Friday, October 7, 2011
Federal Prompt Payment Act Doesn't Give Cause of Action to Subcontractors
In its recent decision in United States for the use and benefit of IES Commercial Inc. v. The Continental Insurance Co., D.D.C., No. 11-0985, 9/30/11, the U.S. District Court for the District of Columbia held that the Federal Prompt Payment Act (PPA) does not provide plaintiffs with a private right of action. It therefore dismissed a subcontractor's claim against a construction company made claiming this. This does not mean though that the PPA provides no remedy, in that it still entitles a claimant due money to interest, but it does mean that a PPA violation, of itself, does not give rise to an independent cause of action or damages. Virginia has a similar PPA scheme in the Virginia Public Procurement Act, which similar does not expressly provide for a private cause of action, and so one would anticipate the same result. A holding like this is good news for prime contractors; but not so much for subcontractors.