§2249. Security in lieu of the amount withheld

A. Under any contract awarded under the provisions of this Chapter, the contractor may, with written consent of his surety company, from time to time, withdraw the entire amount retained from payments due the contractor pursuant to the terms of the contract, or any portion thereof, by depositing with the state treasurer for state contracts, or the treasurer or secretary of a public entity for other than state contracts, the following security, or a combination thereof, in an amount equal to the amount of funds being withdrawn:

(1) Certificates of deposit issued by commercial banks located in the state of Louisiana. The certificates shall not exceed the maximum dollar amount secured by the Federal Deposit Insurance Corporation. The certificates shall be negotiable, with payment of accrued interest, or shall be accompanied by an irrevocable power of attorney executed by the owner of the certificate in favor of the treasurer of the state or other public entity.

(2) Certificates of deposit issued by savings and loan associations located in the state of Louisiana. The certificates shall not exceed the maximum dollar amount secured by the Federal Deposit Insurance Corporation. The certificates shall be negotiable, with payment of accrued interest, or shall be accompanied by an irrevocable power of attorney executed by the owner of the certificate in favor of the treasurer of the state or other public entity.

B. The treasurer of the state or other public entity shall, after the date of substantial completion of the work, as defined in R.S. 38:2241.1, collect all interest or income on the security deposited and shall, by and with written consent of the contractor's surety, pay such interest or income to the contractor. Prior to the date of substantial completion, all interest or income on the security deposited shall accrue to the state or other public entity.

C. In the event that the contractor shall default in performance of the contract or any portion thereof, the securities deposited by him in lieu of the amount withheld, and all interest or income accruing on said securities may be negotiated or sold by the state or other public entity and the proceeds of said negotiation or sale used as if the proceeds represented the payments withheld under the terms of the contract.

D. The provisions of this Section shall have no effect on the prohibition against the Louisiana Department of Transportation and Development's withholding of payments.

E. The provisions of this Section shall not apply to the office of facility planning and control of the division of administration.

Acts 1991, No. 577, §1, eff. July 16, 1991.