PRINTER'S NO. 2484
No. 1900 Session of 2003
INTRODUCED BY BIRMELIN, BELFANTI, BALDWIN, BUXTON, CAPPELLI,
CREIGHTON, DENLINGER, FAIRCHILD, FICHTER, FORCIER, HERSHEY,
LEH, LEWIS, METCALFE, R. MILLER, S. MILLER, PAYNE, PICKETT,
REICHLEY, SCAVELLO, TIGUE, WATSON AND WILT, AUGUST 4, 2003
REFERRED TO COMMITTEE ON INTERGOVERNMENTAL AFFAIRS,
AUGUST 4, 2003
AN ACT
1 Amending Title 62 (Procurement) of the Pennsylvania Consolidated
2 Statutes, further providing for retainage in certain
3 contracts.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Sections 3921, 3922 and 3932 of Title 62 of the
7 Pennsylvania Consolidated Statutes are amended to read:
8 § 3921. Retainage.
9 (a) Contract provision.--[A contract may include a provision
10 for the retainage of a portion of the amount due the contractor
11 to insure the proper performance of the contract except that the
12 sum withheld by the government agency from the contractor shall
13 not exceed 10% of the amount due the contractor until 50% of the
14 contract is completed. When the contract is 50% completed, one-
15 half of the amount retained by the government agency shall be
16 returned to the contractor. However, the architect or engineer
17 must approve the application for payment. The contractor must be
1 making satisfactory progress, and there must be no specific
2 cause for greater withholding. The sum withheld by the
3 government agency from the contractor after the contract is 50%
4 completed shall not exceed 5% of the value of completed work
5 based on monthly progress payment requests.] In the event a
6 dispute arises between the government agency and any prime
7 contractor, which dispute is based upon increased costs claimed
8 by one prime contractor occasioned by delays or other actions of
9 another prime contractor, [additional] retainage in the sum of
10 one and one-half times the amount of any possible liability may
11 be withheld until such time as a final resolution is agreed to
12 by all parties directly or indirectly involved unless the
13 contractor causing the additional claim furnishes a bond
14 satisfactory to the government agency to indemnify the agency
15 against the claim. All money retained by the government agency
16 may be withheld from the contractor until substantial completion
17 of the contract.
18 (b) Department of General Services.--Notwithstanding
19 subsection (a), [when] the Department of General Services [is
20 the government agency, the contract may include a provision for
21 the retainage of a portion of the amount due the contractor to
22 insure the proper performance of the contract except that the
23 sum withheld by the department for the contractor shall not
24 exceed 6% of the then total estimates until 50% of the contract
25 is satisfactorily completed. The sum withheld by the department
26 from the contractor after the contract is 50% satisfactorily
27 completed shall not exceed 3% of the original contract amount.]
28 shall not withhold retainage.
29 § 3922. Payment [of retainage] to subcontractors.
30 In the absence of sufficient reason, within 20 days of the
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1 receipt of payment by the contractor, the contractor shall pay
2 all subcontractors with which it has contracted their earned
3 share of the payment the contractor received.
4 § 3932. Government agency's progress payment obligations.
5 (a) Payments in accordance with contract.--The government
6 agency shall pay the contractor or design professional strictly
7 in accordance with the contract.
8 (b) Application for progress payments.--If the contract does
9 not contain a term governing the time for payment, the
10 contractor or design professional shall be entitled to make
11 application for payment from the government agency for progress
12 payments, and the government agency shall make payment less the
13 applicable retainage amount as authorized in section [3921]
14 3921(a) (relating to retainage) to the contractor or design
15 professional within 45 calendar days of the date the application
16 for payment is received.
17 (c) Interest on progress payments not timely made.--Except
18 as otherwise agreed by the parties, if any progress payment less
19 the applicable retainage amount as authorized in section [3921]
20 3921(a) is not made to a contractor or design professional by
21 the due date established in the contract or in subsection (b),
22 the government agency shall pay to the contractor or design
23 professional, in addition to the amount due, interest on the
24 amount due, and the interest shall be computed at the rate
25 determined by the Secretary of Revenue for interest payments on
26 overdue taxes or the refund of taxes as provided in sections 806
27 and 806.1 of the act of April 9, 1929 (P.L.343, No.176), known
28 as The Fiscal Code.
29 (d) When interest payment not required.--In the event that
30 the contract does not contain a grace period and if a contractor
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1 or design professional is not paid by the payment date required
2 by subsection (b), no interest penalty payment required under
3 this section shall be paid if payment is made on or before the
4 15th calendar day after the payment date required under this
5 subchapter.
6 Section 2. The provisions of this act shall apply to all
7 contracts entered into after the effective date of this act.
8 Section 3. This act shall take effect January 1, 2004.
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