1. (a) Section 1 of this chapter does not apply to the following:

   1. (1) Interagency or intergovernmental transactions.
   2. (2) Amounts payable to employees or prospective employees of state agencies or political subdivisions as reimbursement for expenses.

   3. (3) Claims subject to a good faith dispute, if before the date of timely payment notice of the dispute is:

      1. (A) sent by certified mail;
      2. (B) personally delivered; or
      3. (C) sent in accordance with the procedure in the contract.
   4. (4) Contracts entered into before September 1, 1983.

   5. (5) Contracts related to highway or road construction, reconstruction, or maintenance, if:

      1. (A) the Indiana department of transportation authorizes partial progress payments under IC 8-23-9-14 ; and
      2. (B) each progress payment does not exceed five hundred dollars ($500).
   6. (6) Claims, contracts, or projects that are to be paid for exclusively with federal funds.

2. (b) As used in subsection (a)(3), "good faith dispute" means:

   1. (1) a contention by the state or political subdivision that goods delivered or services rendered were:

      1. (A) of less quantity or quality than ordered or specified by contract;
      2. (B) faulty; or
      3. (C) installed improperly; or
   2. (2) any other reason giving cause for the withholding of payment by the state or political subdivision until such dispute is settled.

As added by P.L.59-1983, SEC.1. Amended by P.L.52-1988, SEC.2; P.L.18-1990, SEC.17.