Amend CSHB 3605 by adding the following appropriately numbered SECTIONS to the bill and renumbering subsequent SECTIONS of the bill accordingly:

SECTION ____.  Section 17.183, Water Code, is amended to read as follows:

Sec. 17.183.  CONSTRUCTION CONTRACT REQUIREMENTS. (a) The governing body of each political subdivision receiving financial assistance from the board shall require in all contracts for the construction of a project:

(1)  that each bidder furnish a bid guarantee equivalent to five percent of the bid price;

(2)  that each contractor awarded a construction contract furnish performance and payment bonds:

(A)  the performance bond shall include without limitation guarantees that work done under the contract will be completed and performed according to approved plans and specifications and in accordance with sound construction principles and practices; and

(B)  the performance and payment bonds shall be in a penal sum of not less than 100 percent of the contract price and remain in effect for one year beyond the date of approval by the engineer of the political subdivision; [and]

(3)  that payment be made in partial payments as the work progresses;

(4)  that each partial payment shall not exceed 95 percent of the amount due at the time of the payment as shown by the engineer of the project, but, if the project is substantially complete, a partial release of the five percent retainage may be made by the political subdivision with approval of the executive administrator;

(5)  that payment of the retainage remaining due upon completion of the contract shall be made only after:

(A)  approval by the engineer for the political subdivision as required under the bond proceedings;

(B)  approval by the governing body of the political subdivision by a resolution or other formal action; and

(C)  certification by the executive administrator in accordance with the rules of the board that the work to be done under the contract has been completed and performed in a satisfactory manner and in accordance with approved plans and specifications [sound engineering principles and practices];

(6)  that no valid approval may be granted unless the work done under the contract has been completed and performed in a satisfactory manner according to approved plans and specifications; and

(7)  that, if a political subdivision receiving financial assistance under Subchapter K of this chapter, labor from inside the political subdivision be used to the extent possible.