GEC H.B. 2506 75(R)BILL ANALYSIS


BUSINESS & INDUSTRY
H.B. 2506
By: Dukes
4-9-97
Committee Report (Unamended)



BACKGROUND 

Presently, contractors and subcontractors providing goods or services to
local governments are entitled by statute to interest on overdue payments
owed by the subdivision.  However, local governments often enjoy disparate
bargaining power over vendors and may use this leverage to require a
contractual waiver of the vendor's statutory right to interest. 

PURPOSE

This bill precludes vendors from contractually waiving their right to
interest on overdue payments owed by political subdivisions.  By removing
interest on overdue payments as a negotiable point in the contract,
contractors and subcontractors are protected from having to surrender this
right in order to secure the business of the local government.  
 
RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 2251.027, Government Code by adding Subsection
(e), which prohibits political subdivisions from requiring contractors or
subcontractors to waive their right to interest on overdue payments owed
by the political subdivision. 

SECTION 2.  Grandfather Clause

SECTION 3.  Emergency Clause