Pennsylvania Act 1994-142 — PUBLIC WORKS CONTRACT REGULATION LAW - AMEND

Act text

PUBLIC WORKS CONTRACT REGULATION LAW - AMEND
                 Act of Dec. 12, 1994, P.L. 1042, No. 142             Cl. 62
                             Session of 1994
                               No. 1994-142

     HB 1914

                                  AN ACT

     Amending the act of November 26, 1978 (P.L.1309, No.317),
        entitled "An act regulating the awarding and execution of
        certain public contracts; providing for contract provisions
        relating to the retention, interest, and payment of funds
        payable under the contracts; and repealing inconsistent
        acts," further providing for prompt payment schedules and for
        bidder lists.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Section 1 of the act of November 26, 1978
     (P.L.1309, No.317), referred to as the Public Works Contract
     Regulation Law, is amended by adding definitions to read:
      Section 1.  Definitions.
        The following words and phrases, when used in this section,
     shall have the following meanings unless the context clearly
     indicates otherwise:
        * * *
        "Contractor."  A person who enters into a public contract
     with a contracting body.
        "Deficiency item."  Work performed but which the design
     professional, the contractor or the inspector will not certify
     as being completed according to the public contract.
        "Design professional."  An architect licensed under the act
     of December 14, 1982 (P.L.1227, No.281), known as the
     "Architects Licensure Law," a professional engineer or
     professional land surveyor licensed under the act of May 23,
     1945 (P.L.913, No.367), known as the "Engineer, Land Surveyor
     and Geologist Registration Law," or a landscape architect
     licensed under the act of January 24, 1966 (1965 P.L.1527,
     No.535), known as the "Landscape Architects' Registration Law."
        "Inspector."  The person authorized or engaged by the
     contracting body to inspect the work performed and materials
     furnished pursuant to a public contract to determine whether the
     work completed is in compliance with the public contract.
        "Local government unit."  Any county, city, borough,
     incorporated town, township, school district, vocational school
     district, county institution, local authority or any joint or
     cooperative body of local government units or any
     instrumentality, authority or corporation thereof which has
     authority to enter into a public contract.
        * * *
        "Subcontractor."  A person who has contracted to furnish
     labor or materials to or has performed labor for a contractor or
     another subcontractor in connection with a public contract.
        * * *
        Section 2.  Section 2 of the act is amended to read:
      Section 2.  Time for awarding contracts; list of bidders.
        (a)  Every public contract shall be awarded by the
     contracting body to the lowest responsible bidder within 60 days
     of the date of bid opening or all bids shall be rejected except
     as otherwise provided in this section.
        If the award is delayed by a required approval of another
     government agency, the sale of bonds, the award of a grant or
     grants, the contracting body shall reject all bids or award the
     contract to the lowest responsible bidder within 120 days of the
     date of bid opening.
        Thirty-day extensions of the date for the award may be made
     by the mutual written consent of the contracting body and the
     lowest responsible bidder.
        (b)  All contracting bodies of the Commonwealth or any State-
     aided institution shall be required to provide a list of the
     bidders and their bid amount on each public contract within ten
     working days of the bid opening to interested parties for a fee
     to be determined by the contracting body to cover the cost of
     developing such list. This requirement shall not apply to the
     contracting bodies of any political subdivision or local
     authority which has the authority to enter into a public
     contract.
        Section 3.  The act is amended by adding sections to read:
      Section 6.1.  Performance by contractor or subcontractor.
        (a)  Performance by a contractor in accordance with the
     provisions of a public contract shall entitle the contractor to
     payment by the contracting body.
        (b)  Performance by a subcontractor in accordance with the
     provisions of a contract shall entitle the subcontractor to
     payment from the contractor with whom the subcontractor has
     contracted.
      Section 6.2.  Contracting body's progress payment obligations.
        (a)  The contracting body shall pay the contractor or design
     professional strictly in accordance with the public contract.
        (b)  If the public contract does not contain a term governing
     the time for payment, the contractor or design professional
     shall be entitled to make application for payment from the
     contracting body for progress payments, and the contracting body
     shall make payment less the applicable retainage amount as
     authorized in section 5 to the contractor or design professional
     within 45 calendar days of the date the application for payment
     is received.
        (c)  Except as otherwise agreed by the parties, if any
     progress payment less the applicable retainage amount as
     authorized in section 5 is not made to a contractor or design
     professional by the due date established in the contract or in
     subsection (b), the contracting body shall pay to the contractor
     or design professional, in addition to the amount due, interest
     on the amount due, and the interest shall be computed at the
     rate determined by the Secretary of Revenue for interest
     payments on overdue taxes or the refund of taxes as provided in
     sections 806 and 806.1 of the act of April 9, 1929 (P.L.343,
     No.176), known as "The Fiscal Code," and any subsequent
     amendments to those sections.
        (d)  In the event that the public contract does not contain a
     grace period and if a contractor or design professional is not
     paid by the payment date required by subsection (b), no interest
     penalty payment required under this section shall be paid if
     payment is made on or before the 15th calendar day after the
     payment date required under this act.
      Section 6.3.  Contractors' and subcontractors' payment
                    obligations.
        (a)  Performance by a subcontractor in accordance with the
     provisions of the contract shall entitle the subcontractor to
     payment from the party with whom the subcontractor has
     contracted. For purposes of this section, the contract between
     the contractor and subcontractor is presumed to incorporate the
     terms of the public contract.
        (b)  A contractor or subcontractor shall disclose to a
     subcontractor, before a subcontract is executed, the due date
     for receipt of progress payments from the contracting body.
     Notwithstanding any other provisions of this act, if a
     contractor or a 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 subsection (c) were met by the contracting
     body. This subsection shall not apply to a change in due dates
     because of conditions outside of the contractor's control,
     including, but not limited to, design changes, change orders or
     delays in construction due to weather conditions.
        (c)  When a subcontractor has performed in accordance with
     the provisions of the contract, a contractor shall pay to the
     subcontractor and each subcontractor shall in turn pay to its
     subcontractors the full or proportional amount received for each
     such subcontractor's work and material, based on work completed
     or services provided under the subcontract, 14 days after
     receipt of a progress payment. Payment shall be made under this
     section unless it is being withheld under section 6.4.
        (d)  If any progress payment is not made to a subcontractor
     by the due date established in the contract or in subsection
     (c), the contractor shall pay to the subcontractor, in addition
     to the amount due, interest as computed in section 6.2(c).
        (e)  In the event that the contract does not contain a grace
     period and if a subcontractor is not paid by the payment date
     required by subsection (c), no interest penalty payment required
     under this section shall be paid if payment is made on or before
     the 15th calendar day after the payment date required under this
     act.
      Section 6.4.  Withholding of payment for good faith claims.
        (a)  The contracting body may withhold payment for deficiency
     items according to terms of the public contract. The contracting
     body shall pay the contractor according to the provisions of
     this act for all other items which appear on the application for
     payment and have been satisfactorily completed. The contractor
     may withhold payment from any subcontractor responsible for a
     deficiency item. The contractor shall pay any subcontractor
     according to the provisions of this act for any item which
     appears on the application for payment and has been
     satisfactorily completed.
        (b)  If a contracting body withholds payment from a
     contractor for a deficiency item, it shall notify the contractor
     of the deficiency item within the time period specified in the
     contract or fifteen calendar days of the date that the
     application for payment is received. If a contractor withholds
     payment from a subcontractor for a deficiency item, it must
     notify the subcontractor or supplier and the contracting body of
     the reason within 15 calendar days of the date after receipt of
     the notice of the deficiency item from the owner.
      Section 6.5.  Penalty and attorney fees.
        (a)  If arbitration or a claim with the Board of Claims or a
     court of competent jurisdiction is commenced to recover payment
     due under this act and it is determined that the contracting
     body, contractor or subcontractor has failed to comply with the
     payment of terms of this act, the arbitrator, the Board of
     Claims or the court may award, in addition to all other damages
     due, a penalty equal to 1% per month of the amount that was
     withheld in bad faith. An amount shall be deemed to have been
     withheld in bad faith to the extent that the withholding was
     arbitrary or vexatious. An amount shall not be deemed to have
     been withheld in bad faith to the extent it was withheld
     pursuant to section 6.4.
        (b)  Notwithstanding any agreement to the contrary, the
     prevailing party in any proceeding to recover any payment under
     this act may be awarded a reasonable attorney fee in an amount
     to be determined by the board of claims, court or arbitrator,
     together with expenses, if it is determined that the contracting
     body, contractor or subcontractor acted in bad faith. An amount
     shall be deemed to have been withheld in bad faith to the extent
     that the withholding was arbitrary or vexatious.
      Section 6.6.  Public contracts involving Federal aid.
        If any provision of this act conflicts with a Federal statute
     or regulation or with conditions attached to the receipt of
     Federal aid, this act shall not operate to prevent receipt of
     the Federal aid in accordance with any Federal statute or
     regulation.
      Section 6.7.  Certain provisions unenforceable.
        A provision in the public contract making it subject to the
     laws of another state or requiring that any litigation,
     arbitration or other dispute resolution process on the contract
     occurs in another state shall be unenforceable.
      Section 6.8.  Applicability.
        (a)  This act shall apply to public contracts entered into on
     or after the effective date of this act.
        (b)  (1)  Section 6.2 shall not apply when the State
        government unit's nonpayment on a particular project is
        caused by the failure of the General Assembly to enact a
        budget for the fiscal year of payment.
            (2)  Section 6.2 shall not apply when a local government
        unit's nonpayment on a particular project is caused by
        failure of the Federal or State government to pay funds due
        and payable to the local government unit.
            (3)  Section 6.2 shall not apply when a contracting
        body's nonpayment on a particular project is caused by the
        failure of the General Assembly to enact an operating budget
        for the fiscal year of payment or a capital budget for the
        capital project or by failure of the Federal, State or local
        government to pay funds designated or to be designated for
        the specific project.
            (4)  Nothing in this act shall be construed to require
        payment of interest penalties by the Federal or State
        government if the municipality is liable for such interest.
        (c)  This act shall not apply to any of the following:
            (1)  A municipality determined to be distressed under the
        act of July 10, 1987 (P.L.246, No.47), known as the
        "Municipalities Financial Recovery Act."
            (2)  A school district which has been determined to be a
        distressed school district under section 691 of the act of
        March 10, 1949 (P.L.30, No.14), known as the "Public School
        Code of 1949."
            (3)  A city of the first class that has entered into the
        Intergovernmental Cooperation Agreement under the act of June
        5, 1991 (P.L.9, No.6), known as the "Pennsylvania
        Intergovernmental Cooperation Authority Act for Cities of the
        First Class," for so long as any deficit-reducing bonds
        issued by the authority pursuant to section 301(b)(1) of that
        act are outstanding and payable.
            (4)  Any corporate entity or school district as defined
        in the "Pennsylvania Intergovernmental Cooperation Authority
        Act for Cities of the First Class."
      Section 6.9.  Claims by innocent parties.
        (a)  The contracting body shall have no obligation to any
     third parties for any claim.
        (b)  Once a contractor has made payment to the subcontractor
     according to the provisions of this act, future claims for
     payment against the contractor or the contractor's surety by
     parties owed payment from the subcontractor which has been paid
     shall be barred.
        Section 4.  This act shall take effect in 60 days.

     APPROVED--The 12th day of December, A. D. 1994.

     ROBERT P. CASEY