Bill > SB835

This bill modifies Maryland's state finance and procurement regulations regarding retention proceeds in construction contracts. The bill mandates that when a contractor has provided both 100% payment and performance security, the retainage (money withheld during a construction project as a financial safeguard) cannot exceed 5% of the total contract amount. The key provision requires that undisputed retention proceeds retained by a procurement unit or contractor must be paid within 90 days after the date of substantial completion, as defined in the specific contract. The bill also clarifies that contractors and subcontractors can only retain a percentage of payments from lower-tier contractors that matches the percentage retained from them, with an exception allowing additional withholding if there are reasonable performance concerns. If retainage is placed in an interest-bearing escrow account, each payment must include a proportional share of the earned interest. The bill is set to take effect on October 1, 2025, and aims to provide more transparency and timely payment in state construction procurement contracts.

Budget and Finance

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/SB0835?ys=2025RS