28-6924

28-6924. Progress payments

A. The following apply to the department's highway construction projects awarded
pursuant to section 28-6923, 28-7365 or 28-7366:

1. Progress payments may be made by the department to the contractor on the basis
of a duly certified and approved estimate of the work performed during a preceding period
of time. The progress payments shall be paid on or before fourteen days after the
estimate of the work is certified and approved. The estimate of the work shall be deemed
received by the department on submission to the person designated by the department for
the submission, review or approval of the estimate of the work. An estimate of the work
submitted under this section shall be deemed approved and certified after seven days from
the date of submission unless before that time the department prepares and issues a
specific written finding detailing those items in the estimate of the work that are not
approved and certified under the contract. The department may withhold an amount from the
progress payment sufficient to pay the expenses the department reasonably expects to
incur in correcting the deficiency set forth in the written finding. On completion and
acceptance of separate divisions of the contract on which the price is stated separately
in the contract, payment may be made in full including retained percentages, less
deductions, unless a substitute security has been provided.

2. The contractor shall pay to the contractor's subcontractors or material
suppliers and each subcontractor shall pay to the subcontractor's subcontractors or
material suppliers, within seven days of receipt of each progress payment, unless
otherwise agreed in writing by the parties, the respective amounts allowed the contractor
or subcontractor on account of the work performed by the contractor's or subcontractor's
subcontractors or material suppliers, to the extent of each subcontractor's or material
supplier's interest in the amount. These payments to subcontractors or material suppliers
shall be based on payments received pursuant to this section. Any diversion by the
contractor or subcontractor of payment received for work performed on a contract or
failure to reasonably account for the application or use of the payments constitutes
grounds for disciplinary action by the registrar of contractors. A subcontractor or
material supplier shall notify the registrar of contractors and the department in writing
of any payment less than the amount of percentage approved for the class or item of work
as set forth in this section.

3. A subcontractor may notify the department in writing requesting that the
subcontractor be notified by the department in writing within five days after payment of
each progress payment made to the contractor. The subcontractor's request under this
paragraph remains in effect for the duration of the subcontractor's work on the project.

4. If any payment to a contractor is delayed after the date due, interest shall be
paid at the rate of one per cent per month or a fraction of the month on the unpaid
balance.

5. If any periodic or final payment to a subcontractor or material supplier is
delayed by more than seven days after receipt of the periodic or final payment by the
contractor or subcontractor, the contractor or subcontractor shall pay the subcontractor
or material supplier interest, beginning on the eighth day, at the rate of one per cent
per month or a fraction of a month on the unpaid balance.

B. A contract for construction shall not materially alter the rights of any
contractor, subcontractor or material supplier to receive prompt and timely payment as
provided under this section.

C. Nothing in this section prevents a contractor or subcontractor, at the time of
application and certification to the department or contractor, from withholding the
application and certification to the department or contractor for payment to the
subcontractor or material supplier for unsatisfactory job progress, defective
construction work or materials not remedied, disputed work or materials, third party
claims filed or reasonable evidence that a claim will be filed, failure of a
subcontractor to make timely payments for labor, equipment and materials, damage to the
contractor or another subcontractor, reasonable evidence that the subcontract cannot be
completed for the unpaid balance of the subcontract amount or a reasonable amount for
retention that does not exceed the annual percentage retained by the department.

D. This section creates no duty of the department to a subcontractor or material
supplier other than the duty to notify pursuant to subsection A, paragraph 3 of this
section and creates no cause of action in favor of a subcontractor or material supplier
against this state, the department or any state employee or agent.