Pennsylvania Prompt Payment Act
Referred to as PPA, this act specifically applies to contracts involving a government agency, the value of which exceeds $50,000. There are some exceptions – contracts with Philadelphia, the Philadelphia School District, PennDot, and distressed municipalities and school districts. Also, nonpayment as a result of a budget that has not been enacted, or when a local government unit doesn’t receive funding from federal or state agencies.
Similar to the Contractor and Subcontractor Payment Act (CASPA), PPA involves a timetable for payments if a payment schedule is not outlined in the contract. The PPA may provide for attorney’s fees, and interest for payments that have been withheld in bad faith. If the government agency is withholding payment due to poor work performance, notices must be given to the contractor and subcontractor within 15 days of receipt of the payment application.
Generally, PPA directs the owner to pay the contractor or design professional within 45 days from the date of the payment application. The PPA also directs the contractor to make payment to the subcontractor within 14 days of receipt of the progress payment. It is also noteworthy that as part of the PPA, the contractor must disclose due dates for progress payments to a subcontractor before the subcontract is entered into by the parties.
Generally, with respect to retainage, the PPA directs payment upon substantial completion to be made within 45 days minus 1.5 times the cost to complete the punch list items.
Engaging an attorney who is experienced in these matters is highly recommended as these types of collections actions can be complicated and difficult. If you would like more information, or to discuss a potential construction collection, call 412-281-5060 or send our attorneys an e-mail by completing the contact form on this website.