senate Bill S6158A

2011-2012 Legislative Session

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 21, 2012 committed to rules
May 21, 2012 advanced to third reading
amended (t) 6158a
May 16, 2012 2nd report cal.
May 15, 2012 1st report cal.803
Jan 09, 2012 referred to finance

Bill Amendments

Original
A (Active)
Original
A (Active)

S6158 - Bill Details

See Assembly Version of this Bill:
A8473A
Current Committee:
Law Section:
State Finance Law
Laws Affected:
Amd §139-f, St Fin L; amd §106-b, Gen Muni L; amd §756-c, Gen Bus L

S6158 - Bill Texts

view summary

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project.

view sponsor memo
BILL NUMBER:S6158

TITLE OF BILL:
An act to amend the state finance law and the general municipal law, in
relation to requiring full payment for delivered materials pertaining to
public work projects; and to amend the general business law, in relation
to prohibiting the retention of any payment due and owing a material
supplier for a construction project

PURPOSE OR GENERAL IDEA OF BILL:
This bill amends the state finance and general municipal laws, in
relation to requiring full payment for delivered materials pertaining to
public works projects; and to amend the general business law, in
relation to prohibiting the retention of any payment due and owing a
material supplier for a construction project.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends the state finance law to clarify that materialmen are
not subject to retainage.

Section 2: Amends the general municipal law to clarify that materialmen
are not subject to retainage.

Section 3: Amends the current law to clarify that an owner, contractor,
or subcontractor may not retain any portion of any payment due to a
material supplier, except as set forth in subsection one of the law.

JUSTIFICATION:
Currently, retainage is withheld on construction jobs to ensure that the
owner is happy with the finished product. Retainage is withheld by the
owner from the contractor, who, as a result of not receiving funds from
the owner, withholds payment from the subcontractors and materialmen.
Once a material supplier has delivered its goods and has been accepted
by the contractor or subcontractor, the supplier has completed its job
and should not be held liable for subsequent work performance. This
legislation would remove materialmen from inclusion under current
retainage laws.

PRIOR LEGISISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall become
law and shall apply to materials deliver on or after such date.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6158

                            I N  S E N A T E

                             January 9, 2012
                               ___________

Introduced  by  Sen.  LIBOUS -- 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 materials pertaining
  to public work projects; and to amend the  general  business  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:

  Section  1. Subdivisions 1 and 2 of section 139-f of the state finance
law, subdivision 1 as added by chapter 769  of  the  laws  of  1978  and
subdivision  2  as amended by section 16 of part MM of chapter 57 of the
laws of 2008, are amended to read as follows:
  1. Payment by public owners to contractors. The contractor shall peri-
odically, in accordance with the terms of the contract,  submit  to  the
public owner and/or [his] ITS 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 contrac-
tor 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, NOT INCLUDING ANY PAYMENT FOR MATE-
RIALS PERTINENT TO  THE  PROJECT  WHICH  HAVE  BEEN  DELIVERED,  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, NOT
INCLUDING ANY PAYMENT FOR MATERIALS PERTINENT TO THE PROJECT WHICH  HAVE
BEEN  DELIVERED,  to  the contractor provided that there are no require-
ments 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 IN FULL, upon requisition from  the
contractor,  for  ALL materials pertinent to the project which have been
delivered to the site or off-site by the contractor and/or subcontractor

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11725-01-1

S. 6158                             2

and suitably stored and secured as required by the public owner and  the
contractor [provided, the public owner may limit such payment to materi-
als  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] ITS 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 judg-
ments 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.
  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] ITS 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 reflect-
ing  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, WITH REGARD TO SUBCONTRACTORS, less any retained amount
as hereafter described. Failure by the contractor to pay any subcontrac-
tor 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 contrac-
tor, 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  estab-
lished  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 subcon-
tractor 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.  THE CONTRACTOR
SHALL PAY IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR  ALL  MATERIALS
PERTINENT  TO  THE  PROJECT  WHICH  HAVE  BEEN  DELIVERED TO THE SITE OR
OFF-SITE BY A MATERIALMAN. 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

S. 6158                             3

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] ITS subcontrac-
tors 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.
  S 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b
of the general municipal law, paragraph (a) of subdivision 1 as  amended
by  chapter  98  of  the  laws  of  1995 and subdivision 2 as amended by
section 15 of part MM of chapter 57 of the laws of 2008, are amended  to
read as follows:
  (a) The contractor shall periodically, in accordance with the terms of
the contract, submit to the public owner and/or [his] ITS agent a requi-
sition  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,  NOT  INCLUDING  ANY  PAYMENT  FOR  MATERIALS  PERTINENT TO THE
PROJECT WHICH HAVE BEEN DELIVERED, 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, NOT INCLUDING ANY  PAYMENT  FOR
MATERIALS  PERTINENT  TO  THE  PROJECT WHICH HAVE BEEN DELIVERED, 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 materi-
al  bond both in the full amount of the contract. The public owner shall
pay IN FULL, upon requisition from the  contractor,  for  ALL  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] ITS 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

S. 6158                             4

pay, upon receipt of a requisition,  for  these  items  less  an  amount
necessary to satisfy any claims, liens or judgments against the contrac-
tor which have not been suitably discharged. Any claims, liens and judg-
ments 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.
  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] ITS 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 reflect-
ing  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, WITH REGARD TO SUBCONTRACTORS, 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 subcon-
tractor 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 subcontrac-
tor 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  subcon-
tractor  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.  THE  CONTRACTOR
SHALL  PAY  IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR ALL MATERIALS
PERTINENT TO THE PROJECT WHICH  HAVE  BEEN  DELIVERED  TO  THE  SITE  OR
OFF-SITE  BY A MATERIALMAN. 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

S. 6158                             5

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] ITS subcontrac-
tors  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.
  S  3.  Section  756-c of the general business law, as added by chapter
127 of the laws of 2002, is amended to read as follows:
  S 756-c. Retention. 1. By mutual agreement of the relevant parties  an
owner may retain a reasonable amount of the contract sum as retainage. A
contractor  or  subcontractor  may  also  retain a reasonable amount for
retainage so long as the amount does not exceed  the  actual  percentage
retained  by  the owner. Retainage shall be released by the owner to the
contractor no later than thirty days after the  final  approval  of  the
work  under a construction contract. In the event that an owner fails to
release retainage as required by this  article,  or  the  contractor  or
subcontractor  fails  to  release a proportionate amount of retainage to
the relevant parties after receipt of  retainage  from  the  owner,  the
owner,  contractor,  or  subcontractor,  as  the  case  may be, shall be
subject to the payment of interest at the rate of one percent per  month
on the date retention was due and owing.
  2.  NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS SECTION,
NO PORTION OF ANY PAYMENT DUE AND OWING TO A MATERIAL SUPPLIER FOR MATE-
RIALS WHICH HAVE BEEN DELIVERED SHALL BE RETAINED BY AN OWNER,  CONTRAC-
TOR OR SUBCONTRACTOR.
  S  4.  This  act shall take effect on the thirtieth day after it shall
have become a law and shall apply to materials  delivered  on  or  after
such date.

S6158A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A8473A
Current Committee:
Law Section:
State Finance Law
Laws Affected:
Amd §139-f, St Fin L; amd §106-b, Gen Muni L; amd §756-c, Gen Bus L

S6158A (ACTIVE) - Bill Texts

view summary

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project.

view sponsor memo
BILL NUMBER:S6158A

TITLE OF BILL:
An act to amend the state finance law and the general municipal law,
in relation to requiring full payment for delivered and accepted
materials pertaining to public work projects; and to amend the general
business law, in relation to prohibiting the retention of any payment
due and owing a material supplier for a construction project

PURPOSE OR GENERAL IDEA OF BILL:
This bill amends the state finance and general municipal laws, in
relation to requiring full payment for delivered materials pertaining
to public works projects; and to amend the general business law, in
relation to prohibiting the retention of any payment due and owing a
material supplier for a construction project.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends the state finance law to clarify that materialmen
are not subject to retainage.

Section 2: Amends the general municipal law to clarify that
materialmen are not subject to retainage.

Section 3: Amends the current law to clarify that an owner,
contractor, or subcontractor may not retain any portion of any payment
due to a material supplier, except as set forth in subsection one of
the law.

JUSTIFICATION:
Currently, retainage is withheld on construction jobs to ensure that
the owner is happy with the finished product. Retainage is withheld
by the owner from the contractor, who, as a result of not receiving
funds from the owner, withholds payment from the subcontractors and
materialmen. Once a material supplier has delivered its goods and has
been accepted by the contractor or subcontractor, the supplier has
completed its job and should not be held liable for subsequent work
performance. This legislation would remove materialmen from inclusion
under current retainage laws.

PRIOR LEGISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall become
law and shall apply to materials deliver on or after such date.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 6158--A
    Cal. No. 803

                            I N  S E N A T E

                             January 9, 2012
                               ___________

Introduced  by  Sen.  LIBOUS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance -- reported favor-
  ably from said committee, ordered to first and second report,  amended
  on  second  report, ordered to a third reading, and to be reprinted as
  amended, retaining its place in the order of third reading

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:

  Section 1. Subdivisions 1 and 2 of section 139-f of the state  finance
law,  subdivision  1  as  added  by  chapter 769 of the laws of 1978 and
subdivision 2 as amended by section 16 of part MM of chapter 57  of  the
laws of 2008, are amended to read as follows:
  1. Payment by public owners to contractors. The contractor shall peri-
odically,  in  accordance  with the terms of the contract, submit to the
public owner and/or [his] ITS 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 contrac-
tor 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, NOT INCLUDING ANY PAYMENT FOR MATE-
RIALS  PERTINENT  TO THE PROJECT WHICH HAVE BEEN DELIVERED AND ACCEPTED,
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, NOT INCLUDING  ANY  PAYMENT  FOR  MATERIALS  PERTINENT  TO  THE
PROJECT  WHICH  HAVE  BEEN  DELIVERED  AND  ACCEPTED,  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11725-02-2

S. 6158--A                          2

both in the full amount of the contract. The public owner shall  pay  IN
FULL,  upon requisition from the contractor, for ALL 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] ITS 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.
  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] ITS 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 reflect-
ing  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, WITH REGARD TO SUBCONTRACTORS, less any retained amount
as hereafter described. Failure by the contractor to pay any subcontrac-
tor 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 contrac-
tor, 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  estab-
lished  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 subcon-
tractor 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.  THE CONTRACTOR
SHALL PAY IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR  ALL  MATERIALS
PERTINENT  TO  THE  PROJECT WHICH HAVE BEEN DELIVERED TO AND ACCEPTED AT

S. 6158--A                          3

THE SITE OR OFF-SITE BY A MATERIALMAN.  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] ITS 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  obli-
gation  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.
  S 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b
of  the general municipal law, paragraph (a) of subdivision 1 as amended
by chapter 98 of the laws of  1995  and  subdivision  2  as  amended  by
section  15 of part MM of chapter 57 of the laws of 2008, are amended to
read as follows:
  (a) The contractor shall periodically, in accordance with the terms of
the contract, submit to the public owner and/or [his] ITS agent a requi-
sition 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, NOT INCLUDING  ANY  PAYMENT  FOR  MATERIALS  PERTINENT  TO  THE
PROJECT WHICH HAVE BEEN DELIVERED AND ACCEPTED, 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,  NOT  INCLUDING  ANY
PAYMENT FOR MATERIALS PERTINENT TO THE PROJECT WHICH HAVE BEEN DELIVERED
AND  ACCEPTED, 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 IN FULL, upon requisition from the contractor,
for ALL 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] ITS 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

S. 6158--A                          4

contract  balance  less two times the value of any remaining items to be
completed and an amount necessary to satisfy any claims, liens or  judg-
ments 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  forego-
ing,  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.
  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] ITS 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 reflect-
ing  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, WITH REGARD TO SUBCONTRACTORS, 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 subcon-
tractor 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 subcontrac-
tor 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  subcon-
tractor  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.  THE  CONTRACTOR
SHALL  PAY  IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR ALL MATERIALS
PERTINENT TO THE PROJECT WHICH HAVE BEEN DELIVERED TO  AND  ACCEPTED  AT
THE  SITE  OR  OFF-SITE  BY A MATERIALMAN. However, the contractor shall
retain nothing  from  those  payments  representing  proceeds  owed  the

S. 6158--A                          5

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] ITS 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 obli-
gation 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.
  S 3. Section 756-c of the general business law, as  added  by  chapter
127 of the laws of 2002, is amended to read as follows:
  S  756-c. Retention. 1. By mutual agreement of the relevant parties an
owner may retain a reasonable amount of the contract sum as retainage. A
contractor or subcontractor may also  retain  a  reasonable  amount  for
retainage  so  long  as the amount does not exceed the actual percentage
retained by the owner. Retainage shall be released by the owner  to  the
contractor  no  later  than  thirty days after the final approval of the
work under a construction contract. In the event that an owner fails  to
release  retainage  as  required  by  this article, or the contractor or
subcontractor fails to release a proportionate amount  of  retainage  to
the  relevant  parties  after  receipt  of retainage from the owner, the
owner, contractor, or subcontractor,  as  the  case  may  be,  shall  be
subject  to the payment of interest at the rate of one percent per month
on the date retention was due and owing.
  2. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS  SECTION,
NO PORTION OF ANY PAYMENT DUE AND OWING TO A MATERIAL SUPPLIER FOR MATE-
RIALS  WHICH  HAVE  BEEN  DELIVERED AND ACCEPTED SHALL BE RETAINED BY AN
OWNER, CONTRACTOR OR SUBCONTRACTOR.
  S 4. This act shall take effect on the thirtieth day  after  it  shall
have become a law and shall apply to materials delivered and accepted on
or after such date.

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