2021 -- H 5475

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LC000048

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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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 Williams, Giraldo, Messier, Vella-Wilkinson, Slater,
Felix, and Alzate

     Date Introduced: February 10, 2021

     Referred To: House Labor

     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) 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. Upon 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 chapter 35 of title 42, the ("administrative procedures act") which are consistent with this

chapter and chapter 2 of title 37, ("the state purchases act") 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. Chapter 42-11.1 of the General Laws entitled "Prompt Payment by

Department of Administration" is hereby amended by adding thereto the following section:

     42-11.1-17. Disqualification from contract award.

     (a) No contract as defined in § 42-11.1-2, shall be awarded to any contractor currently in

violation of the provisions of this chapter.

     (b) Prior to the awarding of any contract as defined in § 42-11.1-2, the contractor shall

certify under oath, that the contractor has fully satisfied and paid all subcontractors for all work

previously provided by the subcontractors pursuant to any subcontract with the contractor, and

additionally shall, if requested, provide evidence satisfactory to the director of the department of

administration that the contractor has fully satisfied and paid all subcontractors for all work

previously provided by the subcontractors pursuant to any subcontract with the contractor.

     SECTION 3. 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 further require that

contractors certify, and if requested provide evidence that all subcontractors have been paid for

previous subcontracting work prior to the award of a state contract.

     This act would take effect upon passage.

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