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.