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2 A BILL
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4 24-251
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6 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA
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8 ___________________
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11 To prohibit a contractor from requiring a subcontractor to indemnify the contractor or owner as
12 to the negligence of the contractor or owner; and to amend the Private Contractor and
13 Subcontractor Prompt Payment Act of 2013 to prohibit a general contractor from
14 withholding payment to subcontractors on work performed and completed on one job to
15 offset payments for another job.
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17 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this
18 act may be cited as the Contractor Indemnity and Subcontractor Prompt Payment Amendment
19 Act of 2022.
20 Sec. 2. Definitions.
21 For purposes of this act, the term:
22 (1) Construction contract means an agreement of any kind of nature, express or
23 implied, to provide labor or materials, or both, for demolition, building, renovation, alteration, or
24 maintenance of buildings, roadways, appurtenances. and structures;
25 (2) Contractor means a person that enters into a construction contract with the
26 owner of a property that is subject to the construction contract;
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27 (3) Owner means a person with a legal ownership interest in the property
28 subject to seizure or forfeiture. The term owner shall not include a District agency as defined in
29 2-221.01(3); and
30 (4) Subcontractor means:
31 (A) A person, entity, or business that has a contract with a contractor;
32 (B) A person, entity, or business that has a contract with a subcontractor;
33 or
34 (C) A person, entity, or business that performs work on a construction site,
35 or fabricates or builds materials off-site, from plans and specifications for the project, for a
36 contractor or another subcontractor.
37 Sec. 3. Certain indemnification in construction contracts declared void.
38 (a) Any provision contained in a construction contract by which a subcontractor purports
39 to indemnify or hold harmless the contractor or owner against liability for damage arising out of
40 bodily injury to persons or damage to property suffered in the course of performance of the
41 contract, caused by or resulting solely from the negligence of the contractor or the owner, or the
42 contractors or owners agents or employees, is against public policy and is void and
43 unenforceable.
44 (b) Subsection (a) shall not affect the validity of any insurance contract, workers
45 compensation, or other agreement issued by an insurer licensed to do business in the District;
46 provided, that no provision in a construction contract shall require the purchase of additional
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47 insured coverage, coverage endorsement, or provision within an insurance policy, providing
48 additional insured coverage if the scope of said coverage would violation subsection (a).
49 (c) The provisions of this section shall not apply to any provision of any contract entered
50 into prior to April 1, 2023.
51 Sec. 4. The Private Contractor and Subcontractor Prompt Payment Act of 2013, effective
52 November 5, 2013 (D.C. Law 20-34; D.C. Official Code 27-131 et seq.), is amended as
53 follows:
54 (a) Section 5 (D.C. Official Code 27-134) is amended as follows:
55 (1) Subsection (a) is amended to read as follows:
56 (a) If a contract is between a contractor and subcontractor, or between subcontractors,
57 the contractor or subcontractor shall pay undisputed amounts owed to its subcontractor within 7
58 days after receipt by the contractor or subcontractor of each payment received for its
59 subcontractors work or materials..
60 (2) New subsection (d) is added to read as follows:
61 (d)(1) A contractor or subcontractor shall not deduct or withhold a subcontractors or
62 lower-tiered subcontractors payment for the purpose of offsetting any other contractual
63 obligation or work to be completed.
64 (2) Any contract or subcontract provision in a contract executed after March 31,
65 2023, that allows a contracting party to withhold funds due under one contract or subcontract for
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66 alleged claims or damages due on another contract or subcontract is void as against public
67 policy..
68 (b) Section 6 (D.C. Official Code 27-135) is amended to read as follows:
69 If a contractor fails to make prompt payments to a subcontractor as required by 27-
70 134, or a subcontractor fails to make prompt payments to another subcontractor, the contractor or
71 subcontractor shall:
72 (1) Pay interest of 1.5% per month or any part of a month to the subcontractor on
73 any undisputed amount not paid on time to the subcontractor; and
74 (2) If the subcontractor prevails in a civil action to collect interest penalties from
75 a contractor or another subcontractor, the subcontractor shall be awarded its costs and
76 disbursements, including reasonable attorneys fees, incurred in bringing the action..
77 Sec. 5. Fiscal impact statement.
78 The Council adopts the fiscal impact statement in the committee report as the fiscal
79 impact statement required by section 4a of the General Legislative Procedures Act of 1975,
80 approved October 16, 2006 (120 Stat. 2038; D.C. Official Code 1-301.47a).
81 Sec. 6. Effective date.
82 This act shall take effect after approval by the Mayor (or in the event of veto by the
83 Mayor, action by the Council to override the veto), a 30-day period of congressional review as
84 provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December
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85 24, 1973 (87 Stat. 813; D.C. Official Code 1-206.02(c)(1)), and publication in the District of
86 Columbia Register.
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