Senate Bill sb0870

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    Florida Senate - 2001                                   SB 870

    By Senator Webster





    12-776-01                                           See HB 113

  1                      A bill to be entitled

  2         An act relating to construction; amending s.

  3         218.72, F.S.; redefining the terms "local

  4         government entity," "purchase," and

  5         "construction services" and defining the terms

  6         "payment request" and "agent" for the purpose

  7         of the Florida Prompt Payment Act; amending s.

  8         218.73, F.S.; providing for timely payment for

  9         nonconstruction services; amending s. 218.735,

10         F.S.; revising provisions with respect to

11         timely payment for purchases of construction

12         services; amending s. 218.74, F.S.; revising

13         provisions with respect to procedures for

14         calculation of payment due dates; amending s.

15         218.75, F.S.; revising provisions with respect

16         to mandatory interest; amending s. 218.76,

17         F.S.; revising provisions with respect to

18         improper invoices and resolution of disputes;

19         providing for the recovery of court costs and

20         attorney's fees under certain circumstances;

21         providing an effective date.

22

23  Be It Enacted by the Legislature of the State of Florida:

24

25         Section 1.  Subsections (2), (5), and (7) of section

26  218.72, Florida Statutes, are amended, and subsections (8) and

27  (9) are added to that section, to read:

28         218.72  Definitions.--As used in this part:

29         (2)  "Local governmental entity" means a county or

30  municipal government, school board, school district,

31  authority, special taxing district, other political

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  subdivision, community college, or any office, board, bureau,

  2  commission, department, branch, division, or institution

  3  thereof or any project supported by county or municipal funds.

  4         (5)  "Purchase" means the purchase of goods, or

  5  services, or construction services; the purchase or lease of

  6  personal property;, or the lease of real property by a local

  7  governmental entity.

  8         (7)  "Construction services" means all labor, services,

  9  and materials provided performed in connection with the

10  construction, alteration, repair, demolition, reconstruction,

11  or any other improvements to real property that require a

12  license under parts I and II of chapter 489.

13         (8)  "Payment request" means a request for payment for

14  construction services which conforms with all statutory

15  requirements and with all requirements specified by the local

16  governmental entity to which the payment request is submitted

17  if:

18         (a)  Such requirements have been adopted by formal

19  action of the local governmental entity taken prior to the

20  transaction to which the payment request applies.

21         (b)  The local governmental entity made such

22  requirements available to vendors.

23         (9)  "Agent" means project architect, project engineer,

24  or any other agency or person acting on behalf of the local

25  governmental entity.

26         Section 2.  Section 218.73, Florida Statutes, is

27  amended to read:

28         218.73  Timely payment for nonconstruction

29  services.--The time at which payment is due for a purchase

30  other than construction services by a local governmental

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  entity, except for the purchase of construction services, is

  2  due must be calculated from:

  3         (1)  The date on which a proper invoice is received by

  4  the chief disbursement officer of the local governmental

  5  entity after approval by the governing body, if required; or

  6         (2)  If a proper invoice is not received by the local

  7  governmental entity, the date:

  8         (a)  On which delivery of personal property is accepted

  9  by the local governmental entity;

10         (b)  On which services are completed;

11         (c)  On which the rental period begins; or

12         (d)  On which the local governmental entity and vendor

13  agree in a contract that provides dates relative to payment

14  periods;

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16  whichever date is latest.

17         Section 3.  Section 218.735, Florida Statutes, is

18  amended to read:

19         218.735  Timely payment for purchases of construction

20  services.--

21         (1)  The due date for payment for the purchase of

22  construction services by a local governmental entity is

23  determined as follows:

24         (a)  If an agent the project architect or project

25  engineer must approve the payment request or invoice prior to

26  the payment request or invoice being submitted to the local

27  governmental entity, payment is due 25 20 business days after

28  the date on which the payment request or architect or engineer

29  approves the invoice and the invoice is stamped as received as

30  provided in s. 218.74(1).

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1         (b)  If an agent the project architect or project

  2  engineer need not approve the payment request or invoice which

  3  is submitted by the contractor, payment is due 20 business

  4  days after the date on which the payment request or invoice is

  5  stamped as received as provided in s. 218.74(1).

  6         (2)  The local governmental entity may reject the

  7  payment request or invoice within 20 business days after the

  8  date on which the payment request or invoice is stamped as

  9  received as provided in s. 218.74(1).  The rejection must be

10  written and must specify the deficiency in the payment request

11  or invoice and the action necessary to make the payment

12  request or invoice proper.

13         (3)  If a payment request or an invoice is rejected

14  under subsection (2) or this subsection and the contractor

15  submits a corrected payment request or invoice which corrects

16  the deficiency specified in writing by the local governmental

17  entity, the corrected payment request or invoice must be paid

18  or rejected on the later of:

19         (a)  Ten business days after the date the corrected

20  payment request or invoice is stamped as received as provided

21  in s. 218.74(1); or

22         (b)  If the governing body is required by ordinance,

23  charter, or other law to approve or reject the corrected

24  payment request or invoice, the first business day after the

25  next regularly scheduled meeting of the governing body held

26  after the corrected payment request or invoice is stamped as

27  received as provided in s. 218.74(1).

28         (4)  If a dispute between the local governmental entity

29  and the contractor cannot be resolved by the procedure in

30  subsection (3), the dispute must be resolved in accordance

31  with the dispute resolution procedure prescribed in the

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  construction contract or in any applicable ordinance.  In the

  2  absence of a prescribed procedure, the dispute must be

  3  resolved by the procedure specified in s. 218.76(2).

  4         (5)  If a local governmental entity disputes a portion

  5  of a payment request or an invoice, the undisputed portion

  6  shall be paid timely, in accordance with subsection (1). The

  7  payment time periods provided in this section for construction

  8  services purchased by a local governmental entity shall not

  9  affect contractual provisions or contractual covenants of a

10  local governmental entity in effect on September 30, 1995.

11         (6)  When a contractor receives payment from a local

12  governmental entity for labor, services, or materials

13  furnished by subcontractors and suppliers hired by the

14  contractor, the contractor shall remit payment due to those

15  subcontractors and suppliers within 15 days after the

16  contractor's receipt of payment.  When a subcontractor

17  receives payment from a contractor for labor, services, or

18  materials furnished by subcontractors and suppliers hired by

19  the subcontractor, the subcontractor shall remit payment due

20  to those subcontractors and suppliers within 15 days after the

21  subcontractor's receipt of payment.  Nothing herein shall

22  prohibit a contractor or subcontractor from disputing,

23  pursuant to the terms of the relevant contract, all or any

24  portion of a payment alleged to be due to another party.  In

25  the event of such a dispute, the contractor or subcontractor

26  may withhold the disputed portion of any such payment but the

27  undisputed portion must be remitted within the time limits

28  imposed by this subsection.

29         (7)(6)  All payments due under this section from a

30  local governmental entity and not made within the time periods

31  period specified by this section shall bear interest at the

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  rate of 1 percent per month, or the rate specified by

  2  contract, whichever is greater as specified in s. 218.74(4).

  3         Section 4.  Section 218.74, Florida Statutes, is

  4  amended to read:

  5         218.74  Procedures for calculation of payment due

  6  dates.--

  7         (1)  Each local governmental entity shall establish

  8  procedures whereby each payment request or invoice received by

  9  the local governmental entity is marked as received on the

10  date on which it is delivered to an agent or employee of the

11  local governmental entity or of a facility or office of the

12  local governmental entity.

13         (2)  The payment due date for a local governmental

14  entity for the purchase of goods or services other than

15  construction services is 45 days after the date specified in

16  s. 218.73.  The payment due date for the purchase of

17  construction services is specified in s. 218.735.

18         (3)  If the terms under which a purchase is made allow

19  for partial deliveries and a payment request or proper invoice

20  is submitted for a partial delivery, the time for payment for

21  the partial delivery must be calculated from the time of the

22  partial delivery and the submission of the payment request or

23  invoice in the same manner as provided in s. 218.73 or s.

24  218.735.

25         (4)  All payments, other than payments for construction

26  services, due from a local governmental entity and not made

27  within the time specified by this section bear interest from

28  30 days after the due date at the rate of 1 percent per month

29  on the unpaid balance. The vendor must invoice the local

30  governmental entity for any interest accrued in order to

31  receive the interest payment.  Any overdue period of less than

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  1 month is considered as 1 month in computing interest.

  2  Unpaid interest is compounded monthly.  With respect to each

  3  past due payment, interest ceases to accrue after interest on

  4  that payment has accrued for 12 months. For the purposes of

  5  this section, the term "1 month" means a period beginning on

  6  any day of one month and ending on the same day of the

  7  following month.

  8         Section 5.  Section 218.75, Florida Statutes, is

  9  amended to read:

10         218.75  Mandatory interest.--No contract between a

11  local governmental entity and a vendor or a provider of

12  construction services shall prohibit the collection of vendor

13  from invoicing the local governmental entity for late payment

14  interest charges allowable under this part.

15         Section 6.  Section 218.76, Florida Statutes, is

16  amended to read:

17         218.76  Improper payment request or invoice; resolution

18  of disputes.--

19         (1)  In any case in which an improper payment request

20  or invoice is submitted by a vendor, the local governmental

21  entity shall, within 10 days after the improper payment

22  request or invoice is received by it, notify the vendor that

23  the payment request or invoice is improper and indicate what

24  corrective action on the part of the vendor is needed to make

25  the payment request or invoice proper.

26         (2)  In the event a dispute occurs between a vendor and

27  a local governmental entity concerning payment of a payment

28  request or an invoice, such disagreement shall be finally

29  determined by the local governmental entity as provided in

30  this section.  Each local governmental entity shall establish

31  a dispute resolution procedure to be followed by the local

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1  governmental entity in cases of such disputes.  Such procedure

  2  shall provide that proceedings to resolve the dispute shall be

  3  commenced not later than 45 days after the date on which the

  4  payment request or proper invoice was received by the local

  5  governmental entity and shall be concluded by final decision

  6  of the local governmental entity not later than 60 days after

  7  the date on which the payment request or proper invoice was

  8  received by the local governmental entity.  Such procedures

  9  shall not be subject to chapter 120, and such procedures shall

10  not constitute an administrative proceeding which prohibits a

11  court from deciding de novo any action arising out of the

12  dispute.  If the dispute is resolved in favor of the local

13  governmental entity, then interest charges shall begin to

14  accrue 10 15 days after the local governmental entity's final

15  decision.  If the dispute is resolved in favor of the vendor,

16  then interest shall begin to accrue as of the original date

17  the payment became due.

18         (3)  In an action to recover amounts due under s.

19  218.70-218.80, the prevailing party shall be entitled to

20  recover court costs and attorney's fees at trial and on

21  appeal.

22         Section 7.  This act shall take effect July 1, 2001.

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    Florida Senate - 2001                                   SB 870
    12-776-01                                           See HB 113




  1            *****************************************

  2                       LEGISLATIVE SUMMARY

  3
      Revises the Florida Prompt Payment Act to:
  4         1.  Redefine the terms "local government entity,"
      "purchase," and "construction services" and defines the
  5    terms "payment request" and "agent."
           2.  Provide for the timely payment for
  6    nonconstruction services.
           3.  Revise provisions with respect to timely payment
  7    for purchases of construction services.
           4.  Revise provisions with respect to calculations
  8    of payment due dates, mandatory interest, improper
      invoices, and resolution of disputes.
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