House Bill 1320

AN ACT TO AMEND SECTION 31-5-33, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE INCLUSION OF PRIVATELY HELD CONTRACTS FOR CONSTRUCTION, REPAIR, ALTERATION OR DEMOLITION OF ANY BUILDING, STRUCTURE OR FACILITY FOR CONTRACT RETAINAGE; TO PROVIDE THE AUTHORITY TO SUBCONTRACTORS TO SUBMIT ALTERNATE SECURITY IN LIEU OF RETENTION; TO AMEND SECTION 31-5-15, MISSISSIPPI CODE OF 1972, IN CONFORMITY TO THE PRECEDING PROVISION; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 31-5-33, Mississippi Code of 1972, is amended as follows:

31-5-33. (1) In any contract for the construction, repair, alteration or demolition of any building, structure or facility, whether privately held or awarded by the State of Mississippi, or any agency, unit or department of the State of Mississippi, or by any political subdivision thereof, which contract provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the state agency, unit or department, or by the political subdivision or contractor pending completion of the contract, such retainage shall be five percent (5%), and the amount retained by the prime contractor from each payment due the subcontractor shall not exceed the percentage withheld by the state, or any agency, unit or department of the state, or by any political subdivision thereof, from the prime contractor.

On any contract as described herein, of which the total amount is Two Hundred Fifty Thousand Dollars ($250,000.00) or greater, or on any contract with a subcontractor, regardless of amount, five percent (5%) shall be retained until the work is at least fifty percent (50%) complete, on schedule and satisfactory in the architect's and/or engineer's opinion, at which time fifty percent (50%) of the retainage held to date shall be returned to the prime contractor for distribution to the appropriate subcontractors and suppliers. * * *~~Provided, however~~ However, * * *~~that~~ future retainage shall be withheld at the rate of two and one-half percent (2-1/2%).

(2) The contractor or subcontractor, in his or its discretion, may substitute securities in lieu of retention as such option is provided under Section 31-5-15 for public contracts.

( * * *23) The provisions of this section shall not apply to contracts let by the Mississippi Transportation Commission for the construction, improvement or maintenance of roads and bridges.

SECTION 2. Section 31-5-15, Mississippi Code of 1972, is amended as follows:

31-5-15. Under any public contract heretofore or hereafter made or awarded by the State of Mississippi, or any agency or department of the State of Mississippi, or by any political subdivision thereof, the contractor or subcontractor may, with the written consent of his or its surety, from time to time, withdraw the whole or any portion of the amount retained from payments due the contractor pursuant to the terms of the contract by depositing with the State Treasurer of the State of Mississippi, or the treasurer or secretary of the political subdivision of the State of Mississippi holding funds belonging to the contractor or subcontractor, the following security, or any combination thereof in an amount equal to or in excess of the amount so withdrawn, said securities to be accepted at the time of deposit at market value but not in excess of par value, to wit:

(1) U.S. Treasury Bonds, U.S. Treasury Notes, U.S. Treasury Certificates of Indebtedness, or U.S. Treasury Bills, or

(2) Bonds or notes of the State of Mississippi, or

(3) Bonds of any political subdivision of the State of Mississippi, or

(4) Certificates of deposit issued by commercial banks located in the State of Mississippi, provided that such certificate is negotiable or is accompanied by a power of attorney executed by the owner of the certificate in favor of the Treasurer of the State of Mississippi or of the treasurer or the secretary of the political subdivision involved, or

(5) Certificates of deposit issued by savings and loan associations located in the State of Mississippi, the accounts of which are insured by the Federal Savings and Loan Insurance Corporation, or whose accounts are insured by a company approved by the State Board of Savings and Loan Associations, provided that such certificate is made payable with accrued interest on demand and is accompanied by a power of attorney executed by the owner of the certificate in favor of the Treasurer of the State of Mississippi or the treasurer or secretary of the political subdivision involved, and provided that any such certificate from any of the savings and loan associations referred to in this subparagraph shall not be for an amount in excess of the maximum dollar amount of coverage of the Federal Savings and Loan Insurance Corporation.

The agency or department of the state shall notify the State Treasurer of the amount of deposit required and shall also notify the State Treasurer when to release the deposit. The political subdivision of the state shall notify its treasurer or secretary of the amount of deposit required and shall also notify him when to release the deposit.

The State Treasurer, or the secretary or treasurer of the political subdivision holding said security, shall, from time to time, collect all interest or income on the security so deposited and shall, by and with the written consent of contractor's surety or subcontractor's surety, pay the same when and as collected to the contractor or contractors or subcontractor or subcontractors who deposited said obligations. If the deposit be in the form of coupon bonds, the coupons as they respectively become due shall be delivered to the contractor or subcontractor.

If in the event of an overpayment to a contractor or subcontractor the contracting authority is unable to obtain reimbursement for such overpayments from the contractor or subcontractor, the chief administrative officer of the contracting authority shall notify the contractor or subcontractor, its surety and the State Treasurer or other holder of the security, of the nature of the overpayment and of the failure to obtain reimbursement. Upon such notification, the security holder shall retain the income on the deposited security until an amount equal to the overpayment is accumulated and paid to the contracting authority.

In the event the contractor or subcontractor shall default in the performance of the contract or any portion thereof, the securities deposited by him in lieu of retainage and all interest and coupons and income accruing on said securities after said default may be sold by the state or any agency or department thereof, or any political subdivision, and the proceeds of said sale used as if such proceeds represented the retainage provided for under the contract.

SECTION 3. This act shall take effect and be in force from and after July 1, 2016.