Bill Text: FL S1056 | 2010 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Local Government Prompt Payment Act [CPSC]
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-04-27 - Placed on Special Order Calendar; Read 2nd time -SJ 00919; Amendment(s) adopted (495022, 482460) -SJ 00919; Substituted CS/HB 1157 -SJ 00919; Laid on Table, companion bill(s) passed, see CS/HB 1157 (Ch. 2010-111) -SJ 00919 [S1056 Detail]
Download: Florida-2010-S1056-Comm_Sub.html
Bill Title: Local Government Prompt Payment Act [CPSC]
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-04-27 - Placed on Special Order Calendar; Read 2nd time -SJ 00919; Amendment(s) adopted (495022, 482460) -SJ 00919; Substituted CS/HB 1157 -SJ 00919; Laid on Table, companion bill(s) passed, see CS/HB 1157 (Ch. 2010-111) -SJ 00919 [S1056 Detail]
Download: Florida-2010-S1056-Comm_Sub.html
Florida Senate - 2010 CS for SB 1056 By the Committee on Community Affairs; and Senator Baker 578-04323-10 20101056c1 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 5 relating to the timely payment for purchases of 6 construction services; requiring a local governmental 7 entity to identify in a construction contract the 8 agent or employee or facility or office to which a 9 contractor may submit its payment request or invoice; 10 requiring that an ordinance providing dispute 11 resolution procedures applicable to a construction 12 contract be referenced in the contract; requiring 13 construction contracts to specify a date for the 14 delivery of a list of items required to render 15 complete, satisfactory, and acceptable the 16 construction services purchased by a local 17 governmental entity; providing for the extension of 18 the contract if the list of items remaining to 19 complete is not timely provided to the contractor; 20 deleting provisions relating to the amount of 21 retainage that may be withheld by a local governmental 22 entity after 50 percent of construction services are 23 completed; providing a timeframe and procedure for 24 subcontractors to submit an invoice for the remainder 25 of unpaid constructions services; amending s. 218.76, 26 F.S.; revising provisions relating to the resolution 27 of disputes concerning an improper payment request or 28 invoice; providing that a local governmental entity 29 waives its objection in a payment dispute if it fails 30 to commence the dispute resolution procedure within 31 the time required; providing an effective date. 32 33 Be It Enacted by the Legislature of the State of Florida: 34 35 Section 1. Section 218.72, Florida Statutes, is reordered 36 and amended to read: 37 218.72 Definitions.—As used in this part, the term: 38 (8)(1)“Proper invoice” means an invoice thatwhich39 conforms with all statutory requirements andwithall 40 requirementsthat have beenspecified by the local governmental 41 entity to which the invoice is submitted. 42 (5)(2)“Local governmental entity” means a county or 43 municipal government, school board, school district, authority, 44 special taxing district, other political subdivision, or any 45 office, board, bureau, commission, department, branch, division, 46 or institution thereof. 47 (4)(3)“County” means a political subdivision of the state 48 established pursuant to s. 1, Art. VIII of the State 49 Constitution. 50 (6)(4)“Municipality” means a municipality created pursuant 51 to general or special law and metropolitan and consolidated 52 governments as provided in s. 6(e) and (f), Art. VIII of the 53 State Constitution. 54 (9)(5)“Purchase” means the purchase of goods, services, or 55 construction services; the purchase or lease of personal 56 property; or the lease of real property by a local governmental 57 entity. 58 (10)(6)“Vendor” means any person who sells goods or 59 services, sells or leases personal property, or leases real 60 property directly to a local governmental entity. The term 61 includes any person who provides waste hauling services to 62 residents or businesses located within the boundaries of a local 63 government pursuant to a contract or local ordinance. 64 (2)(7)“Construction services” means all labor, services, 65 and materials provided in connection with the construction, 66 alteration, repair, demolition, reconstruction, oranyother 67 improvements to real property. 68 (7)(8)“Payment request” means a request for payment for 69 construction services which conforms with all statutory 70 requirements andwithall requirements specified by the local 71 governmental entity to which the payment request is submitted. 72 Such requirements must be included in the invitation to bid or 73 request for proposal for the project for which payment is 74 requested. 75 (1)(9)“Agent” means the project architect, project 76 engineer, oranyother agency or person acting on behalf of the 77 local governmental entity. The agent who is required to review 78 invoices or payment requests must be identified in the 79 invitation to bid or request for proposal for the project for 80 which payment requests or invoices are submitted. 81 (3)(10)“Contractor” or “provider of construction services” 82 means theanyperson who contracts directly with a local 83 governmental entity to provide construction services. 84 Section 2. Section 218.735, Florida Statutes, is amended to 85 read: 86 218.735 Timely payment for purchases of construction 87 services.— 88 (1) The due date for payment for the purchase of 89 construction services by a local governmental entity is 90 determined as follows: 91 (a) If an agent must approve the payment request or invoice 92 beforeprior tothe payment request or invoice isbeing93 submitted to the local governmental entity, payment is due 25 94 business days after the date on which the payment request or 95 invoice is stamped as received as provided in s. 218.74(1). If 96 the payment request or invoice is not rejected before the due 97 date, it shall be deemed accepted. 98 (b) If an agent need not approve the payment request or 99 invoicewhich issubmitted by the contractor, payment is due 20 100 business days after the date on which the payment request or 101 invoice is stamped as received as provided in s. 218.74(1). 102 103 A local governmental entity shall identify the agent or employee 104 of the local governmental entity, or the facility or office, to 105 which the contractor may submit its payment request or invoice. 106 This information shall be included in the contract between the 107 local governmental entity and contractor, or shall be provided 108 by the local governmental entity through a separate written 109 notice, as required under the contract, within 10 days after the 110 contract award. A contractor’s submission of a payment request 111 or invoice to the identified agent, employee, facility, or 112 office of the local governmental entity shall be stamped as 113 received as provided in s. 218.74(1).Upon the submission of the 114 payment request or invoice, the time periods commence for 115 payment or rejection of a payment request or invoice as provided 116 in subsection (1) or subsection (2). 117 (2) If a payment request or invoice does not meet the 118 contract requirements, the local governmental entity mustmay119 reject the payment request or invoice within 20 business days 120 after the date on which the payment request or invoice is 121 stamped as received as provided in s. 218.74(1). The rejection 122 must be written and must specify the deficiencyin the payment123request or invoiceand the action necessary to make the payment 124 request or invoice proper. 125 (3) If a payment request or an invoice is rejected under 126 subsection (2) and the contractor submits acorrectedpayment 127 request or invoice thatwhichcorrects the deficiencyspecified128in writing by the local governmental entity, the corrected 129 payment request or invoice must be paid or rejected on the later 130 of: 131 (a) Ten business days after the date the corrected payment 132 request or invoice is stamped as received as provided in s. 133 218.74(1); or 134 (b) If the local governmental entitygoverning bodyis 135 required by ordinance, charter, or other law to approve or 136 reject the corrected payment request or invoice, the first 137 business day after the next regularly scheduled meeting of the 138 local governmental entitygoverning bodyheld after the 139 corrected payment request or invoice is stamped as received as 140 provided in s. 218.74(1). 141 (4) If a dispute between the local governmental entity and 142 the contractor cannot be resolved by the procedure in subsection 143 (3), the dispute must be resolved in accordance with the dispute 144 resolution procedure prescribed in the construction contract or 145 in any applicable ordinance. Such ordinance shall be referenced 146 in the contract. In the absence of a prescribed procedure, the 147 dispute must be resolved by the procedure specified in s. 148 218.76(2). 149 (5) If a local governmental entity disputes a portion of a 150 payment request or an invoice, the undisputed portion shall be 151 paid timely, in accordance with subsection (1). 152 (6) IfWhena contractor receives payment from a local 153 governmental entity for labor, services, or materials furnished 154 by subcontractors and suppliers hired by the contractor, the 155 contractor mustshallremit payment due to those subcontractors 156 and suppliers within 10 days after the contractor’s receipt of 157 payment. IfWhena subcontractor receives payment from a 158 contractor for labor, services, or materials furnished by 159 subcontractors and suppliers hired by the subcontractor, the 160 subcontractor mustshallremit payment due to those 161 subcontractors and suppliers within 7 days after the 162 subcontractor’s receipt of payment. This subsection does not 163Nothing herein shallprohibit a contractor or subcontractor from 164 disputing, pursuant to the terms of the relevant contract, all 165 or any portion of a payment alleged to be due to another party 166 if the contractor or subcontractor notifies the party whose 167 payment is disputed, in writing, of the amount in dispute and 168 the actions required to cure the dispute. The contractor or 169 subcontractor must pay all undisputed amounts due within the 170 time limits imposed by this section. 171 (7)(a)Each contract for construction services between a 172 local governmental entity and a contractor must provide for the 173 development of a single list of items required to render 174 complete, satisfactory, and acceptable the construction services 175 purchased by the local governmental entity. 176 (a) The contract must specify the process for developing 177the development ofthe list, including the responsibilities of 178 the local governmental entity and the contractor in developing 179 and reviewing the list and a reasonable time for developing the 180 list, as follows: 181 1. For construction projects having an estimated cost of 182 Less than $10 million, within 30 calendar days after reaching 183 substantial completion of the construction services purchased as 184 defined in the contract, or, if not defined in the contract, 185 upon reaching beneficial occupancy or use; or 186 2. For construction projects having an estimated cost of 187 $10 million or more, within 30 calendar days, or, ifunless188otherwiseextended by contract, up tonot to exceed60 calendar 189 days,after reaching substantial completion of the construction 190 services purchased as defined in the contract, or, if not 191 defined in the contract, upon reaching beneficial occupancy or 192 use. 193 194 The contract must also specify a date for the delivery of the 195 list of items, not to exceed 10 days after the list of items has 196 been developed and reviewed within the time periods set forth in 197 subparagraph 1. or subparagraph 2. 198 (b) If the contract between the local governmental entity 199 and the contractor relates to the purchase of construction 200 services on more than one building or structure, or involves a 201 multiphased project, the contract must provide for the 202 development of a list of items required to render complete, 203 satisfactory, and acceptable all the construction services 204 purchased pursuant to the contract for each building, structure, 205 or phase of the project within the time limitations provided in 206 paragraph (a). 207 (c) The final contract completion date must be at least 30 208 days after the delivery of the list of items. If the list is not 209 provided to the contractor by the agreed to date for the 210 delivery of the list, the contract time for completion shall be 211 extended by the number of days the local governmental entity 212 exceeded the delivery date. Damages may not be assessed against 213 a contractor for failing to complete a project within the time 214 required by the contract, unless the contractor failed to 215 complete the project within the contract period as extended 216 pursuant to this paragraph. 217 (d)(c)The failure to include any corrective work or 218 pending items not yet completed on the list developedpursuant219to this subsectiondoes not alter the responsibility of the 220 contractor to complete all the construction services purchased 221 pursuant to the contract. 222 (e)(d)Upon completion of all items on the list, the 223 contractor may submit a payment request for all remaining 224 retainage withheld by the local governmental entity pursuant to 225 this section. If a good faith dispute exists as to whether one 226 or more items identified on the list have been completed 227 pursuant to the contract, the local governmental entity may 228 continue to withhold up toan amount not to exceed150 percent 229 of the total costs to complete such items. 230 (f)(e)All items that require correction under the contract 231 and that are identified after the preparation and delivery of 232 the list remain the obligation of the contractor as defined by 233 the contract. 234 (g)(f)Warranty items or items not included in the list of 235 items required under paragraph (a) may not affect the final 236 payment of retainage as provided in this section or as provided 237 in the contract between the contractor and its subcontractors 238 and suppliers. 239 (h)(g)Retainage may not be held by a local governmental 240 entity or a contractor to secure payment of insurance premiums 241 under a consolidated insurance program or series of insurance 242 policies issued to a local governmental entity or a contractor 243 for a project or group of projects, and the final payment of 244 retainage as provided in this section may not be delayed pending 245 a final audit by the local governmental entity’s or contractor’s 246 insurance provider. 247 (i)(h)If a local governmental entity fails to comply with 248 its responsibilities to develop the list required under 249 paragraph (a) or paragraph (b), as defined in the contract,250 within the time limitations provided in paragraph (a), the 251 contractor may submit a payment request for all remaining 252 retainage withheld by the local governmental entity pursuant to 253 this section. The payment of any remaining undisputed contract 254 amount, less any amount withheld pursuant to the contract for 255 incomplete or uncorrected work, must be paid within 20 business 256 days after receipt of a proper invoice or payment request. If 257 the local governmental entity need not pay or process any 258 payment request for retainage if the contractor has, in whole or 259 in part, failed to cooperate with the local governmental entity 260 in the development of the list or failed to perform its 261 contractual responsibilities, if any, with regard to the 262 development of the list, or if paragraph (8)(c)(8)(f)applies. 263 (8)(a)With regard to any contract for construction264services,A local governmental entity may withhold from each 265 progress payment for construction services made to the 266 contractor an amount not exceeding 10 percent of the payment as 267 retainage until 50 percent50-percentcompletion of such 268 services. 269(b)After 50-percent completion of the construction270services purchased pursuant to the contract, the local271governmental entity must reduce to 5 percent the amount of272retainage withheld from each subsequent progress payment made to273the contractor. For purposes of this subsection, the term “50274percent completion” has the meaning set forth in the contract275between the local governmental entity and the contractor or, if276not defined in the contract, the point at which the local277governmental entity has expended 50 percent of the total cost of278the construction services purchased as identified in the279contract together with all costs associated with existing change280orders and other additions or modifications to the construction281services provided for in the contract. However, notwithstanding282this subsection, a municipality having a population of 25,000 or283fewer, or a county having a population of 100,000 or fewer, may284withhold retainage in an amount not exceeding 10 percent of each285progress payment made to the contractor until final completion286and acceptance of the project by the local governmental entity.287(c)After 50-percent completion of the construction288services purchased pursuant to the contract, the contractor may289elect to withhold retainage from payments to its subcontractors290at a rate higher than 5 percent. The specific amount to be291withheld must be determined on a case-by-case basis and must be292based on the contractor’s assessment of the subcontractor’s past293performance, the likelihood that such performance will continue,294and the contractor’s ability to rely on other safeguards. The295contractor shall notify the subcontractor, in writing, of its296determination to withhold more than 5 percent of the progress297payment and the reasons for making that determination, and the298contractor may not request the release of such retained funds299from the local governmental entity.300(d)After 50-percent completion of the construction301services purchased pursuant to the contract, the contractor may302present to the local governmental entity a payment request for303up to one-half of the retainage held by the local governmental304entity. The local governmental entity shall promptly make305payment to the contractor, unless the local governmental entity306has grounds, pursuant to paragraph (f), for withholding the307payment of retainage. If the local governmental entity makes308payment of retainage to the contractor under this paragraph309which is attributable to the labor, services, or materials310supplied by one or more subcontractors or suppliers, the311contractor shall timely remit payment of such retainage to those312subcontractors and suppliers.313(e)This limitationsectiondoes not prohibit a local 314 governmental entity from withholding retainage at a rate less 315 than 10 percent of each progress payment or,from incrementally 316 reducing the rate of retainage pursuant to a schedule provided 317forin the contract, or from releasing at any point all or a318portion of any retainage withheld by the local governmental319entity which is attributable to the labor, services, or320materials supplied by the contractor or by one or more321subcontractors or suppliers. 322 (a) If a local governmental entity makes any payment of 323 retainage to the contractor which is attributable to the 324 constructionlabor,services, or materialssupplied by one or 325 more subcontractors or suppliers, the contractor shall timely 326 remit payment of such retainage to those subcontractors and 327 suppliers. 328 (b) A subcontractor may submit an invoice to the contractor 329 for the remainder of unpaid construction services 45 days after 330 the completion of such services, including an invoice for the 331 full value of the retainage related to the services. The 332 subcontractor shall include a conditional release of lien and 333 all appropriate warranties and closeout documentation with the 334 final payment invoice to the contractor. The contractor must 335 include the payment request in the next payment application 336 cycle to the agent following the receipt of the subcontractor’s 337 payment request. 338 (c)(f)This subsectionsectiondoes not require the local 339 governmental entity to pay or release any amounts that are the 340 subject of a good faith dispute, the subject of a claim brought 341 pursuant to s. 255.05, or otherwise the subject of a claim or 342 demand by the local governmental entity or contractor. 343 (d)(g)The time limitations set forth in this subsection 344sectionfor payment of payment requests apply to any payment 345 request for retainage made pursuant to this section. 346 (e)(h)This subsection doesParagraphs (a)-(d) donot apply 347 to construction services purchased by a local governmental 348 entity which are paid for, in whole or in part, with federal 349 funds and are subject to federal grantor laws and regulations or 350 requirements that are contrary to any provision of the Local 351 Government Prompt Payment Act. 352 (f)(i)This subsection does not apply toanyconstruction 353 services purchased by a local governmental entity if the total 354 cost of the construction services purchased as identified in the 355 contract is $200,000 or less. 356 (9) All payments due under this section and not made within 357 the time periods specified by this sectionshallbear interest 358 at the rate of 1 percent per month, or the rate specified by 359 contract, whichever is greater. 360 Section 3. Section 218.76, Florida Statutes, is amended to 361 read: 362 218.76 Improper payment request or invoice; resolution of 363 disputes.— 364 (1) IfIn any case in whichan improper payment request or 365 invoice is submitted by a vendor, the local governmental entity 366 shall, within 10 days after the improper payment request or 367 invoice is receivedby it, notify the vendor, in writing, that 368 the payment request or invoice is improper and indicate what 369 corrective action on the part of the vendor is needed to make 370 the payment request or invoice proper. 371 (2) IfIn the eventa dispute arisesoccursbetween a 372 vendor and a local governmental entity concerning payment of a 373 payment request oraninvoice, the disputesuch disagreement374 shall be finally determined by the local governmental entity 375 pursuant toas provided in this section. Each local governmental376entity shall establisha dispute resolution procedure 377 establishedto be followedby the local governmental entityin378cases of such disputes. Such procedure mustshallprovide that 379 proceedings to resolve the dispute areshall becommenced within 380not later than45 days after the dateon whichthe payment 381 request or proper invoice was received by the local governmental 382 entity andshall beconcluded by final decision of the local 383 governmental entity withinnot later than60 days after the date 384on whichthe payment request or proper invoice was received by 385 the local governmental entity. Such procedures areshallnotbe386 subject to chapter 120,and dosuch procedures shallnot 387 constitute an administrative proceeding thatwhichprohibits a 388 court from deciding de novo any action arising out of the 389 dispute. If the dispute is resolved in favor of the local 390 governmental entity,theninterest chargesshallbegin to accrue 391 15 days after the local governmental entity’s final decision. If 392 the dispute is resolved in favor of the vendor,theninterest 393 beginsshall beginto accrue as of the original date the payment 394 became due. If the local governmental entity does not commence 395 the dispute resolution procedure within the time required, the 396 objection to payment shall be deemed to have been waived. The 397 time for dispute resolution may be extended upon the written 398 agreement of the affected parties. 399 (3) In an action to recover amounts due under this partss.400218.70-218.80, the court shall award court costs and reasonable 401 attorney’s fees, including fees incurred throughanyappeal, to 402 the prevailing party, if the court finds that the nonprevailing403party withheld any portion of the payment that is the subject of404the action without any reasonable basis in law or fact to405dispute the prevailing party’s claim to those amounts. 406 Section 4. This act shall take effect July 1, 2010.