The new law modifies portions of Chapter 218, Florida Statutes, and Chapter 255, Florida Statutes, to spell out specific punch list processes and to require faster payments to contractors of amounts that are undisputedly due on projects, despite the existence of a punch list. These changes take effect July 1, 2023.
The portion of Chapter 218, Florida Statutes, modified by the new law is part of Florida’s Local Government Prompt Payment Act. The changes, more specifically listed below, generally require contractors on public projects to be provided with a detailed punch list, including an estimated cost to complete the items on the punch list. The local government entity must then pay the contractor the balance due on the project, less the 150% of the estimated cost of completing the punch list within certain timelines.
This is set forth primarily in section 218.735, Florida Statutes, which is modified as follows (strike throughs are deletions, underlines are additions):
(7) Each contract for construction services between a local governmental entity and a contractor must provide for the development of a single list of items and the estimated cost to complete each item on the list required to render complete, satisfactory, and acceptable the construction services purchased by the local governmental entity
(a) The contract must specify the process for developing the list and for determining the cost to complete each item on the list, and should include, including the responsibilities of the local governmental entity and the contractor in developing and reviewing the list and a reasonable time for developing the list:
1. For construction projects having an estimated cost of less than $10 million, within 30 calendar days after reaching substantial completion of the construction services purchased as defined in the contract, or, if not defined in the contract, upon reaching beneficial occupancy or use; or
2. For construction projects having an estimated cost of 74 $10 million or more, within 30 calendar days, or, if extended by contract, up to 45 60 calendar days after reaching substantial completion of the construction services purchased as defined in the contract, or, if not defined in the contract, upon reaching beneficial occupancy or use.
The contract must also specify a date for the delivery of the list of items, not to exceed 5 days after the list of items has been developed and reviewed in accordance with the time periods set forth in subparagraphs 1. and 2.
. . .
(e) Within 20 business days after the list is created, the local governmental entity must pay the contractor the remaining contract balance that includes all retainage previously withheld by the local governmental entity less an amount equal to 150 percent of the estimated cost to complete the items on the list.
(f) Upon completion of all items on the list, the contractor may submit a payment request for the amount all remaining retainage withheld by the local governmental entity pursuant to paragraph (e) this section. If a good faith dispute exists as to whether one or more items identified on the list have been completed pursuant to the contract, the local governmental entity may continue to withhold up to 150 percent of the total costs to complete such items.
. . .
(j) If a local governmental entity fails to comply with its responsibilities to develop the list required under paragraph (a) or paragraph (b) within the time limitations provided in paragraph (a), the contractor may submit a payment request to the local governmental entity for the all remaining balance of the contract, including all remaining retainage withheld by the local governmental entity. The local governmental entity must pay the contractor pursuant to this section; and payment of any remaining undisputed contract amount, less any amount withheld pursuant to the contract for incomplete or uncorrected work, must be paid within 20 business days after receipt of a proper invoice or payment request. If the local governmental entity has provided written notice to the contractor specifying the failure of the contractor to meet contract requirements in the development of the list of items to be completed, the local governmental entity must pay the contractor the remaining balance of the contract, less an amount equal to 150 percent of the estimated cost to complete the items that the local governmental entity intended to include on the list need not pay or process any payment request for retainage if the contractor has, in whole or in part, failed to cooperate with the local governmental entity in the development of the list or to perform its contractual responsibilities, if any, with regard to the development of the list or if paragraph (8)(c) applies.
. . .
(8) (c) This section does not require the local governmental entity to pay or release any amounts that are the subject of a good faith dispute made in writing pursuant to the contract or, the subject of a claim brought pursuant to s. 255.05, or otherwise the subject of a claim or demand by the local 168 governmental entity or contractor.
Section 218.76, Florida Statutes, is also amended to require disputes to be resolved by the local government entity pursuant to its established procedures, and that those procedures must provide for dispute resolution to commence within 30 days and conclude within 45 days of the date after the payment request was received.
The other statute modified by the new law is the portion of Chapter 255, Florida Statutes, referred to as Florida’s Prompt Payment Act. Multiple portions of Florida’s Prompt Payment Act are modified by the new law to address punch lists and payment of undisputed amounts in a similar manner to Chapter 218, Florida Statutes.
Section 255.073, Florida Statutes, is modified as follows:
(2) If a public entity disputes a portion of a payment request, the undisputed portion must be timely paid by the date required under the contract or by 20 days after receipt of the request, whichever is earlier
Section 255.074, Florida Statutes, is modified as follows:
(3) A public entity must submit a payment request to the Chief Financial Officer for payment no later more than 14 20 days after receipt of the payment request.
Section 255.077, Florida Statutes, is modified as follows:
(1) Each contract for construction services between a public entity and a contractor must provide for the development of a list of items and the estimated cost to complete each item on the list required to render complete, satisfactory, and acceptable the construction services purchased by the public entity. The contract must specify the process for the development of the list and for determining the cost to complete each item on the list, and should include the, including responsibilities of the public entity and the contractor in developing and reviewing the list and a reasonable time for developing the list, as follows:
(a) For construction projects having an estimated cost of less than $10 million, within 30 calendar days after reaching substantial completion of the construction services purchased as defined in the contract, or, if not defined in the contract, upon reaching beneficial occupancy or use; or
(b) For construction projects having an estimated cost of $10 million or more, within 30 calendar days, unless otherwise extended by contract not to exceed 45 60 calendar days, after reaching substantial completion of the construction services purchased as defined in the contract, or, if not defined in the contract, upon reaching beneficial occupancy or use.
. . .
(4) Within 20 business days after developing the list, and after receipt of a proper invoice or payment request, the public entity must pay the contractor the remaining balance of the contract, including any remaining retainage withheld by the public entity pursuant to s. 255.078, less an amount equal to 150 percent of the estimated cost to complete the items on the list.
(9) If a public entity fails to comply with its responsibilities to develop the list required under subsection (1) or subsection (2), as defined in the contract, within the time limitations provided in subsection (1), the contractor may submit a payment request for all remaining retainage withheld by the public entity pursuant to s. 255.078 and the public entity must pay the contractor all remaining retainage previously withheld within 20 days after receipt of the payment request. The public entity is not required to need not pay or process any payment request for retainage if the contractor has, in whole or in part, failed to cooperate with the public entity in the development of the list or failed to perform its contractual responsibilities, if any, with regard to the development of the 254 list or if s. 255.078(3) applies.
Section 255.078, Florida Statutes, is modified as follows:
(3) This section and s. 255.077 do not require the public entity to pay or release any amounts that are the subject of a good faith dispute made in writing pursuant to the contract or, the subject of a claim brought pursuant to s. 255.05, or otherwise the subject of a claim or demand by the public entity or contractor.
Section 255.0992, Florida Statutes, is modified as follows:
(b) “Public works project” means an activity exceeding $1 million in value that is paid for with any state-appropriated funds and that which consists of the construction, maintenance, repair, renovation, remodeling, or improvement of a building, road, street, sewer, storm drain, water system, site development, irrigation system, reclamation project, gas or electrical distribution system, gas or electrical substation, or other facility, project, or portion thereof that is owned in whole or in part by any political subdivision.
Similar to the changes to Chapter 218, Florida Statutes, the changes to Chapter 255, Florida Statutes, are designed to require prompt payment of undisputed funds and to require an upfront estimate of the cost to complete any punch list or incomplete items on the project. The statute is also expanded to apply to projects of less than $1 million in value.