S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6824
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               April 8, 2021
                                ___________
 
 Introduced  by  M.  of A. BICHOTTE HERMELYN, HYNDMAN, SEAWRIGHT, WALKER,
   SOLAGES -- read once and referred to  the  Committee  on  Governmental
   Operations
 
 AN  ACT to amend the state finance law and the general municipal law, in
   relation to payment by public owners to contractors and subcontractors

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The opening paragraph and subdivisions 1 and 2 of section
 139-f of the state finance law, the opening paragraph as added by  chap-
 ter  769 of the laws of 1978, subdivision 1 as amended by chapter 341 or
 the laws of 2020 and subdivision 2 as amended by section 16 of  part  MM
 of chapter 57 of the laws of 2008, are amended to read as follows:
   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 offi-
 cial  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 OR SUBCONTRACTORS in
 accordance with the following:
   1. Payment by public owners to contractors. The contractor shall peri-
 odically, in accordance with the terms of the contract,  submit  to  the
 public  owner  and/or his agent a requisition for a progress payment for
 the work performed and/or materials furnished to the date of the  requi-
 sition  BY THE CONTRACTOR AND ALL SUBCONTRACTORS, less any amount previ-
 ously paid to the contractor OR SUBCONTRACTORS.  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 OR SUBCON-
 TRACTORS  which  have not been suitably discharged and less any retained
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06229-01-1

 A. 6824                             2
 
 amount as hereafter described. The public owner shall  retain  not  more
 than  five  per  centum  of  each progress payment to the contractor AND
 SUBCONTRACTORS 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,  INCLUDING  BALANCES  OWED  TO  SUBCONTRACTORS.
 When  the work or major portions thereof as contemplated by the terms of
 the contract has reached substantial completion which, for the  purposes
 of  this  section,  shall  mean the state in the progress of the project
 when the work required by the contract with the public owner  is  suffi-
 ciently  complete  in  accordance  with  the contract so that the public
 owner may occupy or utilize the work  for  its  intended  use;  provided
 further, that "substantial completion" shall apply to the entire project
 or a portion of the entire project if the contract with the public owner
 provides  for occupancy or use of a portion of the project, the contrac-
 tor 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 contrac-
 tor which have not been suitably discharged. Any claims, liens and judg-
 ments referred to in this section shall pertain to the project and shall
 be  filed in accordance with the terms of the applicable contract and/or
 applicable laws.
   2. Payment by [contractors] PUBLIC OWNERS to  subcontractors.  [Within
 seven calendar days of the receipt] (A) EACH SUBCONTRACTOR SHALL PERIOD-
 ICALLY,  IN  ACCORDANCE  WITH  THE  TERMS OF THE CONTRACT, SUBMIT TO THE
 PUBLIC OWNER AND/OR HIS AGENT AND TO THE CONTRACTOR AND/OR HIS  AGENT  A
 REQUISITION FOR A PROGRESS PAYMENT FOR THE WORK PERFORMED AND/OR MATERI-
 ALS FURNISHED TO THE DATE OF THE REQUISITION, LESS ANY AMOUNT PREVIOUSLY
 PAID  TO THE CONTRACTOR. AT THE TIME of any payment [from] BY the public
 owner[,] TO the contractor  AS  PROVIDED  IN  SUBDIVISION  ONE  OF  THIS
 SECTION, THE PUBLIC OWNER shall pay each of [his] THE 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 mater-
 ialman within seven calendar days of the receipt of any payment from the

 A. 6824                             3

 public owner shall result in the commencement and accrual of interest on
 amounts due to such subcontractor or materialman for the  period  begin-
 ning  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 para-
 graph (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  subcon-
 tractor 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.]  THE PUBLIC OWNER SHALL RETAIN NOT MORE THAN FIVE PER CENTUM  OF
 EACH  PROGRESS PAYMENT TO THE SUBCONTRACTOR 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 SUBCONTRACTOR PROVIDED THAT THERE ARE NO
 REQUIREMENTS BY THE PUBLIC OWNER FOR  THE  SUBCONTRACTOR  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 AS PROVIDED IN SUBDIVISION ONE OF THIS SECTION, FOR MATERIALS
 PERTINENT  TO  THE PROJECT WHICH HAVE BEEN DELIVERED TO THE SITE OR OFF-
 SITE BY THE SUBCONTRACTOR AND SUITABLY STORED AND SECURED AS REQUIRED BY
 THE PUBLIC OWNER AND THE SUBCONTRACTOR 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 SUBCONTRACTOR
 SHALL SUBMIT TO THE CONTRACTOR AND/OR HIS OR HER AGENT A REQUISITION FOR
 PAYMENT OF THE REMAINING AMOUNT OF THE CONTRACT BALANCE. THE  CONTRACTOR
 SHALL  SUBMIT  A  CONTRACT  REQUISITION CONTAINING ALL REQUISITIONS FROM
 SUBCONTRACTORS TO THE PUBLIC OWNER. UPON RECEIPT OF SUCH REQUISITION THE

 A. 6824                             4
 
 PUBLIC OWNER SHALL APPROVE AND PROMPTLY PAY THE REMAINING AMOUNT OF  THE
 CONTRACT  BALANCE  LESS TWO TIMES THE VALUE OF ANY REMAINING ITEMS TO BE
 COMPLETED AND AN AMOUNT NECESSARY TO SATISFY ANY CLAIMS, LIENS OR  JUDG-
 MENTS AGAINST THE SUBCONTRACTOR 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 REQUI-
 SITION, FOR THESE REMAINING ITEMS LESS AN AMOUNT  NECESSARY  TO  SATISFY
 ANY  CLAIMS, LIENS OR JUDGMENTS AGAINST THE SUBCONTRACTOR 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  ACCORD-
 ANCE WITH THE TERMS OF THE APPLICABLE CONTRACT AND/OR APPLICABLE LAWS.
   (B)  AS USED IN THIS SECTION, "SUBCONTRACTOR" MEANS ONLY THOSE SUBCON-
 TRACTORS THAT REPORT DIRECTLY TO  THE  MAIN  CONTRACTOR  WITH  WHOM  THE
 PUBLIC OWNER HAS ENTERED INTO THE CONTRACT, AND DOES NOT INCLUDE SUBCON-
 TRACTORS OF SUBCONTRACTORS.
   §  2.  The opening paragraph and subdivisions 1 and 2 of section 106-b
 of the general municipal law, the opening paragraph as amended by  chap-
 ter  661 of the laws of 1992, subdivision 1 as amended by chapter 341 or
 the laws of 2020, and subdivision 2 as amended by section 15 of part  MM
 of chapter 57 of the laws of 2008, are amended to read as follows:
   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 OR SUBCONTRACTORS 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  BY  THE  CONTRACTOR  AND ALL SUBCONTRACTORS less any amount
 previously paid to the contractor OR SUBCONTRACTORS.  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 OR SUBCON-
 TRACTORS 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  OR
 SUBCONTRACTORS 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  has reached substantial
 completion which, for the purposes of  this  section,  shall  mean,  for
 public  owners  other  than  school  districts and boards of cooperative
 educational services, the state in the progress of the project when  the
 work  required  by  the  contract  with the public owner is sufficiently

 A. 6824                             5
 
 complete in accordance with the contract so that the  public  owner  may
 occupy  or  utilize  the  work  for its intended use and shall mean, for
 school districts and boards of cooperative educational services, is  the
 date  the  partial or final certificate of substantial completion of the
 project which is the date certified by the architect  or  engineer  when
 the construction is code compliant and substantially complete in accord-
 ance  with  the  contract documents so the school district can occupy or
 utilize the project  or  portion  thereof  for  its  intended  use,  the
 contractor  shall submit to the public owner and/or his agent a requisi-
 tion for payment of  the  remaining  amount  of  the  contract  balance,
 INCLUDING  BALANCES OWED TO SUBCONTRACTORS.  Upon receipt of such requi-
 sition 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 forego-
 ing, where the public owner is other than the city of New York and is  a
 municipal  corporation  which  requires  an  elected official to approve
 progress payments, "promptly pay" shall mean payment  within  forty-five
 days,  excluding  legal  holidays,  of receipt of the requisition unless
 such requisition is not approvable in accordance with the terms  of  the
 contract.
   (b)  Not  later  than forty-five business days after the date when the
 project has reached  substantial  completion,  the  public  owner  shall
 submit  to  the contractor a written list describing all remaining items
 to be completed by the contractor. Not later than  seven  calendar  days
 after  receiving  a  written  list  describing all remaining items to be
 completed by the contractor, the contractor shall submit to each subcon-
 tractor from whom the contractor is withholding retainage a written list
 of all remaining items required to be completed  by  the  subcontractor.
 Such  list  may  include  items in addition to those items on the public
 owner's list.
   (c) 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 contrac-
 tor 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

 A. 6824                             6
 
 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.
   (d) 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 speci-
 fied in paragraph (a) of this subdivision, the interest provided for  in
 paragraph  (c) of this subdivision shall not begin to accrue and payment
 shall not be due, until ten days after receipt of the state funds. Noth-
 ing 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 bene-
 fit  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] PUBLIC OWNERS to subcontractors. [Within
 seven calendar days of the receipt] (A) EACH SUBCONTRACTOR SHALL PERIOD-
 ICALLY, IN ACCORDANCE WITH THE TERMS OF  THE  CONTRACT,  SUBMIT  TO  THE
 PUBLIC  OWNER  AND/OR HIS AGENT AND TO THE CONTRACTOR AND/OR HIS AGENT A
 REQUISITION FOR A PROGRESS PAYMENT FOR THE WORK PERFORMED AND/OR MATERI-
 ALS FURNISHED TO THE DATE OF THE REQUISITION, LESS ANY AMOUNT PREVIOUSLY
 PAID TO THE CONTRACTOR.  AT THE TIME of any payment [from] BY the public
 owner[,] TO the contractor  AS  PROVIDED  IN  SUBDIVISION  ONE  OF  THIS
 SECTION, THE PUBLIC OWNER shall pay each of [his] THE subcontractors and
 materialman  the proceeds from the payment representing the value of the
 work performed and/or materials furnished by  the  subcontractor  and/or
 materialmen  and  reflecting  the percentage of the subcontractor's work
 completed or the materialmen'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 subcontrac-
 tor or materialman for the  period  beginning  on  the  day  immediately
 following the expiration of such seven calendar day period and ending on
 the  date on which payment is made by the contractor to such subcontrac-
 tor or materialman. Such interest shall be the  sole  responsibility  of
 the  contractor,  and shall be paid at the rate of interest in effect on
 the date payment is made by the contractor.  Notwithstanding  any  other
 provision of law to the contrary, interest shall be computed at the rate
 established in paragraph (b) of subdivision one of section seven hundred

 A. 6824                             7

 fifty-six-b of the general business law. The contractor shall retain not
 more  than  five  per centum of each payment to the subcontractor and/or
 materialman except that the contractor may retain in excess of five  per
 centum  but  not more than ten per centum of each payment to the subcon-
 tractor provided that prior to entering  into  a  subcontract  with  the
 contractor,  the  subcontractor  is  unable  or  unwilling  to provide a
 performance bond and a labor and material bond both in the  full  amount
 of  the  subcontract  at  the  request  of  the contractor. 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 remain-
 ing 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.]  THE  PUBLIC  OWNER
 SHALL  RETAIN  NOT MORE THAN FIVE PER CENTUM OF EACH PROGRESS PAYMENT TO
 THE SUBCONTRACTOR 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 SUBCONTRACTOR PROVIDED THAT THERE ARE NO REQUIREMENTS  BY
 THE PUBLIC OWNER FOR THE SUBCONTRACTOR 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 AS PROVIDED
 IN SUBDIVISION ONE OF THIS  SECTION,  FOR  MATERIALS  PERTINENT  TO  THE
 PROJECT WHICH HAVE BEEN DELIVERED TO THE SITE OR OFF-SITE BY THE SUBCON-
 TRACTOR  AND SUITABLY STORED AND SECURED AS REQUIRED BY THE PUBLIC OWNER
 AND THE SUBCONTRACTOR 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 SUBCONTRACTOR SHALL SUBMIT  TO
 THE  CONTRACTOR AND/OR HIS OR HER AGENT A REQUISITION FOR PAYMENT OF THE
 REMAINING AMOUNT OF THE CONTRACT BALANCE. THE CONTRACTOR SHALL SUBMIT  A
 CONTRACT  REQUISITION CONTAINING ALL REQUISITIONS FROM SUBCONTRACTORS TO
 THE PUBLIC OWNER. 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 SUBCONTRACTOR 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 SUBCONTRACTOR WHICH HAVE NOT  BEEN  SUIT-
 ABLY  DISCHARGED.  ANY  CLAIMS,  LIENS AND JUDGMENTS REFERRED TO IN THIS

 A. 6824                             8
 
 SECTION SHALL PERTAIN TO THE PROJECT AND SHALL BE  FILED  IN  ACCORDANCE
 WITH THE TERMS OF THE APPLICABLE CONTRACT AND/OR APPLICABLE LAWS.
   (B)  AS USED IN THIS SECTION, "SUBCONTRACTOR" MEANS ONLY THOSE SUBCON-
 TRACTORS THAT REPORT DIRECTLY TO  THE  MAIN  CONTRACTOR  WITH  WHOM  THE
 PUBLIC OWNER HAS ENTERED INTO THE CONTRACT, AND DOES NOT INCLUDE SUBCON-
 TRACTORS OF SUBCONTRACTORS.
   §  3.  This  act shall take effect immediately.  Effective immediately
 the addition, amendment and/or repeal of any rule or  regulation  neces-
 sary  for  the  implementation  of  this  act  on its effective date are
 authorized to be made on or before such date.