On January 17, 2013 Representative Fischer introduced House Bill 13-1090 into the Colorado House of Representatives. HB 1090 was assigned the House Business, Labor, Economic and Workforce Development Committee.
The bill, sponsored by Senator Tochtrop in the Senate, sets the following requirements for both private and public construction contracts:
- The owner and contractor must make regular progress payments approximately every 30 days to contractors and subcontractors for work actually performed.
- To receive the progress payments, the contractor and subcontractor must submit a progress payment invoice plus any required documents.
- A contractor must pass on the progress payment to the subcontractor within 5 days or by the end of the billing cycle.
- Interest accrues on unpaid progress payments.
- A contract may extend a billing cycle to 60 days, but the contract must duly warn of this.
- An owner or contractor may only retain 5% of each progress payment to ensure work is done properly.
- If a subcontractor’s work is done before the whole project is done, the subcontractor may apply to be paid the retained 5%. The owner and contractor must pay the retainage if the work is done correctly and the subcontractor gives waivers and the proper documents.
- A person who retains from a payment must give the contractor or subcontractor a chance to cure the default.
- The owner and contractor must pay for changes made to the contract. If they cannot agree on the price, the person doing the work may bill monthly at cost plus 15% or terminate performance.
- A contractor or subcontractor is authorized to suspend performance after 15 days’ notice if the owner or contractor fails to make progress payments.
- After suspending performance, the contractor or subcontractor is obliged to resume work after being paid for the work and reasonable costs and interest.
- A contractor or subcontractor may not suspend performance if the failure to make a payment is due to a failure of the contractor or subcontractor or a dispute about the construction.
- The bill voids any provision in a construction contract that does not comply with these requirements.
There is a lot of opposition to the bill from within the construction industry, mostly framed as a dispute between general contractors, developers, and owners on one side and subcontractors on the other. The bill was originally scheduled for hearing this afternoon, but has been given late bill status and taken off of the calendar. It is my understanding that it was taken off the calendar so that an amendment could be drafted to remove public projects, with the hope of reducing the opposition to the bill.