The annual General Assembly session is now well underway here in the Commonwealth of Virginia. As is always the case, those in our fine state legislature have introduced with varying success a few construction-related bills. This post will list just a few without comment, and a big one at the end that will likely spur a post or two down the road here at Construction Law Musings:
HB1490: Virginia Public Procurement Act; certain construction contracts; performance and payment bonds. Allows localities to allow a contractor of indefinite-delivery or quantity contracts, defined in the bill, who is otherwise required to furnish performance and payment bonds in the sum of the contract amount to the public body with which he contracted to furnish such bonds only the dollar amount of the individual tasks identified in the underlying contract. Such contractors shall not be required to furnish the sum of the contract amount if the governing locality has adopted such an ordinance.
UPDATE: Passed the House and is being considered in the Senate
UPDATE 2: A substitute bill has passed both the House and the Senate.
HB1633: Department of Professional and Occupational Regulation; Virginia Contractor Transaction Recovery Fund; recovery; arbitration. Allows a person who has a judgment entered in conformity with an order confirming an arbitration award from a court of competent jurisdiction in the Commonwealth against a contractor that involves improper or dishonest conduct in connection with a transaction involving contracting to file a verified claim with the Director of the Department of Professional and Occupational Regulation to obtain a directive ordering payment from the Virginia Contractor Transaction Recovery Fund of the amount unpaid upon the judgment, subject to certain conditions outlined in the bill.
UPDATE: Passed the House and is being considered in the Senate.
UPDATE 2: The House bill has passed as introduced.
HB1957: Virginia Public Procurement Act; construction management and design-build contracting; applicability. Requires a two-step process consisting of (i) a preconstruction contract and (ii) competitive sealed bidding for construction services for certain projects totaling less than $125 million. Complex projects, defined in the bill, may request an exemption from the provisions of the bill and relevant law from the Secretary of Administration. If a complex project totals more than $125 million, the bill provides that an exemption from the provisions of the bill and relevant law is not required. Finally, the bill states that competitive sealed bidding is the preferred method of procurement for construction services in the Commonwealth.
UPDATE: Passed over in committee until February 8, 2023. (Still no action)
UPDATE 2: This bill failed to pass the House.
And now for the big one. As you are well aware if you read this construction blog, Virginia (sort of) banned pay-if-paid clauses in construction beginning January 1, 2023. Well, now the legislature is seeking to clarify certain issues and conflicts caused by the drafting of the original ban. This has resulted in a bill in House and a bill in the Senate that each seek to perform this function in different ways: The bills are linked below with the legislative descriptions. I am sure I will be posting about these bills a few times as this particular “legislative sausage” gets made.
HB2500: Virginia Public Procurement Act; private contracts; payment of subcontractors. Provides that in contracts for construction, contractors shall be liable to their subcontractors for the entire amount owed to their subcontractors regardless of the contractor’s receipt of payment from another party. The bill allows contractors to withhold payment from a subcontractor only for such subcontractor’s noncompliance with the terms of the contract and requires the contractor to provide reasonable notice of the reason for such withholding.
SB1313: Construction contracts; payment clauses to be included in certain contracts; right to payment of subcontractors. Clarifies certain definitions throughout the Code for consistency between public and private construction contracts. The bill updates the notice required when a general contractor withholds all or a part of the amount invoiced by a subcontractor in a public construction contract and when an owner withholds payment from a general contractor to include language specifically identifying the contractual noncompliance, the dollar amount being withheld, and the lower-tier subcontractor responsible for the contractual noncompliance.
As you can see there are two different approaches to “clarification” that will need to be reconciled for the final passage of any legislation. In the meantime, be sure to update any of your construction contracts to take into account the new rules on pay-if-paid with the help of your friendly Virginia construction attorney.
UPDATE: Both bills passed their respective chambers. Stay tuned for how they are reconciled.
UPDATE 2: The House has reported a substitute out of committee. The Senate has not reported any further action on the House bill.
UPDATE 3: The House has passed the substitute bill and the Senate has now published its committee substitute that mirrors the House substitute bill. We’re getting closer to at least “clearer mud.”
UPDATE 4: Both chambers of the General Assembly have passed the final language and it is on the way to Governor Youngkin for review and signature.
UPDATE 5: Governor Youngkin has signed the bill without amendment. I have detailed some of the key changes in another of my Musings.
As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.
