May 6, 2010, Introduced by Senators SWITALSKI and OLSHOVE and referred to the Committee on Commerce and Tourism.
A bill to amend 1963 PA 213, entitled
"An act to provide a procedure for bonding contractors for public
buildings and public works of governmental units; and to repeal
certain acts and parts of acts,"
by amending the title and sections 1, 2, 3, 6, and 7 (MCL 129.201,
129.202, 129.203, 129.206, and 129.207), section 1 as amended by
1982 PA 11.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide a procedure for bonding contractors for
certain public buildings and certain public works of governmental
units; to require certain provisions in certain bonds and in
certain public works contracts; to provide for penalties and
remedies; and to repeal certain acts and parts of
acts.
Sec. 1. Before any contract, exceeding $50,000.00 for the
construction, alteration, demolition, or repair of any public
building
or public work facility or improvement of the state or a
county,
city, village, township, school district, public
educational
institution, other political subdivision, public
authority,
or public agency hereinafter referred to as the
"governmental
unit", for a governmental
unit is
awarded, the
proposed
contractor , hereinafter referred to as the "principal
contractor",
shall furnish to the governmental unit,
at his or her
its
own cost, to the governmental
unit a performance bond and a
payment
bond which shall become meeting
the requirements of
sections 2 and 3 that are binding upon the award of the contract to
the
principal contractor. However, if the principal contractor is a
common
carrier as defined in section 3 of Act No. 300 of the Public
Acts
of 1909, as amended, being section 462.3 of the Michigan
Compiled
Laws 1909 PA 300, MCL
462.3, or the designated operator of
a
state subsidized railroad, the principal contractor may provide
an irrevocable letter of credit from a state or national bank or a
state or federally chartered savings and loan association instead
of the bonds. Neither the invitation for bids, nor any person
acting , or purporting to act , on behalf of the governmental unit,
shall
require that the bonds to be furnished by a particular bank
or
surety company, or through a particular agent or broker, or
through a bank, company, agent, or broker in any particular
locality.
Sec.
2. The performance bond shall be in an amount fixed by
the
governmental unit but that is
not less than 25% 100% of
the
contract amount, conditioned upon the faithful performance of the
contract in accordance with the plans, specifications, and terms
thereof.
of the contract. The bond shall be solely for the
protection of the governmental unit awarding the contract.
Sec.
3. (1) The payment bond shall be in an amount fixed by
the
governmental unit but that is
not less than 25% 100% of
the
contract
amount and be solely
for the protection of claimants , as
defined
in section 6, supplying furnishing
labor, supplies,
equipment, or materials to the principal contractor or his
subcontractors in the prosecution of the work provided for in the
contract.
(2) A payment bond for a contract executed on or after the
effective date of the amendatory act that added this subsection
shall not contain any provision that conditions the payment of the
subcontractor upon the receipt by the contractor of its money from
the governmental unit.
Sec.
6. A "claimant" As
used in this act:
(a) "Claimant" means a person having furnished labor,
supplies,
equipment, or material, or both, used
or reasonably
required
for use in the performance of the
a contract
for all or
part of the construction, alteration, demolition, or repair of a
public
facility. "Labor and
material" includes that part of water,
gas,
power, light, heat, oil, gasoline, telephone service or rental
of
equipment directly applicable to the contract.
(b) "Contract" means a written agreement between a contractor
and a governmental unit having a dollar value in excess of
$50,000.00 for the construction, alteration, demolition, or repair
of a public facility.
(c) "Contractor" means an individual, sole proprietorship,
partnership, corporation, limited liability company, joint venture,
or other legal entity that is a party to a contract with a
governmental unit for the construction, alteration, demolition, or
repair of a public facility.
(d) "Governmental unit" means this state, or a county, city,
township, village, school district, public educational institution,
other political subdivision, public authority, or public agency.
(e) "Public facility" means any building, structure,
transportation or utility infrastructure, roadway, bridge, sewer,
school, drain, ditch, levee, or other structure or work of a
governmental unit that is paid for with public funds or a special
assessment.
Sec. 7. (1) A claimant who has furnished labor, supplies,
equipment, or material in the prosecution of the work provided for
in
such a contract in respect of which payment bond is
furnished
under
the provisions of section 3, and who has not been paid in
full therefor before the expiration of a period of 90 days after
the day on which the last of the labor was done or performed by him
or her or supplies, equipment, or material was furnished or
supplied
by him or her for which claim is made, may sue bring an
action in a court of competent jurisdiction on the payment bond for
the amount, or the balance thereof, unpaid at the time of
institution
of the civil action, prosecute such the action to final
judgment
for the sum justly due, him and have execution thereon.
(2) In an action on a payment bond for a contract executed on
or after the effective date of the amendatory act that added this
subsection, a bond provider may not defend a claim on the basis
that the contractor has not been paid.
(3) A claimant not having a direct contractual relationship
with
the principal contractor shall named
in the bond does not have
a
right of action upon the payment bond unless (a) he both of the
following occur:
(a) He or she has, within 30 days after furnishing the first
of
such the material,
supplies, or equipment or performing
the
first
of such the labor, served on the principal contractor named
in
the bond a written notice, which shall
inform informs the
principal of the nature of the materials, supplies, or equipment
being furnished or to be furnished, or labor being performed or to
be
performed and identifying the party contracting for such the
labor
or materials and the site for the performance of such the
labor
or the delivery of such the
materials, and (b) he supplies,
or
equipment.
(b) He or she has given written notice to the principal
contractor
named in the bond and the governmental unit involved
within
90 days from after the date on which the claimant performed
the last of the labor or furnished or supplied the last of the
material, supplies, or equipment for which the claim is made,
stating with substantial accuracy the amount claimed and the name
of the party to whom the material, supplies, or equipment was
furnished or supplied or for whom the labor was done or performed.
(4) Each notice sent under subsection (3) shall be served by
mailing the same by certified mail, postage prepaid, in an envelope
addressed
to the principal contractor, named
in the bond and the
governmental
unit involved, at any place at which said those
parties maintain a business or residence.
(5) The principal contractor shall is not
be required to make
payment to a subcontractor of sums due from the subcontractor to
parties
performing labor or furnishing materials, or supplies, or
equipment to the subcontractor, except upon the receipt of the
written
orders of such those parties to pay to the subcontractor
the
sums due such to those parties.
(6) In any action brought under this section, the prevailing
party is entitled to recover from the nonprevailing party the
reasonable costs and attorney fees incurred in the action. If, in
such an action, the finder of fact determines that there was no
good faith basis for the nonpayment of the amount sought by the
claimant, the claimant is entitled to recover interest at the rate
of 12% per annum on the amount found to be due by the finder of
fact from the date that payment was due until fully paid.
Enacting section 1. (1) This amendatory act takes effect
January 1, 2011.
(2) This amendatory act applies to any contracts entered into
on or after January 1, 2011.