Assembly Bill No. 527

Assembly Bill No. 527-Committee on Government Affairs

May 23, 1997
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Referred to Committee on Government Affairs

SUMMARY--Requires timely payments to design professionals and their subcontractors on public works. (BDR 28-1200)

FISCAL NOTE: Effect on Local Government: Yes.

Effect on the State or on Industrial Insurance: Yes.

EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.

AN ACT relating to public works; requiring timely payments to certain design professionals and their subcontractors on public works; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1 Chapter 338 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 and 3 of this act.
Sec. 2 1. Except as otherwise provided in subsection 2, a public body that enters into a contract with a design professional for the provision of services on a public work shall pay to the design professional any payment due pursuant to the contract within 45 days after a written demand for payment in accordance with the contract is delivered to the public body. The failure of the public body to make such a payment within the specified time makes the payment untimely.
2. If the public body disputes in good faith any portion of the amount due, it may withhold that amount and notify the design professional in writing within 15 days after the date of delivery of the written demand for payment of the nature of the dispute and the amount disputed. The failure of a public body to give such notice while withholding any portion of the amount due shall be deemed an untimely payment.
3. If there is an untimely payment, the design professional is entitled, in lieu of any interest otherwise due, to an amount equal to 1 and 1/2 percent of the untimely payment per month for every month that timely payment is not made.
4. In an action for a violation of this section, the prevailing party is entitled to reasonable attorney's fees and costs.
5. As used in this section, "design professional" means a person with a professional license issued pursuant to chapter 623, 623A or 625 of NRS.
Sec. 3 1. Except as otherwise provided in subsection 3, a design professional as defined in section 2 of this act who has entered into a contract with a public body for the provision of services on a public work shall, within 15 days after receiving a payment on the contract from the public body, pay to his subcontractors on the public work any amount due to each subcontractor, respectively, from the payment received if a written demand for payment has been delivered to the design professional by the subcontractor. The failure of the design professional to make such a payment within the specified time makes the payment untimely.
2. If a subcontractor delivers a written demand for payment to a design professional, the design professional shall include the amount due to the subcontractor in the next written demand for payment sent to the public body by the design professional. The design professional is not required to prepare a written demand for payment to the public body immediately upon receipt of a written demand for payment by the subcontractor, but the failure to include the amount due to the subcontractor in the next written demand for payment to the public body shall be deemed an untimely payment.
3. If the design professional disputes in good faith any portion of the amount due, he may withhold that amount and notify the subcontractor in writing within 15 days after the date of delivery of the written demand for payment of the nature of the dispute and the amount disputed. The failure to give such notice while withholding any portion of the payment shall be deemed an untimely payment.
4. If there is an untimely payment, the subcontractor is entitled, in lieu of any interest otherwise due, to an amount equal to 1 and 1/2 percent of the untimely payment per month for every month that timely payment is not made.
5. In an action for a violation of this section, the prevailing party is entitled to reasonable attorney's fees and costs.
Sec. 4 The provisions of subsection 1 of NRS 354.599 do not apply to any additional expenses of a local government that are related to the provisions of this act.
Sec. 5 This act becomes effective upon passage and approval.