On January 22, members of the Associated Builders and Contractors (ABC) Florida Gulf Coast Chapter will urge the Florida Legislature to tweak current laws governing retainage and continuing contracts to better reflect nationwide economic, legislative and industry trends.
Retainage is money withheld from a contractor until a project is completed. Currently, in Florida, the amount allowed is 10 percent of every payment until a project is half done. ABC wants to reduce this to five percent (where it would stay for the project’s duration), as stated in Sen. Ed Hooper’s Senate Bill 246 and Rep. Alex Andrade’s House Bill 101.
“Even under the prompt pay statutes, public entities can be slow to pay on public construction projects. This consistently creates cash flow issues, especially with local governments encouraging small and emerging businesses to bid on public opportunities,” said Steve Cona III, president and CEO of ABC Florida Gulf Coast.
“When you combine the slow pay structure with the permissible withholding of retainage on monthly progress payments, you end up with a real cash-flow problem for smaller general and specialty contractors,” he said.
ABC’s second priority is continuing contracts, the subject of Sen. Keith Perry’s Senate Bill 506 and Rep. Nick DiCeglie’s House Bill 441.
Continuing contracts are related to Florida Statute 287.055, known as the Consultants’ Competitive Negotiation Act (CCNA), which “governs the process by which public entities procure certain architectural, landscaping, engineering and surveying services,” said Cona. “It also applies indirectly to the process for procuring design-build and construction management contracts.”
ABC’s “interest in CCNA specifically deals with the option for public entities to bid out continuing contracts,” he said. “The benefit of a continuing contract is that it saves time and money by allowing public entities to directly select a firm for professional services without having to go through the expensive and time-consuming RFQ (request for quote) process for every public project.”
Currently, the state limits continuing contracts to jobs not exceeding $2 million, and the proposed change would increase that threshold.
“That dollar amount was established many years ago,” said Cona. “We believe tying that amount to a fiscal constant would ensure that the threshold amount reflects the economy and industry trends and pricing on an annual basis.”
“We are hopeful that our two bills will be passed this year,” Cona said. “Both have already advanced through the process and are positioned well. We believe the Legislature sees in both the savings of time and money for the state, builders, and laborers. These are good consumer bills, and we’ve been needing these changes for a while.”