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S.F. No. 2783 - Public Contracts Progress Payments and Release of Retainage, The First Engrossment
Author: Senator Mark W. Koran
Prepared By: Stephanie James, Senate Counsel (651/296-0103)
Date: March 8, 2018


SF 2783 is applicable to any public contracting agency. “Public contracting agency” is defined to include any agency of the state of Minnesota or any of its political subdivisions that are authorized to enter into public contracts.

Section 1, Subd. 1a [Prompt Payment to Subcontractors] requires a prime contractor, in a contract with a public contracting agency, to commit to pay subcontractors within ten days of receiving payment from the public contracting agency for the undisputed services of the subcontractor.  The contract must also require the prime contractor to pay 1.5 percent interest per month for late payments to subcontractors, with a specified minimum. This section requires that a court award costs and disbursements, including attorney fees, to a subcontractor who prevails in a civil action to collect interest penalties.

This section applies to required monthly payments, as well as to payment of retainage required in subdivision 3.

The requirements in this subdivision, except as they apply to retainage, are already required of state agencies (Minnesota Statutes, section 16A.1245) and municipalities (Minnesota Statutes, section 471.425).

Subd. 2 [Retainage] does not alter current law.

Subd. 3 [Release of retainage] requires a public contracting agency to release retainage or final payment within 30 days of the issuance of a certificate of occupancy or substantial completion.


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