Viewing a single comment thread. View all comments

MichMaybenot t1_jcfj0p3 wrote

Reply to comment by whitewolfkingndanorf in City terminates infrastructure contract after late payments by locker1313

I don't know anything about how this specific contract was phased, but typically you rely on contract funds to pay your job costs (materials, subs, etc). You can use a bank line to bridge a delayed payment from the owner, but it isn't reasonable to maintain enough liquidity to self-fund your backlog.

9

whitewolfkingndanorf t1_jcfly3d wrote

For smaller companies, sure. But Metra has a $150m contract with the City. They should have enough cash reserves to pay small business owners.

If a company has >25% of its receivables or revenues from one customer, then that’s not ideal. If that was the case here with Metra, then the City should look for another contractor that isn’t so dependent on the City’s contract.

4

saltyjohnson t1_jchk926 wrote

As someone who deals with federal government contracts, I regularly see pay-when-paid provisions within. That means our time to pay a subcontractor or vendor starts once we receive payment from the prime contractor or government. Big projects whose timeline spreads across months are billed monthly based on progress, the government agrees with the schedule of values and progress on each line item, and then issues payment. The subcontractors' work would be included in that billing, so there would be enough money to cover everybody's expenses for the last month. A contractor generally doesn't bankroll the whole thing out of pocket when payments are delayed from the government.

That's federal. Municipal would have different laws and the city itself might have specific provisions in their contracts. But if the 7-day deadline starts when Metra receives payment from the City, and Metra is being kicked out for not meeting their sub payment deadlines, then that means that the city paying them late has nothing to do with their own late payments to subs.

8

A_P_Dahset t1_jci4ry2 wrote

Good point. Well-explained...snarklessly, at that. 👌🏾

1

temptags t1_jcgs78l wrote

They should also have been required to carry a payment bond to ensure that subs get paid regardless of financial circumstances affecting the prime.

5