Orange County Branch Newsletter

August 2011

Law and Civil Engineering

Prompt Payment for Design Professionals on Public Works Projects

By Eugene Bass, Esq

Engineers have the right to demand prompt payment on public works projects and they are entitled to additional sums as penalties from a public agency that fails to pay as well as attorney fees in the event of litigation to enforce payment.

In contracts for public works improvements, the public agency is required to pay the prime design professional any progress payment within 30 days of receipt of a written demand for payment in accordance with the contract. In addition, the final retention payment must be paid within 45 days of receipt of a written demand. If the public agency disputes in good faith any portion of the amount due, it may withhold from the payment an amount not to exceed 150 percent of the disputed amount.

If any amount is wrongfully withheld or is not paid in a timely manner, the prime design professional shall be entitled to a penalty of 1½ % per month in lieu of interest otherwise due for every month that payment is not made. Also, in any action for the collection of amounts withheld in violation of the law, the prevailing party shall be entitled to reasonable attorney's fees and costs.

The law defines a "design professional" as a registered engineer, licensed architect or licensed land surveyor. The "prime design professional" is defined as a design professional with a written contract directly with the public agency. A "public agency" means the state, any county, any city, any city and county, any district, any public authority, any public agency, any municipal corporation or other political subdivision or political corporation of the state. The law, however, does not apply to any state agency contracts.

Engineers should take care that their contracts with public agencies include provisions addressing the presentation of written demands for both progress and final payments. It is also advisable to obtain some proof of receipt of progress and final payment demands from the public entity since the time for payment starts upon receipt of the demand.

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