{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/2.2-4354.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/2.2-4354.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/2.2-4354.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/2.2-4354.html"}],"law_id":67731,"edition_id":1,"section_id":67731,"structure_id":14719,"section_number":"2.2-4354","catch_line":"Payment clauses to be included in contracts","history":"1990, c. 824, \u00a7 11-62.11; 1992, c. 110; 2001, c. 844; 2022, c. 727; 2023, cc. 675, 676.","full_text":"Any contract awarded by any state agency, or any contract awarded by any agency of local government in accordance with \u00a7 2.2-4352, shall include:\n\n1\n\nA payment clause that obligates the contractor on a construction contract, in the event that the contractor has not received payment from the state agency or local government for work performed by a subcontractor under such contract, to be liable for the entire amount owed to such subcontractor and to pay such subcontractor within 60 days of the receipt of an invoice following satisfactory completion of the work for which the subcontractor has invoiced. Such contractor shall not be liable for amounts otherwise reducible due to the subcontractor’s noncompliance with the terms of the contract. However, in the event that the contractor withholds all or a part of the amount invoiced by the subcontractor under the terms of the contract, the contractor shall notify the subcontractor within 50 days of the receipt of such invoice, in writing, of his intention to withhold all or a part of the subcontractor’s payment with the reason for nonpayment, specifically identifying the contractual noncompliance, the dollar amount being withheld, and the lower-tier subcontractor responsible for the contractual noncompliance. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor, regardless of that contractor’s receiving payment for amounts owed to that contractor. Any provision in a construction contract contrary to this section shall be unenforceable. Nothing in this subdivision shall be construed to (i) apply to or prohibit the inclusion of any retainage provisions in a construction contract or (ii) apply to contracts awarded solely for professional services as that term is defined in § 2.2-4301 where the public body is contracting directly with an architectural and engineering firm.2\n\nA payment clause that obligates the contractor to take one of the two following actions within seven days after receipt of amounts paid to the contractor by the state agency or local government for work performed by the subcontractor under that contract:\n\t\t\ta. Pay the subcontractor for the proportionate share of the total payment received from the agency attributable to the work performed by the subcontractor under that contract; or\n\t\t\tb. Notify the agency and subcontractor, in writing, of his intention to withhold all or a part of the subcontractor’s payment with the reason for nonpayment.3\n\nA payment clause that requires (i) individual contractors to provide their social security numbers and (ii) proprietorships, partnerships, and corporations to provide their federal employer identification numbers.4\n\nAn interest clause that obligates the contractor to pay interest to the subcontractor on all amounts owed by the contractor that remain unpaid after seven days following receipt by the contractor of payment from the state agency or agency of local government for work performed by the subcontractor under that contract, except for amounts withheld as allowed in subdivision 2.5\n\nAn interest rate clause stating, “Unless otherwise provided under the terms of this contract, interest shall accrue at the rate of one percent per month.”\n\t\t\tAny such contract awarded shall further require the contractor to include in each of its subcontracts a provision requiring each subcontractor to include or otherwise be subject to the same payment and interest requirements with respect to each lower-tier subcontractor.\n\t\t\tA contractor’s obligation to pay an interest charge to a subcontractor pursuant to the payment clause in this section shall not be construed to be an obligation of the state agency or agency of local government. A contract modification shall not be made for the purpose of providing reimbursement for the interest charge. A cost reimbursement claim shall not include any amount for reimbursement for the interest charge.","order_by":null,"text":{"0":{"id":245346,"text":"Any contract awarded by any state agency, or any contract awarded by any agency of local government in accordance with \u00a7 2.2-4352, shall include:","type":"section","prefixes":[""],"prefix":"","entire_prefix":"","prefix_anchor":"","level":1,"next_prefix":"1"},"1":{"id":245347,"text":"A payment clause that obligates the contractor on a construction contract, in the event that the contractor has not received payment from the state agency or local government for work performed by a subcontractor under such contract, to be liable for the entire amount owed to such subcontractor and to pay such subcontractor within 60 days of the receipt of an invoice following satisfactory completion of the work for which the subcontractor has invoiced. Such contractor shall not be liable for amounts otherwise reducible due to the subcontractor’s noncompliance with the terms of the contract. However, in the event that the contractor withholds all or a part of the amount invoiced by the subcontractor under the terms of the contract, the contractor shall notify the subcontractor within 50 days of the receipt of such invoice, in writing, of his intention to withhold all or a part of the subcontractor’s payment with the reason for nonpayment, specifically identifying the contractual noncompliance, the dollar amount being withheld, and the lower-tier subcontractor responsible for the contractual noncompliance. Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor, regardless of that contractor’s receiving payment for amounts owed to that contractor. Any provision in a construction contract contrary to this section shall be unenforceable. Nothing in this subdivision shall be construed to (i) apply to or prohibit the inclusion of any retainage provisions in a construction contract or (ii) apply to contracts awarded solely for professional services as that term is defined in § 2.2-4301 where the public body is contracting directly with an architectural and engineering firm.","type":"section","prefixes":["1"],"prefix":"1","entire_prefix":"1","prefix_anchor":"1","level":1,"prior_prefix":"","next_prefix":"2"},"2":{"id":245348,"text":"A payment clause that obligates the contractor to take one of the two following actions within seven days after receipt of amounts paid to the contractor by the state agency or local government for work performed by the subcontractor under that contract:\n\t\t\ta. Pay the subcontractor for the proportionate share of the total payment received from the agency attributable to the work performed by the subcontractor under that contract; or\n\t\t\tb. Notify the agency and subcontractor, in writing, of his intention to withhold all or a part of the subcontractor’s payment with the reason for nonpayment.","type":"section","prefixes":["2"],"prefix":"2","entire_prefix":"2","prefix_anchor":"2","level":1,"prior_prefix":"1","next_prefix":"3"},"3":{"id":245349,"text":"A payment clause that requires (i) individual contractors to provide their social security numbers and (ii) proprietorships, partnerships, and corporations to provide their federal employer identification numbers.","type":"section","prefixes":["3"],"prefix":"3","entire_prefix":"3","prefix_anchor":"3","level":1,"prior_prefix":"2","next_prefix":"4"},"4":{"id":245350,"text":"An interest clause that obligates the contractor to pay interest to the subcontractor on all amounts owed by the contractor that remain unpaid after seven days following receipt by the contractor of payment from the state agency or agency of local government for work performed by the subcontractor under that contract, except for amounts withheld as allowed in subdivision 2.","type":"section","prefixes":["4"],"prefix":"4","entire_prefix":"4","prefix_anchor":"4","level":1,"prior_prefix":"3","next_prefix":"5"},"5":{"id":245351,"text":"An interest rate clause stating, “Unless otherwise provided under the terms of this contract, interest shall accrue at the rate of one percent per month.”\n\t\t\tAny such contract awarded shall further require the contractor to include in each of its subcontracts a provision requiring each subcontractor to include or otherwise be subject to the same payment and interest requirements with respect to each lower-tier subcontractor.\n\t\t\tA contractor’s obligation to pay an interest charge to a subcontractor pursuant to the payment clause in this section shall not be construed to be an obligation of the state agency or agency of local government. A contract modification shall not be made for the purpose of providing reimbursement for the interest charge. A cost reimbursement claim shall not include any amount for reimbursement for the interest charge.","type":"section","prefixes":["5"],"prefix":"5","entire_prefix":"5","prefix_anchor":"5","level":1,"prior_prefix":"4"}},"ancestry":[{"id":14719,"edition_id":1,"name":"Prompt Payment","identifier":"4","label":"article","depth":5,"order_by":1,"parent_id":12752,"metadata":{},"date_created":"2026-06-26 03:49:31","date_modified":"2026-06-26 03:49:31","permalink":{"id":177277,"object_type":"structure","relational_id":14719,"identifier":"4","token":"2.2\/II\/B\/43\/4","url":"\/2.2\/II\/B\/43\/4\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12752,"edition_id":1,"name":"Virginia Public Procurement Act","identifier":"43","label":"chapter","depth":4,"order_by":1,"parent_id":12751,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":176989,"object_type":"structure","relational_id":12752,"identifier":"43","token":"2.2\/II\/B\/43","url":"\/2.2\/II\/B\/43\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12751,"edition_id":1,"name":"Transaction of Public Business","identifier":"B","label":"part","depth":3,"order_by":1,"parent_id":12750,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":176445,"object_type":"structure","relational_id":12751,"identifier":"B","token":"2.2\/II\/B","url":"\/2.2\/II\/B\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12750,"edition_id":1,"name":"Administration of State Government","identifier":"II","label":"subtitle","depth":2,"order_by":1,"parent_id":12749,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":176253,"object_type":"structure","relational_id":12750,"identifier":"II","token":"2.2\/II","url":"\/2.2\/II\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12749,"edition_id":1,"name":"Administration of Government","identifier":"2.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:51","date_modified":"2026-06-26 03:43:51","permalink":{"id":171453,"object_type":"structure","relational_id":12749,"identifier":"2.2","token":"2.2","url":"\/2.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":68973,"structure_id":14719,"section_number":"2.2-4347","catch_line":"Definitions","url":"\/2.2-4347\/","token":"2.2\/II\/B\/43\/4\/2.2-4347","metadata":false},{"id":84033,"structure_id":14719,"section_number":"2.2-4348","catch_line":"Exemptions","url":"\/2.2-4348\/","token":"2.2\/II\/B\/43\/4\/2.2-4348","metadata":false},{"id":71738,"structure_id":14719,"section_number":"2.2-4349","catch_line":"Retainage to remain valid","url":"\/2.2-4349\/","token":"2.2\/II\/B\/43\/4\/2.2-4349","metadata":false},{"id":56401,"structure_id":14719,"section_number":"2.2-4350","catch_line":"Prompt payment of bills by state agencies","url":"\/2.2-4350\/","token":"2.2\/II\/B\/43\/4\/2.2-4350","metadata":false},{"id":64826,"structure_id":14719,"section_number":"2.2-4350.1","catch_line":"Prohibition on payment without an appropriation; prohibition on IOUs","url":"\/2.2-4350.1\/","token":"2.2\/II\/B\/43\/4\/2.2-4350.1","metadata":false},{"id":75782,"structure_id":14719,"section_number":"2.2-4351","catch_line":"Defect or impropriety in the invoice or goods and\/or services received","url":"\/2.2-4351\/","token":"2.2\/II\/B\/43\/4\/2.2-4351","metadata":false},{"id":73904,"structure_id":14719,"section_number":"2.2-4352","catch_line":"Prompt payment of bills by localities","url":"\/2.2-4352\/","token":"2.2\/II\/B\/43\/4\/2.2-4352","metadata":false},{"id":82180,"structure_id":14719,"section_number":"2.2-4353","catch_line":"Date of postmark deemed to be date payment is made","url":"\/2.2-4353\/","token":"2.2\/II\/B\/43\/4\/2.2-4353","metadata":false},{"id":67731,"structure_id":14719,"section_number":"2.2-4354","catch_line":"Payment clauses to be included in contracts","url":"\/2.2-4354\/","token":"2.2\/II\/B\/43\/4\/2.2-4354","metadata":false},{"id":72792,"structure_id":14719,"section_number":"2.2-4355","catch_line":"Interest penalty; exceptions","url":"\/2.2-4355\/","token":"2.2\/II\/B\/43\/4\/2.2-4355","metadata":false},{"id":86376,"structure_id":14719,"section_number":"2.2-4356","catch_line":"Comptroller to file annual report","url":"\/2.2-4356\/","token":"2.2\/II\/B\/43\/4\/2.2-4356","metadata":false}],"previous_section":{"id":82180,"structure_id":14719,"section_number":"2.2-4353","catch_line":"Date of postmark deemed to be date payment is made","url":"\/2.2-4353\/","token":"2.2\/II\/B\/43\/4\/2.2-4353","metadata":false},"next_section":{"id":72792,"structure_id":14719,"section_number":"2.2-4355","catch_line":"Interest penalty; exceptions","url":"\/2.2-4355\/","token":"2.2\/II\/B\/43\/4\/2.2-4355","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/2.2-4354\/","history_text":"

This law was first created in 1990. The record of its establishment is cataloged in chapter 824 of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. Unfortunately, the 1990 \u201cActs\u201d aren\u2019t available online. It has been modified 4 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1992, chapter 110; in 2001, chapter 844<\/a>; in 2022, chapter 727<\/a>; in 2023, chapters 675<\/a> and 676<\/a>.<\/p>","references":[{"id":65043,"section_number":"2.2-2244","catch_line":"Exemption of Authority from personnel and procurement procedures; adoption of procurement policies","order_by":null,"url":"\/2.2-2244\/"},{"id":87305,"section_number":"2.2-2325","catch_line":"Exemptions from personnel and procurement procedures; adoption of procurement policies","order_by":null,"url":"\/2.2-2325\/"},{"id":69413,"section_number":"2.2-2364","catch_line":"Exemption of Authority from personnel and procurement procedures; adoption of procurement policies","order_by":null,"url":"\/2.2-2364\/"},{"id":83558,"section_number":"2.2-4807","catch_line":"Debtor information and skip-tracing","order_by":null,"url":"\/2.2-4807\/"},{"id":74516,"section_number":"23.1-1017","catch_line":"Covered institutions; operational authority; procurement","order_by":null,"url":"\/23.1-1017\/"},{"id":67105,"section_number":"23.1-2213","catch_line":"Medical center management; capital projects; leases of property; procurement","order_by":null,"url":"\/23.1-2213\/"},{"id":62366,"section_number":"23.1-3138","catch_line":"Procurement and information technology","order_by":null,"url":"\/23.1-3138\/"}],"refers_to":[{"id":83635,"section_number":"2.2-4301","catch_line":"Definitions","order_by":null,"url":"\/2.2-4301\/"},{"id":73904,"section_number":"2.2-4352","catch_line":"Prompt payment of bills by localities","order_by":null,"url":"\/2.2-4352\/"}],"permalink":{"id":177311,"object_type":"law","relational_id":67731,"identifier":"2.2-4354","token":"2.2\/II\/B\/43\/4\/2.2-4354","url":"\/2.2-4354\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/2.2-4354\/","token":"2.2\/II\/B\/43\/4\/2.2-4354","dublin_core":{"Title":"Payment clauses to be included in contracts","Type":"Text","Format":"text\/html","Identifier":"\u00a7 2.2-4354","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

Any contract<\/span> awarded by any state agency<\/span>, or any contract<\/span> awarded by any agency of local government in accordance with \u00a7 2.2-4352<\/a>, shall include:<\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> A payment clause that obligates the contractor<\/span> on a construction contract<\/span>, in the event that the contractor<\/span> has not received payment from the state agency<\/span> or local government for work performed by a subcontractor<\/span> under such contract, to be liable for the entire amount owed to such subcontractor<\/span> and to pay such subcontractor<\/span> within 60 days of the receipt of an invoice following satisfactory completion of the work for which the subcontractor<\/span> has invoiced. Such contractor<\/span> shall not be liable for amounts otherwise reducible due to the subcontractor<\/span>’s noncompliance with the terms of the contract. However, in the event that the contractor<\/span> withholds all or a part of the amount invoiced by the subcontractor<\/span> under the terms of the contract, the contractor<\/span> shall notify the subcontractor<\/span> within 50 days of the receipt of such invoice, in writing, of his intention to withhold all or a part of the subcontractor<\/span>’s payment with the reason for nonpayment, specifically identifying the contractual noncompliance, the dollar amount being withheld, and the lower-tier subcontractor<\/span> responsible for the contractual noncompliance. Payment by the party<\/span> contracting with the contractor<\/span> shall not be a condition precedent<\/span> to payment to any lower-tier subcontractor<\/span>, regardless of that contractor<\/span>’s receiving payment for amounts owed to that contractor<\/span>. Any provision in a construction contract<\/span> contrary to this section shall be unenforceable. Nothing in this subdivision shall be construed to (i) apply to or prohibit the inclusion of any retainage provisions in a construction contract<\/span> or (ii) apply to contracts<\/span> awarded solely for professional services<\/span> as that term is defined in § 2.2-4301<\/a> where the public body<\/span> is contracting directly with an architectural and engineering firm. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> A payment clause that obligates the contractor<\/span> to take one of the two following actions within seven days after receipt of amounts paid to the contractor<\/span> by the state agency<\/span> or local government for work performed by the subcontractor<\/span> under that contract:\n\t\t\ta. Pay the subcontractor<\/span> for the proportionate share of the total payment received from the agency attributable to the work performed by the subcontractor<\/span> under that contract; or\n\t\t\tb. Notify the agency and subcontractor<\/span>, in writing, of his intention to withhold all or a part of the subcontractor<\/span>’s payment with the reason for nonpayment. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> A payment clause that requires (i) individual contractors<\/span> to provide their social security numbers and (ii) proprietorships, partnerships, and corporations to provide their federal employer identification numbers. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> An interest clause that obligates the contractor<\/span> to pay interest to the subcontractor<\/span> on all amounts owed by the contractor<\/span> that remain unpaid after seven days following receipt by the contractor<\/span> of payment from the state agency<\/span> or agency of local government for work performed by the subcontractor<\/span> under that contract, except for amounts withheld as allowed in subdivision 2. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> An interest rate clause stating, “Unless otherwise provided under the terms of this contract, interest shall accrue at the rate of one percent per month.”\n\t\t\tAny such contract awarded shall further require the contractor<\/span> to include in each of its subcontracts a provision requiring each subcontractor<\/span> to include or otherwise be subject to the same payment and interest requirements with respect to each lower-tier subcontractor<\/span>.\n\t\t\tA contractor<\/span>’s obligation to pay an interest charge to a subcontractor<\/span> pursuant to the payment clause in this section shall not be construed to be an obligation of the state agency<\/span> or agency of local government. A contract modification shall not be made for the purpose of providing reimbursement for the interest charge. A cost reimbursement claim shall not include any amount for reimbursement for the interest charge. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nPAYMENT CLAUSES TO BE INCLUDED IN CONTRACTS (\u00a7 2.2-4354)\n\nAny contract awarded by any state agency, or any contract awarded by any agency\nof local government in accordance with \u00a7 2.2-4352, shall include:\n\n1. A payment clause that obligates the contractor on a construction contract, in\nthe event that the contractor has not received payment from the state agency or\nlocal government for work performed by a subcontractor under such contract, to\nbe liable for the entire amount owed to such subcontractor and to pay such\nsubcontractor within 60 days of the receipt of an invoice following satisfactory\ncompletion of the work for which the subcontractor has invoiced. Such contractor\nshall not be liable for amounts otherwise reducible due to the\nsubcontractor’s noncompliance with the terms of the contract. However, in\nthe event that the contractor withholds all or a part of the amount invoiced by\nthe subcontractor under the terms of the contract, the contractor shall notify\nthe subcontractor within 50 days of the receipt of such invoice, in writing, of\nhis intention to withhold all or a part of the subcontractor’s payment\nwith the reason for nonpayment, specifically identifying the contractual\nnoncompliance, the dollar amount being withheld, and the lower-tier\nsubcontractor responsible for the contractual noncompliance. Payment by the\nparty contracting with the contractor shall not be a condition precedent to\npayment to any lower-tier subcontractor, regardless of that contractor’s\nreceiving payment for amounts owed to that contractor. Any provision in a\nconstruction contract contrary to this section shall be unenforceable. Nothing\nin this subdivision shall be construed to (i) apply to or prohibit the inclusion\nof any retainage provisions in a construction contract or (ii) apply to\ncontracts awarded solely for professional services as that term is defined in\n§ 2.2-4301 where the public body is contracting directly with an\narchitectural and engineering firm.\n\n2. A payment clause that obligates the contractor to take one of the two\nfollowing actions within seven days after receipt of amounts paid to the\ncontractor by the state agency or local government for work performed by the\nsubcontractor under that contract:\n\t\t\ta. Pay the subcontractor for the proportionate share of the total payment\nreceived from the agency attributable to the work performed by the subcontractor\nunder that contract; or\n\t\t\tb. Notify the agency and subcontractor, in writing, of his intention to\nwithhold all or a part of the subcontractor’s payment with the reason for\nnonpayment.\n\n3. A payment clause that requires (i) individual contractors to provide their\nsocial security numbers and (ii) proprietorships, partnerships, and corporations\nto provide their federal employer identification numbers.\n\n4. An interest clause that obligates the contractor to pay interest to the\nsubcontractor on all amounts owed by the contractor that remain unpaid after\nseven days following receipt by the contractor of payment from the state agency\nor agency of local government for work performed by the subcontractor under that\ncontract, except for amounts withheld as allowed in subdivision 2.\n\n5. An interest rate clause stating, “Unless otherwise provided under the\nterms of this contract, interest shall accrue at the rate of one percent per\nmonth.”\n\t\t\tAny such contract awarded shall further require the contractor to include in\neach of its subcontracts a provision requiring each subcontractor to include or\notherwise be subject to the same payment and interest requirements with respect\nto each lower-tier subcontractor.\n\t\t\tA contractor’s obligation to pay an interest charge to a subcontractor\npursuant to the payment clause in this section shall not be construed to be an\nobligation of the state agency or agency of local government. A contract\nmodification shall not be made for the purpose of providing reimbursement for\nthe interest charge. A cost reimbursement claim shall not include any amount for\nreimbursement for the interest charge.\n\nHISTORY: 1990, c. 824, \u00a7 11-62.11; 1992, c. 110; 2001, c. 844; 2022, c. 727;\n2023, cc. 675, 676.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}