N.Y. State Finance Law § 139-f: Payment on public work projects

§ 139-f. Payment on public work projects. Notwithstanding the

provisions of any other law to the contrary, except the provisions of

section thirty-eight of the highway law, all contracts made and awarded

by the state, or by any public department, or by any public benefit

corporation or by any public corporation or official thereof, hereafter

referred to as the public owner, for construction, reconstruction or

alteration of any public work project shall provide for payment by the

public owner to the contractor and payment by the contractor to the

subcontractor in accordance with the following:

1. Payment by public owners to contractors. The contractor shall

periodically, in accordance with the terms of the contract, submit to

the public owner and/or his agent a requisition for a progress payment

for the work performed and/or materials furnished to the date of the

requisition, less any amount previously paid to the contractor. The

public owner shall in accordance with the terms of the contract approve

and promptly pay the requisition for the progress payment less an amount

necessary to satisfy any claims, liens or judgments against the

contractor which have not been suitably discharged and less any retained

amount as hereafter described. The public owner shall retain not more

than five per centum of each progress payment to the contractor except

that the public owner may retain in excess of five per centum but not

more than ten per centum of each progress payment to the contractor

provided that there are no requirements by the public owner for the

contractor to provide a performance bond and a labor and material bond

both in the full amount of the contract. The public owner shall pay,

upon requisition from the contractor, for materials pertinent to the

project which have been delivered to the site or off-site by the

contractor and/or subcontractor and suitably stored and secured as

required by the public owner and the contractor provided, the public

owner may limit such payment to materials in short and/or critical

supply and materials specially fabricated for the project each as

defined in the contract. When the work or major portions thereof as

contemplated by the terms of the contract are substantially completed,

the contractor shall submit to the public owner and/or his agent a

requisition for payment of the remaining amount of the contract balance.

Upon receipt of such requisition the public owner shall approve and

promptly pay the remaining amount of the contract balance less two times

the value of any remaining items to be completed and an amount necessary

to satisfy any claims, liens or judgments against the contractor which

have not been suitably discharged. As the remaining items of work are

satisfactorily completed or corrected, the public owner shall promptly

pay, upon receipt of a requisition, for these remaining items less an

amount necessary to satisfy any claims, liens or judgments against the

contractor which have not been suitably discharged. Any claims, liens

and judgments referred to in this section shall pertain to the project

and shall be filed in accordance with the terms of the applicable

contract and/or applicable laws.

1-a. Not later than forty-five business days after the date when the

project has reached substantial completion, as such term is defined in

the contract or as it is contemplated by the terms of the contract, the

public owner shall submit to the contractor a written list describing

all remaining items to be completed by the contractor. Not later than

five business days after receiving a written list describing all

remaining items to be completed by the contractor, the contractor shall

submit to each subcontractor from whom the contractor is withholding

retainage a written list of all remaining items required to be completed

by the subcontractor. Such list may include items in addition to those

items on the public owner's list.

1-b. Notwithstanding any other provision of this section to the

contrary, payment of the moneys due under a contract awarded (i) by a

state agency as defined in article eleven-A of this chapter or (ii) by a

corporation as defined in subdivision one of section twenty-eight

hundred eighty of the public authorities law which is subject to the

provision of this section shall be made in accordance with the

provisions of such article eleven-A, in the case of such state agencies,

or such section twenty-eight hundred eighty, in the case of such

corporations, provided failure to make such payment, as heretofore

prescribed, shall not be due to any fault, neglect, or omission on the

part of the contractor or by reason of the filing of any lien,

attachment, or other legal process against the money due such

contractor.

2. Payment by contractors to subcontractors. Within seven calendar

days of the receipt of any payment from the public owner, the contractor

shall pay each of his subcontractors and materialmen the proceeds from

the payment representing the value of the work performed and/or

materials furnished by the subcontractor and/or materialman and

reflecting the percentage of the subcontractor's work completed or the

materialman's material supplied in the requisition approved by the owner

and based upon the actual value of the subcontract or purchase order

less an amount necessary to satisfy any claims, liens or judgments

against the subcontractor or materialman which have not been suitably

discharged and less any retained amount as hereafter described. Failure

by the contractor to pay any subcontractor or materialman within seven

calendar days of the receipt of any payment from the public owner shall

result in the commencement and accrual of interest on amounts due to

such subcontractor or materialman for the period beginning on the day

immediately following the expiration of such seven calendar day period

and ending on the date on which payment is made by the contractor to

such subcontractor or materialman. Such interest payment shall be the

sole responsibility of the contractor, and shall be paid at the rate of

interest in effect on the date payment is made by the contractor.

Notwithstanding any other provision of law to the contrary, interest

shall be computed at the rate established in paragraph (b) of

subdivision one of section seven hundred fifty-six-b of the general

business law. The contractor shall retain not more than five per centum

of each payment to the subcontractor and/or materialman except that the

contractor may retain in excess of five per centum but not more than ten

per centum of each payment to the subcontractor provided that prior to

entering into a subcontract with the contractor, the subcontractor is

unable or unwilling to provide a performance bond and a labor and

material bond, both in the full amount of the subcontract, at the

request of the contractor. However, the contractor shall retain nothing

from those payments representing proceeds owed the subcontractor and/or

materialman from the public owner's payments to the contractor for the

remaining amounts of the contract balance as provided in subdivision one

of this section. If the contractor has failed to submit a requisition

for payment of the remaining amounts of the contract balance within

ninety days of substantial completion as provided in subdivision one of

this section, then any clause in the subcontract between the contractor

and the subcontractor or materialman which states that payment by the

contractor to such subcontractor or materialman is contingent upon

payment by the owner to the contractor shall be deemed invalid. Within

seven calendar days of the receipt of payment from the contractor, the

subcontractor and/or materialman shall pay each of his subcontractors

and materialmen in the same manner as the contractor has paid the

subcontractor, including interest as herein provided above. Nothing

provided herein shall create any obligation on the part of the public

owner to pay or to see to the payment of any moneys to any subcontractor

or materialman from any contractor nor shall anything provided herein

serve to create any relationship in contract or otherwise, implied or

expressed, between the subcontractor or materialman and the public

owner.

3. In the event that the terms of payment on a public works project as

provided in this section are pre-empted or superseded as a result of the

provisions of any federal statute, regulation or rule applicable to the

project, the terms of this section shall not apply.

4. Notwithstanding any other provision of this section or other law,

requirements for the furnishing of a performance bond or a payment bond

may be dispensed with at the discretion of the head of the state agency

or corporation, or his or her designee, where the public owner is a

state agency or corporation described in subdivision one-a of this

section and the aggregate amount of the contract awarded or to be

awarded is under fifty thousand dollars and, in a case where the

contract is not subject to the multiple contract award requirements of

section one hundred thirty-five of this article, such requirements may

be dispensed with where the head of the state agency or corporation

finds it to be in the public interest and where the aggregate amount of

the contract awarded or to be awarded is under two hundred thousand

dollars. Provided further, that in a case where a performance or payment

bond is dispensed with, twenty per centum may be retained from each

progress payment or estimate until the entire contract work has been

completed and accepted, at which time the head of the state agency or

corporation shall, pending the payment of the final estimate, pay not to

exceed seventy-five per centum of the amount of the retained percentage.