Virginia Shortens Subsubcontractors' Time to Provide Notice on Public Payment Bond Claims
By: Jason C. Tomasulo
An amendment to the Virginia Public Procurement Act (VPPA) has cut in half the amount of time a sub-subcontractor or supplier has to make a payment bond claim on public construction and transportation projects in Virginia. Payment bonds ensure payment to those who provide labor materials, equipment rentals and public utility services to a construction project. The VPPA requires payment bonds on public construction projects that exceed $500,000 and transportation projects that exceed $250,000.
Prior Law - 180 Days Notice
Until last year, the VPPA required a sub-subcontractor or supplier of a first-tier subcontractor to provide notice of its payment bond claim to the contractor who secured the payment bond within 180 days from the day it last furnished labor or material. Failure to timely provide notice is fatal to a payment bond claim. It was well established in Virginia that this 180-day period could not be shortened by the bonding company or the contractor, even when language in the payment bond required notice within a shorter period.
Current Law - 90 Days Notice
All of that changed last year when the Virginia Legislature amended the VPPA and reduced the notice period from 180 days to 90 days. This change makes the VPPA consistent with:
- The notice period typically required by sureties in payment bonds;
- The notice requirements for similarly situated claimants in Maryland, the District of Columbia and Pennsylvania under their state statutes; and
- The Federal Miller Act, which applies to federal projects in Virginia and elsewhere.
Sub-subcontractors and suppliers to subcontractors in Virginia must be aware of this change in order to protect their payment bond rights on public construction projects. A sub-subcontractor or supplier who fails to timely provide notice within 90 days of last providing labor or materials will lose his right to assert a payment bond claim. For contractors, subcontractors and sureties defending against a payment bond claim, the reduced notice period may provide a defense to payment bond claims if the claimants are not aware of this statutory change.Jason Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.
Jason C. Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.
eme Court overruled the trial court’s interpretation of an earlier decision that stood for the proposition that all subcontractors, regardless of their relationship to the principal under the bond, were third party beneficiaries of the payment bond.