By Bruce Jervis
Companies that supply goods and materials for public works projects can face payment challenges. If their customer fails to pay, their only recourse is against a public works payment bond. But first there are questions as to whether the goods were merely intended for the bonded project, were delivered to the job site, or were actually incorporated into the project. Then there is the sometimes greater challenge of identifying the applicable payment bond and filing a timely claim against it.
In a recent Texas case, a supplier cleared the first hurdle by showing that a lower-tier subcontractor took possession of the goods with the mutual understanding the material was intended for use on a public project. The supplier, however, was unable to identify the payment bond or file a timely claim. The prime contractor’s refusal to respond to the supplier’s inquiry violated a state law, but that did not obligate the prime to pay the supplier. The statute only authorized recovery of the cost of identifying the bond.
Have you encountered situations like this? Are public works contractors sometimes deliberately obstructive in order to push unpaid suppliers and subcontractors outside the payment bond claim period? Should there be more serious sanctions for such conduct? Your comments are welcome.