1-1 By: West, Lucio S.B. No. 227
1-2 (In the Senate - Filed February 1, 1993; February 2, 1993,
1-3 read first time and referred to Committee on State Affairs;
1-4 March 11, 1993, rereferred to Committee on Economic Development;
1-5 April 6, 1993, reported adversely, with favorable Committee
1-6 Substitute by the following vote: Yeas 7, Nays 0; April 6, 1993,
1-7 sent to printer.)
1-8 COMMITTEE VOTE
1-9 Yea Nay PNV Absent
1-10 Parker x
1-11 Lucio x
1-12 Ellis x
1-13 Haley x
1-14 Harris of Dallas x
1-15 Harris of Tarrant x
1-16 Leedom x
1-17 Madla x
1-18 Rosson x
1-19 Shapiro x
1-20 Wentworth x
1-21 COMMITTEE SUBSTITUTE FOR S.B. No. 227 By: Parker
1-22 A BILL TO BE ENTITLED
1-23 AN ACT
1-24 relating to a bond executed in connection with a public works or
1-25 public construction contract.
1-26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-27 SECTION 1. Article 5160, Revised Statutes, is amended by
1-28 amending Sections A, E, G, and I and by adding Section J to read as
1-29 follows:
1-30 A. Any person or persons, firm, or corporation, hereinafter
1-31 referred to as "prime contractor," entering into a formal contract
1-32 in excess of $100,000 <$25,000> with this State, any department,
1-33 board or agency thereof; or any county of this State, department,
1-34 board or agency thereof; or any municipality of this State,
1-35 department, board or agency thereof; or any school district in this
1-36 State, common or independent, or subdivision thereof; or any other
1-37 governmental or quasi-governmental authority whether specifically
1-38 named herein or not, authorized under any law of this State,
1-39 general or local, to enter into contractual agreements for the
1-40 construction, alteration or repair of any public building or the
1-41 prosecution or completion of any public work, shall be required
1-42 before commencing such work to execute to the aforementioned
1-43 governmental authority or authorities, as the case may be, the
1-44 statutory bond <bonds> as hereinafter prescribed, but no
1-45 governmental authority may require a bond if the contract does not
1-46 exceed the sum of $100,000 <$25,000>. Each such bond shall be
1-47 executed by a corporate surety or corporate sureties in accordance
1-48 with Section 1, Chapter 87, Acts of the 56th Legislature, Regular
1-49 Session, 1959 (Article 7.19-1, Vernon's Texas Insurance Code). In
1-50 the case of contracts of the State or a department, board, or
1-51 agency thereof, the aforesaid bond <bonds> shall be payable to the
1-52 State and shall be approved by the Attorney General as to form. In
1-53 case of all other contracts subject to this Act, the bond <bonds>
1-54 shall be payable to the governmental awarding authority concerned,
1-55 and shall be approved by it as to form. Any bond furnished by any
1-56 prime contractor in an attempted compliance with this Act shall be
1-57 treated and construed as in conformity with the requirements of
1-58 this Act as to rights created, limitations thereon, and remedies
1-59 provided. Any provision in any bond furnished by a prime
1-60 contractor in attempted compliance with this Act that expands or
1-61 restricts the rights or liabilities provided under this Act shall
1-62 be disregarded and the provisions of this Act shall be read into
1-63 that bond.
1-64 <(a) A Performance Bond in the amount of the contract
1-65 conditioned upon the faithful performance of the work in accordance
1-66 with the plans, specifications, and contract documents. Said bond
1-67 shall be solely for the protection of the State or the governmental
1-68 authority awarding the contract, as the case may be.>
2-1 <(b)> A Payment Bond shall be executed, in the amount
2-2 of the contract, solely for the protection of all claimants
2-3 supplying labor and material as hereinafter defined, in the
2-4 prosecution of the work provided for in said contract, for the use
2-5 of each such claimant.
2-6 Notwithstanding any provision in this Act or in Chapter 252
2-7 or 262, Local Government Code, if the governmental authority fails
2-8 to obtain from the prime contractor a payment bond in compliance
2-9 with this Act covering a contract in excess of $100,000 <$25,000>,
2-10 the authority is subject to the same liability as that of a surety
2-11 who had issued a valid bond if the authority had complied with this
2-12 section, and a claimant is entitled to a lien on funds due the
2-13 prime contractor in the same manner and to the same extent as if
2-14 the contract were subject to Subchapter J, Chapter 53, Property
2-15 Code.
2-16 E. In the event any contractor<, who shall have furnished
2-17 the bonds provided in this Statute,> shall abandon performance of
2-18 his contract or the awarding authority shall lawfully terminate his
2-19 right to proceed with performance thereof because of a default or
2-20 defaults on his part, no further proceeds of the contract shall be
2-21 payable to him except as <unless and until all costs of completion
2-22 of the work shall have been paid by him or his surety. Any balance
2-23 remaining shall be payable to him or his surety as their interest
2-24 may appear, as may be> established by agreement or judgment of a
2-25 court of competent jurisdiction. A surety that <completes a
2-26 contract or otherwise> incurs a loss under a <any> bond required by
2-27 this Act has a priority claim to the proceeds of the contract, to
2-28 the full extent of the surety's loss, over all other creditors of
2-29 the prime contractor. That priority does not excuse the surety
2-30 from paying any obligations that it may have under its payment
2-31 bonds.
2-32 G. All suits instituted under the provisions of this Act
2-33 shall be brought in a court of competent jurisdiction in the county
2-34 in which the project or work, or any part thereof, is situated. <No
2-35 suit shall be instituted on the performance bond after the
2-36 expiration of one (1) year after the date of final completion,
2-37 abandonment, or termination of such contract.> No suit shall be
2-38 instituted by a claimant on the payment bond after the expiration
2-39 of one (1) year after the date of the filing of a claim as provided
2-40 by this Act. The State of Texas shall not be liable for the
2-41 payment of any cost or the expenses of any suit instituted by any
2-42 party or parties on the payment bond.
2-43 I. (a) A prime contractor, on written request, shall
2-44 furnish the following information within a reasonable time, but not
2-45 later than the 10th day after the date the request is received, to
2-46 any person who has furnished labor or materials for the prosecution
2-47 of the work to be performed under the prime contract:
2-48 (1) the name and last known address of the department,
2-49 board, agency, or other governmental authority with whom the prime
2-50 contractor contracted for the construction; and
2-51 (2) a copy of the payment bond <and performance bonds>
2-52 that relates <relate> to the construction<, including bonds
2-53 furnished by or to the prime contractor>.
2-54 (b) A subcontractor, on written request by the public body,
2-55 the prime contractor, a surety on a bond covering the prime
2-56 contract, or a person furnishing work under the subcontract, shall
2-57 furnish to that party the following information within a reasonable
2-58 time, but not later than the 10th day after the date the request is
2-59 received:
2-60 (1) the name and last known address of each person
2-61 from whom the subcontractor purchased labor or materials for the
2-62 construction project, other than materials that were furnished to
2-63 the project from the subcontractor's inventory;
2-64 (2) the name and last known address of each person to
2-65 whom the subcontractor furnished labor or materials on the
2-66 construction project; and
2-67 (3) whether the subcontractor has furnished a bond for
2-68 the benefit of its subcontractors or materialmen and if so, the
2-69 name and last known address of the surety and a copy of the bond.
2-70 (c) Not later than the 30th day after the date a written
3-1 request is received from the prime contractor or a surety on a bond
3-2 on which a claim is made, a claimant shall furnish to the
3-3 requesting person a copy of any applicable written agreement,
3-4 purchase order, or contract and any billing, statement, or payment
3-5 request of the claimant reflecting the amount claimed and the work
3-6 performed by the claimant for which the claim is made. If
3-7 requested, the claimant shall provide the estimated amount due for
3-8 each calendar month in which the claimant has performed labor or
3-9 furnished materials.
3-10 (d) If a person from whom information is requested does not
3-11 have a direct contractual relationship on the project with the
3-12 person requesting the information, the person from whom information
3-13 is requested, other than a claimant requested to furnish
3-14 information under Subsection (c) of this section, may require
3-15 payment of the actual costs, not to exceed $25, for furnishing the
3-16 requested information.
3-17 (e) A person, other than a claimant requested to furnish
3-18 information under Subsection (c) of this section, who fails to
3-19 furnish information as required by this section is liable to the
3-20 requesting person for that person's reasonable and necessary costs
3-21 incurred in procuring the requested information.
3-22 J. A governmental authority that awards the contract for the
3-23 construction, alteration, or repair of a public building or for the
3-24 prosecution or completion of any public work may provide for
3-25 payment of the prime contractor in installments based on completion
3-26 of work under the contract.
3-27 SECTION 2. Section 252.044, Local Government Code, is
3-28 amended to read as follows:
3-29 Sec. 252.044. CONTRACTOR'S BOND; INSTALLMENT PAYMENTS.
3-30 <(a)> If the contract is for the construction of public works, the
3-31 <bidder to whom the contract is awarded must execute a good and
3-32 sufficient bond. The bond must be:>
3-33 <(1) in the full amount of the contract price;>
3-34 <(2) conditioned that the contractor will faithfully
3-35 perform the contract; and>
3-36 <(3) executed, in accordance with Article 5160,
3-37 Revised Statutes, by a surety company authorized to do business in
3-38 the state.>
3-39 <(b) If the contract requires an expenditure of less than
3-40 $100,000, the bond is not required if the contract provides that
3-41 payment is not due to the contractor until the work is completed
3-42 and is accepted by the municipality.>
3-43 <(c) The> governing body of a home-rule municipality <by
3-44 ordinance> may:
3-45 (1) by ordinance adopt the provisions of <this section
3-46 and> Article 5160, Revised Statutes, relating to contractors'
3-47 payment <surety> bonds, regardless of a conflicting provision in
3-48 the municipality's charter; and
3-49 (2) provide that a contractor will be paid in
3-50 installments based on completion of work under the contract.
3-51 SECTION 3. The heading of Section 262.032, Local Government
3-52 Code, is amended to read as follows:
3-53 Sec. 262.032. BID <OR PERFORMANCE> BOND; PAYMENT UNDER
3-54 CONTRACT.
3-55 SECTION 4. Subsections (b) and (d), Section 262.032, Local
3-56 Government Code, are amended to read as follows:
3-57 (b) The county may provide in the bid notice or request for
3-58 proposals that money will be paid to the contractor in installments
3-59 based on completion of work under the contract <Within 10 days
3-60 after the date of the signing of a contract or issuance of a
3-61 purchase order following the acceptance of a bid or proposal, the
3-62 bidder or proposal offeror shall furnish a performance bond to the
3-63 county for the full amount of the contract if that contract exceeds
3-64 $50,000>.
3-65 (d) A bidder or proposal offeror whose rates are subject to
3-66 regulation by a state agency may not be required to furnish a
3-67 <performance bond or a> bid bond under this section.
3-68 SECTION 5. This Act takes effect September 1, 1993, and
3-69 applies only to a contract entered into on or after that date. A
3-70 contract entered into before the effective date of this Act is
4-1 governed by the law in effect when the contract was entered into,
4-2 and the former law is continued in effect for that purpose.
4-3 SECTION 6. The importance of this legislation and the
4-4 crowded condition of the calendars in both houses create an
4-5 emergency and an imperative public necessity that the
4-6 constitutional rule requiring bills to be read on three several
4-7 days in each house be suspended, and this rule is hereby suspended.
4-8 * * * * *
4-9 Austin,
4-10 Texas
4-11 April 6, 1993
4-12 Hon. Bob Bullock
4-13 President of the Senate
4-14 Sir:
4-15 We, your Committee on Economic Development to which was referred
4-16 S.B. No. 227, have had the same under consideration, and I am
4-17 instructed to report it back to the Senate with the recommendation
4-18 that it do not pass, but that the Committee Substitute adopted in
4-19 lieu thereof do pass and be printed.
4-20 Parker,
4-21 Chairman
4-22 * * * * *
4-23 WITNESSES
4-24 FOR AGAINST ON
4-25 ___________________________________________________________________
4-26 Name: Sol Villasana x
4-27 Representing: Tx Dept. of Commerce
4-28 City: Austin
4-29 -------------------------------------------------------------------
4-30 Name: Larry Casto x
4-31 Representing: City of Dallas
4-32 City: Dallas
4-33 -------------------------------------------------------------------
4-34 Name: Bob McFarland x
4-35 Representing: City of Arlington
4-36 City: Austin
4-37 -------------------------------------------------------------------
4-38 Name: David Pinkus x
4-39 Representing: Small Business United of Tx
4-40 City: Austin
4-41 -------------------------------------------------------------------