By David Milstead, Rocky Mountain News
Why was David Morrill, of Aurora’s Concrete Frame Associates, testifying at the Capitol about “prompt pay” legislation for contractors?
Try $7.6 million in unpaid work, out of $27.7 million in annual revenue, at the end of his last fiscal year in September.
“The current system simply does not work,” he said. “It does not pay us on time.”
He was not alone: Gary Meggison, of construction giant Weitz, said his company had $23.4 million in receivables over 31 days past their due date at Feb. 2. The firm did $285 million in business in Colorado last year, he said.
Tales like that helped sway the Senate State, Veterans, & Military Affairs Committee to send a prompt-payment bill to Appropriations on a 3-2 vote (three Democrats, two Republicans) – albeit unenthusiastically.
In doing so, the committee backed a group of general contractors and building-trades groups over a stream of public and private-sector opponents. Representatives of the Colorado Municipal League, the state’s special districts, the city of Denver and Qwest all testified against the bill.
Their message: The bill interferes with private contracts, requires a rewrite of all their legal documents, imposes new mandates on the construction industry and removes important tools for ensuring that subcontractors’ work is properly done.
Yet, they did not deny that contractors and subcontractors have ballooning receivables. “The government entities came in with their white hats, but as the other side started testifying, the hats turned a shade of gray,” said Sen. Bob Bacon, D-Fort Collins.
Not testifying, however, was one of the groups the bill was supposed to benefit: The Colorado chapter of the American Subcontractors Association.
Executive Director Debra Miller said last week that her group is withholding support for the bill because it still allowed payment terms that were too lengthy and gave contractors too much power over “retainage,” a contract provision that holds payments back until the work is deemed satisfactory.
Said Bacon, before voting in favor: “I still need to investigate whether this is prompt pay for small contractors and subcontractors.”
WHAT’S NEXT
* After passage by the Senate State, Veterans, & Military Affairs Committee, SB 09-095 heads to the Senate Appropriations Committee.
