By: West, Lucio S.B. No. 227
A BILL TO BE ENTITLED
AN ACT
1-1 relating to a bond executed in connection with a public works or
1-2 public construction contract.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 5160, Revised Statutes, is amended by
1-5 amending Section A and by adding Section J to read as follows:
1-6 A. Any person or persons, firm, or corporation, hereinafter
1-7 referred to as "prime contractor," entering into a formal contract
1-8 in excess of $25,000 with this State, any department, board or
1-9 agency thereof; or any county of this State, department, board or
1-10 agency thereof; or any municipality of this State, department,
1-11 board or agency thereof; or any school district in this State,
1-12 common or independent, or subdivision thereof; or any other
1-13 governmental or quasi-governmental authority whether specifically
1-14 named herein or not, authorized under any law of this State,
1-15 general or local, to enter into contractual agreements for the
1-16 construction, alteration or repair of any public building or the
1-17 prosecution or completion of any public work, shall be required
1-18 before commencing such work to execute to the aforementioned
1-19 governmental authority or authorities, as the case may be, the
1-20 statutory bonds as hereinafter prescribed, but no governmental
1-21 authority may require a bond if the contract does not exceed the
1-22 sum of $25,000. Each such bond shall be executed by a corporate
1-23 surety or corporate sureties in accordance with Section 1, Chapter
1-24 87, Acts of the 56th Legislature, Regular Session, 1959 (Article
2-1 7.19-1, Vernon's Texas Insurance Code). In the case of contracts
2-2 of the State or a department, board, or agency thereof, the
2-3 aforesaid bond <bonds> shall be payable to the State and shall be
2-4 approved by the Attorney General as to form. In case of all other
2-5 contracts subject to this Act, the bond <bonds> shall be payable to
2-6 the governmental awarding authority concerned, and shall be
2-7 approved by it as to form. Any bond furnished by any prime
2-8 contractor in an attempted compliance with this Act shall be
2-9 treated and construed as in conformity with the requirements of
2-10 this Act as to rights created, limitations thereon, and remedies
2-11 provided. Any provision in any bond furnished by a prime
2-12 contractor in attempted compliance with this Act that expands or
2-13 restricts the rights or liabilities provided under this Act shall
2-14 be disregarded and the provisions of this Act shall be read into
2-15 that bond.
2-16 (a) A Performance Bond shall be executed for any contract in
2-17 excess of $100,000 in the amount of the contract conditioned upon
2-18 the faithful performance of the work in accordance with the plans,
2-19 specifications, and contract documents. Said bond shall be solely
2-20 for the protection of the State or the governmental authority
2-21 awarding the contract, as the case may be.
2-22 (b) A Payment Bond shall be executed, for any contract in
2-23 excess of $25,000, in the amount of the contract, solely for the
2-24 protection of all claimants supplying labor and material as
2-25 hereinafter defined, in the prosecution of the work provided for in
2-26 said contract, for the use of each such claimant.
2-27 Notwithstanding any provision in this Act or in Chapter 252
3-1 or 262, Local Government Code, if the governmental authority fails
3-2 to obtain from the prime contractor a payment bond in compliance
3-3 with this Act covering a contract in excess of $25,000, the
3-4 authority is subject to the same liability as that of a surety who
3-5 had issued a valid bond if the authority had complied with this
3-6 section, and a claimant is entitled to a lien on funds due the
3-7 prime contractor in the same manner and to the same extent as if
3-8 the contract were subject to Subchapter J, Chapter 53, Property
3-9 Code.
3-10 J. A governmental authority that awards the contract for the
3-11 construction, alteration, or repair of a public building or for the
3-12 prosecution or completion of any public work may provide for
3-13 payment of the prime contractor in installments based on completion
3-14 of work under the contract.
3-15 SECTION 2. Section 252.044, Local Government Code, is
3-16 amended to read as follows:
3-17 Sec. 252.044. CONTRACTOR'S BOND; INSTALLMENT PAYMENTS.
3-18 <(a)> If the contract is for the construction of public works, the
3-19 <bidder to whom the contract is awarded must execute a good and
3-20 sufficient bond. The bond must be:>
3-21 <(1) in the full amount of the contract price;>
3-22 <(2) conditioned that the contractor will faithfully
3-23 perform the contract; and>
3-24 <(3) executed, in accordance with Article 5160,
3-25 Revised Statutes, by a surety company authorized to do business in
3-26 the state.>
3-27 <(b) If the contract requires an expenditure of less than
4-1 $100,000, the bond is not required if the contract provides that
4-2 payment is not due to the contractor until the work is completed
4-3 and is accepted by the municipality.>
4-4 <(c) The> governing body of a home-rule municipality <by
4-5 ordinance> may:
4-6 (1) by ordinance adopt the provisions of <this section
4-7 and> Article 5160, Revised Statutes, relating to contractors'
4-8 surety bonds, regardless of a conflicting provision in the
4-9 municipality's charter; and
4-10 (2) provide that a contractor will be paid in
4-11 installments based on completion of work under the contract.
4-12 SECTION 3. Subsection (b), Section 262.032, Local Government
4-13 Code, is amended to read as follows:
4-14 (b) The county may provide in the bid notice or request for
4-15 proposals that money will be paid to the contractor in installments
4-16 based on completion of work under the contract. Within 10 days
4-17 after the date of the signing of a contract or issuance of a
4-18 purchase order following the acceptance of a bid or proposal, the
4-19 bidder or proposal offeror shall furnish a performance bond to the
4-20 county for the full amount of the contract if that contract exceeds
4-21 $100,000 <$50,000>.
4-22 SECTION 4. This Act takes effect September 1, 1993, and
4-23 applies only to a contract entered into on or after that date. A
4-24 contract entered into before the effective date of this Act is
4-25 governed by the law in effect when the contract was entered into,
4-26 and the former law is continued in effect for that purpose.
4-27 SECTION 5. The importance of this legislation and the
5-1 crowded condition of the calendars in both houses create an
5-2 emergency and an imperative public necessity that the
5-3 constitutional rule requiring bills to be read on three several
5-4 days in each house be suspended, and this rule is hereby suspended.