Bill Text: NY A00574 | 2019-2020 | General Assembly | Introduced


Bill Title: Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project.

Spectrum: Moderate Partisan Bill (Democrat 10-2)

Status: (Introduced) 2019-06-17 - ordered to third reading rules cal.318 [A00574 Detail]

Download: New_York-2019-A00574-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                           574
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                       (Prefiled)
                                     January 9, 2019
                                       ___________
        Introduced  by  M.  of  A.  BRAUNSTEIN, LUPARDO, CRESPO, WOERNER, STECK,
          BRONSON -- read once and referred to  the  Committee  on  Governmental
          Operations
        AN  ACT to amend the state finance law and the general municipal law, in
          relation to requiring full payment for delivered and accepted  materi-
          als pertaining to public work projects; and to amend the general busi-
          ness  law, in relation to prohibiting the retention of any payment due
          and owing a material supplier for a construction project
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1. Subdivisions 1 and 2 of section 139-f of the state finance
     2  law, subdivision 1 as added by chapter 769  of  the  laws  of  1978  and
     3  subdivision  2  as amended by section 16 of part MM of chapter 57 of the
     4  laws of 2008, are amended to read as follows:
     5    1. Payment by public owners to contractors. The contractor shall peri-
     6  odically, in accordance with the terms of the contract,  submit  to  the
     7  public owner and/or [his] its agent a requisition for a progress payment
     8  for  the  work  performed  and/or materials furnished to the date of the
     9  requisition, less any amount previously  paid  to  the  contractor.  The
    10  public  owner shall in accordance with the terms of the contract approve
    11  and promptly pay the requisition for the progress payment less an amount
    12  necessary to satisfy any claims, liens or judgments against the contrac-
    13  tor which have not been suitably discharged and less any retained amount
    14  as hereafter described. The public owner shall retain not more than five
    15  per centum of each progress payment, not including any payment for mate-
    16  rials pertinent to the project which have been delivered,  accepted  and
    17  are  covered  by  a  manufacturer's  warranty, and/or are graded to meet
    18  industry standards, to the contractor except that the public  owner  may
    19  retain  in excess of five per centum but not more than ten per centum of
    20  each progress payment, not including any payment for materials pertinent
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02675-01-9

        A. 574                              2
     1  to the project which have been delivered, accepted and are covered by  a
     2  manufacturer's  warranty,  and/or are graded to meet industry standards,
     3  to the contractor provided that there are no requirements by the  public
     4  owner  for  the contractor to provide a performance bond and a labor and
     5  material bond both in the full amount of the contract. The public  owner
     6  shall pay in full, upon requisition from the contractor, for all materi-
     7  als  pertinent  to  the project which have been delivered to the site or
     8  off-site by the contractor and/or subcontractor and suitably stored  and
     9  secured  as  required  by the public owner and the contractor [provided,
    10  the public owner may limit such payment to  materials  in  short  and/or
    11  critical  supply and materials specially fabricated for the project each
    12  as defined in the contract]. When the work or major portions thereof  as
    13  contemplated  by  the terms of the contract are substantially completed,
    14  the contractor shall submit to the public owner and/or [his] its agent a
    15  requisition for payment of the remaining amount of the contract balance.
    16  Upon receipt of such requisition the  public  owner  shall  approve  and
    17  promptly pay the remaining amount of the contract balance less two times
    18  the value of any remaining items to be completed and an amount necessary
    19  to  satisfy  any claims, liens or judgments against the contractor which
    20  have not been suitably discharged. As the remaining items  of  work  are
    21  satisfactorily  completed  or corrected, the public owner shall promptly
    22  pay, upon receipt of a requisition, for these remaining  items  less  an
    23  amount  necessary  to satisfy any claims, liens or judgments against the
    24  contractor which have not been suitably discharged.  Any  claims,  liens
    25  and  judgments  referred to in this section shall pertain to the project
    26  and shall be filed in  accordance  with  the  terms  of  the  applicable
    27  contract and/or applicable laws.
    28    2.  Payment  by  contractors  to subcontractors. Within seven calendar
    29  days of the receipt of any payment from the public owner, the contractor
    30  shall pay each of [his] its subcontractors and materialmen the  proceeds
    31  from  the  payment  representing  the value of the work performed and/or
    32  materials furnished by the subcontractor and/or materialman and reflect-
    33  ing  the  percentage  of  the  subcontractor's  work  completed  or  the
    34  materialman's material supplied in the requisition approved by the owner
    35  and  based  upon  the  actual value of the subcontract or purchase order
    36  less an amount necessary to  satisfy  any  claims,  liens  or  judgments
    37  against  the  subcontractor  or materialman which have not been suitably
    38  discharged and, with regard to subcontractors, less any retained  amount
    39  as hereafter described. Failure by the contractor to pay any subcontrac-
    40  tor  or  materialman  within  seven  calendar days of the receipt of any
    41  payment from the public owner  shall  result  in  the  commencement  and
    42  accrual  of interest on amounts due to such subcontractor or materialman
    43  for the period beginning on the day immediately following the expiration
    44  of such seven calendar day period  and  ending  on  the  date  on  which
    45  payment  is made by the contractor to such subcontractor or materialman.
    46  Such interest payment shall be the sole responsibility of  the  contrac-
    47  tor,  and  shall  be  paid at the rate of interest in effect on the date
    48  payment is made by the contractor.  Notwithstanding any other  provision
    49  of  law  to  the contrary, interest shall be computed at the rate estab-
    50  lished in paragraph (b) of subdivision  one  of  section  seven  hundred
    51  fifty-six-b of the general business law. The contractor shall retain not
    52  more  than  five per centum of each payment to the subcontractor [and/or
    53  materialman] except that the contractor may retain in excess of five per
    54  centum but not more than ten per centum of each payment to  the  subcon-
    55  tractor  provided  that  prior  to  entering into a subcontract with the
    56  contractor, the subcontractor  is  unable  or  unwilling  to  provide  a

        A. 574                              3
     1  performance  bond and a labor and material bond, both in the full amount
     2  of the subcontract, at the request of the contractor.    The  contractor
     3  shall  pay  in full, upon payment by the public owner, for all materials
     4  pertinent  to  the  project which have been delivered to and accepted at
     5  the site or off-site by a materialman and are covered by  a  manufactur-
     6  er's  warranty,  and/or  are graded to meet industry standards. However,
     7  except in the case of a materialman who is also contracted to install  a
     8  product he/she delivered, the contractor shall retain nothing from those
     9  payments representing proceeds owed the subcontractor and/or materialman
    10  from  the  public  owner's  payments to the contractor for the remaining
    11  amounts of the contract balance as provided in subdivision one  of  this
    12  section.  If  the  contractor  has  failed  to  submit a requisition for
    13  payment of the remaining amounts of the contract balance  within  ninety
    14  days  of  substantial  completion as provided in subdivision one of this
    15  section, then any clause in the subcontract between the  contractor  and
    16  the  subcontractor  or  materialman  which  states  that  payment by the
    17  contractor to such  subcontractor  or  materialman  is  contingent  upon
    18  payment  by  the owner to the contractor shall be deemed invalid. Within
    19  seven calendar days of the receipt of payment from the  contractor,  the
    20  subcontractor and/or materialman shall pay each of [his] its subcontrac-
    21  tors  and  materialmen in the same manner as the contractor has paid the
    22  subcontractor, including interest  as  herein  provided  above.  Nothing
    23  provided  herein  shall  create any obligation on the part of the public
    24  owner to pay or to see to the payment of any moneys to any subcontractor
    25  or materialman from any contractor nor shall  anything  provided  herein
    26  serve  to  create  any relationship in contract or otherwise, implied or
    27  expressed, between the  subcontractor  or  materialman  and  the  public
    28  owner.
    29    § 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b
    30  of  the general municipal law, paragraph (a) of subdivision 1 as amended
    31  by chapter 98 of the laws of  1995  and  subdivision  2  as  amended  by
    32  section  15 of part MM of chapter 57 of the laws of 2008, are amended to
    33  read as follows:
    34    (a) The contractor shall periodically, in accordance with the terms of
    35  the contract, submit to the public owner and/or [his] its agent a requi-
    36  sition for a progress payment for the work  performed  and/or  materials
    37  furnished to the date of the requisition less any amount previously paid
    38  to  the  contractor. The public owner shall in accordance with the terms
    39  of the contract  approve  and  promptly  pay  the  requisition  for  the
    40  progress  payment  less an amount necessary to satisfy any claims, liens
    41  or judgments  against  the  contractor  which  have  not  been  suitably
    42  discharged  and  less  any  retained  amount as hereafter described. The
    43  public owner shall retain not more than five per centum of each progress
    44  payment, not including  any  payment  for  materials  pertinent  to  the
    45  project  which  have  been  delivered,  accepted  and  are  covered by a
    46  manufacturer's warranty, and/or are graded to meet  industry  standards,
    47  to  the  contractor except that the public owner may retain in excess of
    48  five per centum but not more  than  ten  per  centum  of  each  progress
    49  payment,  not  including  any  payment  for  materials  pertinent to the
    50  project which have  been  delivered,  accepted  and  are  covered  by  a
    51  manufacturer's  warranty,  and/or are graded to meet industry standards,
    52  to the contractor provided that there are no requirements by the  public
    53  owner  for  the contractor to provide a performance bond and a labor and
    54  material bond both in the full amount of the contract. The public  owner
    55  shall pay in full, upon requisition from the contractor, for all materi-
    56  als  pertinent  to  the project which have been delivered to the site or

        A. 574                              4
     1  off-site by the contractor and/or subcontractor and suitably stored  and
     2  secured  as  required  by the public owner and the contractor [provided,
     3  the public owner may limit such payment to  materials  in  short  and/or
     4  critical  supply and materials specially fabricated for the project each
     5  as defined in the contract]. When the work or major portions thereof  as
     6  contemplated  by  the terms of the contract are substantially completed,
     7  the contractor shall submit to the public owner and/or [his] its agent a
     8  requisition for payment of the remaining amount of the contract balance.
     9  Upon receipt of such requisition the  public  owner  shall  approve  and
    10  promptly pay the remaining amount of the contract balance less two times
    11  the value of any remaining items to be completed and an amount necessary
    12  to  satisfy  any claims, liens or judgments against the contractor which
    13  have not been suitably discharged. As the remaining items  of  work  are
    14  satisfactorily  completed  or corrected, the public owner shall promptly
    15  pay, upon receipt of a requisition,  for  these  items  less  an  amount
    16  necessary to satisfy any claims, liens or judgments against the contrac-
    17  tor which have not been suitably discharged. Any claims, liens and judg-
    18  ments referred to in this section shall pertain to the project and shall
    19  be  filed in accordance with the terms of the applicable contract and/or
    20  applicable laws. Where the public owner is other than the  city  of  New
    21  York,  the  term  "promptly  pay" shall mean payment within thirty days,
    22  excluding legal holidays, of receipt  of  the  requisition  unless  such
    23  requisition  is  not  approvable  in  accordance  with  the terms of the
    24  contract. Notwithstanding the foregoing, where the public owner is other
    25  than the city of New York and is a municipal corporation which  requires
    26  an  elected  official to approve progress payments, "promptly pay" shall
    27  mean payment  within  forty-five  days,  excluding  legal  holidays,  of
    28  receipt  of the requisition unless such requisition is not approvable in
    29  accordance with the terms of the contract.
    30    2. Payment by contractors to  subcontractors.  Within  seven  calendar
    31  days of the receipt of any payment from the public owner, the contractor
    32  shall  pay each of [his] its subcontractors and materialmen the proceeds
    33  from the payment representing the value of  the  work  performed  and/or
    34  materials furnished by the subcontractor and/or materialman and reflect-
    35  ing  the  percentage  of  the  subcontractor's  work  completed  or  the
    36  materialman's material supplied in the requisition approved by the owner
    37  and based upon the actual value of the  subcontract  or  purchase  order
    38  less  an  amount  necessary  to  satisfy  any claims, liens or judgments
    39  against the subcontractor or materialman which have  not  been  suitably
    40  discharged  and, with regard to subcontractors, less any retained amount
    41  as hereafter described. Failure by the contractor to make  any  payment,
    42  including  any  remaining amounts of the contract balance as hereinafter
    43  described, to any subcontractor or  materialman  within  seven  calendar
    44  days of the receipt of any payment from the public owner shall result in
    45  the  commencement and accrual of interest on amounts due to such subcon-
    46  tractor or materialman for the period beginning on the  day  immediately
    47  following the expiration of such seven calendar day period and ending on
    48  the  date on which payment is made by the contractor to such subcontrac-
    49  tor or materialman. Such interest shall be the  sole  responsibility  of
    50  the  contractor,  and shall be paid at the rate of interest in effect on
    51  the date payment is made by the contractor.  Notwithstanding  any  other
    52  provision of law to the contrary, interest shall be computed at the rate
    53  established in paragraph (b) of subdivision one of section seven hundred
    54  fifty-six-b of the general business law. The contractor shall retain not
    55  more  than  five per centum of each payment to the subcontractor [and/or
    56  materialman] except that the contractor may retain in excess of five per

        A. 574                              5
     1  centum but not more than ten per centum of each payment to  the  subcon-
     2  tractor  provided  that  prior  to  entering into a subcontract with the
     3  contractor, the subcontractor  is  unable  or  unwilling  to  provide  a
     4  performance  bond  and a labor and material bond both in the full amount
     5  of the subcontract at the request  of  the  contractor.  The  contractor
     6  shall  pay  in full, upon payment by the public owner, for all materials
     7  pertinent to the project which have been delivered to  and  accepted  at
     8  the  site  or off-site by a materialman and are covered by a manufactur-
     9  er's warranty, and/or are graded to meet  industry  standards.  However,
    10  except  in the case of a materialman who is also contracted to install a
    11  product he/she delivered, the contractor shall retain nothing from those
    12  payments representing proceeds owed the subcontractor and/or materialman
    13  from the public owner's payments to the  contractor  for  the  remaining
    14  amounts  of  the contract balance as provided in subdivision one of this
    15  section. If the contractor  has  failed  to  submit  a  requisition  for
    16  payment  of  the remaining amounts of the contract balance within ninety
    17  days of substantial completion as provided in subdivision  one  of  this
    18  section,  then  any clause in the subcontract between the contractor and
    19  the subcontractor or  materialman  which  states  that  payment  by  the
    20  contractor  to  such  subcontractor  or  materialman  is contingent upon
    21  payment by the owner to the contractor shall be deemed  invalid.  Within
    22  seven  calendar  days of the receipt of payment from the contractor, the
    23  subcontractor and/or materialman shall pay each of [his] its subcontrac-
    24  tors and materialmen in the same manner as the contractor has  paid  the
    25  subcontractor,  including  interest  as herein provided above.   Nothing
    26  provided herein shall create any obligation on the part  of  the  public
    27  owner to pay or to see to the payment of any moneys to any subcontractor
    28  or  materialman  from  any contractor nor shall anything provided herein
    29  serve to create any relationship in contract or  otherwise,  implied  or
    30  expressed,  between  the  subcontractor  or  materialman  and the public
    31  owner.
    32    § 3. Section 756-c of the general business law, as  added  by  chapter
    33  127 of the laws of 2002, is amended to read as follows:
    34    §  756-c. Retention. 1. By mutual agreement of the relevant parties an
    35  owner may retain a reasonable amount of the contract sum as retainage. A
    36  contractor or subcontractor may also  retain  a  reasonable  amount  for
    37  retainage  so  long  as the amount does not exceed the actual percentage
    38  retained by the owner. Retainage shall be released by the owner  to  the
    39  contractor  no  later  than  thirty days after the final approval of the
    40  work under a construction contract. In the event that an owner fails  to
    41  release  retainage  as  required  by  this article, or the contractor or
    42  subcontractor fails to release a proportionate amount  of  retainage  to
    43  the  relevant  parties  after  receipt  of retainage from the owner, the
    44  owner, contractor, or subcontractor,  as  the  case  may  be,  shall  be
    45  subject  to the payment of interest at the rate of one percent per month
    46  on the date retention was due and owing.
    47    2. Notwithstanding the provisions of subdivision one of this  section,
    48  no portion of any payment due and owing to a material supplier for mate-
    49  rials  which have been delivered, accepted and are covered by a manufac-
    50  turer's warranty, and/or graded to  meet  industry  standards  shall  be
    51  retained by an owner, contractor or subcontractor.
    52    §  4.  This  act shall take effect on the thirtieth day after it shall
    53  have become a law and shall apply to materials delivered and accepted on
    54  or after such effective date.
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