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