Regular Session
Government Affairs & Regulatory Compliance Analysis
HB3005 amends the Texas Prompt Payment Act to prohibit government entities from withholding construction payments beyond 60 days post-substantial completion solely due to an ongoing audit. This legislation effectively removes the "audit loophole" for public work contracts entered into on or after September 1, 2025, forcing state and local agencies to release funds or cite a specific material dispute.
Rep. Barbara Gervin-Hawkins·House Bill·Regular Session
This legislation has regulatory implications for the following Texas businesses and organizations:
Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.
Affected business types:
Affected business types:
lowMinimal cost impact anticipated.
JD Key Consulting provides government affairs and regulatory strategy services. We help businesses navigate Texas agencies, understand legislative impacts, and advocate for their interests.
JD Key Consulting provides strategic guidance on Texas regulatory compliance and legislative impact for your business.
Key implementation requirements and action items for compliance with this legislation
JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.
Schedule a ConsultationInformation presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
This bill's path through the Texas Legislature
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Common questions about HB3005
HB3005 amends the Texas Prompt Payment Act to prohibit government entities from withholding construction payments beyond 60 days post-substantial completion solely due to an ongoing audit. This legislation effectively removes the "audit loophole" for public work contracts entered into on or after September 1, 2025, forcing state and local agencies to release funds or cite a specific material dispute.
HB3005 was authored by Texas Representative Barbara Gervin-Hawkins during the Regular Session.
HB3005 was signed into law by Governor Greg Abbott on June 20, 2025.
The regulatory priority for HB3005 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.
The cost impact of HB3005 is estimated as "low". This may vary based on industry and implementation requirements.
HB3005 addresses topics including business & commerce, business & commerce--general, property interests, property interests--real property and purchasing.
Key dates for HB3005: Effective date is 2025-09-01. Consult with legal counsel regarding applicability.
HB3005 establishes the following penalties: civil penalty of Statutory interest (Texas Prompt Payment Act rates) for Withholding payment on a public work contract due to an audit extending beyond 60 days post-substantial completion (no longer a valid 'bona fide dispute').. Consult with legal counsel for specific applicability to your situation.
HB3005 primarily affects Texas businesses and commercial enterprises, property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.
JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.
