Payment Prohibited for Work Not Completed

Public agencies in the State of Washington are prohibited by the State Constitution from making payments to contractors, consultants, vendors, or any other party for work that has not actually been completed, or for goods and services not actually received.

The Washington State Constitution prohibits the lending of the public’s credit. Article VIII, Section 5 (Credit not to be loaned) states the following: “The credit of the state shall not, in any manner be given or loaned to, or in aid of, any individual, association, company or corporation.” Paying early for work not performed would clearly fall under this prohibition in the Constitution.

In addition, counties, cities, districts or other municipal corporations or political subdivisions are also governed by the provisions of RCW 42.24.080. This law requires that all claims for payment made to the public agency must be audited by the agency for appropriateness and the public agency must certify that:

“the materials have been furnished, the services rendered, the labor performed as described, or that any advance payment is due and payable pursuant to a contract or is available as an option for full or partial fulfillment of a contractual obligation, and that the claim is a just, due and unpaid obligation against the municipal corporation or political subdivision.”

Public agencies should ensure that staff who are charged with reviewing invoices for approval understand their obligations to not authorize payment if the obligations of the contractor, consultant, or vendor have not actually been met.

It is important to verify that obligations have been met before authorizing payment because it is the law, and also because it makes good business sense. Once you’ve paid a contractor, consultant, or vendor without them fulfilling their obligations, you loose your leverage to ensure that they comply with the terms of their contract with your public agency.