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 - Dead) 2020-01-08 - ordered to third reading cal.26 [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. LBD02675-01-9A. 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,10the public owner may limit such payment to materials in short and/or11critical supply and materials specially fabricated for the project each12as 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/or53materialman] 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 aA. 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 orA. 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,3the public owner may limit such payment to materials in short and/or4critical supply and materials specially fabricated for the project each5as 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/or56materialman] except that the contractor may retain in excess of five perA. 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.
