ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature

Second Regular Session

Senate: COM DP 9-0-0-0 | 3rd Read 28-0-2-0-0

House: COM DP 9-0-0-1 | 3rd Read 58-0-2-0


SB 1136: public works; contracts; payments

Sponsor: Senator Gray, LD  21

Transmitted to the Governor

Overview

Outlines requirements for the payment of contractors and subcontractors for changed or additional work (changed work) in construction contracts with certain governmental entities.

History

Statute outlines requirements for state agencies subject to the Arizona Procurement Code, counties, cities, towns and certain special taxing districts (governmental entities) to contract with contractors for public construction contracts. Progress payments may be made by a governmental entity to a contractor on the basis of a duly certified and approved estimate of the work performed. Progress payments must be paid within 14 days after the estimate of work is certified and approved.  The estimate of work is deemed approved and certified 7 days after the date of submission unless the governmental entity issues a written finding detailing such items in the estimate that are not approved and certified under the contract. In any delay of payment to the contractor, interest at the rate of 1% per month may be added on the unpaid balance (A.R.S. §§ 34-101; 41-2577).

☐ Prop 105 (45 votes)	     ☐ Prop 108 (40 votes)      ☐ Emergency (40 votes)	☐ Fiscal NoteProvisions

Contractor Change Orders

1.   Permits a contractor hired by a governmental entity, while the final amount to be paid for any changed work is pending, to request payment for changed work that the contractor has completed during the previous month in monthly pay estimates if:

a)   the governmental entity directs the contractor to perform changed work in accordance with the construction contract; and

b)   the contractor submits to the governmental entity a reasonable cost estimate of the changed work. (Sec. 3, 4, 5, 7)

2.   Directs the person designated in the construction contract to certify and approve monthly payment estimates to: a) make an interim determination for purposes of approval for payment of the costs of any changed work; and b) certify for payment the amount that person determines to be reasonably justified. (Sec. 3, 4, 5, 7)

3.   Stipulates that either the contractor or the governmental entity may disagree with the interim determination and assert a claim in accordance with the terms of the construction contract. (Sec. 3, 4, 5, 7)

Subcontractor Change Orders

4.   Permits a subcontractor working for a contractor hired by governmental entity, while the final amount to be paid for any changed work is pending, to request payment from the contractor for changed work that the subcontractor has completed during the previous month in monthly pay estimates if:

a)   the governmental entity directs the contractor to perform changed work in accordance with the construction contract;

b)   the contractor submits to the governmental entity a cost estimate of the changed work;

c)   the contractor directs the subcontractor to perform the changed work in accordance with the terms of the agreement between the contractor and subcontractor; and  

d)   the subcontractor submits to the contractor a reasonable cost estimate of the changed work. (Sec. 3, 4, 5, 7)

5.   Stipulates that either the subcontractor or the contractor may disagree with the interim determination and assert a claim in accordance with the terms of the agreement between the contractor and subcontractor. (Sec. 3, 4, 5, 7)

Miscellaneous

6.   Provides in any action or arbitration between a contractor, subcontractor or governmental entity regarding payment for work done that the prevailing party is entitled to attorney's fees. (Sec. 3, 4, 5, 7)

7.   Requires the State Board of Education's procurement practice rules for all school districts to comply with prompt payment requirements except in cases where the funding is externally provided and has not yet been received. (Sec. 2)

8.   Specifies that the procurement rules of the Arizona Board of Regents must provide for compliance with partial payments, progress payments and changed work requirements. (Sec. 6)

9.   Defines construction contract, contractor, cost, subcontractor and work. (Sec. 3, 4, 5, 7)

10.  Makes conforming and technical changes. (Sec. 1-7)

 

 

 

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                        SB 1136

Initials PRB/NM          Page 0 Transmitted

 

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