HF 2340

as introduced - 89th Legislature (2015 - 2016) Posted on 05/15/2015 09:16am

A bill for an act
relating to state contracts; permitting uncollectible judgments against prime
contractors to be paid from contract retainage; requiring direct payments to
subcontractors under certain circumstances; amending Minnesota Statutes 2014,
section 16A.1245.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 16A.1245, is amended to read:

16A.1245 PROMPT PAYMENT TO SUBCONTRACTORS.

new text begin (a) new text end Each state agency contract must require the prime contractor to pay any
subcontractor within ten days of the prime contractor's receipt of payment from the state
for undisputed services provided by the subcontractor. The contract must require the
prime contractor to pay interest of 1-1/2 percent per month or any part of a month to
the subcontractor on any undisputed amount not paid on time to the subcontractor. The
minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10.
For an unpaid balance of less than $100, the prime contractor shall pay the actual penalty
due to the subcontractor. A subcontractor who prevails in a civil action to collect interest
penalties from a prime contractor must be awarded its costs and disbursements, including
attorney's fees, incurred in bringing the action. new text begin If the judgment is uncollectible because
the prime contractor has gone out of business or declared bankruptcy, and the state agency
has contract retainage funds, the state agency is authorized to pay a subcontractor who
prevailed, up to the principal amount of the work performed by the subcontractor, from
the retainage. If the retainage is insufficient to pay one or more subcontractors, the state
agency is authorized to dispense pro rata shares of the retainage to subcontractors, based
on the principal amounts due and owing.
new text end

new text begin (b) If a state agency does not require a performance and payment bond, letter
of credit, or other financial mechanism to assure that a prime contractor will pay
subcontractors, the state agency must pay all subcontractors directly during the term of the
contract, upon satisfactory completion of work under the contract.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for contracts entered into on or
after July 1, 2015.
new text end