May 22, 2008, Introduced by Rep. Farrah and referred to the Committee on Regulatory Reform.
A bill to amend 1963 PA 213, entitled
"An act to provide a procedure for bonding contractors for public
buildings and public works of governmental units; and to repeal
certain acts and parts of acts,"
by amending the title and sections 1, 2, 3, 6, 7, and 8 (MCL
129.201, 129.202, 129.203, 129.206, 129.207, and 129.208), section
1 as amended by 1982 PA 11.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide a procedure for bonding contractors for
certain public buildings and certain public works of governmental
units; to provide for certain penalties and remedies; and to repeal
certain
acts and parts of acts.
Sec. 1. (1) Before any contract, exceeding $50,000.00 for the
construction, alteration, or repair of any public building or
public
work or improvement of the state or a county, city, village,
township,
school district, public educational institution, other
political
subdivision, public authority, or public agency
hereinafter
referred to as the "governmental unit", for a
governmental
unit is awarded, the proposed
contractor , hereinafter
referred
to as the "principal contractor", shall furnish to the
governmental
unit, at his or her its own
cost, to the governmental
unit
a performance bond and a payment
bond which shall become that
is
binding upon the award of the contract
to the principal
contractor.
However, if the principal contractor is a common
carrier
as defined in section 3 of Act No. 300 of the Public Acts
of
1909, as amended, being section 462.3 of the Michigan Compiled
Laws
1909 PA 300, MCL 462.3, or the designated operator of a state
subsidized
railroad, the principal contractor may provide an
irrevocable letter of credit from a state or national bank or a
state or federally chartered savings and loan association instead
of the bonds. Neither the invitation for bids, nor any person
acting , or purporting to act , on behalf of the governmental unit,
shall
require that the bonds to be furnished by a particular bank
or
surety company, or through a particular agent or broker, or
through a bank, company, agent, or broker in any particular
locality.
(2) If a governmental unit enters into a contract with a
construction manager, the construction manager shall furnish to the
governmental unit, at its own expense, performance and payment
bonds as provided in subsection (1). The governmental unit shall
determine the amount of the bonds, as provided in sections 2 and 3,
based upon the greater of the total estimated cost of the work,
guaranteed maximum price, or the actual aggregate dollar value of
all agreements entered into by the construction manager for the
complete construction, alteration, demolition, or repair of the
public facility of the governmental unit. The bonds furnished by
the construction manager to the governmental unit shall comply
with, and are subject to, the requirements of sections 2, 3, 4, and
5.
Sec.
2. (1) The performance bond shall be in an amount fixed
determined
by the governmental unit but that is not
less than 25%
or
more than 100% of the contract amount , and shall be conditioned
upon the faithful performance of the contract in accordance with
the
plans, specifications, and terms thereof of the contract.
(2) The performance bond shall be solely for the protection of
the governmental unit awarding the contract.
Sec.
3. The payment bond shall be in an amount fixed
determined
by the governmental unit but that is not
less than 25%
or more than 100% of the contract amount and be solely for the
protection
of claimants , as defined in section 6, supplying
furnishing labor, supplies, equipment, or materials to the
principal
contractor, or
his construction manager, or
subcontractors in the prosecution of the work provided for in the
contract.
Sec.
6. A "claimant" As
used in this act:
(a) "Claimant" means a person having furnished labor,
supplies,
equipment, or material, or both, used
or reasonably
required
for use in the performance of the
a contract
for all or
part of the construction, alteration, demolition, or repair of a
public
facility. "Labor and
material" includes that part of water,
gas,
power, light, heat, oil, gasoline, telephone service or rental
of
equipment directly applicable to the contract.
(b) "Construction manager" means an individual, sole
proprietorship, partnership, corporation, limited liability
company, joint venture, or other legal entity that, pursuant to an
agreement with a governmental unit and acting primarily in a
managerial or administrative capacity, procures and enters into 1
or more contracts for the construction, alteration, demolition, or
repair of a public facility for the governmental unit.
(c) "Contract" means either of the following:
(i) A written agreement between a contractor and a governmental
unit having a dollar value in excess of $50,000.00 for the
construction, alteration, demolition, or repair of a public
facility.
(ii) A written agreement between a construction manager and a
governmental unit for the procurement and delivery of the
construction, alteration, demolition, or repair of a public
facility of the governmental unit having a stated or estimated
value in excess of $50,000.00.
(d) "Contractor" means an individual, sole proprietorship,
partnership, corporation, limited liability company, joint venture,
or other legal entity that is a party to a contract with a
governmental unit for the construction of a public facility.
(e) "Governmental unit" means this state, or a county, city,
township, village, school district, public educational institution,
other political subdivision, public authority, or public agency.
(f) "Public facility" means any building, structure,
transportation or utility infrastructure, roadway, bridge, sewer,
school, drain, ditch, levee, or other structure or work of a
governmental unit that is paid for with public funds or a special
assessment.
Sec. 7. (1) A claimant who has furnished labor or material in
the prosecution of the work provided for in such contract in
respect of which payment bond is furnished under the provisions of
section 3, and who has not been paid in full therefor before the
expiration of a period of 90 days after the day on which the last
of the labor was done or performed by him or her or material was
furnished or supplied by him or her for which claim is made, may
sue on the payment bond for the amount, or the balance thereof,
unpaid at the time of institution of the civil action, prosecute
such
the action to final judgment for the sum justly due, him
and
have execution thereon.
(2) A claimant not having a direct contractual relationship
with
the principal contractor named
in the bond shall not have a
right
of action upon the payment bond unless (a) he both of the
following occur:
(a) He or she has, within 30 days after furnishing the first
of
such the material or performing the first of such the labor,
served
on the principal contractor named
in the bond a written
notice, which shall inform the principal of the nature of the
materials being furnished or to be furnished, or labor being
performed or to be performed and identifying the party contracting
for such labor or materials and the site for the performance of
such
labor or the delivery of such materials.
, and (b) he
(b) He or she has given written notice to the principal
contractor
named in the bond and the governmental unit involved
within
90 days from after the date on which the claimant performed
the last of the labor or furnished or supplied the last of the
material for which the claim is made, stating with substantial
accuracy the amount claimed and the name of the party to whom the
material was furnished or supplied or for whom the labor was done
or performed.
(3) Each notice sent under subsection (2) shall be served by
mailing the same by certified mail, postage prepaid, in an envelope
addressed
to the principal contractor named
in the bond, the
governmental unit involved, at any place at which said parties
maintain a business or residence.
(4) The principal contractor or construction manager shall not
be required to make payment to a subcontractor of sums due from the
subcontractor to parties performing labor or furnishing materials
or supplies to the subcontractor, except upon the receipt of the
written orders of such parties to pay to the subcontractor the sums
due such parties.
(5) In any action brought under this section, the prevailing
party shall be entitled to recover from the nonprevailing party the
reasonable costs and attorney fees incurred in the action. If, in
such action, it is determined by the finder of fact that there was
no good faith basis for the nonpayment of the amount sought by the
claimant, the claimant shall be entitled to recover interest at the
rate of 12% per annum on the amount found to be due by the finder
of fact from the date that payment was due until fully paid.
Sec. 8. (1) The agent in charge of the office of the
governmental unit shall furnish a certified copy of the bond and
the
contract for which it was given to
anyone making application
therefor
applying for such a copy and who submits an affidavit
written certification that he or she will be supplying labor,
materials, or equipment for that work or that he or she has
supplied
labor or materials for such that
work and payment therefor
has
not been made, or that he or
she is being sued on any such
bond,
or that it he or she is the surety thereon. , a certified
copy
of the bond and the contract for which it was given, which
(2) The furnished copy shall be prima facie evidence of the
contents, execution, and delivery of the original.
(3) An applicant for a certified copy furnished under
subsection
(1) shall pay such reasonable fees for such
the
certified copies as the agent in charge of the office of the
governmental
unit fixes determines to cover the actual cost of its
preparation. thereof.
Enacting section 1. (1) This amendatory act takes effect
January 1, 2009.
(2) This amendatory act applies to any contracts entered into
on or after January 1, 2009.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 6176(request no.
04828'07).
(b) Senate Bill No.____ or House Bill No. 6175(request no.
04829'07).
(c) Senate Bill No.____ or House Bill No. 6174(request no.
04830'07).