2019 -- H 5877

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LC002209

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- PROMPT PAYMENT BY

DEPARTMENT OF ADMINISTRATION--SUBCONTRACTOR PAYMENTS

     Introduced By: Representatives Vella-Wilkinson, Shekarchi, Williams, Casey, and
Casimiro

     Date Introduced: March 20, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 42-11.1-3 of the General Laws in Chapter 42-11.1 entitled "Prompt

Payment by Department of Administration" is hereby amended to read as follows:

     42-11.1-3. Time period for payment.

     (a) All bills shall be paid within thirty (30) working calendar days of receipt of a proper

invoice or other contractual dates for periodic payments, except when a contractor has failed to

submit a bill in accordance with contractually imposed time frames.

     (b) Each contractor shall make payment to subcontractors within ten (10) five (5)

calendar days of receipt of payment by the state; provided, however, that the contractor may

setoff a payment due to a subcontractor by an amount equal to the amount of an unpaid legally

enforceable debt owed by the subcontractor to the contractor or any amount which the contractor

is entitled to withhold under the terms of the contract entered into by the contractor and

subcontractor, or any amount owed by the subcontractor to the contractor by way of a statutory

obligation, or enforceable lien, of which the contractor or subcontractor had previous knowledge

or notice, or has reason to believe exists.

     (c) Each subcontractor shall make payments to its lower tier subcontractors within five

(5) calendar days of receipt of payment by the prime contractor.

     (c)(d) This section shall not apply to contractors or subcontractors performing work

pursuant to a contract awarded by the department of transportation unless the subcontractor

provides a payment and performance bond in an amount equal to the contract between the

contractor and subcontractor.

     (e) The state shall pay a deposit to prime contractors in a sufficient period prior to the

commencement of the scope of work of a minority business enterprise (MBE), as defined in § 37-

14.1-3, subcontractors solely for the purpose of the prime contractor making prearranged

scheduled payments, pursuant to a written contract between the prime contractor and MBE

subcontractors, to MBE subcontractors for the scope of the MBE subcontractors' work. Upon

receipt of the deposit, the prime contractor shall pay the MBE subcontractors, within five (5)

calendar days, pursuant to the prearranged scheduled payments based upon percentage of work

completed. Failure of the prime contractor to timely pay the MBE subcontractors, the state shall

pay the MBE subcontractors directly and seek reimbursement from the prime contractor with any

administrative costs incurred by the state. This payment schedule shall be attached as an exhibit

to the prime contractor contract and approved by the state.

     (f) The director of the department of administration shall adopt regulations in accordance

with the administrative procedures act, chapter 35 of title 42, which are consistent with this

chapter and the state purchases act, chapter 2 of title 37, governing the prompt payment by

contractors to subcontractors and in the instance of payments to MBE subcontractors, deposits to

contractors to allow weekly payments to MBE subcontractors.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- PROMPT PAYMENT BY

DEPARTMENT OF ADMINISTRATION--SUBCONTRACTOR PAYMENTS

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     This act would help expedite the payments made to subcontractors for work they perform

on state contracts. It would also establish a new process to help minority business enterprises

collect for their work on state contracts from their prime contractors.

     This act would take effect upon passage.

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LC002209

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