HBA-DMD C.S.H.B. 2717 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2717
By: Brimer
Business & Industry
4/8/1999
Committee Report (Substituted)



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 written purchase
orders. 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 or equipment. 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.  

C.S.H.B. 2717 addresses the above-referenced concerns, as follows. This
bill provides that a written purchase order 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 or equipment 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. C.S.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 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 162.006(a), Property Code, to include a written
purchase order 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 2.  Amends Sections 35.52(b) and (c), Business & Commerce Code, and
adds Subsection (e), to include providing materials or equipment, rather
than labor and 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. Provides that a judgment
rendered by a court or a decision issued by an arbitrator that is
inconsistent with this section is not enforceable in this state. Makes a
nonsubstantive change. 

SECTION 3.  Amends Section 130.001, Civil Practice and Remedies Code, to
modify the definition for "construction contract." 

SECTION 4.  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 5.  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 6.  Amends Section 406.096(c), Labor Code, to include a
self-insurance plan certified under Chapter 407 (Self Insurance
Regulation), Labor Code, as coverage that a contractor who has a contract
that requires workers' compensation insurance coverage is authorized to
provide.  

SECTION 7.Effective date: September 1, 1999. 
Makes application of this Act prospective, as it applies to a contract or
agreement involving the construction or repair of improvements to private
or public real property. 
 
SECTION 8.Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2717 differs from the original bill by deleting the original
SECTIONS 1 and 2, which amended Sections 28.002 and 28.006, Property Code
to require a contractor to submit invoices at least monthly to the owner
for goods or services provided for the owner and requires a subcontractor
to submit invoices at least monthly to the contractor for goods or services
provided for the contractor. 

This substitute redesignates SECTIONS 3-10 from the original bill to
SECTIONS 1-8 of the substitute.  

C.S.H.B. 2717 differs from the original bill in SECTION 1 (Section 162.006,
Property Code), by including a written purchase order, rather than 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.  

C.S.H.B. 2717 differs from the original bill in SECTION 2 (Section 35.52,
Business & Commerce Code), by including providing materials or equipment,
rather than labor, materials or both labor and 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.
This substitute also adds Subsection (e) which provides that a judgment
rendered by a court or a decision issued by an arbitrator that is
inconsistent with this section is not enforceable in this state. This
substitute also makes a nonsubstantive change. 

C.S.H.B. 2717 differs from the original bill in SECTION 4 (Section
2166.259, Government Code), by making a nonsubstantive change. 

C.S.H.B. 2717 differs from the original bill in SECTION 6 (Section 406.096,
Labor Code), by including a self-insurance plan certified under Chapter 407
(Self Insurance Regulation), Labor Code, rather than a qualified
self-insurance plan, as coverage that a contractor who has a contract that
requires workers' compensation insurance coverage is authorized to provide.
 
C.S.H.B. 2717 differs from the original bill in SECTION 7 by adding a
prospective clause.