Bill Text: MI SB0401 | 2011-2012 | 96th Legislature | Introduced
Bill Title: State financing and management; purchasing; payment of transportation construction contracts within certain time frame; require. Amends sec. 7a of 1964 PA 286 (MCL 247.807a) & adds sec. 7b..
Spectrum: Partisan Bill (Republican 10-0)
Status: (Introduced - Dead) 2011-06-01 - Referred To Committee On Transportation [SB0401 Detail]
Download: Michigan-2011-SB0401-Introduced.html
SENATE BILL No. 401
June 1, 2011, Introduced by Senators CASPERSON, CASWELL, NOFS, BRANDENBURG, JONES, MARLEAU, BOOHER, ROBERTSON, ROCCA and HILDENBRAND and referred to the Committee on Transportation.
A bill to amend 1964 PA 286, entitled
"An act to provide for the organization, powers, and duties of the
state transportation commission and the state transportation
department; to provide for the appointment, powers, and duties of
the state transportation director; to abolish the office of state
highway commissioner and the commissioner's advisory board and to
transfer their powers and duties; to provide for penalties and
remedies; and to repeal certain acts and parts of acts,"
by amending section 7a (MCL 247.807a), as amended by 1981 PA 122,
and by adding section 7b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7a. (1) As used in this section and section 7b:
(a) "Completion" means the date when the construction,
improvement, or maintenance of a bridge, highway, or other
transportation facility is accepted in accordance with the contract
documents, so that the bridge, highway, or other transportation
facility may be used for its intended purpose.
(b) "Construction contract" means an agreement between a
contractor and the department for the construction, improvement, or
maintenance of a bridge, highway, or other transportation facility.
(c) "Contractor" means an individual; sole proprietorship;
partnership; corporation; joint venture; or other legal entity,
other than the state, or an agency or department of the state, who
is a party to a construction contract.
(d) "Project" means the specific section of the highway
construction to be performed under the construction contract.
(2)
A construction contract may shall
provide for partial
progress payments as described in section 7b, to be made
periodically
to a contractor. The department may establish
specifications
regarding the retention of a portion of the total
amount
earned under the construction contract.
(3)
At the request of the contractor and upon the approval of
the
department, the portion retained pursuant to the specifications
established
under subsection (2) shall be placed in an escrow
account
pursuant to this section.
(4)
An escrow agent may be selected by the contractor. For
purposes
of this section, an escrow agent shall be a state or
national
bank, a state or federally chartered savings and loan
association,
or a state or federally chartered credit union whose
principal
place of business is located in this state.
(5)
An escrow agreement shall be entered into between the
contracting
parties and the escrow agent. The escrow agreement
shall
contain all of the following terms:
(a)
That the escrow agent shall promptly invest all of the
escrowed
funds.
(b)
That the escrow agent shall hold the escrowed funds until
receipt
of notice from the department. Upon receipt of a notice of
release
from the department, the escrow agent shall promptly remit
the
designated portion of escrowed funds to the contractor involved
in
the contract. Upon receipt of a notice of overpayment or default
of
the contract, the escrow agent shall promptly remit the
designated
portion of escrowed funds to the department.
(c)
That the escrow agent is responsible for all investments
and
money as a result of the deposit of the amount until released
from
responsibility pursuant to the escrow agreement.
(d)
That the contractor shall pay all expenses regarding the
deposit,
investment, and administration of the retained amount and
all
other charges made by the escrow agent.
(e)
Any other provision agreed to by the contracting parties
and
the escrow agent necessary or proper for purposes of this
section.
Sec. 7b. (1) As used in this section:
(a) "Exception" means a point of disagreement.
(b) "Final payment" means payment at completion of a
construction contract.
(c) "Item" means a separate line item in a construction
contract.
(d) "Notice of completion" means the contractor's written
notice stating that the contract work has been fully performed.
(e) "Progress payment" means a payment made for completion of
an item listed in a construction contract.
(f) "Submission date" means the recurring monthly deadline the
department establishes for the contractor to submit the completed
item invoice for progress payments.
(2) The department shall make progress payments to the
contractor on each construction contract according to the following
procedure:
(a) Each month, the contractor shall submit an invoice of the
items completed to the departmental engineer by the submission
date. The department shall pay each item or portion of an item on
the completed item invoice for which no exception is raised by 14
days after the submission date.
(b) If an exception is raised to any item or portion of an
item, the departmental engineer shall provide written notification
to the contractor within 30 days stating the reason for the
exception. The contractor may resubmit the item at the next
submission date after addressing or responding to the exception.
(3) When the contractor completes its work obligations under
the contract, the contractor shall submit a notice of completion to
the department. By 45 days after receipt of the notice of
completion, the department shall provide the contractor with an
offer of final payment. If the contractor disagrees with the offer
of final payment, the contractor may raise an exception by 45 days
after receipt of the offer using the procedures established in the
department's dispute resolution process. Notwithstanding any
pending dispute, by 75 days after receipt of the notice of
completion, the department shall pay the contractor the amount
indicated in the offer of final payment.
(4) If the department fails to make a progress payment by 75
days after payment is due for an item or items for which no written
notice has been provided under subsection (2)(b), the department
shall pay an additional amount equal to 0.75% of the payment to the
contractor for each month or portion of a month after the payment
due date that the payment remains past due.
(5) If the department fails to make a final payment for the
amount in its offer of final payment by 75 days after it receives
the notice of completion, the department shall pay an additional
amount equal to 0.75% of the payment to the contractor for each
month or portion of a month after the payment due date that the
payment remains past due.
(6) If the department fails to pay an amount in dispute for a
completed item or final payment by 75 days after the date the
dispute is resolved with a determination of a sum certain due to
the contractor, the department shall pay the contractor an
additional amount equal to 0.75% of the payment amount for each
month or portion of a month after date the payment amount is
established that the amount remaining unpaid.
(7) The department shall adopt uniform construction contract
prompt payment practices in compliance with this section. This
section applies to all construction contracts entered into after
January 1, 2012.
