AZ SB1403

Reduces payment retention on public works construction contracts from 10% to 5% of project costs for state agencies, counties, and municipalities.

Requires payment of progress estimates within 14 days after certification and approval, with automatic approval after 7 days unless owner issues written findings detailing reasons for non-approval.

Establishes contractor and subcontractor rights to suspend work or terminate contracts for non-payment, with notice requirements (3-7 days depending on circumstances).

Requires contractors to pay subcontractors within 7 days of receiving payment, prohibits withholding retention exceeding amounts retained by owner, and mandates 1% monthly interest on late payments to subcontractors.

Voids contract provisions that prevent suspension or termination for non-payment, require disputes be resolved outside Arizona, or materially limit contractor recovery for delays caused by the owner.