2016 -- S 2229

========

LC003913

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

A N   A C T

RELATING TO PUBLIC PROPERTY AND WORKS - CONTRACTORS' BONDS

     Introduced By: Senators McCaffrey, Doyle, Miller, Jabour, and Lynch Prata

     Date Introduced: January 27, 2016

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 37-12-1, 37-12-2 and 37-12-3 of the General Laws in Chapter 37-

12 entitled "Contractors' Bonds" are hereby amended to read as follows:

     37-12-1. Contractors required to give bond -- Terms and conditions. -- Every person

(which word for the purposes of this chapter shall include a copartnership, a number of persons

engaged in a joint enterprise, or a corporation), before being awarded a contract by the

department of transportation or by the department of administration, as the case may be, and

every person awarded such a contract as a general contractor or construction or project manager

for the construction, improvement, completion, or repair of any public road or portion thereof or

of any bridge in which the contract price shall be in excess of fifty thousand dollars ($50,000), or

for a contract for the construction, improvement, completion, or repair of any public building, or

portion thereof, shall be required to furnish to the respective department a bond of that person to

the state, with good and sufficient surety or sureties (hereafter in this chapter referred to as

surety), acceptable to the respective department, in a sum not less than fifty percent (50%) and

not more than one hundred percent (100%) of the contract price, conditioned that the contractor,

principal in the bond, the person's executors, administrators, or successors, shall in all things, well

and truly keep and perform the covenants, conditions, and agreements in the contract, and in any

alterations thereof made as therein provided, on the person's part to be kept and performed, at the

time and in the manner therein specified, and in all respects according to their true intent and

meaning, and shall indemnify and save harmless the state, the respective department, and all of its

officers, agents, and employees, as therein stipulated, and shall also promptly pay for all such

labor performed or furnished, together with any penalties, assessments, and fines due under law

for nonpayment or late payment of wages due, and for all such materials and equipment

furnished, (which as to equipment shall mean payment of the reasonable rental value, as

determined by the respective department, of its use during the period of its use), as shall be used

in the carrying on of the work covered by the contract, or shall see that they are promptly paid

for, whether or not the labor is directly performed for or furnished to the contractor or is even

directly performed upon the work covered by the contract, and whether or not the materials are

furnished to the contractor or become component parts of the work, and whether or not the

equipment is furnished to the contractor or even directly used upon the work. The bond shall

contain the provisions that it is subject to all such rights and powers of the respective department

and such other provisions as are set forth in the contract and the plans, specifications, and

proposal incorporated by reference in the contract, and that no extension of the time of

performance of the contract or delay in the completion of the work thereunder or any alterations

thereof, made as therein provided, shall invalidate the bond or release the liability of the surety

thereunder. Waiver of the bonding requirements of this section is expressly prohibited.

     37-12-2. Rights of persons furnishing labor and materials. -- Every person who shall

have performed labor and every person who shall have furnished or supplied labor, material, or

equipment in the prosecution of the work provided for in the contract, in respect of which a

payment bond is furnished under § 37-12-1, and who has not been paid in full therefor before the

expiration of a period of ninety (90) days after the day on which the last of the labor was

performed or furnished by him or her, or material or equipment furnished or supplied by him or

her for which a claim is made, shall have the right to sue on the payment bond for the amount, or

the balance thereof, unpaid at the time of institution of the suit and to prosecute the action to final

execution and judgment for the sum or sums justly due him or her in addition to other available

relief; provided, however, that any person having direct contractual relationship with a

subcontractor but no contractual relationship express or implied with the contractor furnishing the

payment bond shall have a right of action upon the payment bond upon giving written notice to

the contractor within ninety (90) days from the date on which the person furnished or performed

the last of the labor, or furnished or supplied the last of the material or equipment for which the

claim is made, stating with substantial accuracy the amount claimed and the name of the party to

whom the labor was furnished or performed or the material or equipment was furnished or

supplied. The notice shall be served by mailing the same by certified mail, postage prepaid, in an

envelope addressed to the contractor at any place he or she maintains an office, conducts his or

LC003913 - Page 2 of 4

her business, or his or her residence.

     37-12-3. Remedies of creditors and state -- Priority of claims. -- The remedy on the

bond shall be by a civil action brought in the superior court for the counties of Providence and

Bristol and in any suit brought on the bond the rights of the state shall be prior to those of all

creditors. The rights of the state shall include any penalties, assessments, and fines due under law

for nonpayment or late payment of wages due. The rights of persons who shall have performed

labor as aforesaid shall be prior to the rights of all other creditors, and there shall be no priorities

among laborers or among other creditors under the bond. The state, either after having recovered

a judgment against the contractor on the contract or without having recovered a judgment, may

bring a suit on the bond against the contractor and surety on the bond, and may join as parties

defendant in the suit any persons claiming to have rights under the bond as creditors; and, if it has

not brought such a suit, it may at any time before a final and conclusive decree, intervene and

become a party in any suit brought, as hereafter provided in this chapter, by any person claiming

to be a creditor under the bond.

     SECTION 2. This act shall take effect upon passage.

========

LC003913

========

LC003913 - Page 3 of 4

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC PROPERTY AND WORKS - CONTRACTORS' BONDS

***

     This act would expand the penalties which public works contractors can be assessed for

failing to properly pay persons for the services they provide to them.

     This act would take effect upon passage.

========

LC003913

========

LC003913 - Page 4 of 4