CS/HB 1157

1	A bill to be entitled
2	An act relating to the Local Government Prompt Payment
3	Act; amending s. 218.72, F.S.; revising definitions;
4	amending s. 218.735, F.S.; revising provisions relating to
5	the timely payment for purchases of construction services;
6	requiring that a dispute be resolved according to
7	procedures in the contract; prohibiting the assessment of
8	damages against a contractor if the list of items
9	remaining to complete is not timely provided to the
10	contractor; amending s. 218.76, F.S.; revising provisions
11	relating to the resolution of disputes concerning an
12	improper payment request or invoice; providing that a
13	local governmental entity waives its objection in a
14	payment dispute if it fails to commence the dispute
15	resolution procedure within the time required; providing
16	an effective date.
17
18	Be It Enacted by the Legislature of the State of Florida:
19
20	Section 1.  Section 218.72, Florida Statutes, is amended to
21	read:
22	218.72  Definitions.-As used in this part, the term:
23	(1)(9)  "Agent" means the project architect, project
24	engineer, or any other agency or person acting on behalf of the
25	local governmental entity. The agent who is required to review
26	invoices or payment requests must be identified in accordance
27	with s. 218.735(1).
28	(2)(7)  "Construction services" means all labor, services,
29	and materials provided in connection with the construction,
30	alteration, repair, demolition, reconstruction, or any other
31	improvements to real property.
32	(3)(10)  "Contractor" or "provider of construction
33	services" means the any person who contracts directly with a
34	local governmental entity to provide construction services.
35	(4)(3)  "County" means a political subdivision of the state
36	established pursuant to s. 1, Art. VIII of the State
37	Constitution.
38	(5)(2)  "Local governmental entity" means a county or
39	municipal government, school board, school district, authority,
40	special taxing district, other political subdivision, or any
41	office, board, bureau, commission, department, branch, division,
42	or institution thereof.
43	(6)(4)  "Municipality" means a municipality created
44	pursuant to general or special law and metropolitan and
45	consolidated governments as provided in s. 6(e) and (f), Art.
46	VIII of the State Constitution.
47	(7)(8)  "Payment request" means a request for payment for
48	construction services which conforms with all statutory
49	requirements and with all requirements specified by the local
50	governmental entity to which the payment request is submitted.
51	Such requirements must be included in the contract for the
52	project for which payment is requested.
53	(8)(1)  "Proper invoice" means an invoice that which
54	conforms with all statutory requirements and with all
55	requirements that have been specified by the local governmental
56	entity to which the invoice is submitted. Such requirements must
57	be included in the contract for the project for which the
58	invoice is submitted.
59	(9)(5)  "Purchase" means the purchase of goods, services,
60	or construction services; the purchase or lease of personal
61	property; or the lease of real property by a local governmental
62	entity.
63	(10)(6)  "Vendor" means any person who sells goods or
64	services, sells or leases personal property, or leases real
65	property directly to a local governmental entity. The term
66	includes any person who provides waste hauling services to
67	residents or businesses located within the boundaries of a local
68	government pursuant to a contract or local ordinance.
69	Section 2.  Subsections (1) through (7) of section 218.735,
70	Florida Statutes, are amended to read:
71	218.735  Timely payment for purchases of construction
72	services.-
73	(1)  The due date for payment for the purchase of
74	construction services by a local governmental entity is
75	determined as follows:
76	(a)  If an agent must approve the payment request or
77	invoice before prior to the payment request or invoice is being
78	submitted to the local governmental entity, payment is due 25
79	business days after the date on which the payment request or
80	invoice is stamped as received as provided in s. 218.74(1). The
81	contractor may send the local government an overdue notice. If
82	the payment request or invoice is not rejected within 2 business
83	days after delivery of the overdue notice, the payment request
84	or invoice shall be deemed accepted, except for any portion of
85	the payment request or invoice that is fraudulent or misleading.
86	(b)  If an agent need not approve the payment request or
87	invoice which is submitted by the contractor, payment is due 20
88	business days after the date on which the payment request or
89	invoice is stamped as received as provided in s. 218.74(1).
90
91	A local governmental entity shall identify the agent or employee
92	of the local governmental entity, or the facility or office, to
93	which the contractor may submit its payment request or invoice.
94	This requirement shall be included in the contract between the
95	local governmental entity and contractor, or shall be provided
96	by the local governmental entity through a separate written
97	notice, as required under the contract, no later than 10 days
98	after the contract award. A contractor's submission of a payment
99	request or invoice to the identified agent, employee, facility,
100	or office of the local governmental entity shall be stamped as
101	received as provided in s. 218.74(1) and shall commence the time
102	periods for payment or rejection of a payment request or invoice
103	as provided in this subsection and subsection (2).
104	(2)  If a payment request or invoice does not meet the
105	contract requirements, the local governmental entity must may
106	reject the payment request or invoice within 20 business days
107	after the date on which the payment request or invoice is
108	stamped as received as provided in s. 218.74(1). The rejection
109	must be written and must specify the deficiency in the payment
110	request or invoice and the action necessary to make the payment
111	request or invoice proper.
112	(3)  If a payment request or an invoice is rejected under
113	subsection (2) and the contractor submits a corrected payment
114	request or invoice that which corrects the deficiency specified
115	in writing by the local governmental entity, the corrected
116	payment request or invoice must be paid or rejected on the later
117	of:
118	(a)  Ten business days after the date the corrected payment
119	request or invoice is stamped as received as provided in s.
120	218.74(1); or
121	(b)  If the local governmental entity governing body is
122	required by ordinance, charter, or other law to approve or
123	reject the corrected payment request or invoice, the first
124	business day after the next regularly scheduled meeting of the
125	local governmental entity governing body held after the
126	corrected payment request or invoice is stamped as received as
127	provided in s. 218.74(1).
128	(4)  If a dispute between the local governmental entity and
129	the contractor cannot be resolved by the procedure in subsection
130	(3), the dispute must be resolved in accordance with the dispute
131	resolution procedure prescribed in the construction contract or
132	in any applicable ordinance, which shall be referenced in the
133	contract. In the absence of a prescribed procedure, the dispute
134	must be resolved by the procedure specified in s. 218.76(2).
135	(5)  If a local governmental entity disputes a portion of a
136	payment request or an invoice, the undisputed portion shall be
137	paid timely, in accordance with subsection (1).
138	(6)  If When a contractor receives payment from a local
139	governmental entity for labor, services, or materials furnished
140	by subcontractors and suppliers hired by the contractor, the
141	contractor must shall remit payment due to those subcontractors
142	and suppliers within 10 days after the contractor's receipt of
143	payment. If When a subcontractor receives payment from a
144	contractor for labor, services, or materials furnished by
145	subcontractors and suppliers hired by the subcontractor, the
146	subcontractor must shall remit payment due to those
147	subcontractors and suppliers within 7 days after the
148	subcontractor's receipt of payment. This subsection does not
149	Nothing herein shall prohibit a contractor or subcontractor from
150	disputing, pursuant to the terms of the relevant contract, all
151	or any portion of a payment alleged to be due to another party
152	if the contractor or subcontractor notifies the party whose
153	payment is disputed, in writing, of the amount in dispute and
154	the actions required to cure the dispute. The contractor or
155	subcontractor must pay all undisputed amounts due within the
156	time limits imposed by this section.
157	(7)(a)  Each contract for construction services between a
158	local governmental entity and a contractor must provide for the
159	development of a single list of items required to render
160	complete, satisfactory, and acceptable the construction services
161	purchased by the local governmental entity.
162	(a)  The contract must specify the process for developing
163	the development of the list, including the responsibilities of
164	the local governmental entity and the contractor in developing
165	and reviewing the list and a reasonable time for developing the
166	list, as follows:
167	1.  For construction projects having an estimated cost of
168	Less than $10 million, within 30 calendar days after reaching
169	substantial completion of the construction services purchased as
170	defined in the contract, or, if not defined in the contract,
171	upon reaching beneficial occupancy or use; or
172	2.  For construction projects having an estimated cost of
173	$10 million or more, within 30 calendar days, or, if unless
174	otherwise extended by contract, up to not to exceed 60 calendar
175	days, after reaching substantial completion of the construction
176	services purchased as defined in the contract, or, if not
177	defined in the contract, upon reaching beneficial occupancy or
178	use.
179
180	The contract must also specify a date for the delivery of the
181	list of items, not to exceed 5 days after the list of items has
182	been developed and reviewed in accordance with the time periods
183	set forth in subparagraphs 1. and 2.
184	(b)  If the contract between the local governmental entity
185	and the contractor relates to the purchase of construction
186	services on more than one building or structure, or involves a
187	multiphased project, the contract must provide for the
188	development of a list of items required to render complete,
189	satisfactory, and acceptable all the construction services
190	purchased pursuant to the contract for each building, structure,
191	or phase of the project within the time limitations provided in
192	paragraph (a).
193	(c)  The final contract completion date must be at least 30
194	days after the delivery of the list of items. If the list is not
195	provided to the contractor by the agreed upon date for delivery
196	of the list, the contract time for completion must be extended
197	by the number of days the local governmental entity exceeded the
198	delivery date. Damages may not be assessed against a contractor
199	for failing to complete a project within the time required by
200	the contract, unless the contractor failed to complete the
201	project within the contract period as extended under this
202	paragraph.
203	(d)(c)  The failure to include any corrective work or
204	pending items not yet completed on the list developed pursuant
205	to this subsection does not alter the responsibility of the
206	contractor to complete all the construction services purchased
207	pursuant to the contract.
208	(e)(d)  Upon completion of all items on the list, the
209	contractor may submit a payment request for all remaining
210	retainage withheld by the local governmental entity pursuant to
211	this section. If a good faith dispute exists as to whether one
212	or more items identified on the list have been completed
213	pursuant to the contract, the local governmental entity may
214	continue to withhold up to an amount not to exceed 150 percent
215	of the total costs to complete such items.
216	(f)(e)  All items that require correction under the
217	contract and that are identified after the preparation and
218	delivery of the list remain the obligation of the contractor as
219	defined by the contract.
220	(g)(f)  Warranty items or items not included in the list of
221	items required under paragraph (a) may not affect the final
222	payment of retainage as provided in this section or as provided
223	in the contract between the contractor and its subcontractors
224	and suppliers.
225	(h)(g)  Retainage may not be held by a local governmental
226	entity or a contractor to secure payment of insurance premiums
227	under a consolidated insurance program or series of insurance
228	policies issued to a local governmental entity or a contractor
229	for a project or group of projects, and the final payment of
230	retainage as provided in this section may not be delayed pending
231	a final audit by the local governmental entity's or contractor's
232	insurance provider.
233	(i)(h)  If a local governmental entity fails to comply with
234	its responsibilities to develop the list required under
235	paragraph (a) or paragraph (b), as defined in the contract,
236	within the time limitations provided in paragraph (a), the
237	contractor may submit a payment request for all remaining
238	retainage withheld by the local governmental entity pursuant to
239	this section and payment of any remaining undisputed contract
240	amount, less any amount withheld pursuant to the contract for
241	incomplete or uncorrected work, must be paid within 20 business
242	days after receipt of a proper invoice or payment request. If
243	the local governmental entity has provided written notice to the
244	contractor specifying the failure of the contractor to meet
245	contract requirements in the development of the list of items to
246	be completed, the local governmental entity need not pay or
247	process any payment request for retainage if the contractor has,
248	in whole or in part, failed to cooperate with the local
249	governmental entity in the development of the list or failed to
250	perform its contractual responsibilities, if any, with regard to
251	the development of the list or if paragraph (8)(f) applies.
252	Section 3.  Section 218.76, Florida Statutes, is amended to
253	read:
254	218.76  Improper payment request or invoice; resolution of
255	disputes.-
256	(1)  If In any case in which an improper payment request or
257	invoice is submitted by a vendor, the local governmental entity
258	shall, within 10 days after the improper payment request or
259	invoice is received by it, notify the vendor, in writing, that
260	the payment request or invoice is improper and indicate what
261	corrective action on the part of the vendor is needed to make
262	the payment request or invoice proper.
263	(2)(a)  If In the event a dispute arises occurs between a
264	vendor and a local governmental entity concerning payment of a
265	payment request or an invoice, the dispute such disagreement
266	shall be finally determined by the local governmental entity
267	pursuant to as provided in this section. Each local governmental
268	entity shall establish a dispute resolution procedure
269	established to be followed by the local governmental entity in
270	cases of such disputes. Such procedure must shall provide that
271	proceedings to resolve the dispute are shall be commenced within
272	not later than 45 days after the date on which the payment
273	request or proper invoice was received by the local governmental
274	entity and shall be concluded by final decision of the local
275	governmental entity within not later than 60 days after the date
276	on which the payment request or proper invoice was received by
277	the local governmental entity. Such procedures are shall not be
278	subject to chapter 120, and do such procedures shall not
279	constitute an administrative proceeding that which prohibits a
280	court from deciding de novo any action arising out of the
281	dispute. If the dispute is resolved in favor of the local
282	governmental entity, then interest charges shall begin to accrue
283	15 days after the local governmental entity's final decision. If
284	the dispute is resolved in favor of the vendor, then interest
285	begins shall begin to accrue as of the original date the payment
286	became due.
287	(b)  If the local governmental entity does not commence the
288	dispute resolution procedure within the time required, a
289	contractor may give written notice to the local governmental
290	entity of the failure to timely commence its dispute resolution
291	procedure. If the local governmental entity fails to commence
292	the dispute resolution procedure within 2 business days after
293	such notice, any amounts resolved in the contractor's favor
294	shall bear mandatory interest, as set forth in s. 218.735(9),
295	from the date the payment request or invoice containing the
296	disputed amounts was submitted to the local governmental entity.
297	If the dispute resolution procedure is not commenced within 2
298	business days after the notice, the objection to the payment
299	request or invoice shall be deemed waived. The waiver of an
300	objection pursuant to this paragraph does not relieve a
301	contractor of its contractual obligations.
302	(3)  In an action to recover amounts due under this part
303	ss. 218.70-218.80, the court shall award court costs and
304	reasonable attorney's fees, including fees incurred through any
305	appeal, to the prevailing party, if the court finds that the
306	nonprevailing party withheld any portion of the payment that is
307	the subject of the action without any reasonable basis in law or
308	fact to dispute the prevailing party's claim to those amounts.
309	This paragraph shall not apply to any litigation commenced
310	before October 1, 2010.
311	Section 4.  This act shall take effect October 1, 2010.

CODING: Words stricken are deletions; words underlined are additions.