Courts typically view the subcontractor as owning the materials until installation, but the owner may require a transfer of title when the subcontractor receives a
progress payment for them (but still has not installed them).
The court ruled that settlement discussions occurring after the contractor unequivocally notified the authority that it considered the contract terminated based upon the authority's failure to make
progress payments did not establish that the contract was still in force; discussions were merely an attempt by parties to work out a settlement of claims that would avoid litigation, and it was never contemplated that the contractor would return to complete work.
It should be noted that the new form (for waiver and release of lien upon
progress payment) is not a model of clarity.
For contractors receiving
progress payments on federal contracts, the impact is greater.
These include interest payments on cost reimbursement public vouchers, potential for higher profits on DoD contracts and the use of performance based
progress payments.
Relying on the terms of the contract, the court found that the risk of failed research rested solely on Fairchild and unmistakably held that the receipt of
progress payments neither shifted that risk nor constituted funding.
In addition, the law stipulates that a construction contract cannot alter the rights of any contractor, subcontractor or material supplier to receive prompt and timely
progress payments. The broad statute makes pay-if paid clauses unenforceable, meaning that Arizona falls into the long succession of states that have rejected contingent payment either through court decisions or by legislating it out of existence.
But despite the concerns of key government employees, the government repeatedly approved PMI's requests for
progress payments and ultimately paid a total of 11
progress payments to PMI for more than $5 million.
The Subcontractor will be paid monthly
progress payments on or before the 15th of each month for the value of the work completed and the value of stored materials, suitably stored on- or off-site during the preceding month.
Accordingly,
progress payments are often structured to keep the contractor's net investment (i.e., accumulated production expenditures) in the contract and, hence, its carrying cost directly traceable to the contract relatively low.
STA focuses its activities on problems affecting subcontractors in public and private construction, including
progress payments, bid-shopping, improper back changes, legislation, prevailing wage enforcement, lien laws, insurance/bonding and the like.
