H.B. No. 31
1-1 AN ACT
1-2 relating to government contracts for which a performance or payment
1-3 bond is required; providing a penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section A, Article 5160, Revised Statutes, is
1-6 amended to read as follows:
1-7 A. Any person or persons, firm, or corporation, hereinafter
1-8 referred to as "prime contractor," entering into a formal contract
1-9 in excess of the amounts specified by this section <$25,000> with
1-10 this State, any department, board or agency thereof; or any county
1-11 of this State, department, board or agency thereof; or any
1-12 municipality of this State, department, board or agency thereof; or
1-13 any school district in this State, common or independent, or
1-14 subdivision thereof; or any other governmental or
1-15 quasi-governmental authority whether specifically named herein or
1-16 not, authorized under any law of this State, general or local, to
1-17 enter into contractual agreements for the construction, alteration
1-18 or repair of any public building or the prosecution or completion
1-19 of any public work, shall be required before commencing such work
1-20 to execute to the aforementioned governmental authority or
1-21 authorities, as the case may be, the statutory bonds as hereinafter
1-22 prescribed<, but no governmental authority may require a bond if
1-23 the contract does not exceed the sum of $25,000>. Each such bond
1-24 shall be executed by a corporate surety or corporate sureties in
2-1 accordance with Section 1, Chapter 87, Acts of the 56th
2-2 Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
2-3 Insurance Code). In the case of contracts of the State or a
2-4 department, board, or agency thereof, the aforesaid bonds shall be
2-5 payable to the State and shall be approved by the Attorney General
2-6 as to form. In case of all other contracts subject to this Act,
2-7 the bonds shall be payable to the governmental awarding authority
2-8 concerned, and shall be approved by it as to form. Any bond
2-9 furnished by any prime contractor in an attempted compliance with
2-10 this Act shall be treated and construed as in conformity with the
2-11 requirements of this Act as to rights created, limitations thereon,
2-12 and remedies provided. Any provision in any bond furnished by a
2-13 prime contractor in attempted compliance with this Act that expands
2-14 or restricts the rights or liabilities provided under this Act
2-15 shall be disregarded and the provisions of this Act shall be read
2-16 into that bond.
2-17 (a) For a contract in excess of $100,000, a <A> Performance
2-18 Bond shall be executed in the amount of the contract conditioned
2-19 upon the faithful performance of the work in accordance with the
2-20 plans, specifications, and contract documents. Said bond shall be
2-21 solely for the protection of the State or the governmental
2-22 authority awarding the contract, as the case may be.
2-23 (b) For a contract in excess of $25,000, a <A> Payment Bond
2-24 shall be executed, in the amount of the contract, solely for the
2-25 protection of all claimants supplying labor and material as
2-26 hereinafter defined, in the prosecution of the work provided for in
2-27 said contract, for the use of each such claimant.
3-1 Notwithstanding any provision in this Act or in Chapter 252
3-2 or 262, Local Government Code, if the governmental authority fails
3-3 to obtain from the prime contractor a payment bond in compliance
3-4 with this Act covering a contract in excess of $25,000, the
3-5 authority is subject to the same liability as that of a surety who
3-6 had issued a valid bond if the authority had complied with this
3-7 section, and a claimant is entitled to a lien on funds due the
3-8 prime contractor in the same manner and to the same extent as if
3-9 the contract were subject to Subchapter J, Chapter 53, Property
3-10 Code.
3-11 SECTION 2. Section 252.044(b), Local Government Code, is
3-12 repealed.
3-13 SECTION 3. This Act takes effect September 1, 1993, and
3-14 applies only to a contract entered into on or after that date. A
3-15 contract entered into before the effective date of this Act is
3-16 governed by the law in effect when the contract was entered into,
3-17 and the former law is continued in effect for that purpose.
3-18 SECTION 4. The importance of this legislation and the
3-19 crowded condition of the calendars in both houses create an
3-20 emergency and an imperative public necessity that the
3-21 constitutional rule requiring bills to be read on three several
3-22 days in each house be suspended, and this rule is hereby suspended.