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S. 1095

STATUS INFORMATION

General Bill
Sponsors: Senator McConnell
Document Path: l:\council\bills\pt\1949mm04.doc

Introduced in the Senate on March 24, 2004
Currently residing in the Senate Committee on Finance

Summary: Construction contracts pursuant to consolidated procurement code, determination of unsatisfactory progress

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
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   3/24/2004  Senate  Introduced and read first time SJ-9
   3/24/2004  Senate  Referred to Committee on Finance SJ-9

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

3/24/2004

TO AMEND SECTION 11-35-3030, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO BONDS AND OTHER SECURITY FOR PERFORMANCE OF A CONSTRUCTION CONTRACT PURSUANT TO THE CONSOLIDATED PROCUREMENT CODE, SO AS TO REQUIRE A DETERMINATION OF UNSATISFACTORY PROGRESS BEFORE A RETAINAGE MAY BE WITHHELD FROM THE CONTRACTOR AND TO PROVIDE THAT THE PRIME CONTRACTOR MAY WITHHOLD ONLY A PROPORTIONATE AMOUNT FROM HIS SUBCONTRACTOR.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Section 11-35-3030(4) of the 1976 Code is amended to read:

"(4)    Retention. (a)     Maximum amount to be withheld. In any contract or subcontract for construction which contract or subcontract provides for progress payments in installments based upon an estimated percentage of completion, with a percentage of the contract's proceeds to be retained by the State or general contractor pending completion of the contract or subcontract, the retained amount of each progress payment or installment shall be no more than five percent. Conditions upon which retainage may be withheld. In a contract for construction that provides for progress payments in installments based upon an estimated percentage of completion, a governmental body may retain funds from the progress payments only upon a determination by the governmental body or its agent that a contractor has not achieved satisfactory progress during any period for which a progress payment is to be made. That decision must be based on the assessment of past performance and the likelihood that the performance will continue. The retainage withheld may not exceed five percent of the approved amount of the progress payment and must be adjusted as the contract approaches completion to recognize better-than-

expected performance and the ability to rely on alternative safeguards. This subsection does not limit the right of a governmental body to retain funds from a contractor if a performance or payment bond is not required.

(b)    Retainage withheld on subcontractors. If retainage is withheld from the prime contractor by a governmental body, the prime contractor may withhold from its subcontractors only a percentage of the progress payment due the subcontractor equal to the percentage of the prime contractor's progress payment that the governmental body retains from the prime contractor. An agreement to the contrary is not enforceable.

(b)(c)    Release of Retained Funds. When If the work to be performed on a state construction project or pursuant to a state construction contract is to be performed by multiple prime contractors or by a prime contractor and multiple subcontractors, the work contracted to be done by each individual contractor or subcontractor will be is considered a separate division of the contract for the purpose of retention. As each such division of the contract is certified as having been completed, that portion of the retained funds which is allocable to the completed division of the contract shall must be released forthwith to the prime contractor, who shall, within ten days of its receipt, release to the subcontractor responsible for the completed work the full amount of any retention previously withheld from him by the prime contractor."

SECTION    2.    This act takes effect upon approval by the Governor and applies to a construction contract entered into after that date.

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