New York Prompt Payment Guide and FAQs

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New York Prompt Payment Overview

New York Prompt Payment Requirements


  • Private Jobs
  • Public Jobs
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30
DAYS
Prime Contractors

For Prime Contractors, progress payment must be made within 30 days of approved invoice (invoice must be approved within 12 days of receipt). Final payment due within 30 days of final approval. Both may be modifed by contract.


7
DAYS
Subcontractors

For Subcontractors, payment due within 7 days after payment received from above.


7
DAYS
Suppliers

For Suppliers, payment due within 7 days after payment received from above.


1%
/ MONTH
Interest & Fees

Interest at 1% month

30
DAYS
Prime Contractors

For Prime (General) Contractors, generally, payment due 30 days after invoice; however, modified for some projects: payment due within 75 days of invoice for highway project. For New york City projects, progress payments due within 30 days of invoice, and 60 days after invoice for final/retianage payment.


7
DAYS
Subcontractors

For Subcontractors, payment due within 7 days after payment received from above.


7
DAYS
Suppliers

For Suppliers, payment due within 7 days after payment received from above.


YES
Interest & Fees

Interest at statutory rate

Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.

Projects Covered by Prompt Payment in New York

The state of New York’s prompt payment provisions are split into two sections, covering both private and public projects. These statutes govern the timing of all payments on construction projects, and impose penalties for late payment in the form of interest.

Private Projects

Private projects in New York are governed by NY Gen. Bus. Law §§756 et seq. These statutes apply to most private construction projects whose aggregate cos is $150,000 or more. There are some exceptions concerning residential projects. The regulations will not apply to residential projects of 3 or less units, residential tract developments of 100 or less 1-2 family dwellings, or any residential project where the aggregate size is 4,500 sq. feet or less.

Payment Deadlines for Private Projects

On private construction projects, once a prime contractor has submitted a pay request to the owner, the owner will have 42 days to make progress payment. These 42 days include 12 days to approve the request, and then 30 days to release payment. Final payments to the prime contractor must be made within 30 days of final approval of the project. These payment deadlines may be modified by the contract between the property owner and the prime contractor. Also, if there is a lender on the project, and they fail to disburse the loan funds in a timely manner, the owner will have a time extension.

Once the prime contractor has received payment from the owner, they must release payment to their subcontractors and suppliers within 7 days. This same 7-day deadline applies to all other payments down the chain.

Penalties for Late Payment on Private Projects

New York allows payments to be properly withheld under certain conditions. If none of these conditions exist, and payment is either late or wrongfully withheld, interest will accrue at a rate of 1% per month until the payment is made; or at a higher rate established in the contract.

Public Projects

New York has multiple sets of statutes that regulate public works projects, depending on which public entity contracted the project. These statutes are found in NY State Fin. Law §§139-f and 179-f, Gen. Mun. Law §106-b, NYC Procurement Policy Board Rules §4-06, and Pub. Auth. Law §2880.

Payment Deadlines for Public Projects

State Contracts

Once the state agency has received a proper request for payment, they must pay the prime contractor within 30 calendar days. For small businesses, this deadline is reduced to just 15 days excluding legal holidays, and for highway construction contracts, this deadline is increased to 75 calendar days. Upon the prime contractor’s receipt of payment from the state agency, they must pass the payments along to their subcontractors and suppliers within 7 calendar days.

Municipal Contracts (excluding New York City)

Municipal agencies must make payment to the prime contractors within 30 calendar days of receipt of a proper request for payment. If the project requires approval by an elected official, this deadline is extended to 45 days. As for all other payments to subcontractors and suppliers, those must be made within 7 calendar days of the higher-tiered party’s receipt of payment.

New York City Contracts

Prompt payment on NYC public works projects are measured from the “Invoice Received or Acceptance Date” (IRA Date). Once the invoice is approved, the city must make payment within 30 days of the IRA date. As for all other payments to subcontractors and suppliers, those must be made within 7 calendar days of the higher-tiered party’s receipt of payment.

Public Authority Contracts

The public authority must make payment to the prime contractor within 30 calendar days of receipt of a proper invoice. If there is any objection to the submitted invoice, the public authority must notify the contractor within 15 days of receipt. As for payments to subcontractors and material suppliers, those will be governed by the contract terms, as they aren’t covered under the statute.

Penalties for Late Payment on Public Projects

Some of the statutes provide circumstances when payments can be properly withheld. If none of these reasons exist, and payment is late or wrongfully withheld, interest will begin accruing on the day payment becomes late. For most types of projects, interest will accrue at a rate equal to the interest rate for overpayment set by the State Commissioner of Taxation and Finance. For NYC municipal projects, the interest rate will be equal to the rate jointly set by the city Comptroller and the Office of Management and Budget, which is set twice a year and published on the NYC Procurement Policy Board website.

New York Prompt Payment Frequently Asked Questions

New York Prompt Payment Private Projects FAQs

Do I have to send a letter or file anything to qualify for Prompt Payment Penalties or Remedies in New York?

In order for the provisions of the New York prompt pay act to apply, the party requesting payment must submit an approved invoice for labor and/or materials furnished.

Can I include Prompt Payment Fees in my New York Mechanics Liens Claim or Bond Claim?

No. New York doesn’t allow miscellaneous amounts to be included on the face of a mechanics lien.

If I am paid late according to Prompt Payment Statutes, can I obtain interest or other Penalty Payments?

In New York, interest begins to accrue at a rate of 1% per month, or, if the contract provides for a higher rate, interest accrues at the higher contractual rate.

Are there reasons for which payment may be withheld past the general deadline?

New York allows payments to be withheld for the following reasons:

  1. Unsatisfactory or disputed progress;
  2. Defective work that is not remedied;
  3. Disputed work materials;
  4. Noncompliance with the contract;
  5. Failure to make required payments to parties below;

What is the best practice for making a demand to a non-paying party to get Prompt Payment Fees?

Sending a notice of intent to lien and prompt payment demand is generally the best method for encouraging parties to make payment.

New York Prompt Payment Public Projects FAQs

Can I include Prompt Payment Fees in my New York Mechanics Liens Claim or Bond Claim?

No. New York doesn’t allow miscellaneous amounts to be included on the face of a bond claim, or lien on contract funds.

Do I have to send a letter or file anything to qualify for Prompt Payment Penalties or Remedies in New York?

New York law regarding prompt payment requirements on public projects is complex and contained within several different statutory sections. The requirements are segmented between state agencies, municipal agencies, and public authorities. Generally speaking, however, a proper invoice or request for payment is necessary for the prompt payment requirements to apply.

If I am paid late according to Prompt Payment Statutes, can I obtain interest or other Penalty Payments?

In New York, interest begins to accrue upon the payment becoming late, with no specific additional notice required.

Are there reasons for which payment may be withheld past the general deadline?

New York allows payments to be withheld for the following reasons:

State Agencies:

  1. If an audit determines that there is reasonable cause to believe that payment may not properly be due;
  2. If an audit or inspection is required prior to payment to determine the resources applied or used by a contractor in fulfilling the terms of the contract;
  3. If the necessary state government appropriation required to authorize payment has not yet been enacted;
  4. If the cash balance of the fund or sub-fund from which the payment is to be made is insufficient to finance the payment;
  5. If a proper invoice must be examined by the federal government prior to payment;
  6. If the labor and/or material was not furnished in compliance with the contract;
  7. If the required payment date is modified as a result of defects in (a) the goods, property, or services, (b) the invoice, or (c) any other suspected impropriety;
  8. Failure to properly submit the necessary documents and other submissions required by contract, statute, or other law.

Municipal Agencies:

If amounts are necessary to be withheld to satisfy claims, liens, or judgments against the party requesting payment
Public Authorities:

Amounts may be withheld if there is a legally enforceable unpaid debt from the party requesting payment to the paying party.

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New York Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of New York’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. New York’s specific laws can be found in: N.Y. Gen. Bus. Law §§ 756 et seq., NY State Fin. Law §§139-f and 179-f, Gen. Mun. Law §106-b, R.C.N.Y. §4-06, and Pub. Auth. Law §2880, which are reproduced below.

Prompt Payment Statute on Private Projects

§ 756: Definitions

As used in this article:

1. “Construction contract” means a written or oral agreement for the construction, reconstruction, alteration, maintenance, moving or demolition of any building, structure or improvement, or relating to the excavation of or other development or improvement to land, and where the aggregate cost of the construction project including all labor, services, materials and equipment to be furnished, equals or exceeds one hundred fifty thousand dollars.

For the purposes of this article a construction contract shall not include any such contract made and awarded by the state, any public department, any public benefit corporation, any public corporation or official thereof, or a municipal corporation or official thereof for construction, reconstruction, alteration, repair, maintenance, moving or demolition of any public works project nor any contract with a contractor or subcontractor which is part of such project; or any such contract the purpose of which is the construction, reconstruction, alteration, repair, maintenance, moving or demolition of an individual one, two or three family residential dwelling or a residential tract development of one hundred or less one or two family dwellings, or any residential construction project where the aggregate size of such project is four thousand five hundred square feet or less, or any residential project of fewer than seventy-five units which receives financial assistance from the federal government, the state or a municipal entity designed for households earning an average of one hundred twenty-five percent of the housing and urban development agency area median income.

2. “Contractor” means any person, firm, partnership, corporation, association, company, organization or other entity, including a construction manager, or any combination thereof, which enters into a construction contract with an owner.

3. “Owner” means any person, firm, partnership, corporation, company, association or other organization or other entity, or a combination of any thereof, (with an ownership interest, whether the interest or estate is in fee, as vendee under a contract to purchase, as lessee or another interest or estate less than fee) that causes a building, structure or improvement, new or existing, to be constructed, altered, repaired, maintained, moved or demolished or that causes land to be excavated or otherwise developed or improved.

4. “Subcontractor” means any person, firm, partnership, corporation, company, association, organization or other entity, or any combination thereof, which is a party to a contract with a contractor or another subcontractor to perform a portion of work pursuant to a construction contract.

5. “Material supplier” means any person, firm, partnership, corporation, company, association, or other organization or entity, or any combination thereof, which is party to a contract with an owner, contractor or subcontractor, for the provision of construction materials and/or equipment necessary to the completion of a construction contract.

6. “Notice.” Any notice by the owner, contractor or subcontractor under this article shall be sent by facsimile and reputable overnight courier and shall be deemed effective on the date sent.

§ 756-A: Obligations

It is the policy and purpose of this article to expedite payment of all monies owed to those who perform contracting services pursuant to construction contracts. Except as otherwise provided in this article, the terms and conditions of a construction contract shall supersede the provisions of this article and govern the conduct of the parties thereto.

1. Billing cycle. The parties to a construction contract may, by mutual agreement, establish a billing cycle for the submission of invoices requesting payment for work performed pursuant to a construction contract. In the absence of an agreement by the parties as to the billing cycle, the billing cycle shall be the calendar month within which the work is performed.

2. Invoices

(a) A contractor shall be entitled to invoice the owner for interim payments at the end of the billing cycle. A contractor shall be entitled to submit a final invoice for payment in full upon the performance of all the contractor’s obligation under the contract.

(i) Upon delivery of an invoice and all contractually required documentation, an owner shall approve or disapprove all or a portion of such invoice within twelve business days. Owner approval of invoices shall not be unreasonably withheld nor shall an owner, in bad faith disapprove all or a portion of an invoice. If an owner declines to approve an invoice or a portion thereof, it must prepare and issue a written statement describing those items in the invoice that are not approved. An owner may decline to approve an invoice or portion of an invoice for:

  1. Unsatisfactory or disputed job progress
  2. Defective construction work or material not remedied
  3. Disputed work materials
  4. Failure to comply with other material provisions of the construction contract
  5. Failure of the contractor to make timely payments for labor including collectively bargained fringe benefit contributions, payroll taxes and insurance, equipment and materials, damage to the owner, or reasonable evidence that the construction contract cannot be completed for the unpaid balance of the construction contract sum
  6. Failure of the owner’s architect to certify payment for any or all of the reasons set forth in this section so long as the reasons are included in the owner’s written statement of disapproval.

(ii) Upon delivery of an invoice and all contractually required documentation, a contractor or subcontractor shall approve or disapprove all or a portion of such invoice within twelve business days. Contractor and subcontractor approval of invoices shall not be unreasonably withheld nor shall a contractor or subcontractor, in bad faith, disapprove all or a portion of an invoice. Nothing in this section shall prohibit the contractor or subcontractor, at the time of application to the owner or contractor, from withholding such application to the owner or contractor for payment to the subcontractor or material supplier for:

  1. Unsatisfactory or disputed job progress;
  2. Defective construction work or material not remedied;
  3. Disputed work;
  4. Failure to comply with other material provisions of the construction contract; or
  5. Failure of the subcontractor to make timely payments for labor including collectively bargained fringe benefit contributions; payroll taxes and insurance, equipment and materials, damage to contractor or another subcontractor or material supplier, or reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum.

(b) Nothing in this subdivision shall authorize the withholding of an application to the owner or contractor for the payment to a subcontractor or material supplier when due to a delay in job progress by the owner, contractor or another subcontractor or material supplier other than the applicant or applicant’s subcontractor or material supplier.

3. Payment

(a) The owner’s payment of a contractor’s interim and final invoices shall be made on the basis of a duly approved invoice of work performed and the material supplied during the billing cycle.

(i) Unless the provisions of this article provide otherwise, the owner shall pay the contractor strictly in accordance with the terms of the construction contract

(ii) Payment of an interim or final invoice shall be due from the owner not later than thirty days after approval of the invoice

(iii) If payment by the owner is contingent upon lender approval, payment of a contractor’s interim or final invoice or the amount of loan proceeds disbursed by the lender for payment of the contractor’s interim or final invoice shall be due from the owner seven days after receipt by the owner of good funds except where the provisions of section seven hundred fifty-six-d of this article applies.

(iv) An owner may withhold from an interim payment only an amount that is sufficient to pay the costs and expenses the owner reasonably expects to incur in order to cure the defect or correct any items set forth in writing pursuant to subparagraph (i) of paragraph (a) of subdivision two of this section, or in the alternative, to withhold an amount not to exceed the line item amount appearing in the agreed schedule of values together with any change orders, additions and/or deletions, if such schedule has been previously submitted, and/or an amount sufficient to cover liquidated damages as established in an agreed upon schedule in the construction contract.

(b) The contractor or subcontractor’s payment of subcontractor or material supplier’s interim or final invoice shall be made on the basis of a duly approved invoice of the work performed and materials supplied during the billing cycle.

(i) Unless the provisions of this article provide otherwise, the contractor or subcontractor shall pay the subcontractor strictly in accordance with the terms of the construction contract. Performance by a subcontractor in accordance with the provisions of its contract shall entitle it to payment from the party with which it contracts. Notwithstanding this article, where a contractor enters into a construction contract with a subcontractor as agent for a disclosed owner, the payment obligation shall flow directly from the disclosed owner as principal to the subcontractor and through the agent.

(ii) When a subcontractor has performed in accordance with the provisions of its construction contract, the contractor shall pay to the subcontractor, and each subcontractor shall in turn pay to its subcontractors, the full or proportionate amount of funds received from the owner for each subcontractor’s work and materials based on work or services provided under the construction contract, seven days after receipt of good funds for each interim or final payment, provided all contractually required documentation and waivers are received.

(iii) A contractor or subcontractor may withhold amounts received from an owner in connection with an interim payment due to a subcontractor or material supplier only such sums that are sufficient to pay the direct expenses as are reasonable to correct deficiencies identified pursuant to subparagraph (ii) of paragraph (a) of subdivision two of this section, or in the alternative, to withhold an amount not to exceed the line item amount appearing in the agreed schedule of values, together with any change order, additions or deletions, if such schedule has been previously submitted.

(iv) If a contractor, after submitting an invoice to an owner under a construction contract, but before making a payment to a subcontractor or material supplier for the subcontractor’s or material supplier’s performance covered by such invoice, discovers that all or a portion of the payment otherwise due to the subcontractor or material supplier is subject to withholding from the subcontractor or material supplier in accordance with the construction contract and the conditions set forth in subparagraph (ii) of paragraph (a) of subdivision two of this section, then the contractor shall:

  1. As soon as practicable upon ascertaining the cause giving rise to a withholding, but prior to the due date for a subcontractor or material supplier payment, furnish to the subcontractor or material supplier and the owner written notice of withholding specifying conditions for withholding payment and identifying the amount to be withheld;
  2. Reduce the subcontractor’s or material supplier’s interim payment by an amount not to exceed the amount specified in the notice of withholding; and
  3. Pay the subcontractor or material supplier amounts withheld within seven days after correction of the identified subcontractor or material supplier performance deficiency and receipt of all required documentation and waivers, unless the funds therefor must be obtained from the owner’s next interim payment due to a reduction in the contractor’s billing directly resulting from the subcontractor’s or material supplier’s performance deficiency identified in the notice of withholding.

(c) A written notice of any withholding under this subdivision shall be issued to a subcontractor or material supplier specifying:

(i) The amount to be withheld;

(ii) The specific causes for withholding under the terms of the construction contract and pursuant to this subdivision;

(iii) The remedial actions necessary to be taken by the subcontractor or material supplier in order to receive payments of the amounts withheld; and

(iv) The documentation and waivers required.

4. Notice. A contractor or subcontractor shall disclose to a subcontractor, at the time the construction subcontract is entered into, the due date for receipt of payments to the contractor or subcontractor from the owner or the contractor as the case may be. If a contractor or subcontractor fails to accurately disclose the due date to a subcontractor, the contractor or subcontractor shall be obligated to pay the subcontractor as though the due dates established in paragraph (a) of subdivision three of this section were met by the owner. In addition, upon written request of a subcontractor, the owner shall provide notice to such subcontractor within five days of making any interim or final payment to the contractor. The subcontractor’s request shall remain in effect for the duration of the subcontractor’s work on the project.

§ 756-B: Remedies

1. (a) If any interim or final payment to a contractor is delayed beyond the due date established in paragraph (a) of subdivision three of section seven hundred fifty-six-a of this article, the owner shall pay the contractor interest beginning on the next day at the rate of one percent per month or fraction of a month on the unpaid balance, or at a higher rate consistent with the construction contract. (b) Notwithstanding any contrary agreement, if any interim or final payment to a subcontractor is delayed beyond the due date established in paragraph (b) of subdivision three of section seven hundred fifty-six-a of this article the contractor or subcontractor shall pay its subcontractor interest, beginning on the next day, at the rate of one percent a month or fraction of a month on the unpaid balance, or at a higher rate consistent with the construction contract. 2. (a) (i) If an owner fails to approve or disapprove an invoice within the time limits established in subparagraph (i) of paragraph (a) of subdivision two of section seven hundred fifty-six-a of this article, or to pay the contractor the undisputed invoice amount within the time limits provided by paragraph (a) of subdivision three of section seven hundred fifty-six-a of this article, the contractor may suspend contractually required performance, only after providing the owner written notice and an opportunity to cure consistent with subparagraph (ii) of this paragraph. (ii) A contractor intending to suspend performance on the construction contract for failure of the owner to make timely payments or approvals within the time limits provided by this article must provide the owner written notice at least ten calendar days before the contractor’s intended suspension. Such notice shall: (A) inform the owner that payment for undisputed invoice amounts have not been received; and (B) state the intent of the contractor to suspend performance for non-payment. If after the tenth calendar day following written notice the owner has not cured the deficiency, the contractor may suspend performance. (iii) A contractor shall not be deemed in breach of the construction contract for suspending performance pursuant to this section. (b)(i) A subcontractor may suspend contractually required performance if any or all of the occurrences outlined in clauses (A), (B) and (C) of this subparagraph occur and only after providing written notice and an opportunity to cure consistent with subparagraph (ii) of this paragraph: (A) If an owner fails to make timely payments for undisputed invoices within the time limits established by subdivision three of section seven hundred fifty-six-a of this article for the subcontractor’s work and the contractor also fails to pay the subcontractor for the approved work; (B) If an owner pays the contractor within the time limits established by subdivision three of section seven hundred fifty-six-a of this article for undisputed invoices for work performed by the subcontractor but the contractor fails to make payment to the subcontractor within the time frames established by this article for the subcontractor’s work; (C) If an owner fails to approve or disapprove a portion of contractor’s invoice for work performed by the subcontractor within the time limits established in paragraph (a) of subdivision two of section seven hundred fifty-six-a of this article; (D) If a contractor or subcontractor fails to approve or disapprove a subcontractor’s invoice within the time limits established in paragraph (b) of subdivision three of section seven hundred fifty-six-a of this article; or (E) If an owner fails to approve portions of the contractors’ billing for work performed by the subcontractor within the time limits established by this article and the reasons for such failure are not the fault of or directly related to the subcontractor’s work. (ii) A subcontractor intending to suspend performance for failure to receive timely payments within the time limits established pursuant to this article must provide both the owner and the contractor written notice at least ten calendar days before the subcontractor’s intended suspension. Such notice shall: (A) inform the owner and the contractor that payment for undisputed billing amounts have not been received; and (B) state the intent of the contractor to suspend performance for non-payment. If after the tenth calendar day following written notice either the owner or the contractor has not cured the deficiency, the subcontractor may suspend performance and/or attempt to resolve in compliance with subdivision three of this section. (iii) A subcontractor shall not be deemed in breach of the construction contract for suspending performance pursuant to this section. (iv) (A) A contractor or subcontractor that suspends performance as provided in this section shall not be required to furnish further labor, materials or services until the contractor or subcontractor is paid the undisputed invoice amount at the time period for completion as provided in the construction contract, or a final determination has been made in compliance with subdivision three of this section and complied with. All of the time frames established within this section shall be extended for the length of time performance was suspended. Payment of documented actual costs incurred for re-mobilization resulting from suspension shall be negotiated between the parties. (B) In the event of suspension of a construction contract, as provided in this article, all materials, equipment, tools, construction equipment and machinery located at the job site shall remain the sole and exclusive property of the contractor or subcontractor and shall be removed from the job site, if necessary, within a reasonable period of time. Access to the contractor’s or subcontractor’s property shall not be unreasonably withheld. 3. (a) Upon receipt of written notice of a complaint (i) that an owner has violated the provisions of this article; (ii) that a contractor has violated the provisions of this article; (iii) where a contractor alleges a subcontractor has violated the provisions of this article; (iv) where a subcontractor alleges a contractor has violated the provisions of this article; (v) where a subcontractor alleges that another subcontractor has violated the provisions of this article; (vi) where a contractor or subcontractor alleges a material supplier has violated the provisions of this article; or (vii) where a material supplier alleges a contractor or subcontractor has violated the provisions of this article; the parties shall attempt to resolve the matter giving rise to such complaint. (b) The written notice required under this section shall be delivered at or sent by any means that provides written, third-party verification of delivery to the last business address known to the party giving notice. (c) If efforts to resolve such matter to the satisfaction of all parties are unsuccessful, the aggrieved party may refer the matter, not less than fifteen days of the receipt of third party verification of delivery of the complaint, to the American Arbitration Association for an expedited arbitration pursuant to the Rules of the American Arbitration Association. (d) Upon conclusion of the arbitration proceedings, the arbitrator shall submit to the parties his or her opinion and award regarding the alleged violation. (e) The award of the arbitrator shall be final and may only be vacated or modified as provided in article seventy-five of the civil practice law and rules upon an application made within the time provided by section seventy-five hundred two of the civil practice law and rules.

§ 756-C: Retention

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.

§ 756-D: Exceptions for Failure of Lender to Disburse Funds

The date of payment required by the owner, the contractor and/or subcontractor pursuant to section seven hundred fifty-six-a of this article, shall be extended to the seventh day after the owner, contractor or subcontractor, as the case may be, receives loan proceeds necessary to make such payment in the event that: 1. the owner, contractor or subcontractor, as the case may be, has obtained a loan intended to pay for all or part of the construction contract; 2. the owner, contractor or subcontractor, as the case may be, has timely requested disbursement of proceeds from that loan; and 3. the lender is legally obligated to disburse such proceeds to the owner, contractor or subcontractor, as the case may be, but has failed to do so in a timely manner.

§ 756-E: Exceptions for Lower Manhattan Reconstruction

The provisions of this article shall not apply to any construction contracts for the reconstruction, alteration, moving or demolition of any building, structure or improvement, or relating to the excavation of or any development or improvement to land in and around the world trade center necessitated by the September eleventh, two thousand one terrorist attack on such center.

§ 757- Void Provisions

The following provisions of construction contracts shall be void and unenforceable: 1. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract, with the exception of a contract with a material supplier, that makes the contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the contract to be conducted in another state. 2. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract stating that a party to the contract cannot suspend performance under the contract if another party to the contract fails to make prompt payments under the contract. 3. A provision, covenant, clause or understanding in, collateral to or affecting a construction contract stating that expedited arbitration as expressly provided for and in the manner established by section seven hundred fifty-six-b of this article is unavailable to one or both parties. 4. A provision, covenant, clause or understanding in collateral to or affecting a construction contract establishing payment provisions which differ from those established in subdivision three of section seven hundred fifty-six-a and section seven hundred fifty-six-b as applicable.

§ 758- Severability

If any clause, sentence, paragraph, subdivision or part of this article, or the application thereof to any person or circumstance, shall be adjudged by any court of competent jurisdiction to be invalid or unconstitutional, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, subdivision or part of this article, or in its application to the person or circumstance, directly involved in the controversy in which such judgment shall have been rendered.

Prompt Payment Statute on Public Projects

NY State Fin. Law § 139-F: Payment on Public 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. 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

NY State Fin. Law § 179-F: Determination of eligibility for payment of interest on amounts owed to contractors

1. Each state agency which is required to make a payment from state 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 in accordance with this article 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 of section one hundred seventy-nine-g of this article is less than ten dollars. 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 state agency and the contractor. Such pro rata share of interest shall be computed daily until such payments are made to the subcontractors and materialmen. 2. The required payment date shall be thirty calendar days, excluding legal holidays, or in the case of final payments on highway construction contracts seventy-five calendar days, excluding legal holidays, after receipt of an invoice for the amount of the contract payment due; except when: (a) the state comptroller in the course of his audit determines that there is reasonable cause to believe that payment may not properly be due, in whole or in part; (b) in accordance with specific statutory or contractual provisions, payment must be preceded by an inspection period or by an audit to determine the resources applied or used by a contractor in fulfilling the terms of the contract; (c) the necessary state government appropriation required to authorize payment has yet to be enacted; (d) the cash balance of the fund or sub-fund from which the payment is to be made is insufficient to finance the payment; (e) a proper invoice must be examined by the federal government prior to payment; (f) the goods or property have not been delivered or the services have not been rendered by the contractor in compliance with the terms or conditions of the contract; (g) the required payment date is modified in accordance with subdivision three of this section; or (h) in the case of final payments on highway construction contracts the commissioner of transportation determines that the contractor has failed to properly submit the necessary documents and other submissions prescribed by the contract specifications and requirements, by the provisions of subdivision eight of section thirty-eight of the highway law, and by all other applicable state and federal laws in order to enable the department of transportation to process the final payment properly and expeditiously. Any time taken to satisfy or rectify any of the types of conditions described in paragraphs (a) through (f) or (h) of this subdivision shall extend the required payment date by an equal period of time. 3. Each state agency shall have fifteen calendar days after receipt of an invoice by the state agency at its designated payment office to notify the contractor of (a) defects in the delivered goods, property, or services, (b) defects in the invoice, or (c) suspected improprieties of any kind; and the existence of such defects or improprieties shall prevent the commencement of the time period specified in subdivision two of this section. When a state agency fails to notify a contractor of such defects or suspected improprieties within fifteen calendar days of receiving the invoice, the number of days allowed for payment of the corrected proper invoice will be reduced by the number of days between the fifteenth day and the day that notification was transmitted to the contractor. If the state agency, in such situations, fails to provide reasonable grounds for its contention that a defect or impropriety exists, the required payment date shall be calculated from the date of receipt of an invoice. 4. Notwithstanding any provision of the public service law or any tariffs promulgated pursuant to that law to the contrary, the provisions of this article shall provide the sole basis for determining and making interest payments on invoices submitted by public utilities to state agencies. 5. A proper invoice submitted by the contractor shall be required to initiate any payment, except where the contract provides that the contractor will be paid at predetermined intervals without having to submit an invoice for each such scheduled payment, in which case the state agency responsible for making the purchase shall submit an approvable voucher to the state comptroller for the payment that is due and, for the purposes of determining eligibility for payment of interest and subject to the exception and time-to-rectify provisions of subdivision two of this section, the required payment date shall be the payment due date specified in accordance with the contract.

Gen. Mun. Law § 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) 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.

R.C.N.Y. §4-06: Prompt Payment

(a) Policy. It is the policy of the City of New York to process contract payments efficiently and expeditiously so as to assure payment in a timely manner to firms and organizations that do business with the City.

(b) Definitions. In this section, the following words have the meanings indicated.

Applicable Interest Rate. Interest shall be the maximum amount allowed by law or such lower uniform interest rate as may be set jointly by the Comptroller and OMB.

Designated Billing Office. The office or employee designated in the contract to which a proper invoice is to be submitted by a contractor.

Discount Date. The date by which, if payment is made, a specified invoice payment reduction, or discount, can be taken.

Invoice Received or Acceptance Date (“IRA Date”) – Goods and Services.

(i) For purposes of determining a payment due date for goods and services and the date on which interest will begin to accrue and for no other purpose, an invoice received or acceptance date (“IRA date”) is defined as the later of:
(A) the date a proper invoice is actually received by the designated billing office if the agency annotates the invoice with the date of receipt at the time of receipt, or
(B) the seventh day after either the date on which the goods are actually delivered or the services are actually performed, unless:
((a)) the agency has actually accepted and approved the goods or the services before the seventh day (in which case the acceptance date shall substitute for the seventh day after the delivery or performance date), or
((b)) a longer acceptance period is required by law or included in the contract to afford the agency a practicable opportunity to inspect, test, and accept the goods or evaluate the services (in which case the date of actual acceptance or the date on which such longer acceptance period ends shall substitute for the seventh day after the delivery or performance date).

Invoice Received or Acceptance Date (“IRA Date”) – Construction and Construction-Related Services. For construction, for purpose of determining a payment due date and the date on which interest will begin to accrue and for no other purpose, an invoice received or acceptance date (“IRA date”) is defined as the date when the field engineer certifies on the payment requisition that the work has been accepted.

Proper Invoice. A written request for a contract payment that is submitted by a vendor in good faith setting forth the description, price, and quantity of goods or services delivered or rendered, in such form and supported by such documentation as an agency may require, and any other documents required by contract.

Required Payment Date or Interest Eligibility Date. The date by which a contract payment must be made in order for an agency not to become liable for interest payments.

Receiving Report. This report may be used by a receiving unit to inform others, such as the purchasing, warehousing, accounting, and quality assurance departments, of the receipt of goods purchased or acceptance of services rendered. A receiving unit may, in some cases, also verify that goods and services conform to specification requirements and may include on the receiving report evidence of the acceptance of the goods and services.

Retainage. The right of the City pursuant to a contract and/or law to withhold from the invoice and retain a specified percentage of payment until such time as it is to be released pursuant to the contract and/or law.

(c) Standards for prompt payment.

(1) Starting the payment period. The period available to an agency to make a timely payment of an invoice without incurring an interest penalty shall begin on the IRA date.

(2) Required payment date. The required payment date shall be:
(i) thirty days; or
(ii) in the case of contract changes, sixty days; or
(iii) in the case of substantial completion payments or final payments on construction contracts, sixty days after the IRA date, except as described in paragraph (3) below; or
(iv) except as provided in subdivision (d)(4)(iv), the required payment date for the release of retained amounts shall be in accordance with the contract and law, and thirty days after the submission of a proper invoice for the return of the retained amounts.

(3) Extension of the required payment date. The date by which a contract payment may be made without the payment of interest may be extended by the time taken to satisfy or rectify any of the following:

(i) the Comptroller, in the course of an audit, determines that there is reasonable cause to believe that payment may not be properly due, in whole or in part, due to fault of the vendor;

(ii) the necessary City, State, or federal government appropriation required to authorize payment has not been made;

(iii) a proper invoice must be examined by the State or federal government prior to payment;

(iv) the goods have not been delivered or the construction or services have not been performed in compliance with the terms and conditions of the contract;

(v) in the case of substantial or final payments on construction contracts, the ACCO determines that the vendor has failed to properly submit the necessary documents and other submissions prescribed by the contract specifications and requirements or by law in order to enable the agency to process the final payment properly and expeditiously; and

(vi) when the required payment date falls on a weekend or City holiday, the required payment date shall be extended to the next following business day.

(4) Proper invoice required to initiate payment. A proper invoice submitted by the vendor shall be required to initiate payment, except where the contract provides that the vendor will be paid at predetermined intervals without having to submit an invoice for each scheduled payment.

(5) Receipt and acceptance of goods and services. Agencies shall ensure that receipt and acceptance are executed within seven days unless otherwise specified in the contract. Receiving reports and invoices shall be stamped or otherwise annotated with the date upon receipt in the designated billing office.

(d) Interest eligibility and computation.

(1) Eligibility. When payments are made after the required payment date, interest shall be paid to the vendor based on the IRA date. Interest shall be computed at the maximum amount allowed by law, or such lower uniform rate set jointly by the Comptroller and OMB. Such interest rate shall not apply to contracts where, as part of the contract obligation, the City is required to pay an interest rate other than the rate determined by the Comptroller and OMB.

(2) The interest rate shall be reviewed every six months by the Comptroller and OMB to determine its continued applicability. The new interest rate for each upcoming six-month period, i.e., July 1 through December 31/January 1 through June 30, shall take effect on payments made on or after the effective date and shall be published by the CCPO in the City Record as soon as is practicable after such determination is made, not to exceed thirty days. The CCPO shall notify in writing all ACCOs of this action.

(3) Interest shall not be paid where:
(i) payment on the invoice is delayed because of a disagreement between an agency and a vendor over the amount of the payment and other issues concerning compliance with the terms of a contract. Payments shall be made, and as required by these Rules, interest shall be paid, on undisputed amounts;
(ii) the failure to make the contract payment is the result of a lien, attachment, or other legal process against the money due to the vendor;
(iii) amounts are temporarily withheld in accordance with the contract; or
(iv) the amount of the interest payment is less than twenty-five dollars.

(4) The following types of payments are ineligible for interest:
(i) payments under the eminent domain law;
(ii) payments to the federal government, to any state or City agency or their instrumentalities, to any duly constituted unit of local government or any of their related instrumentalities, to any public authority or public benefit corporation;
(iii) payment in a situation where the City takes a deduction permitted by law or contract against all or part of a payment due the vendor; or
(iv) where, for reasonable cause, the City determines not to release or to reduce retainage upon completion or substantial completion of a construction contract.

(5) Interest that is due shall be paid within twenty days of payment of the original invoice. The failure to make an interest payment within such twenty days shall not generate additional interest.

(6) The Comptroller and OMB may, for a limited period of time not to exceed thirty days per calendar year, jointly defer the City’s obligation to pay interest when the City is experiencing a shortage of cash. In such event, the CCPO shall provide, at the earliest practicable opportunity, written notice to ACCOs of this action and its expected duration. Notice of this action shall be published by the CCPO in the City Record as soon as is practicable after such determination is made, not to exceed thirty days. The CCPO shall provide similar written notice of subsequent action either to extend or cancel this period of deferral.

(e) Additional requirements for construction and construction-related services contracts.

(1) Progress payment. An agency may not approve a request for a progress payment unless the request includes:
(i) substantiation of the amounts requested, including:
(A) an itemized list of the amounts requested related to the various elements of work required by the contract,
(B) a listing of the amount included for work performed by each subcontractor under the contract,
(C) a listing of the total amount of each subcontract under the contract,
(D) a listing of the amounts previously paid to each such subcontractor under the contract, and
(E) additional supporting data in a form or detail required by the contract or the resident engineer;
(ii) certification by the prime contractor, that:
(A) the amounts requested are only for performance in accordance with the specifications, terms, and conditions of the contract;
(B) payments to subcontractors and vendors have been made from previous payments received under the contract, and timely payments will be made from the proceeds of the payment covered by the certification, in accordance with their subcontract agreements and the requirements of these Rules; and
(C) the application does not include any amounts that the prime contractor intends to withhold or retain from a subcontractor or vendor in accordance with the terms and conditions of their subcontract/agreement except as may be allowed.

(2) Subcontracts.
(i) All construction contracts awarded by the City shall include:
(A) a payment clause that obligates the prime contractor(s) to pay each subcontractor and vendor (including a materials vendor) not later than seven days after receipt of payment out of amounts paid to the contractor by the City for work performed by the subcontractor or supplier under that contract and that provides for the payment of interest by the prime contractor in accordance with Section 106-b of the New York State General Municipal Law on amounts not timely paid to a subcontractor, and
(B) a clause requiring the prime contractor to include in each of its subcontracts a provision requiring each subcontractor to include the same payment clause in their contracts with each lower-tier subcontractor or vendor.
(ii) If a prime contractor is paid interest earned due to late payments by an agency, the proportionate share of that interest shall be forwarded by the prime contractor to each of its subcontractors and vendors.

(f) Determination of appropriations against which interest penalties shall be charged. Except where otherwise required by law, an interest payment required by these Rules shall be paid from the agency expense budget of the agency awarding the contract, provided however that if the obligation to make an interest payment is incurred in whole or in part due to another agency’s involvement in the payment process, then the portion of the total interest payment that is attributable to delays by that agency shall be charged to that agency’s miscellaneous budget.

(g) Responsibilities. Each Agency Head is responsible for the following:
(1) assuring timely payments and the payment of interest penalties where required;
(2) publishing lists of designated agency contacts within their payment centers or finance offices to provide vendors with assistance in determining the status of their invoices;
(3) issuing internal instructions, as necessary, to implement these Rules. Such instructions shall include provisions for monitoring the causes of any interest penalties incurred, taking necessary corrective or disciplinary action, and dealing with inquiries from vendors;
(4) assuring that effective control systems are established and maintained to provide reasonable assurance that administrative activities required under these Rules are effectively and efficiently carried out;
(5) assuring that inspectors general and internal auditors periodically review implementation, as they and their Agency Head deem appropriate. Copies of reports on audits and reviews should be provided to the CCPO and Comptroller upon issuance.
(6) establishing a quality control program to assess performance of payment systems and provide a reliable way to estimate payment performance.

(h) Reporting Requirements. PPB shall coordinate and publish an annual prompt payment performance report detailing each agency’s performance pursuant to Charter Section 332. PPB shall additionally make cumulative prompt payment performance statistics available upon request. All reports shall be distributed to the CCPO, OMB, and Comptroller and shall be posted on the City’s website in a location that is accessible by the public simultaneously with their publication.
(1) Report contents. The annual prompt payment report shall contain the following information for both expense and capital expenditures:
(i) agency performance in descending order by percentage of on-time payments,
(ii) amount and percentage paid by the “Required Payment Date” or “Interest Eligibility Date” by agency in descending order as contrasted with the total amount eligible for payment,
(iii) distribution of interest penalties paid by agencies as a result of late payments, and
(iv) trend information as to how agencies are performing as compared with previous time periods, i.e., past year, past six months, quarter to quarter.

NY Pub. Auth. Law § 2880: Prompt Payment

1. Definitions. As used in this section, the following terms shall have the following meanings unless the context shall indicate another or different meaning or intent: (a) “Corporation” means every public authority and public benefit corporation a majority of the governing board members of which are either appointed by the governor or serve as members by virtue of their service as an officer of a state department, division, agency, board or bureau, or combination thereof. (b) “Contract” means an enforceable agreement entered into between a corporation and a contractor. (c) “Contractor” means any person, partnership, private corporation or association: (i) selling materials, equipment, or supplies or leasing property or equipment to a corporation; (ii) constructing, reconstructing, rehabilitating or repairing buildings, highways or other improvements for or on behalf of a corporation; or (iii) rendering or providing services to a corporation pursuant to a contract. (d) “Designated payment office” means the office designated by the corporation to which a proper invoice is to be submitted by a contractor. (e) “Prompt payment” means payment of a debt due and owing by a corporation before interest accrues thereon pursuant to a statement adopted in accordance with this section. (f) “Proper invoice” means a written request for a contract payment that is submitted by a contractor setting forth the description, price and quantity of goods, property, or services delivered or rendered, in such form and supported by such other substantiating documentation as the corporation may reasonably require. (g) “Receipt of an invoice” means (i) the date on which a proper invoice is actually received in the designated payment office, or (ii) the date on which the corporation receives the purchased goods, property, or services covered by the proper invoice, whichever is later. (h) “Set-off” means the reduction by the corporation of a payment due to a contractor by an amount equal to the amount of an unpaid legally enforceable debt owed by the contractor to the corporation. (i) “Statement” means the rules and regulations adopted by a corporation pursuant to subdivision two of this section and any amendments thereto. 2. Statement adoption. Within one hundred twenty days after either the effective date of this section or the beginning of the existence of the respective corporation, whichever is later, each corporation shall promulgate rules and regulations detailing its prompt payment policy. 3. Statement contents. (a) The statement shall include, but not be limited to, a reference to this section and the following for each type or category of contract as determined by the corporation: (i) a description of the procedure to be followed by a contractor in requesting payment under a contract; (ii) a schedule setting forth the time in which the corporation will make prompt payment under a contract; (iii) a declaration that interest will be paid when prompt payment is not made and a statement of the rate at which such interest will accrue; (iv) a list of the sources of funds available to the corporation to pay an interest penalty on each type or category of contract; and (v) a list of facts and conditions which in the opinion of the corporation’s governing body reasonably justify extension of the date by which contract payment must be made in order for the corporation not to become liable for interest payments in accordance with subdivision seven of this section. (b) Such facts and conditions may include, but shall not be limited to, the following when: (i) in accordance with specific statutory or contractual provisions, payment must be preceded by an inspection period or by an audit to determine the resources applied or used by a contractor in fulfilling the terms of the contract; (ii) the necessary state government appropriation required to authorize payment has yet to be enacted; (iii) a proper invoice must be examined by the federal government prior to payment; and (iv) such date by which contract payment must be made is modified in accordance with subdivision eight of this section. 4. Statement amendment. Each corporation shall have the power to amend its statement by promulgating amended rules and regulations. 5. Statement filing. Each corporation shall, within thirty days after the statement’s adoption, file a copy of such statement, and amendments thereto, with the state comptroller, the state director of the budget, the chairman of the senate finance committee, and the chairman of the assembly ways and means committee. 6. Contract incorporation. The statement in effect at the time of creation of a contract is hereby incorporated into and made a part of that contract. 7. Interest eligibility and computation. (a) In order for the corporation not to be liable for the payment of interest, contract payment must be made within thirty calendar days, excluding legal holidays, after the receipt of an invoice for the amount of the contract payment due; except when the contract payment is of the type where the facts and conditions are as defined pursuant to subparagraph (v) of paragraph (a) of subdivision three of this section. Any time taken to satisfy or rectify any of the facts or conditions described in subdivision three (except for subparagraph (iv) of paragraph (b) of subdivision three) of this section shall extend the date by which contract payment must be made in order for the corporation not to become liable for interest payments by an equal period of time. (b) A corporation, which must process payments through the state department of audit and control, the department of taxation and finance, or some other entity not under the corporation’s control, shall not be liable for interest due to the process time taken by such entity. (c) 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. (d) A corporation shall not be liable for payment of interest when such interest as computed pursuant to the provisions of paragraph (c) of this subdivision is less than ten dollars. 8. Each corporation shall have fifteen calendar days after receipt of an invoice by the corporation at its designated payment office to notify the contractor of (a) defects in the delivered goods, property, or services, (b) defects in the invoice, or (c) suspected improprieties of any kind; and the existence of such defects or improprieties shall prevent the commencement of the time period specified in subdivision seven of this section. When a corporation fails to notify a contractor of such defects or suspected improprieties within fifteen calendar days of receiving the invoice, the number of days allowed for payment of the corrected proper invoice will be reduced by the number of days between the fifteenth day and the day that notification was transmitted to the contractor. If the corporation, in such situations, fails to provide reasonable grounds for its contention that a defect or impropriety exists, the date by which contract payment must be made in order for the corporation not to become liable for interest payments shall be calculated from the date of receipt of an invoice. 9. Notwithstanding any provision of the public service law or any tariffs promulgated pursuant to that law to the contrary, the provisions of this section shall provide the sole basis for determining and making interest payments on invoices submitted by public utilities to corporations. 10. A proper invoice submitted by the contractor shall be required to initiate any payment, except where the contract provides that the contractor will be paid at predetermined intervals without having to submit an invoice for each such scheduled payment and, for the purposes of determining eligibility for payment of interest and subject to the exception and time-to-rectify provisions of subdivisions three and seven of this section, the date by which contract payment must be made in order for the corporation not to become liable for interest payments shall be the payment due date specified in accordance with the contract. 11. Annual report. (a) Each corporation shall annually prepare a report on the scope and implementation of its prompt payment policy which shall include, but not be limited to: (i) A listing of the types or categories of contracts which the corporation entered into during the twelve month period covered by the report, together with a brief indication of whether each such type or category of contract was subject to the prompt payment requirements promulgated by the corporation and, if not, why not; (ii) The number and amounts of interest payments made for contracts arranged according to each such type or category; (iii) The number of interest chargeable days and the total number of days taken to process each late contract payment; and (iv) A summary of the principal reasons that such late payments occurred. (b) Within ninety days after the completion of its fiscal year, each corporation shall file copies of the report required by paragraph (a) of this subdivision with the state comptroller, the state director of the budget, the chairman of the senate finance committee, and the chairman of the assembly ways and means committee. 12. Public access. (a) Each corporation shall make available to the public, upon a reasonable request therefor, copies of its statement and annual report. (b) Each contractor doing business with a corporation shall be given a copy of that corporation’s statement. 13. Inapplicability of section. The provisions of this section shall not apply to payments due and owing by a corporation: (a) under the eminent domain procedure law; (b) as interest allowed on judgments rendered by a court pursuant to any provision of law other than those contained in this section; (c) to the federal government; to any state agency or its instrumentalities; to any duly constituted unit of local government including, but not limited to, counties, cities, towns, villages, school districts, special districts, or any of their related instrumentalities; to any other public authority or public benefit corporation; or to its employees when acting in, or incidental to, their public employment capacity; (d) in situations where the corporation exercises a legally authorized set-off against all or part of the payment due the contractor. 14. The provisions of this section shall not apply to the facilities development corporation or the state university construction fund. 15. Judicial review. Any determination made by a corporation pursuant to this section which prevents the commencement of the time in which interest will be paid shall be subject to judicial review in a proceeding pursuant to article seventy-eight of the civil practice law and rules. Such proceedings shall only be commenced in the absence, or upon completion, of other review procedures specified in the contract or by regulation. 16. Court action or other legal processes. (a) Notwithstanding any other provisions of law to the contrary, the liability of a corporation, insofar as incurring an obligation to make an interest payment to a contractor pursuant to the terms of this section is concerned, shall not extend beyond the date of a notice of intention to file a claim, the date of a notice of a claim, or the date commencing a legal action for the payment of such interest, whichever occurs first. (b) With respect to the court action or other legal processes referred to in paragraph (a) of this subdivision, any interest obligation incurred by a corporation after the date specified therein pursuant to any provision of law other than this section shall be determined as prescribed by such separate provision of law, shall be paid as directed by the court, and shall be paid from any source of funds available for that purpose.

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