Bill > SB0074

This bill creates the State Agency Retainage Act, which establishes rules for how state agencies can withhold a portion of payment (called "retainage") from contractors during construction projects. Under the new law, a state agency may retain up to 10% of a contract's payment until the project is 50% complete, after which the retainage cannot exceed 5% for the remainder of the contract. The bill specifies that retainage cannot be used arbitrarily and must be based on a case-by-case assessment of the contractor's performance and potential future performance. State agencies are required to have a legitimate reason for withholding funds and must make determinations about retainage transparently. The bill allows for adjustments to retainage as the project progresses, potentially reducing the withheld amount if the contractor demonstrates better-than-expected performance or if alternative safeguards are available. When the contract is fully completed, all retained funds must be paid promptly. Additionally, the bill amends the State Prompt Payment Act to explicitly exclude retainage withheld under this new Act from its provisions. The legislation aims to provide a clear, fair framework for managing financial risks in state construction contracts while protecting contractors from arbitrary fund withholding.

Government Affairs

https://www.ilga.gov/legislation/BillStatus.asp?DocNum=74&GAID=18&DocTypeID=SB&SessionID=114&GA=104