HOUSE FILE 2005

BY  BALTIMORE

A BILL FOR

An Act relating to the retention of funds due to contractors on public improvements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 573.1, Code 2011, is amended by adding the following new subsections:
   NEW SUBSECTION.  2A.  “Principal contractor” means those persons, firms, or corporations having contracts directly with the public corporation.
   NEW SUBSECTION.  6.  “Subcontractor” shall include every person, firm, or corporation performing labor for or furnishing materials to a public improvement, except those persons, firms, or corporations having contracts directly with the public corporation.
    Sec. 2.  Section 573.15, Code 2011, is amended by striking the section and inserting in lieu thereof the following:
   573.15  Exception.
   1.  A person, firm, or corporation performing labor for or furnishing materials to a subcontractor shall not be entitled to a claim against the retainage or bond under this chapter unless the person, firm, or corporation performing the labor or furnishing the materials does all of the following:
   a.  Notifies the principal contractor in writing with a one-time notice containing the name, mailing address, and telephone number of the person, firm, or corporation performing the labor or furnishing the materials and the name of the subcontractor for whom the labor was performed or to whom the materials were furnished, within forty-five calendar days after first performing the labor or furnishing the materials for the public improvement. Additional labor performed, or materials furnished by the same person, firm, or corporation to the same subcontractor for the public improvement shall be covered by this notice.
   b.  Supports the claim with a certified statement that the principal contractor was notified in writing with a notice containing the name, mailing address, and telephone number of the person, firm, or corporation performing the labor or furnishing the materials and the name of the subcontractor for whom the labor was performed or to whom the materials were furnished, within forty-five calendar days after the labor was performed or the materials were furnished, pursuant to paragraph “a”.
   2.  Notwithstanding any other provision of this chapter, a principal contractor shall not be prohibited from requesting information from a subcontractor or from a person, firm, or corporation performing labor for or furnishing materials to a subcontractor regarding payments made or payments to be made to a person, firm, or corporation performing labor for or furnishing materials to a subcontractor.
   3.  This section does not apply to claims for labor filed by employees of principal contractors or employees of subcontractors.
   4.  A public corporation shall not retain any part of the unpaid fund due to the contractor as provided in this chapter because of the commencement of any action by the contractor against the state department of transportation under authority granted in section 613.11.
EXPLANATION
   Current law provides an exception to the requirement that a public corporation retain a portion of funds due a contractor on a public improvement project in a fund for the payment of claims for materials furnished and labor performed. The exception provides that a public corporation need only retain funds due a supplier of material to a general contractor if the supplier provides the general contractor with one of two permitted types of notice after the materials are supplied.
   This bill provides that the exception shall apply to both claims for labor and claims for material. The bill also amends the notice requirement to provide that a supplier of labor or material to a general contractor must give only one type of notice, along with a certified statement that such notice was given. The bill provides that a principal contractor, as defined in the bill, shall not be prohibited from requesting information from a subcontractor or from an entity performing labor for or furnishing materials to a subcontractor regarding payments made to the entity from the subcontractor for labor or materials. The bill provides that the bill does not apply to claims for labor filed by employees of principal contractors or employees of subcontractors.