HBA-DMD H.B. 2717 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2717 By: Brimer Business & Industry 3/28/1999 Introduced BACKGROUND AND PURPOSE Current law does not specify how frequently a contractor must submit invoices in order to be paid promptly. Materials that are fabricated especially for a project are not necessarily something for which a contractor must be paid promptly. Currently, a contractor who enters into a written contract to improve a residential homestead for an amount over $5,000 must deposit funds in a construction account in a financial institution, but there is no similar requirement for oral contracts. Current law defines a construction contract as one obligating a party to provide labor or labor and materials, but it does not cover a contract obligating a party to provide materials only. Under current law, the General Services Commission (commission) is not obligated to provide for pollution liability coverage for public works projects. In addition, the commission requires a review of uniform general conditions of state building construction contracts not less than once every five years. H.B. 2717 addresses the above-referenced concerns, as follows. This bill requires contractors and subcontractors to submit invoices at least monthly for goods or services provided. It also provides that an oral contract entered into by a contractor with a property owner to construct improvements to a residential homestead for an amount exceeding $5,000 requires the contractor to deposit the funds in a construction account in a financial institution. It includes providing materials as a principal obligation to a party for the construction or repair of improvements to real property located in this state when defining a construction contract. H.B. 2717 requires the commission to provide for the centralized purchasing of pollution liability. This bill requires the commission to require a review of the uniform general conditions of state building construction contracts whenever the commission considers review worthwhile, but not less frequently than once every three years. This bill also authorizes a contractor who has a contract that requires workers' compensation insurance coverage to provide the coverage through a qualified self-insurance plan. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 28.002, Property Code, as follows: Sec. 28.002. PROMPT PAY REQUIRED. (a) Requires a contractor to submit invoices at least monthly to the owner for goods or services provided for the owner, including goods or services provided to the contractor by a subcontractor. Requires a subcontractor to submit invoices at least monthly to the contractor for goods or services provided for the contractor, including goods or services provided to the subcontractor by another subcontractor. Sets forth that this subsection does not apply to improvements to or construction of a single-family residence, duplex, triplex, or quadruplex. (b) Requires an owner, if the owner or a person authorized to act on behalf of the owner receives a written payment request from a contractor for an amount that is allowed to the contractor under the contract for properly performed work or suitably stored or specially fabricated materials, to pay the amount to the contractor, less any amount withheld as authorized by statute, rather than less any statutory offsets, no later than 45 days after the owner receives the request. Redesignated from Subsection (a). (c) Includes the specification for work "properly" performed by a subcontractor under the requirement of an owner to pay a portion of the payment received under Subsection (b) to that subcontractor. Redesignated from Subsection (b). Makes conforming changes. (d) Redesignated from Subsection (c). Makes conforming changes. SECTION 2. Amends Section 28.006(b), Property Code, to make conforming changes. SECTION 3. Amends Section 162.006(a), Property Code, to include an oral contract entered into by a contractor with a property owner to construct improvements to a residential homestead for an amount exceeding $5,000, that requires the contractor to deposit the trust funds in a construction account in a financial institution. SECTION 4. Amends Sections 35.52(b) and (c), Business & Commerce Code, to include providing materials as a principal obligation to a party for the construction or repair of improvements to real property located in this state when defining a construction contract. Makes a nonsubstantive change. SECTION 5. Amends Section 130.001, Civil Practice and Remedies Code, to modify the definition for "construction contract." SECTION 6. Amends Section 2166.259(c), Government Code, to include pollution liability coverage in a list of the General Service Commission's (commission) requirements to provide centralized purchasing. Makes nonsubstantive and conforming changes. SECTION 7. Amends Section 2166.305(a), Government Code, to require the commission to require a review of the uniform general conditions of state building construction contracts whenever the commission considers review worthwhile, but not less frequently than once every three, rather than five, years. SECTION 8. Amends Section 406.096(c), Labor Code, to include a qualified self-insurance plan as coverage that a contractor who has a contract that requires workers' compensation insurance coverage is authorized to provide. SECTION 9.Effective date: September 1, 1999. SECTION 10.Emergency clause.