Sec 28-411. Prompt payment; progress payment; consultants and contractors; subconsultants and subcontractors; design professional

A. The department shall make progress payments pursuant to the terms of an agreement with a consultant or contractor on the basis of an invoice for work already performed. All progress payments shall be paid on or before the twenty-first day after the date the department receives the invoice unless the department does not approve and certify the invoice pursuant to subsection B of this section.

B. Any invoice from a consultant or contractor for progress payments shall be deemed approved and certified by the department unless within seven days from the date the department receives the invoice the department sends the consultant or contractor written notice by first class mail or by electronic means of those items that the department does not approve and certify under the terms of the agreement.

C. On or before the seventh day after the date the department makes a progress payment, if the consultant or contractor contracted with subconsultants or subcontractors to perform the work for which the department made the progress payment, the consultant or contractor shall pay the subconsultants or subcontractors for the work performed to the extent of each subconsultant's or subcontractor's contractual interest in the progress payment. If any subconsultant or subcontractor contests the amount paid by a consultant or contractor from a progress payment made under subsection A of this section, the subconsultant or subcontractor shall notify the department in writing within thirty days after receiving the payment from the consultant or contractor. This subsection does not apply if the contract between the consultant or contractor and the subconsultant or subcontractor expressly provides that the prompt payment provisions of this subsection do not apply to the agreement between the consultant or contractor and the subconsultant or subcontractor.

D. If a consultant or contractor fails to pay a subconsultant or subcontractor within seven days of receiving a progress payment from the department, the consultant or contractor shall pay the subconsultant or subcontractor interest on the unpaid balance, beginning on the eighth day at the rate of one percent per month or fraction of a month. This subsection does not apply if the contract between the consultant or contractor and the subconsultant or subcontractor expressly provides that the prompt payment provisions of this subsection do not apply to the agreement between the consultant or contractor and the subconsultant or subcontractor.

E. A subconsultant or subcontractor may submit a written request to the department asking the department to notify the subconsultant or subcontractor of each subsequent progress payment made to the consultant or contractor. If the department receives a written request under this subsection, the department shall send the requesting party a written notice by first class mail of each subsequent progress payment within five days of making the progress payment.

F. Agreements with the department for consultant or contractor services do not alter the rights of any consultant or contractor to receive prompt and timely payment as provided under this section.

G. Subject to the requirements of this section, the department shall pay the agreed or reasonable value of all labor, materials, work or services furnished, installed or performed by a design professional pursuant to a limited notice to proceed from the department's authorized agent before the execution of a contract or contract modification applicable to the labor, materials, work or services. The unit prices, contract sum, hourly rates or other cost or pricing formula of the contract or contract modification applicable to the labor, materials, work or services is the fair and reasonable cost for purposes of this section unless the department and its design professional otherwise agree in writing. If the parties fail to successfully negotiate and sign a contract or contract modification, the design professional shall be paid for costs incurred pursuant to the limited notice to proceed and subject to the department's cost allowability guidelines. For the purposes of this subsection, "design professional" means an individual or firm registered pursuant to title 32, chapter 1, article 1, to practice architecture, engineering, geology, landscape architecture or land surveying or any combination of those professions and persons employed by the registered individual or firm.

H. To the extent that this section conflicts with section 28-6924, section 28-6924 controls any agreement between the department and a contractor for highway construction projects.