CS/HB 1157

A bill to be entitled
2An act relating to the Local Government Prompt Payment
3Act; amending s. 218.72, F.S.; revising definitions;
4amending s. 218.735, F.S.; revising provisions relating to
5the timely payment for purchases of construction services;
6requiring that a dispute be resolved according to
7procedures in the contract; prohibiting the assessment of
8damages against a contractor if the list of items
9remaining to complete is not timely provided to the
10contractor; amending s. 218.76, F.S.; revising provisions
11relating to the resolution of disputes concerning an
12improper payment request or invoice; providing that a
13local governmental entity waives its objection in a
14payment dispute if it fails to commence the dispute
15resolution procedure within the time required; providing
16an effective date.
18Be It Enacted by the Legislature of the State of Florida:
20     Section 1.  Section 218.72, Florida Statutes, is amended to
22     218.72  Definitions.-As used in this part, the term:
23     (1)(9)  "Agent" means the project architect, project
24engineer, or any other agency or person acting on behalf of the
25local governmental entity. The agent who is required to review
26invoices or payment requests must be identified in accordance
27with s. 218.735(1).
28     (2)(7)  "Construction services" means all labor, services,
29and materials provided in connection with the construction,
30alteration, repair, demolition, reconstruction, or any other
31improvements to real property.
32     (3)(10)  "Contractor" or "provider of construction
33services" means the any person who contracts directly with a
34local governmental entity to provide construction services.
35     (4)(3)  "County" means a political subdivision of the state
36established pursuant to s. 1, Art. VIII of the State
38     (5)(2)  "Local governmental entity" means a county or
39municipal government, school board, school district, authority,
40special taxing district, other political subdivision, or any
41office, board, bureau, commission, department, branch, division,
42or institution thereof.
43     (6)(4)  "Municipality" means a municipality created
44pursuant to general or special law and metropolitan and
45consolidated governments as provided in s. 6(e) and (f), Art.
46VIII of the State Constitution.
47     (7)(8)  "Payment request" means a request for payment for
48construction services which conforms with all statutory
49requirements and with all requirements specified by the local
50governmental entity to which the payment request is submitted.
51Such requirements must be included in the contract for the
52project for which payment is requested.
53     (8)(1)  "Proper invoice" means an invoice that which
54conforms with all statutory requirements and with all
55requirements that have been specified by the local governmental
56entity to which the invoice is submitted. Such requirements must
57be included in the contract for the project for which the
58invoice is submitted.
59     (9)(5)  "Purchase" means the purchase of goods, services,
60or construction services; the purchase or lease of personal
61property; or the lease of real property by a local governmental
63     (10)(6)  "Vendor" means any person who sells goods or
64services, sells or leases personal property, or leases real
65property directly to a local governmental entity. The term
66includes any person who provides waste hauling services to
67residents or businesses located within the boundaries of a local
68government pursuant to a contract or local ordinance.
69     Section 2.  Subsections (1) through (7) of section 218.735,
70Florida Statutes, are amended to read:
71     218.735  Timely payment for purchases of construction
73     (1)  The due date for payment for the purchase of
74construction services by a local governmental entity is
75determined as follows:
76     (a)  If an agent must approve the payment request or
77invoice before prior to the payment request or invoice is being
78submitted to the local governmental entity, payment is due 25
79business days after the date on which the payment request or
80invoice is stamped as received as provided in s. 218.74(1). The
81contractor may send the local government an overdue notice. If
82the payment request or invoice is not rejected within 2 business
83days after delivery of the overdue notice, the payment request
84or invoice shall be deemed accepted, except for any portion of
85the payment request or invoice that is fraudulent or misleading.
86     (b)  If an agent need not approve the payment request or
87invoice which is submitted by the contractor, payment is due 20
88business days after the date on which the payment request or
89invoice is stamped as received as provided in s. 218.74(1).
91A local governmental entity shall identify the agent or employee
92of the local governmental entity, or the facility or office, to
93which the contractor may submit its payment request or invoice.
94This requirement shall be included in the contract between the
95local governmental entity and contractor, or shall be provided
96by the local governmental entity through a separate written
97notice, as required under the contract, no later than 10 days
98after the contract award. A contractor's submission of a payment
99request or invoice to the identified agent, employee, facility,
100or office of the local governmental entity shall be stamped as
101received as provided in s. 218.74(1) and shall commence the time
102periods for payment or rejection of a payment request or invoice
103as provided in this subsection and subsection (2).
104     (2)  If a payment request or invoice does not meet the
105contract requirements, the local governmental entity must may
106reject the payment request or invoice within 20 business days
107after the date on which the payment request or invoice is
108stamped as received as provided in s. 218.74(1). The rejection
109must be written and must specify the deficiency in the payment
110request or invoice and the action necessary to make the payment
111request or invoice proper.
112     (3)  If a payment request or an invoice is rejected under
113subsection (2) and the contractor submits a corrected payment
114request or invoice that which corrects the deficiency specified
115in writing by the local governmental entity, the corrected
116payment request or invoice must be paid or rejected on the later
118     (a)  Ten business days after the date the corrected payment
119request or invoice is stamped as received as provided in s.
120218.74(1); or
121     (b)  If the local governmental entity governing body is
122required by ordinance, charter, or other law to approve or
123reject the corrected payment request or invoice, the first
124business day after the next regularly scheduled meeting of the
125local governmental entity governing body held after the
126corrected payment request or invoice is stamped as received as
127provided in s. 218.74(1).
128     (4)  If a dispute between the local governmental entity and
129the contractor cannot be resolved by the procedure in subsection
130(3), the dispute must be resolved in accordance with the dispute
131resolution procedure prescribed in the construction contract or
132in any applicable ordinance, which shall be referenced in the
133contract. In the absence of a prescribed procedure, the dispute
134must be resolved by the procedure specified in s. 218.76(2).
135     (5)  If a local governmental entity disputes a portion of a
136payment request or an invoice, the undisputed portion shall be
137paid timely, in accordance with subsection (1).
138     (6)  If When a contractor receives payment from a local
139governmental entity for labor, services, or materials furnished
140by subcontractors and suppliers hired by the contractor, the
141contractor must shall remit payment due to those subcontractors
142and suppliers within 10 days after the contractor's receipt of
143payment. If When a subcontractor receives payment from a
144contractor for labor, services, or materials furnished by
145subcontractors and suppliers hired by the subcontractor, the
146subcontractor must shall remit payment due to those
147subcontractors and suppliers within 7 days after the
148subcontractor's receipt of payment. This subsection does not
149Nothing herein shall prohibit a contractor or subcontractor from
150disputing, pursuant to the terms of the relevant contract, all
151or any portion of a payment alleged to be due to another party
152if the contractor or subcontractor notifies the party whose
153payment is disputed, in writing, of the amount in dispute and
154the actions required to cure the dispute. The contractor or
155subcontractor must pay all undisputed amounts due within the
156time limits imposed by this section.
157     (7)(a)  Each contract for construction services between a
158local governmental entity and a contractor must provide for the
159development of a single list of items required to render
160complete, satisfactory, and acceptable the construction services
161purchased by the local governmental entity.
162     (a)  The contract must specify the process for developing
163the development of the list, including the responsibilities of
164the local governmental entity and the contractor in developing
165and reviewing the list and a reasonable time for developing the
166list, as follows:
167     1.  For construction projects having an estimated cost of
168Less than $10 million, within 30 calendar days after reaching
169substantial completion of the construction services purchased as
170defined in the contract, or, if not defined in the contract,
171upon reaching beneficial occupancy or use; or
172     2.  For construction projects having an estimated cost of
173$10 million or more, within 30 calendar days, or, if unless
174otherwise extended by contract, up to not to exceed 60 calendar
175days, after reaching substantial completion of the construction
176services purchased as defined in the contract, or, if not
177defined in the contract, upon reaching beneficial occupancy or
180The contract must also specify a date for the delivery of the
181list of items, not to exceed 5 days after the list of items has
182been developed and reviewed in accordance with the time periods
183set forth in subparagraphs 1. and 2.
184     (b)  If the contract between the local governmental entity
185and the contractor relates to the purchase of construction
186services on more than one building or structure, or involves a
187multiphased project, the contract must provide for the
188development of a list of items required to render complete,
189satisfactory, and acceptable all the construction services
190purchased pursuant to the contract for each building, structure,
191or phase of the project within the time limitations provided in
192paragraph (a).
193     (c)  The final contract completion date must be at least 30
194days after the delivery of the list of items. If the list is not
195provided to the contractor by the agreed upon date for delivery
196of the list, the contract time for completion must be extended
197by the number of days the local governmental entity exceeded the
198delivery date. Damages may not be assessed against a contractor
199for failing to complete a project within the time required by
200the contract, unless the contractor failed to complete the
201project within the contract period as extended under this
203     (d)(c)  The failure to include any corrective work or
204pending items not yet completed on the list developed pursuant
205to this subsection does not alter the responsibility of the
206contractor to complete all the construction services purchased
207pursuant to the contract.
208     (e)(d)  Upon completion of all items on the list, the
209contractor may submit a payment request for all remaining
210retainage withheld by the local governmental entity pursuant to
211this section. If a good faith dispute exists as to whether one
212or more items identified on the list have been completed
213pursuant to the contract, the local governmental entity may
214continue to withhold up to an amount not to exceed 150 percent
215of the total costs to complete such items.
216     (f)(e)  All items that require correction under the
217contract and that are identified after the preparation and
218delivery of the list remain the obligation of the contractor as
219defined by the contract.
220     (g)(f)  Warranty items or items not included in the list of
221items required under paragraph (a) may not affect the final
222payment of retainage as provided in this section or as provided
223in the contract between the contractor and its subcontractors
224and suppliers.
225     (h)(g)  Retainage may not be held by a local governmental
226entity or a contractor to secure payment of insurance premiums
227under a consolidated insurance program or series of insurance
228policies issued to a local governmental entity or a contractor
229for a project or group of projects, and the final payment of
230retainage as provided in this section may not be delayed pending
231a final audit by the local governmental entity's or contractor's
232insurance provider.
233     (i)(h)  If a local governmental entity fails to comply with
234its responsibilities to develop the list required under
235paragraph (a) or paragraph (b), as defined in the contract,
236within the time limitations provided in paragraph (a), the
237contractor may submit a payment request for all remaining
238retainage withheld by the local governmental entity pursuant to
239this section and payment of any remaining undisputed contract
240amount, less any amount withheld pursuant to the contract for
241incomplete or uncorrected work, must be paid within 20 business
242days after receipt of a proper invoice or payment request. If
243the local governmental entity has provided written notice to the
244contractor specifying the failure of the contractor to meet
245contract requirements in the development of the list of items to
246be completed, the local governmental entity need not pay or
247process any payment request for retainage if the contractor has,
248in whole or in part, failed to cooperate with the local
249governmental entity in the development of the list or failed to
250perform its contractual responsibilities, if any, with regard to
251the development of the list or if paragraph (8)(f) applies.
252     Section 3.  Section 218.76, Florida Statutes, is amended to
254     218.76  Improper payment request or invoice; resolution of
256     (1)  If In any case in which an improper payment request or
257invoice is submitted by a vendor, the local governmental entity
258shall, within 10 days after the improper payment request or
259invoice is received by it, notify the vendor, in writing, that
260the payment request or invoice is improper and indicate what
261corrective action on the part of the vendor is needed to make
262the payment request or invoice proper.
263     (2)(a)  If In the event a dispute arises occurs between a
264vendor and a local governmental entity concerning payment of a
265payment request or an invoice, the dispute such disagreement
266shall be finally determined by the local governmental entity
267pursuant to as provided in this section. Each local governmental
268entity shall establish a dispute resolution procedure
269established to be followed by the local governmental entity in
270cases of such disputes. Such procedure must shall provide that
271proceedings to resolve the dispute are shall be commenced within
272not later than 45 days after the date on which the payment
273request or proper invoice was received by the local governmental
274entity and shall be concluded by final decision of the local
275governmental entity within not later than 60 days after the date
276on which the payment request or proper invoice was received by
277the local governmental entity. Such procedures are shall not be
278subject to chapter 120, and do such procedures shall not
279constitute an administrative proceeding that which prohibits a
280court from deciding de novo any action arising out of the
281dispute. If the dispute is resolved in favor of the local
282governmental entity, then interest charges shall begin to accrue
28315 days after the local governmental entity's final decision. If
284the dispute is resolved in favor of the vendor, then interest
285begins shall begin to accrue as of the original date the payment
286became due.
287     (b)  If the local governmental entity does not commence the
288dispute resolution procedure within the time required, a
289contractor may give written notice to the local governmental
290entity of the failure to timely commence its dispute resolution
291procedure. If the local governmental entity fails to commence
292the dispute resolution procedure within 2 business days after
293such notice, any amounts resolved in the contractor's favor
294shall bear mandatory interest, as set forth in s. 218.735(9),
295from the date the payment request or invoice containing the
296disputed amounts was submitted to the local governmental entity.
297If the dispute resolution procedure is not commenced within 2
298business days after the notice, the objection to the payment
299request or invoice shall be deemed waived. The waiver of an
300objection pursuant to this paragraph does not relieve a
301contractor of its contractual obligations.
302     (3)  In an action to recover amounts due under this part
303ss. 218.70-218.80, the court shall award court costs and
304reasonable attorney's fees, including fees incurred through any
305appeal, to the prevailing party, if the court finds that the
306nonprevailing party withheld any portion of the payment that is
307the subject of the action without any reasonable basis in law or
308fact to dispute the prevailing party's claim to those amounts.
309This paragraph shall not apply to any litigation commenced
310before October 1, 2010.
311     Section 4.  This act shall take effect October 1, 2010.

CODING: Words stricken are deletions; words underlined are additions.

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