By: Bomer H.B. No. 643
73R3162 CAG-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the authority of a municipality or county to set
1-3 reasonable financial criteria for a surety company that provides a
1-4 payment or performance bond.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subchapter C, Chapter 252, Local Government Code,
1-7 is amended by adding Section 252.0445 to read as follows:
1-8 Sec. 252.0445. FINANCIAL CRITERIA FOR SURETY COMPANY. A
1-9 municipality may establish financial criteria for a surety company
1-10 that provides a payment or performance bond relating to a contract
1-11 made under this chapter.
1-12 SECTION 2. Section 262.025(d), Local Government Code, is
1-13 redesignated as Section 262.0256 and amended to read as follows:
1-14 Sec. 262.0256. WORK TO BE PERFORMED BY BIDDER. (a) This
1-15 section applies only to:
1-16 (1) <(d) In> a county with a population of 2.2 million
1-17 or more; and
1-18 (2) a<, the county and any> district or authority that
1-19 is located in a county with a population of 2.2 million or more, is
1-20 created under Article XVI, Section 59, of the Texas Constitution,
1-21 and is governed by <of which the governing body is> the
1-22 commissioners court of the county.
1-23 (b) The county, district, or authority may require that a
1-24 minimum of 25 percent of the work be performed by the bidder <and,
2-1 notwithstanding any other law to the contrary, may establish
2-2 financial criteria for the surety companies that provide payment
2-3 and performance bonds>.
2-4 SECTION 3. Subchapter C, Chapter 262, Local Government Code,
2-5 is amended by adding Section 262.0257 to read as follows:
2-6 Sec. 262.0257. FINANCIAL CRITERIA FOR SURETY COMPANY. A
2-7 county, district, or authority may establish financial criteria for
2-8 a surety company that provides a payment or performance bond
2-9 relating to a contract made under this subchapter.
2-10 SECTION 4. Section 271.025(e), Local Government Code, is
2-11 redesignated as Section 271.0255 and amended to read as follows:
2-12 Sec. 271.0255. WORK TO BE PERFORMED BY BIDDER. (a) This
2-13 section applies only to:
2-14 (1) <(e) In> a county with a population of 2.2 million
2-15 or more; and
2-16 (2) a<, the county and any> district or authority that
2-17 is located in a county with a population of 2.2 million or more, is
2-18 created under Article XVI, Section 59, of the Texas Constitution,
2-19 and is governed by <of which the governing body is> the
2-20 commissioners court of the county.
2-21 (b) The county, district, or authority may require that a
2-22 minimum of 25 percent of the work be performed by the bidder <and,
2-23 notwithstanding any other law to the contrary, may establish
2-24 financial criteria for the surety companies that provide payment
2-25 and performance bonds>.
2-26 SECTION 5. Subchapter B, Chapter 271, Local Government Code,
2-27 is amended by adding Section 271.0256 to read as follows:
3-1 Sec. 271.0256. FINANCIAL CRITERIA FOR SURETY COMPANY. A
3-2 county, municipality, district, or authority may establish
3-3 financial criteria for a surety company that provides a payment or
3-4 performance bond relating to a contract made under this subchapter.
3-5 SECTION 6. Section 271.055(e), Local Government Code, is
3-6 redesignated as Section 271.0565 and amended to read as follows:
3-7 Sec. 271.0565. WORK TO BE PERFORMED BY BIDDER. (a) This
3-8 section applies only to:
3-9 (1) <(e) In> a county with a population of 2.2 million
3-10 or more; and
3-11 (2) a<, the county and any> district or authority that
3-12 is located in a county with a population of 2.2 million or more, is
3-13 created under Article XVI, Section 59, of the Texas Constitution,
3-14 and is governed by <of which the governing body is> the
3-15 commissioners court of the county.
3-16 (b) The county, district, or authority may require that a
3-17 minimum of 25 percent of the work be performed by the bidder <and,
3-18 notwithstanding any other law to the contrary, may establish
3-19 financial criteria for the surety companies that provide payment
3-20 and performance bonds>.
3-21 SECTION 7. Subchapter C, Chapter 271, Local Government Code,
3-22 is amended by adding Section 271.0566 to read as follows:
3-23 Sec. 271.0566. FINANCIAL CRITERIA FOR SURETY COMPANY. An
3-24 issuer may establish financial criteria for a surety company that
3-25 provides a payment or performance bond relating to a contract made
3-26 under this subchapter.
3-27 SECTION 8. Section A, Article 5160, Revised Statutes, is
4-1 amended to read as follows:
4-2 A. Any person or persons, firm, or corporation, hereinafter
4-3 referred to as "prime contractor," entering into a formal contract
4-4 in excess of $25,000 with this State, any department, board or
4-5 agency thereof; or any county of this State, department, board or
4-6 agency thereof; or any municipality of this State, department,
4-7 board or agency thereof; or any school district in this State,
4-8 common or independent, or subdivision thereof; or any other
4-9 governmental or quasi-governmental authority whether specifically
4-10 named herein or not, authorized under any law of this State,
4-11 general or local, to enter into contractual agreements for the
4-12 construction, alteration or repair of any public building or the
4-13 prosecution or completion of any public work, shall be required
4-14 before commencing such work to execute to the aforementioned
4-15 governmental authority or authorities, as the case may be, the
4-16 statutory bonds as hereinafter prescribed, but no governmental
4-17 authority may require a bond if the contract does not exceed the
4-18 sum of $25,000. Each such bond shall be executed by a corporate
4-19 surety or corporate sureties in accordance with Section 252.0445,
4-20 262.0257, 271.0256, or 271.0566, Local Government Code, if
4-21 applicable, and with Section 1, Chapter 87, Acts of the 56th
4-22 Legislature, Regular Session, 1959 (Article 7.19-1, Vernon's Texas
4-23 Insurance Code). In the case of contracts of the State or a
4-24 department, board, or agency thereof, the aforesaid bonds shall be
4-25 payable to the State and shall be approved by the Attorney General
4-26 as to form. In case of all other contracts subject to this Act,
4-27 the bonds shall be payable to the governmental awarding authority
5-1 concerned, and shall be approved by it as to form. Any bond
5-2 furnished by any prime contractor in an attempted compliance with
5-3 this Act shall be treated and construed as in conformity with the
5-4 requirements of this Act as to rights created, limitations thereon,
5-5 and remedies provided. Any provision in any bond furnished by a
5-6 prime contractor in attempted compliance with this Act that expands
5-7 or restricts the rights or liabilities provided under this Act
5-8 shall be disregarded and the provisions of this Act shall be read
5-9 into that bond.
5-10 (a) A Performance Bond in the amount of the contract
5-11 conditioned upon the faithful performance of the work in accordance
5-12 with the plans, specifications, and contract documents. Said bond
5-13 shall be solely for the protection of the State or the governmental
5-14 authority awarding the contract, as the case may be.
5-15 (b) A Payment Bond, in the amount of the contract, solely
5-16 for the protection of all claimants supplying labor and material as
5-17 hereinafter defined, in the prosecution of the work provided for in
5-18 said contract, for the use of each such claimant.
5-19 Notwithstanding any provision in this Act or in Chapter 252
5-20 or 262, Local Government Code, if the governmental authority fails
5-21 to obtain from the prime contractor a payment bond in compliance
5-22 with this Act covering a contract in excess of $25,000, the
5-23 authority is subject to the same liability as that of a surety who
5-24 had issued a valid bond if the authority had complied with this
5-25 section, and a claimant is entitled to a lien on funds due the
5-26 prime contractor in the same manner and to the same extent as if
5-27 the contract were subject to Subchapter J, Chapter 53, Property
6-1 Code.
6-2 SECTION 9. The importance of this legislation and the
6-3 crowded condition of the calendars in both houses create an
6-4 emergency and an imperative public necessity that the
6-5 constitutional rule requiring bills to be read on three several
6-6 days in each house be suspended, and this rule is hereby suspended,
6-7 and that this Act take effect and be in force from and after its
6-8 passage, and it is so enacted.