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.