Unless a contractor wants to finance public construction projects, a contractor on a State project wants to collect interest on any late payments the State of South Carolina owes. South Carolina’s Prompt Payment Act permits contractors to recover interest on such late payments, but a recent decision shows contractors must carefully comply with the statute’s notice requirement to preserve this right.
In Consensus Construction & Consulting, Inc. v. Horry-Georgetown Technical College, Case No. 2015-003, (CPOC, March 15, 2016), the Chief Procurement Officer for Construction (“CPOC”) found the State wrongfully withheld payment from a contractor and then turned to the issue of whether the contractor was entitled to recover interest on the payment owed. The State’s Standard Contract Modifications and Standard Supplementary Conditions replace the interest provisions in standard form contracts with a provision limiting the recovery of interest to only those situations where the State must pay interest under the Prompt Payment Act. The CPOC held that the Prompt Payment Act applies to the State, but the contractor was not entitled to interest because of the Act’s notice requirement which provides: “no interest is due unless the person being charged interest has been notified of the provisions of this section at the time the request for payment is made.” S.C. Code Ann. § 29-6-50. Continue Reading