§ 106-B — Payment on public work projects

§ 106-b. Payment on public work projects. Notwithstanding the\nprovisions of any other law to the contrary, all contracts made and\nawarded by the appropriate officer, board or agency of a political\nsubdivision or of any district therein, hereafter referred to as the\npublic owner, for construction, reconstruction or alteration of any\npublic work project shall provide for payment by the public owner to the\ncontractor and payment by the contractor to the subcontractor in\naccordance with the following:\n 1. Payment by public owners to contractors. (a) The contractor shall\nperiodically, in accordance with the terms of the contract, submit to\nthe public owner and/or his agent a requisition for a progress payment\nfor the work performed and/or materials furnished to the date of the\nrequisition less any amount previously paid to the contractor. The\npublic owner shall in accordance with the terms of the contract approve\nand promptly pay the requisition for the progress payment less an amount\nnecessary to satisfy any claims, liens or judgments against the\ncontractor which have not been suitably discharged and less any retained\namount as hereafter described. The public owner shall retain not more\nthan five per centum of each progress payment to the contractor except\nthat the public owner may retain in excess of five per centum but not\nmore than ten per centum of each progress payment to the contractor\nprovided that there are no requirements by the public owner for the\ncontractor to provide a performance bond and a labor and material bond\nboth in the full amount of the contract. The public owner shall pay,\nupon requisition from the contractor, for materials pertinent to the\nproject which have been delivered to the site or off-site by the\ncontractor and/or subcontractor and suitably stored and secured as\nrequired by the public owner and the contractor provided, the public\nowner may limit such payment to materials in short and/or critical\nsupply and materials specially fabricated for the project each as\ndefined in the contract. When the work or major portions thereof as\ncontemplated by the terms of the contract are substantially completed,\nthe contractor shall submit to the public owner and/or his agent a\nrequisition for payment of the remaining amount of the contract balance.\nUpon receipt of such requisition the public owner shall approve and\npromptly pay the remaining amount of the contract balance less two times\nthe value of any remaining items to be completed and an amount necessary\nto satisfy any claims, liens or judgments against the contractor which\nhave not been suitably discharged. As the remaining items of work are\nsatisfactorily completed or corrected, the public owner shall promptly\npay, upon receipt of a requisition, for these items less an amount\nnecessary to satisfy any claims, liens or judgments against the\ncontractor which have not been suitably discharged. Any claims, liens\nand judgments referred to in this section shall pertain to the project\nand shall be filed in accordance with the terms of the applicable\ncontract and/or applicable laws. Where the public owner is other than\nthe city of New York, the term "promptly pay" shall mean payment within\nthirty days, excluding legal holidays, of receipt of the requisition\nunless such requisition is not approvable in accordance with the terms\nof the contract. Notwithstanding the foregoing, where the public owner\nis other than the city of New York and is a municipal corporation which\nrequires an elected official to approve progress payments, "promptly\npay" shall mean payment within forty-five days, excluding legal\nholidays, of receipt of the requisition unless such requisition is not\napprovable in accordance with the terms of the contract.\n (b) Not later than forty-five business days after the date when the\nproject has reached substantial completion, as such term is defined in\nthe contract or as it is contemplated by the terms of the contract, the\npublic owner shall submit to the contractor a written list describing\nall remaining items to be completed by the contractor. Not later than\nfive business days after receiving a written list describing all\nremaining items to be completed by the contractor, the contractor shall\nsubmit to each subcontractor from whom the contractor is withholding\nretainage a written list of all remaining items required to be completed\nby the subcontractor. Such list may include items in addition to those\nitems on the public owner's list.\n (c) Each public owner other than the city of New York which is\nrequired to make a payment from public funds pursuant to a contract and\nwhich does not make such contract payment by the required payment date\nshall make an interest payment to the contractor on the amount of the\ncontract payment which is due unless failure to make such contract\npayment is the result of a lien, attachment, or other legal process\nagainst the money due said contractor, or unless the amount of the\ninterest payment as computed in accordance with the provisions set forth\nhereinafter is less than ten dollars. Interest payments on amounts due\nto a contractor pursuant to this paragraph shall be paid to the\ncontractor for the period beginning on the day after the required\npayment date and ending on the payment date for those payments required\naccording to this section and shall be paid at the rate of interest in\neffect on the date when the interest payment is made. Notwithstanding\nany other provision of law to the contrary, interest shall be computed\nat the rate equal to the overpayment rate set by the commissioner of\ntaxation and finance pursuant to subsection (e) of section one thousand\nninety-six of the tax law. A pro rata share of such interest shall be\npaid by the contractor or subcontractor, as the case may be, to\nsubcontractors and materialmen in a proportion equal to the percentage\nof their pro rata share of the contract payment. Such pro rata share of\ninterest shall be due to such subcontractors and materialmen only for\nthose payments which are not paid to such subcontractors and materialmen\nprior to the date upon which interest begins to accrue between the\npublic owner and the contractor. Such pro rata shares of interest shall\nbe computed daily until such payments are made to the subcontractors and\nmaterialmen.\n (d) For projects of a public owner other than the city of New York, if\nstate funds directly related to and which have been budgeted for the\nconstruction of the project for which the payment is due have not been\nreceived prior to the expiration of the thirty or forty-five days\nspecified in paragraph (a) of this subdivision, the interest provided\nfor in paragraph (c) of this subdivision shall not begin to accrue and\npayment shall not be due, until ten days after receipt of the state\nfunds. Nothing in this paragraph shall prevent the public owner from\napproving the requisition, subject to receipt of the state funds. State\nfunds shall mean monies provided to the public owner by the state, its\nofficers, boards, departments, commissions, or a public authority and\npublic benefit corporation, a majority of the members of which have been\nappointed by the governor or who serve as members by virtue of holding a\ncivil office of the state, or a combination thereof.\n 2. Payment by contractors to subcontractors. Within seven calendar\ndays of the receipt of any payment from the public owner, the contractor\nshall pay each of his subcontractors and materialmen the proceeds from\nthe payment representing the value of the work performed and/or\nmaterials furnished by the subcontractor and/or materialman and\nreflecting the percentage of the subcontractor's work completed or the\nmaterialman's material supplied in the requisition approved by the owner\nand based upon the actual value of the subcontract or purchase order\nless an amount necessary to satisfy any claims, liens or judgments\nagainst the subcontractor or materialman which have not been suitably\ndischarged and less any retained amount as hereafter described. Failure\nby the contractor to make any payment, including any remaining amounts\nof the contract balance as hereinafter described, to any subcontractor\nor materialman within seven calendar days of the receipt of any payment\nfrom the public owner shall result in the commencement and accrual of\ninterest on amounts due to such subcontractor or materialman for the\nperiod beginning on the day immediately following the expiration of such\nseven calendar day period and ending on the date on which payment is\nmade by the contractor to such subcontractor or materialman. Such\ninterest shall be the sole responsibility of the contractor, and shall\nbe paid at the rate of interest in effect on the date payment is made by\nthe contractor. Notwithstanding any other provision of law to the\ncontrary, interest shall be computed at the rate established in\nparagraph (b) of subdivision one of section seven hundred fifty-six-b of\nthe general business law. The contractor shall retain not more than five\nper centum of each payment to the subcontractor and/or materialman\nexcept that the contractor may retain in excess of five per centum but\nnot more than ten per centum of each payment to the subcontractor\nprovided that prior to entering into a subcontract with the contractor,\nthe subcontractor is unable or unwilling to provide a performance bond\nand a labor and material bond both in the full amount of the subcontract\nat the request of the contractor. However, the contractor shall retain\nnothing from those payments representing proceeds owed the subcontractor\nand/or materialman from the public owner's payments to the contractor\nfor the remaining amounts of the contract balance as provided in\nsubdivision one of this section. If the contractor has failed to submit\na requisition for payment of the remaining amounts of the contract\nbalance within ninety days of substantial completion as provided in\nsubdivision one of this section, then any clause in the subcontract\nbetween the contractor and the subcontractor or materialman which states\nthat payment by the contractor to such subcontractor or materialman is\ncontingent upon payment by the owner to the contractor shall be deemed\ninvalid. Within seven calendar days of the receipt of payment from the\ncontractor, the subcontractor and/or materialman shall pay each of his\nsubcontractors and materialmen in the same manner as the contractor has\npaid the subcontractor, including interest as herein provided above.\nNothing provided herein shall create any obligation on the part of the\npublic owner to pay or to see to the payment of any moneys to any\nsubcontractor or materialman from any contractor nor shall anything\nprovided herein serve to create any relationship in contract or\notherwise, implied or expressed, between the subcontractor or\nmaterialman and the public owner.\n 3. In the event that the terms of payment on a public works project,\nas provided in this section, are pre-empted or superseded as a result of\nthe provisions of any federal statute, regulation or rule applicable to\nthe project, the terms of this section shall not apply.\n