By: West, Royce S.B. No. 227
73R1668 MJW-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the minimum contract amount in a public works or
1-3 construction contract requiring execution of a bond.
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 $100,000 <$25,000> with this State, any department,
1-10 board or agency thereof; or any county of this State, department,
1-11 board or agency thereof; or any municipality of this State,
1-12 department, board or agency thereof; or any school district in this
1-13 State, common or independent, or subdivision thereof; or any other
1-14 governmental or quasi-governmental authority whether specifically
1-15 named herein or not, authorized under any law of this State,
1-16 general or local, to enter into contractual agreements for the
1-17 construction, alteration or repair of any public building or the
1-18 prosecution or completion of any public work, shall be required
1-19 before commencing such work to execute to the aforementioned
1-20 governmental authority or authorities, as the case may be, the
1-21 statutory bonds as hereinafter prescribed, but no governmental
1-22 authority may require a bond if the contract does not exceed the
1-23 sum of $100,000 <$25,000>. Each such bond shall be executed by a
1-24 corporate surety or corporate sureties in accordance with Section
2-1 1, Chapter 87, Acts of the 56th Legislature, Regular Session, 1959
2-2 (Article 7.19-1, Vernon's Texas Insurance Code). In the case of
2-3 contracts of the State or a department, board, or agency thereof,
2-4 the aforesaid bonds shall be payable to the State and shall be
2-5 approved by the Attorney General as to form. In case of all other
2-6 contracts subject to this Act, the bonds shall be payable to the
2-7 governmental awarding authority concerned, and shall be approved by
2-8 it as to form. Any bond furnished by any prime contractor in an
2-9 attempted compliance with this Act shall be treated and construed
2-10 as in conformity with the requirements of this Act as to rights
2-11 created, limitations thereon, and remedies provided. Any provision
2-12 in any bond furnished by a prime contractor in attempted compliance
2-13 with this Act that expands or restricts the rights or liabilities
2-14 provided under this Act shall be disregarded and the provisions of
2-15 this Act shall be read into that bond.
2-16 (a) A Performance Bond in the amount of the contract
2-17 conditioned upon the faithful performance of the work in accordance
2-18 with the plans, specifications, and contract documents. Said bond
2-19 shall be solely for the protection of the State or the governmental
2-20 authority awarding the contract, as the case may be.
2-21 (b) A Payment Bond, in the amount of the contract,
2-22 solely for the protection of all claimants supplying labor and
2-23 material as hereinafter defined, in the prosecution of the work
2-24 provided for in said contract, for the use of each such claimant.
2-25 Notwithstanding any provision in this Act or in Chapter 252
2-26 or 262, Local Government Code, if the governmental authority fails
2-27 to obtain from the prime contractor a payment bond in compliance
3-1 with this Act covering a contract in excess of $100,000 <$25,000>,
3-2 the authority is subject to the same liability as that of a surety
3-3 who had issued a valid bond if the authority had complied with this
3-4 section, and a claimant is entitled to a lien on funds due the
3-5 prime contractor in the same manner and to the same extent as if
3-6 the contract were subject to Subchapter J, Chapter 53, Property
3-7 Code.
3-8 SECTION 2. Section 252.044(b), Local Government Code, is
3-9 repealed.
3-10 SECTION 3. This Act takes effect September 1, 1993, and
3-11 applies only to a contract entered into on or after that date. A
3-12 contract entered into before the effective date of this Act is
3-13 governed by the law in effect when the contract was entered into,
3-14 and the former law is continued in effect for that purpose.
3-15 SECTION 4. The importance of this legislation and the
3-16 crowded condition of the calendars in both houses create an
3-17 emergency and an imperative public necessity that the
3-18 constitutional rule requiring bills to be read on three several
3-19 days in each house be suspended, and this rule is hereby suspended.