States on the date the subcontract or the money was received by the principal contractor until the date of payment.

Money payable to a subcontractor or supplier accrues interest at a rate equal to the lowest daily prime rate at the three largest banks in the United States on the date the subcontract or order for supplies was executed plus 2 percent, from 15 days after the money was received by the principal contractor until the date of payment.

If the dispute is not resolved within 20 working days after the date that the Director receives notice of the amount due, the contractor shall depositThe thecontractor, disputedsubcontractor amountor insupplier anmay escrowpursue accountany thatlegal bearsorest. interest.

The contractor, subcontractor or supplier may pursue any legal or equitable remedy to resolve the dispute over the amount due.

If the Director awards to a railroad company a contract for a project for the construction, reconstruction, improvement or maintenance of a highway and the project is located - *AB22_R1* – 5 – on property that is owned by or under the control of the railroad company, the Director may agree in the contract not to retain any portion of the contract price.

The amendatory provisions of section 1 of this act do not apply to any highway contract that is made or awarded by the DepSec.Department of Transportation before the effective date of this act.

- 80th Session (2019) – 5 – Sec.