4. Misconduct. If the general contractor or subcontractor has been convicted of collusion or fraud or any other civil or criminal violation relating to construction projects.

If a general contractor or subcontractor is disqualified for any of the reasons stated in subsection 1, 2 or 4, the director may disallow the general contractor or subcontractor from bidding on any similar public improvements for a period not to exceed one year.

Sec. 4. Application. This Act applies to public improvement projects for which contracts are signed on or after January 1, 2000.

SUMMARY

The bill applies to state construction projects over $1,000,000 in value and to school construction projects over $1,000,000 in value and for which state aid is received. The bill limits the retention of contract payments on those public improvement construction projects to line items in the project contract and to situations in which unsatisfactory progress has been made by a contractor or subcontractor. In those cases, up to 5% of the payment due under the project contract may be withheld until all contract requirements for the line item have been completed. Following completion of a line item, any retained payments must be paid promptly. At the end of a project, the value of punch list and incomplete items may be retained as well as withholding to cover good faith claims of the owner, including claims for unsatisfactory progress on the project. Over the course of the project, the owner makes the determination of how much of the payment due will be retained up to the 5% limit and as to whether satisfactory progress has been made on the project.