Sec. 17.183. CONSTRUCTION CONTRACT REQUIREMENTS. (a) The governing body of each political subdivision receiving financial assistance from the board shall require in all contracts for the construction of a project:
(1) that each bidder furnish a bid guarantee equivalent to five percent of the bid price;
(2) that each contractor awarded a construction contract furnish performance and payment bonds:
(A) the performance bond shall include without limitation guarantees that work done under the contract will be completed and performed according to approved plans and specifications and in accordance with sound construction principles and practices; and
(B) the performance and payment bonds shall be in a penal sum of not less than 100 percent of the contract price and remain in effect for one year beyond the date of approval by the engineer of the political subdivision;
(3) that payment be made in partial payments as the work progresses;
(4) that each partial payment shall not exceed 95 percent of the amount due at the time of the payment as shown by the engineer of the project, but, if the project is substantially complete, a partial release of the five percent retainage may be made by the political subdivision with approval of the executive administrator;
(5) that payment of the retainage remaining due upon completion of the contract shall be made only after:
(A) approval by the engineer for the political subdivision as required under the bond proceedings;
(B) approval by the governing body of the political subdivision by a resolution or other formal action; and
(C) certification by the executive administrator in accordance with the rules of the board that the work to be done under the contract has been completed and performed in a satisfactory manner and in accordance with approved plans and specifications;
(6) that no valid approval may be granted unless the work done under the contract has been completed and performed in a satisfactory manner according to approved plans and specifications;
(7) that, if a political subdivision receiving financial assistance under Subchapter K of this chapter, labor from inside the political subdivision be used to the extent possible; and
(8) that the contract include a requirement that iron and steel products and manufactured goods used in the project be produced in the United States, unless:
(A) such products or goods are not:
(i) available in sufficient quantities;
(ii) readily available; or
(iii) of a satisfactory quality; or
(B) the use of such products or goods will increase the total cost of the project by more than 20 percent.
(b) Plans and specifications submitted to the board in connection with an application for financial assistance must include a seal by a licensed engineer affirming that the plans and specifications are consistent with and conform to current industry design and construction standards.
(c) For the purposes of Subsections (a)(8) and (d):
(1) "Component" means any article, material, or supply, whether a manufactured good or raw material, that is directly incorporated into a manufactured good.
(2) "Manufactured good" means an item produced as the result of a manufacturing process.
(3) "Manufacturing process" means the application of a process to alter the form or function of materials or elements of a product in a manner that adds value and transforms the materials or elements so that a new end product is produced that is functionally different from the product that would result from simple assembly of the materials or elements.
(4) "Produced in the United States" means:
(A) in the case of iron and steel products, products for which all manufacturing processes, from initial melting through application of coatings, take place in the United States, except metallurgical processes that involve the refinement of steel additives; and
(B) in the case of a manufactured good, a good for which:
(i) all of the manufacturing process that produced the manufactured good takes place in the United States; and
(ii) more than 60 percent of the components of the manufactured good, by cost, originate in the United States.
(d) For the purposes of Subsection (c)(4)(B)(ii), if a component originates in the United States, the entire cost of that component contributes to the determination of the percentage of the components of the manufactured good that originate in the United States.
(e) This section shall be applied in a manner consistent with this state's obligations under any international agreement.
Amended by Acts 1987, 70th Leg., ch. 1103, Sec. 1, eff. Sept. 1, 1987; Acts 1989, 71st Leg., ch. 309, Sec. 2, eff. Sept. 1, 1989; Acts 1989, 71st Leg., ch. 624, Sec. 2.18; Acts 2003, 78th Leg., ch. 1057, Sec. 6, eff. June 20, 2003.
Amended by:
Acts 2013, 83rd Leg., R.S., Ch. 207 (H.B. 4), Sec. 2.08, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 1139 (H.B. 3605), Sec. 3, eff. September 1, 2013.
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