2023 New York Laws › GMU - General Municipal › Article 5-A - Public Contracts › 106-B - Payment on Public Work Projects.

§   106-b.  Payment  on  public  work  projects.  Notwithstanding  the
provisions of any other law to the  contrary,  all  contracts  made  and
awarded  by  the  appropriate  officer,  board  or agency of a political
subdivision or of any district therein, 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. (a) 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  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. Where the public owner is other than
the city of New York, the term "promptly pay" shall mean payment  within
thirty  days,  excluding  legal  holidays, of receipt of the requisition
unless such requisition is not approvable in accordance with  the  terms
of  the  contract. Notwithstanding the foregoing, where the public owner
is other than the city of New York and is a municipal corporation  which
requires  an  elected  official  to approve progress payments, "promptly
pay"  shall  mean  payment  within  forty-five  days,  excluding   legal
holidays,  of  receipt of the requisition unless such requisition is not
approvable in accordance with the terms of the contract.
(b) 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.
(c) Each public owner other  than  the  city  of  New  York  which  is
required  to make a payment from public funds pursuant to a contract and
which does not make such contract payment by the required  payment  date
shall  make  an  interest payment to the contractor on the amount of the
contract payment which is due  unless  failure  to  make  such  contract
payment  is  the  result  of  a lien, attachment, or other legal process
against the money due said contractor,  or  unless  the  amount  of  the
interest payment as computed in accordance with the provisions set forth
hereinafter  is  less than ten dollars. Interest payments on amounts due
to a contractor  pursuant  to  this  paragraph  shall  be  paid  to  the
contractor  for  the  period  beginning  on  the  day after the required
payment date and ending on the payment date for those payments  required
according  to  this section and shall be paid at the rate of interest in
effect on the date when the interest payment  is  made.  Notwithstanding
any  other  provision of law to the contrary, interest shall be computed
at the rate equal to the overpayment rate set  by  the  commissioner  of
taxation  and finance pursuant to subsection (e) of section one thousand
ninety-six of the tax law. A pro rata share of such  interest  shall  be
paid  by  the  contractor  or  subcontractor,  as  the  case  may be, to
subcontractors and materialmen in a proportion equal to  the  percentage
of  their pro rata share of the contract payment. Such pro rata share of
interest shall be due to such subcontractors and  materialmen  only  for
those payments which are not paid to such subcontractors and materialmen
prior  to  the  date  upon  which  interest begins to accrue between the
public owner and the contractor.  Such pro rata shares of interest shall
be computed daily until such payments are made to the subcontractors and
materialmen.
(d) For projects of a public owner other than the city of New York, if
state funds directly related to and which have  been  budgeted  for  the
construction  of  the project for which the payment is due have not been
received prior to the  expiration  of  the  thirty  or  forty-five  days
specified  in  paragraph  (a) of this subdivision, the interest provided
for in paragraph (c) of this subdivision shall not begin to  accrue  and
payment  shall  not  be  due,  until ten days after receipt of the state
funds. Nothing in this paragraph shall prevent  the  public  owner  from
approving  the requisition, subject to receipt of the state funds. State
funds shall mean monies provided to the public owner by the  state,  its
officers,  boards,  departments,  commissions, or a public authority and
public benefit corporation, a majority of the members of which have been
appointed by the governor or who serve as members by virtue of holding a
civil office of the state, or a combination thereof.
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 make any payment, including any remaining amounts
of  the  contract balance as hereinafter described, to 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  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.