Senate Bill sb0632c1

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    Florida Senate - 2005                            CS for SB 632

    By the Committee on Community Affairs; and Senators Bennett
    and King




    578-1913-05

  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 an award of court costs and attorney's

29         fees; providing for the resolution of disputes;

30         providing for project closeout and payment of

31         retainage; providing that ss. 255.072-255.076,

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 1         F.S., apply to the payment of any payment

 2         request for retainage; providing exceptions;

 3         amending s. 255.05, F.S.; providing

 4         requirements for certain notices of nonpayment

 5         served by a claimant who is not in privity with

 6         the contractor; providing limitations on a

 7         claimant's institution of certain actions

 8         against a contractor or surety; amending s.

 9         95.11, F.S., to conform a cross-reference;

10         providing that specified sections of the act do

11         not apply to certain pending contracts and

12         projects; providing an effective date.

13  

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

15  

16         Section 1.  Section 218.70, Florida Statutes, is

17  amended to read:

18         218.70  Short title.--This part may be cited as the

19  "Local Government Florida Prompt Payment Act."

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

21  218.72, Florida Statutes, are amended, and subsection (10) is

22  added to that section, to read:

23         218.72  Definitions.--As used in this part:

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

25  municipal government, school board, school district,

26  authority, special taxing district, other political

27  subdivision, or any office, board, bureau, commission,

28  department, branch, division, or institution thereof or any

29  project supported by county or municipal funds.

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

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

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 1  property directly to a local governmental entity. The term

 2  includes any person who provides waste-hauling services to

 3  residents or businesses located within the boundaries of a

 4  local government pursuant to a contract or local ordinance.

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

 6  and materials provided in connection with the construction,

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

 8  improvements to real property that require a license under

 9  parts I and II of chapter 489.

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

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

12  governmental entity to provide construction services.

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

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

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

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

17         218.735  Timely payment for purchases of construction

18  services.--

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

20  governmental entity for labor, services, or materials

21  furnished by subcontractors and suppliers hired by the

22  contractor, the contractor shall remit payment due to those

23  subcontractors and suppliers within 10 15 days after the

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

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

26  furnished by subcontractors and suppliers hired by the

27  subcontractor, the subcontractor shall remit payment due to

28  those subcontractors and suppliers within 7 15 days after the

29  subcontractor's receipt of payment. Nothing herein shall

30  prohibit a contractor or subcontractor from disputing,

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

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

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

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

 4  contractor or subcontractor notifies the party whose payment

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

 6  actions required to cure the dispute. The contractor or

 7  subcontractor must pay all undisputed amounts due within the

 8  time limits imposed by this section.

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

10  a local governmental entity and a contractor must provide for

11  the development of a list of items required to render

12  complete, satisfactory, and acceptable the construction

13  services purchased by the local governmental entity. The

14  contract must specify the process for the development of the

15  list, including responsibilities of the local governmental

16  entity and the contractor in developing and reviewing the list

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

18         1.  For construction projects having an estimated cost

19  of less than $10 million, within 30 calendar days after

20  reaching substantial completion of the construction services

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

22  the contract, upon reaching beneficial occupancy or use; or

23         2.  For construction projects having an estimated cost

24  of $10 million or more, within 30 calendar days, unless

25  otherwise extended by contract not to exceed 60 calendar days,

26  after reaching substantial completion of the construction

27  services purchased as defined in the contract, or, if not

28  defined in the contract, upon reaching beneficial occupancy or

29  use.

30         (b)  If the contract between the local governmental

31  entity and the contractor relates to the purchase of

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 1  construction services on more than one building or structure,

 2  or involves a multiphased project, the contract must provide

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

 4  complete, satisfactory, and acceptable all the construction

 5  services purchased pursuant to the contract for each building,

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

 7  provided in paragraph (a).

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

 9  pending items not yet completed on the list developed pursuant

10  to this subsection does not alter the responsibility of the

11  contractor to complete all the construction services purchased

12  pursuant to the contract.

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

14  contractor may submit a payment request for all remaining

15  retainage withheld by the local governmental entity pursuant

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

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

18  pursuant to the contract, the local governmental entity may

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

20  the total costs to complete such items.

21         (e)  All items that require correction under the

22  contract and that are identified after the preparation and

23  delivery of the list remain the obligation of the contractor

24  as defined by the contract.

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

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

27  contract between the contractor and its subcontractors and

28  suppliers.

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

30  entity or a contractor to secure payment of insurance premiums

31  under a consolidated insurance program or series of insurance

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 1  policies issued to a local governmental entity or a contractor

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

 3  retainage as provided in this section may not be delayed

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

 5  contractor's insurance provider.

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

 7  with its responsibilities to develop the list required under

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

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

10  contractor may submit a payment request for all remaining

11  retainage withheld by the local governmental entity pursuant

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

13  process any payment request for retainage if the contractor

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

15  governmental entity in the development of the list or failed

16  to perform its contractual responsibilities, if any, with

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

18  applies.

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

20  services, a local governmental entity may withhold from each

21  progress payment made to the contractor an amount not

22  exceeding 10 percent of the payment as retainage until

23  50-percent completion of such services.

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

25  services purchased pursuant to the contract, the local

26  governmental entity must reduce to 5 percent the amount of

27  retainage withheld from each subsequent progress payment made

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

29  "50-percent completion" has the meaning set forth in the

30  contract between the local governmental entity and the

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

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 1  which the local governmental entity has expended 50 percent of

 2  the total cost of the construction services purchased as

 3  identified in the contract together with all costs associated

 4  with existing change orders and other additions or

 5  modifications to the construction services provided for in the

 6  contract. However, notwithstanding this subsection, a

 7  municipality having a population of 25,000 or fewer, or a

 8  county having a population of 100,000 or fewer, may withhold

 9  retainage in an amount not exceeding 10 percent of each

10  progress payment made to the contractor until final completion

11  and acceptance of the project by the local governmental

12  entity.

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

14  services purchased pursuant to the contract, the contractor

15  may elect to withhold retainage from payments to its

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

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

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

19  subcontractor's past performance, the likelihood that such

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

21  rely on other safeguards. The contractor shall notify the

22  subcontractor, in writing, of its determination to withhold

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

24  for making that determination, and the contractor may not

25  request the release of such retained funds from the local

26  governmental entity.

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

28  services purchased pursuant to the contract, the contractor

29  may present to the local governmental entity a payment request

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

31  governmental entity. The local governmental entity shall

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 1  promptly make payment to the contractor, unless the local

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

 3  for withholding the payment of retainage. If the local

 4  governmental entity makes payment of retainage to the

 5  contractor under this paragraph which is attributable to the

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

 7  subcontractors or suppliers, the contractor shall timely remit

 8  payment of such retainage to those subcontractors and

 9  suppliers.

10         (e)  This section does not prohibit a local

11  governmental entity from withholding retainage at a rate less

12  than 10 percent of each progress payment, from incrementally

13  reducing the rate of retainage pursuant to a schedule provided

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

15  portion of any retainage withheld by the local governmental

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

17  materials supplied by the contractor or by one or more

18  subcontractors or suppliers. If a local governmental entity

19  makes any payment of retainage to the contractor which is

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

21  one or more subcontractors or suppliers, the contractor shall

22  timely remit payment of such retainage to those subcontractors

23  and suppliers.

24         (f)  This section does not require the local

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

26  subject of a good-faith dispute, the subject of a claim

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

28  claim or demand by the local governmental entity or

29  contractor.

30  

31  

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

 2  payment of payment requests apply to any payment request for

 3  retainage made pursuant to this section.

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

 5  services purchased by a local governmental entity which are

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

 7  subject to federal grantor laws and regulations or

 8  requirements that are contrary to any provision of the Local

 9  Government Prompt Payment Act.

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

11  services purchased by a local governmental entity if the total

12  cost of the construction services purchased as identified in

13  the contract is $200,000 or less.

14         Section 4.  Section 255.0705, Florida Statutes, is

15  created to read:

16         255.0705  Short title.--Sections 255.0705-255.078 may

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

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

19  Florida Statutes, are amended to read:

20         255.071  Payment of subcontractors, sub-subcontractors,

21  materialmen, and suppliers on construction contracts for

22  public projects.--

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

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

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

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

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

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

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

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

31  

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

 2  subsection (4).

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

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

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

 6  building or public work improvements to real property may file

 7  a verified complaint alleging:

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

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

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

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

12  were provided in accordance with the contract.

13         (c)  The amount of the contract price.

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

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

16  contract and the amount thereof that is undisputed.

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

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

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

20  were received.

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

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

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

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

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

26  prior to the date the complaint was filed.

27         Section 6.  Section 255.072, Florida Statutes, is

28  created to read:

29         255.072  Definitions.--As used in ss. 255.073-255.078,

30  the term:

31  

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

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

 3  entity.

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

 5  and materials provided in connection with the construction,

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

 7  improvements to real property. The term "construction

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

 9  Department of Transportation.

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

11  directly with a public entity to provide construction

12  services.

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

14  construction services which conforms with all statutory

15  requirements and with all requirements specified by the public

16  entity to which the payment request is submitted.

17         (5)  "Public entity" means the state, or any office,

18  board, bureau, commission, department, branch, division, or

19  institution thereof, but does not include a local governmental

20  entity as defined in s. 218.72.

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

22  services.

23         Section 7.  Section 255.073, Florida Statutes, is

24  created to read:

25         255.073  Timely payment for purchases of construction

26  services.--

27         (1)  Except as otherwise provided in ss.

28  255.072-255.078, s. 215.422 governs the timely payment for

29  construction services by a public entity.

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

31  request, the undisputed portion must be timely paid.

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

 2  entity for labor, services, or materials furnished by

 3  subcontractors and suppliers hired by the contractor, the

 4  contractor shall remit payment due to those subcontractors and

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

 6  payment. When a subcontractor receives payment from a

 7  contractor for labor, services, or materials furnished by

 8  subcontractors and suppliers hired by the subcontractor, the

 9  subcontractor shall remit payment due to those subcontractors

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

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

12  subcontractor from disputing, pursuant to the terms of the

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

14  be due to another party if the contractor or subcontractor

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

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

17  dispute. The contractor or subcontractor must pay all

18  undisputed amounts due within the time limits imposed by this

19  subsection.

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

21  services and not made within the applicable time limits shall

22  bear interest at the rate specified in s. 215.422. After July

23  1, 2006, such payments shall bear interest at the rate of 1

24  percent per month, to the extent that the Chief Financial

25  Officer's replacement project for the state's accounting and

26  cash management systems is operational for the particular

27  affected public entity. After January 1, 2007, all such

28  payments due from public entity shall bear interest at the

29  rate of 1 percent per month.

30         Section 8.  Section 255.074, Florida Statutes, is

31  created to read:

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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 20 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  Award of court costs and attorney's fees.--In

25  an action to recover amounts due for construction services

26  purchased by a public entity, the court shall award court

27  costs and reasonable attorney's fees, including fees incurred

28  through any appeal, to the prevailing party, if the court

29  finds that the nonprevailing party withheld any portion of the

30  payment that is the subject of the action without any

31  

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 1  reasonable basis in law or fact to dispute the prevailing

 2  party's claim to those amounts.

 3         Section 11.  Section 255.077, Florida Statutes, is

 4  created to read:

 5         255.077  Project closeout and payment of retainage.--

 6         (1)  Each contract for construction services between a

 7  public entity and a contractor must provide for the

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

 9  satisfactory, and acceptable the construction services

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

11  process for the development of the list, including

12  responsibilities of the public entity and the contractor in

13  developing and reviewing the list and a reasonable time for

14  developing the list, as follows:

15         (a)  For construction projects having an estimated cost

16  of less than $10 million, within 30 calendar days after

17  reaching substantial completion of the construction services

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

19  the contract, upon reaching beneficial occupancy or use; or

20         (b)  For construction projects having an estimated cost

21  of $10 million or more, within 30 calendar days, unless

22  otherwise extended by contract not to exceed 60 calendar days,

23  after reaching substantial completion of the construction

24  services purchased as defined in the contract, or, if not

25  defined in the contract, upon reaching beneficial occupancy or

26  use.

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

28  contractor relates to the purchase of construction services on

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

30  project, the contract must provide for the development of a

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

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 1  acceptable all the construction services purchased pursuant to

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

 3  project within the time limitations provided in subsection

 4  (1).

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

 6  pending items not yet completed on the list developed pursuant

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

 8  responsibility of the contractor to complete all the

 9  construction services purchased pursuant to the contract.

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

11  contractor may submit a payment request for all remaining

12  retainage withheld by the public entity pursuant to s.

13  255.078. If a good-faith dispute exists as to whether one or

14  more items identified on the list have been completed pursuant

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

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

17  complete such items.

18         (5)  All items that require correction under the

19  contract and that are identified after the preparation and

20  delivery of the list remain the obligation of the contractor

21  as defined by the contract.

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

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

24  contract between the contractor and its subcontractors and

25  suppliers.

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

27  contractor to secure payment of insurance premiums under a

28  consolidated insurance program or series of insurance policies

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

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

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

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

 2  provider.

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

 4  responsibilities to develop the list required under subsection

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

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

 7  may submit a payment request for all remaining retainage

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

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

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

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

12  list or failed to perform its contractual responsibilities, if

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

14  255.078(6) applies.

15         Section 12.  Section 255.078, Florida Statutes, is

16  created to read:

17         255.078  Public construction retainage.--

18         (1)  With regard to any contract for construction

19  services, a public entity may withhold from each progress

20  payment made to the contractor an amount not exceeding 10

21  percent of the payment as retainage until 50-percent

22  completion of such services.

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

24  services purchased pursuant to the contract, the public entity

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

26  each subsequent progress payment made to the contractor. For

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

28  the meaning set forth in the contract between the public

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

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

31  of the total cost of the construction services purchased as

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 1  identified in the contract together with all costs associated

 2  with existing change orders and other additions or

 3  modifications to the construction services provided for in the

 4  contract.

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

 6  services purchased pursuant to the contract, the contractor

 7  may elect to withhold retainage from payments to its

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

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

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

11  subcontractor's past performance, the likelihood that such

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

13  rely on other safeguards. The contractor shall notify the

14  subcontractor, in writing, of its determination to withhold

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

16  for making that determination, and the contractor may not

17  request the release of such retained funds from the public

18  entity.

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

20  services purchased pursuant to the contract, the contractor

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

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

23  public entity shall promptly make payment to the contractor,

24  unless the public entity has grounds, pursuant to subsection

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

26  entity makes payment of retainage to the contractor under this

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

28  materials supplied by one or more subcontractors or suppliers,

29  the contractor shall timely remit payment of such retainage to

30  those subcontractors and suppliers.

31  

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




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

 2  public entity from withholding retainage at a rate less than

 3  10 percent of each progress payment, from incrementally

 4  reducing the rate of retainage pursuant to a schedule provided

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

 6  portion of any retainage withheld by the public entity which

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

 8  by the contractor or by one or more subcontractors or

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

10  to the contractor which is attributable to the labor,

11  services, or materials supplied by one or more subcontractors

12  or suppliers, the contractor shall timely remit payment of

13  such retainage to those subcontractors and suppliers.

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

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

16  subject of a good-faith dispute, the subject of a claim

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

18  claim or demand by the public entity or contractor.

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

20  request apply regardless of whether the payment request is

21  for, or includes, retainage.

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

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

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

25  federal grantor laws and regulations or requirements that are

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

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

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

29  construction services purchased as identified in the contract

30  is $200,000 or less.

31  

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1         Section 13.  Paragraph (a) of subsection (2) of section

 2  255.05, Florida Statutes, is amended and subsection (10) is

 3  added to that section, to read:

 4         255.05  Bond of contractor constructing public

 5  buildings; form; action by materialmen.--

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

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

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

 9  prescribed time in this paragraph within which an action to

10  enforce any claim against a payment bond provided pursuant to

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

12  office a notice in substantially the following form:

13  

14                    NOTICE OF CONTEST OF CLAIM

15                       AGAINST PAYMENT BOND

16  

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

18  

19         You are notified that the undersigned contests your

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

21  on the undersigned on ............, ........, and that the

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

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

24  

25         DATED on ............, .........

26  

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

28  

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

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

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

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1  notice shall be extinguished automatically. The clerk shall

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

 3  address shown in the notice of nonpayment or most recent

 4  amendment thereto and shall certify to such service on the

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

 6  upon mailing.

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

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

 9  45 days after commencing to furnish labor, materials, or

10  supplies for the prosecution of the work, furnish the

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

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

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

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

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

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

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

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

19  45 days after the first furnishing of labor, services, or

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

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

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

23  90 days after the date that the rental equipment was last on

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

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

26  which includes sums for retainage must specify the portion of

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

28  materials, or supplies may be instituted against the

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

30  Notices required or permitted under this section may be served

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

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1  exclusively for recovery of retainage, must be instituted

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

 3  the payment provisions of a combined payment and performance

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

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

 6  exclusively for recovery of retainage must be instituted

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

 8  performance of the labor or completion of delivery of the

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

10  final payment (or the payment estimate containing the owner's

11  final reconciliation of quantities if no further payment is

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

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

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

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

16  claim against a payment bond under this section, the

17  prevailing party is entitled to recover a reasonable fee for

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

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

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

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

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

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

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

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

26  the issuance of a certificate of occupancy or the issuance of

27  a certificate of substantial completion.

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

29  retainage, must be instituted against the contractor or the

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

31  combined payment and performance bond within 1 year after the

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1  performance of the labor or completion of delivery of the

 2  materials or supplies. An action for recovery of retainage

 3  must be instituted against the contractor or the surety within

 4  1 year after the performance of the labor or completion of

 5  delivery of the materials or supplies; however, such an action

 6  may not be instituted until one of the following conditions is

 7  satisfied:

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

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

10  255.073(3) or s. 218.735(6) for payment of that retainage to

11  the claimant has expired;

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

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

14  its final payment request to the public entity;

15         (c)  One hundred and sixty days have passed since

16  reaching substantial completion of the construction services

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

18  the contract, since reaching beneficial occupancy or use of

19  the project; or

20         (d)  The claimant has asked the contractor, in writing,

21  for any of the following information and the contractor has

22  failed to respond to the claimant's request, in writing,

23  within 10 days after receipt of the request:

24         1.  Whether the project has reached substantial

25  completion, as that term is defined in the contract, or if not

26  defined in the contract, if beneficial occupancy or use of the

27  project has occurred.

28         2.  Whether the contractor has received payment of the

29  claimant's retainage, and if so, the date the retainage was

30  received by the contractor.

31  

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1         3.  Whether the contractor has sent its final payment

 2  request to the public entity, and if so, the date on which the

 3  final payment request was sent.

 4  

 5  If none of the conditions described in paragraphs (a) through

 6  (d) is satisfied and an action for recovery of retainage

 7  therefore cannot be instituted within the 1-year limitation

 8  period set forth in this subsection, this limitation period

 9  shall be extended until 120 days after one of these conditions

10  is satisfied.

11         Section 14.  Paragraph (b) of subsection (2) of section

12  95.11, Florida Statutes, is amended to read:

13         95.11  Limitations other than for the recovery of real

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

15  shall be commenced as follows:

16         (2)  WITHIN FIVE YEARS.--

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

18  obligation, or liability founded on a written instrument,

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

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

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

22         Section 15.  Neither the amendments to sections 95.11,

23  218.70, 218.72, 218.735, and 255.071, Florida Statutes, and

24  subsection (2) of section 255.05, Florida Statutes, as

25  provided in this act, nor subsection (10) of section 255.05,

26  Florida Statutes, and section 255.078, Florida Statutes, as

27  created by this act, applies to any existing construction

28  contract pending approval by a local governmental entity or

29  public entity, or to any project advertised for bid by the

30  local government entity or public entity, on or before October

31  1, 2005.

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    Florida Senate - 2005                            CS for SB 632
    578-1913-05




 1         Section 16.  This act shall take effect October 1,

 2  2005.

 3  

 4          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 5                         Senate Bill 632

 6                                 

 7  The CS eliminates the stated rational for retaining 10 percent
    of funds until 50 percent completion of the construction
 8  project.

 9  The CS clarifies that a local government or other public
    entity does not need to release any retainage that is part of
10  a "claim" rather than an "action" against the contractor.

11  The CS prohibits a claimant(a subcontractor or supplier) from
    initiating an action for the sole purpose of recovery of
12  retainage against the contractor or against the surety
    providing payment or performance bond until after the timely
13  payment for purposes of construction services has expired.
    Similarly, the CS provides that such claims cannot be pursued
14  until 160 days following substantial completion of the
    construction services, or the claimant has unsuccessfully
15  requested certain information in writing from the contractor.

16  The CS implements several technical corrections to comply with
    statutory construction requirements.
17  

18  

19  

20  

21  

22  

23  

24  

25  

26  

27  

28  

29  

30  

31  

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