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SF1714 (Legislative Session 94 (2025-2026))

Public contracts payment transparency requirement provision

Related bill: HF1234

AI Generated Summary

This bill seeks to enhance payment transparency and retainage regulations in public contracts within Minnesota by amending certain statutes. Key provisions include:

  1. Retainage Limits and Payment Timelines:

    • Public agencies can withhold up to 5% retainage from progress payments but may choose to reduce or eliminate this amount if work is progressing satisfactorily.
    • All retainage must be released within 60 days after substantial completion.
    • Contractors must pay subcontractors their respective retainage within 10 days of receiving it from the agency, unless there is a dispute over the subcontractor’s work.
    • An agency may withhold up to 1.25% of costs to correct or complete work at the time of substantial completion, and up to 1% of the contract value (or at least $500) until all final paperwork is submitted.

  2. Payment Transparency Requirements:

    • Public agencies must notify contractors and subcontractors of all payment details within three business days, including:
      • Payment amount
      • Date of payment
      • Recipient details
      • Scope of work or project progress related to the payment
      • Any retainage applied or withheld payments
    • No fees can be charged to contractors or subcontractors for these notifications.

  3. Regulations for Owners in Private Construction Projects:

    • Standard monthly progress payments are required unless stated otherwise.
    • Retainage for private contracts may not exceed 5%, and owners can reduce or eliminate retainage as work progresses.
    • Retainage must be released within 60 days of substantial completion unless withheld for outstanding paperwork or work completion.
    • Warranty work cannot be used to justify retainage withholding.

  4. Additional Considerations:

    • These provisions do not apply to professional service contracts or public agencies in certain cases.
    • Restricting or delaying the submission of an invoice through contract management processes is considered void and unenforceable.

Summary

The bill strengthens payment transparency and retainage release practices while ensuring that payments to subcontractors are protected. It introduces mandatory notifications for all contractors and subcontractors about payments and requires timely payment of retainage after project completion.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 19, 2025SenateFloorActionIntroduction and first reading
February 19, 2025SenateFloorActionReferred toState and Local Government

Citations

 
[
  {
    "analysis": {
      "added": [
        "A clause that aligns retainage release timelines with the definition of 'substantial completion'."
      ],
      "removed": [],
      "summary": "This bill relates to modifications regarding contract retainages and references the term 'substantial completion' as defined under section 541.051.",
      "modified": [
        "Clarifies when substantial completion is achieved, impacting the retainage release timeline."
      ]
    },
    "citation": "541.051"
  },
  {
    "analysis": {
      "added": [
        "Clarifies that final paperwork includes the withholding exemption certificate as per section 270C.66."
      ],
      "removed": [],
      "summary": "The bill references section 270C.66 for requirements pertaining to the withholding exemption certificate.",
      "modified": [
        "Requires submission of withholding certificate as part of fulfilling final paperwork obligations before payment."
      ]
    },
    "citation": "270C.66"
  }
]

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