[As Amended by House Committee of the Whole]

As Amended by Senate Committee

          Session of 1998
By Committee on Transportation and Tourism
          12             AN ACT concerning construction contracts; providing procedure for par-
13             tial payment[; establishing minimum wages therefor.]; amending
14             K.S.A. 68-411 and 68-1120 and K.S.A. 1997 Supp. 68-521 and re-
15             pealing the existing sections.
17       Be it enacted by the Legislature of the State of Kansas:
18           New Section 1. Notwithstanding any other statutory provision of this
19       state, in any contract entered into by the state of Kansas or any depart-
20       ment or agency of the state, or any county, city, school district or any
21       other political subdivision of the state, for the construction, reconstruc-
22       tion, renovation, remodeling or repair of any building or structure or for
23       the construction, reconstruction, repair or maintenance of any highway,
24       road, bridge, underpass, viaduct, sewer or waterworks, or other improve-
25       ments to public property, the contracting public entity may include a
26       provision for retaining moneys until such time as the contract has been
27       satisfactorily completed, subject to the following:
28           (a) Such withholding from any partial or complete payment shall not
29       exceed 5% of such payment, not to exceed 5% of the entire contract
30       amount.
31           (b) (a) With respect to any contract to which this act applies of
32       $1,000,000 or more, at any time before the public contracting entity re-
33       leases the contract funds it has retained, the contractor may request pub-
34       lic entity may approve a request from the contractor that the retained
35       funds be placed in an interest bearing escrow account. It shall be the
36       responsibility of the contractor to establish the escrow account in a state
37       or national bank, federally chartered savings and loan association, or fed-
38       erally chartered savings bank with offices located in Kansas. All fees or
39       charges for establishing and maintaining the escrow account shall be paid
40       by the contractor. Prior to paying any retained funds into the escrow
41       account the public contracting entity shall enter into an appropriate es-
42       crow agreement with the bank, savings and loan association or savings
43       bank and the contractor. The escrow agreement shall provide that the

SB 489--Am. by HCW


  1       retained funds shall be returned to the contracting public entity in the
  2       event the contracting public entity notifies the bank, savings and loan
  3       association or savings bank that the contractor has defaulted on the con-
  4       tract, that the retained funds shall not be released to the contractor until
  5       authorized by the contracting public entity and that the interest on the
  6       retained funds shall be paid to the contractor as it accumulates.
  7           (c) (b) With respect to any contract to which this act applies of
  8       $1,000,000 or more, at any time after the contracting public entity has
  9       retained any contract funds the contractor shall be allowed, upon request
10       by the contractor, to may request and upon approval by the public
11       contracting entity of such request the contractor may substitute se-
12       curities of the following types for the retained contract funds:
13           (1) United States treasury bonds, United States treasury notes,
14       United States treasury certificates of indebtedness or United States treas-
15       ury bills;
16           (2) bonds or notes of the state of Kansas or any political subdivision
17       of the state; or
18           (3) certificates of deposit from any state or national bank, federally
19       chartered savings and loan association, or federally chartered savings
20       bank, with offices located in Kansas.
21           The value of the securities substituted must be at least equal to the
22       amount of the funds retained. The substituted securities shall be issued
23       in such a manner as to allow the contracting public entity to convert the
24       securities to cash in the event the contracting public entity makes a claim
25       against the contractor as a result of the contractor's default on the con-
26       tract. Upon substitution of appropriate securities the contracting public
27       entity shall pay the retained funds to the contractor within five working
28       days. When the contract is satisfactorily completed the substituted se-
29       curities will be returned to the contractor with any interest that has ac-
30       cumulated. In the event that the contracting public entity makes a claim
31       against the retained securities the entity shall retain only such substituted
32       securities of a sufficient value to cover the amount of the claim and return
33       the remaining substituted securities to the contractor plus any accumu-
34       lated interest. Substituted securities retained to cover the amount of the
35       claim made by the contracting public entity may be converted to cash by
36       the entity. All costs associated with substituting securities as provided in
37       this subsection shall be paid by the contractor. The contracting public
38       entity may require the contractor to establish and maintain an escrow
39       account with an escrow agent approved by the contracting public entity
40       for the purpose of effectuating the substitution of securities provided for
41       in this subsection.
42           Sec. 2. K.S.A. 68-411 is hereby amended to read as follows: 68-411.
43       The secretary of transportation shall make partial payment to a contractor

SB 489--Am. by HCW


  1       performing any road or bridge work under contract with it, as the work
  2       may progress, said such partial payment not to be less than ninety percent
  3       (90%) of the contract price of the material delivered and work done and
  4       accepted to be made in accordance with the provisions of section 1. The
  5       secretary shall provide by regulation rules and regulations, to be made a
  6       part of all specifications, for the withholding of not more than ten percent
  7       (10%) 5% of the full contract price of any such work until the work is
  8       satisfactorily completed and approved by the secretary and the provisions
  9       of the contract and bond therefor have been fully satisfied.
10           Sec. 3. K.S.A. 1997 Supp. 68-521 is hereby amended to read as fol-
11       lows: 68-521. (a) The board of county commissioners before awarding any
12       contract for the construction, surfacing, repairing or maintaining of any
13       road as provided in K.S.A. 68-520, and amendments thereto, when the
14       county engineer's estimated cost of such improvement is more than
15       $10,000, shall have the estimate and the approved plans and specifications
16       which have been adopted by order of the board for such work filed in
17       the county clerk's office or in some other county office designated by the
18       board at least 20 days prior to the time of the letting.
19           The county clerk or some other county officer designated by the board
20       shall give not less than 20 days' notice of the letting by publication in at
21       least two consecutive weekly issues of the official county paper, the first
22       publication of such notice to be not less than 20 days prior to such letting.
23       The notice shall specify with reasonable minuteness the character of the
24       improvement contemplated, where it is located, the kind of material to
25       be used, the hour, date and place of letting of such contract, when the
26       work is to be completed, and invite sealed proposals for the same. Such
27       other notice may be given as the board may deem proper. All bids shall
28       be made on the proposal blanks furnished by the county, signed by the
29       bidder, sealed and delivered, or sent by mail, by the bidder, or the agent
30       or attorney thereof, to the county clerk or to some other county officer
31       designated by the board. The letting of all contracts shall be conducted
32       in such manner as to give free, open competition, and all bidders shall be
33       given an equal opportunity to bid upon the plans and specifications on
34       file. Each bidder shall be required to accompany the submitted bid with
35       a bid surety in an amount equal to 5% of the bid amount in the form
36       prescribed by the board as a guarantee that, if the contract is awarded to
37       the bidder, the bidder will enter into the contract with the board. If a
38       bidder fails to enter into the contract when awarded to the bidder, the
39       bid surety shall become the property of the county as its liquidated dam-
40       ages and shall be paid to the county treasurer for credit to the general
41       fund of the county, and the board may award the contract to the next
42       lowest responsible bidder. The bids shall be opened publicly by the board
43       or a designee thereof at the place and hour named in the advertising

SB 489--Am. by HCW


  1       notice, and all bids shall be considered, and accepted or rejected.
  2           In case the work is let at such public letting or thereafter, the contract
  3       shall be awarded to the lowest responsible bidder, or the board, if it deems
  4       the proposals too high, may reject all bids, and readvertise the work as
  5       before. No such contract shall be let at an amount exceeding the county
  6       engineer's estimated cost of the work. No such contract shall be consid-
  7       ered as awarded unless the contractor shall within 10 days after the letting
  8       enter into contract and shall give the bond required by K.S.A. 60-1111,
  9       and amendments thereto, and a performance bond to the county in a
10       penal sum equal to the amount of the contract price, conditioned upon
11       the faithful performance of the contract, payable to the county upon fail-
12       ure to comply with the terms of the contract. The contractor shall file
13       with the county clerk the bonds, which shall be approved by the chair-
14       person of the board and the county attorney by their signatures indorsed
15       thereon.
16           (b) The provisions of subsection (a) shall not apply to contracts for
17       the expenditure of county moneys for the reconstruction or repair of a
18       road if:
19           (1) The road has been damaged or destroyed as a result of a disaster;
20           (2) the governor has declared the county, or that part of the county
21       in which the road is located, a disaster area;
22           (3) the board of county commissioners finds that a hardship would
23       result if the road is not immediately reconstructed or repaired;
24           (4) the board of county commissioners has obtained an estimate of
25       the cost of the reconstruction or repair of the road from the county en-
26       gineer. If there is no county engineer, the board shall obtain such estimate
27       from the Kansas department of transportation; and
28           (5) the contract for the reconstruction or repair of the road is awarded
29       within 60 days of the governor's declaration required by paragraph (2).
30           (c) The county attorney shall meet with and advise the board of
31       county commissioners in all matters pertaining to letting and making of
32       all contracts under this act. The board may make partial payments in
33       accordance with the provisions of section 1, on the written estimate of its
34       county engineer, upon any contract work as the same progresses, but not
35       more than 90% 95% of the estimate of the materials furnished and work
36       done, or of the contract price, shall be paid in advance of the full and
37       satisfactory completion of the contract. Final payment shall not be made
38       on any such contract until the county engineer has inspected the work
39       and certified in writing that it has been properly done and completed in
40       accordance with the contract, plans and specifications, and the county
41       engineer's certificate to that effect has been filed in the office of the
42       county clerk or some other county officer designated by the board.
43           Sec. 4. K.S.A. 68-1120 is hereby amended to read as follows: 68-

SB 489--Am. by HCW


  1       1120. The board of county commissioners may make partial payments in
  2       accordance with the provisions of section 1, upon written estimate of their
  3       engineer, on any contract for bridge or culvert work under this act as the
  4       same progresses;, but at no time shall more than ninety percent (90%)
  5       95% of the estimate of the materials at such time furnished and of the
  6       work at such time done be paid in advance of the full and satisfactory
  7       completion of said such work. Final payment shall not be made on any
  8       of such contracts where the amount of the contract involved exceeds three
  9       hundred dollars ($300) $300 by any county board until the county engi-
10       neer has inspected the structure and certified in writing that the work
11       has been done properly and completed according to contract, plans and
12       specifications, and labor and materials paid for, and the county engineer's
13       certificate to that effect shall be filed in the office of the county clerk.
14       The acceptance of any bridge or the approval thereof shall not relieve the
15       contractor or sureties of such contractor from any liability for any failure
16       to fully perform the contract or under any provisions of such contractor's
17       bond.
18           Sec. 5. K.S.A. 68-411 and 68-1120 and K.S.A. 1997 Supp. 68-521 are
19       hereby repealed.
20        [Sec. 2. (a) Each contract entered into pursuant to this act
21       shall be based on bid or contract specifications prescribing and
22       requiring that employees of any contractor or subcontractor shall
23       be paid not less than the hourly wages, including fringe benefits,
24       paid to corresponding classes of laborers and mechanics employed
25       on similar projects in the county where the project is to be per-
26       formed. Such minimum wage shall be the wage paid to the majority
27       of the laborers or mechanics, unless the same wages are not paid
28       to a majority, in which case the minimum wage shall be the average
29       wages paid, weighted by the total employed in the classification.
30       In the alternative, the minimum wage shall be that determined
31       under federal law which would be required to be paid on federally
32       funded projects at the location of the public works project.
33           [(b) Employees employed by contractors or subcontractors in
34       the execution of any nonfederal aid, public works project contract
35       with any state agency shall be paid not less than the wages as de-
36       termined pursuant to subsection (a).
37           [(c) All work done on public works projects owned by or built
38       for any state agency shall be done by Kansas resident employees
39       whenever possible.]
40           Sec. 6 2 [3]. This act shall take effect and be in force from and after
41       its publication in the statute book.