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.