This bill, introduced in the Minnesota House of Representatives by Scott Hollins and Mekeland, seeks to enhance payment transparency in public contracts by amending Minnesota Statutes Sections 15.72 and 337.10. Key provisions include:

1. Retainage Rules for Public Contracts (Section 15.72, Subd. 2):

   • Limits retainage (withheld payment) to no more than 5% of progress payments.
   • Retainage must be released within 60 days after substantial completion.
   • Contractors must pay subcontractors retainage within 10 days of receiving retainage from the public contracting agency.
   • Public agencies may withhold up to:
     • 250% of the cost to correct/complete unfinished work.
     • 1% of the contract value or $500 (whichever is greater) until final paperwork submission.
   • Withholding retainage for warranty work is prohibited.
   • Public agencies are not required to pay the portion of a contract funded by federal or state aid until those funds are received.
   • A contract management system that delays or restricts invoicing is prohibited and unenforceable.

2. Transparency Requirements for Public Contract Payments (New Subd. 4 in Section 15.72):

   • Public agencies must notify all contractors and subcontractors for public improvement projects about any payments (progress, retainage, final, or other).
   • Notification must include:
     • Amount, date, recipient, and scope of work related to the payment.
     • Percentage of project completion (if applicable).
     • Reasons for payment withholding or retainage terms.
   • Notifications must be provided within 3 business days of payment.
   • No costs or fees can be charged for providing such notices.

3. Retainage Rules for Private Construction Contracts (Section 337.10, Subd. 4):

   • Retainage is capped at 5%, with flexibility to reduce or eliminate it if work progresses satisfactorily.
   • Retainage must be released within 60 days of substantial completion.
   • Contractors must pay subcontractor retainage within 10 days unless there is a dispute.
   • Private contract owners may withhold:
     • 250% of the cost of work that needs correction/completion.
     • 1% of the contract value or $500 (whichever is greater) until final paperwork is submitted.
   • Withholding retainage for warranty work is prohibited.
   • This retainage provision does not apply to:
     • Public agency contracts.
     • Professional service contracts.

Overall, this bill aims to increase transparency in public and private construction contracts, ensure timely release of payments, and prevent arbitrary delays in invoice processing.