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Senate Bill 0544

Senate Bill sb0544c2

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    Florida Senate - 2004                     CS for CS for SB 544

    By the Committees on Governmental Oversight and Productivity;
    Comprehensive Planning; and Senator Bennett




    302-2221-04

  1                      A bill to be entitled

  2         An act relating to prompt payment for

  3         construction services; amending s. 218.70,

  4         F.S.; providing a short title; amending s.

  5         218.72, F.S.; redefining terms used in part VII

  6         of ch. 218, F.S.; amending s. 218.735, F.S.;

  7         revising provisions relating to timely payment

  8         for purchases of construction services;

  9         revising deadlines for payment; providing

10         procedures for project closeout and payment of

11         retainage; providing requirements for local

12         government construction retainage; providing

13         that ss. 218.72-218.76, F.S., apply to the

14         payment of any payment request for retainage;

15         providing exceptions; creating s. 255.0705,

16         F.S.; providing a short title; amending s.

17         255.071, F.S.; revising deadlines for the

18         payment of subcontractors, sub-subcontractors,

19         materialmen, and suppliers on construction

20         contracts for public projects; creating ss.

21         255.072, 255.073, 255.074, 255.075, 255.076,

22         255.077, and 255.078, F.S.; providing

23         definitions; providing for timely payment for

24         purchases of construction services by a public

25         entity; providing procedures for calculating

26         payment due dates; providing procedures for

27         handling improper payment requests; providing

28         for the resolution of disputes; providing for

29         project closeout and payment of retainage;

30         providing that ss. 255.072-255.076, F.S., apply

31         to the payment of any payment request for

                                  1

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 1         retainage; providing exceptions; amending s.

 2         255.05, F.S.; providing requirements for

 3         certain notices of nonpayment served by a

 4         claimant who is not in privity with the

 5         contractor; providing limitations on a

 6         claimant's institution of certain actions

 7         against a contractor or surety; creating s.

 8         725.09, F.S.; prohibiting a contract provision

 9         that makes payment contingent upon certain

10         conditions; amending s. 95.11, F.S., to conform

11         a cross-reference; providing that this act does

12         not apply to contracts pending approval on the

13         effective date of the act or to projects

14         advertised on or before that date; providing an

15         effective date.

16  

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

18  

19         Section 1.  Section 218.70, Florida Statutes, is

20  amended to read:

21         218.70  Popular name Short title.--This part may be

22  cited as the "Local Government Florida Prompt Payment Act."

23         Section 2.  Subsections (2), (6), and (7) of section

24  218.72, Florida Statutes, are amended, and subsection (10) is

25  added to that section, to read:

26         218.72  Definitions.--As used in this part:

27         (2)  "Local governmental entity" means a county or

28  municipal government, district, authority, school board,

29  school district, authority, special taxing district, other

30  political subdivision or separate unit of local government

31  created or established pursuant to law, or any office, board,

                                  2

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 1  bureau, commission, department, branch, division, or

 2  institution thereof or any project supported by county or

 3  municipal funds.

 4         (6)  "Vendor" means any person who sells goods or

 5  services, sells or leases personal property, or leases real

 6  property directly to a local governmental entity. The term

 7  includes any person who provides waste-hauling services to

 8  residents or businesses located within the boundaries of a

 9  local government pursuant to a contract or local ordinance.

10         (7)  "Construction services" means all labor, services,

11  and materials provided in connection with the construction,

12  alteration, repair, demolition, reconstruction, or any other

13  improvements to real property that require a license under

14  parts I and II of chapter 489.

15         (10)  "Contractor" or "provider of construction

16  services" means any person who contracts directly with a local

17  governmental entity to provide construction services.

18         Section 3.  Subsection (6) of section 218.735, Florida

19  Statutes, is amended, present subsection (7) of that section

20  is redesignated as subsection (9), and new subsections (7) and

21  (8) are added to that section, to read:

22         218.735  Timely payment for purchases of construction

23  services.--

24         (6)  When a contractor receives payment from a local

25  governmental entity for labor, services, or materials

26  furnished by subcontractors and suppliers hired by the

27  contractor, the contractor shall remit payment due to those

28  subcontractors and suppliers within 10 15 days after the

29  contractor's receipt of payment. When a subcontractor receives

30  payment from a contractor for labor, services, or materials

31  furnished by subcontractors and suppliers hired by the

                                  3

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 1  subcontractor, the subcontractor shall remit payment due to

 2  those subcontractors and suppliers within 7 15 days after the

 3  subcontractor's receipt of payment. Nothing herein shall

 4  prohibit a contractor or subcontractor from disputing,

 5  pursuant to the terms of the relevant contract, all or any

 6  portion of a payment alleged to be due to another party. In

 7  the event of such a dispute, the contractor or subcontractor

 8  may withhold the disputed portion of any such payment if the

 9  contractor or subcontractor notifies the party whose payment

10  is disputed, in writing, of the amount in dispute and the

11  actions required to cure the dispute. The contractor or

12  subcontractor must pay all undisputed amounts due within the

13  time limits imposed by this section.

14         (7)(a)  Each contract for construction services between

15  a local governmental entity and a contractor must provide for

16  the development of a list of items required to render

17  complete, satisfactory, and acceptable the construction

18  services purchased by the local governmental entity. The

19  contract must specify the process for the development of the

20  list, including responsibilities of the local governmental

21  entity and the contractor in developing and reviewing the list

22  and a reasonable time for developing the list, as follows:

23         1.  For construction projects with an estimated cost of

24  less than $10 million, within 30 calendar days after reaching

25  substantial completion of the construction services purchased

26  as defined in the contract, or, if not defined in the

27  contract, upon reaching beneficial occupancy or use; or

28         2.  For construction projects with an estimated cost of

29  $10 million or more, within 30 calendar days, unless otherwise

30  extended by contract not to exceed 60 calendar days, after

31  reaching substantial completion of the construction services

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 1  purchased as defined in the contract, or, if not defined in

 2  the contract, upon reaching beneficial occupancy or use.

 3         (b)  If the contract between the local governmental

 4  entity and the contractor relates to the purchase of

 5  construction services on more than one building or structure,

 6  or involves a multiphased project, the contract shall provide

 7  for the development of a list of items required to render

 8  complete, satisfactory, and acceptable all the construction

 9  services purchased pursuant to the contract for each building,

10  structure, or phase of the project within the time limitations

11  provided in paragraph (a).

12         (c)  The failure to include any corrective work or

13  pending items not yet completed on the list developed pursuant

14  to this subsection does not alter the responsibility of the

15  contractor to complete all the construction services purchased

16  pursuant to the contract.

17         (d)  Upon completion of all items on the list, the

18  contractor may submit a payment request for all remaining

19  retainage withheld by the local governmental entity pursuant

20  to this section. If a good-faith dispute exists as to whether

21  one or more items identified on the list have been completed

22  pursuant to the contract, the local governmental entity may

23  continue to withhold an amount not to exceed 150 percent of

24  the total costs to complete such items.

25         (e)  All items that require correction under the

26  contract and that are identified after the preparation and

27  delivery of the list remain the obligation of the contractor

28  as defined by the contract.

29         (f)  Warranty items may not affect the final payment of

30  retainage as provided in this section or as provided in the

31  

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 1  contract between the contractor and its subcontractors and

 2  suppliers.

 3         (g)  Retainage may not be held by a local governmental

 4  entity or a contractor to secure payment of insurance premiums

 5  under a consolidated insurance program or series of insurance

 6  policies issued to a local governmental entity or a contractor

 7  for a project or group of projects, and the final payment of

 8  retainage as provided in this section may not be delayed

 9  pending a final audit by the local governmental entity's or

10  contractor's insurance provider.

11         (h)  If a local governmental entity fails to comply

12  with its responsibilities to develop the list required under

13  paragraph (a) or paragraph (b), as defined in the contract,

14  within the time limitations provided in paragraph (a), the

15  contractor may submit a payment request for all remaining

16  retainage withheld by the local governmental entity pursuant

17  to this section. The local governmental entity need not pay or

18  process any payment request for retainage if the contractor

19  has, in whole or in part, failed to cooperate with the local

20  governmental entity in the development of the list or failed

21  to perform its contractual responsibilities, if any, with

22  regard to the development of the list or if paragraph (8)(f)

23  applies.

24         (8)(a)  With regard to any contract for construction

25  services, a local governmental entity may withhold from each

26  progress payment made to the contractor an amount not

27  exceeding 10 percent of the payment as retainage to ensure the

28  satisfactory completion of the construction services purchased

29  pursuant to the contract until 50-percent completion of such

30  services.

31  

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 1         (b)  After 50-percent completion of the construction

 2  services purchased pursuant to the contract, the local

 3  governmental entity must reduce to 5 percent the amount of

 4  retainage withheld from each subsequent progress payment made

 5  to the contractor. For purposes of this subsection, the term

 6  "50-percent completion" has the meaning set forth in the

 7  contract between the local governmental entity and the

 8  contractor, or, if not defined in the contract, the point at

 9  which the local governmental entity has expended 50 percent of

10  the total cost of the construction services purchased as

11  identified in the contract together with all costs associated

12  with existing change orders and other additions or

13  modifications to the construction services provided for in the

14  contract. However, notwithstanding this subsection, a

15  municipality with a population of 25,000 or fewer, or a county

16  with a population of 100,000 or fewer, may withhold retainage

17  in an amount not exceeding 10 percent of each progress payment

18  made to the contractor until final completion and acceptance

19  of the project by the local governmental entity.

20         (c)  After 50-percent completion of the construction

21  services purchased pursuant to the contract, the contractor

22  may elect to withhold retainage from payments to its

23  subcontractors at a rate higher than 5 percent. The specific

24  amount to be withheld must be determined on a case-by-case

25  basis and must be based on the contractor's assessment of the

26  subcontractor's past performance, the likelihood that such

27  performance will continue, and the contractor's ability to

28  rely on other safeguards. The contractor shall notify the

29  subcontractor, in writing, of its determination to withhold

30  more than 5 percent of the progress payment and the reasons

31  for making that determination, and the contractor may not

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 1  request the release of such retained funds from the local

 2  governmental entity.

 3         (d)  After 50-percent completion of the construction

 4  services purchased pursuant to the contract, the contractor

 5  may present to the local governmental entity a payment request

 6  for up to one-half of the retainage held by the local

 7  governmental entity. The local governmental entity shall

 8  promptly make payment to the contractor, unless the local

 9  governmental entity has grounds, pursuant to paragraph (f),

10  for withholding the payment of retainage. If the local

11  governmental entity makes payment of retainage to the

12  contractor under this paragraph which is attributable to the

13  labor, services, or materials supplied by one or more

14  subcontractors or suppliers, the contractor shall timely remit

15  payment of such retainage to those subcontractors and

16  suppliers.

17         (e)  This section does not prohibit a local

18  governmental entity from withholding retainage at a rate less

19  than 10 percent of each progress payment, from incrementally

20  reducing the rate of retainage pursuant to a schedule provided

21  for in the contract, or from releasing at any point all or a

22  portion of any retainage withheld by the local governmental

23  entity which is attributable to the labor, services, or

24  materials supplied by the contractor or by one or more

25  subcontractors or suppliers. If a local governmental entity

26  makes any payment of retainage to the contractor which is

27  attributable to the labor, services, or materials supplied by

28  one or more subcontractors or suppliers, the contractor shall

29  timely remit payment of such retainage to those subcontractors

30  and suppliers.

31  

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 1         (f)  This section does not require the local

 2  governmental entity to pay or release any amounts that are the

 3  subject of a good-faith dispute, the subject of an action

 4  brought pursuant to s. 255.05, or otherwise the subject of a

 5  claim or demand by the local governmental entity or

 6  contractor.

 7         (g)  The time limitations set forth in this section for

 8  payment of payment requests apply to any payment request for

 9  retainage made pursuant to this section.

10         (h)  Paragraphs (a)-(d) do not apply to construction

11  services purchased by a local governmental entity which are

12  paid for, in whole or in part, with federal funds and are

13  subject to federal grantor laws and regulations or

14  requirements that are contrary to any provision of the Local

15  Government Prompt Payment Act.

16         (i)  This subsection does not apply to any construction

17  services purchased by a local governmental entity if the total

18  cost of the construction services purchased as identified in

19  the contract is $200,000 or less.

20         Section 4.  Section 255.0705, Florida Statutes, is

21  created to read:

22         255.0705  Popular name.--Sections 255.0705-255.078 may

23  be cited as the "Florida Prompt Payment Act."

24         Section 5.  Subsections (2) and (3) of section 255.071,

25  Florida Statutes, are amended to read:

26         255.071  Payment of subcontractors, sub-subcontractors,

27  materialmen, and suppliers on construction contracts for

28  public projects.--

29         (2)  The failure to pay any undisputed obligations for

30  such labor, services, or materials within 30 days after the

31  date the labor, services, or materials were furnished and

                                  9

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 1  payment for such labor, services, or materials became due, or

 2  within the time limitations set forth in s. 255.073(3) 30 days

 3  after the date payment for such labor, services, or materials

 4  is received, whichever last occurs, shall entitle any person

 5  providing such labor, services, or materials to the procedures

 6  specified in subsection (3) and the remedies provided in

 7  subsection (4).

 8         (3)  Any person providing labor, services, or materials

 9  for the construction of a public building, for the prosecution

10  and completion of a public work, or for repairs upon a public

11  building or public work improvements to real property may file

12  a verified complaint alleging:

13         (a)  The existence of a contract for providing such

14  labor, services, or materials to improve real property.

15         (b)  A description of the labor, services, or materials

16  provided and alleging that the labor, services, or materials

17  were provided in accordance with the contract.

18         (c)  The amount of the contract price.

19         (d)  The amount, if any, paid pursuant to the contract.

20         (e)  The amount that remains unpaid pursuant to the

21  contract and the amount thereof that is undisputed.

22         (f)  That the undisputed amount has remained due and

23  payable pursuant to the contract for more than 30 days after

24  the date the labor or services were accepted or the materials

25  were received.

26         (g)  That the person against whom the complaint was

27  filed has received payment on account of the labor, services,

28  or materials described in the complaint and, as of the date

29  the complaint was filed, has failed to make payment within the

30  time limitations set forth in s. 255.073(3) more than 30 days

31  prior to the date the complaint was filed.

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 1         Section 6.  Section 255.072, Florida Statutes, is

 2  created to read:

 3         255.072  Definitions.--As used in ss. 255.073-255.078,

 4  the term:

 5         (1)  "Agent" means project architect, project engineer,

 6  or any other agency or person acting on behalf of a public

 7  entity.

 8         (2)  "Construction services" means all labor, services,

 9  and materials provided in connection with the construction,

10  alteration, repair, demolition, reconstruction, or any other

11  improvements to real property. The term "construction

12  services" does not include contracts or work performed for the

13  Department of Transportation.

14         (3)  "Contractor" means any person who contracts

15  directly with a public entity to provide construction

16  services.

17         (4)  "Payment request" means a request for payment for

18  construction services which conforms with all statutory

19  requirements and with all requirements specified by the public

20  entity to which the payment request is submitted.

21         (5)  "Public entity" means the state, a state

22  university, or any office, board, bureau, commission,

23  department, branch, division, or institution thereof, but does

24  not include a local governmental entity as defined in s.

25  218.72.

26         (6)  "Purchase" means the purchase of construction

27  services.

28         Section 7.  Section 255.073, Florida Statutes, is

29  created to read:

30         255.073  Timely payment for purchases of construction

31  services.--

                                  11

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 1         (1)  Except as otherwise provided in ss.

 2  255.072-255.078, s. 215.422 governs the timely payment for

 3  construction services by a public entity.

 4         (2)  If a public entity disputes a portion of a payment

 5  request, the undisputed portion must be timely paid.

 6         (3)  When a contractor receives payment from a public

 7  entity for labor, services, or materials furnished by

 8  subcontractors and suppliers hired by the contractor, the

 9  contractor shall remit payment due to those subcontractors and

10  suppliers within 10 days after the contractor's receipt of

11  payment. When a subcontractor receives payment from a

12  contractor for labor, services, or materials furnished by

13  subcontractors and suppliers hired by the subcontractor, the

14  subcontractor shall remit payment due to those subcontractors

15  and suppliers within 7 days after the subcontractor's receipt

16  of payment. This subsection does not prohibit a contractor or

17  subcontractor from disputing, pursuant to the terms of the

18  relevant contract, all or any portion of a payment alleged to

19  be due to another party if the contractor or subcontractor

20  notifies the party whose payment is disputed, in writing, of

21  the amount in dispute and the actions required to cure the

22  dispute. The contractor or subcontractor must pay all

23  undisputed amounts due within the time limits imposed by this

24  subsection.

25         (4)  All payments due for the purchase of construction

26  services and not made within the applicable time limits shall

27  bear interest at the rate of 1 percent per month, or the rate

28  specified by contract, whichever is greater.

29         Section 8.  Section 255.074, Florida Statutes, is

30  created to read:

31  

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 1         255.074  Procedures for calculation of payment due

 2  dates.--

 3         (1)  Each public entity shall establish procedures

 4  whereby each payment request received by the public entity is

 5  marked as received on the date on which it is delivered to an

 6  agent or employee of the public entity or of a facility or

 7  office of the public entity.

 8         (2)  If the terms under which a purchase is made allow

 9  for partial deliveries and a payment request is submitted for

10  a partial delivery, the time for payment for the partial

11  delivery must be calculated from the time of the partial

12  delivery and the submission of the payment request.

13         (3)  A public entity must submit a payment request to

14  the Chief Financial Officer for payment no more than 25 days

15  after receipt of the payment request.

16         Section 9.  Section 255.075, Florida Statutes, is

17  created to read:

18         255.075  Mandatory interest.--A contract between a

19  public entity and a contractor may not prohibit the collection

20  of late payment interest charges authorized under s.

21  255.073(4).

22         Section 10.  Section 255.076, Florida Statutes, is

23  created to read:

24         255.076  Improper payment request; resolution of

25  disputes.--

26         (1)  If a contractor submits an improper payment

27  request, the public entity shall, within 10 days after

28  receiving the improper payment request, notify the contractor

29  that the payment request is improper and indicate what

30  corrective action on the part of the contractor is needed to

31  make the payment request proper.

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 1         (2)  If a dispute occurs between a contractor and a

 2  public entity concerning payment of a payment request, the

 3  dispute must be submitted to a dispute resolution process

 4  established by the public entity for this purpose. Under such

 5  a process, proceedings to resolve the dispute must commence

 6  not later than 45 days after the date on which the public

 7  entity received the payment request and must conclude by final

 8  decision of the public entity not later than 60 days after the

 9  date on which the public entity received the payment request.

10  Such a dispute resolution process is not subject to chapter

11  120 and does not constitute an administrative proceeding that

12  prohibits a court from deciding de novo any action arising out

13  of the dispute. If the dispute is resolved in favor of the

14  public entity, interest charges begin to accrue 15 days after

15  the public entity's final decision. If the dispute is resolved

16  in favor of the contractor, interest begins to accrue as of

17  the original date the payment became due.

18         (3)  In an action to recover amounts due for

19  construction services purchased by a public entity, the court

20  shall award court costs and reasonable attorney's fees,

21  including fees incurred through any appeal, to the prevailing

22  party, if the court finds that the nonprevailing party

23  withheld any portion of the payment that is the subject of the

24  action without any reasonable basis in law or fact to dispute

25  the prevailing party's claim to those amounts.

26         Section 11.  Section 255.077, Florida Statutes, is

27  created to read:

28         255.077  Project closeout and payment of retainage.--

29         (1)  Each contract for construction services between a

30  public entity and a contractor must provide for the

31  development of a list of items required to render complete,

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 1  satisfactory, and acceptable the construction services

 2  purchased by the public entity. The contract must specify the

 3  process for the development of the list, including

 4  responsibilities of the public entity and the contractor in

 5  developing and reviewing the list and a reasonable time for

 6  developing the list, as follows:

 7         1.  For construction projects with an estimated cost of

 8  less than $10 million, within 30 calendar days after reaching

 9  substantial completion of the construction services purchased

10  as defined in the contract, or, if not defined in the

11  contract, upon reaching beneficial occupancy or use; or

12         2.  For construction projects with an estimated cost of

13  $10 million or more, within 30 calendar days, unless otherwise

14  extended by contract not to exceed 60 calendar days, after

15  reaching substantial completion of the construction services

16  purchased as defined in the contract, or, if not defined in

17  the contract, upon reaching beneficial occupancy or use.

18         (2)  If the contract between the public entity and the

19  contractor relates to the purchase of construction services on

20  more than one building or structure, or involves a multiphased

21  project, the contract shall provide for the development of a

22  list of items required to render complete, satisfactory, and

23  acceptable all the construction services purchased pursuant to

24  the contract for each building, structure, or phase of the

25  project within the time limitations provided in subsection

26  (1).

27         (3)  The failure to include any corrective work or

28  pending items not yet completed on the list developed pursuant

29  to subsection (1) or subsection (2) does not alter the

30  responsibility of the contractor to complete all the

31  construction services purchased pursuant to the contract.

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 1         (4)  Upon completion of all items on the list, the

 2  contractor may submit a payment request for all remaining

 3  retainage withheld by the public entity pursuant to s.

 4  255.078. If a good-faith dispute exists as to whether one or

 5  more items identified on the list have been completed pursuant

 6  to the contract, the public entity may continue to withhold an

 7  amount not to exceed 150 percent of the total costs to

 8  complete such items.

 9         (5)  All items that require correction under the

10  contract and that are identified after the preparation and

11  delivery of the list remain the obligation of the contractor

12  as defined by the contract.

13         (6)  Warranty items may not affect the final payment of

14  retainage as provided in this section or as provided in the

15  contract between the contractor and its subcontractors and

16  suppliers.

17         (7)  Retainage may not be held by a public entity or a

18  contractor to secure payment of insurance premiums under a

19  consolidated insurance program or series of insurance policies

20  issued to a public entity or a contractor for a project or

21  group of projects, and the final payment of retainage as

22  provided in this section may not be delayed pending a final

23  audit by the public entity's or contractor's insurance

24  provider.

25         (8)  If a public entity fails to comply with its

26  responsibilities to develop the list required under subsection

27  (1) or subsection (2), as defined in the contract, within the

28  time limitations provided in subsection (1), the contractor

29  may submit a payment request for all remaining retainage

30  withheld by the public entity pursuant to s. 255.078. The

31  public entity need not pay or process any payment request for

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 1  retainage if the contractor has, in whole or in part, failed

 2  to cooperate with the public entity in the development of the

 3  list or failed to perform its contractual responsibilities, if

 4  any, with regard to the development of the list or if s.

 5  255.078(6) applies.

 6         Section 12.  Section 255.078, Florida Statutes, is

 7  created to read:

 8         255.078  Public construction retainage.--

 9         (1)  With regard to any contract for construction

10  services, a public entity may withhold from each progress

11  payment made to the contractor an amount not exceeding 10

12  percent of the payment as retainage to ensure the satisfactory

13  completion of the construction services purchased pursuant to

14  the contract until 50-percent completion of such services.

15         (2)  After 50-percent completion of the construction

16  services purchased pursuant to the contract, the public entity

17  must reduce to 5 percent the amount of retainage withheld from

18  each subsequent progress payment made to the contractor. For

19  purposes of this section, the term "50-percent completion" has

20  the meaning set forth in the contract between the public

21  entity and the contractor, or, if not defined in the contract,

22  the point at which the public entity has expended 50 percent

23  of the total cost of the construction services purchased as

24  identified in the contract together with all costs associated

25  with existing change orders and other additions or

26  modifications to the construction services provided for in the

27  contract.

28         (3)  After 50-percent completion of the construction

29  services purchased pursuant to the contract, the contractor

30  may elect to withhold retainage from payments to its

31  subcontractors at a rate higher than 5 percent. The specific

                                  17

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 1  amount to be withheld must be determined on a case-by-case

 2  basis and must be based on the contractor's assessment of the

 3  subcontractor's past performance, the likelihood that such

 4  performance will continue, and the contractor's ability to

 5  rely on other safeguards. The contractor shall notify the

 6  subcontractor, in writing, of its determination to withhold

 7  more than 5 percent of the progress payment and the reasons

 8  for making that determination, and the contractor may not

 9  request the release of such retained funds from the public

10  entity.

11         (4)  After 50-percent completion of the construction

12  services purchased pursuant to the contract, the contractor

13  may present to the public entity a payment request for up to

14  one-half of the retainage held by the public entity. The

15  public entity shall promptly make payment to the contractor,

16  unless the public entity has grounds, pursuant to subsection

17  (6), for withholding the payment of retainage. If the public

18  entity makes payment of retainage to the contractor under this

19  subsection which is attributable to the labor, services, or

20  materials supplied by one or more subcontractors or suppliers,

21  the contractor shall timely remit payment of such retainage to

22  those subcontractors and suppliers.

23         (5)  Neither this section nor s. 255.077 prohibits a

24  public entity from withholding retainage at a rate less than

25  10 percent of each progress payment, from incrementally

26  reducing the rate of retainage pursuant to a schedule provided

27  for in the contract, or from releasing at any point all or a

28  portion of any retainage withheld by the public entity which

29  is attributable to the labor, services, or materials supplied

30  by the contractor or by one or more subcontractors or

31  suppliers.  If a public entity makes any payment of retainage

                                  18

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 1  to the contractor which is attributable to the labor,

 2  services, or materials supplied by one or more subcontractors

 3  or suppliers, the contractor shall timely remit payment of

 4  such retainage to those subcontractors and suppliers.

 5         (6)  Neither this section nor s. 255.077 requires the

 6  public entity to pay or release any amounts that are the

 7  subject of a good-faith dispute, the subject of an action

 8  brought pursuant to s. 255.05, or otherwise the subject of a

 9  claim or demand by the public entity or contractor.

10         (7)  The same time limits for payment of a payment

11  request apply regardless of whether the payment request is

12  for, or includes, retainage.

13         (8)  Subsections (1)-(4) do not apply to construction

14  services purchased by a public entity which are paid for, in

15  whole or in part, with federal funds and are subject to

16  federal grantor laws and regulations or requirements that are

17  contrary to any provision of the Florida Prompt Payment Act.

18         (9)  This section does not apply to any construction

19  services purchased by a public entity if the total cost of the

20  construction services purchased as identified in the contract

21  is $200,000 or less.

22         Section 13.  Paragraph (a) of subsection (2) and

23  subsection (4) of section 255.05, Florida Statutes, are

24  amended, and subsection (10) is added to that section, to

25  read:

26         255.05  Bond of contractor constructing public

27  buildings; form; action by materialmen.--

28         (2)(a)1.  If a claimant is no longer furnishing labor,

29  services, or materials on a project, a contractor or the

30  contractor's agent or attorney may elect to shorten the

31  prescribed time in this paragraph within which an action to

                                  19

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 1  enforce any claim against a payment bond provided pursuant to

 2  this section may be commenced by recording in the clerk's

 3  office a notice in substantially the following form:

 4  

 5                    NOTICE OF CONTEST OF CLAIM

 6                       AGAINST PAYMENT BOND

 7  

 8  To: ...(Name and address of claimant)...

 9  

10         You are notified that the undersigned contests your

11  notice of nonpayment, dated ............, ........, and served

12  on the undersigned on ............, ........, and that the

13  time within which you may file suit to enforce your claim is

14  limited to 60 days after the date of service of this notice.

15  

16         DATED on ............, .........

17  

18  Signed:...(Contractor or Attorney)...

19  

20  The claim of any claimant upon whom such notice is served and

21  who fails to institute a suit to enforce his or her claim

22  against the payment bond within 60 days after service of such

23  notice shall be extinguished automatically. The clerk shall

24  mail a copy of the notice of contest to the claimant at the

25  address shown in the notice of nonpayment or most recent

26  amendment thereto and shall certify to such service on the

27  face of such notice and record the notice. Service is complete

28  upon mailing.

29         2.  A claimant, except a laborer, who is not in privity

30  with the contractor shall, before commencing or not later than

31  45 days after commencing to furnish labor, materials, or

                                  20

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    Florida Senate - 2004                     CS for CS for SB 544
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 1  supplies for the prosecution of the work, furnish the

 2  contractor with a notice that he or she intends to look to the

 3  bond for protection. A claimant who is not in privity with the

 4  contractor and who has not received payment for his or her

 5  labor, materials, or supplies shall deliver to the contractor

 6  and to the surety written notice of the performance of the

 7  labor or delivery of the materials or supplies and of the

 8  nonpayment. The notice of nonpayment may be served at any time

 9  during the progress of the work or thereafter but not before

10  45 days after the first furnishing of labor, services, or

11  materials, and not later than 90 days after the final

12  furnishing of the labor, services, or materials by the

13  claimant or, with respect to rental equipment, not later than

14  90 days after the date that the rental equipment was last on

15  the job site available for use. Any notice of nonpayment

16  served by a claimant who is not in privity with the contractor

17  which includes sums for retainage must specify the portion of

18  the amount claimed for retainage. No action for the labor,

19  materials, or supplies may be instituted against the

20  contractor or the surety unless both notices have been given.

21  Notices required or permitted under this section may be served

22  in accordance with s. 713.18. An action, except for an action

23  exclusively for recovery of retainage, must be instituted

24  against the contractor or the surety on the payment bond or

25  the payment provisions of a combined payment and performance

26  bond within 1 year after the performance of the labor or

27  completion of delivery of the materials or supplies. An action

28  exclusively for recovery of retainage must be instituted

29  against the contractor or the surety within 1 year after the

30  performance of the labor or completion of delivery of the

31  materials or supplies, or within 90 days after receipt of

                                  21

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    Florida Senate - 2004                     CS for CS for SB 544
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 1  final payment (or the payment estimate containing the owner's

 2  final reconciliation of quantities if no further payment is

 3  earned and due as a result of deductive adjustments) by the

 4  contractor or surety, whichever comes last. A claimant may not

 5  waive in advance his or her right to bring an action under the

 6  bond against the surety. In any action brought to enforce a

 7  claim against a payment bond under this section, the

 8  prevailing party is entitled to recover a reasonable fee for

 9  the services of his or her attorney for trial and appeal or

10  for arbitration, in an amount to be determined by the court,

11  which fee must be taxed as part of the prevailing party's

12  costs, as allowed in equitable actions. The time periods for

13  service of a notice of nonpayment or for bringing an action

14  against a contractor or a surety shall be measured from the

15  last day of furnishing labor, services, or materials by the

16  claimant and shall not be measured by other standards, such as

17  the issuance of a certificate of occupancy or the issuance of

18  a certificate of substantial completion.

19         (4)  The payment provisions of all bonds furnished for

20  public work contracts described in subsection (1) shall,

21  regardless of form, be construed and deemed statutory bond

22  provisions, subject to all requirements of subsections

23  subsection (2) and (10).

24         (10)  An action, except for an action for recovery of

25  retainage, must be instituted against the contractor or the

26  surety on the payment bond or the payment provisions of a

27  combined payment and performance bond within 1 year after the

28  performance of the labor or completion of delivery of the

29  materials or supplies. An action for recovery of retainage

30  must be instituted against the contractor or the surety within

31  1 year after the performance of the labor or completion of

                                  22

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    Florida Senate - 2004                     CS for CS for SB 544
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 1  delivery of the materials or supplies, provided that such an

 2  action may not be instituted until one of the following

 3  conditions is satisfied:

 4         (a)  The public entity has paid out the claimant's

 5  retainage to the contractor, and the time provided under s.

 6  255.073(3) for payment of that retainage to the claimant has

 7  expired;

 8         (b)  The claimant has completed all work required under

 9  its contract and 70 days have passed since the contractor sent

10  its final payment request to the public entity; or

11         (c)  The claimant has asked the contractor, in writing,

12  when the contractor received payment of the claimant's

13  retainage or when the contractor sent its final payment

14  request to the public entity, and the contractor has failed to

15  respond to this request, in writing, within 10 days after

16  receipt.

17  

18  If none of the conditions described in paragraph (a),

19  paragraph (b), or paragraph (c) is satisfied and an action for

20  recovery of retainage therefore cannot be instituted within

21  the 1-year limitation period set forth in this subsection,

22  this limitation period shall be extended until 120 days after

23  one of these conditions is satisfied.

24         Section 14.  Section 725.09, Florida Statutes, is

25  created to read:

26         725.09  Construction contracts; contingent payment

27  provisions.--An entity may not enter into a contract for the

28  purchase of construction materials or services which

29  conditions payment for such materials or services on the

30  receipt of payment from any other entity. Any such conditional

31  

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    Florida Senate - 2004                     CS for CS for SB 544
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 1  payment provision is void as a violation of the public policy

 2  of this state.

 3         Section 15.  Paragraph (b) of subsection (2) of section

 4  95.11, Florida Statutes, is amended to read:

 5         95.11  Limitations other than for the recovery of real

 6  property.--Actions other than for recovery of real property

 7  shall be commenced as follows:

 8         (2)  WITHIN FIVE YEARS.--

 9         (b)  A legal or equitable action on a contract,

10  obligation, or liability founded on a written instrument,

11  except for an action to enforce a claim against a payment

12  bond, which shall be governed by the applicable provisions of

13  ss. 255.05(10) 255.05(2)(a)2. and 713.23(1)(e).

14         Section 16.  Neither the amendments to sections 95.11,

15  218.70, 218.72, 218.735, 255.05, and 255.071, Florida

16  Statutes, as provided in this act, nor section 255.078,

17  Florida Statutes, as created by this act, applies to any

18  existing construction contract pending approval by a local

19  governmental entity or public entity, or to any project

20  advertised for bid by the local governmental entity or public

21  entity, on or before the effective date of this act.

22         Section 17.  This act shall take effect October 1,

23  2004.

24  

25          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
26                      CS for Senate Bill 544

27                                 

28  Removes community colleges from the Local Government Prompt
    Payment Act. Permits up to 60 days for the development of a
29  punch list for construction projects costing more than $10
    million. Provides that retainage requirements are not
30  applicable for certain contracts funded by federal money.
    Provides that specified provisions of the bill do not apply to
31  contracts pending approval or to projects that have been
    advertised for bid on or before the effective date of the act.
                                  24

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