During the 2022 Regular Session of the General Assembly of Georgia, the Legislature enacted legislation that impacts public works contracts. Ultimately, these revisions to O.C.G.A. §§ 13-10-80 & 81 appear most favorable to contractors and subcontractors since the legislature reduced retainage during the contract term and simplified the procedures for use and payment of retainage received by contractors and subcontractors. However, these revisions will also make contract administration and payment procedures simpler for the public bodies awarding the contracts. The following is a summary of those statutory amendments which became effective on July 1, 2022:
Revisions to Retainage Provisions Applicable to All Public Works Contracts:
Act 871 (Senate Bill 438) amends O.C.G.A. § 13-10-80, which applies to any public works contract (other than a DOT contract) when, at the time the contract is awarded, the contract has a value of at least $150,000.00 or the work is expected to last at least 45 days. Specifically, Act 871 amends subsection (b)(2)(A) by reducing the amount of maximum retainage authorized under subsection (b)(1) from 10% to 5% of each progress payment paid under the contract, and by eliminating the requirement that no retainage be allowed once the contract is 50% complete. Consistent therewith, subsections (b)(2)(C) & (D) have also been amended by eliminating the requirement that 50% of the subcontractor (or lower-tier subcontractor) work be completed before the contractor (or subcontractor) is required to pay any retainage payment it receives to the subcontractor (or lower tier subcontractor).
Revisions to Retainage Provisions Applicable to Water or Sewer Contracts:
Act 871 also amends O.C.G.A. § 13-10-81, which applies to public contracts involving water or sewer facilities. Specifically, Act 871 amends subsection (a) by reducing the maximum amount of retainage a public contract may require from 10% to 5% of the gross value of the work completed, and by eliminating the requirement that no retainage be allowed once the contract is 50% complete. Subsection (c) is also amended to allow the public body to withhold up to 200% of the value of any incomplete item from the final payment when it previously only allowed withholding for incomplete minor items (i.e. “punch list” items).
