January 20, 2021
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       Florida Senate - 2010                             CS for SB 1056
       
       
       
       By the Committee on Community Affairs; and Senator Baker
       
       
       
       
       578-04323-10                                          20101056c1
    1                        A bill to be entitled                      
    2         An act relating to the Local Government Prompt Payment
    3         Act; amending s. 218.72, F.S.; revising definitions;
    4         amending s. 218.735, F.S.; revising provisions
    5         relating to the timely payment for purchases of
    6         construction services; requiring a local governmental
    7         entity to identify in a construction contract the
    8         agent or employee or facility or office to which a
    9         contractor may submit its payment request or invoice;
   10         requiring that an ordinance providing dispute
   11         resolution procedures applicable to a construction
   12         contract be referenced in the contract; requiring
   13         construction contracts to specify a date for the
   14         delivery of a list of items required to render
   15         complete, satisfactory, and acceptable the
   16         construction services purchased by a local
   17         governmental entity; providing for the extension of
   18         the contract if the list of items remaining to
   19         complete is not timely provided to the contractor;
   20         deleting provisions relating to the amount of
   21         retainage that may be withheld by a local governmental
   22         entity after 50 percent of construction services are
   23         completed; providing a timeframe and procedure for
   24         subcontractors to submit an invoice for the remainder
   25         of unpaid constructions services; amending s. 218.76,
   26         F.S.; revising provisions relating to the resolution
   27         of disputes concerning an improper payment request or
   28         invoice; providing that a local governmental entity
   29         waives its objection in a payment dispute if it fails
   30         to commence the dispute resolution procedure within
   31         the time required; providing an effective date.
   32  
   33  Be It Enacted by the Legislature of the State of Florida:
   34  
   35         Section 1. Section 218.72, Florida Statutes, is reordered
   36  and amended to read:
   37         218.72 Definitions.—As used in this part, the term:
   38         (8)(1) “Proper invoice” means an invoice that which
   39  conforms with all statutory requirements and with all
   40  requirements that have been specified by the local governmental
   41  entity to which the invoice is submitted.
   42         (5)(2) “Local governmental entity” means a county or
   43  municipal government, school board, school district, authority,
   44  special taxing district, other political subdivision, or any
   45  office, board, bureau, commission, department, branch, division,
   46  or institution thereof.
   47         (4)(3) “County” means a political subdivision of the state
   48  established pursuant to s. 1, Art. VIII of the State
   49  Constitution.
   50         (6)(4) “Municipality” means a municipality created pursuant
   51  to general or special law and metropolitan and consolidated
   52  governments as provided in s. 6(e) and (f), Art. VIII of the
   53  State Constitution.
   54         (9)(5) “Purchase” means the purchase of goods, services, or
   55  construction services; the purchase or lease of personal
   56  property; or the lease of real property by a local governmental
   57  entity.
   58         (10)(6) “Vendor” means any person who sells goods or
   59  services, sells or leases personal property, or leases real
   60  property directly to a local governmental entity. The term
   61  includes any person who provides waste hauling services to
   62  residents or businesses located within the boundaries of a local
   63  government pursuant to a contract or local ordinance.
   64         (2)(7) “Construction services” means all labor, services,
   65  and materials provided in connection with the construction,
   66  alteration, repair, demolition, reconstruction, or any other
   67  improvements to real property.
   68         (7)(8) “Payment request” means a request for payment for
   69  construction services which conforms with all statutory
   70  requirements and with all requirements specified by the local
   71  governmental entity to which the payment request is submitted.
   72  Such requirements must be included in the invitation to bid or
   73  request for proposal for the project for which payment is
   74  requested.
   75         (1)(9) “Agent” means the project architect, project
   76  engineer, or any other agency or person acting on behalf of the
   77  local governmental entity. The agent who is required to review
   78  invoices or payment requests must be identified in the
   79  invitation to bid or request for proposal for the project for
   80  which payment requests or invoices are submitted.
   81         (3)(10) “Contractor” or “provider of construction services”
   82  means the any person who contracts directly with a local
   83  governmental entity to provide construction services.
   84         Section 2. Section 218.735, Florida Statutes, is amended to
   85  read:
   86         218.735 Timely payment for purchases of construction
   87  services.—
   88         (1) The due date for payment for the purchase of
   89  construction services by a local governmental entity is
   90  determined as follows:
   91         (a) If an agent must approve the payment request or invoice
   92  before prior to the payment request or invoice is being
   93  submitted to the local governmental entity, payment is due 25
   94  business days after the date on which the payment request or
   95  invoice is stamped as received as provided in s. 218.74(1). If
   96  the payment request or invoice is not rejected before the due
   97  date, it shall be deemed accepted.
   98         (b) If an agent need not approve the payment request or
   99  invoice which is submitted by the contractor, payment is due 20
  100  business days after the date on which the payment request or
  101  invoice is stamped as received as provided in s. 218.74(1).
  102  
  103  A local governmental entity shall identify the agent or employee
  104  of the local governmental entity, or the facility or office, to
  105  which the contractor may submit its payment request or invoice.
  106  This information shall be included in the contract between the
  107  local governmental entity and contractor, or shall be provided
  108  by the local governmental entity through a separate written
  109  notice, as required under the contract, within 10 days after the
  110  contract award. A contractor’s submission of a payment request
  111  or invoice to the identified agent, employee, facility, or
  112  office of the local governmental entity shall be stamped as
  113  received as provided in s. 218.74(1).Upon the submission of the
  114  payment request or invoice, the time periods commence for
  115  payment or rejection of a payment request or invoice as provided
  116  in subsection (1) or subsection (2).
  117         (2) If a payment request or invoice does not meet the
  118  contract requirements, the local governmental entity must may
  119  reject the payment request or invoice within 20 business days
  120  after the date on which the payment request or invoice is
  121  stamped as received as provided in s. 218.74(1). The rejection
  122  must be written and must specify the deficiency in the payment
  123  request or invoice and the action necessary to make the payment
  124  request or invoice proper.
  125         (3) If a payment request or an invoice is rejected under
  126  subsection (2) and the contractor submits a corrected payment
  127  request or invoice that which corrects the deficiency specified
  128  in writing by the local governmental entity, the corrected
  129  payment request or invoice must be paid or rejected on the later
  130  of:
  131         (a) Ten business days after the date the corrected payment
  132  request or invoice is stamped as received as provided in s.
  133  218.74(1); or
  134         (b) If the local governmental entity governing body is
  135  required by ordinance, charter, or other law to approve or
  136  reject the corrected payment request or invoice, the first
  137  business day after the next regularly scheduled meeting of the
  138  local governmental entity governing body held after the
  139  corrected payment request or invoice is stamped as received as
  140  provided in s. 218.74(1).
  141         (4) If a dispute between the local governmental entity and
  142  the contractor cannot be resolved by the procedure in subsection
  143  (3), the dispute must be resolved in accordance with the dispute
  144  resolution procedure prescribed in the construction contract or
  145  in any applicable ordinance. Such ordinance shall be referenced
  146  in the contract. In the absence of a prescribed procedure, the
  147  dispute must be resolved by the procedure specified in s.
  148  218.76(2).
  149         (5) If a local governmental entity disputes a portion of a
  150  payment request or an invoice, the undisputed portion shall be
  151  paid timely, in accordance with subsection (1).
  152         (6) If When a contractor receives payment from a local
  153  governmental entity for labor, services, or materials furnished
  154  by subcontractors and suppliers hired by the contractor, the
  155  contractor must shall remit payment due to those subcontractors
  156  and suppliers within 10 days after the contractor’s receipt of
  157  payment. If When a subcontractor receives payment from a
  158  contractor for labor, services, or materials furnished by
  159  subcontractors and suppliers hired by the subcontractor, the
  160  subcontractor must shall remit payment due to those
  161  subcontractors and suppliers within 7 days after the
  162  subcontractor’s receipt of payment. This subsection does not
  163  Nothing herein shall prohibit a contractor or subcontractor from
  164  disputing, pursuant to the terms of the relevant contract, all
  165  or any portion of a payment alleged to be due to another party
  166  if the contractor or subcontractor notifies the party whose
  167  payment is disputed, in writing, of the amount in dispute and
  168  the actions required to cure the dispute. The contractor or
  169  subcontractor must pay all undisputed amounts due within the
  170  time limits imposed by this section.
  171         (7)(a) Each contract for construction services between a
  172  local governmental entity and a contractor must provide for the
  173  development of a single list of items required to render
  174  complete, satisfactory, and acceptable the construction services
  175  purchased by the local governmental entity.
  176         (a) The contract must specify the process for developing
  177  the development of the list, including the responsibilities of
  178  the local governmental entity and the contractor in developing
  179  and reviewing the list and a reasonable time for developing the
  180  list, as follows:
  181         1. For construction projects having an estimated cost of
  182  Less than $10 million, within 30 calendar days after reaching
  183  substantial completion of the construction services purchased as
  184  defined in the contract, or, if not defined in the contract,
  185  upon reaching beneficial occupancy or use; or
  186         2. For construction projects having an estimated cost of
  187  $10 million or more, within 30 calendar days, or, if unless
  188  otherwise extended by contract, up to not to exceed 60 calendar
  189  days, after reaching substantial completion of the construction
  190  services purchased as defined in the contract, or, if not
  191  defined in the contract, upon reaching beneficial occupancy or
  192  use.
  193  
  194  The contract must also specify a date for the delivery of the
  195  list of items, not to exceed 10 days after the list of items has
  196  been developed and reviewed within the time periods set forth in
  197  subparagraph 1. or subparagraph 2.
  198         (b) If the contract between the local governmental entity
  199  and the contractor relates to the purchase of construction
  200  services on more than one building or structure, or involves a
  201  multiphased project, the contract must provide for the
  202  development of a list of items required to render complete,
  203  satisfactory, and acceptable all the construction services
  204  purchased pursuant to the contract for each building, structure,
  205  or phase of the project within the time limitations provided in
  206  paragraph (a).
  207         (c) The final contract completion date must be at least 30
  208  days after the delivery of the list of items. If the list is not
  209  provided to the contractor by the agreed to date for the
  210  delivery of the list, the contract time for completion shall be
  211  extended by the number of days the local governmental entity
  212  exceeded the delivery date. Damages may not be assessed against
  213  a contractor for failing to complete a project within the time
  214  required by the contract, unless the contractor failed to
  215  complete the project within the contract period as extended
  216  pursuant to this paragraph.
  217         (d)(c) The failure to include any corrective work or
  218  pending items not yet completed on the list developed pursuant
  219  to this subsection does not alter the responsibility of the
  220  contractor to complete all the construction services purchased
  221  pursuant to the contract.
  222         (e)(d) Upon completion of all items on the list, the
  223  contractor may submit a payment request for all remaining
  224  retainage withheld by the local governmental entity pursuant to
  225  this section. If a good faith dispute exists as to whether one
  226  or more items identified on the list have been completed
  227  pursuant to the contract, the local governmental entity may
  228  continue to withhold up to an amount not to exceed 150 percent
  229  of the total costs to complete such items.
  230         (f)(e) All items that require correction under the contract
  231  and that are identified after the preparation and delivery of
  232  the list remain the obligation of the contractor as defined by
  233  the contract.
  234         (g)(f) Warranty items or items not included in the list of
  235  items required under paragraph (a) may not affect the final
  236  payment of retainage as provided in this section or as provided
  237  in the contract between the contractor and its subcontractors
  238  and suppliers.
  239         (h)(g) Retainage may not be held by a local governmental
  240  entity or a contractor to secure payment of insurance premiums
  241  under a consolidated insurance program or series of insurance
  242  policies issued to a local governmental entity or a contractor
  243  for a project or group of projects, and the final payment of
  244  retainage as provided in this section may not be delayed pending
  245  a final audit by the local governmental entity’s or contractor’s
  246  insurance provider.
  247         (i)(h) If a local governmental entity fails to comply with
  248  its responsibilities to develop the list required under
  249  paragraph (a) or paragraph (b), as defined in the contract,
  250  within the time limitations provided in paragraph (a), the
  251  contractor may submit a payment request for all remaining
  252  retainage withheld by the local governmental entity pursuant to
  253  this section. The payment of any remaining undisputed contract
  254  amount, less any amount withheld pursuant to the contract for
  255  incomplete or uncorrected work, must be paid within 20 business
  256  days after receipt of a proper invoice or payment request. If
  257  the local governmental entity need not pay or process any
  258  payment request for retainage if the contractor has, in whole or
  259  in part, failed to cooperate with the local governmental entity
  260  in the development of the list or failed to perform its
  261  contractual responsibilities, if any, with regard to the
  262  development of the list, or if paragraph (8)(c) (8)(f) applies.
  263         (8)(a)With regard to any contract for construction
  264  services, A local governmental entity may withhold from each
  265  progress payment for construction services made to the
  266  contractor an amount not exceeding 10 percent of the payment as
  267  retainage until 50 percent 50-percent completion of such
  268  services.
  269         (b)After 50-percent completion of the construction
  270  services purchased pursuant to the contract, the local
  271  governmental entity must reduce to 5 percent the amount of
  272  retainage withheld from each subsequent progress payment made to
  273  the contractor. For purposes of this subsection, the term “50
  274  percent completion” has the meaning set forth in the contract
  275  between the local governmental entity and the contractor or, if
  276  not defined in the contract, the point at which the local
  277  governmental entity has expended 50 percent of the total cost of
  278  the construction services purchased as identified in the
  279  contract together with all costs associated with existing change
  280  orders and other additions or modifications to the construction
  281  services provided for in the contract. However, notwithstanding
  282  this subsection, a municipality having a population of 25,000 or
  283  fewer, or a county having a population of 100,000 or fewer, may
  284  withhold retainage in an amount not exceeding 10 percent of each
  285  progress payment made to the contractor until final completion
  286  and acceptance of the project by the local governmental entity.
  287         (c)After 50-percent completion of the construction
  288  services purchased pursuant to the contract, the contractor may
  289  elect to withhold retainage from payments to its subcontractors
  290  at a rate higher than 5 percent. The specific amount to be
  291  withheld must be determined on a case-by-case basis and must be
  292  based on the contractor’s assessment of the subcontractor’s past
  293  performance, the likelihood that such performance will continue,
  294  and the contractor’s ability to rely on other safeguards. The
  295  contractor shall notify the subcontractor, in writing, of its
  296  determination to withhold more than 5 percent of the progress
  297  payment and the reasons for making that determination, and the
  298  contractor may not request the release of such retained funds
  299  from the local governmental entity.
  300         (d)After 50-percent completion of the construction
  301  services purchased pursuant to the contract, the contractor may
  302  present to the local governmental entity a payment request for
  303  up to one-half of the retainage held by the local governmental
  304  entity. The local governmental entity shall promptly make
  305  payment to the contractor, unless the local governmental entity
  306  has grounds, pursuant to paragraph (f), for withholding the
  307  payment of retainage. If the local governmental entity makes
  308  payment of retainage to the contractor under this paragraph
  309  which is attributable to the labor, services, or materials
  310  supplied by one or more subcontractors or suppliers, the
  311  contractor shall timely remit payment of such retainage to those
  312  subcontractors and suppliers.
  313         (e) This limitation section does not prohibit a local
  314  governmental entity from withholding retainage at a rate less
  315  than 10 percent of each progress payment or, from incrementally
  316  reducing the rate of retainage pursuant to a schedule provided
  317  for in the contract, or from releasing at any point all or a
  318  portion of any retainage withheld by the local governmental
  319  entity which is attributable to the labor, services, or
  320  materials supplied by the contractor or by one or more
  321  subcontractors or suppliers.
  322         (a) If a local governmental entity makes any payment of
  323  retainage to the contractor which is attributable to the
  324  construction labor, services, or materials supplied by one or
  325  more subcontractors or suppliers, the contractor shall timely
  326  remit payment of such retainage to those subcontractors and
  327  suppliers.
  328         (b) A subcontractor may submit an invoice to the contractor
  329  for the remainder of unpaid construction services 45 days after
  330  the completion of such services, including an invoice for the
  331  full value of the retainage related to the services. The
  332  subcontractor shall include a conditional release of lien and
  333  all appropriate warranties and closeout documentation with the
  334  final payment invoice to the contractor. The contractor must
  335  include the payment request in the next payment application
  336  cycle to the agent following the receipt of the subcontractor’s
  337  payment request.
  338         (c)(f) This subsection section does not require the local
  339  governmental entity to pay or release any amounts that are the
  340  subject of a good faith dispute, the subject of a claim brought
  341  pursuant to s. 255.05, or otherwise the subject of a claim or
  342  demand by the local governmental entity or contractor.
  343         (d)(g) The time limitations set forth in this subsection
  344  section for payment of payment requests apply to any payment
  345  request for retainage made pursuant to this section.
  346         (e)(h)This subsection does Paragraphs (a)-(d) do not apply
  347  to construction services purchased by a local governmental
  348  entity which are paid for, in whole or in part, with federal
  349  funds and are subject to federal grantor laws and regulations or
  350  requirements that are contrary to any provision of the Local
  351  Government Prompt Payment Act.
  352         (f)(i) This subsection does not apply to any construction
  353  services purchased by a local governmental entity if the total
  354  cost of the construction services purchased as identified in the
  355  contract is $200,000 or less.
  356         (9) All payments due under this section and not made within
  357  the time periods specified by this section shall bear interest
  358  at the rate of 1 percent per month, or the rate specified by
  359  contract, whichever is greater.
  360         Section 3. Section 218.76, Florida Statutes, is amended to
  361  read:
  362         218.76 Improper payment request or invoice; resolution of
  363  disputes.—
  364         (1) If In any case in which an improper payment request or
  365  invoice is submitted by a vendor, the local governmental entity
  366  shall, within 10 days after the improper payment request or
  367  invoice is received by it, notify the vendor, in writing, that
  368  the payment request or invoice is improper and indicate what
  369  corrective action on the part of the vendor is needed to make
  370  the payment request or invoice proper.
  371         (2) If In the event a dispute arises occurs between a
  372  vendor and a local governmental entity concerning payment of a
  373  payment request or an invoice, the dispute such disagreement
  374  shall be finally determined by the local governmental entity
  375  pursuant to as provided in this section. Each local governmental
  376  entity shall establish a dispute resolution procedure
  377  established to be followed by the local governmental entity in
  378  cases of such disputes. Such procedure must shall provide that
  379  proceedings to resolve the dispute are shall be commenced within
  380  not later than 45 days after the date on which the payment
  381  request or proper invoice was received by the local governmental
  382  entity and shall be concluded by final decision of the local
  383  governmental entity within not later than 60 days after the date
  384  on which the payment request or proper invoice was received by
  385  the local governmental entity. Such procedures are shall not be
  386  subject to chapter 120, and do such procedures shall not
  387  constitute an administrative proceeding that which prohibits a
  388  court from deciding de novo any action arising out of the
  389  dispute. If the dispute is resolved in favor of the local
  390  governmental entity, then interest charges shall begin to accrue
  391  15 days after the local governmental entity’s final decision. If
  392  the dispute is resolved in favor of the vendor, then interest
  393  begins shall begin to accrue as of the original date the payment
  394  became due. If the local governmental entity does not commence
  395  the dispute resolution procedure within the time required, the
  396  objection to payment shall be deemed to have been waived. The
  397  time for dispute resolution may be extended upon the written
  398  agreement of the affected parties.
  399         (3) In an action to recover amounts due under this part ss.
  400  218.70-218.80, the court shall award court costs and reasonable
  401  attorney’s fees, including fees incurred through any appeal, to
  402  the prevailing party, if the court finds that the nonprevailing
  403  party withheld any portion of the payment that is the subject of
  404  the action without any reasonable basis in law or fact to
  405  dispute the prevailing party’s claim to those amounts.
  406         Section 4. This act shall take effect July 1, 2010.

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