Subcontractor’s Right to Direct Payment from Public Authority
Subcontractors on public projects in Massachusetts have the right to seek payment directly from the awarding authority when the prime contractor has not made timely payment. A Massachusetts Superior Court judge has reinforced the awarding authority’s obligation to pay when a proper request has been made.
The so-called “direct payment claim” statute allows certain first-tier subcontractors and suppliers to the prime contractor to seek payment directly from the awarding authority when payment is late and upon submission of a proper request. The request must include a sworn statement, a detailed breakdown of amounts due, and a statement of the status of completion of the sub’s work. It must be sent by certified mail to the awarding authority and the GC. The GC has ten days to respond in similar fashion – a detailed statement of what the GC says is due the sub, along with any backcharges or offsets claimed by the GC.
Upon receipt of the sub’s claim, the awarding authority “shall make direct payment” of undisputed amounts within 15 days, and must place any disputed amounts in a joint account under the name of sub and GC.
Harold Bros., a mechanical sub on a public school project made a direct payment claim to the town of Braintree. The GC, Shawmut, failed to timely respond. Braintree failed to pay the sub the amounts claimed due, although it eventually made a partial payment based on Shawmut’s tardy assertion of backcharges against Harold Bros.
In the follow-on lawsuit, Harold Bros. filed for judgment on the pleadings – an unusual step – and its motion was allowed. Both Braintree and Shawmut acknowledged the timetable, but argued that late notice was still effective. The court disagreed. It noted that “an integral part of the statute is the timing for a response to a direct payment [request]. The timing, in part, achieves the statutory purpose of ensuring that subcontractors receive prompt payment on public works projects.”
Thus, Shawmut’s failure to timely respond meant that the Town of Braintree was obligated to pay Harold Bros. the full amount claimed due. (This amount would be deducted, of course, from the prime contract balance.) This should serve as a reminder for contractors on Massachusetts public projects, to follow pertinent payment statutes.
The case is Harold Bros. Mechanical Contrs. v. Town of Braintree, 2021 Mass. Super. LEXIS 516 (Dec. 16, 2021).