13.1.2.4.1. Any individual item on the schedule of values that is rejected by the Owner's Representative must be properly identified and reason for rejection substantiated and notified to the Contractor within said time period.
13.1.2.4.2. The Owner's Representative may allow certain individual items to appear in the schedule of values as lump sum items. These items must be broken down into individual items prior to request any partial payment regarding said individual item.
13.1.2.5. If the Owner's Representative does not reject the schedule of values as specified herein, then the same shall be deemed approved.
13.2 Progress Payments 13.2.1. Applications for Payments
13.2.1.1. The Progress Payment Period shall be one (1) month long unless otherwise indicated in the Contract Documents. The end of the Progress Payment period shall be the last day of the month unless otherwise established in the Contract Documents. The Contractor does not have to submit an application for payment every month if he so chooses.
13.2.1.2. At least twenty (20) days before the date established for each progress payment, Contractor shall submit to Owner's Representative for review an Application for Payment filled out and signed by Contractor covering the Work completed as of the date of the Application and accompanied by such supporting documentation as is required by the Contract Documents.
13.2.1.3. The determination of quantities of acceptable completed Work under the terms of the Contract Documents will be jointly made by the Owner's Representative and Contractor. It will be based on measurements made by them, or their assistants, according to the units of measurement for each item as shown in the schedule of values and by the method indicated in the corresponding specification, if so indicated in said specification for said item.
13.2.1.4. If the requested payment is based on materials and equipment not incorporated in the Work, but delivered and suitably stored at the Site, or at another location, agreed to in writing, the Application for Payment shall also be accompanied by: (i) a bill of sale, invoice, or other documentation warranting that Owner has received the materials and equipment free and clear of all Liens and (ii) evidence that the materials and equipment are covered by appropriate property insurance or other arrangements to protect Owner's interest therein. All evidence required herein shall be in form satisfactory to Owner.
13.2.1.4.1. Such advance payment may be made to the Contractor for the cost of materials that are to be incorporated into the work, provided the materials meet the requirements of the plans and specifications and are on hand at the Site or stored in acceptable storage places.
13.2.1.4.1.1. No advance payment will be made on living or perishable plant materials.
13.2.1.4.1.2. In the case of materials that have been purchased by the Contractor, the cost shall be determined by the vendors invoice.
- 81 -
13.2.1.4.1.3. In the case of materials manufactured or obtained by the Contractor through the use of his own workmen or equipment, the cost will be determined by the Owner's Representative in accordance with and based upon that particular unit of the Project in which the materials are to be utilized.
13.2.1.4.2. The Contractor shall present signed receipts or other documentary evidence to prove that the cost of the materials for which he is to receive advance payment has been paid in full or, if the materials have not been paid for, the invoice shall be accompanied by a release from the materials dealer expressing his agreement with the payment for such materials to the Contractor by the Owner.
13.2.1.4.3. If at any time after the Contractor has received advance payment for materials on hand at the Site, the Owner or Owner's Representative obtains evidence indicating that said materials, or any part or parts thereof, are defective, or that said materials, or parts thereof, do not conform to the specifications, the Owner will proceed to deduct from any of the succeeding partial payments due the Contractor for work actually performed, a sum sufficient to cover the cost of the materials, or part or parts thereof, found to be defective.
13.2.1.4.4. Materials for which the Contractor has received advance payment shall be properly housed at the Site or in acceptable storage places in the vicinity of the Project in a secure manner that will insure the preservation of their quality and fitness for the Work.
13.2.1.4.4.1. Moreover, the Contractor shall not withdraw said materials for any purpose other than incorporation into the Project, unless he has written consent from the Owner or Owner's Representative to do so.
13.2.1.4.4.2. Storage and protection costs and the cost of replacing lost or damaged materials shall be borne by the Contractor.
13.2.1.4.5. Approval of partial payments for stockpiled materials will not constitute acceptance of such materials for use in completing items of Work.
13.2.1.4.6. An amount equal to the value of materials incorporated into the Work and for which an advance payment has been made, shall be deducted from the partial estimates.
13.2.1.4.7. Unless otherwise specified in the Contract Documents, Payment shall be made to the Contractor for materials fabricated, pre-cast or otherwise produced for the Project and stored at an approved site in Puerto Rico other than in the immediate vicinity of the Project, provided the Contractor furnish and file with the Owner insurance which shall protect the Contractor and the Owner from all risk of physical loss or damage to these materials.
13.2.1.4.7.1. The amount of such insurance shall not be less than the value of such materials.
13.2.2. Retainage
13.2.2.1. The amount of retainage with respect to progress payments shall be as stipulated in the bid documents.
13.2.2.1.1. Unless otherwise specified in the Contract Documents, such retainage shall be five percent (5%) of each partial payment made to the Contractor.
- 82 -
13.2.2.1.1.1. In cases in which a ten percent (10%) Retainage is required by Owner, then after fifty percent (50%) of the Work has been completed to the Owner’s Representative’s satisfaction and the Project is on schedule and the quality of Work is satisfactory to the Owner’s Representative, all the remaining payments may be made in full.
13.2.2.1.2. Immediately after the Owner's Representative, on the basis of an inspection, has determined and certified that the Work is sufficiently complete, or the Work has been occupied for the use for which it was intended, the Owner will release to the Contractor fifty percent (50%) of the amount previously retained provided the following conditions are met.
13.2.2.1.2.1. A written consent of Surety to make such payment is submitted.
13.2.2.1.2.2. There are no claims to be settled from the Owner to the Contractor.
13.2.2.1.2.3. There are no liquidated damages due.
13.2.2.1.2.3.1. However, at Owner's discretion, the Owner may release to Contractor the difference between fifty percent (50%) of the retainage and the amount of liquidated damages.
13.2.3. Review of Applications
13.2.3.1. The Owner's Representative will review the Application for Payment as soon as it is received and will notify the Contractor within five (5) working days of any exceptions he may have. The Contractor will make the necessary corrections and resubmit the Application.
13.2.3.2. The Owner's Representative will, within seven (7) days of the Contractor's date of submittal or five (5) days from the date of resubmission, if the corrections are acceptable, submit the approved Application for Payment to the Owner with all required documentation and approvals from the Architect/Engineer and the Owner's Representative.
13.2.3.3. Owner's Representative's recommendation of any payment requested in an Application for Payment will constitute a representation by Owner's Representative to Owner, based on Owner's Representative's observations on the Site of the executed Work as an experienced and qualified professional and on Owner's Representative's review of the Application for Payment and the accompanying data and schedules, that to the best of Owner's Representative's knowledge, information and belief.
13.2.3.3.1. the Work has progressed to the point indicated
13.2.3.3.2. the quality of the Work is generally in accordance with the Contract Documents (subject to an evaluation of the Work as a functioning whole prior to or upon Substantial Completion, to the results of any subsequent test called for in the Contract Documents, to a final determination of quantities and classifications for Unit Price Work, and to any other qualifications stated in the recommendation); and
13.2.3.3.3. the conditions precedent to Contractor's being entitled to such payment appear to have been fulfilled in so far as it is Owner's Representative's responsibility to observe the Work.
13.2.3.4. By recommending any such payment, Owner's Representative will not thereby be deemed to have
- 83 - represented that:
13.2.3.4.1. inspections made to check the quality or the quantity of the Work as it has been performed have been exhaustive, extended to every aspect of the Work in progress, or involved detailed inspections of the Work beyond the responsibilities specifically assigned to Owner's Representative in the Contract Documents; or 13.2.3.4.2. that there may not be other matters or issues between the parties that might entitle Contractor to be paid additionally by Owner or entitle Owner to withhold payment to Contractor.
13.2.3.5. Neither Owner's Representative's review of Contractor's Work for the purposes of recommending payments nor Owner's Representative's recommendation of any payment, including final payment, will impose responsibility on Owner's Representative to supervise, direct, or control the Work or for the means, methods, techniques, sequences, or procedures of construction, or the safety precautions and programs incident thereto, or for Contractor's failure to comply with Laws and Regulations applicable to Contractor's performance of the Work.
13.2.3.5.1. Additionally, said review or recommendation will not impose responsibility on Owner's Representative to make any examination to ascertain how or for what purposes Contractor has used the moneys paid on account of the Contract Price, or to determine that title to any of the Work, materials, or equipment has passed to Owner free and clear of any Liens.
13.2.3.6. Owner's Representative may refuse to recommend in whole or in part of any payment if, in Owner's Representative's reasonable opinion, it would be untruthful to make the representations to Owner referred to in Article 13.2.3.3.
13.2.3.6.1. Owner's Representative may also (i) refuse to recommend any such payment or, because of subsequently discovered evidence or the results of subsequent inspections or tests, (ii) revise or (iii) revoke any such payment recommendation previously made, to such extent as may be necessary in Owner's Representative's reasonable opinion to protect Owner from loss because:
13.2.3.6.1.1. the Work is defective, or completed Work has been damaged, requiring correction or replacement;
13.2.3.6.1.2. the Contract Price has been reduced by Written Amendment, Change Orders or Extra Work Orders to the extent that justifies withholding payment;
13.2.3.6.1.3. Owner has been required to correct deficient Work or complete Work and has not yet done so; or 13.2.3.6.1.4. Owner's Representative has actual knowledge of the occurrence of any of the events enumerated in Article 15.2.1.
13.2.4. Payments Becomes Due
13.2.4.1. Unless otherwise specified in the Contract Documents, forty (40) days after Owner's approval of the Application for Payment, with Owner's Representative's recommendation, the amount recommended will become due, and when due, shall be paid by Owner to Contractor.
13.2.5. Reduction in Payment
- 84 -
13.2.5.1. The Owner's Representative, without incurring in liability, may decline to approve any Application for Payment or, because of subsequently discovered evidence or subsequent inspection, he may nullify the whole or any part of any Application for Payment previously issued, to such extent as may be necessary in his opinion to protect the Owner from loss because of:
13.2.5.1.1. Deficient Work not remedied; or
13.2.5.1.2. Failure of the Contractor to comply with any requirements of the Contract Documents.
13.2.5.2. Owner may refuse to make payment of the full amount recommended by Owner's Representative because:
13.2.5.2.1. claims have been made against Owner on account of Contractor's performance or furnishing of the Work;
13.2.5.2.2. Liens have been filed in connection with the Work, except where Contractor has delivered a specific Bond satisfactory to Owner to secure the satisfaction and discharge of such Liens;
13.2.5.2.3. there are other items entitling Owner to a set-off against the amount recommended; or
13.2.5.2.4. Owner has actual knowledge of the occurrence of any of the events enumerated in Article 13.2.3.6 or 15.2.1.
13.2.5.3. If Owner refuses to make payment of the full amount recommended by Owner's Representative, Owner must give Contractor immediate written notice (with a copy to Owner's Representative) stating the reasons for such action and promptly pay Contractor any amount remaining after deduction of the amount so withheld.
13.2.5.3.1. Owner shall promptly pay Contractor the amount so withheld, or any adjustment thereto agreed to by Owner and Contractor, when Contractor corrects to Owner's Representative's satisfaction the reasons for such action.
13.2.5.3.2. If it is subsequently determined that Owner's refusal of payment was not justified, the amount wrongfully withheld shall be treated as an amount due as determined by Article 13.2.4.
13.2.5.4. Partial payments may be suspended when in the judgment of the Owner the Work has not proceeded according to the terms of the Contract Documents.
13.2.5.5. If at any time during the construction of the Project, the Owner receives proper notice from a third party stating a claim under Civil Code Article 1489, the Contractor shall settle the claim with the third party within fifteen (15) calendar days from the notice to the Owner and inform the Owner of said settlement or otherwise if Contractor disputes the validity of said claim, post a bond, acceptable to Owner, for the benefit of Owner to protect Owner against liability for payment to the third party under Civil Code Article 1489 in which case partial payment therefore will not be withheld. This will apply in any project where there is no Payment or Performance Bond, or the penal sum of such bond is an amount less than one hundred (100) percent of the Contract Sum.
13.2.5.5.1. If no settlement is reached or a bond is not posted and accepted, the Owner, the Contractor, and the claimant third party shall meet within thirty (30) days after the expiration of the fifteen (15) calendar days to
- 85 - ascertain the amount of the alleged debt.
13.2.5.5.2. Contractor shall then pay within five (5) calendar days the undisputed amount. If no payment is made, the Owner shall retain said amount from the next partial payment and proceed to pay directly the undisputed amount to the third party. If the Contractor posts a bond as provided in Article 13.2.5.5 the Owner will not withhold said amount from Contractor and will not pay the amount to the third party claimant until the Contractor or the third party claimant notify Owner that the dispute among them has been resolved at which time Owner will act accordingly.
13.2.6. Scope of Payment
13.2.6.1. The payment of any partial estimate or of any retained percentage, in no way shall release the obligation of the Contractor to renew or repair any deficient materials used in the construction, or to be responsible for all damage due to such deficiencies.
13.2.6.2. No payment will be made for any unauthorized work.
13.2.6.3. No certificate for a progress payment, nor any progress payment, or any partial or entire use or occupancy of the Project by the Owner shall constitute an acceptance of any Work not in accordance with the Contract Documents.