S.B. 591

VETOES

Article - State Finance and Procurement

17-110.

(A)   (1) IF A CONTRACTOR HAS FURNISHED 100% PAYMENT SECURITY AND
100% PERFORMANCE SECURITY IN ACCORDANCE WITH THIS SUBTITLE UNDER A
CONTRACT FOR CONSTRUCTION AWARDED BY A PUBLIC BODY, THE PERCENTAGE
SPECIFIED IN THE CONTRACT FOR RETAINAGE MAY NOT EXCEED 5% 10% OF THE
TOTAL AMOUNT FOR THE FIRST 50% OF THE CONTRACT.

(2) UNLESS A PUBLIC BODY DEMONSTRATES THE NEED TO RETAIN
MORE THAN 5% TO PROTECT THE PUBLIC INTEREST, AFTER 50% OF THE CONTRACT
IS COMPLETED, A PUBLIC BODY MAY RETAIN ONLY 5% OF THE TOTAL AMOUNT.

(3) IN ADDITION TO RETAINAGE, A PUBLIC BODY MAY WITHHOLD FROM
PAYMENTS OTHERWISE DUE A CONTRACTOR ANY AMOUNT THAT THE PUBLIC BODY
REASONABLY BELIEVES NECESSARY TO PROTECT THE PUBLIC BODY'S INTEREST.

(3) RETAINAGE WITHHELD BY A PUBLIC BODY MAY BE DEPOSITED IN AN
INTEREST BEARING ESCROW ACCOUNT IN ACCORDANCE WITH § 17-111 OF THIS
SUBTITLE.

(4)  EXCEPT AS PROVIDED IN PARAGRAPH (5) OF THIS SUBSECTION,
WITHIN 120 DAYS AFTER SATISFACTORY COMPLETION OF A CONTRACT FOR
CONSTRUCTION, A PUBLIC BODY SHALL:

(I) RELEASE ANY RETAINAGE DUE TO THE CONTRACTOR; AND

(II) PAY ANY INTEREST THAT:

1. HAS ACCRUED ON THE RETAINAGE; AND
2. IS DUE AND PAYABLE TO THE CONTRACTOR.

(5)   IF THERE IS A DISPUTE OR CONTRACT CLAIM BETWEEN THE
CONTRACTOR AND THE PUBLIC BODY CONCERNING THE SATISFACTORY
COMPLETION OF A CONTRACT FOR CONSTRUCTION, THE PUBLIC BODY SHALL
RELEASE THE RETAINAGE AND ANY INTEREST DUE TO THE CONTRACTOR WITHIN 120
DAYS OF AFTER THE RESOLUTION OF THE DISPUTE OR CONTRACT CLAIM.

(B)   (1) A CONTRACTOR MAY NOT RETAIN A PERCENTAGE OF PAYMENTS DUE
A SUBCONTRACTOR THAT EXCEEDS THE PERCENTAGE OF PAYMENTS RETAINED BY
THE PUBLIC BODY.

(2) PARAGRAPH (1) OF THIS SUBSECTION MAY NOT BE CONSTRUED TO
PROHIBIT A CONTRACTOR FROM WITHHOLDING ANY AMOUNT IN ADDITION TO
RETAINAGE IF THE CONTRACTOR DETERMINES THAT A SUBCONTRACTOR'S
PERFORMANCE UNDER THE SUBCONTRACT PROVIDES REASONABLE GROUNDS FOR
WITHHOLDING THE ADDITIONAL AMOUNT.

(C)   (1) A SUBCONTRACTOR MAY NOT RETAIN A PERCENTAGE OF PAYMENTS
DUE A LOWER TIER SUBCONTRACTOR THAT EXCEEDS THE PERCENTAGE OF
PAYMENTS RETAINED FROM THE SUBCONTRACTOR.

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