Washington DC Prompt Payment Guide and FAQs

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Washington DC Prompt Payment Overview

Washington DC Prompt Payment Requirements


  • Private Jobs
  • Public Jobs
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15
DAYS
Prime Contractors

For Prime (General) Contractors, payment due within 15 days from occupancy permit, owner possession, or receipt of invoice; whichever is earlier.


7
DAYS
Subcontractors

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


NO
DAYS
Suppliers

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


1.5%
/ MONTH
Interest & Fees

Interest at 1.5% month. Attorneys' fees awarded to prevailing party.

30
DAYS
Prime Contractors

For Prime (General) Contractors, payment due within the later of 30 days from invoice or 30 days from receipt of services.


10
DAYS
Subcontractors

For Subcontractors, payment due within 10 days of payment received from above.


10
DAYS
Suppliers

For Suppliers, payment due within 10 days of payment received from above.


1%
/ MONTH
Interest & Fees

Interest at 1% month for prime; interest at statutory rate for subs. Attorneys' fees awarded to prevailing party.

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 Washington DC

Washington DC’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

Payments on private projects in Washington DC are governed by D.C. Code §27-131 to 136.

Payment Deadlines on Private Projects

Payments from the property owner to the prime contractor must be made within 15 days of either the issuance of an occupancy permit, possession of the improvement by the owner, or the date the request for payment is received; whichever is earliest. For all other payments down the payment chain, once the higher-tiered party receives payment, they must pay the lower tier project participants within 7 days.

Penalties for Late Payment

Any late or wrongfully withheld undisputed payment will be subject to interest penalties. Interest will accrue at a rate of 1.5% our month until the debt is paid. If the dispute results in a civil action, the prevailing party will be awarded costs and disbursements, along with reasonable attorney fees.

Public Projects

All payments on DC public works projects are governed by D.C. Code §§2-221.01 to 2-221.06.

Payment Deadlines for Public Projects

A prime contractor on a public works project must be paid within 30 days (excluding legal holidays) of receipt of a proper request for payment, unless the contract between the parties states otherwise. All other payments on the project must be made to the lower-tiered participant within 7 days of the higher-tiered party’s receipt of payment.

Penalties for Late Payment on Public Projects

Any payments that are late or wrongfully withheld on a public works project in DC will accrue interest at a rate of 1.5% per month. This interest is compounded monthly, meaning at the end of each delinquent month the interest accrued will be added to the principal and begin accruing interest on the increased amount the following month.

Washington DC Prompt Payment Frequently Asked Questions

Washington DC’s prompt payment statutes set forth specific timeframes for when general contractors, subcontractors, suppliers, and others involved with a public construction project must be paid. This page provides an overview of these regulations and addresses frequently asked questions related to the Washington DC prompt payment laws.

Washington DC Prompt Payment Private Projects FAQs

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

In Washington DC, parties are entitled to pay subject to the timing requirements of the prompt pay act after performance of the work, and upon satisfactions of any conditions to payment set forth in the contract.

Attorneys’ fees would only be awarded upon a successful claim for withheld pay.

Can I include Prompt Payment Fees in my Washington DC Mechanics Liens Claim or Bond Claim?

No. Washington DC law does not allow for the recovery of miscellaneous amounts in a mechanics lien.

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

If an undisputed payment is received late, the party to be paid is entitled to recover interest at the rate of 1.5% per month.

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

DC does not specifically identify reasons for which payment may be withheld.

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.

Washington DC Prompt Payment Public Projects FAQs

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

Claims for interest penalties must be filed with the contracting officer for a decision. The claim must be filed within 90 days after the principal is paid, however, this time period may be extended to 180 days if, within the original 90-day period, the claimant notifies the contracting officer in writing of the contractor’s intent to file a claim.

Can I include Prompt Payment Fees in my Washington DC Mechanics Liens Claim or Bond Claim?

No. Washington DC law does not allow for the recovery of miscellaneous amounts in a bond claim.

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

If payment is received late, the claimant is entitled to interest.

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

DC does not specifically identify reasons for which payment may be withheld.

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Washington DC Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Washington DC’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. Washington DC’s specific laws can be found in: D.C. Code §§27-131 to 136, and §§2-221.01 – 2-221.06, and are reproduced below.

Prompt Payment Statute on Private Projects

27-131: Definitions

For the purposes of this subchapter, the term:

(1) “Contract” means:

(A) A construction contract that is an agreement of any kind of nature, express or implied, to provide labor or materials, or both, for demolition, building, renovation, alteration, or maintenance of buildings, roadways, and structures; or

(B) A food service contract that is an agreement of any kind of nature, express or implied, for doing work or furnishing materials, or both.

(2) “Contractor” means a person, entity, or business that has a contract with an owner.

(3) “Subcontractor” means:

(A) A person, entity, or business that has a contract with a contractor;

(B) A person, entity, or business that has a contract with a subcontractor; or

(C) A person, entity, or business that performs work on a construction site for a contractor or another subcontractor or that fabricates materials off-site, from plans and specifications unique to the project, for installation on the construction site.

(4) “Owner” means an owner of the property or a tenant; provided, that the tenant enters into contract with a contractor. The term “owner” does not include a District agency as that term is defined in § 2-221.01(3).

(5) “Undisputed amount” means an amount owed on a contract or a subcontract for which there is no good-faith dispute, including any retainage withheld.

27-132: Prompt Payment to Contractors

(a) If a construction contract between an owner and contractor does not provide for specific dates and times of payment, the owner shall pay to the contractor undisputed amounts owed under the terms of the written contract within the earlier of:

(1) 15 days after the day on which the occupancy permit is granted;

(2) 15 days after the day on which the owner or the owner’s agent takes possession; or

(3) 15 days after an owner receives a contractor’s payment request.

(b) If a food service contract between an owner and contractor does not provide for specific dates and times of payment, the owner shall pay to the contractor undisputed amounts owed under the terms of the written contract within the earlier of:

(1) 15 days after the day on which the owner or the owner’s agent takes possession; or

(2) 15 days after an owner receives a contractor’s payment request.

(c) If a contract provides for specific dates or times of payment, the owner shall pay to the contractor undisputed amounts owed within 7 days after the date or time specified in the contract.

27-133: Failure to Make Prompt Payments to a Contractor

If an owner fails to make prompt payments to a contractor as required by section 3, the owner shall:

(1) Pay interest of 1.5% per month or any part of a month to the contractor on any undisputed amount not paid on time to the contractor; and

(2) If a contractor prevails in a civil action to collect interest penalties from an owner, the contractor shall be awarded its costs and disbursements, including reasonable attorney’s fees, incurred in bringing the action.

27-134: Prompt Payments to Subcontractors

(a) If a contract is between a contractor and subcontractor, or between a first-tier subcontractor and a second-tier subcontractor, the contractor or subcontractor shall pay undisputed amounts owed to its subcontractor within 7 days after receipt by the contractor or subcontractor of each payment received for its subcontractors’ work or materials.

(b) Notwithstanding subsection (a) of this section, conditions of payment to the subcontractor on receipt by the contractor of payment from the owner may not abrogate or waive the right of the subcontractor to:

(1) Claim a mechanics’ lien; or

(2) Sue on a contractor’s bond.

(c) Any provision of a contract made in violation of subsection (b) of this section is void as against the public policy of the District.

27-135: Failure to Make Prompt Payment to a Subcontractor

If a contractor fails to make prompt payments to a subcontractor as required by § 27-134, or a first-tier subcontractor fails to make prompt payments to a second-tier subcontractor, the contractor or subcontractor shall:

(1) Pay interest of 1.5% per month or any part of a month to the subcontractor on any undisputed amount not paid on time to the subcontractor; and

(2) If the subcontractor prevails in a civil action to collect interest penalties from a contractor or first-tier subcontractor, the subcontractor shall be awarded its costs and disbursements, including reasonable attorney’s fees, incurred in bringing the action.

27-136: Applicability

This subchapter shall apply to all contracts entered into on or after October 1, 2013.

Prompt Payment Statute on Public Projects

2-221.01: Definitions

For the purposes of this subchapter, the term:

(1) “Business concern” means any person engaged in a trade or business and nonprofit entities operating as contractors.

(1A) “Contractor” means any entity that has a direct contract with a District agency, as that term is defined in paragraph (3) of this section.

(2) “Designated payment office” means the place named in the contract for forwarding the invoice for payment or, in certain instances, for approval.

(3) “District agency” means any office, department, division, board, commission, or other agency of the District government, including, unless otherwise provided, an independent agency, required by law or by the Mayor or the Council to administer any law or any rule adopted under the authority of a law. For the purposes of this definition, the term “independent agency” means any agency of government not subject to the administrative control of the Mayor and includes, but is not limited to, the Superior Court of the District of Columbia, District of Columbia Court of Appeals, Council of the District of Columbia, Board of Elections and Ethics, Armory Board, Zoning Commission, Convention Center Board of Directors, District of Columbia Board of Education, and Public Service Commission.

(4) “Proper invoice” means an invoice which contains or is accompanied by substantiating documentation required by regulation or contract.

(5) “Subcontractor” means any entity that furnishes labor, material, equipment, or services to a contractor in performance of the contractor’s contract with a District agency.

2-221.02: Rules and Regulations Governing Interest Penalty Payments by District Agencies; Computation and Payment of Penalties

(a)
(1) In accordance with rules and regulations issued by the Mayor of the District of Columbia (“Mayor”), each agency of the District of Columbia government (“District”), under the direct control of the Mayor, which acquires property or services from a business concern but which does not make payment for each complete delivered item of property or service by the required payment date shall pay an interest penalty to the business concern in accordance with this section on the amount of the payment which is due.

(2) Each rule or regulation issued pursuant to paragraph (1) of this subsection shall:

   (A) Specify that the required payment date shall be:

      (i) The date on which payment is due under the terms of the contract for the provision of the property or service; o
      (ii) 30 calendar days, excluding legal holidays, after receipt of a proper invoice for the amount of the payment due, if a specific date on which payment is due is not established by contract;

    (B) (i) Specify, in the case of any acquisition of meat or of a meat food product, a required payment date which is not later than 7 calendar days, excluding legal holidays, after the date of delivery of the meat or meat food product; and
      (ii) Specify, in the case of any acquisition of a perishable agricultural commodity, a required payment date which is not later than 10 calendar days, excluding legal holidays, after the date of delivery of the perishable agricultural commodity pursuant to this subchapter;

   (C) Specify separate required payment dates for contracts under which property or services are provided in a series of partial executions or deliveries, to the extent that the contract provides for separate payment for partial execution or delivery; and

   (D) Require that, within 15 days after the date on which any invoice is received, District agencies notify the business concern in writing of any defect in the invoice or delivered goods, property or services or impropriety of any kind which would prevent the running of the time period specified in subparagraph (A)(ii) of this paragraph.

(b)
(1) Interest penalties on amounts due to a business concern under this subchapter shall be due and payable to the concern for the period beginning on the day after the required payment date and ending on the date on which payment of the amount is made, except that no interest penalty shall be paid if payment for the complete delivered item of property or service concerned is made on or before: (A) the 3rd day after the required payment date, in the case of meat or a meat product, described in subsection (a)(2)(B)(i) of this section; (B) the 5th day after the required payment date, in the case of an agricultural commodity, described in subsection (a)(2)(B)(ii) of this section; or (C) the 15th day after the required payment date in the case of any other item. Interest, computed at a rate of not less than 1%, shall be determined by the Mayor by regulation.

(1A) Each contract executed pursuant to Chapter 3 of Title 2 shall include in the solicitation a description of the contractor’s rights and responsibilities under the chapter.

(1B) Paragraphs (1) and (1A) of this subsection shall apply to claims arising after October 7, 1998.

(2) Any amount of an interest penalty which remains unpaid at the end of any 30-day period shall be added to the principal amount of the debt and thereafter interest penalties shall accrue on the added amount.

(c)
This section does not authorize the appropriation of additional funds for the payment of interest penalties required by this section. A District agency shall pay any interest penalty required by this section out of funds made available for the administration or operation of the program for which the penalty was incurred.

(d)
Any contract awarded by a District agency shall include:

(1) A payment clause that obligates the contractor to take one of the 2 following actions within 7 days of receipt of any amount paid to the contractor by the District agency for work performed by any subcontractor under a contract:

   (A) Pay the subcontractor for the proportionate share of the total payment received from the District agency that is attributable to the subcontractor for work performed under the contract; or

   (B) Notify the District agency and the subcontractor, in writing, of the contractor’s intention to withhold all or part of the subcontractor’s payment with the reason for the nonpayment;

(2) An interest clause that obligates the contractor to pay interest to the subcontractor or supplier as provided in subsection (b)(1) and (2) of this section; and

(3) A clause that obligates the contractor to include in any subcontract a provision that requires each subcontractor to include the payment and interest clauses required under paragraphs (1) and (2) of this subsection in a contract with any lower-tier subcontractor or supplier.

(e)
(1) A contractor’s obligation to pay an interest charge to a subcontractor pursuant to subsection (d)(2) of this section shall not constitute an obligation of the District agency.

(2) A contract modification shall not be made for the purpose of providing reimbursement for any interest charge pursuant to subsection (d)(2) of this section.

(3) A cost reimbursement claim shall not include any amount for reimbursement for any interest charge pursuant to subsection (d)(2) of this section.

(f)
(1) A dispute between a contractor and subcontractor relating to the amount or entitlement of a subcontractor to a payment or a late payment interest penalty under the provisions of this subchapter does not constitute a dispute to which the District of Columbia is a party. The District of Columbia may not be interpleaded in any judicial or administrative proceeding involving such a dispute.

(2) This subsection shall not limit or impair any contractual, administrative, or judicial remedies otherwise available to a contractor or subcontractor in the event of a dispute involving late payment or nonpayment by a prime contractor or deficient subcontract performance or nonperformance by a subcontractor.

2-221.03: Interest penalty for failure to pay discounted price within specified period

(a) If a business concern offers a District agency a discount from the amount otherwise due under a contract for property or services in exchange for payment within a specified period of time, the District agency may make payment in an amount equal to the discounted price only if payment is made within the specified period of time.

(b) Each District agency which violates subsection (a) of this section shall pay an interest penalty on any amount which remains unpaid in violation of subsection (a) of this section. The interest penalty shall accrue on the unpaid amount in accordance with the regulations issued pursuant to § 2‑221.02, except that the required payment date with respect to the unpaid amount shall be the last day of the specified period of time described in subsection (a) of this section.

2-221.04: Filing of Claims; Disputed Payments

(a)
(1) Claims for interest penalties which a District agency has failed to pay in accordance with the requirements of §§ 2‑221.02 and 2‑221.03 shall be filed with the contracting officer for a decision. Interest penalties under this subchapter shall not continue to accrue: (A) after the filing of an appeal for the penalties with the Contract Appeals Board; or (B) for more than one year.

(2) The contracting officer shall issue a decision within 60 days from the receipt of any claim submitted under this subchapter.

(3) Within 90 days from the receipt of a decision of the contracting officer, the contractor may appeal the decision to the Contract Appeals Board.

(4) The contractor shall file a claim for interest penalties and any amendments to such claim within 90 days after the principal is paid, except that if the contractor notifies the contracting officer in writing of the contractor’s intent to file a claim within the 90-day period, the contractor shall be allowed 180 days after the principal is paid to file such claim.

(b)
Except as provided in § 2‑221.03 with respect to disputes concerning discounts, this subchapter shall not be construed to require interest penalties on payments which are not made by the required payment date by reason of a dispute between a District agency and a business concern over the amount of that payment or other allegations concerning compliance with a contract. Claims concerning any dispute, and any interest which may be payable with respect to the period while the dispute is being resolved, shall be subject to the ruling of the Contract Appeals Board.

(c)
(1) With respect to any claim arising from a payment between March 15, 1985, and October 7, 1998, the contractor shall file a claim for interest penalties and any amendments to such claim with the contracting officer within 180 days of October 7, 1998.

(2) The 180 days specified in paragraph (1) of this subsection shall be extended to 270 days to file a claim if the contractor notifies the contracting officer in writing of the contractor’s intent to file a claim for interest penalties within 180 days of October 7, 1998.

(3) A claim filed by a contractor may be amended at any time prior to the issuance of a decision by the contracting officer.

(d)
Subsection (a) of this section shall apply to claims arising after October 7, 1998.

2-221.06: Determination of Receipt and Payment Dates; Construction of Rental Contracts

(a) An invoice shall be deemed to have been received by an agency on (1) the date on which the agency’s designated payment office actually receives a proper invoice, or (2) the date on which the agency accepts the property or service concerned, whichever is later.

(b)
(1) District agencies shall mail or otherwise deliver checks to a business concern on or about the same day that the checks are dated.

(2) If a District agency makes a payment by check on or about same day as the date of the check, then the payment shall be considered made on the date on which a check for payment is dated.

(c) A contract for the rental of real or personal property is a contract for the acquisition of that property.

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