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 4 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 or notice to proceed. A contractor's
99	submission of a payment request or invoice to the identified
100	agent, employee, facility, or office of the local governmental
101	entity shall be stamped as received as provided in s. 218.74(1)
102	and shall commence the time periods for payment or rejection of
103	a payment request or invoice as provided in this subsection and
104	subsection (2).
105	(2)  If a payment request or invoice does not meet the
106	contract requirements, the local governmental entity must may
107	reject the payment request or invoice within 20 business days
108	after the date on which the payment request or invoice is
109	stamped as received as provided in s. 218.74(1). The rejection
110	must be written and must specify the deficiency in the payment
111	request or invoice and the action necessary to make the payment
112	request or invoice proper.
113	(3)  If a payment request or an invoice is rejected under
114	subsection (2) and the contractor submits a corrected payment
115	request or invoice that which corrects the deficiency specified
116	in writing by the local governmental entity, the corrected
117	payment request or invoice must be paid or rejected on the later
118	of:
119	(a)  Ten business days after the date the corrected payment
120	request or invoice is stamped as received as provided in s.
121	218.74(1); or
122	(b)  If the local governmental entity governing body is
123	required by ordinance, charter, or other law to approve or
124	reject the corrected payment request or invoice, the first
125	business day after the next regularly scheduled meeting of the
126	local governmental entity governing body held after the
127	corrected payment request or invoice is stamped as received as
128	provided in s. 218.74(1).
129	(4)  If a dispute between the local governmental entity and
130	the contractor cannot be resolved by the procedure in subsection
131	(3), the dispute must be resolved in accordance with the dispute
132	resolution procedure prescribed in the construction contract or
133	in any applicable ordinance, which shall be referenced in the
134	contract. In the absence of a prescribed procedure, the dispute
135	must be resolved by the procedure specified in s. 218.76(2).
136	(5)  If a local governmental entity disputes a portion of a
137	payment request or an invoice, the undisputed portion shall be
138	paid timely, in accordance with subsection (1).
139	(6)  If When a contractor receives payment from a local
140	governmental entity for labor, services, or materials furnished
141	by subcontractors and suppliers hired by the contractor, the
142	contractor must shall remit payment due to those subcontractors
143	and suppliers within 10 days after the contractor's receipt of
144	payment. If When a subcontractor receives payment from a
145	contractor for labor, services, or materials furnished by
146	subcontractors and suppliers hired by the subcontractor, the
147	subcontractor must shall remit payment due to those
148	subcontractors and suppliers within 7 days after the
149	subcontractor's receipt of payment. This subsection does not
150	Nothing herein shall prohibit a contractor or subcontractor from
151	disputing, pursuant to the terms of the relevant contract, all
152	or any portion of a payment alleged to be due to another party
153	if the contractor or subcontractor notifies the party whose
154	payment is disputed, in writing, of the amount in dispute and
155	the actions required to cure the dispute. The contractor or
156	subcontractor must pay all undisputed amounts due within the
157	time limits imposed by this section.
158	(7)(a)  Each contract for construction services between a
159	local governmental entity and a contractor must provide for the
160	development of a single list of items required to render
161	complete, satisfactory, and acceptable the construction services
162	purchased by the local governmental entity.
163	(a)  The contract must specify the process for developing
164	the development of the list, including the responsibilities of
165	the local governmental entity and the contractor in developing
166	and reviewing the list and a reasonable time for developing the
167	list, as follows:
168	1.  For construction projects having an estimated cost of
169	Less than $10 million, within 30 calendar days after reaching
170	substantial completion of the construction services purchased as
171	defined in the contract, or, if not defined in the contract,
172	upon reaching beneficial occupancy or use; or
173	2.  For construction projects having an estimated cost of
174	$10 million or more, within 30 calendar days, or, if unless
175	otherwise extended by contract, up to not to exceed 60 calendar
176	days, after reaching substantial completion of the construction
177	services purchased as defined in the contract, or, if not
178	defined in the contract, upon reaching beneficial occupancy or
179	use.
180
181	The contract must also specify a date for the delivery of the
182	list of items, not to exceed 5 days after the list of items has
183	been developed and reviewed in accordance with the time periods
184	set forth in subparagraphs 1. and 2.
185	(b)  If the contract between the local governmental entity
186	and the contractor relates to the purchase of construction
187	services on more than one building or structure, or involves a
188	multiphased project, the contract must provide for the
189	development of a list of items required to render complete,
190	satisfactory, and acceptable all the construction services
191	purchased pursuant to the contract for each building, structure,
192	or phase of the project within the time limitations provided in
193	paragraph (a).
194	(c)  The final contract completion date must be at least 30
195	days after the delivery of the list of items. If the list is not
196	provided to the contractor by the agreed upon date for delivery
197	of the list, the contract time for completion must be extended
198	by the number of days the local governmental entity exceeded the
199	delivery date. Damages may not be assessed against a contractor
200	for failing to complete a project within the time required by
201	the contract, unless the contractor failed to complete the
202	project within the contract period as extended under this
203	paragraph.
204	(d)(c)  The failure to include any corrective work or
205	pending items not yet completed on the list developed pursuant
206	to this subsection does not alter the responsibility of the
207	contractor to complete all the construction services purchased
208	pursuant to the contract.
209	(e)(d)  Upon completion of all items on the list, the
210	contractor may submit a payment request for all remaining
211	retainage withheld by the local governmental entity pursuant to
212	this section. If a good faith dispute exists as to whether one
213	or more items identified on the list have been completed
214	pursuant to the contract, the local governmental entity may
215	continue to withhold up to an amount not to exceed 150 percent
216	of the total costs to complete such items.
217	(f)(e)  All items that require correction under the
218	contract and that are identified after the preparation and
219	delivery of the list remain the obligation of the contractor as
220	defined by the contract.
221	(g)(f)  Warranty items or items not included in the list of
222	items required under paragraph (a) may not affect the final
223	payment of retainage as provided in this section or as provided
224	in the contract between the contractor and its subcontractors
225	and suppliers.
226	(h)(g)  Retainage may not be held by a local governmental
227	entity or a contractor to secure payment of insurance premiums
228	under a consolidated insurance program or series of insurance
229	policies issued to a local governmental entity or a contractor
230	for a project or group of projects, and the final payment of
231	retainage as provided in this section may not be delayed pending
232	a final audit by the local governmental entity's or contractor's
233	insurance provider.
234	(i)(h)  If a local governmental entity fails to comply with
235	its responsibilities to develop the list required under
236	paragraph (a) or paragraph (b), as defined in the contract,
237	within the time limitations provided in paragraph (a), the
238	contractor may submit a payment request for all remaining
239	retainage withheld by the local governmental entity pursuant to
240	this section and payment of any remaining undisputed contract
241	amount, less any amount withheld pursuant to the contract for
242	incomplete or uncorrected work, must be paid within 20 business
243	days after receipt of a proper invoice or payment request. If
244	the local governmental entity has provided written notice to the
245	contractor specifying the failure of the contractor to meet
246	contract requirements in the development of the list of items to
247	be completed, the local governmental entity need not pay or
248	process any payment request for retainage if the contractor has,
249	in whole or in part, failed to cooperate with the local
250	governmental entity in the development of the list or failed to
251	perform its contractual responsibilities, if any, with regard to
252	the development of the list or if paragraph (8)(f) applies.
253	Section 3.  Section 218.76, Florida Statutes, is amended to
254	read:
255	218.76  Improper payment request or invoice; resolution of
256	disputes.-
257	(1)  If In any case in which an improper payment request or
258	invoice is submitted by a vendor, the local governmental entity
259	shall, within 10 days after the improper payment request or
260	invoice is received by it, notify the vendor, in writing, that
261	the payment request or invoice is improper and indicate what
262	corrective action on the part of the vendor is needed to make
263	the payment request or invoice proper.
264	(2)(a)  If In the event a dispute arises occurs between a
265	vendor and a local governmental entity concerning payment of a
266	payment request or an invoice, the dispute such disagreement
267	shall be finally determined by the local governmental entity
268	pursuant to as provided in this section. Each local governmental
269	entity shall establish a dispute resolution procedure
270	established to be followed by the local governmental entity in
271	cases of such disputes. Such procedure must shall provide that
272	proceedings to resolve the dispute are shall be commenced within
273	not later than 45 days after the date on which the payment
274	request or proper invoice was received by the local governmental
275	entity and shall be concluded by final decision of the local
276	governmental entity within not later than 60 days after the date
277	on which the payment request or proper invoice was received by
278	the local governmental entity. Such procedures are shall not be
279	subject to chapter 120, and do such procedures shall not
280	constitute an administrative proceeding that which prohibits a
281	court from deciding de novo any action arising out of the
282	dispute. If the dispute is resolved in favor of the local
283	governmental entity, then interest charges shall begin to accrue
284	15 days after the local governmental entity's final decision. If
285	the dispute is resolved in favor of the vendor, then interest
286	begins shall begin to accrue as of the original date the payment
287	became due.
288	(b)  If the local governmental entity does not commence the
289	dispute resolution procedure within the time required, a
290	contractor may give written notice to the local governmental
291	entity of the failure to timely commence its dispute resolution
292	procedure. If the local governmental entity fails to commence
293	the dispute resolution procedure within 4 business days after
294	such notice, any amounts resolved in the contractor's favor
295	shall bear mandatory interest, as set forth in s. 218.735(9),
296	from the date the payment request or invoice containing the
297	disputed amounts was submitted to the local governmental entity.
298	If the dispute resolution procedure is not commenced within 4
299	business days after the notice, the objection to the payment
300	request or invoice shall be deemed waived. The waiver of an
301	objection pursuant to this paragraph does not relieve a
302	contractor of its contractual obligations.
303	(3)  In an action to recover amounts due under this part
304	ss. 218.70-218.80, the court shall award court costs and
305	reasonable attorney's fees, including fees incurred through any
306	appeal, to the prevailing party, if the court finds that the
307	nonprevailing party withheld any portion of the payment that is
308	the subject of the action without any reasonable basis in law or
309	fact to dispute the prevailing party's claim to those amounts.
310	Section 4.  This act shall take effect October 1, 2010.

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