Bill Text: NY S05498 | 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: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2020-01-08 - REFERRED TO FINANCE [S05498 Detail]
Download: New_York-2019-S05498-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 5498 2019-2020 Regular Sessions IN SENATE May 3, 2019 ___________ Introduced by Sen. BROOKS -- read twice and ordered printed, and when printed to be committed to the Committee on Finance 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 21 to the project which have been delivered, accepted and are covered by a 22 manufacturer's warranty, and/or are graded to meet industry standards, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD02675-01-9S. 5498 2 1 to the contractor provided that there are no requirements by the public 2 owner for the contractor to provide a performance bond and a labor and 3 material bond both in the full amount of the contract. The public owner 4 shall pay in full, upon requisition from the contractor, for all materi- 5 als pertinent to the project which have been delivered to the site or 6 off-site by the contractor and/or subcontractor and suitably stored and 7 secured as required by the public owner and the contractor [provided,8the public owner may limit such payment to materials in short and/or9critical supply and materials specially fabricated for the project each10as defined in the contract]. When the work or major portions thereof as 11 contemplated by the terms of the contract are substantially completed, 12 the contractor shall submit to the public owner and/or [his] its agent a 13 requisition for payment of the remaining amount of the contract balance. 14 Upon receipt of such requisition the public owner shall approve and 15 promptly pay the remaining amount of the contract balance less two times 16 the value of any remaining items to be completed and an amount necessary 17 to satisfy any claims, liens or judgments against the contractor which 18 have not been suitably discharged. As the remaining items of work are 19 satisfactorily completed or corrected, the public owner shall promptly 20 pay, upon receipt of a requisition, for these remaining items less an 21 amount necessary to satisfy any claims, liens or judgments against the 22 contractor which have not been suitably discharged. Any claims, liens 23 and judgments referred to in this section shall pertain to the project 24 and shall be filed in accordance with the terms of the applicable 25 contract and/or applicable laws. 26 2. Payment by contractors to subcontractors. Within seven calendar 27 days of the receipt of any payment from the public owner, the contractor 28 shall pay each of [his] its subcontractors and materialmen the proceeds 29 from the payment representing the value of the work performed and/or 30 materials furnished by the subcontractor and/or materialman and reflect- 31 ing the percentage of the subcontractor's work completed or the 32 materialman's material supplied in the requisition approved by the owner 33 and based upon the actual value of the subcontract or purchase order 34 less an amount necessary to satisfy any claims, liens or judgments 35 against the subcontractor or materialman which have not been suitably 36 discharged and, with regard to subcontractors, less any retained amount 37 as hereafter described. Failure by the contractor to pay any subcontrac- 38 tor or materialman within seven calendar days of the receipt of any 39 payment from the public owner shall result in the commencement and 40 accrual of interest on amounts due to such subcontractor or materialman 41 for the period beginning on the day immediately following the expiration 42 of such seven calendar day period and ending on the date on which 43 payment is made by the contractor to such subcontractor or materialman. 44 Such interest payment shall be the sole responsibility of the contrac- 45 tor, and shall be paid at the rate of interest in effect on the date 46 payment is made by the contractor. Notwithstanding any other provision 47 of law to the contrary, interest shall be computed at the rate estab- 48 lished in paragraph (b) of subdivision one of section seven hundred 49 fifty-six-b of the general business law. The contractor shall retain not 50 more than five per centum of each payment to the subcontractor [and/or51materialman] except that the contractor may retain in excess of five per 52 centum but not more than ten per centum of each payment to the subcon- 53 tractor provided that prior to entering into a subcontract with the 54 contractor, the subcontractor is unable or unwilling to provide a 55 performance bond and a labor and material bond, both in the full amount 56 of the subcontract, at the request of the contractor. The contractorS. 5498 3 1 shall pay in full, upon payment by the public owner, for all materials 2 pertinent to the project which have been delivered to and accepted at 3 the site or off-site by a materialman and are covered by a manufactur- 4 er's warranty, and/or are graded to meet industry standards. However, 5 except in the case of a materialman who is also contracted to install a 6 product he/she delivered, the contractor shall retain nothing from those 7 payments representing proceeds owed the subcontractor and/or materialman 8 from the public owner's payments to the contractor for the remaining 9 amounts of the contract balance as provided in subdivision one of this 10 section. If the contractor has failed to submit a requisition for 11 payment of the remaining amounts of the contract balance within ninety 12 days of substantial completion as provided in subdivision one of this 13 section, then any clause in the subcontract between the contractor and 14 the subcontractor or materialman which states that payment by the 15 contractor to such subcontractor or materialman is contingent upon 16 payment by the owner to the contractor shall be deemed invalid. Within 17 seven calendar days of the receipt of payment from the contractor, the 18 subcontractor and/or materialman shall pay each of [his] its subcontrac- 19 tors and materialmen in the same manner as the contractor has paid the 20 subcontractor, including interest as herein provided above. Nothing 21 provided herein shall create any obligation on the part of the public 22 owner to pay or to see to the payment of any moneys to any subcontractor 23 or materialman from any contractor nor shall anything provided herein 24 serve to create any relationship in contract or otherwise, implied or 25 expressed, between the subcontractor or materialman and the public 26 owner. 27 § 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b 28 of the general municipal law, paragraph (a) of subdivision 1 as amended 29 by chapter 98 of the laws of 1995 and subdivision 2 as amended by 30 section 15 of part MM of chapter 57 of the laws of 2008, are amended to 31 read as follows: 32 (a) The contractor shall periodically, in accordance with the terms of 33 the contract, submit to the public owner and/or [his] its agent a requi- 34 sition for a progress payment for the work performed and/or materials 35 furnished to the date of the requisition less any amount previously paid 36 to the contractor. The public owner shall in accordance with the terms 37 of the contract approve and promptly pay the requisition for the 38 progress payment less an amount necessary to satisfy any claims, liens 39 or judgments against the contractor which have not been suitably 40 discharged and less any retained amount as hereafter described. The 41 public owner shall retain not more than five per centum of each progress 42 payment, not including any payment for materials pertinent to the 43 project which have been delivered, accepted and are covered by a 44 manufacturer's warranty, and/or are graded to meet industry standards, 45 to the contractor except that the public owner may retain in excess of 46 five per centum but not more than ten per centum of each progress 47 payment, not including any payment for materials pertinent to the 48 project which have been delivered, accepted and are covered by a 49 manufacturer's warranty, and/or are graded to meet industry standards, 50 to the contractor provided that there are no requirements by the public 51 owner for the contractor to provide a performance bond and a labor and 52 material bond both in the full amount of the contract. The public owner 53 shall pay in full, upon requisition from the contractor, for all materi- 54 als pertinent to the project which have been delivered to the site or 55 off-site by the contractor and/or subcontractor and suitably stored and 56 secured as required by the public owner and the contractor [provided,S. 5498 4 1the public owner may limit such payment to materials in short and/or2critical supply and materials specially fabricated for the project each3as defined in the contract]. When the work or major portions thereof as 4 contemplated by the terms of the contract are substantially completed, 5 the contractor shall submit to the public owner and/or [his] its agent a 6 requisition for payment of the remaining amount of the contract balance. 7 Upon receipt of such requisition the public owner shall approve and 8 promptly pay the remaining amount of the contract balance less two times 9 the value of any remaining items to be completed and an amount necessary 10 to satisfy any claims, liens or judgments against the contractor which 11 have not been suitably discharged. As the remaining items of work are 12 satisfactorily completed or corrected, the public owner shall promptly 13 pay, upon receipt of a requisition, for these items less an amount 14 necessary to satisfy any claims, liens or judgments against the contrac- 15 tor which have not been suitably discharged. Any claims, liens and judg- 16 ments referred to in this section shall pertain to the project and shall 17 be filed in accordance with the terms of the applicable contract and/or 18 applicable laws. Where the public owner is other than the city of New 19 York, the term "promptly pay" shall mean payment within thirty days, 20 excluding legal holidays, of receipt of the requisition unless such 21 requisition is not approvable in accordance with the terms of the 22 contract. Notwithstanding the foregoing, where the public owner is other 23 than the city of New York and is a municipal corporation which requires 24 an elected official to approve progress payments, "promptly pay" shall 25 mean payment within forty-five days, excluding legal holidays, of 26 receipt of the requisition unless such requisition is not approvable in 27 accordance with the terms of the contract. 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 make any payment, 40 including any remaining amounts of the contract balance as hereinafter 41 described, to any subcontractor or materialman within seven calendar 42 days of the receipt of any payment from the public owner shall result in 43 the commencement and accrual of interest on amounts due to such subcon- 44 tractor or materialman for the period beginning on the day immediately 45 following the expiration of such seven calendar day period and ending on 46 the date on which payment is made by the contractor to such subcontrac- 47 tor or materialman. Such interest shall be the sole responsibility of 48 the contractor, and shall be paid at the rate of interest in effect on 49 the date payment is made by the contractor. Notwithstanding any other 50 provision of law to the contrary, interest shall be computed at the rate 51 established in paragraph (b) of subdivision one of section seven hundred 52 fifty-six-b of the general business law. The contractor shall retain not 53 more than five per centum of each payment to the subcontractor [and/or54materialman] except that the contractor may retain in excess of five per 55 centum but not more than ten per centum of each payment to the subcon- 56 tractor provided that prior to entering into a subcontract with theS. 5498 5 1 contractor, the subcontractor is unable or unwilling to provide a 2 performance bond and a labor and material bond both in the full amount 3 of the subcontract at the request of the contractor. The contractor 4 shall pay in full, upon payment by the public owner, for all materials 5 pertinent to the project which have been delivered to and accepted at 6 the site or off-site by a materialman and are covered by a manufactur- 7 er's warranty, and/or are graded to meet industry standards. However, 8 except in the case of a materialman who is also contracted to install a 9 product he/she delivered, the contractor shall retain nothing from those 10 payments representing proceeds owed the subcontractor and/or materialman 11 from the public owner's payments to the contractor for the remaining 12 amounts of the contract balance as provided in subdivision one of this 13 section. If the contractor has failed to submit a requisition for 14 payment of the remaining amounts of the contract balance within ninety 15 days of substantial completion as provided in subdivision one of this 16 section, then any clause in the subcontract between the contractor and 17 the subcontractor or materialman which states that payment by the 18 contractor to such subcontractor or materialman is contingent upon 19 payment by the owner to the contractor shall be deemed invalid. Within 20 seven calendar days of the receipt of payment from the contractor, the 21 subcontractor and/or materialman shall pay each of [his] its subcontrac- 22 tors and materialmen in the same manner as the contractor has paid the 23 subcontractor, including interest as herein provided above. Nothing 24 provided herein shall create any obligation on the part of the public 25 owner to pay or to see to the payment of any moneys to any subcontractor 26 or materialman from any contractor nor shall anything provided herein 27 serve to create any relationship in contract or otherwise, implied or 28 expressed, between the subcontractor or materialman and the public 29 owner. 30 § 3. Section 756-c of the general business law, as added by chapter 31 127 of the laws of 2002, is amended to read as follows: 32 § 756-c. Retention. 1. By mutual agreement of the relevant parties an 33 owner may retain a reasonable amount of the contract sum as retainage. A 34 contractor or subcontractor may also retain a reasonable amount for 35 retainage so long as the amount does not exceed the actual percentage 36 retained by the owner. Retainage shall be released by the owner to the 37 contractor no later than thirty days after the final approval of the 38 work under a construction contract. In the event that an owner fails to 39 release retainage as required by this article, or the contractor or 40 subcontractor fails to release a proportionate amount of retainage to 41 the relevant parties after receipt of retainage from the owner, the 42 owner, contractor, or subcontractor, as the case may be, shall be 43 subject to the payment of interest at the rate of one percent per month 44 on the date retention was due and owing. 45 2. Notwithstanding the provisions of subdivision one of this section, 46 no portion of any payment due and owing to a material supplier for mate- 47 rials which have been delivered, accepted and are covered by a manufac- 48 turer's warranty, and/or graded to meet industry standards shall be 49 retained by an owner, contractor or subcontractor. 50 § 4. This act shall take effect on the thirtieth day after it shall 51 have become a law and shall apply to materials delivered and accepted on 52 or after such effective date.
