By Bailey H.B. No. 2884
76R7660 JRD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to government contracts for public works.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 2252, Government Code, is amended by
1-5 adding Subchapter E to read as follows:
1-6 SUBCHAPTER E. BIDDING ON PUBLIC WORKS CONTRACTS
1-7 Sec. 2252.121. DEFINITIONS. In this subchapter:
1-8 (1) "Governmental entity" means:
1-9 (A) the state, a county, a municipality, or
1-10 another political subdivision of the state;
1-11 (B) a department, board, or agency of the state
1-12 or of a county, municipality, or other political subdivision of the
1-13 state;
1-14 (C) a school district or a subdivision of a
1-15 school district; or
1-16 (D) any other governmental or quasi-governmental
1-17 authority authorized by statute to make a public works contract.
1-18 (2) "Public works" includes the construction,
1-19 alteration, or repair of a public building or the construction or
1-20 completion of another public work such as a public road or highway.
1-21 Sec. 2252.122. INFORMATION REQUIRED IN BID OR PROPOSAL FOR
1-22 PUBLIC WORKS CONTRACT. A business entity submitting a bid or
1-23 proposal to a governmental entity for a public works contract must
1-24 include the following information in the bid or proposal:
2-1 (1) the name of each governmental entity that has
2-2 awarded a public works contract to the business entity during the
2-3 preceding 10 years;
2-4 (2) whether the business entity has at any time during
2-5 the preceding seven years filed in bankruptcy, been adjudged
2-6 bankrupt, or been reorganized because of insolvency;
2-7 (3) whether a principal, director, executive officer,
2-8 or partner of the business entity has at any time during the
2-9 preceding seven years:
2-10 (A) filed in bankruptcy, been adjudged bankrupt,
2-11 or been reorganized because of insolvency; or
2-12 (B) been a principal, director, executive
2-13 officer, or partner of another business entity that has at any
2-14 time during the preceding seven years filed in bankruptcy, been
2-15 adjudged bankrupt, or been reorganized because of insolvency; and
2-16 (4) the name of each person with which the business
2-17 entity intends to subcontract in the course of performing the
2-18 public works contract.
2-19 Sec. 2252.123. CONSIDERATION OF PAST PERFORMANCE. In
2-20 considering which bid or proposal for a public works contract is
2-21 the lowest and best bid or proposal or offers the best value, a
2-22 governmental entity shall consider the past performance of the
2-23 bidder or proposer on past public works contracts with any
2-24 governmental entity. In particular, the governmental entity shall
2-25 consider past performance that involved poor workmanship, excessive
2-26 cost overruns, or excessive change orders.
2-27 Sec. 2252.124. CERTAIN CONTRACTS PROHIBITED. (a) A
3-1 governmental entity may not award a public works contract to a
3-2 bidder or proposer that a court has found to have been, or that a
3-3 state or federal agency has formally found after notice and a
3-4 hearing to have been, in violation of a state or federal law that
3-5 applied to the bidder or proposer in the course of the bidder's or
3-6 proposer's performance under a previous public works contract with
3-7 a governmental entity.
3-8 (b) A governmental entity may not refuse to award a public
3-9 works contract to a bidder or proposer solely on the ground that
3-10 the bidder or proposer has filed in bankruptcy, been adjudged
3-11 bankrupt, or been reorganized because of insolvency or because a
3-12 principal, director, executive officer, or partner of the bidder
3-13 or proposer has or has been affiliated with another business entity
3-14 that has filed in bankruptcy, been adjudged bankrupt, or been
3-15 reorganized because of insolvency. However, the governmental entity
3-16 may consider the financial resources of any bidder or proposer for
3-17 a public works contract and may not award the contract to a bidder
3-18 or proposer if the governmental entity determines that the bidder
3-19 or proposer lacks the financial resources to successfully perform
3-20 the contract.
3-21 Sec. 2252.125. SUBCONTRACTORS. The bidder or proposer that
3-22 is awarded the public works contract shall furnish to the
3-23 governmental entity the name of each subcontractor to which it
3-24 awards a subcontract in the course of performing the public works
3-25 contract.
3-26 SECTION 2. Section 2253.021, Government Code, is amended to
3-27 read as follows:
4-1 Sec. 2253.021. PERFORMANCE AND PAYMENT BONDS REQUIRED. (a)
4-2 A governmental entity that makes a public work contract with a
4-3 prime contractor shall require the prime contractor and each
4-4 subcontractor who contracts directly with the prime contractor,
4-5 before beginning the work, to execute to the governmental entity:
4-6 (1) a performance bond for each [if the] contract or
4-7 subcontract the contractor is awarded that is in excess of
4-8 $100,000; and
4-9 (2) a payment bond for each [if the] contract or
4-10 subcontract the contractor is awarded that is in excess of $25,000.
4-11 (b) Each [The] performance bond is:
4-12 (1) solely for the protection of the state or
4-13 governmental entity awarding the prime public work contract;
4-14 (2) in the amount of the contract or subcontract; and
4-15 (3) conditioned on the faithful performance of the
4-16 work in accordance with the plans, specifications, and contract
4-17 documents.
4-18 (c) Each [The] payment bond is:
4-19 (1) solely for the protection and use of payment bond
4-20 beneficiaries who have a direct contractual relationship with the
4-21 prime contractor or a subcontractor to supply public work labor or
4-22 material; and
4-23 (2) in the amount of the contract or subcontract.
4-24 (d) A bond required by this section must be executed by a
4-25 corporate surety in accordance with Section 1, Chapter 87, Acts of
4-26 the 56th Legislature, Regular Session, 1959 (Article 7.19-1,
4-27 Vernon's Texas Insurance Code).
5-1 (e) A bond executed for or under a public work contract with
5-2 the state or a department, board, or agency of the state must be
5-3 payable to the state and its form must be approved by the attorney
5-4 general. A bond executed for or under a public work contract with
5-5 another governmental entity must be payable to and its form must be
5-6 approved by the awarding governmental entity.
5-7 SECTION 3. Section 2253.023, Government Code, is amended to
5-8 read as follows:
5-9 Sec. 2253.023. ATTEMPTED COMPLIANCE. (a) A bond furnished
5-10 by a [prime] contractor in an attempt to comply with this chapter
5-11 shall be construed to comply with this chapter regarding the rights
5-12 created, limitations on those rights, and remedies provided.
5-13 (b) A provision in a bond furnished by a [prime] contractor
5-14 in an attempt to comply with this chapter that expands or restricts
5-15 a right or liability under this chapter shall be disregarded, and
5-16 this chapter shall apply to that bond.
5-17 SECTION 4. Section 2253.025(a), Government Code, is amended
5-18 to read as follows:
5-19 (a) A payment bond beneficiary, not later than the 30th day
5-20 after the date the beneficiary receives a written request from the
5-21 [prime] contractor or a surety on a bond on which a claim is made,
5-22 shall provide to the contractor or surety:
5-23 (1) a copy of any applicable written agreement or
5-24 purchase order; and
5-25 (2) any statement or payment request of the
5-26 beneficiary that shows the amount claimed and the work performed by
5-27 the beneficiary for which the claim is made.
6-1 SECTION 5. Section 2253.026(a), Government Code, is amended
6-2 to read as follows:
6-3 (a) A governmental entity shall furnish a certified copy of
6-4 a payment bond and the public work contract for or under which the
6-5 bond was given to any person who applies for the copy and who
6-6 submits an affidavit that the person:
6-7 (1) has supplied public work labor or material for
6-8 which the person has not been paid;
6-9 (2) has contracted for specially fabricated material
6-10 for which the person has not been paid; or
6-11 (3) is being sued on a payment bond.
6-12 SECTION 6. Section 2253.027, Government Code, is amended to
6-13 read as follows:
6-14 Sec. 2253.027. LIABILITY OF GOVERNMENTAL ENTITY. If a
6-15 governmental entity fails to obtain from a [prime] contractor a
6-16 payment bond as required by Section 2253.021:
6-17 (1) the entity is subject to the same liability that a
6-18 surety would have if the surety had issued a payment bond and if
6-19 the entity had obtained the bond; and
6-20 (2) a payment bond beneficiary is entitled to a lien
6-21 on money due to the prime contractor or relevant subcontractor in
6-22 the same manner and to the same extent as if the public work
6-23 contract were subject to Subchapter J, Chapter 53, Property Code.
6-24 SECTION 7. Section 2253.041(a), Government Code, is amended
6-25 to read as follows:
6-26 (a) To recover in a suit under Section 2253.073 on a payment
6-27 bond for a claim for payment for public work labor performed or
7-1 public work material delivered, a payment bond beneficiary must
7-2 mail to the prime contractor or relevant subcontractor and the
7-3 surety written notice of the claim.
7-4 SECTION 8. Section 2253.046(a), Government Code, is amended
7-5 to read as follows:
7-6 (a) To recover in a suit under Section 2253.073 on a payment
7-7 bond for a claim for payment of retainage, a payment bond
7-8 beneficiary whose contract with a prime contractor or subcontractor
7-9 provides for retainage must mail written notice of the claim to the
7-10 prime contractor or relevant subcontractor and the surety on or
7-11 before the 90th day after the date of final completion of the
7-12 public work contract.
7-13 SECTION 9. Section 2253.047, Government Code, is amended to
7-14 read as follows:
7-15 Sec. 2253.047. ADDITIONAL NOTICE REQUIRED FOR PAYMENT BOND
7-16 BENEFICIARY WITHOUT DIRECT CONTRACTUAL RELATIONSHIP WITH [PRIME]
7-17 CONTRACTOR. (a) To recover in a suit under Section 2253.073 on a
7-18 payment bond, a payment bond beneficiary who does not have a direct
7-19 contractual relationship with the prime contractor or the
7-20 subcontractor under whose bond the beneficiary intends to recover
7-21 for public work labor or material must mail notice as required by
7-22 this section.
7-23 (b) A payment bond beneficiary who contracts with a
7-24 subcontractor for retainage must mail, on or before the 15th day of
7-25 the second month after the date of the beginning of the delivery of
7-26 public work material or the performance of public work labor,
7-27 written notice to the prime contractor or relevant subcontractor
8-1 that:
8-2 (1) the contract provides for retainage; and
8-3 (2) generally indicates the nature of the retainage.
8-4 (c) The payment bond beneficiary must mail to the prime
8-5 contractor or relevant subcontractor written notice of a claim for
8-6 any unpaid public work labor performed or public work material
8-7 delivered. The notice must be mailed on or before the 15th day of
8-8 the second month after each month in which the labor was performed
8-9 or the material was delivered. A copy of the statement sent to a
8-10 subcontractor is sufficient as notice under this subsection.
8-11 (d) The payment bond beneficiary must mail to the prime
8-12 contractor or relevant subcontractor, on or before the 15th day of
8-13 the second month after the receipt and acceptance of an order for
8-14 specially fabricated material, written notice that the order has
8-15 been received and accepted.
8-16 (e) This section applies only to a payment bond beneficiary
8-17 who is not an individual mechanic or laborer and who makes a claim
8-18 for wages.
8-19 SECTION 10. Section 2253.048(b), Government Code, is amended
8-20 to read as follows:
8-21 (b) A notice required by this subchapter to be mailed to a
8-22 [prime] contractor must be addressed to the [prime] contractor at
8-23 the contractor's residence or last known business address.
8-24 SECTION 11. Sections 2253.071(a) and (c), Government Code,
8-25 are amended to read as follows:
8-26 (a) The proceeds of a public work contract are not payable,
8-27 until all costs of completion of the contract work are paid by the
9-1 contractor or the contractor's surety, to a contractor who
9-2 furnishes a bond required by this chapter if:
9-3 (1) the contractor abandons performance of the
9-4 contract; or
9-5 (2) the contractor's right to proceed with performance
9-6 of the contract is lawfully terminated by the awarding governmental
9-7 entity or the prime contractor because of the contractor's default.
9-8 (c) A surety that completes a public work contract or incurs
9-9 a loss under a performance bond required under this chapter has a
9-10 claim to the proceeds of the contract prior to all other creditors
9-11 of the [prime] contractor to the full extent of the surety's loss.
9-12 That priority does not excuse the surety from paying an obligation
9-13 under a payment bond.
9-14 SECTION 12. This Act takes effect September 1, 1999. The
9-15 changes in law made by this Act apply only in relation to a public
9-16 works contract for which a governmental entity disseminates
9-17 requests for bids or proposals on or after that date.
9-18 SECTION 13. The importance of this legislation and the
9-19 crowded condition of the calendars in both houses create an
9-20 emergency and an imperative public necessity that the
9-21 constitutional rule requiring bills to be read on three several
9-22 days in each house be suspended, and this rule is hereby suspended.