Bill > HB1166

This bill modifies Maryland's state finance and procurement regulations regarding retention proceeds in construction contracts, establishing clearer guidelines for withholding and releasing funds. Specifically, the bill requires that undisputed retention proceeds (money temporarily withheld from contractor payments as a form of financial protection) must be paid within 90 days after the date of substantial completion, as defined in the applicable contract. The bill also maintains existing provisions that limit retainage (withheld funds) to no more than 5% of the total contract amount when a contractor has provided 100% payment and performance security. Additionally, the bill clarifies that contractors and subcontractors can only retain payments from lower-tier contractors at the same percentage as the primary procurement unit, while still allowing them to withhold additional funds if there are reasonable performance concerns. The changes aim to provide more transparency and predictability in how retention proceeds are handled in state construction contracts, with the new provisions set to take effect on October 1, 2025.

Health and Social Services

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB1166?ys=2025RS