Bidder Beware: Construction Contracting By and With Local Governments in Florida

When a local government wants to build something, they have to follow specific rules for hiring a construction company. There are different types of contracts they can use, and they have to follow certain laws and regulations. One important thing to know is that the construction lien law doesn’t apply to government contracts, so contractors can’t put a lien on the government’s property if they don’t get paid. Basically, when a contractor does work for the government, they have to get a surety bond from an insurance company. This bond is to make sure that everyone who worked on the project gets paid and that the contractor does a good job. The contractor also has to file the bond with the county and give a copy to the government before starting work. Instead of a bond, the contractor can also give the government cash or a letter of credit. The government has to pay the contractor within 25 days of getting a bill, and the contractor has to pay their workers within 10 days of getting paid. Subcontractors have to pay their workers within 7 days of getting paid by the contractor. The Prompt Payment Act requires local government construction contracts to have a detailed plan for finishing the project. If the contract doesn’t have this, it’s not following the law. If the government pays late, they have to pay extra interest. The government can hold onto a maximum of 10% of each payment until 50% of the work is done, then they have to reduce it to 5%. Contractors can ask for their retainage money early if they give the government certain kinds of valuable items. The contractor can also hold onto some of the money they owe their subcontractors, but they have to have a good reason for doing so. If there’s a disagreement with the local government, there’s a specific way it needs to be resolved. This may involve certain people in the government making decisions and possibly going to the city council or county commission for an appeal. It may also mean that the dispute can only be taken to court in a limited way. This means that a jury will never hear the case. In Florida, local governments have special legal protections that make it harder to sue them. These protections apply to lawsuits over things like accidents or injuries (tort claims). But when it comes to contracts, like those for construction projects, it can be tough for contractors to get extra money if the government didn’t agree to it in writing. And even other types of contract claims, like unjust enrichment, won’t work against a local government. This means that local governments have a lot of power to protect themselves from certain types of legal claims. City and county purchasing rules are important for construction contractors. These rules can affect a contractor’s ability to get future contracts based on their past performance. “No damages for delay” clauses in government contracts can protect the government from having to pay extra money if the project is delayed, but they may not hold up in court if the government caused the delay on purpose. The Public Records Act says that if a construction contractor is working for a local government, they have to provide public records to the government when asked. If they don’t, they could get in trouble and have to pay for legal costs. For example, if a county hires a private firm to take care of medical treatment for inmates in its jail, the firm has to provide public records when asked. When a city hires a private company to tow wrecked or abandoned vehicles, the company’s records are public and can be inspected. It’s less clear if the same applies when a county hires a construction firm to work on projects like installing water lines or building new government buildings. A court case from 1996 said some records related to building a public building were public, but not all. Until there’s more guidance from the law, both the government and the construction company should assume that some records are public and follow the rules for public records. There are also other laws that apply to construction contracts with local governments. When local governments in Florida want to build something, they have to follow special rules for hiring construction companies. They have to tell the company how much they’re going to charge for things like permits and inspections before the company starts the job. And if the government doesn’t pay the company on time, the company can take legal action to get their money. But if the government makes a mistake and wants the company to pay for it, that’s not allowed. So, companies need to be careful when working with Florida local governments. These are references to court cases and laws in Florida. They are important for local government and construction projects. The information was provided by a county attorney for Manatee County. The column is from the City, County and Local Government Law Section.

Source: https://www.floridabar.org/the-florida-bar-journal/bidder-beware-construction-contracting-by-and-with-local-governments-in-florida/