New York Laws
Article 9 - Contracts
139-F - Payment on Public Work Projects.

§ 139-f. Payment on public work projects. Notwithstanding the
provisions of any other law to the contrary, except the provisions of
section thirty-eight of the highway law, all contracts made and awarded
by the state, or by any public department, or by any public benefit
corporation or by any public corporation or official thereof, 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. 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 remaining 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.

1-a. 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.


1-b. Notwithstanding any other provision of this section to the
contrary, payment of the moneys due under a contract awarded (i) by a
state agency as defined in article eleven-A of this chapter or (ii) by a
corporation as defined in subdivision one of section twenty-eight
hundred eighty of the public authorities law which is subject to the
provision of this section shall be made in accordance with the
provisions of such article eleven-A, in the case of such state agencies,
or such section twenty-eight hundred eighty, in the case of such
corporations, provided failure to make such payment, as heretofore
prescribed, shall not be due to any fault, neglect, or omission on the
part of the contractor or by reason of the filing of any lien,
attachment, or other legal process against the money due such
contractor.

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 pay 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 payment 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.

4. Notwithstanding any other provision of this section or other law,
requirements for the furnishing of a performance bond or a payment bond
may be dispensed with at the discretion of the head of the state agency
or corporation, or his or her designee, where the public owner is a
state agency or corporation described in subdivision one-a of this
section and the aggregate amount of the contract awarded or to be
awarded is under fifty thousand dollars and, in a case where the
contract is not subject to the multiple contract award requirements of
section one hundred thirty-five of this article, such requirements may
be dispensed with where the head of the state agency or corporation
finds it to be in the public interest and where the aggregate amount of
the contract awarded or to be awarded is under two hundred thousand
dollars. Provided further, that in a case where a performance or payment
bond is dispensed with, twenty per centum may be retained from each
progress payment or estimate until the entire contract work has been
completed and accepted, at which time the head of the state agency or
corporation shall, pending the payment of the final estimate, pay not to
exceed seventy-five per centum of the amount of the retained percentage.

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