March 17, 2005, Introduced by Rep. Acciavatti and referred to the Committee on Government Operations.
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, 6, and 7 (MCL 129.201,
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
public buildings and public works of governmental units; to provide
for
certain contract remedies; and to
repeal certain acts and
parts of acts.
Sec.
1. (1) Before any contract , exceeding $50,000.00
for
the construction, alteration, or repair of any public building or
public
work 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", a
governmental
unit is awarded, the proposed contractor,
hereinafter referred to
as
the "principal contractor", principal contractor shall furnish
at his or her own cost to the governmental unit a performance bond
and
a payment bond which that shall become binding upon the award
of the contract to the principal contractor.
(2) 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 required by subsection (1). Neither the invitation for bids,
nor any person acting, or purporting to act, on behalf of the
governmental unit shall require that the bonds 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.
6. A "claimant" As
used in this act:
(a)
"Claimant" means a person having
that furnished labor,
material, or both, used or reasonably required for use in the
performance
of the a contract.
(b) "Contract" means an agreement for the providing of
improvements to real property and includes an addition to, deletion
from, or amendment to the agreement.
(c) "Contractor" means a person who, under a contract with the
owner or lessee of real property, provides an improvement to real
property.
(d) "Governmental unit" means the state or a county, village,
township, school district, public educational institution, other
political subdivision, public authority, or public agency.
(e) "Improvement" means the result of labor or material
provided by a contractor, subcontractor, supplier, or laborer
including, but not limited to, surveying, engineering and
architectural planning, construction management, clearing,
demolishing, excavating, filling, building, erecting, constructing,
altering, repairing, ornamenting, landscaping, paving, leasing
equipment, or installing or affixing a fixture or material, under a
contract.
(f) "Labor and material" includes that part of water, gas,
power, light, heat, oil, gasoline, telephone service or rental of
equipment
directly applicable to the a contract.
(g) "Owner" means a person holding a fee interest in real
property or an equitable interest arising out of a land contract.
(h) "Principal contractor" means the contractor that contracts
with an owner or lessee to provide, directly or indirectly through
contracts with subcontractors, suppliers, or laborers,
substantially all of the improvements to real property under a
contract.
(i) "Residence" means a detached 1-family or 2-family
residence building not exceeding 5,000 square feet in calculated
floor area.
(j) "Subcontractor" means a person that has a direct contract
with a contractor or another subcontractor to perform a portion of
the improvements under a contract.
(k) "Supplier" means a person who, pursuant to a contractor or
subcontractor, leases, rents, or in any other manner provides
material or equipment that is used in the improvement of real
property under a contract.
Sec. 7. (1) A claimant who has furnished labor 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 for that
claim 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
material
was furnished or supplied by him for which claim is
made, may sue 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
execute on the judgment. A
claimant not having a direct contractual relationship with the
principal
contractor shall does not have a right of action upon
the payment bond unless both of the following have occurred:
(a)
he The claimant has, within 30 days after furnishing the
first of such material or performing the first of such labor,
served
on the principal contractor a written notice , which shall
inform
informing the principal contractor of the nature of the
materials being furnished or to be furnished, or labor being
performed or to be performed, and identifying the party contracting
for
such that labor or materials and the site for the performance
of
such that labor or the delivery of such those
materials. ,
and
(b)
he The claimant has given written notice to the
principal contractor 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 for
which the claim is made, stating with substantial accuracy the
amount claimed and the name of the party to whom the material was
furnished or supplied or for whom the labor was done or performed.
(2) Each notice under subsection (1) shall be served by
mailing
the same it by certified mail, postage prepaid, in an
envelope
addressed to the principal contractor
, and the
governmental
unit involved, at any place at which said the
parties maintain a business or residence.
(3) 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,
except
upon the receipt of the written orders of such those
parties
to pay to the subcontractor the sums due such those
parties.
(4) Subsections (5), (6), and (7) apply only to a contract
that conforms with all of the following:
(a) Is in the amount of $10,000.00 or more.
(b) Is written.
(c) Does not involve the building, alteration, or improvement
of a residence.
(d) Contains a specific payment provision.
(5) Except as exempted from this section, an owner, a
contractor, or a principal contractor shall pay a supplier,
subcontractor, or other contractor on or before the date specified
in the contract.
(6) Failure of an owner, a contractor, or a principal
contractor to pay in compliance with this section is considered a
material breach and allows the supplier, subcontractor, or other
contractor to suspend performance of the contract or act as
otherwise provided by law.
(7) This section does not require any contract to contain any
of the provisions of subsections (5) and (6).
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 4509(request no.
00199'05 a) of the 93rd Legislature is enacted into law.