North Carolina recently amended the statute that governs the process by which general contractors on certain public projects submit claims to the Director of the State Construction Office (“Director”). While many aspects of the statute remain unchanged, the primary amendment is that there are now definitive timelines by which the Director must issue his decisions on claims.
Broadly speaking, as many general contractors are keenly aware, a general contractor dealing with certain State agencies (or “Boards” as defined by the statute) must first submit its contract claims to the Board with which it dealt. Thereafter, if a claim remains, the contractor must submit a verified written claim to the Director within 60 days of the decision issued by the Board.
Previously, the statute provided that the Director had 90 days to “investigate” claims, but it provided no express timeline by which the Director had to issue decisions. The lack of any express time requirements often left claims pending under review for extended periods of time. The result was that the general contractor could not further pursue its claims in court. Now, the Director must issue its decisions as follows:
- If the claim is for an amount less than $100,000, within 120 days
- If the claim is for $100,000 to $5,000,000, within 180 days
- If the claim is for $5,000,000 or more, within 270 days
Importantly, if the Director fails to issue a final written decision within the time periods listed above, the verified written claim shall be deemed denied. Thus, once the Director issues a decision or the claim is deemed denied by the passage of time, a general contractor seeking to appeal or contest the Director’s decision is free to either initiate a “contested case” with the Office of Administrative Hearings or file a civil suit in Superior Court. The statute takes effect January 1, 2020 and applies to verified written claims submitted on or after that date.
This amendment benefits general contractors dealing with the State, as it adds certainty to the claims process and enables general contractors to avoid unnecessary delay before advancing to the next stage of the claims process.