Bill Text: NY A01194 | 2023-2024 | General Assembly | Amended
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: Slight Partisan Bill (Democrat 5-2)
Status: (Engrossed - Dead) 2024-06-03 - REFERRED TO RULES [A01194 Detail]
Download: New_York-2023-A01194-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 1194--A 2023-2024 Regular Sessions IN ASSEMBLY January 13, 2023 ___________ Introduced by M. of A. BRAUNSTEIN, WOERNER, STECK, PAULIN, BRABENEC -- Multi-Sponsored by -- M. of A. TAGUE -- read once and referred to the Committee on Governmental Operations -- recommitted to the Committee on Governmental Operations in accordance with Assembly Rule 3, sec. 2 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee 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 amended by chapter 128 of the laws of 2021 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD01209-02-4A. 1194--A 2 1 retain in excess of five per centum but not more than ten per centum of 2 each progress payment, not including any payment for materials pertinent 3 to the project which have been delivered, accepted and are covered by a 4 manufacturer's warranty, and/or are graded to meet industry standards, 5 to the contractor provided that there are no requirements by the public 6 owner for the contractor to provide a performance bond and a labor and 7 material bond both in the full amount of the contract. The public owner 8 shall pay in full, upon requisition from the contractor, for all materi- 9 als pertinent to the project which have been delivered to the site or 10 off-site by the contractor and/or subcontractor and suitably stored and 11 secured as required by the public owner and the contractor [provided,12the public owner may limit such payment to materials in short and/or13critical supply and materials specially fabricated for the project each14as defined in the contract]. When the work or major portions thereof as 15 contemplated by the terms of the contract are substantially completed, 16 the contractor shall submit to the public owner and/or [his] its agent a 17 requisition for payment of the remaining amount of the contract balance. 18 Upon receipt of such requisition the public owner shall approve and 19 promptly pay the remaining amount of the contract balance less two times 20 the value of any remaining items to be completed and an amount necessary 21 to satisfy any claims, liens or judgments against the contractor which 22 have not been suitably discharged. As the remaining items of work are 23 satisfactorily completed or corrected, the public owner shall promptly 24 pay, upon receipt of a requisition, for these remaining items less an 25 amount necessary to satisfy any claims, liens or judgments against the 26 contractor which have not been suitably discharged. Any claims, liens 27 and judgments referred to in this section shall pertain to the project 28 and shall be filed in accordance with the terms of the applicable 29 contract and/or applicable laws. 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 pay any subcontrac- 42 tor or materialman within seven calendar days of the receipt of any 43 payment from the public owner shall result in the commencement and 44 accrual of interest on amounts due to such subcontractor or materialman 45 for the period beginning on the day immediately following the expiration 46 of such seven calendar day period and ending on the date on which 47 payment is made by the contractor to such subcontractor or materialman. 48 Such interest payment shall be the sole responsibility of the contrac- 49 tor, and shall be paid at the rate of interest in effect on the date 50 payment is made by the contractor. Notwithstanding any other provision 51 of law to the contrary, interest shall be computed at the rate estab- 52 lished in paragraph (b) of subdivision one of section seven hundred 53 fifty-six-b of the general business law. The contractor shall retain not 54 more than five per centum of each payment to the subcontractor [and/or55materialman] except that the contractor may retain in excess of five per 56 centum but not more than ten per centum of each payment to the subcon-A. 1194--A 3 1 tractor provided that prior to entering into a subcontract with the 2 contractor, the subcontractor is unable or unwilling to provide a 3 performance bond and a labor and material bond, both in the full amount 4 of the subcontract, at the request of the contractor. The contractor 5 shall pay in full, upon payment by the public owner, for all materials 6 pertinent to the project which have been delivered to and accepted at 7 the site or off-site by a materialman and are covered by a manufactur- 8 er's warranty, and/or are graded to meet industry standards. However, 9 except in the case of a materialman who is also contracted to install a 10 product he/she delivered, the contractor shall retain nothing from those 11 payments representing proceeds owed the subcontractor and/or materialman 12 from the public owner's payments to the contractor for the remaining 13 amounts of the contract balance as provided in subdivision one of this 14 section. If the contractor has failed to submit a requisition for 15 payment of the remaining amounts of the contract balance within ninety 16 days of substantial completion as provided in subdivision one of this 17 section, then any clause in the subcontract between the contractor and 18 the subcontractor or materialman which states that payment by the 19 contractor to such subcontractor or materialman is contingent upon 20 payment by the owner to the contractor shall be deemed invalid. Within 21 seven calendar days of the receipt of payment from the contractor, the 22 subcontractor and/or materialman shall pay each of [his] its subcontrac- 23 tors and materialmen in the same manner as the contractor has paid the 24 subcontractor, including interest as herein provided above. Nothing 25 provided herein shall create any obligation on the part of the public 26 owner to pay or to see to the payment of any moneys to any subcontractor 27 or materialman from any contractor nor shall anything provided herein 28 serve to create any relationship in contract or otherwise, implied or 29 expressed, between the subcontractor or materialman and the public 30 owner. 31 § 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b 32 of the general municipal law, paragraph (a) of subdivision 1 as amended 33 by chapter 128 of the laws of 2021 and subdivision 2 as amended by 34 section 15 of part MM of chapter 57 of the laws of 2008, are amended to 35 read as follows: 36 (a) The contractor shall periodically, in accordance with the terms of 37 the contract, submit to the public owner and/or [his] its agent a requi- 38 sition for a progress payment for the work performed and/or materials 39 furnished to the date of the requisition less any amount previously paid 40 to the contractor. The public owner shall in accordance with the terms 41 of the contract approve and promptly pay the requisition for the 42 progress payment less an amount necessary to satisfy any claims, liens 43 or judgments against the contractor which have not been suitably 44 discharged and less any retained amount as hereafter described. The 45 public owner shall retain not more than five per centum of each progress 46 payment, not including any payment for materials pertinent to the 47 project which have been delivered, accepted and are covered by a 48 manufacturer's warranty, and/or are graded to meet industry standards, 49 to the contractor except that the public owner may retain in excess of 50 five per centum but not more than ten per centum of each progress 51 payment, not including any payment for materials pertinent to the 52 project which have been delivered, accepted and are covered by a 53 manufacturer's warranty, and/or are graded to meet industry standards, 54 to the contractor provided that there are no requirements by the public 55 owner for the contractor to provide a performance bond and a labor and 56 material bond both in the full amount of the contract. The public ownerA. 1194--A 4 1 shall pay in full, upon requisition from the contractor, for all materi- 2 als pertinent to the project which have been delivered to the site or 3 off-site by the contractor and/or subcontractor and suitably stored and 4 secured as required by the public owner and the contractor [provided,5the public owner may limit such payment to materials in short and/or6critical supply and materials specially fabricated for the project each7as defined in the contract]. When the work or major portions thereof as 8 contemplated by the terms of the contract are substantially completed, 9 the contractor shall submit to the public owner and/or [his] its agent a 10 requisition for payment of the remaining amount of the contract balance. 11 Upon receipt of such requisition the public owner shall approve and 12 promptly pay the remaining amount of the contract balance less two times 13 the value of any remaining items to be completed and an amount necessary 14 to satisfy any claims, liens or judgments against the contractor which 15 have not been suitably discharged. As the remaining items of work are 16 satisfactorily completed or corrected, the public owner shall promptly 17 pay, upon receipt of a requisition, for these items less an amount 18 necessary to satisfy any claims, liens or judgments against the contrac- 19 tor which have not been suitably discharged. Any claims, liens and judg- 20 ments referred to in this section shall pertain to the project and shall 21 be filed in accordance with the terms of the applicable contract and/or 22 applicable laws. Where the public owner is other than the city of New 23 York, the term "promptly pay" shall mean payment within thirty days, 24 excluding legal holidays, of receipt of the requisition unless such 25 requisition is not approvable in accordance with the terms of the 26 contract. Notwithstanding the foregoing, where the public owner is other 27 than the city of New York and is a municipal corporation which requires 28 an elected official to approve progress payments, "promptly pay" shall 29 mean payment within forty-five days, excluding legal holidays, of 30 receipt of the requisition unless such requisition is not approvable in 31 accordance with the terms of the contract. 32 2. Payment by contractors to subcontractors. Within seven calendar 33 days of the receipt of any payment from the public owner, the contractor 34 shall pay each of [his] its subcontractors and materialmen the proceeds 35 from the payment representing the value of the work performed and/or 36 materials furnished by the subcontractor and/or materialman and reflect- 37 ing the percentage of the subcontractor's work completed or the 38 materialman's material supplied in the requisition approved by the owner 39 and based upon the actual value of the subcontract or purchase order 40 less an amount necessary to satisfy any claims, liens or judgments 41 against the subcontractor or materialman which have not been suitably 42 discharged and, with regard to subcontractors, less any retained amount 43 as hereafter described. Failure by the contractor to make any payment, 44 including any remaining amounts of the contract balance as hereinafter 45 described, to any subcontractor or materialman within seven calendar 46 days of the receipt of any payment from the public owner shall result in 47 the commencement and accrual of interest on amounts due to such subcon- 48 tractor or materialman for the period beginning on the day immediately 49 following the expiration of such seven calendar day period and ending on 50 the date on which payment is made by the contractor to such subcontrac- 51 tor or materialman. Such interest shall be the sole responsibility of 52 the contractor, and shall be paid at the rate of interest in effect on 53 the date payment is made by the contractor. Notwithstanding any other 54 provision of law to the contrary, interest shall be computed at the rate 55 established in paragraph (b) of subdivision one of section seven hundred 56 fifty-six-b of the general business law. The contractor shall retain notA. 1194--A 5 1 more than five per centum of each payment to the subcontractor [and/or2materialman] except that the contractor may retain in excess of five per 3 centum but not more than ten per centum of each payment to the subcon- 4 tractor provided that prior to entering into a subcontract with the 5 contractor, the subcontractor is unable or unwilling to provide a 6 performance bond and a labor and material bond both in the full amount 7 of the subcontract at the request of the contractor. The contractor 8 shall pay in full, upon payment by the public owner, for all materials 9 pertinent to the project which have been delivered to and accepted at 10 the site or off-site by a materialman and are covered by a manufactur- 11 er's warranty, and/or are graded to meet industry standards. However, 12 except in the case of a materialman who is also contracted to install a 13 product he/she delivered, the contractor shall retain nothing from those 14 payments representing proceeds owed the subcontractor and/or materialman 15 from the public owner's payments to the contractor for the remaining 16 amounts of the contract balance as provided in subdivision one of this 17 section. If the contractor has failed to submit a requisition for 18 payment of the remaining amounts of the contract balance within ninety 19 days of substantial completion as provided in subdivision one of this 20 section, then any clause in the subcontract between the contractor and 21 the subcontractor or materialman which states that payment by the 22 contractor to such subcontractor or materialman is contingent upon 23 payment by the owner to the contractor shall be deemed invalid. Within 24 seven calendar days of the receipt of payment from the contractor, the 25 subcontractor and/or materialman shall pay each of [his] its subcontrac- 26 tors and materialmen in the same manner as the contractor has paid the 27 subcontractor, including interest as herein provided above. Nothing 28 provided herein shall create any obligation on the part of the public 29 owner to pay or to see to the payment of any moneys to any subcontractor 30 or materialman from any contractor nor shall anything provided herein 31 serve to create any relationship in contract or otherwise, implied or 32 expressed, between the subcontractor or materialman and the public 33 owner. 34 § 3. Section 756-c of the general business law, as amended by chapter 35 657 of the laws of 2023, is amended to read as follows: 36 § 756-c. Retention. 1. By mutual agreement of the relevant parties an 37 owner may retain no more than five per centum of the contract sum as 38 retainage. A contractor or subcontractor may also retain no more than 39 five per centum for retainage and in no case shall retainage exceed the 40 actual percentage retained by the owner. Retainage shall be released by 41 the owner to the contractor no later than thirty days after the final 42 approval of the work under a construction contract. In the event that an 43 owner fails to release retainage as required by this article, or the 44 contractor or subcontractor fails to release a proportionate amount of 45 retainage to the relevant parties after receipt of retainage from the 46 owner, the owner, contractor, or subcontractor, as the case may be, 47 shall be subject to the payment of interest at the rate of one percent 48 per month on the date retention was due and owing. 49 2. Notwithstanding the provisions of subdivision one of this section, 50 no portion of any payment due and owing to a material supplier for mate- 51 rials which have been delivered, accepted and are covered by a manufac- 52 turer's warranty, and/or graded to meet industry standards shall be 53 retained by an owner, contractor or subcontractor. 54 § 4. This act shall take effect on the thirtieth day after it shall 55 have become a law and shall apply to materials delivered and accepted on 56 or after such effective date.
