2023 -- H 6202

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LC002578

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO PUBLIC PROPERTY AND WORKS -- CONTRACTORS BONDS

     Introduced By: Representatives Cruz, Potter, Alzate, Giraldo, Kazarian, Slater, and
Boylan

     Date Introduced: March 24, 2023

     Referred To: House Labor

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 37-12-1 and 37-12-10 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 or

prime contractor 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 one hundred and

fifty thousand dollars ($150,000), 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 penalties assessed

pursuant to § 37-13-14.1(b), 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. However, upon application and for good cause, the chief purchasing officer of the state

may waive the bonding requirement for a State of Rhode Island office of diversity, equity, and

opportunity certified minority business enterprise (MBE) or women owned business enterprise

(WBE) prime contractor or subcontractor on a public works project for up to two hundred fifty

thousand dollars ($250,000).

     37-12-10. Retainers relating to contracts for public works, sewer, or water main

construction.

     (a) Upon substantial completion of the work required by a contract aggregating in amount

less than five hundred thousand dollars ($500,000) for the construction, reconstruction, alteration,

remodeling, repair, or improvement of sewers and water mains, or any public works project defined

in § 37-13-1, the awarding authority may deduct from its payment a retention to secure satisfactory

performance of the contractual work not exceeding five percent (5%) of the contract price.

     (b) There shall also be deducted and retained from the contract price an additional sum

sufficient to pay the estimated cost of municipal police traffic control on any public works project.

Municipalities shall directly pay the officers working traffic details and shall bill and be reimbursed

by the withholding authority for which the contract is being performed every thirty (30) days until

the project is complete.

     (c) Notwithstanding the foregoing, with respect to projects located within the town of

Warren, the withholding authority shall hold an amount from the contract price that shall be

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reasonably sufficient to pay the estimated cost of municipal police traffic control. The withholding

authority shall pay to the town of Warren within seventy-two (72) hours of written demand the

actual costs of police traffic control associated with said project on an ongoing basis.

     (d) The director of the department of administration shall establish, by rule and regulation

adopted in accordance with chapter 35 of title 42 ("administrative procedures"), methods for the

interim release of retainage of State of Rhode Island office of diversity, equity, and opportunity

minority business enterprises (MBEs).

     SECTION 2. Section 42-11.1-3 of the General Laws in Chapter 42-11.1 entitled "Prompt

Payment by Department of Administration" is hereby amended to read as follows:

     42-11.1-3. Time period for payment.

     (a) All bills shall be paid within thirty (30) working calendar days of receipt of a proper

invoice or other contractual dates for periodic payments, except when a contractor has failed to

submit a bill in accordance with contractually imposed time frames.

     (b) Each contractor shall make payment to subcontractors within ten (10) seven (7) days of

receipt of payment by the state; provided, however, that the contractor may setoff a payment due

to a subcontractor by an amount equal to the amount of an unpaid legally enforceable debt owed

by the subcontractor to the contractor or any amount which the contractor is entitled to withhold

under the terms of the contract entered into by the contractor and subcontractor, or any amount

owed by the subcontractor to the contractor by way of a statutory obligation, or enforceable lien,

of which the contractor or subcontractor had previous knowledge or notice, or has reason to believe

exists.

     (c) This section shall not apply to contractors or subcontractors performing work pursuant

to a contract awarded by the department of transportation unless the subcontractor provides a

payment and performance bond in an amount equal to the contract between the contractor and

subcontractor. Each subcontractor shall make payments to its lower tier subcontractor within seven

(7) days of receipt of payment by the prime contractor.

     (d) The state shall pay a deposit to prime contractors in a sufficient period prior to the

commencement of the scope of the work of a minority business enterprise (MBE) as defined in §

37-14.1-3, subcontractors solely for the purposes of the prime contractor making prearranged

scheduled payments, pursuant to a written contract between the prime contractor and the MBE

subcontractors, to MBE subcontractors for the scope of the MBE subcontractors' work. Upon

receipt of deposit, the prime contractor shall pay the MBE subcontractors within seven (7) calendar

days, pursuant to the prearranged scheduled payments based upon a percentage of the work

completed. Upon failure of the prime contractor to timely pay the MBE subcontractors, the state

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shall pay the MBE subcontractors directly and seek reimbursement from the prime contractor with

any administrative costs incurred by the state. This payment schedule shall be attached as an exhibit

to the prime contractor contract and approved by the state.

     (f) The director of administration shall adopt rules and regulations in accordance with

chapter 35 of title 42 ("administrative procedures"), which are consistent with this chapter and

chapter 2 of title 37 ("state purchases") governing the prompt payment by contractors and

subcontractors and in the instance of payments to MBE subcontractors, deposits to contractors to

allow weekly payments the MBE subcontractors.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC PROPERTY AND WORKS -- CONTRACTORS BONDS

***

     This act would provide that upon application, and good cause, the state may waive the

bonding requirement for certified minority business enterprises or women owned businesses and

would amend the time frame and procedure for payment by prime contractors to minority business

enterprise subcontractors.

     This act would take effect upon passage.

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