Sec. 1. 5 MRSA §1746, first ¶ is amended to read:

In Except as provided in section 1746-A, in any contract awarded for any public improvement the State shall withhold 5% of the money due the contractor until the project under the contract has been accepted by or for the State, except that when the contract has been substantially completed the State may, upon request, further reduce the amounts withheld if it deems determines it desirable and prudent.

Sec. 2. 5 MRSA §1746-A is enacted to read:

§1746-A.__Retention of part of contract payment for state and

major school construction projects

This section governs the retention of part of the contract payment for public improvement projects as defined in subsection 1.__This section does not prevent the withholding of payment to cover good faith claims as provided in Title 10, section 1118.

1.__Definitions.__As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

A.__"Nonperformance" includes, but is not limited to, defects in workmanship or materials, failure to perform all the work specified or delay by the general contractor or subcontractor that causes adverse financial consequences.

B.__"Owner" means the State, a school administrative unit or a school building committee having an interest in real property on which a public improvement project is or will be constructed.

C.__"Public improvement project" means:__the construction, major alteration or repair of buildings or public works owned or leased or hereafter constructed, acquired or leased by the State or any department, officer, board, commission or agency of the State when that construction, major alteration or repair of buildings or public works is in excess of $1,000,000 in value; or the construction, major alteration or repair of school buildings that is in excess of $1,000,000 in value and for which state school construction aid is paid.

D.__Punch list" means a list made near the completion of work that indicates minor items to be corrected or work to be performed by the general contractor or subcontractor in order to complete the work as specified in the contract documents.