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Legislative Changes

6/2/13

By: Bart Gary
 
This year’s session of the General Assembly saw several new laws and amendments affecting the construction industry.

1. Mechanic’s Lien Law

The General Assembly adopted a change to O.C.G.A. § 44-14-361 regarding the amount that may be claimed in a lien.  Effective July 1, 2013, the amount of a lien may be either (1) the amount due and owing to the claimant under the terms of its contract, subcontract, or  purchase order or (2) the unpaid value of the labor, material, and services provided by the claimant for the improvement of the real estate in the absence of a contract, subcontract, or purchase order.  In addition, interest on the principal amount due may be included in the claim of lien.  O.C.G.A. § 44-14-361(c).  The intent of the amendment is to overrule legislatively the court of appeals decision in 182 Tenth, LLC v. Manhattan Constr. Co.,730 S.E.2d 495 (Ga. App. 2012), in which the court held that a contractor’s general condition costs or overhead costs could not be included in a claim of lien because they did not constitute labor, material, or machinery that increased the value of the realty.

1. Bid Bonds

The General Assembly amended several code sections concerning surety bonds for public projects to eliminate the requirement for a bid bond for responses to requests for proposals for projects where the price or project costs will not be a selection or evaluation factor, unless the State or local government specifically provides for a bid bond in the request for proposals.  See O.C.G.A. §§ 13-10-20(e) and 36-91-41.  These changes became effective upon signing of the Act by the Governor on May 6, 2013.

1. Early Completion Incentives

The General Assembly amended two (2) sections of the statutes concerning public works, so that construction contracts may include both liquidated damages provisions for delay in project completion and incentives for early project completion when it is determined that there is value to the public body.  The terms of the liquidated damage provisions and incentive provisions must be established in the construction contract.  See O.C.G.A. §§13-10-70 and 36-91-32.  While liquidated damages clauses for delay are common, there was concern that incentives for early completion might run afoul of prohibitions against gratuities.  These changes became effective on May 6, 2013, when signed by the Governor.

1. Qualification of Bidders

The General Assembly also enacted two new code sections applicable to the prequalification of bidders on state and local government projects.  Where contracts are awarded on sealed, competitive bids or proposals, no bidder shall be disqualified or denied prequalification or receive a lower ranking in the evaluation of a bid or proposal based upon a lack of previous experience with a job of the size of the bid or proposal, if the bid or proposal is no more than thirty (30%) percent greater in scope or cost from the bidder’s previous experience, the bidder has a reasonable amount of experience in performing the work for which the bid or proposal is sought, and the bidder is capable of being bonded by a surety which meets the qualifications of the bid documents.  In simple terms, if a bid or proposal is within thirty (30%) percent of the bidder’s previous experience in jobs, then the bidder’s proposal may not be disallowed or disqualified or “marked down” because the bidder has not had experience with a project of the size of the bid.  O.C.G.A. §§ 13-10-4 and 36-91-23, effective April 24, 2013.