(a) The approval of any bill, invoice or statement by the Secretary of Finance, or the presentation of any payment transaction approved by him or her, shall be considered full authority for the payment of the same by the State Treasurer.
(b) All checks shall be drawn in consecutive numerical order. The Secretary of Finance shall keep records of expenditures of all state agencies so that the amount and nature of all such expenditures may be readily ascertained.
(c) The Secretary of Finance shall periodically verify that the State Treasurer has drawn no checks other than those that have been accounted for in the manner provided in this section.
(d) In the event that the State shall, within 30 days of the later of the presentment of a valid invoice or bill on which a state agency (as defined in this chapter) is liable to make payment or the receipt of the goods or services reflected in such invoice or bill, fail to make payment on such invoice or bill, the vendor presenting such invoice or bill may require the payment of interest by such state agency; provided, however, that:
(1) Presentment is deemed made when an invoice or bill is received by that agency, provided that the invoice or bill is received in a form consistent with the State Accounting Manual and regulations issued by the Director of the Office of Management and Budget and the Secretary of Finance.
(2) The vendor may not require interest with respect to any portion of such invoice or bill if such portion is controverted on reasonable grounds by the state agency, provided that the agency notifies the vendor in writing, within the 30-day period specified in this subsection, of the reason or reasons for controverting the invoice or bill.
(3) A vendor may require that interest under this subsection commence from the end of the 30-day period and continue until payment. All interest charges under this chapter shall be paid by the agency receiving the goods or services from the vendor. Such interest shall be calculated by the vendor in dollar amounts and expressly billed as such to the agency receiving goods or services from the vendor.
(4) A vendor may require that interest under this subsection accrue on the unpaid balance at a rate not to exceed an annualized rate of 12 percent.
(5) Agencies liable for interest payments under this subsection shall be authorized to make such payments from amounts appropriated for “contractual services” in the event an unencumbered balance shall exist in such line. In the case of agencies of public or higher education, such payment shall be made from local funds or state general funds not restricted to another purpose. The Office of Management and Budget shall establish procedures according to which interest payments under this subsection are recorded separately from other expenditures for contractual services.
(6) The requirement that interest payments be made by the agency receiving goods or services be imposed upon a different agency when, in the sound discretion of the Director of the Office of Management and Budget and the Controller General, the receiving agency demonstrates that some other agency or agencies bear greater responsibility for causing the delay which occasioned the payment of interest, in which case the responsible agency or agencies shall reimburse the receiving agency for interest charges.
(e) The Secretary of Finance shall transmit to the Controller General on January 15 and July 15 of each year a report which provides the following information:
(1) The name of any state agency which has, within the past 6 months, paid interest to a vendor in accordance with subsection (d) of this section;
(2) The number of such interest payments made by each agency; and
(3) The total amount of interest paid by each agency.
(f) For public works contracts as defined by § 6902 of this title, the following shall apply:
(1) The agency agent, by mutual agreement, may make progress payments on contracts of less than 90 days and shall make monthly progress payments on all other contracts as provided for in this paragraph.
The agency agent shall approve or disapprove an estimate of the work submitted for payment within 7 days from the date of submission of the written application for payment. If the agency agent approves the estimate of work, such estimate shall be certified for payment. If the agency agent disapproves the estimate of work, the agency or the agency agent shall issue a specific written finding within 21 days from the submission of the applicant for payment setting forth those items in detail in the estimate of the work that are not approved for payment under the contract. The agency may withhold 150% of the amount of expenses the agency reasonably expects to incur, as approved by the Director of the Office of Management and Budget, in correcting the deficiency set forth in the written finding. The progress payments shall be paid on or before 21 days after the estimate of work is certified and approved. If the approval of a federal agency is required, the payment shall be deemed timely if the payment is made within 10 days of a required federal agency’s approval.
(2) An agency agent, contractor or subcontractor may decline to approve and certify a billing or estimate or a portion of a billing or estimate for any of the following reasons:
a. Unsatisfactory job progress;
b. Defective construction work of materials not remedied;
c. Disputed work or materials;
d. Failure to comply with material provisions of the contract;
e. Third-party claims filed or reasonable evidence that a claim will be filed;
f. Failure of the contractor or subcontractor to make timely payments for labor, equipment or materials;
g. Damage to the agency, contractor or subcontractor;
h. Reasonable evidence that the construction cannot be completed for the unpaid balance of the construction contract; or
i. Retainage of funds.
(3) The retainage, as allowed by § 6962(d)(5) of this title, shall be retained by the agency as a guarantee for complete performance of the contract, to be paid to the contractor within 60 days after completion or filing notice of completion of the contract or within 30 days of a required federal agency’s final approval or certification. Retention of payments by an agency longer than 60 days after final completion and acceptance requires a specific written finding by the agency of the reasons justifying the delay in payment. Such written finding shall be furnished by the agency within 10 days after completion or filing notice to the contractor or within 10 days of the required federal agency’s final approval or certification. No agency may retain any moneys after 60 days in an amount exceeding 150% of the necessary amount to pay the expenses the agency reasonably expects to incur in order to pay or discharge the expenses determined by the agency in the finding justifying the retention of moneys.
(4) If a progress payment to a contractor is delayed by more than 21 days after the date of the agency agent’s approval or the final payment to a contractor is delayed by more than 60 days after the date of the final submission, the contractor may require the payment of interest by such agency, except for periods of time during which payment is withheld pursuant to paragraph (f)(2) of this section, beginning on the twenty-second day for progress payments and on the sixty-first day for final payment; provided, however, that:
a. Presentment is deemed made when an invoice or bill is received by that agency or agency agent, provided that the invoice or bill is received in a form consistent with the State Accounting Manual and regulations issued by the Director of the Office of Management and Budget and the Secretary of Finance. Such forms shall be included in the project’s bid documents.
b. The contractor may not require interest with respect to any portion of such invoice or bill if such portion is controverted on reasonable grounds by the state agency or agency agent, provided that the agency notifies the contractor in writing, within the 21-day period for progress payments or 60 days for final payments, of the reason or reasons for controverting the invoice or bill.
c. A vendor may require that interest under this subsection commence from the end of the 21-day period for progress payments or the 60-day period for final payment and continue until payment. All interest charges under this chapter shall be paid by the agency receiving the goods or services from the contractor. Such interest shall be calculated by the contractor in dollar amounts and expressly billed as such to the agency receiving goods or services from the contractor.
d. A contractor may require that interest under this subsection accrue on the unpaid balance at a rate not to exceed 2% above the prime interest rate as established by the Federal Reserve.
e. Agencies liable for interest payments under this subsection shall be authorized to make such payments from amounts appropriated for “contractual services” in the event an unencumbered balance shall exist in such line. In the case of agencies of public or higher education, such payment shall be made from local funds or state general funds not restricted to another purpose. The Office of Management and Budget shall establish procedures according to which interest payments under this subsection are recorded separately from other expenditures for contractual services.
f. Interest payments to be made by the agency receiving goods or services may be imposed upon a different agency when, in the sound discretion of the Director of the Office of Management and Budget and the Controller General, the receiving agency demonstrates that some other agency or agencies bear greater responsibility for causing the delay which occasioned the payment of interest, in which case the responsible agency or agencies shall reimburse the receiving agency for interest charges.
(5) The agency, contractor or subcontractor may change the time periods outlined in this subsection only if:
a. Prior written approval is given by the Director of the Office of Management and Budget;
b. The public works contract specifically provides in a clear and conspicuous manner for a later payment defined by a specific number of days after certification and approval; and
c. All plan documents, including bid plans and construction plans, shall permanently display, in clear and conspicuous type, the following legend or substantially similar language:
NOTICE OF EXTENDED PAYMENT PROVISION
This contract allows the agency, contractor and subcontractor to make payment within ________ days after certification and approval of billings and estimates. Such changes shall also be indicated in a clear and conspicuous manner by contractors and subcontractors on all contracts with subcontractors and material suppliers.
(6) An agency may change the time period to certify and approve a billing or estimate only if:
a. Prior approval is given by the Director of the Office of Management and Budget;
b. The public works contract specifically provides in a clear and conspicuous manner for an extended time period within which a billing or estimate shall be certified or approved, defined by a specific number of days after the agency has received the billing or estimate; and
c. All plan documents, including bid plans and construction plans, shall include, in clear and conspicuous type, the following legend or substantially similar language:
NOTICE OF EXTENDED CERTIFICATION AND APPROVAL PERIOD PROVISION
This contract allows the agency to certify and approve billings and estimate within ________ days after the billings and estimates are received from the contractor.
Such changes shall also be indicated in a clear and conspicuous manner by contractors and subcontractors on all contracts with subcontractors and material suppliers.
(7) The contractor shall pay the contractor’s subcontractors or material suppliers and each subcontractor shall pay the subordinate subcontractors or material supplier within 21 days of receipt of each progress payment, unless otherwise agreed to in writing by the parties, the respective amounts allowed the subordinate or subcontractor or material supplier on account of the work performed by subordinate contractors and material suppliers, to the extent of each subordinate subcontractor’s or material suppliers interest therein, except that no contract for public works may materially alter the rights of any contractor, subcontractor, subordinate subcontractor or material supplier to receive prompt and timely payment as provided under this subsection or Chapter 35 of Title 6. If a progress or final payment to a subordinate subcontractor or material supplier is delayed by more than 21 days after receipt of a progress or final payment by the contractor or subcontractor, the subordinate subcontractor or material supplier may require payment of interest by the contractor or subcontractor except for periods of time during which payment is withheld pursuant to paragraph (2) of this section, beginning on the twenty-second day, provided, however, that:
a. Presentment is deemed made when an invoice or bill is received by that contractor or subcontractor, provided that the invoice or bill is received in a form consistent with the contractor’s or subcontractor requirements.
b. The subcontractor or material supplier may not require interest with respect to any portion of such invoice or bill if such portion is controverted on reasonable evidence by the contractor or subcontractor, provided that the contractor or subcontractor notifies the vendor in writing within the 21-day period specified in this subsection of the reason or reasons for controverting the invoice or bill.
c. A subordinate subcontractor or material supplier may require that interest under this subsection commence from the end of the 21-day period and continue until payment. All interest charges under this chapter shall be paid by the contractor or subcontractor and shall not be charged to any state agency. Such interest shall be calculated by the subordinate subcontractor or material supplier in dollar amounts and expressly billed as such to the contractor or subcontractor.
d. A subordinate subcontractor or material supplier may require that interest under this subsection accrue on the unpaid balance at a rate not to exceed 2% above the prime interest rate as established by the Federal Reserve.
(8) In any action or arbitration brought to collect payments or interest under this subsection, the arbitrator or court shall award damages equal to the amount that is determined by the arbitrator or court to have been wrongfully withheld. An amount shall not be deemed to have been wrongfully withheld to the extent it bears a reasonable relation to the value of any disputed amount or claim held in good faith by the agency contractor or subcontractor against whom the contractor, subcontractor of material supplier is seeking to recover payment.
