Florida Senate - 2019                                     SB 246
       By Senator Hooper
       16-00384-19                                            2019246__
    1                        A bill to be entitled                      
    2         An act relating to public construction; amending s.
    3         255.05, F.S.; revising requirements for Department of
    4         Management Services rules governing certain contracts;
    5         amending s. 255.078, F.S.; revising the amounts of
    6         retainage that certain public entities and contractors
    7         may withhold from progress payments for any
    8         construction services contract; specifying
    9         nonapplicability of the act; providing an effective
   10         date.
   12  Be It Enacted by the Legislature of the State of Florida:
   14         Section 1. Paragraph (f) of subsection (1) of section
   15  255.05, Florida Statutes, is amended to read:
   16         255.05 Bond of contractor constructing public buildings;
   17  form; action by claimants.—
   18         (1) A person entering into a formal contract with the state
   19  or any county, city, or political subdivision thereof, or other
   20  public authority or private entity, for the construction of a
   21  public building, for the prosecution and completion of a public
   22  work, or for repairs upon a public building or public work shall
   23  be required, before commencing the work or before recommencing
   24  the work after a default or abandonment, to execute and record
   25  in the public records of the county where the improvement is
   26  located, a payment and performance bond with a surety insurer
   27  authorized to do business in this state as surety. A public
   28  entity may not require a contractor to secure a surety bond
   29  under this section from a specific agent or bonding company.
   30         (f) The Department of Management Services shall adopt rules
   31  with respect to all contracts for $200,000 or less, to provide:
   32         1. Procedures for retaining up to 5 10 percent of each
   33  request for payment submitted by a contractor and procedures for
   34  determining disbursements from the amount retained on a pro rata
   35  basis to laborers, materialmen, and subcontractors, as defined
   36  in s. 713.01.
   37         2. Procedures for requiring certification from laborers,
   38  materialmen, and subcontractors, as defined in s. 713.01, before
   39  final payment to the contractor that such laborers, materialmen,
   40  and subcontractors have no claims against the contractor
   41  resulting from the completion of the work provided for in the
   42  contract.
   44  The state is not liable to any laborer, materialman, or
   45  subcontractor for any amounts greater than the pro rata share as
   46  determined under this section.
   47         Section 2. Subsections (1), (2), (3), and (5) of section
   48  255.078, Florida Statutes, are amended to read:
   49         255.078 Public construction retainage.—
   50         (1) With regard to any contract for construction services,
   51  a public entity may withhold from each progress payment made to
   52  the contractor an amount not exceeding 5 10 percent of the
   53  payment as retainage until 50-percent completion of such
   54  services.
   55         (2) After 50-percent completion of the construction
   56  services purchased pursuant to the contract, the public entity
   57  must reduce to 2.5 5 percent the amount of retainage withheld
   58  from each subsequent progress payment made to the contractor.
   59  For purposes of this section, the term “50-percent completion”
   60  means the definition that is provided has the meaning set forth
   61  in the contract between the public entity and the contractor or,
   62  if not defined in the contract, the point at which the public
   63  entity has expended 50 percent of the total cost of the
   64  construction services purchased as identified in the contract
   65  together with all costs associated with existing change orders
   66  and other additions or modifications to the construction
   67  services provided for in the contract.
   68         (3) After 50-percent completion of the construction
   69  services purchased pursuant to the contract, the contractor may
   70  elect to withhold retainage from payments to its subcontractors
   71  at a rate higher than 2.5 5 percent. The specific amount to be
   72  withheld must be determined on a case-by-case basis and must be
   73  based on the contractor’s assessment of the subcontractor’s past
   74  performance, the likelihood that such performance will continue,
   75  and the contractor’s ability to rely on other safeguards. The
   76  contractor shall notify the subcontractor, in writing, of its
   77  determination to withhold more than 2.5 5 percent of the
   78  progress payment and the reasons for making that determination,
   79  and the contractor may not request the release of such retained
   80  funds from the public entity.
   81         (5) Neither This section and nor s. 255.077 do not prohibit
   82  prohibits a public entity from withholding retainage at a rate
   83  less than 5 10 percent of each progress payment, from
   84  incrementally reducing the rate of retainage pursuant to a
   85  schedule provided for in the contract, or from releasing at any
   86  point all or a portion of any retainage withheld by the public
   87  entity which is attributable to the labor, services, or
   88  materials supplied by the contractor or by one or more
   89  subcontractors or suppliers. If a public entity makes any
   90  payment of retainage to the contractor which is attributable to
   91  the labor, services, or materials supplied by one or more
   92  subcontractors or suppliers, the contractor must shall timely
   93  remit payment of such retainage to those subcontractors and
   94  suppliers.
   95         Section 3. This act does not apply to any contract for
   96  construction services which is entered into or is pending
   97  approval by a public entity, as defined in s. 255.072, Florida
   98  Statutes, or to any construction services project advertised for
   99  bid by the public entity, on or before July 1, 2019.
  100         Section 4. This act shall take effect July 1, 2019.