HB 1169 2003
1	CHAMBER ACTION
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6	The Committee on Business Regulation recommends the following:
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8	Committee Substitute
9	Remove the entire bill and insert:
10	A bill to be entitled
11	An act relating to prompt payment for construction
12	services; amending s. 218.70, F.S.; providing a popular
13	name; amending s. 218.72, F.S.; redefining terms used in
14	pt. VII of ch. 218, F.S.; amending s. 218.735, F.S.;
15	revising provisions relating to timely payment for
16	purchases of construction services; revising deadlines for
17	payment; providing procedures for project closeout and
18	payment of retainage; providing requirements for local
19	government construction retainage; providing that ss.
20	218.72-218.76, F.S., apply to the payment of any payment
21	request for retainage; creating s. 255.0705, F.S.;
22	providing a popular name; amending s. 255.071, F.S.;
23	revising deadlines for the payment of subcontractors, sub-
24	subcontractors, materialmen, and suppliers on construction
25	contracts for public projects; creating ss. 255.072,
26	255.073, 255.074, 255.075, 255.076, 255.077, and 255.078,
27	F.S.; providing definitions; providing for timely payment
28	for purchases of construction services by a public entity;
29	providing procedures for calculating payment due dates;
30	permitting collection of interest; providing procedures
31	for handling improper payment requests; providing for the
32	resolution of disputes; providing for project closeout and
33	payment of retainage; providing for public construction
34	retainage; providing that ss. 255.072-255.076, F.S., apply
35	to the payment of any payment request for retainage;
36	amending s. 255.05, F.S.; providing requirements for
37	certain notices of nonpayment served by a claimant who is
38	not in privity with the contractor; providing limitations
39	on a claimant's institution of certain actions against a
40	contractor or surety; providing for the tolling of a
41	statute of limitations for bringing suit against a
42	contractor or surety; providing for liability; providing
43	an effective date.
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45	Be It Enacted by the Legislature of the State of Florida:
46
47	Section 1. Section 218.70, Florida Statutes, is amended to
48	read:
49	218.70 Popular nameShort title.--This part shall be known
50	by the popular namemay be cited as the "Local Government
51	FloridaPrompt Payment Act."
52	Section 2. Subsections (2), (6), and (7) of section
53	218.72, Florida Statutes, are amended to read:
54	218.72 Definitions.--As used in this part:
55	(2) "Local governmental entity" means a county or
56	municipal government, school board, school district, authority,
57	special taxing district, other political subdivision, community
58	college,or any office, board, bureau, commission, department,
59	branch, division, or institution thereof or any project
60	supported by county or municipal funds.
61	(6) "Vendor" means any person who sells goods or services,
62	sells or leases personal property, or leases real property
63	directlyto a local governmental entity.
64	(7) "Construction services" means all labor, services, and
65	materials provided in connection with the construction,
66	alteration, repair, demolition, reconstruction, or any other
67	improvements to real property that require a license under parts
68	I and II of chapter 489.
69	Section 3. Subsection (6) of section 218.735, Florida
70	Statutes, is amended, present subsection (7) is renumbered as
71	subsection (9), and new subsections (7) and (8) are added to
72	said section, to read:
73	218.735 Timely payment for purchases of construction
74	services.--
75	(6) When a contractor receives payment from a local
76	governmental entity for labor, services, or materials furnished
77	by subcontractors and suppliers hired by the contractor, the
78	contractor shall remit payment due to those subcontractors and
79	suppliers within 1015days after the contractor's receipt of
80	payment. When a subcontractor receives payment from a contractor
81	for labor, services, or materials furnished by subcontractors
82	and suppliers hired by the subcontractor, the subcontractor
83	shall remit payment due to those subcontractors and suppliers
84	within 1015days after the subcontractor's receipt of payment.
85	Nothing herein shall prohibit a contractor or subcontractor from
86	disputing, pursuant to the terms of the relevant contract, all
87	or any portion of a payment alleged to be due to another party.
88	In the event of such a dispute, the contractor or subcontractor
89	may withhold the disputed portion of any such payment if the
90	contractor or subcontractor notifies the party whose payment is
91	disputed, in writing, of the amount in dispute and the actions
92	required to cure the dispute. The contractor or subcontractor
93	must pay all undisputed amounts due within the time limits
94	imposed by this section.
95	(7)(a) A local governmental entity must present to the
96	vendor a final punch list of all items required to render
97	complete, satisfactory, and acceptable the construction services
98	purchased within 30 days after the earliest of the following:
99	1. Issuance of a temporary or final certificate of
100	occupancy, if applicable;
101	2. Substantial completion of the construction services
102	purchased, as defined in the contract; or
103	3. Beneficial occupancy or use of the structure, building,
104	facility, or improvement that is the subject of the construction
105	services purchased, as defined in the contract.
106	(b) If the purchase relates to construction services on
107	more than one building or structure, the local governmental
108	entity shall prepare a final punch list for each building or
109	structure. The local governmental entity must present to the
110	vendor a final punch list with regard to each building or
111	structure within 30 days after the earliest of the following:
112	1. Issuance of a temporary or final certificate of
113	occupancy on the particular building or structure, if
114	applicable;
115	2. Substantial completion of the particular building or
116	structure, as defined in the contract; or
117	3. Beneficial occupancy or use of the particular
118	structure, building, facility, or improvement as defined in the
119	contract.
120
121	Unless the contract provides otherwise, the local governmental
122	entity shall pay out retainage to the vendor based upon the
123	value of the construction services rendered with regard to that
124	structure, building, facility, or improvement as compared to the
125	total value of the purchase.
126	(c) Upon completion of all items on the final punch list,
127	or within 30 days after issuance of the punch list, whichever
128	occurs sooner, the vendor shall submit a payment request for the
129	appropriate amount of retainage. The owner may withhold up to
130	150 percent of the cost to complete any incomplete final punch
131	list items. Thereafter, this act applies to the payment of any
132	payment request for retainage.
133	(d) If the local governmental entity fails to present to
134	the vendor a final punch list within the time periods provided
135	in paragraph (a) or paragraph (b), the project is considered to
136	be complete and the vendor shall submit a payment request for
137	the appropriate amount of retainage. Thereafter, this act
138	applies to the payment of any payment request for retainage.
139	(e) All items that require correction under the contract
140	and that are identified after the preparation and delivery of
141	the final punch list must be considered warranty items or make-
142	good items, and such items have no effect on the final payment
143	of retainage provided in this section.
144	(8)(a) From the commencement of a local government
145	construction project that is subject to this act until 50
146	percent of the contract value has been earned, a local
147	governmental entity may not withhold as retainage more than 10
148	percent of each progress payment to the vendor. When 50 percent
149	of the contract value has been earned, the vendor may submit a
150	payment request to the local governmental entity for up to one-
151	half of the retainage withheld up to that time.
152	(b) After 50 percent of the contract value has been
153	earned, the local governmental entity may not withhold as
154	retainage more than 5 percent of each progress payment to the
155	vendor. However, the vendor may withhold retainage from payments
156	to its subcontractors at a rate higher than 5 percent. The
157	specific amount to be withheld must be determined on a case-by-
158	case basis and must be based on the vendor's assessment of the
159	subcontractor's past performance, the likelihood that such
160	performance will continue, and the vendor's ability to rely on
161	other safeguards. The vendor shall notify the subcontractor, in
162	writing, of its determination to withhold more than 5 percent of
163	the progress payment and the reasons for making that
164	determination.
165	(c) This section does not require the payment or release
166	of amounts that are the subject of a good-faith dispute.
167	(d) This act applies to the payment of any payment request
168	for retainage.
169	Section 4. Section 255.0705, Florida Statutes, is created
170	to read:
171	255.0705 Popular name.--Sections 255.0705-255.078 shall be
172	known by the popular name the "Florida Prompt Payment Act."
173	Section 5. Subsections (2) and (3) of section 255.071,
174	Florida Statutes, are amended to read:
175	255.071 Payment of subcontractors, sub-subcontractors,
176	materialmen, and suppliers on construction contracts for public
177	projects.--
178	(2) The failure to pay any undisputed obligations for such
179	labor, services, or materials within 30 days after the date the
180	labor, services, or materials were furnished and payment for
181	such labor, services, or materials became due, or within 1030
182	days after the date payment for such labor, services, or
183	materials is received, whichever last occurs, shall entitle any
184	person providing such labor, services, or materials to the
185	procedures specified in subsection (3) and the remedies provided
186	in subsection (4).
187	(3) Any person providing labor, services, or materials for
188	the construction of a public building, for the prosecution and
189	completion of a public work, or for repairs upon a public
190	building or public work improvements to real property may file a
191	verified complaint alleging:
192	(a) The existence of a contract for providing such labor,
193	services, or materials to improve real property.
194	(b) A description of the labor, services, or materials
195	provided and alleging that the labor, services, or materials
196	were provided in accordance with the contract.
197	(c) The amount of the contract price.
198	(d) The amount, if any, paid pursuant to the contract.
199	(e) The amount that remains unpaid pursuant to the
200	contract and the amount thereof that is undisputed.
201	(f) That the undisputed amount has remained due and
202	payable pursuant to the contract for more than 30 days after the
203	date the labor or services were accepted or the materials were
204	received.
205	(g) That the person against whom the complaint was filed
206	has received payment on account of the labor, services, or
207	materials described in the complaint more than 1030days prior
208	to the date the complaint was filed.
209	Section 6. Section 255.072, Florida Statutes, is created
210	to read:
211	255.072 Definitions.--As used in ss. 255.073-255.078, the
212	term:
213	(1) "Agent" means project architect, project engineer, or
214	any other agency or person acting on behalf of a public entity.
215	(2) "Construction services" means all labor, services, and
216	materials provided in connection with the construction,
217	alteration, repair, demolition, reconstruction, or any other
218	improvements to real property. The term "construction services"
219	does not include contracts or work performed for the Department
220	of Transportation.
221	(3) "Payment request" means an invoice or request for
222	payment for construction services that conforms with all
223	statutory requirements and with all requirements specified by
224	the public entity to which the payment request is submitted.
225	(4) "Public entity" means the state, a state university,
226	or any office, board, bureau, commission, department, branch,
227	division, or institution thereof, or any project supported by
228	state funds. The term does not include a local governmental
229	entity as defined in s. 218.72(2).
230	(5) "Purchase" means the purchase of construction
231	services.
232	(6) "Vendor" means any person providing construction
233	services to a public entity.
234	Section 7. Section 255.073, Florida Statutes, is created
235	to read:
236	255.073 Timely payment for purchases of construction
237	services.--
238	(1) Except as otherwise provided in ss. 255.072-255.078,
239	s. 215.422 governs the timely payment for construction services
240	by a public entity under this act.
241	(2) If a public entity disputes a portion of a payment
242	request, the undisputed portion must be timely paid in
243	accordance with subsection (1).
244	(3) When a vendor receives payment from a public entity
245	for labor, services, or materials furnished by subcontractors
246	and suppliers hired by the vendor, the vendor shall remit
247	payment due to those subcontractors and suppliers within 10 days
248	after the vendor's receipt of payment. When a subcontractor
249	receives payment from a vendor for labor, services, or materials
250	furnished by subcontractors and suppliers hired by the
251	subcontractor, the subcontractor shall remit payment due to
252	those subcontractors and suppliers within 10 days after the
253	subcontractor's receipt of payment. This subsection does not
254	prohibit a vendor or subcontractor from disputing, pursuant to
255	the terms of the relevant contract, all or any portion of a
256	payment alleged to be due to another party. If such a dispute
257	occurs, the vendor or subcontractor may withhold the disputed
258	portion of any such payment if the vendor or subcontractor
259	notifies the party whose payment is disputed, in writing, of the
260	amount in dispute and the actions required to cure the dispute.
261	The vendor or subcontractor must pay all undisputed amounts due
262	within the time limits imposed by this section.
263	(4) All payments due under this section and not made
264	within the time periods specified by this section shall bear
265	interest at the rate of 1 percent per month, or the rate
266	specified by contract, whichever is greater.
267	Section 8. Section 255.074, Florida Statutes, is created
268	to read:
269	255.074 Procedures for calculation of payment due dates.--
270	(1) Each public entity shall establish procedures whereby
271	each payment request received by the public entity is marked as
272	received on the date on which it is delivered to an agent or
273	employee of the public entity or of a facility or office of the
274	public entity.
275	(2) If the terms under which a purchase is made allow for
276	partial deliveries and a payment request is submitted for a
277	partial delivery, the time for payment for the partial delivery
278	must be calculated from the time of the partial delivery and the
279	submission of the payment request in the same manner as provided
280	in s. 255.073.
281	(3) The public entity must submit a payment request to the
282	Chief Financial Officer for payment no more than 25 days after
283	receipt of the payment request.
284	Section 9. Section 255.075, Florida Statutes, is created
285	to read:
286	255.075 Mandatory interest.--A contract between a public
287	entity and a vendor or a provider of construction services may
288	not prohibit the collection of late payment interest charges
289	allowable under ss. 255.072-255.078.
290	Section 10. Section 255.076, Florida Statutes, is created
291	to read:
292	255.076 Improper payment request; resolution of
293	disputes.--
294	(1) If a vendor submits an improper payment request, the
295	public entity shall, within 10 days after receiving the improper
296	payment request, notify the vendor that the payment request is
297	improper and indicate what corrective action on the part of the
298	vendor is needed to make the payment request proper.
299	(2) If a dispute occurs between a vendor and a public
300	entity concerning payment of a payment request, the dispute must
301	be resolved as provided in this section. Each public entity
302	shall establish a dispute resolution procedure to be followed by
303	the public entity if such a dispute occurs. The procedure must
304	provide that proceedings to resolve the dispute must commence no
305	later than 45 days after the date on which the public entity
306	received the payment request and must conclude by final decision
307	of the public entity no later than 60 days after the date on
308	which the public entity received the payment request. Such
309	procedures are not subject to chapter 120 and do not constitute
310	an administrative proceeding that prohibits a court from
311	deciding de novo any action arising out of the dispute. If the
312	dispute is resolved in favor of the public entity, interest
313	charges begin to accrue 15 days after the public entity's final
314	decision. If the dispute is resolved in favor of the vendor,
315	interest begins to accrue as of the original date the payment
316	became due.
317	(3) In an action to recover amounts due under ss. 255.072-
318	255.078, the court shall award court costs and reasonable
319	attorney's fees, including fees incurred through any appeal, to
320	the prevailing party if the court finds that the nonprevailing
321	party withheld any portion of the payment that is the subject of
322	the action without any reasonable basis in law or fact to
323	dispute the prevailing party's claim to those amounts.
324	Section 11. Section 255.077, Florida Statutes, is created
325	to read:
326	255.077 Project closeout and payment of retainage.--
327	(1) A public entity must present to the vendor a final
328	punch list of all items required to render complete,
329	satisfactory, and acceptable the construction services purchased
330	within 30 days after the earliest of the following:
331	(a) Issuance of a temporary or final certificate of
332	occupancy, if applicable;
333	(b) Substantial completion of the construction services
334	purchased, as defined in the contract; or
335	(c) Beneficial occupancy or use of the structure,
336	building, facility, or improvement that is the subject of the
337	construction services purchased, as defined in the contract.
338	(2) If the purchase relates to construction services on
339	more than one building or structure, the public entity shall
340	prepare a final punch list for each building or structure. The
341	public entity must present to the vendor a final punch list with
342	regard to each building or structure within 30 days after the
343	earliest of the following:
344	(a) Issuance of a temporary or final certificate of
345	occupancy on the particular building or structure, if
346	applicable;
347	(b) Substantial completion of the particular building or
348	structure, as defined in the contract; or
349	(c) Beneficial occupancy or use of the particular
350	structure, building, facility, or improvement as defined in the
351	contract.
352
353	Unless the contract provides otherwise, the public entity shall
354	pay out retainage to the vendor based upon the value of the
355	construction services rendered with regard to that structure,
356	building, facility, or improvement as compared to the total
357	value of the purchase.
358	(3) Upon completion of all items on the final punch list
359	or within 30 days after issuance of the punch list, whichever
360	occurs sooner, the vendor shall submit a payment request for the
361	appropriate amount of retainage. The owner may withhold up to
362	150 percent of the cost to complete any incomplete final punch
363	list items. Thereafter, ss. 255.072-255.076 apply to the payment
364	of any payment request for retainage.
365	(4) If the public entity fails to present to the vendor a
366	final punch list within the time period provided in subsection
367	(1) or subsection (2), the project is considered to be complete
368	and the vendor shall submit a payment request for the
369	appropriate amount of retainage. Thereafter, ss. 255.072-255.076
370	apply to the payment of any payment request for retainage.
371	(5) All items that require correction under the contract
372	that are identified subsequent to preparation and delivery of
373	the final punch list must be considered warranty items or make-
374	good items, and such items have no effect on the final payment
375	of retainage provided in this section.
376	Section 12. Section 255.078, Florida Statutes, is created
377	to read:
378	255.078 Public construction retainage.--
379	(1) From the commencement of a public construction project
380	that is subject to ss. 255.072-255.078 until 50 percent of the
381	contract value has been earned, a public entity may not withhold
382	as retainage more than 10 percent of each progress payment to
383	the vendor. When 50 percent of the contract value has been
384	earned, the vendor may submit a payment request to the public
385	entity for up to one-half of the retainage withheld up to that
386	time.
387	(2) After 50 percent of the contract value has been
388	earned, the public entity may not withhold as retainage more
389	than 5 percent of each progress payment to the vendor. However,
390	the vendor may withhold retainage from payments to its
391	subcontractors at a rate higher than 5 percent. The specific
392	amount to be withheld must be determined on a case-by-case basis
393	and must be based on the vendor's assessment of the
394	subcontractor's past performance, the likelihood that such
395	performance will continue, and the vendor's ability to rely on
396	other safeguards. The vendor shall notify the subcontractor, in
397	writing, of its determination to withhold more than 5 percent of
398	the progress payment and the reasons for making that
399	determination.
400	(3) This section does not require the payment or release
401	of amounts that are the subject of a good faith dispute.
402	(4) Sections 255.072-255.076 apply to the payment of any
403	payment request for retainage.
404	Section 13. Paragraph (a) of subsection (2) of section
405	255.05, Florida Statutes, is amended, and subsections (10),
406	(11), (12), and (13) are added to said section, to read:
407	255.05 Bond of contractor constructing public buildings;
408	form; action by materialmen.--
409	(2)(a)1. If a claimant is no longer furnishing labor,
410	services, or materials on a project, a contractor or the
411	contractor's agent or attorney may elect to shorten the
412	prescribed time in this paragraph within which an action to
413	enforce any claim against a payment bond provided pursuant to
414	this section may be commenced by recording in the clerk's office
415	a notice in substantially the following form:
416
417	NOTICE OF CONTEST OF CLAIM
418	AGAINST PAYMENT BOND
419
420	To: . . . (Name and address of claimant) . . .
421
422	You are notified that the undersigned contests your notice
423	of nonpayment, dated ____________, ________, and served on the
424	undersigned on ____________, ________, and that the time within
425	which you may file suit to enforce your claim is limited to 60
426	days after the date of service of this notice.
427
428	DATED on ____________, ________.
429
430
431	Signed: . . . (Contractor or Attorney) . . .
432
433	The claim of any claimant upon whom such notice is served and
434	who fails to institute a suit to enforce his or her claim
435	against the payment bond within 60 days after service of such
436	notice shall be extinguished automatically. The clerk shall mail
437	a copy of the notice of contest to the claimant at the address
438	shown in the notice of nonpayment or most recent amendment
439	thereto and shall certify to such service on the face of such
440	notice and record the notice. Service is complete upon mailing.
441	2. A claimant, except a laborer, who is not in privity
442	with the contractor shall, before commencing or not later than
443	45 days after commencing to furnish labor, materials, or
444	supplies for the prosecution of the work, furnish the contractor
445	with a notice that he or she intends to look to the bond for
446	protection. A claimant who is not in privity with the contractor
447	and who has not received payment for his or her labor,
448	materials, or supplies shall deliver to the contractor and to
449	the surety written notice of the performance of the labor or
450	delivery of the materials or supplies and of the nonpayment. The
451	notice of nonpayment may be served at any time during the
452	progress of the work or thereafter but not before 45 days after
453	the first furnishing of labor, services, or materials, and not
454	later than 90 days after the final furnishing of the labor,
455	services, or materials by the claimant or, with respect to
456	rental equipment, not later than 90 days after the date that the
457	rental equipment was last on the job site available for use. Any
458	notice of nonpayment served by a claimant who is not in privity
459	with the contractor that includes sums for retainage must
460	specify the portion of the amount claimed for retainage.No
461	action for the labor, materials, or supplies may be instituted
462	against the contractor or the surety unless both notices have
463	been given. Notices required or permitted under this section may
464	be served in accordance with s. 713.18. An action, except for an
465	action exclusively for recovery of retainage, must be instituted
466	against the contractor or the surety on the payment bond or the
467	payment provisions of a combined payment and performance bond
468	within 1 year after the performance of the labor or completion
469	of delivery of the materials or supplies. An action exclusively
470	for recovery of retainage must be instituted against the
471	contractor or the surety within 1 year after the performance of
472	the labor or completion of delivery of the materials or
473	supplies, or within 90 days after receipt of final payment (or
474	the payment estimate containing the owner's final reconciliation
475	of quantities if no further payment is earned and due as a
476	result of deductive adjustments) by the contractor or surety,
477	whichever comes last. A claimant may not waive in advance his or
478	her right to bring an action under the bond against the surety.
479	In any action brought to enforce a claim against a payment bond
480	under this section, the prevailing party is entitled to recover
481	a reasonable fee for the services of his or her attorney for
482	trial and appeal or for arbitration, in an amount to be
483	determined by the court, which fee must be taxed as part of the
484	prevailing party's costs, as allowed in equitable actions. The
485	time periods for service of a notice of nonpayment or for
486	bringing an action against a contractor or a surety shall be
487	measured from the last day of furnishing labor, services, or
488	materials by the claimant and shall not be measured by other
489	standards, such as the issuance of a certificate of occupancy or
490	the issuance of a certificate of substantial completion.
491	(10) Notwithstanding any other provision of law to the
492	contrary, a claimant may not institute an action for the sole
493	purpose of recovery of retainage against the contractor or
494	against the surety issuing a payment or performance bond
495	pursuant to this section until:
496	(a) The public entity has paid out that retainage to the
497	contractor and the time provided under ss. 218.70-218.76 or ss.
498	255.072-255.078 for payment of that retainage to the claimant
499	has expired; or
500	(b) The claimant has completed all work under its contract
501	and, if the contractor submitted its final payment request in
502	accordance with this act, 60 days have passed since the owner's
503	receipt of the contractor's final payment request.
504	(11) An owner shall furnish in writing to a claimant who
505	has provided labor, services, or materials to a project, within
506	5 business days after receipt of a written request from that
507	claimant, the following information:
508	(a) The dates of all payment requests received by the
509	owner from the contractor.
510	(b) The dates of all payments made by the owner to the
511	contractor.
512	(c) Whether the owner has received the contractor's final
513	payment request and, if so, the date the final payment request
514	was submitted by the contractor to the owner.
515	(12) The owner has a duty to notify all claimants of
516	record for the project, in writing, that the final payment has
517	been made to the contractor or, if no further payment is earned
518	by the contractor, a statement that no further payment will be
519	made voluntarily by the owner to the contractor and the date on
520	which the owner provided the contractor with the owner's final
521	reconciliation of quantities. The notice to claimants must be
522	made in writing within 5 days after the date final payment is
523	made or the final reconciliation of quantities is given.
524	(13) An owner who fails to furnish any information
525	required by this section is liable directly to a claimant for
526	damages sustained as a result of the failure to timely provide
527	the information, plus costs, interest, and attorney's fees.
528	Section 14. This act shall take effect July 1, 2003.