January 25, 2012
HOUSE BILL No. 1163
_____
DIGEST OF HB 1163
(Updated January 24, 2012 5:19 pm - DI 87)
Citations Affected: IC 4-13.6; IC 5-16; IC 36-1.
Synopsis: Bonding and retainage in public works projects. Provides
that a person who has a claim against the retainage or the payment
bond of a contractor on a public works project must make the claim and
deliver a copy of the claim to the contractor not later than stated times
after that person performed the service or labor or supplied the
materials for the public works project. Decreases the amount that may
be withheld on state public works projects upon substantial completion
to cover remaining uncompleted minor items. Makes stylistic and
technical changes.
Effective: July 1, 2012.
Torr
January 9, 2012, read first time and referred to Committee on Government and Regulatory
Reform.
January 25, 2012, amended, reported _ Do Pass.
January 25, 2012
Second Regular Session 117th General Assembly (2012)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in
this style type, and deletions will appear in
this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in
this style type. Also, the
word
NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in
this style type or
this style type reconciles conflicts
between statutes enacted by the 2011 Regular Session of the General Assembly.
HOUSE BILL No. 1163
A BILL FOR AN ACT to amend the Indiana Code concerning state
and local administration.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 4-13.6-7-3; (12)HB1163.1.1. -->
SECTION 1. IC 4-13.6-7-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 3. (a) To determine the
amount of retainage to be withheld, the division shall elect one (1) of
the following options:
(1) To withhold no more than six percent (6%) of the dollar value
of all work satisfactorily completed until the public work is fifty
percent (50%) complete, and nothing further after that.
(2) To withhold no more than three percent (3%) of the dollar
value of all work satisfactorily completed until the public work is
substantially complete.
(b)
If Upon substantial completion of the work,
the division shall
withhold the following:
(1) If there are any remaining uncompleted minor items,
the
division shall withhold, until those items are completed, an
amount equal to
four two hundred percent
(400%) (200%) of the
value of each item as determined by the architect-engineer.
(2) Any amounts required to be withheld under section 8(b) of
this chapter.
SOURCE: IC 4-13.6-7-8; (12)HB1163.1.2. -->
SECTION 2. IC 4-13.6-7-8 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 8. (a) Except for
amounts withheld:
(1) from the contractor under section 3 of this chapter for
uncompleted minor items; and
(2) under subsection (b);
the division may make a full, final, and complete settlement with a
contractor, including providing for full payment of all escrowed
principal and escrowed income, within not later than sixty-one (61)
days following the date of substantial completion if
(1) the contractor has materially fulfilled all of its obligations
under the public works contract.
(2) the division has received no claims from subcontractors or
suppliers under this chapter; and
(3) the contractor has furnished satisfactory evidence showing full
payment of all subcontractors and suppliers in the performance of
the contract.
(b) If the division receives a claim from a subcontractor or a
supplier under section 9 of this chapter, the division shall withhold
the amount of the claim until the claim is resolved under section
9(c) of this chapter.
(b) (c) After the division makes a final settlement with a contractor,
all claims by subcontractors and suppliers to funds withheld from that
contractor under section 2 of this chapter are barred.
SOURCE: IC 4-13.6-7-10; (12)HB1163.1.3. -->
SECTION 3. IC 4-13.6-7-10 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 10. (a) In order to
receive payment under section 9 of this chapter or to proceed against
the bond of the contractor required under section 6 of this chapter,
any
a subcontractor or supplier making a claim for payment on account of
having performed any labor or having furnished any material or service
in relation to a public works project must file a verified claim with the
division
within and deliver a copy of the claim to the contractor not
later than sixty (60) days
from after the
date the last labor
was
performed,
the last material
was furnished, or
the last service
was
rendered
by that subcontractor or supplier. The claim shall state the
amount due and owing to the person and shall give as much detail
explaining the claim as possible. The division shall notify the
contractor of any filed claims before taking action under section 9 of
this chapter.
(b) In order to proceed against the bond of the contractor required
under section 6 of this chapter, the claimant must notify the surety of
the contractor by sending a copy of the claim required by subsection (a)
to the surety company. The claimant shall also inform the division and
the contractor that the surety has been notified. The division shall
supply the claimant with any information the claimant requires to
notify the surety and the contractor.
(c) The claimant may not file suit against the contractor's surety on
the contractor's bond until the expiration of before thirty (30) days after
filing of the claim with the division and delivering a copy of the
claim to the contractor. If the claim is not paid in full at the expiration
of the thirty (30) day period, the claimant may bring an action in a court
of competent jurisdiction in the claimant's own name upon the bond.
SOURCE: IC 5-16-5-0.4; (12)HB1163.1.4. -->
SECTION 4. IC 5-16-5-0.4 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2012]: Sec. 0.4. As used in this chapter, "person" includes a firm,
limited liability company, or corporation.
SOURCE: IC 5-16-5-0.5; (12)HB1163.1.5. -->
SECTION 5. IC 5-16-5-0.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2012]: Sec. 0.5. As used in this chapter, "public body" refers to
a board, commission, trustee, officer, or agent acting on behalf of
the state or a commission created by law.
SOURCE: IC 5-16-5-0.6; (12)HB1163.1.6. -->
SECTION 6. IC 5-16-5-0.6 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2012]: Sec. 0.6. As used in this chapter, "public work" refers to
the construction, erection, alteration, or repair of a public building,
public improvement, or other public work, the cost of which is paid
for by funds derived from taxation. The term includes all roads,
highways, streets, alleys, bridges, sewers, drains, or other public
improvements.
SOURCE: IC 5-16-5-1; (12)HB1163.1.7. -->
SECTION 7. IC 5-16-5-1 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2012]: Sec. 1.
(a) Except as
hereinafter
otherwise provided
in this chapter, when
any public building or other
a public work
or public improvement of any character whatsoever is
being constructed, erected, altered or repaired is performed under
contract at the expense of the state or a commission created by law,
it
shall be the duty of any such board, commission, trustee, officer or
agent acting on behalf of the state or commission created by law, to the
public body shall withhold final payment to the contractor until
such
the contractor has paid to:
the subcontractor or
(1) all subcontractors;
materialmen
(2) all suppliers of materials for material furnished;
(3) all labor employed in
such construction or the public work;
and
(4) all those furnishing any service in relation to or in connection
with
such construction, erection, alteration or repair, the public
work;
all bills due and owing
the same; Provided, That there is a sufficient
sum owing to the contractor to pay all such bills, and to the persons
described in subdivisions (1) through (4) who have filed a claim
under subsection (c).
(b) If there is not a sufficient sum owing to
such the contractor on
such the contract to pay all
such the bills, then the sum owing on
such
the contract shall be prorated in payment of all
such the bills among
the
parties persons entitled
thereto; Provided, That such subcontractor
or subcontractors, materialmen, laborers or those furnishing service as
herein provided shall to payment.
(c) A person claiming payment under this section must file with
any such board, commission, trustee, officer, or agent acting on behalf
of such state or commission created by law, their the public body a
claim
within not later than sixty (60) days
from after the last labor
is
performed,
the last material
is furnished, or
the last service
is rendered
by
them, that person, as provided in section 2 of this chapter.
Where
no
(d) If there is no dispute
shall arise between any parties interested
in such funds so withheld, the board, commission, trustee, officer or
agent acting on behalf of said state or commission created by law,
among the claimants, the public body shall pay
said claim or all
claims out of the funds due
such the contractor and take
a receipt
therefor, which sum or sums for each payment. The total of amounts
paid under this subsection shall be deducted from the contract price.
Where
(e) If there is a dispute
between any of the parties claiming to be
entitled to such funds so withheld, or any part thereof, among the
claimants, the public body shall retain sufficient funds
shall be
retained by such board, commission, trustee, officer or agent acting on
behalf of said state or commission created by law until
such the dispute
is settled,
and the correct
amount is amounts are determined,
when
and payment
of those amounts shall be made
as aforesaid; Provided,
however, That nothing in as provided in subsection (d).
(f) Except for amounts required to be withheld under subsection
(e) or as otherwise provided in this chapter, this chapter
contained
shall prevent or does not preclude a full, final, and complete settlement
upon a contract with
the a contractor
or contractors after thirty (30)
days from the date of the completion and acceptance of the work as
completed.
upon the furnishing of satisfactory evidence showing the
payment in full of all subcontractors, materialmen, laborers, or those
furnishing services in the performance of said contract. Provided,
further, That
(g) The surety of said a contractor or contractors shall may not be
released until the expiration of one (1) year after the final settlement
with said contractor or all contractors. The terms "public building,"
"public work" and "public improvement," or combinations thereof, as
used in this chapter, shall be construed to include all buildings, work
or improvements the cost of which is paid for by funds derived from
taxation.
SOURCE: IC 5-16-5-2; (12)HB1163.1.8. -->
SECTION 8. IC 5-16-5-2 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2012]: Sec. 2. (a)
In all contracts A contract
awarded
contractors for
the construction, erection, alteration, or repair
of a public building or other a public work
or improvement as provided
in section 1 of this chapter, the contract must provide for the payment
of subcontractors, labor,
materialmen, suppliers of materials, and
those performing service in connection with the
construction, erection,
alteration, or repair. public work. The contract must provide for the
payment of subcontractors by withholding by the
board, commission,
trustee, officer, or agent acting on behalf of the state or commission,
public body funds sufficient from the contract price to pay the
subcontractor, subcontractors, labor,
materialmen, suppliers of
materials, and those furnishing service in relation to or in connection
with
construction, erection, alteration, or repair. the public work. The
contractor shall execute a bond
shall be executed by the contractor to
the state, approved by the
board, commission, trustee, officer, or agent
acting on behalf of the state or commission, public body in an amount
equal to the total contract price. The bond shall be conditioned for
payment by the contractor, the contractor's successors and assigns, and
by the subcontractors, their successors and assigns, of all indebtedness,
which may accrue to any person
firm, limited liability company, or
corporation on account of for any labor or service performed, materials
furnished, or service rendered in the
construction, erection, alteration,
or repair of a building, work, or improvement, including all road,
highway, street, alley, bridge, sewer, drain, or other public
improvement. public work. The bond by its terms shall be conditioned
to directly inure to the benefit of subcontractors, laborers,
materialmen,
suppliers of materials, and those performing service who have
furnished or supplied labor, material, or service for the
construction of
any public work.
or improvement.
(b) The bond required under subsection (a) shall be deposited with
the
board, commission, trustee, officer, or agent acting on behalf of the
state or commission public body for the benefit of a person firm,
limited liability company, or corporation interested in and entitled to
the bond. The bond shall be conditioned that:
(1) a change, modification, omission, or addition in and to the
terms or conditions of the contract, plans, specifications,
drawings, or profile; or
(2) any irregularity or defect in the contract or in the proceedings
preliminary to the letting and awarding of the contract;
shall does not affect or operate to release or discharge the surety.
(c) The provisions of this chapter shall become a part of the terms
of a contract awarded under this chapter. A bond for a public work or
improvement is subject to the provisions of this chapter.
(d) A person firm, limited liability company, or corporation to whom
money is due on account of for having performed labor or having
furnished material or service in the construction, erection, alteration,
or repair of a building, for a public work or improvement under this
chapter shall, within must, not later than sixty (60) days after the
completion of that person completed the labor or service or within
sixty (60) days after that person furnished the last item of material:
has been furnished,
(1) file with the board, commission, trustee, officer, clerk, or
agent of the state or commission that entered into contract with
the principal contractor for the public work or improvement
public body duplicate verified statements of the amount due to
the subcontractor. person; and
(2) deliver a copy of the statement to the contractor.
The board, commission, trustee, officer, authorized clerk, or agent of
the state public body shall deliver to the surety or sureties on the bond
one (1) of the duplicate statements. The failure to deliver a duplicate
statement by a board, commission, trustee, officer, authorized clerk, or
agent of the state the public body does not affect or invalidate the
rights of the person firm, limited liability company, or corporation to
whom money is due, on account of having performed labor or service
or having furnished material, nor does the failure to deliver a duplicate
statement operate as a defense for the surety.
(e) No A suit shall may not be brought against a surety or sureties
on a bond under this section until the expiration of before thirty (30)
days after both of the following have occurred:
(1) The filing of the verified duplicate statement.
(2) A copy of the notice has been delivered to the contractor.
If the indebtedness is not paid in full at the expiration of after thirty
(30) days, the person, firm, limited liability company, or corporation
may bring an action in a court of competent jurisdiction upon the bond.
The action must be commenced within brought not later than sixty
(60) days from after the date of the final completion and acceptance of
the public building or public work. and unless commenced within sixty
(60) days, An action on the bond against the a surety or sureties is
barred if not brought within this time.
(f) IC 8-23-9, and not this chapter, applies to bonds and claims
on state highway road and bridge contracts. the provisions of the
Indiana department of transportation law (IC 8-23-9) with respect to the
bond shall govern.
SOURCE: IC 36-1-12-12; (12)HB1163.1.9. -->
SECTION 9. IC 36-1-12-12 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 12. (a) When a public
work project is to be performed, the board shall withhold final payment
to the contractor until the contractor has paid the subcontractors,
material suppliers, laborers,
or and those furnishing services. However,
if there is not a sufficient sum owed to the contractor to pay those bills,
the sum owed to the contractor shall be prorated in payment of the bills
among the
parties claimants entitled
to payment.
(b) To receive payment
the a subcontractor,
or subcontractors,
material
suppliers, supplier, laborers, laborer, or
those person
furnishing services
shall must file
their claims a claim with the board
within not later than sixty (60) days after
the that person performed
the last labor,
performed, furnished the last material,
furnished, or
performed the last service
rendered, by them, as provided in section
13 of this chapter.
(c) If there is no dispute
between among the
parties claiming to be
entitled to the money withheld, claimants, the board shall pay the
claim from the money due the contractor and deduct
it the amount of
the claims from the contract price. The board shall take a receipt for
each payment made on a claim.
(d) If there is a dispute
between among the
parties claiming to be
entitled to the money withheld, claimants, the board shall retain
sufficient money to pay the claims until the dispute is settled and the
correct amount is determined. However, the board may make a final
and complete settlement with the contractor after thirty (30) days after
the date of the completion and acceptance of the public work if the
board is furnished with satisfactory evidence indicating the payment in
full of all subcontractors, material suppliers, laborers, or those
furnishing services. contractor has materially fulfilled all of its
obligations under the public works contract.
(e) If the board receives a claim from a subcontractor or a
material supplier under this section, the board shall withhold the
amount of the claim until the claim is resolved under this section.
(e) (f) A claim form must be signed by an individual from the
political subdivision or agency who is directly responsible for the
project and who can verify:
(1) the quantity of a purchased item; or
(2) the weight or volume of the material applied, in the case of a
road, street, or bridge project.
SOURCE: IC 36-1-12-13.1; (12)HB1163.1.10. -->
SECTION 10. IC 36-1-12-13.1, AS AMENDED BY P.L.133-2007,
SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2012]: Sec. 13.1. (a) Except as provided in subsection (e), the
appropriate political subdivision or agency:
(1) shall require the contractor to execute a payment bond to the
appropriate political subdivision or agency, approved by and for
the benefit of the political subdivision or agency, in an amount
equal to the contract price if the cost of the public work is
estimated to be more than two hundred thousand dollars
($200,000); and
(2) may require the contractor to execute a payment bond to the
appropriate political subdivision or agency, approved by and for
the benefit of the political subdivision or agency, in an amount
equal to the contract price if the cost of the public work is
estimated to be not more than two hundred thousand dollars
($200,000).
The payment bond is binding on the contractor, the subcontractor, and
their successors and assigns for the payment of all indebtedness to a
person for labor and service performed, material furnished, or services
rendered. The payment bond must state that it is for the benefit of the
subcontractors, laborers, material suppliers, and those performing
services.
(b) The payment bond shall be deposited with the board. The
payment bond must specify that:
(1) a modification, omission, or addition to the terms and
conditions of the public work contract, plans, specifications,
drawings, or profile;
(2) a defect in the public work contract; or
(3) a defect in the proceedings preliminary to the letting and
awarding of the public work contract;
does not discharge the surety. The surety of the payment bond may not
be released until one (1) year after the board's final settlement with the
contractor.
(c) A person to whom money is due for labor performed, material
furnished, or services provided
shall, within must, not later than sixty
(60) days after the completion of that person completed the labor or
service or within sixty (60) days after the that person furnished the
last item of material: has been furnished:
(1) file with the board signed duplicate statements of the amount
due; and
(2) deliver a copy of the statement to the contractor.
The board shall forward to the surety of the payment bond one (1) of
the signed duplicate statements. However, failure of the board to
forward a signed duplicate statement does not affect the rights of a
person to whom money is due. In addition, a failure of the board to
forward the statement does not operate as a defense for the surety.
(d) An action may not be brought against the surety until before
thirty (30) days after:
(1) the filing of the signed duplicate statements with the board;
and
(2) delivery of a copy of the statement to the contractor.
If the indebtedness is not paid in full at the end of that thirty (30) day
period the person may bring an action in court. The court action must
be brought within not later than sixty (60) days after the date of the
final completion and acceptance of the public work.
(e) This subsection applies to contracts for a capital improvement
entered into by, for, or on behalf of the Indiana stadium and convention
building authority created by IC 5-1-17-6. The board awarding the
contract for the capital improvement project may waive any payment
bond requirement if the board, after public notice and hearing,
determines:
(1) that:
(A) an otherwise responsive and responsible bidder is unable
to provide the payment bond; or
(B) the cost or coverage of the payment bond is not in the best
interest of the project; and
(2) that an adequate alternative is provided through a letter of
credit, additional retainage of at least ten percent (10%) of the
contract amount, a joint payable check system, or other sufficient
protective mechanism.