1998 Legislation
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HOUSE BILL NO. 533 – Public works contracts, perf bonds

HOUSE BILL NO. 533

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H0533.............................................................by GAGNER
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
subcontractor.

01/28    House intro - 1st rdg - to printing
01/29    Rpt prt - to Bus

Bill Text


H0533


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 533

                                        BY GAGNER

 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
29    contract.
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


                                          2

 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 / Fiscal Impact


    





                          STATEMENT OF PURPOSE
    
                                RS 07730
    
    RETAINAGE: 54-1926
    
    Elimination of retainage when the project is bonded at 100% of 
    value of the work to be accomplished.
    
    FISCAL NOTE
    
    None to state or local municipalities.
    
    Contact: Representative Lee Gagner
             332-1248
    
    STATEMENT OF PURPOSE/FISCAL NOTE
    
    Bill No. H 533