Texas Rated Most Improved for Sub-Friendly Policies
Texas is showing a friendlier attitude toward subcontractors. The American Subcontractors Association named Texas the state with the most improved public-policy environment for construction subcontractors in 2011.
Drawing from the American Subcontractors Association's (ASA) report, "The Policy Environment in the States," Texas’ ranking among states rose to No. 10 from No. 29 in terms of the public-policy environment in all 50 states.
“Texas succeeded in driving legislative reforms in five major areas: electronic reverse auctions, payment bonds on public-private partnerships, risk allocation, lien claims for retainage and statutory lien forms,” said 2011-12 ASA President Kerrick Whisenant of Cornerstone Detention Products, Tanner, Ala. “In 2012, subcontractors across the country should build on these victories.”
ASA published the annual report after evaluating states' treatment of prompt pay, mechanics' liens, bid shopping and risk transfer. New Mexico came in first place and Wyoming was dead last in 2011's report. Two big states, New York and California, were tied for third place. Louisiana fell roughly in the middle of the field, ranking at No. 27.
The report highlighted six Texas laws, all signed by Gov. Rick Perry on June 17, 2011, that helped change the landscape for subcontractors in the state.
H.B. 1390 allows subcontractors 30 days from completion of work to provide lien notices to owners. ASA says the change will allow subcontractors more time to file lien claims for retainage that prime contractors have failed to release in a timely manner. Another law, H.B. 1456, establishes statutory lien waiver forms, both conditional and unconditional, for progress payments and final payment on construction projects, which ASA says will streamline the process.
H.B. 628 prohibits any use of electronic reverse auctions to obtain contracted services for state and local construction projects on which a surety bond is required. ASA says the ban will protect subcontractors from being forced to divulge and change their bids in reverse auctions for bonded state and local work.
H.B. 2093 bans broad-form indemnification clauses in private and public construction contracts and makes additional insured requirements in construction contracts “void and unenforceable,” except on consolidated insurance programs (CIPs) and for personal injury claims.
S.B. 1048 requires that payment and performance bonds complying with the state’s Little Miller Act be provided on projects funded by public-private partnerships.
H.B. 2093 requires three years of completed operations coverage on CIPs. The ASA says the requirement helps protect subcontractors and other members of the construction team against third-party claims for bodily injury or property damage that are filed after they complete work on a CIP project.
Texas still has a ways to go, according to the ASA. Although the policy environment improved last year, it is still lacking, according to the report. On a scale of one to 100, with 100 being the highest, the state received a numeric grade of 36 in 2010 and 52 in 2011. Anything below 60 equates is a failing grade, according to the ASA scale.