Senator Harry Coates (R-OK, District 28) has introduced SB 1053 a bill to provide payment protection for subcontractors when working on projects under Public-Private Partnerships (P3s). Sen. Coates introduced the bill at the urging of ASA-OK.
"There is longstanding public policy that payment protection should be provided to subcontractors. Bonding requirements on public projects provide such protection, as does the right to place mechanic liens on private construction," said Mike Jones, ASA-OK Legislative, Regulatory & Judicial Affairs Committee Vice Chair and President of ML Jones.
He explained that since public land cannot be liened and Little Miller Act bonding requirements do not apply to private construction, a construction subcontractor working on a project financed by a P3 may have no payment assurances.
"This is problematic since subcontractors and suppliers extend large amounts of credit on construction projects. They pay most of the laborers, vendors, and taxes even before submitting an invoice for their work to their prime contractor client," he stated.
According to a policy position published by ASA-OK, passage of SB 1053 will resolve the problem and provide payment protection by requiring Little Miller Act bonding on P3s at all sub levels of the project.
"When subcontractors have doubts about getting paid for the work they perform, firms may choose not to work on P3s or charge higher prices in an attempt to account for their higher risk," the statement said. "Ultimately, this will cause projects to either cost more at a time when government can ill afford it, or projects financed by P3s will not have the expertise of some of the best firms in the construction industry."
A second bill, SB 1517, was introduced by Senator Rob Johnson (R-OK, District 22) which provides a statutory structure for P3s in Oklahoma and is scheduled for consideration by the Senate General Government Committee on February 13th.
