PRIOR PRINTER'S NO. 1662                      PRINTER'S NO. 1766

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1323 Session of 1982


        INTRODUCED BY O'CONNELL, ROMANELLI, STOUT, LOEPER, JUBELIRER,
           RHOADES, EARLY AND SCANLON, FEBRUARY 5, 1982

        AS AMENDED ON THIRD CONSIDERATION, MARCH 23, 1982

                                     AN ACT

     1  Amending the act of November 26, 1978 (P.L.1309, No.317),
     2     entitled "An act regulating the awarding and execution of
     3     certain public contracts; providing for contract provisions
     4     relating to the retention, interest, and payment of funds
     5     payable under the contracts; and repealing inconsistent
     6     acts," regulating retainage and interest.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Section 5, act of November 26, 1978 (P.L.1309,
    10  No.317), referred to as the Public Works Contract Regulation
    11  Law, is amended to read:
    12  Section 5.  Contract provision for retainage.
    13     (A)  A public contract may include a provision for the         <--
    14  retainage of a portion of the amount due the contractor to
    15  insure the proper performance of the contract, except that the
    16  sum or sums withheld by the contracting body from the contractor
    17  shall not exceed 10% of the amount due the contractor until 50%
    18  of the contract is completed. When the contract is 50%
    19  completed, one-half of the amount retained by the contracting
    20  body shall be returned to the contractor. The sum or sums

     1  withheld by the contracting body from the contractor after the
     2  contract is 50% completed shall not exceed 5% of the amount due
     3  the contractor on the remaining work: Provided, however, That in
     4  the event a dispute arises between the contracting body and any
     5  prime contractor, which dispute is based upon increased costs
     6  claimed by one prime contractor occasioned by delays or other
     7  actions of another prime contractor, additional retainage in the
     8  sum of one and one-half times the amount of any possible
     9  liability may be withheld until such time as a final resolution
    10  is agreed to by all parties directly or indirectly involved,
    11  unless the contractor causing the additional claim furnishes a
    12  bond satisfactory to the contracting body to indemnify such
    13  contracting body against the claim. However, all such moneys
    14  retained by the contracting body may be withheld from the
    15  contractor until substantial completion of the contract.
    16     (B)  NOTWITHSTANDING SUBSECTION (A), WHEN THE DEPARTMENT OF    <--
    17  GENERAL SERVICES IS THE CONTRACTING BODY, THE DEPARTMENT'S
    18  PUBLIC CONTRACT MAY INCLUDE A PROVISION FOR THE RETAINAGE OF A
    19  PORTION OF THE AMOUNT DUE THE CONTRACTOR TO INSURE THE PROPER
    20  PERFORMANCE OF THE CONTRACT, EXCEPT THAT THE SUM OR SUMS
    21  WITHHELD BY THE DEPARTMENT FROM THE CONTRACTOR SHALL NOT EXCEED
    22  6% OF THE THEN TOTAL ESTIMATES UNTIL 50% OF THE CONTRACT IS
    23  SATISFACTORILY COMPLETED. THE SUM OR SUMS WITHHELD BY THE
    24  DEPARTMENT FROM THE CONTRACTOR AFTER THE CONTRACT IS 50%
    25  SATISFACTORILY COMPLETED SHALL NOT EXCEED 3% OF THE ORIGINAL
    26  CONTRACT AMOUNT.
    27     Section 2.  Section 8 of the act is amended to read:
    28  Section 8.  Interest payable on final payment.
    29     The final payment due the contractor from the contracting
    30  body after substantial completion of the contract shall bear
    19820S1323B1766                  - 2 -

     1  interest at a rate of [6%] 12% per annum after the date that
     2  such payment shall become due and payable to the contractor:
     3  Provided, however, That where the contracting body has issued
     4  bonds to finance the project, interest shall be payable to the
     5  contractor at the rate of interest of the bond issue or at the
     6  rate of 12% per annum, whichever is less.
     7     Section 3.  This act shall take effect in 60 days.
















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