10.__Daily financial incentive.__The Director of the Bureau of General Services may approve contracts with a provision for a daily financial incentive for public improvements completed before the scheduled date when it can be demonstrated that the early completion will result in financial savings to the owner of a public improvement.__The financial incentive may not exceed the projected daily rate of savings to the owner.

Sec. 3. Application. The Maine Revised Statutes, Title 5, section 1746 applies to public improvement construction contracts in which substantial completion, as defined in Title 5, section 1746-A, subsection 1, paragraph C, is reached before January 1, 2006. Title 5, section 1746-A applies to public improvement construction contracts in which substantial completion, as defined in section 1746-A, subsection 1, paragraph C, is reached after December 31, 2005.

SUMMARY

This bill provides that in any contract awarded for a public improvement the owner of the public improvement may retain 5% of the money due the contractor until substantial completion of the work. At substantial completion, the owner and the contractor shall inspect the work and prepare a punch list. The owner may thereafter withhold for defective or incomplete work only those funds that are sufficient to account for 1.5 times the value of punch list work. As punch list work is completed, the retainage held by the owner must be correspondingly reduced. Current law provides that 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 it desirable and prudent.