Bill Text: NY A01925 | 2023-2024 | General Assembly | Introduced
Bill Title: Relates to payment by public owners to contractors and subcontractors.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced) 2024-01-03 - referred to governmental operations [A01925 Detail]
Download: New_York-2023-A01925-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 1925 2023-2024 Regular Sessions IN ASSEMBLY January 23, 2023 ___________ Introduced by M. of A. BICHOTTE HERMELYN, HYNDMAN, SEAWRIGHT, WALKER -- 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 payment by public owners to contractors and subcontractors The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The opening paragraph and subdivisions 1 and 2 of section 2 139-f of the state finance law, the opening paragraph as added by chap- 3 ter 769 of the laws of 1978, subdivision 1 as amended by chapter 128 of 4 the laws of 2021 and subdivision 2 as amended by section 16 of part MM 5 of chapter 57 of the laws of 2008, are amended to read as follows: 6 Notwithstanding the provisions of any other law to the contrary, 7 except the provisions of section thirty-eight of the highway law, all 8 contracts made and awarded by the state, or by any public department, or 9 by any public benefit corporation or by any public corporation or offi- 10 cial thereof, hereafter referred to as the public owner, for 11 construction, reconstruction or alteration of any public work project 12 shall provide for payment by the public owner to the contractor and 13 [payment by the contractor] to the subcontractor or subcontractors in 14 accordance with the following: 15 1. Payment by public owners to contractors. The contractor shall peri- 16 odically, in accordance with the terms of the contract, submit to the 17 public owner and/or his agent a requisition for a progress payment for 18 the work performed and/or materials furnished to the date of the requi- 19 sition by the contractor and all subcontractors, less any amount previ- 20 ously paid to the contractor or subcontractors. The public owner shall 21 in accordance with the terms of the contract approve and promptly pay 22 the requisition for the progress payment less an amount necessary to 23 satisfy any claims, liens or judgments against the contractor or subcon- 24 tractors which have not been suitably discharged and less any retained 25 amount as hereafter described. The public owner shall retain not more EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03310-01-3A. 1925 2 1 than five per centum of each progress payment to the contractor and 2 subcontractors, except that the public owner may retain in excess of 3 five per centum but not more than ten per centum of each progress 4 payment to the contractor provided that there are no requirements by the 5 public owner for the contractor to provide a performance bond and a 6 labor and material bond both in the full amount of the contract. The 7 public owner shall pay, upon requisition from the contractor, for mate- 8 rials pertinent to the project which have been delivered to the site or 9 off-site by the contractor [and/or subcontractor] and suitably stored 10 and secured as required by the public owner and the contractor provided, 11 the public owner may limit such payment to materials in short and/or 12 critical supply and materials specially fabricated for the project each 13 as defined in the contract, including balances owed to subcontractors. 14 When the work or major portions thereof as contemplated by the terms of 15 the contract are substantially completed, the contractor shall submit to 16 the public owner and/or his agent a requisition for payment of the 17 remaining amount of the contract balance. Upon receipt of such requisi- 18 tion the public owner shall approve and promptly pay the remaining 19 amount of the contract balance less two times the value of any remaining 20 items to be completed and an amount necessary to satisfy any claims, 21 liens or judgments against the contractor which have not been suitably 22 discharged. As the remaining items of work are satisfactorily completed 23 or corrected, the public owner shall promptly pay, upon receipt of a 24 requisition, for these remaining items less an amount necessary to 25 satisfy any claims, liens or judgments against the contractor which have 26 not been suitably discharged. Any claims, liens and judgments referred 27 to in this section shall pertain to the project and shall be filed in 28 accordance with the terms of the applicable contract and/or applicable 29 laws. 30 2. Payment by [contractors] public owners to subcontractors. [Within31seven calendar days of the receipt] (a) Each subcontractor shall period- 32 ically, in accordance with the terms of the contract, submit to the 33 public owner and/or his agent and to the contractor and/or his agent a 34 requisition for a progress payment for the work performed and/or materi- 35 als furnished to the date of the requisition, less any amount previously 36 paid to the contractor. At the time of any payment [from] by the public 37 owner[,] to the contractor as provided in subdivision one of this 38 section, the public owner shall pay each of [his] the subcontractors and 39 materialmen the proceeds from the payment representing the value of the 40 work performed and/or materials furnished by the subcontractor and/or 41 materialman and reflecting the percentage of the subcontractor's work 42 completed or the materialman's material supplied in the requisition 43 approved by the owner and based upon the actual value of the subcontract 44 or purchase order less an amount necessary to satisfy any claims, liens 45 or judgments against the subcontractor or materialman which have not 46 been suitably discharged and less any retained amount as hereafter 47 described. [Failure by the contractor to pay any subcontractor or mater-48ialman within seven calendar days of the receipt of any payment from the49public owner shall result in the commencement and accrual of interest on50amounts due to such subcontractor or materialman for the period begin-51ning on the day immediately following the expiration of such seven52calendar day period and ending on the date on which payment is made by53the contractor to such subcontractor or materialman. Such interest54payment shall be the sole responsibility of the contractor, and shall be55paid at the rate of interest in effect on the date payment is made by56the contractor. Notwithstanding any other provision of law to theA. 1925 3 1contrary, interest shall be computed at the rate established in para-2graph (b) of subdivision one of section seven hundred fifty-six-b of the3general business law. The contractor shall retain not more than five per4centum of each payment to the subcontractor and/or materialman except5that the contractor may retain in excess of five per centum but not more6than ten per centum of each payment to the subcontractor provided that7prior to entering into a subcontract with the contractor, the subcon-8tractor is unable or unwilling to provide a performance bond and a labor9and material bond, both in the full amount of the subcontract, at the10request of the contractor. However, the contractor shall retain nothing11from those payments representing proceeds owed the subcontractor and/or12materialman from the public owner's payments to the contractor for the13remaining amounts of the contract balance as provided in subdivision one14of this section. If the contractor has failed to submit a requisition15for payment of the remaining amounts of the contract balance within16ninety days of substantial completion as provided in subdivision one of17this section, then any clause in the subcontract between the contractor18and the subcontractor or materialman which states that payment by the19contractor to such subcontractor or materialman is contingent upon20payment by the owner to the contractor shall be deemed invalid. Within21seven calendar days of the receipt of payment from the contractor, the22subcontractor and/or materialman shall pay each of his subcontractors23and materialmen in the same manner as the contractor has paid the24subcontractor, including interest as herein provided above. Nothing25provided herein shall create any obligation on the part of the public26owner to pay or to see to the payment of any moneys to any subcontractor27or materialman from any contractor nor shall anything provided herein28serve to create any relationship in contract or otherwise, implied or29expressed, between the subcontractor or materialman and the public30owner.] The public owner shall retain not more than five per centum of 31 each progress payment to the subcontractor except that the public owner 32 may retain in excess of five per centum but not more than ten per centum 33 of each progress payment to the subcontractor provided that there are no 34 requirements by the public owner for the subcontractor to provide a 35 performance bond and a labor and material bond both in the full amount 36 of the contract. The public owner shall pay, upon requisition from the 37 contractor as provided in subdivision one of this section, for materials 38 pertinent to the project which have been delivered to the site or off- 39 site by the subcontractor and suitably stored and secured as required by 40 the public owner and the subcontractor provided, the public owner may 41 limit such payment to materials in short and/or critical supply and 42 materials specially fabricated for the project each as defined in the 43 contract. When the work or major portions thereof as contemplated by the 44 terms of the contract are substantially completed, the subcontractor 45 shall submit to the contractor and/or his or her agent a requisition for 46 payment of the remaining amount of the contract balance. The contractor 47 shall submit a contract requisition containing all requisitions from 48 subcontractors to the public owner. Upon receipt of such requisition the 49 public owner shall approve and promptly pay the remaining amount of the 50 contract balance less two times the value of any remaining items to be 51 completed and an amount necessary to satisfy any claims, liens or judg- 52 ments against the subcontractor which have not been suitably discharged. 53 As the remaining items of work are satisfactorily completed or 54 corrected, the public owner shall promptly pay, upon receipt of a requi- 55 sition, for these remaining items less an amount necessary to satisfy 56 any claims, liens or judgments against the subcontractor which have notA. 1925 4 1 been suitably discharged. Any claims, liens and judgments referred to in 2 this section shall pertain to the project and shall be filed in accord- 3 ance with the terms of the applicable contract and/or applicable laws. 4 (b) As used in this section, "subcontractor" means only those subcon- 5 tractors that report directly to the main contractor with whom the 6 public owner has entered into the contract, and does not include subcon- 7 tractors of subcontractors. 8 § 2. The opening paragraph and subdivisions 1 and 2 of section 106-b 9 of the general municipal law, the opening paragraph as amended by chap- 10 ter 661 of the laws of 1992, subdivision 1 as amended by chapter 128 of 11 the laws of 2021, and subdivision 2 as amended by section 15 of part MM 12 of chapter 57 of the laws of 2008, are amended to read as follows: 13 Notwithstanding the provisions of any other law to the contrary, all 14 contracts made and awarded by the appropriate officer, board or agency 15 of a political subdivision or of any district therein, hereafter 16 referred to as the public owner, for construction, reconstruction or 17 alteration of any public work project shall provide for payment by the 18 public owner to the contractor and [payment by the contractor] to the 19 subcontractor or subcontractors in accordance with the following: 20 1. Payment by public owners to contractors. (a) The contractor shall 21 periodically, in accordance with the terms of the contract, submit to 22 the public owner and/or his agent a requisition for a progress payment 23 for the work performed and/or materials furnished to the date of the 24 requisition by the contractor and all subcontractors less any amount 25 previously paid to the contractor or subcontractors. The public owner 26 shall in accordance with the terms of the contract approve and promptly 27 pay the requisition for the progress payment less an amount necessary to 28 satisfy any claims, liens or judgments against the contractor or subcon- 29 tractors which have not been suitably discharged and less any retained 30 amount as hereafter described. The public owner shall retain not more 31 than five per centum of each progress payment to the contractor or 32 subcontractors except that the public owner may retain in excess of five 33 per centum but not more than ten per centum of each progress payment to 34 the contractor provided that there are no requirements by the public 35 owner for the contractor to provide a performance bond and a labor and 36 material bond both in the full amount of the contract. The public owner 37 shall pay, upon requisition from the contractor, for materials pertinent 38 to the project which have been delivered to the site or off-site by the 39 contractor [and/or subcontractor] and suitably stored and secured as 40 required by the public owner and the contractor provided, the public 41 owner may limit such payment to materials in short and/or critical 42 supply and materials specially fabricated for the project each as 43 defined in the contract. When the work or major portions thereof as 44 contemplated by the terms of the contract are substantially completed, 45 the contractor shall submit to the public owner and/or his agent a 46 requisition for payment of the remaining amount of the contract balance, 47 including balances owed to subcontractors. Upon receipt of such requi- 48 sition the public owner shall approve and promptly pay the remaining 49 amount of the contract balance less two times the value of any remaining 50 items to be completed and an amount necessary to satisfy any claims, 51 liens or judgments against the contractor which have not been suitably 52 discharged. As the remaining items of work are satisfactorily completed 53 or corrected, the public owner shall promptly pay, upon receipt of a 54 requisition, for these items less an amount necessary to satisfy any 55 claims, liens or judgments against the contractor which have not been 56 suitably discharged. Any claims, liens and judgments referred to in thisA. 1925 5 1 section shall pertain to the project and shall be filed in accordance 2 with the terms of the applicable contract and/or applicable laws. Where 3 the public owner is other than the city of New York, the term "promptly 4 pay" shall mean payment within thirty days, excluding legal holidays, of 5 receipt of the requisition unless such requisition is not approvable in 6 accordance with the terms of the contract. Notwithstanding the forego- 7 ing, where the public owner is other than the city of New York and is a 8 municipal corporation which requires an elected official to approve 9 progress payments, "promptly pay" shall mean payment within forty-five 10 days, excluding legal holidays, of receipt of the requisition unless 11 such requisition is not approvable in accordance with the terms of the 12 contract. 13 (b) Not later than forty-five business days after the date when the 14 project has reached substantial completion, as such term is defined in 15 the contract or as it is contemplated by the terms of the contract, the 16 public owner shall submit to the contractor a written list describing 17 all remaining items to be completed by the contractor. Not later than 18 five business days after receiving a written list describing all remain- 19 ing items to be completed by the contractor, the contractor shall submit 20 to each subcontractor from whom the contractor is withholding retainage 21 a written list of all remaining items required to be completed by the 22 subcontractor. Such list may include items in addition to those items on 23 the public owner's list. 24 (c) Each public owner other than the city of New York which is 25 required to make a payment from public funds pursuant to a contract and 26 which does not make such contract payment by the required payment date 27 shall make an interest payment to the contractor on the amount of the 28 contract payment which is due unless failure to make such contract 29 payment is the result of a lien, attachment, or other legal process 30 against the money due said contractor, or unless the amount of the 31 interest payment as computed in accordance with the provisions set forth 32 hereinafter is less than ten dollars. Interest payments on amounts due 33 to a contractor pursuant to this paragraph shall be paid to the contrac- 34 tor for the period beginning on the day after the required payment date 35 and ending on the payment date for those payments required according to 36 this section and shall be paid at the rate of interest in effect on the 37 date when the interest payment is made. Notwithstanding any other 38 provision of law to the contrary, interest shall be computed at the rate 39 equal to the overpayment rate set by the commissioner of taxation and 40 finance pursuant to subsection (e) of section one thousand ninety-six of 41 the tax law. A pro rata share of such interest shall be paid by the 42 contractor or subcontractor, as the case may be, to subcontractors and 43 materialmen in a proportion equal to the percentage of their pro rata 44 share of the contract payment. Such pro rata share of interest shall be 45 due to such subcontractors and materialmen only for those payments which 46 are not paid to such subcontractors and materialmen prior to the date 47 upon which interest begins to accrue between the public owner and the 48 contractor. Such pro rata shares of interest shall be computed daily 49 until such payments are made to the subcontractors and materialmen. 50 (d) For projects of a public owner other than the city of New York, if 51 state funds directly related to and which have been budgeted for the 52 construction of the project for which the payment is due have not been 53 received prior to the expiration of the thirty or forty-five days speci- 54 fied in paragraph (a) of this subdivision, the interest provided for in 55 paragraph (c) of this subdivision shall not begin to accrue and payment 56 shall not be due, until ten days after receipt of the state funds. Noth-A. 1925 6 1 ing in this paragraph shall prevent the public owner from approving the 2 requisition, subject to receipt of the state funds. State funds shall 3 mean monies provided to the public owner by the state, its officers, 4 boards, departments, commissions, or a public authority and public bene- 5 fit corporation, a majority of the members of which have been appointed 6 by the governor or who serve as members by virtue of holding a civil 7 office of the state, or a combination thereof. 8 2. Payment by [contractors] public owners to subcontractors. [Within9seven calendar days of the receipt] (a) Each subcontractor shall period- 10 ically, in accordance with the terms of the contract, submit to the 11 public owner and/or his agent and to the contractor and/or his agent a 12 requisition for a progress payment for the work performed and/or materi- 13 als furnished to the date of the requisition, less any amount previously 14 paid to the contractor. At the time of any payment [from] by the public 15 owner[,] to the contractor as provided in subdivision one of this 16 section, the public owner shall pay each of [his] the subcontractors and 17 materialman the proceeds from the payment representing the value of the 18 work performed and/or materials furnished by the subcontractor and/or 19 materialmen and reflecting the percentage of the subcontractor's work 20 completed or the materialmen's material supplied in the requisition 21 approved by the owner and based upon the actual value of the subcontract 22 or purchase order less an amount necessary to satisfy any claims, liens 23 or judgments against the subcontractor or materialman which have not 24 been suitably discharged and less any retained amount as hereafter 25 described. [Failure by the contractor to make any payment, including any26remaining amounts of the contract balance as hereinafter described, to27any subcontractor or materialman within seven calendar days of the28receipt of any payment from the public owner shall result in the29commencement and accrual of interest on amounts due to such subcontrac-30tor or materialman for the period beginning on the day immediately31following the expiration of such seven calendar day period and ending on32the date on which payment is made by the contractor to such subcontrac-33tor or materialman. Such interest shall be the sole responsibility of34the contractor, and shall be paid at the rate of interest in effect on35the date payment is made by the contractor. Notwithstanding any other36provision of law to the contrary, interest shall be computed at the rate37established in paragraph (b) of subdivision one of section seven hundred38fifty-six-b of the general business law. The contractor shall retain not39more than five per centum of each payment to the subcontractor and/or40materialman except that the contractor may retain in excess of five per41centum but not more than ten per centum of each payment to the subcon-42tractor provided that prior to entering into a subcontract with the43contractor, the subcontractor is unable or unwilling to provide a44performance bond and a labor and material bond both in the full amount45of the subcontract at the request of the contractor. However, the46contractor shall retain nothing from those payments representing47proceeds owed the subcontractor and/or materialman from the public48owner's payments to the contractor for the remaining amounts of the49contract balance as provided in subdivision one of this section. If the50contractor has failed to submit a requisition for payment of the remain-51ing amounts of the contract balance within ninety days of substantial52completion as provided in subdivision one of this section, then any53clause in the subcontract between the contractor and the subcontractor54or materialman which states that payment by the contractor to such55subcontractor or materialman is contingent upon payment by the owner to56the contractor shall be deemed invalid. Within seven calendar days ofA. 1925 7 1the receipt of payment from the contractor, the subcontractor and/or2materialman shall pay each of his subcontractors and materialmen in the3same manner as the contractor has paid the subcontractor, including4interest as herein provided above. Nothing provided herein shall create5any obligation on the part of the public owner to pay or to see to the6payment of any moneys to any subcontractor or materialman from any7contractor nor shall anything provided herein serve to create any8relationship in contract or otherwise, implied or expressed, between the9subcontractor or materialman and the public owner.] The public owner 10 shall retain not more than five per centum of each progress payment to 11 the subcontractor except that the public owner may retain in excess of 12 five per centum but not more than ten per centum of each progress 13 payment to the subcontractor provided that there are no requirements by 14 the public owner for the subcontractor to provide a performance bond and 15 a labor and material bond both in the full amount of the contract. The 16 public owner shall pay, upon requisition from the contractor as provided 17 in subdivision one of this section, for materials pertinent to the 18 project which have been delivered to the site or off-site by the subcon- 19 tractor and suitably stored and secured as required by the public owner 20 and the subcontractor provided, the public owner may limit such payment 21 to materials in short and/or critical supply and materials specially 22 fabricated for the project each as defined in the contract. When the 23 work or major portions thereof as contemplated by the terms of the 24 contract are substantially completed, the subcontractor shall submit to 25 the contractor and/or his or her agent a requisition for payment of the 26 remaining amount of the contract balance. The contractor shall submit a 27 contract requisition containing all requisitions from subcontractors to 28 the public owner. Upon receipt of such requisition the public owner 29 shall approve and promptly pay the remaining amount of the contract 30 balance less two times the value of any remaining items to be completed 31 and an amount necessary to satisfy any claims, liens or judgments 32 against the subcontractor which have not been suitably discharged. As 33 the remaining items of work are satisfactorily completed or corrected, 34 the public owner shall promptly pay, upon receipt of a requisition, for 35 these remaining items less an amount necessary to satisfy any claims, 36 liens or judgments against the subcontractor which have not been suit- 37 ably discharged. Any claims, liens and judgments referred to in this 38 section shall pertain to the project and shall be filed in accordance 39 with the terms of the applicable contract and/or applicable laws. 40 (b) As used in this section, "subcontractor" means only those subcon- 41 tractors that report directly to the main contractor with whom the 42 public owner has entered into the contract, and does not include subcon- 43 tractors of subcontractors. 44 § 3. This act shall take effect immediately. Effective immediately 45 the addition, amendment and/or repeal of any rule or regulation neces- 46 sary for the implementation of this act on its effective date are 47 authorized to be made and completed on or before such date.