Section 106-B. Payment on public work projects  


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  • 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) 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.
        (c) 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 (b) 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.