Bill Text: NJ A1898 | 2016-2017 | Regular Session | Amended
Bill Title: Allows State agency to pay subcontractor directly for work performed in certain situations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2016-06-06 - Reported out of Assembly Comm. with Amendments, 2nd Reading [A1898 Detail]
Download: New_Jersey-2016-A1898-Amended.html
ASSEMBLY, No. 1898
STATE OF NEW JERSEY
217th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2016 SESSION
Sponsored by:
Assemblyman JOHN S. WISNIEWSKI
District 19 (Middlesex)
SYNOPSIS
Allows State agency to pay subcontractor directly for work performed in certain situations.
CURRENT VERSION OF TEXT
As reported by the Assembly Transportation and Independent Authorities Committee on June 6, 2016, with amendments.
An Act concerning payment on certain State contracts and amending P.L.1991, c.507.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1991, c.507 (C.52:32-41) is amended to read as follows:
2. a. Prior to the issuance of a progress payment by a State agency to a prime contractor, the prime contractor shall certify to the State agency that a subcontractor or supplier has been paid any amount due from any previous progress payment and shall be paid any amount due from the current progress payment, or that there exists a valid basis under the terms of the subcontractor's or supplier's contract to withhold payment from the subcontractor or supplier and therefore payment is withheld.
b. If the prime contractor withholds payment from a subcontractor or supplier, the prime contractor shall provide to the subcontractor or supplier written notice of a withholding of payment. The notice shall detail the reason for withholding payment and state the amount of payment withheld. A copy of the notice shall be provided to the bonding company providing the performance bond for the general contractor and to the State agency.
c. In addition to any amount due, a subcontractor or supplier shall also receive from a prime contractor interest on the amount due at a rate equal to the prime rate plus one percent if a subcontractor or supplier is not paid within 10 calendar days after receipt by the prime contractor of payment by a State agency for completed work which is the subject of a subcontract or a material supply agreement and if no valid basis exists for withholding payment. This interest shall begin to accrue on the 10th calendar day after receipt of payment by the prime contractor. In addition, a subcontractor or supplier shall receive any court costs incurred by the subcontractor or supplier to collect payments withheld without a valid basis by the prime contractor.
d. If court action is taken by a subcontractor or supplier to collect payments withheld by a prime contractor and it is determined that a valid basis existed for the withholding of those payments, the subcontractor or supplier shall be liable for any court costs incurred by the prime contractor in connection with the action.
e. 1[In the event that a prime contractor, who has performed work on a valid construction contract under this section, becomes insolvent prior to receiving a progress payment from a State agency pursuant to subsection a. of this section, any subcontractor who has performed work for that prime contractor and for which the subcontractor has not been paid, may seek payment directly from a State agency] A subcontractor who has not been paid by a prime contractor for work performed pursuant to a valid construction contract with that prime contractor under this section, and for which there exists no valid basis to withhold payment from the subcontractor, may seek payment directly from a State agency if the prime contractor: (1) has not provided the certification to a State agency required pursuant to subsection a. of this section; or (2) has provided the certification to a State agency required pursuant to subsection a. of this section but thereafter becomes unable to or fails to make payment to the subcontractor. Any State agency that provides payment directly to a subcontractor pursuant to the provisions of this subsection may deduct the amount paid to the subcontractor from any future payments to be made to the prime contractor or may take whatever actions necessary to recover from the prime contractor the amount paid to the subcontractor pursuant to this subsection. Nothing in this subsection shall be construed to diminish the rights of any subcontractor to receive interest from a prime contractor pursuant to subsection c. of this section1.
(cf: P.L.1991, c.507, s.2)
2. This act shall take effect immediately.
