New Jersey Gov. Chris Christie today signed into law legislation sponsored by Senator Kevin O’Toole (R-Bergen, Passaic, Essex, Morris) to expedite payment to contractors making major improvements to state colleges.
“This law fosters job creation by enabling contractors to simultaneously pay their employees, order materials, finish development projects and hire more workers to break ground on additional projects,” O’Toole said. “It assures that those that are improving or expanding any of our state’s eight colleges will not wait months to receive such a significant piece of their payment. They will be paid in a reasonable timeframe so they can complete more projects quicker and help grow the economy.”
Under O’Toole’s law, former Senate bill 2737, any state college contract for more than $100,000 that involves construction, reconstruction, alteration, repair or improvement to any tangible property. It limits retainage to 2 percent of the amount due on each partial payment or allows a contractor to choose to deposit bonds in the amount necessary to satisfy the withholding amount. Upon acceptance of the work performed pursuant to the contract for which the contractor has agreed to a retainage deduction, all amounts being withheld by the State college must be paid in full to the contractor within 45 days of the final acceptance date agreed upon by the contractor and the State college.
Under former law, a contractor working a $50 million state higher education project with a 10 percent retainage would have potentially $5 million of its compensation withheld from until the firm completed all phases of work.