Print Friendly HOUSE BILL NO. 533 – Public works contracts, perf bonds
HOUSE BILL NO. 533
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PUBLIC WORKS CONTRACTS - Amends existing law to provide that if a
performance or payment bond equal to the total contract amount is furnished
to a public body on a public works contract, no retainage can be withheld
by the public body from the contractor, or by the contractor from the
01/28 House intro - 1st rdg - to printing
01/29 Rpt prt - to Bus
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fourth Legislature Second Regular Session - 1998
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 533
1 AN ACT
2 RELATING TO PUBLIC WORKS CONTRACTORS; AMENDING SECTION 54-1926, IDAHO CODE, TO
3 PROVIDE THAT NO RETAINAGE SHALL BE WITHHELD WHEN A PERFORMANCE BOND OR
4 PAYMENT BOND IS PROVIDED WHICH IS EQUAL TO THE TOTAL CONTRACT AMOUNT AND
5 TO MAKE TECHNICAL CORRECTIONS.
6 Be It Enacted by the Legislature of the State of Idaho:
7 SECTION 1. That Section 54-1926, Idaho Code, be, and the same is hereby
8 amended to read as follows:
9 54-1926. PERFORMANCE AND PAYMENT BONDS REQUIRED OF CONTRACTORS FOR PUBLIC
10 BUILDINGS AND PUBLIC WORKS OF THE STATE, POLITICAL SUBDIVISIONS AND OTHER PUB-
11 LIC INSTRUMENTALITIES -- REQUIREMENTS FOR BONDS -- GOVERNMENTAL OBLIGATIONS.
12 Before any contract for the construction, alteration, or repair of any public
13 building or public work or improvement of the state of Idaho, or of any
14 county, city, town, municipal corporation, township, school district, public
15 educational institution, or other political subdivision, public authority, or
16 public instrumentality, or of any officer, board, commission, institution, or
17 agency of the foregoing, is awarded to any person, he shall furnish to the
18 state of Idaho, or to such county, city, town, municipal corporation, town-
19 ship, school district, public educational institution, or other political sub-
20 division, public authority, or public instrumentality, or to such officer,
21 board, commission, institution, or agency thereof, bonds which shall become
22 binding upon the award of the contract to such person, who is hereinafter des-
23 ignated as "contractor":
24 (1) A performance bond in any amount to be fixed by the contracting body,
25 but in no event less than fifty per cent percent
26 (50%) of the contract amount conditioned upon the faithful performance of the
27 contract in accordance with the plans, specifications and conditions thereof.
28 Said bond shall be solely for the protection of the public body awarding the
30 (2) A payment bond in an amount to be fixed by the contracting body but
31 in no event less than fifty per cent percent (50%)
32 of the contract amount, solely for the protection of persons supplying labor
33 or materials, or renting, leasing, or otherwise supplying equipment to the
34 contractor or his subcontractors in the prosecution of the work provided for
35 in such contract.
36 (3) Public bodies requiring a performance bond or payment bond in excess
37 of fifty per cent percent (50%) but less than
38 one hundred percent (100%) of the total contract amount shall not be
39 authorized to withhold from the contractor or subcontractor any amount exceed-
40 ing five per cent percent (5%) of the total amount
41 payable as retainage. Further, the public body shall release to the contractor
42 any retainage for those portions of the project accepted by the contracting
43 public body and the contractors as complete within thirty (30) days after such
1 acceptance. Public bodies who are furnished a performance bond or pay-
2 ment bond equal to the total contract amount shall not be authorized to with-
3 hold from the contractor or subcontractor any amount as retainage. Con-
4 tractors, contracting with subcontractors pursuant to contract work with a
5 public body, shall not be authorized to withhold from the subcontractor any
6 amount exceeding five per cent percent (5%) of the
7 total amount payable to the subcontractor as retainage. The contractor shall
8 remit the retainage to the subcontractor within thirty (30) days after comple-
9 tion of the subcontract. If the public body is not authorized to with-
10 hold any amount from the contractor as retainage pursuant to this subsection,
11 the contractor shall not be authorized to withhold any amount from the subcon-
12 tractor as retainage.
13 Each bond shall be executed by a surety company or companies duly autho-
14 rized to do business in this state, or the contractor may deposit any of the
15 type of government obligations listed in subsection (h) of section 54-1901,
16 Idaho Code, in lieu of furnishing a surety company performance or payment bond
17 or bonds. In the case of contracts of the state or a department, board, com-
18 mission, institution, or agency thereof the aforesaid bonds shall be payable
19 to the state, or particular state agency where authorized. In case of all
20 other contracts subject to this act, the bonds shall be payable to the public
21 body concerned.
22 Said bonds shall be filed in the office of the department, board, commis-
23 sion, institution, agency or other contracting body awarding the contract.
24 Nothing in this section shall be construed to limit the authority of the
25 state of Idaho or other public body hereinabove mentioned to require a perfor-
26 mance bond or other security in addition to these, or in cases other than the
27 cases specified in this act.
28 It shall be illegal for the invitation for bids, or any person acting or
29 purporting to act, on behalf of the contracting body to require that such
30 bonds be furnished by a particular surety company, or through a particular
31 agent or broker.
STATEMENT OF PURPOSE
Elimination of retainage when the project is bonded at 100% of
value of the work to be accomplished.
None to state or local municipalities.
Contact: Representative Lee Gagner
STATEMENT OF PURPOSE/FISCAL NOTE
Bill No. H 533