By: Ellis, Barrientos S.B. No. 257
A BILL TO BE ENTITLED
AN ACT
1-1 relating to government contracts for which a performance or payment
1-2 bond is required.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section A, Article 5160, Revised Statutes, is
1-5 amended 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 $150,000 <$25,000> with this State, any department,
1-9 board or agency thereof; or any county of this State, department,
1-10 board or agency thereof; or any municipality of this State,
1-11 department, board or agency thereof; or any school district in this
1-12 State, 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 $150,000 <$25,000>. Each such bond shall be executed by a
1-23 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, solely
2-22 for the protection of all claimants supplying labor and material as
2-23 hereinafter defined, in the prosecution of the work provided for in
2-24 said contract, for the use of each such claimant.
2-25 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 $150,000 <$25,000>,
3-4 the authority is subject to the same liability as that of a surety
3-5 who 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 SECTION 2. This Act takes effect September 1, 1993, and the
3-11 changes in law made by this Act relating to the contractual amount
3-12 that requires the execution of bonds apply only to a contract
3-13 entered into on or after that date. A contract entered into before
3-14 the effective date of this Act is governed by Section A, Article
3-15 5160, Revised Statutes, as it existed before the effective date of
3-16 this Act, and the former law is continued in effect for this
3-17 purpose.
3-18 SECTION 3. 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.