State entities which fail to pay are liable for breach of contract claims just like a private job. However, collecting from a public entity can be extremely difficult and frustrating. In 2018, the Louisiana legislature amended the “prompt pay” statute which allows contractors to file mandamus proceedings to force an entity to pay them what they are owed.
What is the “Prompt Pay Statute” and How Does it Work?
The Prompt Pay Statute which is codified in Louisiana Revised Statute 38:2191 provides that all public entities shall pay all obligations arising under public contracts when they become due and payable under the contract. If a public entity fails to make a payment within forty-five (45) days following its receipt of a certified request for payment without reasonable cause, the public entity can be held liable for reasonable attorney fees and interest charged at one-half percent accumulated daily, not to exceed fifteen percent.
In order to force payment, the general contractor can file a writ of mandamus, which orders the state entity or official to properly fulfill their official duties and correct any abuse of discretion
Any action by the contractor on the contract or on the bond (or by the contractor, surety, or both on the bond furnished by the contractor) that is against the state (or any of its agencies, boards or subdivisions) that are in connection with the construction, alteration, or repair of any public works contracted by the state shall prescribe five years from either the completion, substantial completion, or acceptance of such work dependent on whichever occurs first.
Any action which would be extinguished by the provisions of this Section may be brought within one year of the effective day of this Section La. Rev. Stat. Ann. § 38:2189.1.
Should you have any questions or you would like to discuss this issue in further detail, please do not hesitate to contact us to schedule a free consultation.