HB 1169 2003
1	A bill to be entitled
2	An act relating to prompt payment for construction
3	services; amending s. 218.70, F.S.; providing a popular
4	name; amending s. 218.72, F.S.; redefining the term "local
5	governmental entity," as used in pt. VII of ch. 218, F.S.,
6	to include community colleges; amending s. 218.735, F.S.;
7	revising provisions relating to timely payment for
8	purchases of construction services; revising deadlines for
9	payment; providing procedures for project closeout and
10	payment of retainage; providing requirements for local
11	government construction retainage; providing that ss.
12	218.72-218.76, F.S., apply to the payment of any payment
13	request for retainage; creating s. 255.0705, F.S.;
14	providing a popular name; amending s. 255.071, F.S.;
15	revising deadlines for the payment of subcontractors, sub-
16	subcontractors, materialmen, and suppliers on construction
17	contracts for public projects; creating ss. 255.072,
18	255.073, 255.074, 255.075, 255.076, 255.077, and 255.078,
19	F.S.; providing definitions; providing for timely payment
20	for purchases of construction services by a public entity;
21	providing procedures for calculating payment due dates;
22	allowing collection of interest; providing procedures for
23	handling improper payment requests; providing for the
24	resolution of disputes; providing for project closeout and
25	payment of retainage; providing for public construction
26	retainage; providing that ss. 255.072-255.076, F.S., apply
27	to the payment of any payment request for retainage;
28	amending s. 255.05, F.S.; providing requirements for
29	certain notices of nonpayment served by a claimant who is
30	not in privity with the contractor; providing limitations
31	on a claimant's institution of certain actions against a
32	contractor or surety; providing for the tolling of a
33	statute of limitations for bringing suit against a
34	contractor or surety; providing an effective date.
35
36	Be It Enacted by the Legislature of the State of Florida:
37
38	Section 1. Section 218.70, Florida Statutes, is amended to
39	read:
40	218.70 Popular nameShort title.--This part shall be known
41	by the popular namemay be cited as the "Local Government
42	FloridaPrompt Payment Act."
43	Section 2. Subsection (2) of section 218.72, Florida
44	Statutes, is amended to read:
45	218.72 Definitions.--As used in this part:
46	(2) "Local governmental entity" means a county or
47	municipal government, school board, school district, authority,
48	special taxing district, other political subdivision, community
49	college,or any office, board, bureau, commission, department,
50	branch, division, or institution thereof or any project
51	supported by county or municipal funds.
52	Section 3. Subsection (6) of section 218.735, Florida
53	Statutes, is amended, present subsection (7) is renumbered as
54	subsection (9), and new subsections (7) and (8) are added to
55	said section, to read:
56	218.735 Timely payment for purchases of construction
57	services.--
58	(6) When a contractor receives payment from a local
59	governmental entity for labor, services, or materials furnished
60	by subcontractors and suppliers hired by the contractor, the
61	contractor shall remit payment due to those subcontractors and
62	suppliers within 1015days after the contractor's receipt of
63	payment. When a subcontractor receives payment from a contractor
64	for labor, services, or materials furnished by subcontractors
65	and suppliers hired by the subcontractor, the subcontractor
66	shall remit payment due to those subcontractors and suppliers
67	within 1015days after the subcontractor's receipt of payment.
68	Nothing herein shall prohibit a contractor or subcontractor from
69	disputing, pursuant to the terms of the relevant contract, all
70	or any portion of a payment alleged to be due to another party.
71	In the event of such a dispute, the contractor or subcontractor
72	may withhold the disputed portion of any such payment if the
73	contractor or subcontractor notifies the party whose payment is
74	disputed, in writing, of the amount in dispute and the actions
75	required to cure the dispute. The contractor or subcontractor
76	must pay all undisputed amounts due within the time limits
77	imposed by this section.
78	(7)(a) A local governmental entity must present to the
79	vendor a final punch list of all items required to render
80	complete, satisfactory, and acceptable the construction services
81	purchased, within 30 days after the earliest of the following:
82	1. Issuance of a temporary or final certificate of
83	occupancy, if applicable;
84	2. Substantial completion of the construction services
85	purchased, as defined in the contract; or
86	3. Beneficial occupancy or use of the structure, building,
87	or facility that is the subject of the construction services
88	purchased, as defined in the contract.
89	(b) If the purchase relates to construction services on
90	more than one building or structure, the local governmental
91	entity shall prepare a final punch list for each building or
92	structure. The local governmental entity must present to the
93	vendor a final punch list with regard to each building or
94	structure within 30 days after the earliest of the following:
95	1. Issuance of a temporary or final certificate of
96	occupancy on the particular building or structure, if
97	applicable;
98	2. Substantial completion of the particular building or
99	structure, as defined in the contract; or
100	3. Beneficial occupancy or use of the particular
101	structure, building or facility, as defined in the contract.
102
103	Unless the contract provides otherwise, the local governmental
104	entity shall pay out retainage to the vendor based upon the
105	value of the construction services rendered with regard to that
106	structure or building as compared to the total value of the
107	purchase.
108	(c) Upon completion of all items on the final punch list,
109	or within 30 days, whichever occurs sooner, the vendor shall
110	submit a payment request for the appropriate amount of
111	retainage. Thereafter, this act applies to the payment of any
112	payment request for retainage.
113	(d) If the local governmental entity fails to present to
114	the vendor a final punch list within the time periods provided
115	in paragraph (a) or paragraph (b), the project is considered to
116	be complete and the vendor shall submit a payment request for
117	the appropriate amount of retainage. Thereafter, this act
118	applies to the payment of any payment request for retainage.
119	(e) All items that require correction and that are
120	identified after the preparation and delivery of the final punch
121	list must be considered warranty items or make-good items, and
122	such items have no effect on the final payment of retainage
123	provided in this section.
124	(8)(a) From the commencement of a local government
125	construction project that is subject to this act until the
126	project is 50-percent complete, as defined in the contract
127	between the local governmental entity and the vendor, a local
128	governmental entity may not withhold as retainage more than 10
129	percent of each progress payment to the vendor. At 50-percent
130	completion, the vendor may submit a payment request to the local
131	governmental entity for up to one-half of the retainage withheld
132	up to that time.
133	(b) After 50-percent completion, as defined in the
134	contract between the local governmental entity and the vendor,
135	the local governmental entity may not withhold as retainage more
136	than 5 percent of each progress payment to the vendor. After 50-
137	percent completion, however, the vendor may withhold retainage
138	from payments to its subcontractors at a rate higher than 5
139	percent, upon showing good cause and providing written notice to
140	the subcontractor. The local governmental entity shall withhold
141	from each progress payment to the vendor the same dollar amount
142	of retainage which the vendor is withholding from that payment
143	from those subcontractors whose work was included in the
144	corresponding payment request.
145	(c) This section does not require the payment or release
146	of amounts that are the subject of a good-faith dispute.
147	(d) This act applies to the payment of any payment request
148	for retainage.
149	Section 4. Section 255.0705, Florida Statutes, is created
150	to read:
151	255.0705 Popular name.--Sections 255.0705-255.078 shall be
152	known by the popular name the "Florida Prompt Payment Act."
153	Section 5. Subsections (2) and (3) of section 255.071,
154	Florida Statutes, are amended to read:
155	255.071 Payment of subcontractors, sub-subcontractors,
156	materialmen, and suppliers on construction contracts for public
157	projects.--
158	(2) The failure to pay any undisputed obligations for such
159	labor, services, or materials within 30 days after the date the
160	labor, services, or materials were furnished and payment for
161	such labor, services, or materials became due, or within 1030
162	days after the date payment for such labor, services, or
163	materials is received, whichever last occurs, shall entitle any
164	person providing such labor, services, or materials to the
165	procedures specified in subsection (3) and the remedies provided
166	in subsection(4).
167	(3) Any person providing labor, services, or materials for
168	the construction of a public building, for the prosecution and
169	completion of a public work, or for repairs upon a public
170	building or public work improvements to real property may file a
171	verified complaint alleging:
172	(a) The existence of a contract for providing such labor,
173	services, or materials to improve real property.
174	(b) A description of the labor, services, or materials
175	provided and alleging that the labor, services, or materials
176	were provided in accordance with the contract.
177	(c) The amount of the contract price.
178	(d) The amount, if any, paid pursuant to the contract.
179	(e) The amount that remains unpaid pursuant to the
180	contract and the amount thereof that is undisputed.
181	(f) That the undisputed amount has remained due and
182	payable pursuant to the contract for more than 30 days after the
183	date the labor or services were accepted or the materials were
184	received.
185	(g) That the person against whom the complaint was filed
186	has received payment on account of the labor, services, or
187	materials described in the complaint more than 1030days prior
188	to the date the complaint was filed.
189	Section 6. Section 255.072, Florida Statutes, is created
190	to read:
191	255.072 Definitions.--As used in ss. 255.073-255.078, the
192	term:
193	(1) "Agent" means project architect, project engineer, or
194	any other agency or person acting on behalf of a public entity.
195	(2) "Construction services" means all labor, services, and
196	materials provided in connection with the construction,
197	alteration, repair, demolition, reconstruction, or any other
198	improvements to real property that require a license under part
199	I or part II of chapter 489.
200	(3) "Payment request" means an invoice or request for
201	payment for construction services which conforms with all
202	statutory requirements and with all requirements specified by
203	the public entity to which the payment request is submitted.
204	(4) "Public entity" means the state, a state university,
205	or any office, board, bureau, commission, department, branch,
206	division, or institution thereof, or any project supported by
207	state funds.
208	(5) "Purchase" means the purchase of construction
209	services.
210	(6) "Vendor" means any person providing construction
211	services to a public entity.
212	Section 7. Section 255.073, Florida Statutes, is created
213	to read:
214	255.073 Timely payment for purchases of construction
215	services.--
216	(1) Except as otherwise provided in ss. 255.072-255.078,
217	s. 215.422 governs the timely payment for construction services
218	by a public entity under this act.
219	(2) If a public entity disputes a portion of a payment
220	request, the undisputed portion must be timely paid, in
221	accordance with subsection (1).
222	(3) When a vendor receives payment from a public entity
223	for labor, services, or materials furnished by subcontractors
224	and suppliers hired by the vendor, the vendor shall remit
225	payment due to those subcontractors and suppliers within 10 days
226	after the vendor's receipt of payment. When a subcontractor
227	receives payment from a vendor for labor, services, or materials
228	furnished by subcontractors and suppliers hired by the
229	subcontractor, the subcontractor shall remit payment due to
230	those subcontractors and suppliers within 10 days after the
231	subcontractor's receipt of payment. This subsection does not
232	prohibit a vendor or subcontractor from disputing, pursuant to
233	the terms of the relevant contract, all or any portion of a
234	payment alleged to be due to another party. If such a dispute
235	occurs, the vendor or subcontractor may withhold the disputed
236	portion of any such payment if the vendor or subcontractor
237	notifies the party whose payment is disputed, in writing, of the
238	amount in dispute and the actions required to cure the dispute.
239	The vendor or subcontractor must pay all undisputed amounts due
240	within the time limits imposed by this section.
241	(4) All payments due under this section and not made
242	within the time periods specified by this section shall bear
243	interest at the rate of 1 percent per month, or the rate
244	specified by contract, whichever is greater.
245	Section 8. Section 255.074, Florida Statutes, is created
246	to read:
247	255.074 Procedures for calculation of payment due dates.--
248	(1) Each public entity shall establish procedures whereby
249	each payment request received by the public entity is marked as
250	received on the date on which it is delivered to an agent or
251	employee of the public entity or of a facility or office of the
252	public entity.
253	(2) If the terms under which a purchase is made allow for
254	partial deliveries and a payment request is submitted for a
255	partial delivery, the time for payment for the partial delivery
256	must be calculated from the time of the partial delivery and the
257	submission of the payment request in the same manner as provided
258	in s. 255.073.
259	(3) The public entity must submit a payment request to the
260	Chief Financial Officer for payment no more than 25 days after
261	receipt of the payment request.
262	Section 9. Section 255.075, Florida Statutes, is created
263	to read:
264	255.075 Mandatory interest.--A contract between a public
265	entity and a vendor or a provider of construction services may
266	not prohibit the collection of late payment interest charges
267	allowable under ss. 255.072-255.078.
268	Section 10. Section 255.076, Florida Statutes, is created
269	to read:
270	255.076 Improper payment request; resolution of
271	disputes.--
272	(1) If a vendor submits an improper payment request, the
273	public entity shall, within 10 days after receiving the improper
274	payment request, notify the vendor that the payment request is
275	improper and indicate what corrective action on the part of the
276	vendor is needed to make the payment request proper.
277	(2) If a dispute occurs between a vendor and a public
278	entity concerning payment of a payment request, the dispute must
279	be resolved as provided in this section. Each public entity
280	shall establish a dispute resolution procedure to be followed by
281	the public entity if such a dispute occurs. The procedure must
282	provide that proceedings to resolve the dispute must commence
283	not later than 45 days after the date on which the public entity
284	received the payment request and must conclude by final decision
285	of the public entity not later than 60 days after the date on
286	which the public entity received the payment request. Such
287	procedures are not subject to chapter 120 and do not constitute
288	an administrative proceeding that prohibits a court from
289	deciding de novo any action arising out of the dispute. If the
290	dispute is resolved in favor of the public entity, interest
291	charges begin to accrue 15 days after the public entity's final
292	decision. If the dispute is resolved in favor of the vendor,
293	interest begins to accrue as of the original date the payment
294	became due.
295	(3) In an action to recover amounts due under ss. 255.072-
296	255.078, the court shall award court costs and reasonable
297	attorney's fees, including fees incurred through any appeal, to
298	the prevailing party, if the court finds that the nonprevailing
299	party withheld any portion of the payment that is the subject of
300	the action without any reasonable basis in law or fact to
301	dispute the prevailing party's claim to those amounts.
302	Section 11. Section 255.077, Florida Statutes, is created
303	to read:
304	255.077 Project closeout and payment of retainage.--
305	(1) A public entity must present to the vendor a final
306	punch list of all items required to render complete,
307	satisfactory, and acceptable the construction services
308	purchased, within 30 days after the earliest of the following:
309	(a) Issuance of a temporary or final certificate of
310	occupancy, if applicable;
311	(b) Substantial completion of the construction services
312	purchased, as defined in the contract; or
313	(c) Beneficial occupancy or use of the structure,
314	building, or facility that is the subject of the construction
315	services purchased, as defined in the contract.
316	(2) If the purchase relates to construction services on
317	more than one building or structure, the public entity shall
318	prepare a final punch list for each building or structure. The
319	public entity must present to the vendor a final punch list with
320	regard to each building or structure within 30 days after the
321	earliest of the following:
322	(a) Issuance of a temporary or final certificate of
323	occupancy on the particular building or structure, if
324	applicable;
325	(b) Substantial completion of the particular building or
326	structure, as defined in the contract; or
327	(c) Beneficial occupancy or use of the particular
328	structure, building, or facility, as defined in the contract.
329
330	Unless the contract provides otherwise, the public entity shall
331	pay out retainage to the vendor based upon the value of the
332	construction services rendered with regard to that structure or
333	building as compared to the total value of the purchase.
334	(3) Upon completion of all items on the final punch list
335	or within 30 days, whichever occurs sooner, the vendor shall
336	submit a payment request for the appropriate amount of
337	retainage. Thereafter, ss. 255.072-255.076 apply to the payment
338	of any payment request for retainage.
339	(4) If the public entity fails to present to the vendor a
340	final punch list within the time periods provided in subsection
341	(1) or subsection (2), the project is considered to be complete
342	and the vendor shall submit a payment request for the
343	appropriate amount of retainage. Thereafter, ss. 255.072-255.076
344	apply to the payment of any payment request for retainage.
345	(5) All items that require correction which are identified
346	subsequent to preparation and delivery of the final punch list
347	must be considered warranty items or make-good items, and such
348	items have no effect on the final payment of retainage provided
349	in this section.
350	Section 12. Section 255.078, Florida Statutes, is created
351	to read:
352	255.078 Public construction retainage.--
353	(1) From the commencement of a public construction project
354	that is subject to ss. 255.072-255.078 until the project is 50-
355	percent complete, as defined in the contract between the public
356	entity and the vendor, a public entity may not withhold as
357	retainage more than 10 percent of each progress payment to the
358	vendor. At 50-percent completion, the vendor may submit a
359	payment request to the public entity for up to one-half of the
360	retainage withheld up to that time.
361	(2) After 50-percent completion, as defined in the
362	contract between the public entity and the vendor, the public
363	entity may not withhold as retainage more than 5 percent of each
364	progress payment to the vendor. After 50-percent completion,
365	however, the vendor may withhold retainage from payments to its
366	subcontractors at a rate higher than 5 percent, upon showing
367	good cause and providing written notice to the subcontractor.
368	The public entity shall withhold from each progress payment to
369	the vendor the same dollar amount of retainage the vendor is
370	withholding from that payment from those subcontractors whose
371	work was included in the corresponding payment request.
372	(3) This section does not require the payment or release
373	of amounts that are the subject of a good-faith dispute.
374	(4) Sections 255.072-255.076 apply to the payment of any
375	payment request for retainage.
376	Section 13. Paragraph (a) of subsection (2) of section
377	255.05, Florida Statutes, is amended, and subsections (10) and
378	(11) are added to said section, to read:
379	255.05 Bond of contractor constructing public buildings;
380	form; action by materialmen.--
381	(2)(a)1. If a claimant is no longer furnishing labor,
382	services, or materials on a project, a contractor or the
383	contractor's agent or attorney may elect to shorten the
384	prescribed time in this paragraph within which an action to
385	enforce any claim against a payment bond provided pursuant to
386	this section may be commenced by recording in the clerk's office
387	a notice in substantially the following form:
388
389	NOTICE OF CONTEST OF CLAIM
390	AGAINST PAYMENT BOND
391
392	To: . . . (Name and address of claimant) . . .
393
394	You are notified that the undersigned contests your notice
395	of nonpayment, dated ____________, ________, and served on the
396	undersigned on ____________, ________, and that the time within
397	which you may file suit to enforce your claim is limited to 60
398	days after the date of service of this notice.
399
400	DATED on ____________, ________.
401
402
403	Signed: . . . (Contractor or Attorney) . . .
404
405	The claim of any claimant upon whom such notice is served and
406	who fails to institute a suit to enforce his or her claim
407	against the payment bond within 60 days after service of such
408	notice shall be extinguished automatically. The clerk shall mail
409	a copy of the notice of contest to the claimant at the address
410	shown in the notice of nonpayment or most recent amendment
411	thereto and shall certify to such service on the face of such
412	notice and record the notice. Service is complete upon mailing.
413	2. A claimant, except a laborer, who is not in privity
414	with the contractor shall, before commencing or not later than
415	45 days after commencing to furnish labor, materials, or
416	supplies for the prosecution of the work, furnish the contractor
417	with a notice that he or she intends to look to the bond for
418	protection. A claimant who is not in privity with the contractor
419	and who has not received payment for his or her labor,
420	materials, or supplies shall deliver to the contractor and to
421	the surety written notice of the performance of the labor or
422	delivery of the materials or supplies and of the nonpayment. The
423	notice of nonpayment may be served at any time during the
424	progress of the work or thereafter but not before 45 days after
425	the first furnishing of labor, services, or materials, and not
426	later than 90 days after the final furnishing of the labor,
427	services, or materials by the claimant or, with respect to
428	rental equipment, not later than 90 days after the date that the
429	rental equipment was last on the job site available for use. Any
430	notice of nonpayment served by a claimant who is not in privity
431	with the contractor which includes sums for retainage must
432	specify the portion of the amount claimed for retainage.No
433	action for the labor, materials, or supplies may be instituted
434	against the contractor or the surety unless both notices have
435	been given. Notices required or permitted under this section may
436	be served in accordance with s. 713.18. An action, except for an
437	action exclusively for recovery of retainage, must be instituted
438	against the contractor or the surety on the payment bond or the
439	payment provisions of a combined payment and performance bond
440	within 1 year after the performance of the labor or completion
441	of delivery of the materials or supplies. An action exclusively
442	for recovery of retainage must be instituted against the
443	contractor or the surety within 1 year after the performance of
444	the labor or completion of delivery of the materials or
445	supplies, or within 90 days after receipt of final payment (or
446	the payment estimate containing the owner's final reconciliation
447	of quantities if no further payment is earned and due as a
448	result of deductive adjustments) by the contractor or surety,
449	whichever comes last. A claimant may not waive in advance his or
450	her right to bring an action under the bond against the surety.
451	In any action brought to enforce a claim against a payment bond
452	under this section, the prevailing party is entitled to recover
453	a reasonable fee for the services of his or her attorney for
454	trial and appeal or for arbitration, in an amount to be
455	determined by the court, which fee must be taxed as part of the
456	prevailing party's costs, as allowed in equitable actions. The
457	time periods for service of a notice of nonpayment or for
458	bringing an action against a contractor or a surety shall be
459	measured from the last day of furnishing labor, services, or
460	materials by the claimant and shall not be measured by other
461	standards, such as the issuance of a certificate of occupancy or
462	the issuance of a certificate of substantial completion.
463	(10) Notwithstanding any other provision of law to the
464	contrary, a claimant may not institute an action for the sole
465	purpose of recovery of retainage against the contractor or
466	against the surety issuing a payment or performance bond
467	pursuant to this section until:
468	(a) The public entity has paid out that retainage to the
469	contractor and the time provided under ss. 218.70-218.76 or ss.
470	255.072-255.078 for payment of that retainage to the claimant
471	has expired; or
472	(b) The claimant has completed all work under its
473	contract, including the items identified on the owner's final
474	punch list, and 60 days have passed since the owner's receipt of
475	the contractor's final payment request.
476	(11) Notwithstanding any other provision of law to the
477	contrary, the statute of limitations for bringing suit against a
478	contractor or a surety shall not run if the contractor has
479	failed to comply with the payment provisions set forth in ss.
480	255.072-255.078.
481	Section 14. This act shall take effect July 1, 2003.