Massachusetts law provides a mechanism through which subcontractors on public projects may get paid directly from awarding authorities. If a general contractor does not pay a subcontract balance due within seventy days after the subcontractor substantially completes the work, the subcontractor may demand payment directly from the awarding authority in certain circumstances. These requirements are outlined in M.G. L. c. 30, § 39F.
First, for a subcontractor to recover via direct payment it must be either a filed sub-bidder or been approved in writing by the awarding authority. A proper demand is made by sending a letter to the awarding authority detailing the balance owed under the subcontract with a breakdown of the accounting, and the status of the subcontract work. The letter must be under oath and sent via certified mail to both the awarding authority and general contractor. The general contractor must respond with any disputes within 10 days. If the general contractor timely disputes the claim the awarding authority must place the disputed amount in a joint bank account for the subcontractor and general contractor. If the dispute is for only part of the claim, the awarding authority must pay the subcontractor the undisputed balance, and place the disputed portion in a joint account until the dispute is settled. Once the general contractor and subcontractor come to an agreement, the bank must release the amount as instructed by them. If they do not reach an agreement, the bank can release the amount in accordance with a court order. The awarding authority must pay the subcontractor the undisputed balance due within 15 days of receipt of the demand.
It is best to consult with a construction attorney to ensure strict compliance with statutory requirements when making direct payment demands.
