Page:United States Statutes at Large Volume 102 Part 3.djvu/508

 102 STAT. 2460

PUBLIC LAW 100-496—OCT. 17, 1988 LIMITATIONS ON DISCOUNT PAYMENTS

SEC. 8. Section 3904 of title 31, United States Code, is amended by inserting after the first sentence the following: "For the purpose of the preceding sentence, the specified time shall be determined from the date of the invoice.". PAYMENT PROVISIONS RELATING TO CONSTRUCTION CONTRACTS

SEC. 9. (a) Chapter 39 of title 31, United States Code, is amended— (1) by redesignating sections 3905 and 3906 as sections 3906 and 3907, respectively; and (2) by inserting after section 3904 the following: "§ 3905. Payment provisions relating to construction contracts "(a) In the event that a contractor, after making a certified payment request to an agency pursuant to section 39O30t)) of this title, discovers that a portion or all of such payment request constitutes a payment for performance by such contractor that fails to conform to the specifications, terms, and conditions of its contract (hereafter in this subsection referred to as the 'unearned amount'), then the contractor shall— "(1) notify the agency of such performance deficiency; and "(2) be obligated to pay the Government an amount equal to interest on the unearned amount (computed in the manner provided in section 3903(c) of this title), from the date of the contractor's receipt of such unearned amount until— "(A) the date the contractor notifies the agency that the performance deficiency has been corrected; or "(B) the date the contractor reduces the amount of any subsequent certified application for payment to such agency by an amount equal to the unearned amount. "(b) Each construction contract awarded by an agency shall include a clause that requires the prime contractor to include in each subcontract for property or services entered into by the prime contractor and a subcontractor (including a material supplier) for the purpose of performing such construction contract— "(1) a payment clause which obligates the prime contractor to pay the subcontractor for satisfactory performance under its subcontract within 7 days out of such amounts as are paid to the prime contractor by the agency under such contract; and "(2) an interest penalty clause which obligates the prime contractor to pay to the subcontractor an interest penalty on amounts due in the case of each payment not made in accordance with the payment clause included in the subcontract pursuant to paragraph (1) of this subsection— "(A) for the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; and (B) computed at the rate specified by section 3902(a) of this title. "(c) The construction contract awarded by the agency shall further require the prime contractor to include in each of its subcontracts (for the purpose of performance of such construction contract) a provision requiring the subcontractor to include a payment clause and an interest penalty clause conforming to the standards of subsection (b) of this section in each of its subcontracts

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