2016 -- H 8185

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LC005841

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- PROMPT PAYMENT TO STATE

CONTRACTORS

     Introduced By: Representatives Ackerman, Shekarchi, Serpa, Craven, and Ruggiero

     Date Introduced: May 06, 2016

     Referred To: House Labor

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 42-11.1-2 and 42-11.1-3 of the General Laws in Chapter 42-11.1

entitled "Prompt Payment by Department of Administration" are hereby amended to read as

follows:

     42-11.1-2. Definitions. -- As used in this chapter, the following terms shall have the

following meanings unless otherwise specified:

      (1) "Contract" means an enforceable agreement entered into by a contractor and a state

agency.

      (2) "Contractor" means any person, partnership, firm, corporation, or association:

      (i) Selling materials, equipment, or supplies or leasing property or equipment to a state

agency:

      (ii) Constructing, reconstructing, rehabilitating, or repairing buildings or highways for,

or on behalf of, a state agency; or

      (iii) Rendering or providing services pursuant to a contract with a state agency,

including, without limitation, services which help people in need.

      (3) "Designated payment office" means the office designated by the state agency to

which a proper invoice is to be submitted by a contractor.

      (4) "Payment date" means the date on which a payment is due according to a contract.

      (5) "Proper invoice" means a written request for a contract payment that is submitted by

a contractor setting forth the description, price, and quantity of goods, property or services

delivered or rendered, in such form and supported by such other substantiating documentation as

the state controller or individual state agency may reasonably require. In the case of state highway

and bridge construction contracts, periodic payment estimates prepared by the department of

transportation shall be considered proper invoices for purposes of this chapter and such estimates

shall be prepared monthly or more often and shall include the total amount of work done from the

date of the prior estimate.

      (6) "Receipt of an invoice" means the date on which a proper invoice is actually received

in the designated payment office or the date on which the state agency receives the purchased

goods, property, or services covered by the proper invoice, whichever is later.

      (7) "Required payment date" means the date by which a contract payment must be made

in order for the state government not to become liable for interest payments, pursuant to

subsections (b) and (g) of § 42-11.1-5.

      (8) "Set-off" means the reduction by the controller of a payment due to a contractor by

an amount equal to the amount of an unpaid legally enforceable debt owed by the contractor to

the state or any amount which the state is entitled to withhold under the terms of the contract, or

any amount owed by the contractor to the state by way of a statutory obligation or enforceable

lien, of which the contractor had previous knowledge or notice.

      (9) "State agency" means any department, board, bureau, commission, division, office,

council, institution, authority or committee in the executive, legislative, or judicial branches of

state government; including the University of Rhode Island and all other quasi-public bodies

created by state law whose purpose and function are directly related to the health, safety, and

welfare of the general populace of the state, including the Rhode Island lottery.

      (10) "State funds" means funds held by the general treasurer in the general fund of the

state.

     (11) "Subcontractor" means any person, partnership, firm, corporation, or association that

has a direct contract with a contractor, governed by this chapter, to provide services and materials

pursuant to a construction contract with a state agency.

      (11)(12) "Nonprofit provider" means any not for profit firm, partnership, or corporation

which provides services to people in need pursuant to a contract with a state agency. A nonprofit

provider is a contractor for purposes of this chapter. A nonprofit provider shall not be considered

a public benefit corporation for the purposes of § 42-11.1-14.

     42-11.1-3. Time period for payment. -- (a) All bills shall be paid within thirty (30)

working days of receipt of a proper invoice or other contractual dates for periodic payments,

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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) 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) 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.

     (d) If a contractor fails to make timely payments to a subcontractor as required by §42-

11.1-3(b) then it must pay an additional monthly one percent (1%) interest payment of the

contractual amount owed to the subcontractor until its debt is paid in full.

     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 TO STATE

CONTRACTORS

***

     This act would require state contractors, that are paid by the state, to pay monthly interest

of the contractual amount owed to its subcontractors that it had not timely paid.

     This act would take effect upon passage.

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