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House Bill 692 |
House Author: Shine et al. |
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Effective: 6-15-21 |
Senate Sponsor: Creighton |
House Bill 692 amends the Government Code to revise retainage requirements for certain public works contracts to establish limits on the amount of retainage withheld to prevent the withholding of excessive retainage and to prohibit the misuse of retainage to confer additional liability or free warranty work, while also providing for the partial release of retainage to incentivize project completion. Among other provisions, the bill requires a governmental entity to include in each applicable public works contract a provision that establishes the circumstances under which the project that is the subject of the contract is considered substantially complete and the circumstances under which the entity may release all or a portion of the retainage for substantially completed portions or fully completed and accepted portions of the project. The bill requires a governmental entity to maintain an accurate record of accounting for the retainage withheld on periodic contract payments and the retainage released to the prime contractor for a public works contract. The bill provides for the maximum amount of retainage that a governmental entity may withhold based on the price and type of a public works contract and for the maximum amount that a prime contractor or subcontractor may withhold from a subcontractor with respect to those contracts.
House Bill 692 prohibits a governmental entity from withholding retainage after completion of a public works contract or for the purpose of requiring the prime contractor, after completion of the contract, to perform work on manufactured goods or systems that were specified by the designer of record and properly installed by the contractor. The bill sets out provisions relating to the continued withholding by a governmental entity of retainage after application to the entity for final payment and release of retainage due to a bona fide dispute and entitles the prime contractor, if there is no bona fide dispute between the entity and the contractor and neither party is in default under the contract, to cure any noncompliant labor, services, or materials or offer the governmental entity a reasonable amount of money as compensation for any noncompliant labor, services, or materials that cannot be promptly cured. The bill provides that a governmental entity is not required to accept the offer of compensation and provides that the bill's provisions may not be construed to limit an applicable party's right to pursue any remedy available under the contract or other applicable law.