78R7159 MTB-F

By:  Wentworth                                                    S.B. No. 1580



A BILL TO BE ENTITLED

AN ACT

relating to bond requirements for privatized maintenance 
contracts.         
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 223.042, Transportation Code, is amended 
by adding Subsections (i), (j), and (k) to read as follows:
	(i)  Before beginning work, a private sector contractor 
awarded a contract under this section shall post a bond securing the 
contractor's performance under the contract. Notwithstanding any 
other law, including Chapter 2253, Government Code, if a contract 
awarded under this section covers more than one year, the 
contractor shall post a bond annually in an amount equal to the 
amount to be paid to the contractor over the life of the contract, 
excluding any penalties or bonuses, divided by the number of years 
covered by the contract.
	(j)  A bond posted under Subsection (i) must:                           
		(1)  be solely for the protection of the department; 
and             
		(2)  be conditioned on the faithful performance of the 
maintenance work in accordance with the contract requirements.
	(k)  If a private sector contractor awarded a contract under 
this section fails to post a bond as required, the contract 
terminates and the department is excused from any future 
performance under the contract. A surety that issues a bond 
required under Subsection (i) is:
		(1)  liable only for claims accruing during the term of 
the bond; and
		(2)  not liable for the private sector contractor's 
failure to post a bond during a year covered by the contract.
	SECTION 2.  (a)  This Act takes effect immediately if it 
receives a vote of two-thirds of all the members elected to each 
house, as provided by Section 39, Article III, Texas Constitution.  
If this Act does not receive the vote necessary for immediate 
effect, this Act takes effect September 1, 2003.
	(b)  A maintenance contract entered into by the Texas 
Department of Transportation before September 1, 2003, under 
Section 223.042, Transportation Code, is governed during the 
remaining term of the contract by Section 223.042, Transportation 
Code, as it existed immediately before September 1, 2003, and the 
prior law is continued in effect for that purpose.  Section 223.042, 
Transportation Code, as amended by this Act, applies to the renewal 
of a contract described by this subsection.