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AASHTO Subcommittee on Construction Contract Administration Section

Summary of Practice Regarding Prompt Payment Procedures June 2012

The Contract Administration Section of the AASHTO Subcommittee on Construction initiated a survey regarding a State’s prompt payment procedures for construction contracts. This report is a summary of the participating State responses to the following three survey questions.

1. Do your highway construction projects contain a prompt payment specification for subcontract work? If yes, please include a link to the specification or attach a copy of the contract provision to your response. 2. Do you have formal procedures for the administration of prompt payment specifications? If yes, please provide a link to the procedures or attach a copy to your response. 3. Do you have any best practices or procedures that have improved the administration of prompt payment issues in your state (tracking, notification, complaints, etc).

During the process of summarizing the survey responses, additional information of interest on prompt payment was located and is included in Appendix A, Additional Information, of this report.

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1. Do your highway construction projects contain a prompt payment specification for subcontract work? If yes, please include a link to the specification or attach a copy of the contract provision to your response. Alabama Standard Specifications for Highway Construction, 2012 Edition, Section 109.08.

Alaska Regarding Alaska Prompt Payment Provisions (AS 36.90.210), we do require them in Subcontracts per both State and Federal law (on FHWA projects). We require the Contractor to list subcontracts and self certify them using Form 25D-042 (10/09). We check about 10% of the subcontracts for conformance.

We do not replicate state and federal law in our contracts - instead we reference the state statute in Subsection 108-1.01 of the 2004 Standard Specifications as modified by E102 (3/05/12).

There is a standard modification to the highway contracts. Our State law requires prompt payment within 8 days, so it is for the most part more stringent then federal standards. I thought there was a small revision in the works but it hasn’t been posted yet, this one was adopted in 2007. Arkansas The Standard Specifications for Highway Construction 2003, Subsection 108.01 state that the Contractor shall pay all subcontractors their respective subcontract amount within 10 calendar days after the Contractor receives payment from the Department.

California The California Department of Transportation Standard Specifications 2010, Section 8-1.13, “Contractor’s Control Termination,” item #3, is the specification for prompt payment. Public Contract Code section 10262 (PCC 10262) is the state's law that requires prime contractors to pay their subcontractors within seven days of receipt of a progress payment.

Colorado Standard Specifications for Roads and Bridges 2011, Section 109.06(e). Delaware General Notice for Subcontractors Working on Federal Aid Construction Projects, DBE Bulletin Board. Florida Supplemental Specification (SS0090200) to the 2010 Standard Specification, Section 9-5.6, Certification of Payments to Subcontractors. Idaho Standard Specifications Edition 2004, Supplemental Specification (January 2012), Section 109.05 Partial Payments.

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Illinois We require the Prime to submit a Certification of Subcontractor Payment. Special Provision for Payments to Subcontractors (BDE), Revised: January 1, 2006 (PPSpecialProv). Indiana Standard Specifications, Edition 2012, Section 108.02 Release of Retainage to Subcontractors. Iowa Standard Specifications Edition 2009, Article 1109.05B. Prompt Payment to Subcontractors. Kansas Standard Specifications, 2007 Edition, Subsection 109.6 Payments to Subcontractors & Suppliers and Special Provisions, 2007 Edition, Subsection 109.6, Revision 08-12-11.

Louisiana No, but State law does require payment of subcontractors within in a specific time frame (14 calendar days). (Louisiana Revised Statute 9:2784) Maine Standard Specifications, Section 104.5.5 Prompt Payment of Subcontractors. Massachusetts MA General Law Chapter 30, Section 39F, Construction contracts; assignment and subrogation; subcontractor defined; enforcement of claim for direct payment; deposit, reduction of disputed amounts. (G.L. c. 30, s.39F) Michigan Special Provision for Prompt Payment, Subsection 109.08 (12SP109(A)). Minnesota MN Statutes - 16A.1245 Prompt Payment to Subcontractors (16A.1245). Missouri Missouri Standard Specification, Section 109.13, governs prompt payment to suppliers and subcontractors. The specification language mirrors the Missouri Prompt Payment Act, Revised Missouri Statutes, Chapter 34, Section 34.057 (RSMo 34.057).

Montana Supplemental Specifications to Montana Standard Specifications 2006 Edition (Effective 10-8-09), Subsection 109.06.1. Also mandated by state law: Montana Code Annotated 2011, 28-2-2103, Payment to Contractor and Subcontractor (MCA_28-2-2103). Nevada Standard Specifications 2001, 109.08 Payments to Subcontractors. We have modified the prompt payment Standard Specification to refer to 49 CFR §26.29(b)(2).

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New Jersey NJDOT Standard Specifications, 2007, Subsection 109.05 requires contractor's to provide a certification that they have paid subcontractors from previous progress payments, and references NJ state statutes that subcontractors and suppliers may receive interest (from the Prime Contractor) if they are not paid within 10 days after the Contractor received payment from the Department. New York Standard Specifications of May 1, 2008 (amended January 12, 2012), 109-07 Prompt Payments by the Contractor. North Carolina Prior to 2006, prompt payment was included in contracts as a special provision. It has been in our Standard Specifications since the 2006 edition, Subarticle 109-4(B). North Dakota ND Standard Specifications, Volume 1, October 2008, Section 109.5 B. Prompt Payment. Ohio Construction and Material Specifications (CMS), January 1, 2011, Section 107.21 Prompt Payment . Oklahoma Oklahoma Dept. of Transportation Standard Specifications, Section 109.11 Payment to Subcontractors. Oregon Standard Specifications, 180.21(d) Terms of Subcontracts. Pennsylvania Publication 408/2011, Highway Construction Specifications, 110.05 Current Estimate Payments. South Carolina Supplemental Specification, Prompt Payment Clause, January 5, 2012. South Dakota Standard Specifications 2004, 9.13 Prompt Payment and Retainage. Tennessee Supplemental Specification, March 1, 2006 (Rev. 10-31-11), 109.02 Scope of Payment. Texas Special Provision 009---009, Measurement and Payment (04-06) (SP009009).

Vermont 2011 Standard Specifications, 107.01 LAWS TO BE OBSERVED, (g) Prompt Payment Act and (h) Subcontractor Payments; Reporting; Violations; Inclusion In Subcontracts.

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Virginia 2007 Road and Bridge Specifications, 109.08(b) – Payment to Sub-Contractors. 2007 Road and Bridge Specifications, 107.01 – Laws To Be Observed. Washington 2012 Standard Specifications, Section 1-08.1(1), Subcontract Completion and Return of Retainage Withheld. Construction Manual, July 2011, Section 1-2.7B(1) Prompt Return of Retainage to All Subcontractors. West Virginia Special Provision for Subcontractor Prompt Payment, March 2, 2012, including the Certification of Subcontract Payments form. Wisconsin Payment to all Subcontractors, Additional Special Provision 4 (ASP-4), July 2003. Wyoming Standard specification, 2010 edition, 109.5.2, Contractor's Payment to Subcontractors.

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2. Do you have formal procedures for the administration of prompt payment specifications? If yes, please provide a link to the procedures or attach a copy to your response. Alabama See Section 109.08 in our Standard Specifications for Highway Construction and the November 23, 2004, Construction Information Memorandum (CIM 2-2004) regarding “Payment to Subcontractors.” Alaska The forms and standard modifications are issued by a chief engineer’s directive (CE 021412) and are required in all contracts. Arkansas Yes, the Standard Specifications outline procedures that range from withholding pay estimates up to Contractor Default and Termination of Contract. Subsection 103.08(b) and Subsection 108.08 outline procedures that range from withholding pay estimates up to Contractor Default and Termination of Contract.

California Yes. Generally, Caltrans relies on state law to address prompt pay issues. This includes the use of stop payment notices (the public version of a mechanic's lien). The policies and procedures for administering construction projects are documented in the Construction Manual. Prompt payment issues are addressed in Section 8-303 of the manual. Colorado No. Delaware On the same link above (DBE Bulletin Board) there are other topics along the right side of the screen. Review the Delaware Code and its respective links which address payment.

Florida Construction Project Administration Manual (CPAM), Chapter 6.1 Unpaid Bills Processing (CPAM 6s1) Idaho Contract Administration Manual, Section 109.05 Prompt Payment to Subcontractors and Certification of Payment (Form ITD 2892). Illinois Yes. Illinois Prompt Payment Act (30ILCS540) Indiana INDOT has a Subcontractor payment tracking application (SPT). It can be found at the INDOT Technical Application Pathway (ITAP).

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Iowa We require the Prime to submit a Certification of Subcontractor Payments. Construction Manual, 2.25 Subcontracts and Appendix 2.23, Certification of Subcontractor Payments, Form 518002wd (12/10).

Kansas Refer to Question #1 and the Standard Specifications, 2007 Edition, Subsection 109.7 Sanctions for Failure to Pay Promptly. Louisiana No. Maine No. Massachusetts The Administrative Law Judge rules on subcontractor direct payment demands brought under G.L. c.30, s.39F. Refer to Subcontractor Direct Payment Demands for a summary of the direct payment process. Michigan Yes. Minnesota No. Missouri We do not have a formal procedure to administer this specification. We handle issues on a case by case basis when they arise. Montana No. Nevada Not really. We currently have a draft policy in review by our Contract Compliance Section and the state Attorney General’s Office to address payment disputes (Memo #2011-0XX, Payment Disputes). The FHWA NV Division office has not seen the draft yet. The draft has been distributed to our Resident Engineers. Basically prime contractors are required to pay when paid within 15 days by Contract and by Nevada Revised Statute. And Nevada Revised Statute requires that the Director “attempt” to resolve payment disputes within 20 days.

We are looking at technology to help us with this. The Contact Compliance Section is trying to purchase a software program called B2T to help us actively administer prompt payment provisions. The procurement process has been delayed though.

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New Jersey NJDOT does not adjudicate contractor-subcontractor disputes. Subcontractors are not considered a third party beneficiary to our Contract. We simply require contractor's to certify payment to subcontractors prior to receiving payment. Subcontractors alleging underpayment are provided with information for the payment bond surety. New York NYSDOT uses EBO, our Civil Rights Reporting Software to track Prompt Payments. Payment information is needed for both monitoring of Prompt Payment requirements, and also for DBE Reporting. The software records payments to the prime, and the prime enters the amounts and dates of payment to subcontractors/DBEs. Subs/DBEs must electronically acknowledge receipt of payments. North Carolina Yes. NCDOT Construction Manual, Revised December 2011, Section 109.4 Partial Payments.

North Dakota No. Ohio No. Payments are generally monitored via payroll submissions as required by specifications, and the finalization process (CMS Section 109.12). Oklahoma Oklahoma uses a complaint driven system to initiate the investigation into alleged prompt payment noncompliance. The details of that procedure are not available on our web page but can be sent to you upon request. Oregon Yes. Construction Manual, Chapter 26 – Prompt Payment/Claims Against Contractor’s Bond (CM26). Pennsylvania Publication 2, Project Office Manual, B.2.4 Subcontractor/Supplier Estimate Monitoring (B.2.4) and Subcontractor/Supplier Request for Estimate Monitoring (Form CS-111). South Carolina No, we handle on a case by case basis with no formal procedure. South Dakota No, but we have informal procedures that we follow. We typically contact the contractor and ask them why payment is not being made. If there is no reasonable explanation, we direct them to make payment and we issue a specification deviation price adjustment against the prime. If there is a reasonable explanation (poor quality, failure to perform the work, etc.), we feel that our only option is to direct the subcontractor or supplier to file a lien on the project in accordance with our state laws. The filing of a lien requires the DOT to withhold the lien amount for 30 days. During that period, the supplier or subcontractor has that amount of time to file a lawsuit. The judge can then issue direction to the DOT to make payment directly to the

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supplier or sub. We don’t feel we have the legal right to act as judge and jury on prompt payment issues encountered on our projects. Tennessee We require the contractor to submit a monthly Prompt Payment certification of found in our Construction Circular Letters (CL109.02-05). Texas No. Basically, subcontractor must file against the payment bond. Upon notification they have filed against the bond, TxDOT area engineer will typically notify the prime that there is an allegation of non-payment and that they must respond to the allegations of TxDOT will pursue other options which could include withholding of future estimates. Vermont Yes. Refer to Question #1. Virginia No. Washington Yes. Refer to Question #1. West Virginia Yes. Refer to Question #1. Wisconsin Yes. Refer to Question #1 and the Construction and Material Manual (CMM), November 2006, 2.40.1 Prompt Payment Complaint and Procedures. Wyoming Yes. Refer to Question #1.

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3. Do you have any best practices or procedures that have improved the administration of prompt payment issues in your state (tracking, notification, complaints, etc)? Alabama Nothing additional to current specifications and procedures. Alaska We don’t have a practice or procedure for tracking prompt payment. We consider that to be a matter between the contractor and subs. It is my personal belief that it should be handled by the Surety since they are the ones guaranteeing payment. If we get a complaint from the sub we would ask the contractor the reason for non-payment, but for the most part the subs are reluctant to file claims against the contractor. Arkansas No. California No. Caltrans has not established additional procedures beyond what is required by law and does not track the payment to subcontractors at this time. The Caltrans Accounting Department issues a letter to contractors and subcontractors when stop payment notices are submitted to Caltrans. The letter, though, references statutory law, procedures to comply with that law, and the remedies it provides. On a complaint basis, Caltrans staff may facilitate discussions between prime contractors and their subcontractors but they do not decide if a dispute between a prime and its sub is valid or meritorious. Colorado a. We advise the Prime Contractor of the prompt payment requirements at outreach events and at the Pre Construction Conference. b. When CDOT does full project compliance reviews, prompt payment is one thing we check. We check what payments the Prime has made to the subcontractors and compare that to the actual pay estimates. Delaware I recommend you contact Carla Elliott, Civil Right Administrator, at 302-760-2555 to discuss this question further. Florida Best practice is being responsive to notifications of non-payment assertions being made by subcontractors/suppliers. Utilize a tracking system to log non-payment notifications so that can address with contractors during prequalification period. Idaho The Department is looking to institute a random procedure that requires contractors to submit documentation showing that they are indeed complying with prompt payment.

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Illinois No. Indiana INDOT uses the sign up and tracking of the payments and also follows up on complaints. Some Prime Contractors try to take advantage of the last part of the specification and tell us that the subcontractor has not finished all required submittals on the contract, some of which may not be submitted until later in the project. Iowa Specifications include a formal complaint process (Standard Specifications Article 1109.05 D. Complaints). We are developing a process to spot check the Certifications. Kansas We don’t have any formal tracking system, notifications and complaints policy. Each field office is responsible to track payments, receipt of prompt payment certification from contractor and field office checking of certification. Complaints are handled as we get them, we don’t get many. I assist the field office is they need help on all of these items. Louisiana The contractor is required to submit Form CP-1A, ‘Contractor’s Monthly DBE Participation,’ to the Compliance Programs Section on subcontractor’s involvement, if the subcontractor is a DBE. Our Compliance Section tracks and addresses nonpayment or prompt payment issues if notified by a Subcontractor. Additionally, all disputes between contracts and subcontractors relating to payment of completed work or retainage shall be referred to the DBE Oversight Committee. The contractor is also required to submit the Form CP-2A, ‘DBE Final Report,’ to the Compliance Programs Section with a copy to the Project Engineer detailing all DBE subcontract payments. Maine Recently added the payment tracking module to the electronic Davis-Bacon payroll system we’re using –Elation Systems product. Massachusetts We are in the process of implementing reports that can be used to track all payments on projects. These will be made available to all district offices through our internal website and they can be run by contract, by Resident Engineer and the district office. Michigan N/A. Minnesota MnDOT doesn’t get in the middle of disputes between Contractor and subs. We rely on the surety and payment bond. Missouri We do not have any best practices. Frankly we rarely hear complaints from suppliers or subcontractors. I think it helps us having it written into statute.

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Montana This isn’t much of an issue in Montana. Nevada None to share at this time. New Jersey This issue is not considered a problem for NJDOT. New York The use of EBO has provided an excellent tool to both monitor prompt payment and perform DBE reporting. After several visits by FHWA National Review Team (NRT), EBO was noted as a nationwide best practice. During field visits, several DBEs/subcontractors stated that they were very pleased with the use of EBO, as it provided transparent payment data, and resulted in much more timely payments from primes. North Carolina Creation of a standard prompt payment letter sent out by the contract administrator (Resident Engineer) which outlines the immediate action the contractor must take and tracking of all prompt payment notifications by a central unit has improved our administration of prompt payment issues. North Dakota No. Ohio The language for prompt payment (CMS Section 107.21) has been tweaked over the years. Notifications of non-payment/ late payment are handled via our Office of Contracts. No best practices offered at this time. Oklahoma What FHWA is apparently considering to impose for reporting and tracking, in my opinion, is ridiculous. I thought we were supposed to be delivering the federal program to provide a safe, economical and effective transportation network for the people and commerce. Tedious red tape regulations such as this, will deter our field personnel from the accomplishment of that critical responsibility. And, it will drive the administration costs up for our contracting community. All in an effort to try to provide a haystack to enable a needle search.

Oklahoma does not track payments to all subcontractors, suppliers, truckers, etc. on our construction contracts. The level of effort for the contractor to tabulate and report that information, and for the ODOT field personnel to enforce the accurate and timely submissions would be just as burdensome as the current Davis-Bacon DOL requirements for weekly certified payrolls to be submitted. And, it would be just as useless. Oklahoma uses a complaint driven system to initiate the investigation of alleged prompt payment noncompliance. Those instances are tracked and notification is documented to all parties on the results of the investigation. Oregon Nothing beyond what is in the Construction Manual.

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Pennsylvania During the subcontractor evaluation process, subs are asked if they were promptly paid. The prime contractor’s payment bond can be made available to the subcontractor in order to pursue payment. South Carolina No. South Dakota No. This continues to be very difficult to administer. Tennessee Current process appears to be working. Texas When determined necessary, the notification that we will withhold the next estimate gets the prime's attention and typically results in the prime following up with TxDOT to resolve. Vermont The spec covers the process pretty well. Virginia Construction Directive CD-2008-10 sets forth procedures for handling non-payment claims on both bonded as well as un-bonded contracts. (CD-2008-10) Washington No, they are referred back to the project engineer in charge of the project for resolution in accordance with the contract. West Virginia We have begun to require the contractor to provide proof of payment by completing a form which requires both his/her signature and the subs. If the form is not completed and returned in a timely manner, penalties are accessed until compliance. This is more proactive rather than our old system which was reactive (only looked into when a complaint was received). Wisconsin No. Wyoming Tracking is currently done in conjunction with the engineer’s monthly report.

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APPENDIX A - Additional Information Colorado Prompt Pay Information and Resources brochure.

Colorado Revised Statutes, 24-91-103. Public entity - contracts - partial payments.

109.06 Partial Payments. Prompt Payment Notice to all Subcontractors and Suppliers. Delaware

DBE Program Plan, V. Monitoring, Enforcement and Sanctions, Prompt Payment (§26.29).

Title17, Section 8, Highway Construction Payments.

105.18 Contractor and Subcontractor/Supplier Disputes.

109.02 Scope of Payment.

Construction Manual, B12-02. Construction Manual, Implementation of CN-91.

Florida

Form 700-010-38, Certification, Disbursement of Previous Periodic Payment to Subcontractors.

Indiana 100-C-151C, DBE Record Keeping and Timely Pay, Section 109. DBE Program Manual, C. Prompt Payment. Michigan Bureau of Highway Instructional Memorandum 2011-06 Special Provision for Prompt Payment brochure. Minnesota MN Statutes 2011, 471.425 Prompt Payment of Local Government Bills.

DBE Special Provisions, Prompt Payment.

DBE Special Provisions, Contractor Payment Form. Montana Supplemental Specification, 108.01.3 Subcontractor Payments. Civil Rights Manual, 4. Prompt Payment. DBE Manual, 3.2 Prompt Payment. MDT Contract Payments form. Nevada Contractor’s Monthly Report of Payments to Subcontractors, NDOT Form 052-060 (Rev

9/02). New Jersey II. Prompt Payment on Construction Projects.

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New York Equitable Business Opportunities (EBO) Background. Oregon 00170.10 Required Payments by Contractors. Oregon Revised Statutes, Chapter 279C — Public Contracting ‐ Public Improvements and

Related Contracts.

Tennessee Tenn. Code Ann. § 12-4-707 (2012), 12-4-707. Payments to subcontractors -- Interest. Texas 9.6.B. Payment Provisions for Subcontractors. Prompt Payment Certification, Federal-Aid Projects and Projects with SBE Goals, Form 2177. Construction and Materials Tips Quarterly Newsletter, Special Edition 2006, Subcontractor

Prompt Payment. Vermont Vermont Statutes, Title 9, Chapter 102, § 4003. Contractor's and subcontractor's payment

obligations. Virginia Revised Section 109.08(b)—Payment to Sub-Contractors 2.2-4354. Payment clauses to be included in contracts. West Virginia Certification of Subcontractor Payments. Wyoming

Certification of Subcontract Payments, Form E-139 (12/02).

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APPENDIX B – State Contact and Sources of Information

Alabama Information Sources Standard Specifications for Highway Construction, 2012 Edition, Payments to

Subcontractors. Section 109.08 (pg 79) November 23, 2004, Construction Information Memorandum, “Payment to Subcontractors.”

CIM 2-2004 Contact Jeff Benefield Road Construction Engineer Alabama Department of Transportation P.O. Box 303050 1409 Coliseum Blvd. Montgomery, AL 36110-2060 334-242-6213 benefieldj@dot.state.al.us

Alaska Information Sources

Alaska Statute, Required Contractual Terms. AS 36.90.210

“Contractor Self Certification for Subcontractors and Lower Tier Subcontractors.” Form 25D-042 (10/09)

February 14, 2012, Chief Engineer’s Directive, “Highway Specification and Form Revisions for Prompt Payment of Subcontractors and DBE Program.” CE 021412

Standard Modification for 2004, 3/05/12. E102 (pgs 8-11) Contact James G. Green Statewide Construction Standards Alaska DOT & PF 3132 Channel Drive Juneau, AK 99801 907-465-1222 jim.green@alaska.gov

Arkansas Information Sources The Standard Specifications for Highway Construction 2003: Subletting of Contract. Subsection 108.01 (pgs 88-89) Disadvantaged Business Enterprise (DBE) in Highway Construction. (b) Policy. Subsection

103.08(b) (pgs 27-29) Default and Termination of Contract. Subsection 108.08 (pgs 100-103)

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Contact Benjamin Browning, P.E. Systems Administrator, Construction Division Arkansas State Highway & Transportation Department 10324 Interstate 30 Little Rock, AR 72209 501-569-2122 benjamin.browning@ahtd.ar.gov

California Information Sources

Standard Specifications 2010, Contractor’s Control Termination. Section 8-1.13 (pg 107)

Public Contract Code Section 10262. (PCC 10262)

Construction Manual, Prompt Payment Clauses. Section 8-303 (pgs 3.4-3.5)

Contact Rob Effinger Chief, Officer of Construction Support Division of Construction California Department of Transportation 1120 N Street, Room 2500 Sacramento, CA 95814 916-654-6796 robert_effinger@dot.ca.gov

Colorado Information Sources Standard Specifications for Roads and Bridges 2011, Prompt Payment. Section 109.06(e)

(pg 155) Additional Information Sources

“Prompt Payment Information and Resources,” 5/2009 brochure. Colorado Revised Statutes 24-91-103(2) Public entity – contracts – partial payments.

CRS 24-91-103 Standard Specifications for Roads and Bridges 2011, Partial Payments. Section 109.06

(pgs 154-157) “Prompt Payment – Notice to all subcontractors and suppliers” poster. Bulletin Board

Required Postings

Contact Mark Straub Area Engineer R2/R5 Project Development Branch Colorado Department of Transportation 4201 E. Arkansas Avenue, Room 400 Denver, CO 80222 303-757-9595 Mark.Straub@dot.state.co.us

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Delaware Information Sources General Notice for Subcontractors Working on Federal Aid Construction Projects. DBE

Bulletin Board (web page) Addition Information Sources

DBE Program Plan, V. Monitoring, Enforcement and Sanctions. DBE Plan (pgs 15-16) Delaware Title 17, Highways, Chapter 8. Highway Construction Payments. (17 Del. Laws,

c. 8) Standard Specification, August 2001, Contractor and Subcontractor/Supplier Disputes.

Section 105.18 (pg 36) Standard Specification, August 2001, Scope of Payment. Section 109.02 (pg 54) Construction Manual, January 2004, Progress Estimates. Section B12-02 (pg B-31) Construction Manual, January 2004, General Contractor’s Certification of Payment.

Standard Form CN91 (pgs 67-69)

Contact Gregory G. Pawlowski, P.E. Area Engineer, South I Construction Delaware Department of Transportation 800 Bay Road P.O. Box 778 Dover, DE 19903-0778 302-760-2256 Gregory.Pawlowski@state.de.us

Florida Information Sources Supplemental Specification to the 2010 Standard Specification, Section 9-5.6, Certification of

Payments to Subcontractors. SS0090200 (pgs 3-4) Construction Project Administration Manual, Chapter 6.1 Unpaid Bills Processing. (CPAM

6s1) Additional Information Sources

“Certification Disbursement of Previous Periodic Payment to Subcontractors” form. (Form No. 700-010-38)

Contact David A. Sadler, P.E. Director, Office of Construction Florida Department of Transportation 605 Suwannee Street Mail Station #31 Tallahassee, FL 32399-0450 850-414-5203 david.sadler@dot.state.fl.us

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Idaho Information Sources Standard Specifications Edition 2004, Supplemental Specification (January 2012), Partial

Payments. Section 109.05 (sheets 1631-1632) Contract Administration Manual, Section 109 Measurement and Payment. 109.05 Partial

Payments (pgs 10-11) “Certification of Payment’ form. (Form ITD 2892)

Contact Frances Hood Manager, Consultant Admin Unit Division of Highways Idaho Transportation Department 3311 W. State Street PO Box 7129 Boise, ID 83707-7129 208-334-8426 Frances.Hood@itd.idaho.gov

Illinois Information Sources Special Provision for Payments to Subcontractors (BDE), Revised: January 1, 2006.

(PPSpecialProv) Illinois Prompt Payment Act. (30 ILCS 540)

Contact Mike F. Renner Chief, Construction Bureau Illinois Department of Transportation 2300 S. Dirksen Parkway Springfield, IL 62764 217-782-6667 Mike.Renner@illinois.gov

Indiana Information Sources Standard Specifications, Edition 2012, Release of Retainage to Subcontractors. Section

108.02 (pgs 77-78) Additional Information Sources

Construction Contract Recurring Special Provision 100-C-151C, DBE Record Keeping and Timely Pay (Sept 2011 Edition), Section 109, after line 792. RSP 100-C-151C

DBE Program Manual. C. Prompt Payment (pg 11) Subcontractor Payment Tracking and INDOT Technical Application Pathway.

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Contact Gregory G. Pankow, P.E. State Construction Engineer Indiana Department of Transportation 100 N Senate Avenue, Room N925-CM Indianapolis, IN 46204 317-232-5502 gpankow@indot.in.gov

Iowa Information Sources Standard Specifications Edition 2009, Prompt Payment to Subcontractors. Article

1109.05B (pgs 7-8) Construction Manual, Certification of Subcontractor Payments. 2.25 Subcontracts (pg 2-38)

and Appendix 2.23 Additional Information Sources

The Standards Specifications Edition 2009, “Certification of Subcontractor Payments.” Article 1109.05.E. (pg 8-9) and Form 518002

The Standards Specifications Edition 2009, formal complaint process. Article 1109.05 D. Complaints (pg 8)

Contact John Smythe Director, Office of Construction Iowa Department of Transportation 800 Lincoln Way Ames, IA 50010 515-239-1503 John.Smythe@dot.iowa.gov

Kansas Information Sources Standard Specifications, 2007 Edition, Payments to Subcontractors & Suppliers. Subsection

109.6 (pg 100-76) Special Provisions, 2007 Edition, Subsection 109.6. 08-12-11 C&M (pg 2) Additional Information Sources

Standard Specifications, 2007 Edition, Provisions for Lower-Tier Subcontractors. Subsection 109.8 (pg 100-77)

Standard Specifications, 2007 Edition, Sanctions for Failure to Pay Promptly. Subsection 109.7 (pg 100-77)

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Contact Susan Darling Assistant Bureau Chief Construction & Maintenance Kansas Department of Transportation Dwight D. Eisenhower State Office Building 700 SW. Harrison Street Topeka, KS 66603-3754 785-296-7138 sdarling@ksdot.org

Louisiana Information Sources Late payment by contractors to subcontractors and suppliers; penalties. Louisiana Revised

Statute 9:2784 Contact Brian Buckel Chief Engineer, Construction Division Louisiana Dept of Transportation & Development 1201 Capital Access Road, Room 507C Baton Rouge, LA 70802 225-379-1503 Brian.Buckel@la.gov

Maine Information Sources Standard Specifications, Prompt Payment of Subcontractors. Section 104.5.5 (pg 1-44) Additional Information Sources

Web-based labor compliance program. Elation Systems

Contact Scott Bickford Contracts & Specifications Engineer Maine Department of Transportation State House Station #1616 Augusta, ME 04333-0016 207-624-3533 Scott.Bickford@maine.gov

Massachusetts Information Sources MA General Law. G.L. c. 30, s.39F Administrative Law Judge Subcontractor Direct Payment Demands

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Contact Michael A. McGrath Deputy Chief Engineer, Construction MassDOT Highway Division 10 Park Plaza, Suite 4160 Boston, MA 02116 617-973-7800 Michael.A.McGrath@dot.state.ma.us

Michigan Information Sources Special Provision for Prompt Payment, 12SP109(A). Subsection 109.08 Additional Information Sources

Field Review of Prompt Payment Complaints. BOH IM 2011-06

Contact Brenda J. O'Brien, P.E. Engineer of Construction Field Services Michigan Department of Transportation 8885 Ricks Road P.O. Box 30049 Lansing, MI 48909 517-322-1085 obrienb2@michigan.gov

Minnesota Information Sources MN Statutes, Prompt Payment to Subcontractors. 16A.1245 Additional Sources

MN Statutes, Prompt Payment of Local Government Bills. 471.425

Contact Jennifer L. Carlson Engineering Specialist Office of Construction and Innovative Contracting Minnesota Department of Transportation 395 John Ireland Blvd Saint Paul, MN 55155-1899 651-366-4207 jennifer.carlson@state.mn.us

Missouri Information Sources Missouri Standard Specification, Prompt Payment to Subcontractors and Suppliers. Section

109.13 (pgs 8-9) Missouri Prompt Payment Act, Revised Missouri Statutes. RSMo 34.057

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Contact Dennis Bryant Construction & Materials Engineer MoDOT, Central Office 105 W. Capitol Avenue Jefferson City, MO 65102 573-751-8608 Dennis.Bryant@modot.mo.gov

Montana Information Sources Supplemental Specifications to the 2006 Standard Specifications, Billing Cycle. Subsection

109.06.1 (pg 31) Montana Code Annotated 2011, Payment to Contractor and Subcontractor. MCA 28-2-2103 Additional Information Sources

Supplemental Specifications to the 2006 Standard Specifications, Subcontractor Payments. Section 108.01.3 (pg 24)

Civil Rights Manual, Section 4 – Disadvantaged Business Enterprise. C.4. Prompt Payment (pg 42) and C.5. Subcontractor Payments (pg 42)

DBE Program Manual, Prompt Payment. Section 3.2 (pgs 15-16) Contract Payments Form Contact Kevin Christensen, P.E. Construction Engineer, Highways & Engineering Division Montana Department of Transportation 2701 Prospect Avenue PO Box 201001 Helena MT 59620-1001 406-444-6008 kechristensen@mt.gov

Nevada Information Sources Standard Specifications 2001, Payments to Subcontractors. Section 109.08 (pgs 75-76) Special Provision, 109.06 Partial Payment, January 2009. Contractor’s Monthly Report of Payments to Subcontractors. Form 052-060. Policy Procedure Memo #2011-0XX (draft), November 4, 2011, Payment Disputes.

Contact Jeff Shapiro, P.E. Chief Construction Engineer Nevada Department of Transportation 1263 South Stewart Street Carson City, Nevada 89712 775-888-7065 jshapiro@dot.state.nv.us

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New Jersey Information Sources NJDOT Standard Specifications, 2007, Estimates. Subsection 109.05 Additional Information Sources

New Jersey Construction Law, II. Prompt Payment on Construction Projects (pgs 5-8)

Contact Sean Sheehy, Supervising Engineer Office of Director, Construction Services & Materials New Jersey Department of Transportation PO Box 600 Trenton, NJ 08625-0600 609-530-8166 Sean.Sheehy@dot.state.nj.us

New York Information Sources Standard Specifications of May 1, 2008 (amended May 3, 2012), Prompt Payments by the

Contractor. Section 109-07 (pg 144) Additional Information Sources

Equitable Business Opportunities (EBO) Internet based Civil Rights Reporting System. NYSDOT EBO

Contact James Tynan, P.E. Director, Engineering Division NYSDOT, Office of Construction 50 Wolf Road Albany, NY 12232 518-457-6472 jtynan@dot.state.ny.us

North Carolina Information Sources NCDOT 2012 Standard Specifications, Prompt Payments. Subarticle 109-4(B) (pg 1-81) NCDOT Construction Manual, Revised December 2011, Partial Payments. Section 109.4

(sheets 1-84, 85 & 86)

Contact Ronald A. Hancock State Construction Engineer, Construction Unit North Carolina Department of Transportation 1543 Mail Service Center Raleigh, NC 27699-1543 919-733-2210 rhancock@ncdot.gov

Prompt Payment Survey 2012 Page 25

North Dakota Information Sources ND Standard Specifications, Volume 1, October 2008, Prompt Payment, Retainage, & No

Circumvention. Section 109.5 B, C & D (pgs 85-86)

Contact Cal J. Gendreau P.E. Construction Services Engineer North Dakota Department of Transportation 608 East Boulevard Avenue Bismarck, ND 58505-0700 701-328-2563 cgendrea@nd.gov

Ohio Information Sources Construction and Material Specifications (CMS), January 1, 2011, Prompt Payment. Section

107.21 (pg 48) Construction and Material Specifications (CMS), January 1, 2011, Final Acceptance. Section

109.12 (pgs 80-82)

Contact Gary E. Angles, P.E. State Construction Engineer Construction Management Division Ohio Department of Transportation 1980 West Broad Street Columbus, OH 43223 614-466-7057 gary.angles@dot.state.oh.us

Oklahoma Information Sources Oklahoma Dept. of Transportation Standard Specifications, Payment to Subcontractors.

Section 109.11 (pgs 102-103)

Contact George T. Raymond, P.E. State Construction Engineer Oklahoma Department of Transportation 200 N.E. 21st Street Oklahoma City, OK 73105-3204 405-521-2561 graymond@odot.org

Prompt Payment Survey 2012 Page 26

Oregon Information Sources Standard Specifications 2008 Edition, Terms of Subcontracts. Section 180.21(d) (pgs 79-80) Additional Information Sources

Standard Specifications, 170.10 Required Payments by Contractors, (pgs 63-64). Oregon Revised Statutes. (ORS 279C.505,515, 570, 580(3) & 580(5)) Construction Manual, Updated October 2010. Chapter 26 – Prompt Payment/Claims

Against Contractor’s Bond

Contact Jeffrey L. Gower State Construction and Materials Engineer Highway Division, Construction Section Oregon Department of Transportation State Materials Lab Building 800 Airport Road, SE. Salem, OR 97301 503-986-3123 Jeffrey.L.Gower@odot.state.or.us

Pennsylvania Information Sources Publication 408/2011, Highway Construction Specifications. 110.05 Current Estimate

Payments (pg 12) Publication 2, March 1, 2011, Project Office Manual, B.2.4 Subcontractor/Supplier Estimate

Monitoring and Subcontractor/Supplier Request for Estimate Monitoring, Form CS-111 (1-96).

Contact J. Michael Long, P.E. Chief, Bureau of Project Delivery Highway Delivery Division Contract Management Section Pennsylvania Department of Transportation 400 North Street, 7th Floor Harrisburg, PA 17120 717-787-7894 Johlong@pa.gov

South Carolina Information Sources Supplemental Specification, January 5, 2012. Prompt Payment Clause

Prompt Payment Survey 2012 Page 27

Contact Charles R. Eleazer Construction Engineer South Carolina Department of Transportation 955 Park Street P.O. Box 191 Columbia, SC 29202-0191 803-737-1308 EleazerCR@dot.state.sc.us

South Carolina Information Sources Standard Specifications 2004. 9.13 Prompt Payment and Retainage (pg 67)

Contact Jason Humphrey South Dakota Department of Transportation Becker-Hansen Building 700 E. Broadway Avenue Pierre, SD 57501 605-773-3571 Jason.Humphrey@state.sd.us

Tennessee Information Sources Supplemental Specification, March 1, 2006 (Rev. 10-31-11). 109.02 Scope of Payment (pgs

17-18) Special Provision regarding Prompt Payment. SP109P (Rev 7-15-05) Construction Circular Letter, December 1, 2006. 109.02-05 Certification of Prompt Payment

(pgs 104-105) Additional Information Sources

TN Code Annotated, Section 12-4-707 (2012).

Contact Brian Egan, P.E. Director, Construction Division James K. Polk Building, Suite 700 505 Deaderick Street Nashville, TN 37243-0339 615-741-2414 Brian.Egan@tn.gov

Prompt Payment Survey 2012 Page 28

Texas Information Sources Special Provision 009---009 (SP009009), Measurement and Payment (04-06). Additional Information Sources:

Standard Specifications, June 1, 2004. Article 9.6.B. Payment Provisions for Subcontractors (pg 72)

Prompt Payment Certification. Form 2177 Construction and Material Tips newsletter, Special Edition 2006. Subcontractor Prompt

Payment.

Contact Roxana García-Zinsmeyer, P.E. CST-C/Interim Construction Section Director Texas Department of Transportation 200 E. Riverside Drive Austin, TX 78704 512-416-2482 Roxana.GarciaZinsmeyer@txdot.gov

Vermont Information Sources 2011 Standard Specifications, 107.01 LAWS TO BE OBSERVED, (g) Prompt Payment Act (pg

86) and (h) Subcontractor Payments; Reporting; Violations; Inclusion In Subcontracts (pg 87).

Additional Information Sources V.S.A. Title 9, Chapter 102. Section 4003. Contractor's and subcontractor's payment

obligations.

Contact David J. Hoyne Construction Engineer Vermont Agency of Transportation Project Development and Construction National Life Building, Drawer 33 Montpelier, VT 05633-5001 David.Hoyne@state.vt.us

Virginia Information Sources 2007 Road and Bridge Specifications. 109.08(b) – Payment to Sub-Contractors (pg 121) 2007 Road and Bridge Specifications. 107.01 – Laws To Be Observed (pgs 64-65). Additional Information Sources:

Supplemental Specifications (SS1D013-1211), Oct 31, 2011. Section 109.08(b) Payment to Sub-Contractors (pgss 184-185)

Code of Virginia, Title 2.2, Chapter 43 – Virginia Public Procurement Act. 2.2-4354. Payment clauses to be included in contracts

Construction Directive CD-2008-10. Non-Payment Claims Against Contractor

Prompt Payment Survey 2012 Page 29

Contact Kerry A. Bates, P.E. Assistant State Construction Engineer Virginia Department of Transportation Scheduling & Contract Division 1401 East Broad Street Richmond, Virginia 23219 804-371-4312 kerry.bates@vdot.virginia.gov

Washington Information Sources 2012 Standard Specifications, Section 1-08.1(1), Subcontract Completion and Return of

Retainage Withheld (pgs 72-73). Construction Manual, July 2011. Section 1-2.7B(1) Prompt Return of Retainage to All

Subcontractors (pg 122)

Contact Craig McDaniel, P.E. Construction Engineer, Administration Washington State Department of Transportation Construction Office P.O. Box 47354 Olympia, WA 98504-7354 360-705-7823 McDaniC@wsdot.wa.gov

West Virginia Information Sources Special Provision for Subcontractor Prompt Payment, March 2, 2012.

Contact Stephen T. Rumbaugh Director, Contract Administration Division Building 5, Room A-172 1900 Kanawha Boulevard East Charleston, WV 25305-0430 304-558-9569 Stephen.T.Rumbaugh@wv.gov

Wisconsin Information Sources Payment to all Subcontractors, Additional Special Provision 4 (ASP-4), July 2003. Payment to

all Subcontractors Construction and Material Manual (CMM), November 2006. 2.40.1 Prompt Payment

Complaint and Procedures

Prompt Payment Survey 2012 Page 30

Contact Donald J. Greuel Chief Project Services Engineer Wisconsin Department of Transportation 4802 Sheboygan Avenue, 601 Madison, WI 53705 608-516-1793 donald.greuel@dot.wi.gov

Wyoming Information Sources Standard specification, 2010 edition. 109.5.2, Contractor's Payment to Subcontractors (pgs

122-123) Additional Information Sources:

Certification of Subcontract Payments, Form E-139, 12/02 and Instructions.

Contact Andy Long, P.E. State Construction Engineer Wyoming Department of Transportation 5300 Bishop Blvd. Cheyenne, WY 82009-3340 307-777-4425 andy.long@wyo.gov

Prompt Payment Survey 2012 Page 31

contain or incorporate by reference all applicable portions of the Contract including the federal provisions contained in Appendix A, if applicable.

The Contractor shall continuously update the list referenced in (A) above and provide it to the Department throughout the duration of the Project.

If requested by the Department, the Contractor shall provide the Department with copies of any subcontract or other document that establishes the relationship of the Contractor and any Subcontractors. The Contractor may omit, remove or obscure any Unit Prices shown in the copy of the subcontract submitted to the Department. 104.5.4 Discharge of Subcontractors The Department, upon written notice to the Contractor, may require that the Contractor discharge any Subcontractor that the Department determines jeopardizes safety of any person or the Project without cost or liability to the Department. If the Department determines that a Subcontractor’s performance jeopardizes the intent of the Contract otherwise, the Department may, but is not required, to notify the Contractor of such a determination. Such notice, or lack thereof, does not affect the Contractor's duties regarding Subcontractors. Upon Receipt of such notice, the Contractor shall take any action it determines is necessary to fulfill its obligations under the Contract. For related provisions, see Sections 104.3.4 - Workers and Equipment, 104.5.2 - Contractor’s Duties Regarding Subcontractors, 105.1 - Intent of the Contract, and 105.2 - Health and Safety. 104.5.5 Prompt Payment of Subcontractors

A. Pay When Paid The Contractor shall pay Subcontractors for all Work satisfactorily performed and Invoiced by the Subcontractor no later than 30 Days from the date the Contractor receives payment from the Department for such Subcontractor’s Work.

B. Retainage The Contractor shall return to the Subcontractor all retainage withheld from the Subcontractor within 30 Days after the date the Subcontractor's Work is satisfactorily completed. If there is a Delay in such return of retainage, the Subcontractor may pursue all rights it may have under the claims procedure referenced in Section 104.5.6 - Subcontractor Claims for Payment.

104.5.6 Subcontractor Claims for Payment The Contractor agrees to notify all Subcontractors of the claim filing procedure contained in 23 MRSA § 52-A(2). As provided in this statute, the Department may use retainage to discharge Subcontractor claims. 104.5.7 Flow Down All subcontracts of the Contractor, and all lower tier subcontracts, shall contain or reference all applicable provisions of the Contract, including all safety, wage, Prompt payment, labor, environmental, and equal opportunity provisions. The Contractor indemnifies and hold harmless the Department against any and all claims or liabilities arising from the failure to include such flow down provisions.

1-44

100SS 100SS

Page 17 of 22 If the Contract or any portion thereof is terminated before completion of all items of work in

the contract; payment will be made for the actual number of units of items of work completed at the contract unit prices and as mutually agreed for items or work partially completed. No claim for loss of overhead or anticipated profits, including anticipated earnings on usage of owned equipment, and impact, delay, or other direct or indirect costs resulting from this termination, will be compensated as part of any settlement. Items that are eliminated in their entirety by the termination, will be paid according to subsection 109.05.

Completed or partially completed work will be paid for at the contract unit prices of the actual number of units or items of contract work completed prior to the effective date of the termination, or on a force account basis, as determined by the Engineer.

Reimbursement for organization of the Work (when not otherwise included in the contract) and moving equipment to and from the job will be considered where the volume of work completed is too small to compensate the Contractor for these expenses under the contract unit prices, the intent being that an equitable settlement will be made with the Contractor. The Department may consider reimbursing the Contractor for actual work done and actual costs incurred by the Contractor before notification. It may include only such cost items as mobilization, subcontractor costs not otherwise paid for, actual idle equipment costs only for any time the work is stopped in advance of the termination date, and guaranteed payments for private land usage as part of the original contract (when not otherwise included in the contract). Any claim request for additional costs, not covered in this section or elsewhere in the contract, shall be submitted within 60 calendar days of the effective termination date.

Acceptable materials, obtained by the Contractor for the Work, that have been inspected, tested, and accepted by the Engineer, and that are not incorporated in the Work, may, at the option of the Engineer, be purchased from the Contractor. The Contractor shall submit the proof of actual cost, as shown by receipted bills and actual cost records. The Engineer, as shown by actual cost records, may designate all actual costs for delivery at such points of delivery to be added to this cost. If the Engineer and the Contractor do not agree to purchase such materials, the Department may reimburse the Contractor for any reasonable restocking fees and handling costs incurred by the Contractor in returning said materials to the vendor. In the event that only portions of the contract work are eliminated, the Department may stop delivery and payment for materials made unnecessary.

Termination of a Contract or a portion thereof shall not relieve the Contractor of his responsibilities for the completed Work, nor shall it relieve his Surety of its obligation for and concerning any just claims arising out of the Work performed.

Subsection 109.02 Add the following to the end of Subsection 109.02: The prime contractor must pay each subcontractor for work performed under its subcontract

no later than 30 days from the date the prime contractor receives payment for the work from the Department. The prime contractor must pay each material supplier for materials supplied to the project no later than 30 days from the date the prime contractor receives payment for the material from the Department. In addition, all subcontractors, at all tiers, must make payment no later than 30 days to each subcontractor and material supplier for work and/or material provided for the project once they receive payment from the prime contractor or subcontractor. The prime contractor shall provide monthly payment certification to the Department entitled “Prompt Payment Certification Form”. An officer of the prime contractor shall sign the “Prompt Payment Certification Form”. The Department will withhold estimate payments if information is not

100SS 100SS

Page 18 of 22 submitted. The Department will withhold estimate payments for subcontracted items if subcontractors, at any tier, or materials suppliers are not paid. Also, all required certifications must be in the field office and accepted before such work is deemed satisfactorily completed. Any delay or postponement of payment from the above referenced time frame will result in accrual of interest as provided under TCA, Section 12-4-707(b).

The prime contractor, or subcontractors, at any tier, shall not withhold any retainage from progress payments made to their subcontractors.

Subsection 109.04-Methods of Payment for Extra Work, (a) Labor, Add “for profit and overhead” to the end of the second sentence.

Subsection 109.04-Methods of Payment for Extra Work, (c) Materials, Add “for profit and overhead” to the end of the sentence.

Subsection 109.04-Methods of Payment for Extra Work, (d) Equipment, Revise to the following:

(d) Equipment

Equipment used for Force Account work shall be of the size, type and number necessary to perform the required work in an economic and expeditious manner.

The Contractor shall submit for approval a list of all contractor owned equipment or equipment rented from another contractor (i.e. an entity not in the commercial rental business), including the manufacturer, make, model, year of manufacture, type of fuel, and other necessary information to determine proper hourly payment rate. The hourly rate shall not exceed the Monthly rate less the regional adjustment and age adjustment, as published in "The Rental Rate Blue Book for Construction Equipment" published by Equipment Watch, Prism Business Media, divided by 176. The contractor shall also submit for approval the hourly operating cost for all equipment. The hourly operating cost shall include all costs and labor for routine maintenance and servicing, including but not limited to fuel, lubrication, filters, blades, belts, pumps, lines, hoses, teeth, tires, tracks, etc.. The hourly operating costs shall not exceed the rates published in "The Rental Rate Blue Book for Construction Equipment". The rental rates will be paid for the actual time that the equipment is in operation. The weekly, daily or hourly premium equipment rates shown in the Blue Book shall not be used.

Contractor owned equipment or equipment rented from another contractor that has been approved for force account work that remains idle or on standby will be paid at a rate of 50% of the hourly rate calculated above. Idle equipment shall not be paid for more than 8 hours in a day or 40 hours in a week or on days of inclement weather when no other work is taking place. Equipment that is inoperable will not be paid idle time. The Department will determine if it will be more cost effective to pay idle time on approved equipment or for multiple mobilizations.

For equipment being used to complete force account work for part of the day and idle for a part of a day, the total hours that can be charged will be 8 hours, unless the equipment is in operation for more than 8 hours. Idle time will not be paid for any equipment which operates more than 8 hours in a day

Equipment that is rented or leased from a commercial rental company will be paid for at actual invoice price, provided the prices are fair and reasonable but not to exceed

SP109P SP109P Sheet 1 of 1 1 S T A T E O F T E N N E S S E E (Rev. 7-15-05) March 30, 2001 SPECIAL PROVISION REGARDING PROMPT PAYMENT Add the following to the end of Subsection 109.02:

In accordance with TCA, Section 12-4-707, the prime Contractor agrees to pay each subcontractor under this contract for satisfactory performance of its subcontract no later than 30 days from receipt of each payment the prime Contractor receives from the Department. Satisfactory performance means that the work has been inspected by the Department and is accepted as complete according to the Standard Specifications. Also, all required certifications must be in the field office and accepted before such work is deemed satisfactorily completed. Any delay or postponement of payment from the above referenced time frame will result in accrual of interest as provided under TCA, Section 12-4-707(b).

The Contractor shall not withhold any retainage from progress payments to their

subcontractors.

Page 1 of 2

CIRCULAR LETTER

SECTION: 109.02 SCOPE OF PAYMENTNUMBER: 109.02-05 SUBJECT: CERTIFICATION OF PROMPT PAYMENTDATE: DECEMBER 1, 2006

The Standard Specifications, in accordance with TCA, Section 12-4-707, requires the Prime Contractor to pay each subcontractor for satisfactory performance of its subcontract work no later than 30 days from receipt of each payment the Prime Contractor receives from the Department. In order to validate this payment, the Prime Contractor shall certify each month that these payments have been made. The certification shall run 2 months in arrears. If circumstances arise where payment to the subcontractors has not been made, the Prime Contractor shall list reasons for nonpayment and note whether or not the subcontractors are Disadvantaged Business Enterprises (DBE) in the exception block. Also, the Prime Contractor shall be required to list all subcontractors where joint checks are utilized and note whether or not the subcontractors are DBEs in the joint checks box.

This certification once completed by the contractor shall be sent to the Project Supervisor. When exceptions or joint check subcontractors are listed, the Project Supervisor shall send copies to the Director of Construction and the Regional Construction office. If the exceptions or joint checks boxes include a DBE subcontractor then an additional copy shall be sent to the Small Business Development Office. Monthly progress payments shall not be processed without this certification.

Page 2 of 2

TENNESSEE DEPARTMENT OF TRANSPORTATIONCERTIFICATION REGARDING

PROMPT PAYMENT TO SUBCONTRACTORS

Contract Number ContractorProject Number County

I certify that to the best of my knowledge, for the estimate period of ______________________ that all subcontractors have been paid; including retainage where applicable, for the quantities estimated to date by the Department in accordance with the tables below. I have listed exceptions and reasons for non-payment to Subcontractors and where joint checks were utilized, as provided below.

Signature Title DateExceptions:

Subcontractor DBEYes/No

Reason For Nonpayment

Only complete the following if joint checks were utilized³:Subcontractor DBE

Yes/NoDate Agmt

SignedAmount Paid On

EstimateTotal Paid To Date

Guidelines:1. This certification will be required before processing a monthly progress payment to the Contractor. The

certification will run two months in arrears (i.e. progress payment for March 2006 would require certification for January 2006).

2. This certification shall be sent to the Project Supervisor. When exceptions or joint check subcontractors are listed, the Project Supervisor shall send copies to the Director of Construction and the Regional Construction Office. If an exception or joint check includes a DBE subcontractor then an additional copy shall be sent to the Small business Development Office.

3. Copies of joint checks are to be attached to this report.

This certification is for the Department’s information only and does not place any obligation on the part of the Department with regard to any party including but not limited to any subcontractor and Contractor’s surety.

Title 12 Public Property, Printing And Contracts Chapter 4 Public Contracts

Part 7 Prompt Pay Act of 1985

Tenn. Code Ann. § 12-4-707 (2012) 12-4-707. Payments to subcontractors -- Interest. (a) Upon payment by an agency, a business which has acquired under contract, property or services in connection with its contract with such agency from a subcontractor or supplier shall pay the subcontractor or supplier within thirty (30) days after receiving payment from the agency. (b) Interest at the rate of one and one-half percent (11/2%) per month shall accrue and is due any subcontractor or supplier who is not paid within thirty (30) days after the business receives payment from the agency, unless otherwise provided by contract between the agency and the business, or by contract between the business and the subcontractor or supplier. Interest begins to accrue on the thirty-first day at the rate specified in this subsection (b). HISTORY: Acts 1985, ch. 57, § 1.

109.05 Estimates

The Department will make monthly payments to the Contractor for work performed and for materials delivered, as specified in 109.06. The RE will calculate the payment in an Estimate consistent with the provisions of the Contract. If not otherwise described in the Contract, the RE will be the sole judge of the amount of progress payment due for partially completed work. The quantities provided in the Estimate may be approximations and may not be based on as-built quantity measurements. The Department will establish the date of the month that the Estimate is processed.

The RE will provide a summary of the Estimate to the Contractor. Before the issuance of each payment, certify, on forms provided by the Department, that:

1. Each subcontractor or supplier has been paid the amount due from the previous progress payment and shall be paid the amount due from the current progress payment and no retainage is being withheld from any subcontractor on Federally funded projects; or

2. There exists a valid basis under the terms of the subcontractor's or supplier's contract to withhold payment from the subcontractor or supplier, and therefore payment is withheld.

If the certification indicates that the Contractor has withheld or will withhold payment from a subcontractor or supplier, provide written notice, according to N.J.S.A. 52:32-40 and N.J.S.A. 52:32-41, of such non-payment to the subcontractor or supplier. Provide a copy of the notice to the Department and to the Surety that holds the performance bond. Include the reason for withholding payment and state the amount of payment withheld in the notice.

The date that the Department receives the certification will initiate the 20-day approval period under N.J.S.A. 2A:30A-1, et seq. The Department will not accept the certification before being requested by the RE.

If no valid basis exists for withholding payment, N.J.S.A. 52:32-40 and N.J.S.A. 52:32-41 authorize any subcontractor or supplier from whom payment is withheld to receive from the Contractor, in addition to any amount due, interest at a rate equal to the prime rate plus one percent if the subcontractor or supplier is not paid within 10 days after receipt by the Contractor of payment by the Department for completed work that is the subject of a subcontract or a material supply agreement. This interest begins to accrue on the tenth day after receipt of payment by the Contractor.

If court action is taken by a subcontractor or supplier to collect payments withheld by a Contractor and it is determined that a valid basis existed for the withholding of those payments, the subcontractor or supplier shall be liable for any court costs incurred by the Contractor in connection with the action.

The Department will not make payment for an Estimate having a value less than $5000, unless it is for the Final Certificate.

From the total Estimate amount, excluding amounts for subcontracted work on Federally funded projects, the Department will deduct and retain 2 percent until Substantial Completion.

In the first Estimate following Substantial Completion, the Department will reduce the retainage withheld to one percent of the total adjusted Contract price, excluding subcontracted work on Federally funded projects, unless it has been determined by the Department that the withholding of additional retainage is required. If retainage is held in cash withholdings, the reduction is to be accomplished by payment under the next Estimate. If retainage is held in bonds, the Department will authorize a reduction in the escrow account.

The RE has the right to not process an Estimate when, in the judgment of the RE, the work is not performed or proceeding as specified in the Contract or following the Department giving the Contractor and Surety notice of default as specified in 108.14.

The Department's processing or payment of an Estimate is not an approval of defective or improper work. The Department, upon determining that any payment under a previous Estimate was improper or unwarranted for any reason, has the right to recover erroneous payment from the Contractor.

formally accepted to file suit. N.J.S.A.2A:44-145 to 146. This process left claimants at the mercy of the general contractor and owner if disputes unrelated to the claimants' work prevented the project from being accepted.

As amended, N.J.S.A. 2A:44-145 no longer requires a claimant to await formal acceptance of the entire project before filing a statement of claim with the surety. Now, the claimant or "beneficiary" is to file its statement of claim with the surety company within one year "from the last date upon which such beneficiary shall have performed actual work or delivered materials to the project…"

Also, the amended version of N.J.S.A. 2A:44-145 no longer requires a claimant to await formal acceptance of the entire project before bringing suit on the bond. Now, the claimant can bring suit 90 days after filing the Statement of Claim with the surety "… but in no event later than one year from the last date upon which such beneficiary shall have performed actual work or delivered materials to the project…"

In other words, the claimant must bring an action against the surety within one year from the last date that work was performed or materials were supplied, provided the claimant issued a notice of claim to the surety at least ninety (90) days before. Otherwise,the claimant's time period is effectively only nine (9) months, because suit cannot be brought against a surety for at least 90 days after notice of the claim is delivered to the surety.

C. Affect of Bond Act Amendment on Subcontractor Payment Bonds.

The Bond Act applies only to the payment bond required of the Contractor on public works projects. The Act does not require payment bonds required from any subcontractor to conform with its provisions. Therefore, it is the Contractor's responsibility to ensure that any bonds required from its subcontractors conform with the aforementioned notice and suit limitations. Equally as important, the subcontractor's bonds should be written to afford coverage for those who not only supply labor or material directly to the subcontractor, but also to any lower tier sub-subcontractors. In that manner, the Contractor can ensure that it will not face exposure under its own payment bond for claims that cannot be made against the subcontractor's surety. In order to accomplish this, the Contractor should insist that the bond requirements are written into both the subcontract and the subcontract payment bond (although our courts have held that as long as the bond requirements are set forth in the subcontract, incorporation of the subcontract by reference in the subcontract payment bond is sufficient to bind the surety to those obligations.)

II. PROMPT PAYMENT ON CONSTRUCTION PROJECTS.

For all contracts entered on or after September 1, 2006, New Jersey law governing prompt payment on construction projects has been significantly revised.

Previously, New Jersey law addressed only prompt payment between contracting parties on projects for State Agencies (N.J.S.A. 52:32-32 et seq., the “New Jersey Prompt Payment Act”) and, on all other projects, addressed only payments to Subcontractors and

1864256-01 5

suppliers—not payments by Owners to Prime Contractors (N.J.S.A. 2A:30A-1 et seq.).2

The law now establishes deadlines for payment between essentially all contracting parties, on virtually all types of construction work (except certain federally-funded transportation projects), and applies at all levels of New Jersey government and on all private projects. The new law also provides stronger remedies to unpaid parties in the form of penalty interest and the ability to suspend work.

Although the remedies for failure to pay promptly are the same for both unpaid Prime Contractors (one who contracts directly with the Owner) and Subcontractors, Sub-subcontractors, or suppliers (awaiting payment from Prime Contractors or upper tier Subcontractors), the required timing of payment (and certain other exceptions) varies depending on whether a party is acting as a Prime Contractor, or as a Subcontractor, Sub-subcontractor, or supplier.

A. Timing of Payments.

The Act generally requires Owners to pay Prime Contractors within thirty (30) calendar days after the billing date.3 The key to the new law is that, within twenty (20) days of its receipt of the Prime Contractor’s invoice, an Owner must now either accept the work or must provide a written statement of both the amount withheld and reason for withholding.4 If the Owner fails to provide such written objection, the work is deemed “approved and certified,” and the Owner must pay the Prime Contractor within thirty (30) days of the billing date, or the Prime Contractor can institute its remedies of penalty interest and/or suspension of work, as discussed further below.5

Payment to Subcontractors, Sub-subcontractors, and suppliers, on the other hand, must generally be made within ten (10) days of the Prime Contractor’s receipt of payment from Owner (or, in the case of Sub-subcontractors, within ten (10) days of the Subcontractor’s receipt from the Prime Contractor, etc.).6 Notably, by explicitly providing that the Act’s payment requirements apply where the “parties have not otherwise agreed in writing,” the Act retains a previously-existing opt-out related to payment terms for Subcontractors, Sub-subcontractors, and suppliers.7 As such, Subcontract Agreements may be modified to allow different payment terms to be agreed to between Prime Contractors and their Subcontractors or suppliers (or between Subcontractors and their Sub-subcontractors or suppliers), as long as it is done in writing.

2 The recent revisions discussed herein are reflected in the latter statute, N.J.S.A. 2A:30A-1 et seq.Where the revised statute provides stronger remedies than those that existed under the “New Jersey Prompt Payment Act,” the new revisions expressly supersede previously existing law. N.J.S.A. 2A:30A-2(e). 3 N.J.S.A. 2A:30A-2(a). 4 Id.5 N.J.S.A. 2A:30A-2(a), (c), and (d). 6 N.J.S.A. 2A:30A-2(b). 7 Id.

1864256-01 6

B. Remedies for Unpaid Parties.

The law provides unpaid parties with two remedies: a penalty interest remedy and a suspension of performance remedy.

The unpaid Prime Contractor, Subcontractor, Sub-subcontractor or supplier (or “Payee”), if not promptly paid (and where payment is not disputed by the Owner in writing, nor falls within other applicable exceptions discussed further below), is entitled to charge penalty interest (prime rate plus 1%) beginning on the day after payment was required until the date the payment check is finally drawn.8

In addition to the interest penalty, the law now permits an unpaid party—once certain conditions are met—to suspend work (without liability for breach of contract) until payment is made. In order to exercise this provision, the Payee must first provide seven (7) days written notice, and three additional conditions must then be met.9 If, after written notice, the amount remains unpaid, no written statement of the amount and reason for withholding was provided, and the Payor is not “engaged in good faith efforts to resolve” the payment issue, then, and only then, can the Payee suspend work and properly claim protection under the Act.10

C. Exceptions.

The law provides three noteworthy exceptions.

First, parties may not invoke the penalty interest remedy or suspension of work remedy on certain federally-funded transportation projects.11 Notably, the definition of what projects are exempt varies for the two remedies. Interest penalties cannot be asserted on “Transportation Projects” (as defined in N.J.S.A. 27:1B-3, the “New Jersey Transportation Trust Fund Authority Act") where that project is receiving federal funding and where the awarding agency has been notified by the federal government that with will be classified as a “high risk grantee.”12 The suspension of work remedy cannot be invoked on “Transportation Projects” where that project is receiving federal funding andwhere “the application of this provision would jeopardize federal funding because the owner could not meet the federal standards for financial management systems [as required under federal law].”13 Perhaps more important than the varying definitions of exempt projects, the law does not expressly require Owners to indicate in their bid specifications or contracts whether these exceptions apply. As such, it may be prudent for contractors to request such information during the bidding phase on transportation projects that will receive, or are likely to receive, federal funding.

8 N.J.S.A. 2A:30A-2(c). 9 N.J.S.A. 2A:30A-2(d). 10 Id.11 N.J.S.A. 2A:30A-2(c) and (d). 12 N.J.S.A. 2A:30A-2(c). 13 N.J.S.A. 2A:30A-2(d).

1864256-01 7

Second, the revised law provides a potentially significant exception with regard to payments to Subcontractors, Sub-subcontractors, and suppliers where partial payments are made during for ongoing work on the same project. In that situation, a Prime Contractor or Subcontractor may withhold the amount of money owed for work already completed if that Subcontractor, Sub-subcontractor or supplier’s work is not being performed to the “satisfaction of the prime contractor or subcontractor, as applicable.”14

Third, the law recognizes an exception for those public owners that require authorization by a governing body prior to approval of Prime Contractor invoices. Instead of the twenty (20) day notice requirement for disputing invoices, such owners have until the “next scheduled public meeting of the entity’s governing body” within which to approve or dispute an invoice, and then (assuming approval) must pay the approved amount within the entity’s “subsequent payment cycle.”15 However, in order for such a public entity to properly invoke this exception, it must explicitly indicate this exception in both its bid specifications and its contracts.16

D. Optional Dispute Resolution Required Contract Clause Litigation & Recovery of Costs and Attorneys Fees.

Finally, the Act provides that prompt payment disputes may be resolved through an optional dispute resolution process (presumably mediation or arbitration).17 To this end, the Act requires that all contracts within the scope of the law must provide that prompt payment disputes “may be submitted to a process of alternative dispute resolution.”18 The law specifically excludes bidding disputes, disputes over award, or disputes over the formation of contracts or subcontracts from the optional dispute resolution process.19 If parties choose not to invoke the optional alternative dispute resolution process, and a lawsuit is filed to collect pursuant to this Act the prevailing party is entitled to recover reasonable costs and attorneys’ fees.20

III. AFFIDAVIT OF MERIT.

A. Affidavit of Merit – Introduction.

In a lawsuit alleging professional malpractice or negligence by specified licensed individuals (including architects, engineers and licensed land surveyors) seeking damages for property damage, personal injuries or wrongful death, a plaintiff must, within sixty (60)

14 N.J.S.A. 2A:30A-2(b). 15 N.J.S.A. 2A:30A-2(a). 16 Id.17 N.J.S.A. 2A:30A-2(f). 18 Id. This requirement appears to be a remnant of earlier versions of the law, which originally proposed that all prompt payment disputes be brought to binding arbitration before the American Arbitration Association under its expedited rules. The enacted version of the law watered down that requirement and now requires contractual references to, instead, this optional, nonbinding, dispute resolution. 19 Id.20 Id.

1864256-01 8

109.12 Change Orders. Except as otherwise provided for in the change order, an adjustment of the contract price or time of contract performance in a change order constitutes compensation in full to the contractor and the contractor’s subcontractors and suppliers for all costs and time effects directly or indirectly attributable to the matter described in the change order, for all delays related thereto, for all impact, cumulative impacts and for performance of the change within the time stated. The surety's liability under the contract bond and contract shall not be limited to the penal sum as set forth in the contract bond. The surety shall be liable and responsible to the Commission for the contractor's entire performance and of all obligations arising under or from the contract, which shall include, but not be limited to, any change orders issued under the contract that increase the cost of the contract.

109.13 Prompt Payment to Subcontractors and Suppliers. The requirements set forth in this section will apply to all contracts where the federal government is participating in the cost of construction.

109.13.1 When the contractor receives any payment from the Commission, the contractor shall, within the earlier of fifteen days of receipt of that payment, or the date provided by the subcontract or purchase order, pay each subcontractor or supplier a sum, less only any retention provided by the subcontractor or purchase order or sum withheld as allowed by Sec 109.13.3, equal to one of the following:

(a) The value of that subcontractor's work, services or material included on the contractor payment estimate applicable to that payment.

(b) The amount of any material allowance under Sec 109.7.

(c) Such greater sum as provided by the subcontract or purchase order for work included on the contractor payment estimate.

109.13.2 Notwithstanding any conflicting provision in a subcontract or purchase order and subject only to the requirements of Sec 109.13.3, the contractor shall make final payment of the balance of all sums under a subcontract or purchase order, including any retention, within 30 days of the satisfactory completion of the subcontractor's work or services, or a supplier's final delivery of materials to be provided.

109.13.3 The contractor may withhold periodic payment or final payment to a subcontractor or supplier only for the following causes and only if that subcontractor or supplier is directly involved:

(a) The engineer has rejected specific areas or items of work or materials as not conforming to the contract or such areas or items of work or materials are deemed not suitable for payment.

(b) Unsatisfactory job progress.

(c) Defective construction work or materials not remedied.

(d) Disputed work, but only the disputed amount.

(e) Failure to comply with other material provisions of the contract.

(f) Third party claims filed, or reasonable evidence that a claim will be filed, but not claims covered by a subcontractor or supplier's insurance required by Sec 107.

(g) Substantial evidence of the subcontractor or supplier's failure to make timely payments for labor, equipment or materials; damage to the contractor or another subcontractor

or material supplier, but not such damage as is covered by a subcontractor or supplier's insurance required by Sec 107.13.2.4.

(h) Substantial evidence that the subcontractor or supplier's work cannot be completed for the unpaid balance of the subcontract or purchase order sum, or a reasonable amount for retention.

109.14 Price Adjustment for Fuel. The method of price adjustment for the fuel used on various items of work that may be involved in the construction of this project will be based on "Fuel Usage Factors" for the various items as noted below: The On-Road Factor is based upon a 30-mile round trip haul:

Item of Work Unit Fuel Usage Factor Fuel Usage Factor On-Road Hauling (30 mile

avg.) Class A Excavation gal/yd3 0.20 n/a Unclassified Excavation gal/yd3 0.30 n/a Class C Excavation (Includes Sandstone and Igneous Rock Excavation)

gal/yd3 0.40 n/a

Embankment in Place gal/yd3 0.35 n/a Bituminous Constructiona

(Includes all Gal/Ton of Plant Mix Asphalt Mixes) If paid by SY convert to equivalent tons.

Total Mix 2.65 0.67

Concrete Pavement Round to nearest 1 in. increment. (e.g. if 7.5” pavement use 8 in. factor). If less than 6 in. use 6 in. factor. If paid by CY convert to equivalent thickness.

gal/yd2

6 in. 7 in. 8 in. 9 in.

10 in. 11 in. 12 in. 13 in. 14 in.

0.27 0.29 0.31 0.33 0.35 0.36 0.39 0.41 0.42

0.22 0.26 0.29 0.33 0.37 0.41 0.44 0.48 0.52

Aggregate Baseb gal/yd2

4 in. n/a 0.15 a Includes ultrathin bonded asphalt wearing surface b Includes stabilized permeable base

109.14.1 The first day of each month (excluding Saturdays, Sundays, and holidays) in which the project is bid will be used to establish the "Starting Fuel Index" for the duration of the project. The "Starting Fuel Index" will be the average of the values given for No. 2 fuel as reported by Platt's Oilgram - PAD 2 - St. Louis Area.

109.14.2 The pay items and unit prices in the contract will not change. The Commission will, on the first day of each month (excluding Saturdays, Sundays and holidays), determine the "Monthly Fuel Index" of No. 2 fuel from the price index as reported by Platt's Oilgram - PAD 2 - St. Louis Area, which will apply to all payment estimates during that month regardless of the type fuel used.

Missouri Revised Statutes Chapter 34

State Purchasing and Printing Section 34.057

August 28, 2011

Public works contracts--prompt payment by public owner to contractor--prompt payment by contractor to subcontractor--progress payments--retainage--late payment charges--withholding of payments.

34.057. 1. Unless contrary to any federal funding requirements or unless funds from a state grant are not timely received by the contracting public municipality but notwithstanding any other law to the contrary, all public works contracts made and awarded by the appropriate officer, board or agency of the state or of a political subdivision of the state or of any district therein, including any municipality, county and any board referred to as the public owner, for construction, reconstruction or alteration of any public works project, shall provide for prompt payment by the public owner to the contractor and prompt payment by the contractor to the subcontractor and material supplier in accordance with the following:

(1) A public owner shall make progress payments to the contractor on at least a monthly basis as the work progresses, or, on a lump sum basis according to the terms of the lump sum contract. Except in the case of lump sum contracts, payments shall be based upon estimates prepared at least monthly of work performed and material delivered, as determined by the project architect or engineer. Retainage withheld on public works projects shall not exceed five percent of the value of the contract or subcontract unless the public owner and the architect or engineer determine that a higher rate of retainage is required to ensure performance of the contract. Retainage, however, shall not exceed ten percent of the value of the contract or subcontract. Except as provided in subsection 4 of this section, the public owner shall pay the contractor the amount due, less a retainage not to exceed ten percent, within thirty days following the latter of the following:

(a) The date of delivery of materials or construction services purchased;

(b) The date, as designated by the public owner, upon which the invoice is duly delivered to the person or place designated by the public owner; or

(c) In those instances in which the contractor approves the public owner's estimate, the date upon which such notice of approval is duly delivered to the person or place designated by the public owner;

(2) Payments shall be considered received within the context of this section when they are duly posted with the United States Postal Service or other agreed upon delivery service or when they are hand-delivered to an authorized person or place as agreed to by the contracting parties;

(3) If, in the discretion of the owner and the project architect or engineer and the contractor, it is determined that a subcontractor's performance has been completed and the subcontractor can be released

prior to substantial completion of the public works contract without risk to the public owner, the contractor shall request such adjustment in retainage, if any, from the public owner as necessary to enable the contractor to pay the subcontractor in full. The public owner may reduce or eliminate retainage on any contract payment if, in the public owner's opinion, the work is proceeding satisfactorily. If retainage is released and there are any remaining minor items to be completed, an amount equal to two hundred percent of the value of each item as determined by the public owner's duly authorized representative shall be withheld until such item or items are completed;

(4) The public owner shall pay the retainage, less any offsets or deductions authorized in the contract or otherwise authorized by law, to the contractor after substantial completion of the contract work and acceptance by the public owner's authorized contract representative, or as may otherwise be provided by the contract specifications for state highway, road or bridge projects administered by the state highways and transportation commission. Such payment shall be made within thirty days after acceptance, and the invoice and all other appropriate documentation and certifications in complete and acceptable form are provided, as may be required by the contract documents. If at that time there are any remaining minor items to be completed, an amount equal to two hundred percent of the value of each item as determined by the public owner's representative shall be withheld until such items are completed;

(5) All estimates or invoices for supplies and services purchased, approved and processed, or final payments, shall be paid promptly and shall be subject to late payment charges provided in this section. Except as provided in subsection 4 of this section, if the contractor has not been paid within thirty days as set forth in subdivision (1) of subsection 1 of this section, the contracting agency shall pay the contractor, in addition to the payment due him, interest at the rate of one and one-half percent per month calculated from the expiration of the thirty-day period until fully paid;

(6) When a contractor receives any payment, the contractor shall pay each subcontractor and material supplier in proportion to the work completed by each subcontractor and material supplier his application less any retention not to exceed ten percent. If the contractor receives less than the full payment due under the public construction contract, the contractor shall be obligated to disburse on a pro rata basis those funds received, with the contractor, subcontractors and material suppliers each receiving a prorated portion based on the amount of payment. When, however, the public owner does not release the full payment due under the contract because there are specific areas of work or materials he is rejecting or because he has otherwise determined such areas are not suitable for payment then those specific subcontractors or suppliers involved shall not be paid for that portion of the work rejected or deemed not suitable for payment and all other subcontractors and suppliers shall be paid in full;

(7) If the contractor, without reasonable cause, fails to make any payment to his subcontractors and material suppliers within fifteen days after receipt of payment under the public construction contract, the contractor shall pay to his subcontractors and material suppliers, in addition to the payment due them, interest in the amount of one and one-half percent per month, calculated from the expiration of the fifteen-day period until fully paid. This subdivision shall also apply to any payments made by subcontractors and material suppliers to their subcontractors and material suppliers and to all payments made to lower tier subcontractors and material suppliers throughout the contracting chain;

(8) The public owner shall make final payment of all moneys owed to the contractor, less any offsets or deductions authorized in the contract or otherwise authorized by law, within thirty days of the due date. Final payment shall be considered due upon the earliest of the following events:

(a) Completion of the project and filing with the owner of all required documentation and certifications, in complete and acceptable form, in accordance with the terms and conditions of the contract;

(b) The project is certified by the architect or engineer authorized to make such certification on behalf of the owner as having been completed, including the filing of all documentation and certifications required by the contract, in complete and acceptable form; or

(c) The project is certified by the contracting authority as having been completed, including the filing of all documentation and certifications required by the contract, in complete and acceptable form.

2. Nothing in this section shall prevent the contractor or subcontractor, at the time of application or certification to the public owner or contractor, from withholding such applications or certifications to the owner or contractor for payment to the subcontractor or material supplier. Amounts intended to be withheld shall not be included in such applications or certifications to the public owner or contractor. Reasons for withholding such applications or certifications shall include, but not be limited to, the following: unsatisfactory job progress; defective construction work or material not remedied; disputed work; failure to comply with other material provisions of the contract; third party claims filed or reasonable evidence that a claim will be filed; failure of the subcontractor to make timely payments for labor, equipment and materials; damage to a contractor or another subcontractor or material supplier; reasonable evidence that the contract can not be completed for the unpaid balance of the subcontract sum or a reasonable amount for retention, not to exceed the initial percentage retained by the owner.

3. Should the contractor determine, after application or certification has been made and after payment has been received from the public owner, or after payment has been received by a contractor based upon the public owner's estimate of materials in place and work performed as provided by contract, that all or a portion of the moneys needs to be withheld from a specific subcontractor or material supplier for any of the reasons enumerated in this section, and such moneys are withheld from such subcontractor or material supplier, then such undistributed amounts shall be specifically identified in writing and deducted from the next application or certification made to the public owner or from the next estimate by the public owner of payment due the contractor, until a resolution of the matter has been achieved. Disputes shall be resolved in accordance with the terms of the contract documents. Upon such resolution the amounts withheld by the contractor from the subcontractor or material supplier shall be included in the next application or certification made to the public owner or the next estimate by the public owner and shall be paid promptly in accordance with the provisions of this section. This subsection shall also apply to applications or certifications made by subcontractors or material suppliers to the contractor and throughout the various tiers of the contracting chain.

4. The contracts which provide for payments to the contractor based upon the public owner's estimate of materials in place and work performed rather than applications or certifications submitted by the contractor, the public owner shall pay the contractor within thirty days following the date upon which the estimate is required by contract to be completed by the public owner, the amount due less a retainage not to exceed five percent. All such estimates by the public owner shall be paid promptly and shall be subject to late payment charges as provided in this subsection. After the thirtieth day following the date upon which the estimate is required by contract to be completed by the public owner, the contracting agency shall pay the contractor, in addition to the payment due him, interest at a rate of one and one-half percent per month calculated from the expiration of the thirty-day period until fully paid.

5. Nothing in this section shall prevent the owner from withholding payment or final payment from the contractor, or a subcontractor or material supplier. Reasons for withholding payment or final payment shall include, but not be limited to, the following: liquidated damages; unsatisfactory job progress; defective construction work or material not remedied; disputed work; failure to comply with any material provision of the contract; third party claims filed or reasonable evidence that a claim will be filed; failure to make timely payments for labor, equipment or materials; damage to a contractor, subcontractor or

material supplier; reasonable evidence that a subcontractor or material supplier cannot be fully compensated under its contract with the contractor for the unpaid balance of the contract sum; or citation by the enforcing authority for acts of the contractor or subcontractor which do not comply with any material provision of the contract and which result in a violation of any federal, state or local law, regulation or ordinance applicable to that project causing additional costs or damages to the owner.

6. Notwithstanding any other provisions in this section to the contrary, no late payment interest shall be due and owing for payments which are withheld in good faith for reasonable cause pursuant to subsections 2 and 5 of this section. If it is determined by a court of competent jurisdiction that a payment which was withheld pursuant to subsections 2 and 5 of this section was not withheld in good faith for reasonable cause, the court may impose interest at the rate of one and one-half percent per month calculated from the date of the invoice and may, in its discretion, award reasonable attorney fees to the prevailing party. In any civil action or part of a civil action brought pursuant to this section, if a court determines after a hearing for such purpose that the cause was initiated, or a defense was asserted, or a motion was filed, or any proceeding therein was done frivolously and in bad faith, the court shall require the party who initiated such cause, asserted such defense, filed such motion, or caused such proceeding to be had to pay the other party named in such action the amount of the costs attributable thereto and reasonable expenses incurred by such party, including reasonable attorney fees.

(L. 1990 S.B. 808 & 672 � 1)

Prompt Payment December 2002

NOTICE TO BIDDERS Minnesota Statutes that require prompt payment to subcontractors: 16A.1245 Prompt payment to subcontractors.

Each state agency contract must require the prime contractor to pay any subcontractor within ten days of the prime contractor's receipt of payment from the state for undisputed services provided by the subcontractor. The contract must require the prime contractor to pay interest of 1-1/2 percent per month or any part of a month to the subcontractor on any undisputed amount not paid on time to the subcontractor. The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid balance of less than $100, the prime contractor shall pay the actual penalty due to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from a prime contractor must be awarded its costs and disbursements, including attorney's fees, incurred in bringing the action.

HIST: 1990 c 541 s 1 337.10 Building and construction contracts; prohibited provisions.

Subd. 3. Prompt payment to subcontractors. A building and construction contract shall be deemed to require the prime contractor and all subcontractors to promptly pay any subcontractor or material supplier contract within ten days of receipt by the party responsible for payment of payment for undisputed services provided by the party requesting payment. The contract shall be deemed to require the party responsible for payment to pay interest of 1-1/2 percent per month to the party requesting payment on any undisputed amount not paid on time. The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid balance of less than $100, the party responsible for payment shall pay the actual penalty due to the party requesting payment. A party requesting payment who prevails in a civil action to collect interest penalties from a party responsible for payment must be awarded its costs and disbursements, including attorney fees incurred in bringing the action. This subdivision does not apply to construction of or improvements to residential real estate as defined in section 326.83, subdivision 17, or to construction of or improvements to attached single-family dwellings, if those dwellings are used for residential purposes and have fewer than 13 units per structure. HIST: 1997 c 127 s 1; 1998 c 289 s 1,2; 1999 c 116 s 2

NOTICE TO BIDDERS

Minnesota Statutes that require prompt payment to subcontractors:

471.425 Prompt payment of local government bills.

Subd. 1. Definitions. For the purposes of this section, the following terms have the meanings here given them.

(d) "Municipality" means any home rule charter or statutory city, county, town, school district, political subdivision or agency of local government. "Municipality" means the metropolitan council or any board or agency created under chapter 473.

Subd. 4a. Prompt payment to subcontractors.

Each contract of a municipality must require the prime contractor to pay any subcontractor within ten days of the prime contractor's receipt of payment from the municipality for undisputed services provided by the subcontractor. The contract must require the prime contractor to pay interest of 1-1/2 percent per month or any part of a month to the subcontractor on any undisputed amount not paid on time to the subcontractor. The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid balance of less than $100, the prime contractor shall pay the actual penalty due to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from a prime contractor must be awarded its costs and disbursements, including attorney's fees, incurred in bringing the action.

HIST: 1985 c 136 s 5; 1995 c 31 s 1

1 MINNESOTA STATUTES 2011 471.425

471.425 PROMPT PAYMENT OF LOCAL GOVERNMENT BILLS.

Subdivision 1. Definitions. For the purposes of this section, the following terms have themeanings here given them.

(a) "Contract" means any written legal document or documents signed by both parties inwhich the terms and conditions of any interest or other penalty for late payments are clearly stated.

(b) "Date of receipt" means the completed delivery of the goods or services or the satisfactoryinstallation, assembly or specified portion thereof, or the receipt of the invoice for the deliveryof the goods or services, whichever is later.

(c) "Governing board" means the elected or appointed board of the municipality andincludes, but is not limited to, city councils, town boards and county boards.

(d) "Municipality" means any home rule charter or statutory city, county, town, schooldistrict, political subdivision or agency of local government. "Municipality" means theMetropolitan Council or any board or agency created under chapter 473.

Subd. 2. Payment required. A municipality must pay each vendor obligation accordingto the terms of the contract or, if no contract terms apply, within the standard payment periodunless the municipality in good faith disputes the obligation. Standard payment period is definedas follows:

(a) For municipalities who have governing boards which have regularly scheduled meetingsat least once a month, the standard payment period is defined as within 35 days of the date ofreceipt.

(b) For municipalities whose governing boards do not regularly meet at least once a month,the standard payment period is defined as 45 days after receipt of the goods or services or theinvoice for the goods or services, whichever is later.

(c) For joint powers organizations organized under section 471.59, the standard paymentperiod is within 45 days of the date of receipt.

Subd. 3. Invoice errors. If an invoice is incorrect, defective or otherwise improper, themunicipality must notify the vendor within ten days of the date of receipt. Upon receiving acorrected invoice from the vendor, the municipality must pay the obligation within the standardpayment period defined in subdivision 2.

Subd. 4. Payment of interest on late payments required. (a) Except otherwise provided inthis section, a municipality shall calculate and pay interest to a vendor if the municipality has notpaid the obligation according to the terms of the contract or, if no contract terms apply, withinthe standard payment period as defined in subdivision 2. The standard payment period for anegotiated contract or agreement between a vendor and a municipality which requires an audit bythe municipality before acceptance and payment of the vendor's invoice shall not be begun untilthe completion of the audit by the municipality.

(b) The rate of interest calculated and paid by the municipality on the outstanding balanceof the obligation not paid according to the terms of the contract or during the standard paymentperiod shall be 1-1/2 percent per month or part of a month.

(c) No interest penalties may accrue against a purchaser who delays payment of a vendorobligation due to a good faith dispute with the vendor regarding the fitness of the product or

Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved.

2 MINNESOTA STATUTES 2011 471.425

service, contract compliance, or any defect, error or omission related thereto. If such delayundertaken by the municipality is not in good faith, the vendor may recover costs and attorney'sfees.

(d) The minimum monthly interest penalty payment that a municipality shall calculate andpay a vendor for the unpaid balance for any one overdue bill of $100 or more is $10. For unpaidbalances of less than $100, the municipality shall calculate and pay the actual interest penaltydue the vendor.

Subd. 4a. Prompt payment to subcontractors. Each contract of a municipality must requirethe prime contractor to pay any subcontractor within ten days of the prime contractor's receiptof payment from the municipality for undisputed services provided by the subcontractor. Thecontract must require the prime contractor to pay interest of 1-1/2 percent per month or any partof a month to the subcontractor on any undisputed amount not paid on time to the subcontractor.The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10.For an unpaid balance of less than $100, the prime contractor shall pay the actual penalty dueto the subcontractor. A subcontractor who prevails in a civil action to collect interest penaltiesfrom a prime contractor must be awarded its costs and disbursements, including attorney's fees,incurred in bringing the action.

Subd. 5. Applicability. This section applies to all goods, leases and rents, and contracts forservices, construction, repair and remodeling. Purchases from or contracts for service with apublic utility as defined in section 216B.02 or a telephone company as defined in section 237.01that has on file with the public utilities commission an approved practice regarding late fees arenot subject to this section.

History: 1985 c 136 s 5; 1995 c 31 s 1

Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved.

Minnesota Department of Transportation DBE Special Provisions

Office of Civil Rights 5/2011

DBE Page 13

substitution, including the reasons for the substitution; and,

2. Mn/DOT's Office of Civil Rights grants the contractor a written approval of the substitution.

Mn/DOT staff may assist the Contractor, when requested, in replacing DBEs. This assistance may include but is not limited to:

1. Providing the contractor with information regarding the availability of other DBEs. 2. Providing the contractor with assistance in locating available DBEs PROMPT PAYMENT

Minnesota Statutes §16A.1245 requires that the prime contractor agrees to pay each subcontractor within ten (10) days of the prime contractor’s receipt of payment from the state for undisputed services provided by the subcontractor. The prime contractor is subject to pay interest charges of 1-1/2 percent per month, or any part of a month, to the subcontractor on any undisputed amount not paid to the subcontractor within the ten (10) day period. This provision applies to DBE and non-DBE subcontractors.

Prime contractors are required to make prompt and full payment of any retainage kept by the prime contractor to the subcontractor within 10 days after the subcontractor's work is satisfactorily completed. Satisfactorily completed means when all the tasks called for in the subcontract have been accomplished and documented as required by Mn/DOT. When Mn/DOT has made incremental acceptances of a portion of a prime contract, the work of a subcontractor covered by that acceptance is deemed to be satisfactorily completed. See 49 C.F.R. § 26.29(b) and (c).

Failure to comply with these payment provisions may result in penalties including the withholding of progress payments to prime contractors. Appropriate penalties will be determined by Mn/DOT. The Contractor Payment Form must be completed for payments to subcontractors regardless of their DBE status.

Minnesota Department of Transportation Office of Civil Rights

DBE Page 24

Page _____of _____

Contractor Payment Form

State Project Number Prime Contractor: 1st Tier Sub-

Contractor:

Payment Reporting Period: From: To: Instructions: All Contractors making payments to Contractors/Subcontractors/Suppliers/Service Providers, regardless of their tier or DBE status, are required to complete and submit this form to the Mn/DOT Office of Civil Rights (OCR), each time payments are made to sub-contractors until final payment is made. Failure to comply with this form and Minnesota’s prompt payment law may cause progress payments to be withheld. Submit one copy of this form to the Mn/DOT OCR and one copy to the Project Engineer, no later than ten (10) days after receiving payment from Mn/DOT.

Contractor Information Original Contract Amount Committed DBE % Actual DBE % to Date

Name:

Address:

Phone:

Name of Subcontractor/Supplier DBE?

(Check if Yes) Description of Work Subcontract Amount

1. 1. 1.

2. 2. 2.

3. 3. 3.

4. 4. 4.

5. 5. 5.

6. 6. 6.

Amount of Current Payment Total Sub-Contractor Payment-To-Date % Paid to date Final Payment? Yes/No

1. 1. 1. 1.

2. 2. 2. 2.

3. 3. 3. 3.

4. 4. 4. 4.

5. 5. 5. 5.

6. 6. 6. 6.

Company Officials Signature & Title Date Signed Name & Title of Individual Completing Report

(Type or Print Clearly)

Title: Title:

Phone: Fax: Phone: Fax:

Minnesota Department of Transportation Office of Civil Rights

DBE Page 25

Contractor Payment Form Instructions All Contractors making payments to Contractors/Subcontractors/Suppliers/Service Providers, regardless of their tier or DBE status, are required to complete and submit this form to the Mn/DOT Office of Civil Rights (OCR), each time payments are made to sub-contractors until final payment is made. Failure to comply with this form and Minnesota’s prompt payment law may cause progress payments to be withheld. Submit one copy of this form to the Mn/DOT OCR and one copy to the Project Engineer, no later than ten (10) days after receiving payment from Mn/DOT. State Project Number: As identified by Mn/DOT Prime Contractor: The contractor who was awarded the project. 1

st Tier Sub-Contractor: If a subcontractor has a subcontractor, list the 1st tier sub here and then list all of the 2nd tier Subcontractor(s) in the Name of Subcontractor/Supplier

area. All areas should be filled in regarding the prime as well. Payment Reporting Period: This should reflect the current payment period. Contractor Information: Contractor’s information who is making the payments. This must be filled out completely. Original Contract Amount: Prime contractor’s contract dollar amount. Committed DBE%: The DBE commitment certified in the prime’s bid is the minimum percentage of DBE participation on the project. Actual DBE % to Date: The percent met to date. Name of Subcontractor/Supplier: Company who is working for the prime contractor on this project. (If a sub was contracted for more than one contract, list each contract separately.) DBE?: Check this box if the subcontractor is a certified DBE in Minnesota. You can find a listing of the DBE firms certified in Minnesota at http://www.dot.state.mn.us/eeocm/ucpdirectory.html . Description of Work: The type of work the subcontractor was contracted for. Subcontract Amount: The dollar amount the subcontractor was contracted for. Amount of Current Payment: The current dollar amount being paid to the sub. Total Sub-Contractor Payment-to-Date: Total dollar amount paid to the sub including the current payment. % Paid to Date: Percentage of total payments made in comparison to the prime’s award amount. Final Payment?: Indicate whether this is the final payment being made to the sub. Company Officials Signature & Title: Self explanatory Name & Title of Individual Completing Report: Self explanatory If you have questions on completing the form, call the Office of Civil Rights at (651) 366-3073.

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(b) Contract Contrary. If the Contractor discovers any provisions in the Contract that are contrary to or inconsistent with any law, ordinance, regulation, order, or decree, the Contractor shall immediately report it to the Engineer in writing.

(c) U.S., VOSHA, and Environmental Protection Regulations. The Contractor’s attention is directed to the various regulations promulgated and enforced by the United States and VOSHA and the environmental protection agencies.

(d) Fair Employee Practices Act. The Contractor shall comply with all of the requirements of Title 21 VSA Chapter 5, subchapter 6, relating to fair employment practices to the extent applicable. A similar provision shall be included in any and all subcontracts.

(e) Hazardous Wastes. The Contractor’s attention is directed to regulations regarding the management of hazardous wastes such as waste crankcase and hydraulic oils, and waste paint generated by construction operations (ref: Agency of Natural Resources’ Department of Environmental Conservation and Title 10 VSA Chapter 159).

(f) Americans with Disabilities Act. The Contractor shall comply with the Americans with Disabilities Act of 1990 and shall assure that individuals with disabilities have equal access to the services, programs and employment activities/opportunities offered by the Contractor under this Contract.

(g) Prompt Payment Act. The Contractor shall fully comply with the provisions of 9 V.S.A. Chapter 102, also referred to as Act No. 74 of 1991 or the Prompt Payment Act, as amended.

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(h) Subcontractor Payments; Reporting; Violations; Inclusion In Subcontracts. On all federal-aid and state funded contracts, the Contractor, during the life of the Contract and on a monthly basis, shall submit electronically, a listing of payments to subcontractors on the form specified by the State and made available at: http://www.aot.state.vt.us/dbe/login.asp. Electronic reports shall be filed with the Agency Office of Civil Rights by an authorized representative and received in the Agency Office of Civil Rights on or before the tenth working day after month end. Contractors without access to the internet shall obtain and submit manual reports to the Agency Office of Civil Rights. Manual reports shall be signed by an authorized representative, sent to the Agency Office of Civil Rights, and postmarked on or before the tenth working day after month end. There shall be no direct compensation allowed the Contractor for this work, but the cost thereof shall be included in the general cost of the work.

In accordance with 9 V.S.A. Section 4003, notwithstanding any contrary agreement, payments made to subcontractors after seven days from receipt of a corresponding progress payment by the State to the Contractor, or seven days after receipt of a subcontractor’s invoice, whichever is later, violate this agreement.

Violations shall be reported to the Agency Office of Civil Rights for review. Failure to resolve disputes in a timely manner may result in a complaint made to the Agency Pre-qualification Committee. In this Committee’s judgment, appropriate penalties may be involved for failure to comply with this specification. Penalties may include suspension, reduction or revocation of the Contractor’s pre-qualification rating.

This clause shall be included in the prime Contractor’s Contract made with all if its subcontractors.

107.02 PERMITS, LICENSES, AND TAXES. The Contractor shall procure all permits and licenses, pay all charges, fees, and taxes, and give all notices necessary and incidental to the lawful prosecution of the work.

The Vermont Statutes Online

Title 9: Commerce and Trade

Chapter 102: CONSTRUCTION CONTRACTS

9 V.S.A. § 4003. Contractor's and subcontractor's payment obligations

§ 4003. Contractor's and subcontractor's payment obligations

(a) Performance by a subcontractor in accordance with the provisions of its contract shall entitle it to payment from the party with which it contracts.

(b) Notwithstanding any contrary agreement, a contractor or subcontractor shall disclose to a subcontractor, before a subcontract is entered, the due date for receipt of payments from the owner. Notwithstanding any other provision of this chapter, if a contractor or subcontractor fails to accurately disclose the due date to a subcontractor, the contractor or subcontractor shall be obligated to pay the subcontractor as though the 20-day due dates in subsection 4002(c) of this title were met by the owner.

(c) Notwithstanding any contrary agreement, when a subcontractor has performed in accordance with the provisions of its contract, a contractor shall pay to the subcontractor, and each subcontractor shall in turn pay to its subcontractors, the full or proportional amount received for each such subcontractor's work and materials based on work completed or service provided under the subcontract, seven days after receipt of each progress or final payment or seven days after receipt of the subcontractor's invoice, whichever is later.

(d) Notwithstanding any contrary agreement, if any progress or final payment to a subcontractor is delayed beyond the due date established in subsections (b) or (c) of this section, the contractor or subcontractor shall pay its subcontractor interest, beginning on the next day, at an interest rate equal to that established by 12 V.S.A. § 2903(b), on such unpaid balance as may be due. (Added 1991, No. 74, § 1, eff. Jan. 1, 1992.)

[Text of section applicable as provided by 2009, 30, Secs. 15 and 46.]  

MA General Law Chapter 30, Section 39F, Construction contracts; assignment and subrogation; subcontractor defined; enforcement of claim for direct payment; deposit, reduction of disputed amounts. 

Section 39F. (1) Every contract awarded pursuant to sections forty‐four A to L, inclusive, of chapter one hundred and forty‐nine shall contain the following subparagraphs (a) through (i) and every contract awarded pursuant to section thirty‐nine M of chapter thirty shall contain the following subparagraphs (a) through (h) and in each case those subparagraphs shall be binding between the general contractor and each subcontractor.  

(a) Forthwith after the general contractor receives payment on account of a periodic estimate, the general contractor shall pay to each subcontractor the amount paid for the labor performed and the materials furnished by that subcontractor, less any amount specified in any court proceedings barring such payment and also less any amount claimed due from the subcontractor by the general contractor.  

(b) Not later than the sixty‐fifth day after each subcontractor substantially completes his work in accordance with the plans and specifications, the entire balance due under the subcontract less amounts retained by the awarding authority as the estimated cost of completing the incomplete and unsatisfactory items of work, shall be due the subcontractor; and the awarding authority shall pay that amount to the general contractor. The general contractor shall forthwith pay to the subcontractor the full amount received from the awarding authority less any amount specified in any court proceedings barring such payment and also less any amount claimed due from the subcontractor by the general contractor.  

(c) Each payment made by the awarding authority to the general contractor pursuant to subparagraphs (a) and (b) of this paragraph for the labor performed and the materials furnished by a subcontractor shall be made to the general contractor for the account of that subcontractor; and the awarding authority shall take reasonable steps to compel the general contractor to make each such payment to each such subcontractor. If the awarding authority has received a demand for direct payment from a subcontractor for any amount which has already been included in a payment to the general contractor or which is to be included in a payment to the general contractor for payment to the subcontractor as provided in subparagraphs (a) and (b), the awarding authority shall act upon the demand as provided in this section.  

(d) If, within seventy days after the subcontractor has substantially completed the subcontract work, the subcontractor has not received from the general contractor the balance due under the subcontract including any amount due for extra labor and materials furnished to the general contractor, less any amount retained by the awarding authority as the estimated cost of completing the incomplete and unsatisfactory items of work, the subcontractor may demand direct payment of that balance from the awarding authority. The demand shall be by a sworn 

statement delivered to or sent by certified mail to the awarding authority, and a copy shall be delivered to or sent by certified mail to the general contractor at the same time. The demand shall contain a detailed breakdown of the balance due under the subcontract and also a statement of the status of completion of the subcontract work. Any demand made after substantial completion of the subcontract work shall be valid even if delivered or mailed prior to the seventieth day after the subcontractor has substantially completed the subcontract work. Within ten days after the subcontractor has delivered or so mailed the demand to the awarding authority and delivered or so mailed a copy to the general contractor, the general contractor may reply to the demand. The reply shall be by a sworn statement delivered to or sent by certified mail to the awarding authority and a copy shall be delivered to or sent by certified mail to the subcontractor at the same time. The reply shall contain a detailed breakdown of the balance due under the subcontract including any amount due for extra labor and materials furnished to the general contractor and of the amount due for each claim made by the general contractor against the subcontractor.  

(e) Within fifteen days after receipt of the demand by the awarding authority, but in no event prior to the seventieth day after substantial completion of the subcontract work, the awarding authority shall make direct payment to the subcontractor of the balance due under the subcontract including any amount due for extra labor and materials furnished to the general contractor, less any amount (i) retained by the awarding authority as the estimated cost of completing the incomplete or unsatisfactory items of work, (ii) specified in any court proceedings barring such payment, or (iii) disputed by the general contractor in the sworn reply; provided, that the awarding authority shall not deduct from a direct payment any amount as provided in part (iii) if the reply is not sworn to, or for which the sworn reply does not contain the detailed breakdown required by subparagraph (d). The awarding authority shall make further direct payments to the subcontractor forthwith after the removal of the basis for deductions from direct payments made as provided in parts (i) and (ii) of this subparagraph.  

(f) The awarding authority shall forthwith deposit the amount deducted from a direct payment as provided in part (iii) of subparagraph (e) in an interest‐bearing joint account in the names of the general contractor and the subcontractor in a bank in Massachusetts selected by the awarding authority or agreed upon by the general contractor and the subcontractor and shall notify the general contractor and the subcontractor of the date of the deposit and the bank receiving the deposit. The bank shall pay the amount in the account, including accrued interest, as provided in an agreement between the general contractor and the subcontractor or as determined by decree of a court of competent jurisdiction.  

(g) All direct payments and all deductions from demands for direct payments deposited in an interest‐bearing account or accounts in a bank pursuant to subparagraph (f) shall be made out of amounts payable to the general contractor at the time of receipt of a demand for direct payment from a subcontractor and out of amounts which later become payable to the general contractor and in the order of receipt of such demands from subcontractors. All direct payments shall discharge the obligation of the awarding authority to the general contractor to the extent of such payment.  

(h) The awarding authority shall deduct from payments to a general contractor amounts which, together with the deposits in interest‐bearing accounts pursuant to subparagraph (f), are sufficient to satisfy all unpaid balances of demands for direct payment received from subcontractors. All such amounts shall be earmarked for such direct payments, and the subcontractors shall have a right in such deductions prior to any claims against such amounts by creditors of the general contractor.  

(i) If the subcontractor does not receive payment as provided in subparagraph (a) or if the general contractor does not submit a periodic estimate for the value of the labor or materials performed or furnished by the subcontractor and the subcontractor does not receive payment for same when due less the deductions provided for in subparagraph (a), the subcontractor may demand direct payment by following the procedure in subparagraph (d) and the general contractor may file a sworn reply as provided in that same subparagraph. A demand made after the first day of the month following that for which the subcontractor performed or furnished the labor and materials for which the subcontractor seeks payment shall be valid even if delivered or mailed prior to the time payment was due on a periodic estimate from the general contractor. Thereafter the awarding authority shall proceed as provided in subparagraph (e), (f), (g) and (h).  

(2) Any assignment by a subcontractor of the rights under this section to a surety company furnishing a bond under the provisions of section twenty‐nine of chapter one hundred forty‐nine shall be invalid. The assignment and subrogation rights of the surety to amounts included in a demand for direct payment which are in the possession of the awarding authority or which are on deposit pursuant to subparagraph (f) of paragraph (1) shall be subordinate to the rights of all subcontractors who are entitled to be paid under this section and who have not been paid in full.  

(3) “Subcontractor” as used in this section (i) for contracts awarded as provided in sections forty‐four A to forty‐four H, inclusive, of chapter one hundred forty‐nine shall mean a person who files a sub‐bid and receives a subcontract as a result of that filed sub‐bid or who is approved by the awarding authority in writing as a person performing labor or both performing labor and furnishing materials pursuant to a contract with the general contractor, (ii) for contracts awarded as provided in paragraph (a) of section thirty‐nine M of chapter thirty shall mean a person approved by the awarding authority in writing as a person performing labor or both performing labor and furnishing materials pursuant to a contract with the general contractor, and (iii) for contracts with the commonwealth not awarded as provided in forty‐four A to forty‐four H, inclusive, of chapter one hundred forty‐nine shall also mean a person contracting with the general contractor to supply materials used or employed in a public works project for a price in excess of five thousand dollars.  

(4) A general contractor or a subcontractor shall enforce a claim to any portion of the amount of a demand for direct payment deposited as provided in subparagraph (f) of paragraph 1 by a petition in equity in the superior court against the other and the bank shall not be a necessary party. A subcontractor shall enforce a claim for direct payment or a right to require a deposit as 

provided in subparagraph (f) of paragraph 1 by a petition in equity in the superior court against the awarding authority and the general contractor shall not be a necessary party. Upon motion of any party the court shall advance for speedy trial any petition filed as provided in this paragraph. Sections fifty‐nine and fifty‐nine B of chapter two hundred thirty‐one shall apply to such petitions. The court shall enter an interlocutory decree upon which execution shall issue for any part of a claim found due pursuant to sections fifty‐nine and fifty‐nine B and, upon motion of any party, shall advance for speedy trial the petition to collect the remainder of the claim. Any party aggrieved by such interlocutory decree shall have the right to appeal therefrom as from a final decree. The court shall not consolidate for trial the petition of any subcontractor with the petition of one or more subcontractors or the same general contract unless the court finds that a substantial portion of the evidence of the same events during the course of construction (other than the fact that the claims sought to be consolidated arise under the same general contract) is applicable to the petitions sought to be consolidated and that such consolidation will prevent unnecessary duplication of evidence. A decree in any such proceeding shall not include interest on the disputed amount deposited in excess of the interest earned for the period of any such deposit. No person except a subcontractor filing a demand for direct payment for which no funds due the general contractor are available for direct payment shall have a right to file a petition in court of equity against the awarding authority claiming a demand for direct payment is premature and such subcontractor must file the petition before the awarding authority has made a direct payment to the subcontractor and has made a deposit of the disputed portion as provided in part (iii) of subparagraph (e) and in subparagraph (f) of paragraph (1).  

(5) In any petition to collect any claim for which a subcontractor has filed a demand for direct payment the court shall, upon motion of the general contractor, reduce by the amount of any deposit of a disputed amount by the awarding authority as provided in part (iii) of subparagraph (e) and in subparagraph (f) of paragraph (1) any amount held under a trustee writ or pursuant to a restraining order or injunction.  

The Office of the Administrative Law Judge is established within the Massachusetts Department of Transportation to hear disputes arising from public contracts.

The Administrative Law Judge (ALJ) "shall hear all claims by contractors from determinations of the division; ... and shall, after hearing, render to the secretary a report of the matter including a recommendation as to the disposition of the claim." G.L. c.6C, s.40, as amended by St. 2009, c.25, s.8.

Subcontractor Direct Payment Demands The ALJ rules on subcontractor direct payment demands brought under G.L. c.30, s.39F. Subcontractor direct payment demands should be sent certified mail and addressed to Director, Fiscal Operations of MassDOT, 10 Park Plaza, Room 5510, Boston, MA 02116-3973.

General Statement

Approved subcontractors to general contractors awarded contracts by MassDOT under G.L. c. 30 have the right under G.L. c. 30, s.39F to make a sworn demand for payment of the balance due under a subcontract from the awarding authority 65 days after the final completion of subcontract work. A subcontractor is defined to include a person contracting with a general contractor or a materialman providing materials worth more than $5,000.

General contractors may file a sworn reply to a sworn demand.

The sworn demand of a subcontractor may be adjusted by an amount retained by the awarding authority to complete unsatisfactory work, an amount specified in a court order, or amounts claimed due under the subcontract by the general contractor in a sworn reply.

Summary of Direct Payment Process A direct payment demand should be addressed to: Director, Fiscal Operations, MassDOT, 10 Park Plaza, Room 5510, Boston, MA 02116-3973. It must contain

1. Name and address of subcontractor, name and address of general contractor, Mass contract number, location of project, amount of balance due under the subcontract, statement identifying whether demand is by a subcontractor or a material supplier.

2. Proof that it was delivered by hand or by certified mail to the general contractor when delivered to Director, Fiscal Operations.

3. Statement by the authorized signer that the demand was made "under pains and penalties of perjury." The sworn demand must also be notarized.

4. Statement of the status of completion of the subcontract work. 5. Detailed breakdown of the balance due under the subcontract.

Formal Requirements of Section 39F

(1) Filing by Hand or Certified Mail

Section 39F requires that a sworn demand and sworn reply be filed at MassDOT by certified mail with a copy mailed to the general contractor at the same time. Filing may also be made by hand delivery with a copy delivered to the general contractor at the same time.

(2) Sworn Statement

Section 39F requires that direct payment demands "shall be made by a sworn statement." The demand should include an explicit statement that the person signing it has made the statements contained within the demand "under the pains and penalties of perjury."

(3) Statement That Subcontract Work Is Substantially Complete

Section 39F permits a subcontractor on a general contract awarded under G.L. c.30 to make a demand 65 days after "substantial completion" of the subcontract work. The demand is subject to adjustment by the awarding authority for the estimated cost of completing "incomplete or unsatisfactory items of work." The sworn demand must contain a "statement of the status of completion of the subcontract work."

(4) Detailed Breakdown of the Balance Due Under the Subcontract

Section 39F requires that both a subcontractor sworn demand and a general contractor sworn reply "contain a detailed breakdown of the balance due under the subcontract." The detailed breakdown of a subcontractor's demand must be sufficiently detailed under the circumstances of the subcontract that a general contractor's sworn reply may identify with specificity the disputed amount.

A "detailed breakdown of the balance due under the subcontract" (see example) should set forth the original value of the subcontract, all MassDOT-approved additions to the subcontract work through amendments to the general contractor, all pending but not-yet-approved amendments for subcontract work, all payments made by the general contractor for approved subcontract work done, all retainage taken or held, all credits, deletions, back charges or other material financial facts. The detailed breakdown should be self-explanatory and demonstrate through appropriate line items how the stated "balance due under the subcontract" was derived.

107.20

48

dust creates unsafe conditions as determined by the Engineer. Perform this work without additional compensation except for Item 616.

Perform open burning according to 105.16.

107.20 Civil Rights. Comply with Federal, State, and local laws, rules, and regulations that prohibit unlawful employment practices including that of discrimination because of race, religion, color, sex, or national origin and that define actions required for Affirmative Action and Disadvantaged Business Enterprise (DBE) programs.

107.21 Prompt Payment. Make payment to each subcontractor and supplier within 10 Calendar Days after receipt of payment from the Department for Work performed or materials delivered or incorporated into the Project, according to ORC 4113.61, provided that the pay estimate prepared by the Engineer includes Work performed or materials delivered or incorporated into the public improvement by the subcontractor or supplier.

Also require that this contractual obligation be placed in all subcontractor and supplier contracts that it enters into and further require that all subcontractor and suppliers place the same payment obligation in each of their lower tier contracts. If the Contractor, subcontractors, or supplier subject to this provision fail to comply with the 10 Calendar Day requirement, the offending party shall pay, in addition to the payment due, interest in the amount of 18 percent per annum of the payment due, beginning on the eleventh Calendar Day following the receipt of payment from the Department and ending on the date of full payment of the payment due plus interest.

Repeated failures to pay subcontractors and suppliers timely pursuant to this subsection will result in a finding by the Department that the Contractor is in breach of Contract and subject to all legal consequences that such a finding entails. Further, repeated failures to pay timely pursuant to this subsection will result in a lower evaluation score for the Contractor and those subcontractors who are subject to evaluation by the Department.

108 PROSECUTION AND PROGRESS 108.01 Subletting of the Contract. Perform Work amounting to not less than

50 percent of the Contract Price with its own organization, unless otherwise approved by the Director. The phrase “its own organization” includes only workers employed and paid directly, inclusive of employees who are employed by a lease agreement acceptable to the Department, and equipment owned or rented with or without operators by the Contractor. The phrase does not include employees or equipment of a subcontractor, assignee, or agent of the Contractor. Obtain the Director’s written consent to subcontract, sublet, sell, transfer, assign, or otherwise relinquish rights, title, or interest in the Work. Provide the Director with a copy of all Disadvantaged Business Enterprise subcontracts.

The Contractor’s percentage of the total Contract Price includes the cost of materials and manufactured products purchased by the Contractor, but not the cost of materials and manufactured products purchased by subcontractors.

109.11

80

materials are delivered, accepted, and properly stored on the project or stored in acceptable storage places in the vicinity of the Project.

The Department will pay for the cost of approved materials before they are incorporated in the Work when asked by the Contractor, if the Engineer determines that it is not practical to deliver the material to the Project site. This provision applies only to bulky materials that are durable in nature and represent a significant portion of the project cost, such as aggregates, steel, and pre-cast concrete. The Department will not pay delivered materials on small warehouse items or for plant materials.

109.11 Partial Acceptance. Upon completion of a portion of the Work, the Contractor may request acceptance of a completed portion of the Work.

An inspection may be performed on a completed portion of the project roadway section provided:

A. All safety items are in place including permanent pavement markings.

B. Traffic is in its final pattern.

C. A completed portion of the project constitutes a completed geographic section of the project or a direction of traffic on a divided highway.

D. Is in accordance with other contract provisions.

An inspection may be performed on a completed bridge provided:

A. All work on the bridge and approaches are complete, including all safety items and permanent pavement markings.

B. The Contractor will not return to the bridge for any work except as allowed in D.

C. Traffic is in its final pattern.

D. Painting of structural steel is either completed or scheduled to be performed.

E. Is in accordance with other contract provisions.

The Final Inspector will grant written partial acceptance for that portion of the Work or reject the Contractor’s request. Such written partial acceptance will designate what portion of the Work is accepted, the date of acceptance, and the warranty provisions started by the partial acceptance.

Partial acceptance will relieve the Contractor of maintenance responsibility for the designated portion of the Work. This does not relieve the Contractor of responsibility to correct defective Work or repair damage caused by the Contractor or waive any other remedy to which the Department is entitled at law or in equity.

109.12 Final Acceptance..

A. Final Inspection. The Department will perform a Final Inspection for the sole purpose of relieving the Contractor of maintenance responsibility for the Work.

The Final Inspection shall be a limited visual review of the Work and shall only serve as the Department’s verification that the Work appears substantially

109.12

81

complete. Final Inspection does not waive any available rights or remedies of the Department, nor divest the Contractor of any responsibility for compliance with the contract or liability for damages.

Notify the Engineer when the Project is complete and all of the Engineer’s punch list items are complete. If the Engineer agrees the Project is complete, then within 10 business days the District Final Inspector will inspect the Work and categorize it as one of the following:

1. Unacceptable or not complete.

2. Substantially complete with punch list items found by the Final Inspector.

3. Substantially complete.

If the Final Inspector finds the Work substantially complete or substantially complete with punch list items, then the Contractor’s maintenance responsibilities end on the day of the Final Inspection, except for any maintenance related to unfinished punch list items. This does not relieve the Contractor of responsibility to correct defective Work or repair damage caused by the Contractor or waive any other remedy to which the Department is entitled at law or in equity. The Final Inspector will issue a Final Inspection Report that will document the findings of the inspection and start any warranty period.

B. Punch List. The Final Inspector will issue to the Contractor a written punch list of work required as a condition of acceptance. The Final Inspector’s punch list will stipulate a reasonable time to complete the required Work. Failure of the Contractor to complete the punch list items by the stipulated time will result in the assessment of fifty percent of the Liquidated Damages according to 108.07 for each Calendar Day for every day beyond the stipulated time the punch list work remains incomplete and beyond the revised Completion Date.

C. Finalization. The Contractor shall accept the final quantities as determined by the Engineer or provide a written notice indicating the reason for disagreement within 30 Calendar Days of receiving the Engineer’s list of final quantities. The prescribed 30 Calendar Day period can be modified by mutual agreement of the Contractor and the District Construction Engineer. If no notice of disagreement is received, then the final payment will be based on the Engineer’s list of final quantities.

Supply all documents necessary for Project finalization within 60 Calendar Days from the date that the Work is physically complete. These documents include:

1. Delinquent material certifications.

2. Delinquent certified payrolls or required revised payrolls.

3. Wage affidavit required by ORC Chapter 4115 on projects without any Federal funding.

4. Delinquent force account records.

5. If applicable, DBE affidavits.

109.12

82

Failure to submit these acceptably completed documents will result in an administrative fee of $100 per Calendar Day for every day that any of the required documents remain delinquent, starting 30 Calendar Days after receipt of written notification from the Engineer of a document deficiency.

D. Final Payment. Final payment is based on:

1. The agreed final quantities or as determined by the Engineer if agreement is not possible, no compensation for unauthorized work is allowed.

2. Finding of substantial completion by the Final Inspector.

3. Receipt of acceptable finalization documents.

4. Contractor certification that the Work was performed in accordance with the contract.

E. Completion of Contract and Continuation of Contractor’s Responsibility. The Contract is complete, except for items covered by the required bonds, when the Contractor receives final payment. The DCE will issue a letter confirming completion of the contract, noting any exception as provided in Items 659 and 661 and any warranty. The date the final payment is approved by the District constitutes acceptance for the purpose of ORC 5525.16. Neither Completion of the Contract nor substantial completion relieves the Contractor of any responsibilities to properly perform or correct the Work or to repair damage or waives any remedies to which the Department is entitled at law or in equity.

MEASUREMENT AND PAYMENT 9

Page 67

Contractor of the potential for compensation adjustment, and compute the compensation adjustment.Fuel Cost Adjustments will be applied as an added compensation to the Contractor or as a credit tothe Department. Fuel Cost adjustments totaling less than $500.00 for the contract, will not beprocessed for payment or for credit.

The total fuel requirement will be established using fuel usage factors established by the Departmentand the plans estimate of the volume of work to be accomplished.

The amount of compensation adjustment will be calculated by multiplying the total fuel requirementfor the project by the percentage of the project work accomplished during the estimate period, thisresult will then be multiplied by either, the difference between the Current Fuel Index price and 150percent of the Base Fuel Index price when fuel prices have increased from the base price, or by thedifference between the Current Fuel Index price and 50 percent of the Base Fuel Index price whenfuel prices have decreased from the base price.

9.13 PROMPT PAYMENT AND RETAINAGE– The contractor shall pay subcontractors or supplierswithin 15 days of receiving payment for work that is submitted for progress payment by theDepartment.

If the Contractor elects to utilize retainage on subcontract work, the retainage shall be released within15 days after the work is satisfactorily completed. A subcontractor’s work is satisfactorily completedwhen all of the tasks called for in the subcontract have been accomplished, paid for, and documentedin accordance with the contract. The required documentation may include, but is not limited to:certified payrolls, material certifications, haul road releases, pit releases, warranties, operatingmanuals, product literature, and verification of final quantities. The maximum amount permitted forretainage for any subcontract shall be 10% of each progress payment.

The prompt payment and release of retainage applies to all tiers of subcontracts.

If the Contractor withholds payment beyond these time periods, written justification by the contractorshall be submitted to the Engineer upon request. If it is determined that a subcontractor or supplierhas not received payment due without just cause, the Department may withhold future estimatedpayments and/or may direct the prime contractor to make such payment to the subcontractor orsupplier. Prompt payment and release of retainage deviations will be subject to price adjustments asspecified in Section 5.3 (Conformity with Plans and Specifications) of the Standard Specifications forRoads and Bridges.

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110.04(b) 110.06(a)

110 - 12 Change No. 1

7. Payment/Rebate. The price adjustment will be paid, or rebated, upon approval of a work order to be prepared after completion of all work. Cumulative price adjustments amounting to less than $500 will be disregarded. Upon written request by the Contractor, partial payments may be made, before total completion, when the unpaid accrued price increase exceeds $10,000 or once every 12 months. 8. Inspection of Records. The Department, through the Office of Inspector General, reserves the right to inspect the records of the prime contractor and its subcontractors and material suppliers to ascertain actual pricing and cost information for the asphalt cement used in the bituminous materials incorporated in the work. 9. Extra Work. If applicable items of work, as specified herein, are added to the contract as extra work, as specified in Section 110.03, no price adjustment will be made for fluctuations in the cost of asphalt cement used in any bituminous materials placed in the performance of the extra work, unless otherwise approved. The current price for asphalt cement is to be used when preparing required backup data for extra work to be performed at a negotiated price. For extra work performed on a force account basis, reimbursement for material costs along with the specified overhead and profit markup will be considered to include full compensation for the current cost of asphalt cement. 110.05 CURRENT ESTIMATE PAYMENTS—Current estimate payments will be processed based upon assessments made by the Department as work is satisfactorily completed. Processing of estimate payments will begin on the first estimate date established following the Notice to Proceed Date or indicated in the special provisions. No estimate payments will be processed before the Notice to Proceed Date. Current estimate payments exceeding $1,000 will be processed by the Department at semimonthly intervals, or more frequently, as work progresses. Current estimate payments amounting to less than $1,000 may be processed monthly. Final payments amounting to between -$10 and +$10 will be disregarded. Partial payments do not bind the Department to the acceptance of any material furnished or work performed. Within 7 calendar days of the receipt of current estimate and final payments from the Department, pay all subcontractors their earned share of the payments, including all retainage, provided the terms and conditions of the applicable subcontract or purchase agreement have been reasonably met. 110.06 MATERIAL STORED OR ON HAND— (a) Stored Material. The Representative may authorize payment for certain material, before its incorporation into the work. Upon the Contractor's written request and the Representative's written approval, the Contractor may be paid 100% of the cost of the material, less the pro-rata share of the retainage, if any; provided the quantity of stored material does not exceed the total estimated quantity required to complete the project, the cost is at least $1,000 but does not exceed 90% of the contract price of the applicable contract item and/or component item, and the accumulative costs do not exceed 25% of the current contract amount. The cost of the material is that amount to be paid by the Contractor as evidenced by invoices. Fabricated structural steel that is to receive a protective coating may be approved for prepayment at 75% of the contract price of the applicable contract item and/or component item, before application of the coating, provided the structure has been fully fabricated and preassembly of field connections has been made. Payment for stored material will not be authorized until the material has been delivered to the project site or an approved location in the vicinity of the project, is inspected by the Representative to ensure the material is in a satisfactory condition and of sufficient quantity, is stored in an approved manner, and conforms to the requirements specified in this Section and Section 106.03. Identify stored material by project designation and set apart from other materials. Material to be stored less than 45 days is not eligible for prepayment. In determining eligibility for prepayment, the beginning date for evaluating whether the required 45-day minimum storage period will be met will be the date the material is delivered to the project or approved storage location, or the date the invoice is submitted to the Department, whichever is the latter. Material, originally determined to be ineligible for prepayment due to the minimum storage period requirement, that is then stored for more than 45 days, is eligible for prepayment on the next estimate, provided the invoice has been submitted to the Department. If the Representative determines that, because of required fabrication at an off-site location, it is not feasible or practicable to store material in the vicinity of the project, the material may be stored at an approved location, which is not in the vicinity of the project, at the Contractor’s expense.

REPLACESB.2.4

PENNSYLVANIADEPARTMENT OF TRANSPORTATION

PROJECT OFFICE MANUAL

PARTB

SECTION2

PAGE4-1

DATED03/01/1996

DATEMarch 1, 2011

SUBJECT

SUBCONTRACTOR/SUPPLIER ESTIMATE MONITORING

March 2011 Edition

Form CS-111, "Subcontractor/Supplier Request for Estimate Monitoring", is to be used in monitoring payments to Subcontractors and suppliers from Contractors.

Emphasis on the importance of the procedure is to be maintained, as Central Office continues to receive numerous requests from Subcontractors to assist them in obtaining money owed them by Contractors.

This procedure should have been discussed at the Pre-construction Conference and the Contractor should have been provided with a sufficient number of forms to accommodate the Subcontractors on the project. The Contractor should be instructed/reminded to notify his subcontractors of the availability of this monitoring procedure.

The procedure involves four steps:

1. Subcontractor submission of form (page 1).2. District Verification of work items and quantities submitted by the Subcontractor.3. Contractor’s verification of payment or explanation of non-payment.4. District follow-up to determine if Contractor is or is not in compliance. The Assistant

District Engineer for Construction is to render the final determination for these payment issues.

If the Subcontractor intends to pursue a determination in favor of the Contractor after step 4, a copy of the payment bond will be provided to the Subcontractor upon Request.

This procedure is not expected to become the norm for all Subcontractor payments; rather it should be used as an option for the Subcontractor to pursue, on a case by case basis, when he determines there may be an injustice in the payment process. The responsibility of initiating the procedure is that of the Subcontractor's and a separate request should be submitted for each estimate period.

PARTB

SECTION2

PAGE4-2

DATEMarch 1, 2011

March 2011 Edition

This page left intentionally blank.

CS-111 (1-96)Reproduce LocallyFillable Fields/Print

Pennsylvania Department of Transportation Page 1 of 2

Subcontractor/Supplier Request for Estimate Monitoring

Date:_____________

Subject: Request for Estimate Monitoring

To: The Pennsylvania Department of Transportation

District: - 0

From:__________________________________________________________________________________________________ (name of Subcontractor/Supplier)

By:______________________________________________________________________________________________

Title:____________________________________________________________________________________________

RegardingContract Number:___________________________________________________________________________________

County:___________________________________________________________________________________________

State Route:________________________________________________________________________________________

Section Number:____________________________________________________________________________________

Prime Contractor:___________________________________________________________________________________

Estimate Number:________________________________________________________________

Estimate Period: from(____________)to(____________)

List Work Item Numbers and Quantities Associated with this Estimate in the chart below.

Item Number Quantity Item Number Quantity

Note: In order for Estimates to be monitored, subcontractors/supplier must process by completing page 1 of this form.

CS-111 (1-96) Page 2 of 2

District Follow-up to Request for Estimate MonitoringReview CMS to verify the following:

1. Work items identified on Page 1 are included on the subject Estimate.

2. Quantities associated with Work Items are accurate

3. Date of FIMS approval of Estimate: ____________

4. Date check paid: ____________

If the Work Items and/or Quantities do not correspond, provide the subcontractor/supplier with the information from the Inspector’s log.

Inform the subcontractors/suppliers that in the event of a dispute, the Inspector’s quantity determination will govern until thedispute is resolved.

If any of the referenced work items are additional/extra work not on an approved work order, process work order immediately, if appropriate.

After verification of the Work Items and Quantities, and completion of the above dates, forward this form to the prime contractor.

Prime Contractor’s Verification of payment to Subcontractor/supplier(If two party check, list both parties as payee)

Payee:___________________________________________________________________________ _______________________________________________________________________________

Amount of check: $________._____

Date of check: ____________

Reported by: ____________________________________________________________________

If Estimate has not been paid, provide explanation to District in letter. Return form and/or letter to District within seven (7) days.

District Follow-up to Prime Contractor’s Verification If prime contractor verifies payment has been made, determine if subcontractor/supplier has received payment

If payment has been received, claim is considered closed.

If payment has not been received, or if prime contractor has provided an explanation, proceed as follows:

Schedule meeting with ADE for Construction, prime contractor, and subcontractor/supplier.

Make determination of compliance with Section 110 of Publication 408 M (408).

If determination is in favor of subcontractor/supplier, prime contractor should be directed to pay within seven days. Failure to render payment will be reported to the Prequalification Office for further action.

If determination is in favor of prime contractor, the decision to proceed with further appeals will be left to the discretion of the subcontractor/supplier.

Page 1-72 2012 Standard Specifications M 41-10

1-08 Prosecution and Progress

established and recognized commercial plants; or (2) delivery of these materials to the Work site in vehicles owned or operated by such plants or by recognized independent or commercial hauling companies hired by those commercial plants. However, the Washington State Department of Labor and Industries may determine that RCW 39.12 applies to the employees of such firms identified in 1 and 2 above in accordance with WAC 296-127. If this should occur, the provisions of Section 1-07.9, as modified or supplemented, shall apply.

On all projects funded with Contracting Agency funds only, the Contractor shall certify to the actual amounts paid Disadvantaged, Minority, or Women’s Business Enterprise firms that were used as Subcontractors, lower tier subcontractors, manufacturers, regular dealers, or service providers on the Contract. This Certification shall be submitted to the Project Engineer on WSDOT Form 421-023, Quarterly Report of Amounts Paid as MBE/WBE Participants, quarterly for the State fiscal quarters: January 1 through March 31, April 1 through June 30, July 1 through September 30, October 1 through December 31, and for any remaining portion of a quarter through Physical Completion of the Contract. The report is due 20 calendar days following the fiscal quarter end or 20 calendar days after Physical Completion of the Contract.

On all projects funded with both Contracting Agency funds and Federal assistance the Contractor shall submit a “Quarterly Report of Amounts Credited as DBE Participation” on a quarterly basis, in which DBE Work is accomplished, for every quarter in which the Contract is active or upon completion of the project, as appropriate. The quarterly reports are due on the 20th of April, July, October, and January for the four respective quarters. When required, this Quarterly Report of Amounts Credited as DBE Participation is in lieu of WSDOT Form 421-023, Quarterly Report of Amounts Paid as MBE/WBE Participants.

If dissatisfied with any part of the subcontracted Work, the Engineer may request in writing that the Subcontractor be removed. The Contractor shall comply with this request at once and shall not employ the Subcontractor for any further Work under the Contract.

1-08.1(1) Subcontract Completion and Return of Retainage WithheldThe following procedure shall apply to all subcontracts entered into as a part of

this Contract:Requirements1. The Subcontractor shall make a written request to the Contractor for the release of the

Subcontractor’s retainage or retainage bond.2. Within 10 working days of the request, the Contractor shall determine if the subcontract

has been satisfactorily completed and shall inform the Subcontractor, in writing, of the Contractor’s determination.

3. If the Contractor determines that the subcontract has been satisfactorily completed, the Subcontractor’s retainage or retainage bond shall be released by the Contractor within 10 working days from the date of the written notice.

4. If the Contractor determines that the Subcontractor has not achieved satisfactory completion of the subcontract, the Contractor must provide the Subcontractor with written notice, stating specifically why the subcontract Work is not satisfactorily completed and what has to be done to achieve completion. The Contractor shall release the Subcontractor’s retainage or retainage bond within 8 working days after the Subcontractor has satisfactorily completed the Work identified in the notice.

5. In determining whether satisfactory completion has been achieved, the Contractor may require the Subcontractor to provide documentation such as certifications and releases, showing that all laborers, lower-tiered subcontractors, suppliers of material and equipment, and others involved in the Subcontractor’s Work have been paid in full. The Contractor may also require any documentation from the Subcontractor that is required by the subcontract or by the Contract between the Contractor and Contracting Agency or by law such as affidavits of wages paid, material acceptance certifications and releases from applicable governmental agencies to the extent that they relate to the Subcontractor’s Work.

2012 Standard Specifications M 41-10 Page 1-73

Prosecution and Progress 1-08

6. If the Contractor fails to comply with the requirements of the Specification and the Subcontractor’s retainage or retainage bond is wrongfully withheld, the Subcontractor may seek recovery against the Contractor under applicable prompt pay statutes in addition to any other remedies provided for by the subcontract or by law.

Conditions1. This clause does not create a contractual relationship between the Contracting Agency

and any Subcontractor as stated in Section 1-08.1. Also, it is not intended to bestow upon any Subcontractor, the status of a third-party beneficiary to the Contract between the Contracting Agency and the Contractor.

2. This Section of the Contract does not apply to retainage withheld by the Contracting Agency from monies earned by the Contractor. The Contracting Agency shall continue to process the release of that retainage based upon the Completion Date of the project as defined in Section 1-08.5 Time for Completion and in accordance with the requirements and procedures set forth in RCW 60.28.

PaymentThe Contractor will be solely responsible for any additional costs involved in paying

retainage to the Subcontractors prior to total project completion. Those costs shall be incidental to the respective Bid items

1-08.2 AssignmentThe Contractor shall not assign all or any part of the Work unless the Engineer approves

in writing. The Engineer will not approve any proposed assignment that would relieve the original Contractor or Surety of responsibility under the Contract.

Money due (or that will become due) to the Contractor may be assigned. If given written notice, the Contracting Agency will honor such an assignment to the extent the law permits. But the assignment shall be subject to all setoffs, withholdings, and deductions required by law and the Contract.

1-08.3 Progress Schedule

1-08.3(1) General RequirementsThe Contractor shall submit Type A or Type B Progress Schedules and Schedule Updates

to the Engineer for approval. Schedules shall show Work that complies with all time and order of Work requirements in the Contract. Scheduling terms and practices shall conform to the standards established in Construction Planning and Scheduling, Second Edition, published by the Associated General Contractors of America. Except for Weekly Look-Ahead Schedules, all schedules shall meet these General Requirements, and provide the following information:

1. Include all activities necessary to physically complete the project.2. Show the planned order of Work activities in a logical sequence.3. Show durations of Work activities in working days as defined in Section 1-08.5.4. Show activities in durations that are reasonable for the intended Work.5. Define activity durations in sufficient detail to evaluate the progress of individual

activities on a daily basis.6. Show the Physical Completion of all Work within the authorized Contract time.The Contracting Agency allocates its resources to a Contract based on the total time

allowed in the Contract. The Contracting Agency may accept a Progress Schedule indicating an early Physical Completion Date but cannot guarantee the Contracting Agency’s resources will be available to meet an accelerated schedule. No additional compensation will be allowed if the Contractor is not able to meet their accelerated schedule due to the unavailability of Contracting Agency’s resources or for other reasons beyond the Contracting Agency’s control.

If the Engineer determines that the Progress Schedule or any necessary Schedule Update does not provide the required information, then the schedule will be returned to the Contractor for correction and resubmittal.

1-2.7B EEO (Federally Funded Projects)

WSDOT has committed to FHWA to perform comprehensive construction compliance reviews to ensure that the requirements of Standard Specifications Section 1-07.11 have been adhered to. This review is performed by the WSDOT Office of Equal Opportunity (OEO) on a selected number of FHWA funded projects and may take place at any point during the life of the project or after the project has been completed. A Contractor that is found in violation of the contractually required affirmative action good faith efforts will be invited to a compliance conference to develop a corrective action plan. Failure to accept and comply with a corrective action plan may result in sanctions. The records that have been maintained at the Contractor’s office will be utilized for these reviews. The FHWA also retains the authority to review the Contractor’s records for EEO compliance. These reviews do not normally involve the project office other than notification of their occurrence and the resulting findings.

Contract compliance reviews include an on-site review, and interviews of contractor employees, while the contractor is actively engaged in performing work associated with the contract. If interviews cannot be conducted during the site review, such interviews may be conducted off-site, at other locations, or at a later time. The WSDOT Office of Equal Opportunity (OEO) may also interview WSDOT personnel associated with the project. FHWA has established narrow time frames during the execution of the project that maximize the potential for obtaining the information required for an on-site review. OEO will contact the Region EEO Officer or project staff to facilitate the timing of the review. Federal regulations for projects having federal-aid dollars as part of their funding source require the full cooperation of any contractor who performs work on the project.

1-2.7B(1)  Prompt Return of Retainage to All Subcontractors

As a condition of receiving Federal funding, WSDOT is required to ensure prompt payment to all subcontractors on all contracts regardless of funding. State Statutes (Revised Code of Washington) pertaining to prompt pay require that the contracting agency make prompt payment to the prime contractor and that the prime contractor, in turn, pass these payments on to subcontractors in a timely manner.

Return of the subcontractor’s retainage held by the prime contractor is required by the Standard Specifications. This is a race neutral effort intended to support all small businesses in their efforts to participate in WSDOT contracts. Therefore, in accordance with the contract provisions, the prime contractor is required to release any and all retainage to the subcontractor within a designated time period after subcontract completion. The Project Engineer has no role in this process other than to respond to allegations of non-compliance with this contract requirement as with any other. We need to keep in mind that our contract is with the prime contractor, and we are not a party to the prime contractor’s subcontract documents. We should avoid becoming involved in a prime’s relationship with their subcontractors.

In the prime contractor’s effort to determine completion of subcontract work, as required by the contract provisions, the Project Engineer may be asked to determine completion of a portion of the work. While we need to work with the Contractor to comply with the requirements of the specification, we should also take specific

Administration Chapter 1

Page 1-122   WSDOT Construction Manual  M 41-01.11 July 2011

AS 36.90.210  

Alaska Statutes Title 36. Public Contracts Chapter 90. Miscellaneous Provisions Section 210. Required Contractual Terms.  (a) The prime contractor and a subcontractor on a public construction or public works contract shall include in a subcontract between the prime contractor and subcontractor for the public construction or public works a clause that requires the prime contractor to pay   

(1) the subcontractor for satisfactory performance under the subcontract within eight working days after receiving payment from which the subcontractor is to be paid;  

 (2) the subcontractor all retainage due under the subcontract within eight working days after final payment is received from the state or political subdivision or after the notice period under AS 36.25.020 (b) expires, whichever is later;  

 (3) the subcontractor interest on an amount that is not paid in accordance with (1) of this subsection for the period beginning on the day after the required payment date and ending on the day on which payment of the amount due is made: the interest shall be computed at an interest rate that is equal to the amount set out in AS 45.45.010 (a);  

 (4) interest on retainage withheld from the subcontractor at an interest rate that is equal to the amount set out in AS 45.45.010 (a).  

 (b) A subcontractor on a public construction or public works contract shall include in each subcontract under which a person agrees to provide the subcontractor with services, other than as an employee, or supplies to be used in the public construction or public works project a clause that requires the subcontractor to pay   

(1) the person for satisfactory performance under the subcontract within eight working days after receiving payment from which the person is to be paid;  

 (2) the person all retainage due under the subcontract with the person within eight working days after the subcontractor receives its share of the state‐held retainage from the prime contractor or another subcontractor;  

 (3) the person interest on an amount that is not paid in accordance with (1) of this subsection for the period beginning on the day after the required payment date and ending on the day on which payment of the amount due is made: the interest shall be computed at an interest rate that is equal to the amount set out in AS 45.45.010 (a);   (4) interest on retainage withheld from the person at an interest rate that is equal to the amount set out in AS 45.45.010 (a). 

Form 25D-042 (10/09)

Alaska Department of Transportation & Public Facilities

Contractor Self Certification for Subcontractors and Lower Tier Subcontractors (Form 25D-042)

Project Name: Project Number:

Federal-Aid Number:

Submission Number: Subcontractor or Lower Tier Subcontractor: Contractor Certification Agreement as included herein refers to the legally binding written contract between the Contractor and Subcontractor or between the Subcontractor and Lower Tier Subcontractor and identified in items 1 or 2 below.

1. A written agreement has been executed between Contractor and the above listed subcontractor.

2. A written Agreement has been executed between (Subcontractor) and the above listed Lower Tier Subcontractor

• All Subcontractors are qualified to perform the work. • All Subcontractors have adequate insurance as required by the Contract, or the Contractor has

adequate insurance for the Subcontractor(s) as required by the contract. • All subcontractors are included on the Bidder’s Registration List. • The “Prompt Payment” clauses (AS 36.90.210) are included in the Agreement language. • All requirements and pertinent provisions of the Contract , including but not limited to; Form 25D-55

(included in the contract), Required Contract Provisions for Federal Aid Construction Contracts, DBE provisions, and minimum wage rates, are included in the agreement.

• All agreements with Subcontractors and with Lower Tier Subcontractors will be in continued compliance with all provisions of the Contract.

• The Contractor remains responsible for all quality control and proper performance of all requirements of the Contract.

• The Contractor will continue to perform at least thirty percent (30%) of the Contract work with his own organization.

• This Contractor Self Certification does not relieve the Contractor and his surety, or either the Contractor or surety from any liability or responsibility under the Contract.

• The Contractor certifies firms or individuals debarred or suspended by the Department, FAA, or FHWA are not employed or subcontracted under this construction project.

Total Agreement Amount: Total Agreement Amount is % of the Total Contract Award Amount. Total cumulative subcontracts (including this Agreement) are % of the Total Contract Award Amount.

Form 25D-042 (10/09)

Subcontractor or Lower Tier Subcontractor Federal I.D. No. (if no Federal I.D. No., use owner SSN): Business License Number: Contractor’s License Number: Electrical/Mechanical Administrator’s License Number (if applicable): Surveyor’s License Number (if applicable): Phone Number: Address: City: State: Estimated Starting Date: Department’s Request for Information – If the Department at any time makes written request for the Agreement, licenses, proof of insurance, or any other information relating to the certifications contained herein, the Contractor will deliver an executed copy of the Agreement and /or other requested information to the Department within five calendar days. If the Contractor fails to provide the requested information within five calendar days, or if the Contractor fails to include required language and conditions in the Agreement, the Department may suspend all work relating to the Agreement. The Contractor shall not be due any additional compensation or contract time if the Department suspends work due to the Contractor’s failure to provide requested information or failure to include required language and conditions in the Agreement. False Statement or Omission – If a false statement or omission is made in connection with this Contractor Self Certification the Contractor will be excluded from participating in the self-certification process for the remainder of this Contract and for the following construction season. Contractors excluded from the self-certification process will be required to submit all necessary information for the Department’s approval of proposed Subcontractors or Lower Tier Subcontractors. Any false statement or omission made in connection with this Contractor Self Certification may be cause for suspension, a determination of non-responsibility on future bids, and may be cause for revocation of award, default, or debarment. The person or entity making the false statement or omission is subject to any and all civil and criminal penalties available pursuant to applicable state and federal law. I certify the above information and statements are true, correct, and complete. Contractor: By: ___________________________________ Date: Title:

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STANARD MODIFICATION 3/05/12 E 102 Replaces E 11

SECTION 108

PROSECUTION AND PROGRESS Delete Subsection 108-1.01 in its entirety and replace with the following: 108-1.01 SUBCONTRACTING OF CONTRACT. The Contractor shall submit a Contractor Self Certification for Subcontractors and Lower Tier Subcontractors, Form 25D-042, before the Contractor or any subcontractor subcontracts, sells, transfers, assigns, or otherwise disposes of the Contract or any portion of the Contract. The Department has authority to review subcontracts and to deny permission to subcontract work. The Department may penalize the Contractor for false statements or omissions made in connection with Form 25D-042. The Contractor shall perform, with the Contractor's own organization, work amounting to at least 30 percent of the difference between the original Contract price and the price of designated Specialty Items. For the purpose of this Subsection, work is defined as the dollar value of the services, equipment, materials, and manufactured products furnished under the Contract. The Engineer will determine the value of the subcontracts based on Contract unit prices or upon reasonable value, if entire items are not subcontracted. The Department’s consent to the subcontracting, sale, transfer, assignment, or disposal of all or a part of the Contract shall not relieve the Contractor and the Surety of responsibility for fulfillment of the Contract or for liability under the bonds regardless of the terms of the transfer or sublet approvals.

1. The Contractor shall ensure that for all subcontracts (agreements): a. The Department is furnished with one completed Contractor Self Certification, Form 25D-042,

for each subcontract; b. The subcontractors have submitted a Bidder Registration, Form 25D-6; c. The required prompt payment provisions of AS 36.90.210 are included in all subcontracts: d. A clause is included requiring the Contractor to pay the subcontractor for satisfactory

performance according to AS 36.90.210 and within eight (8) working days after receiving payment from which the subcontractor is to be paid;

e. A clause is included requiring the Contractor to pay the subcontractor interest, according to AS 45.45.010(a), for the period beginning the day after the required payment date and ending on the day payment of the amount due is made:

f. A clause is included requiring the Contractor to pay the subcontractor all retainage due under the subcontract, within eight (8) working days after final payment is received from the Department, or after the notice period under AS 36.25.020(b) expires, whichever is later;

g. A clause is included requiring the Contractor to pay interest on retainage, according to AS 36.90.250 and AS 45.45.101(a):

h. Other required items listed in Form 25D-042 are included in the subcontracts; i. The subcontractors pay current prevailing rate of wages as per Subsection 107-1.04 and file

certified payrolls with the Engineer and DOLWD for all work performed on the project; and j. Upon receipt of a request for more information regarding subcontracts, the requested

information is provided to the Department within 5 calendar days.

2. The Contractor shall ensure that for all lower tier subcontracts (agreements between subcontractors and lower tier subcontractors): a. The required prompt payment provisions of AS 36.90.210 are included in all lower tier

subcontracts;

Page 2 of 3

b. A clause is included requiring the subcontractor to pay the lower tier subcontractor for satisfactory performance according to AS 36.90.210, and within eight (8) working days after receiving payment from which the subcontractor is to be paid;

c. A clause is included requiring the subcontractor to pay the lower tier subcontractor interest, according to AS 45.45.010(a), for the period beginning the day after the required payment date and ending on the day payment of the amount due is made;

d. A clause is included requiring the subcontractor to pay the lower tier subcontractor all retainage due under the subcontract, within eight (8) working days after final payment is received, or after the notice period under AS 36.25.020(b) expires, whichever is later;

e. A clause is included requiring the subcontractor to pay the lower tier subcontractor interest on retainage, according to AS 36.90.250 and AS 45.45.101(a);

f. Other required items listed in Form 25D-042 are included in the lower tier subcontracts; g. The lower tier subcontractors pay current prevailing rate of wages as per Subsection 107-

1.04 and file certified payrolls with the Engineer and DOLWD for all work performed on the project; and

h. Upon receipt of a request for more information regarding subcontracts, the requested information is provided to the Department within 5 calendar days.

3. The following will be considered as subcontracting, unless performed by the Contractor:

a. Roadside Production. Roadside production of crushed stone, gravel, and other materials

with portable or semi-portable crushing, screening, or washing plants set up or reopened in the vicinity of the project to supply materials for the project, including borrow pits used exclusively or nearly exclusively for the project.

b. Temporary Plants. Production of aggregate mix, concrete mix, asphalt mix, other materials, or fabricated items from temporary batching plants, temporary mixing plants, or temporary factories that are set up or reopened in the vicinity of the project to supply materials exclusively or nearly exclusively for the project.

c. Hauling. Hauling from the project to roadside production, temporary plants, or commercial plants, from roadside production or temporary plants to the project, from roadside production or temporary plants to commercial plants, and all other hauling not specifically excluded in this subsection.

d. Other Contractors. All other contractors working on the project site under contract with the Contractor are considered subcontractors unless specifically excluded in this subsection.

4. The following will not be considered as subcontracting, but the Contractor shall comply with the

prompt payment provisions of AS 36.90: a. Commercial Plants. The purchase of sand, gravel, crushed stone, crushed slag, batched

concrete aggregates, ready-mixed concrete, asphalt paving mix, and any other material or fabrication produced at and furnished from established and recognized commercial plants that sell to both public and private purchasers.

b. Hauling. Delivery of materials from a commercial plant to a different commercial plant, and delivery from a commercial plant to the project site by vehicles owned and operated by the commercial plants or by commercial freight companies that have a contract with the commercial plant. Commercial freight companies are trucking or hauling companies that deliver multiple types of materials to multiple clients, both public and private, on an established route and on a recurrent basis.

c. Contractors' General Business. Work within permanent home offices, branch plants, fabrication plants, tool yards, and other establishments that are part of a contractor's or subcontractor's general business operations.

5. Owner-Operators. Hauling of materials for the project by bona fide truck owner-operators who

are listed as such on the certified payroll of the Contractor or approved subcontractor is not considered subcontracting for purposes of AS 36.30.115.

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The Contractor shall ensure that the required prompt payment provisions of AS 36.90.210 are included in contracts with owner-operators.

The Contractor shall collect and maintain at the project site current and valid copies of the following to prove that each trucker listed is a bona fide owner-operator:

a. Alaska Driver's License with appropriate CDL class and endorsements; b. Business license for trucking with supporting documents that list the driver as the business

owner or corporate officer; c. Documents showing the driver's ownership interest in the truck, including copies of:

(1) Truck registration; and (2) Lease (if truck is not registered in driver's name or in the name of the driver's company).

The Contractor shall maintain legible copies of these records for a period of at least three years after final acceptance of the project.

Owner-operators must qualify as independent contractors under the current Alaska Department of Labor’s criteria. Owner-operators may be required to show:

a. The owner-opeator’s right to control the manner in which the work is to be performed; b. The owner-operator’s opportunity for profit or loss depending upon their managerial skill; c. The owner-operator’s investment in equipment or materials required for their task, or the

employment of helpers; d. Whether the service rendered requires a special skill; e. The degree of permanence of the working relationship; and f. Whether the service rendered is an integral part of the owner-operator’s business.

The status of owner-operators is subject to evaluation throughout the project period. If the criteria for an independent contractor are not met, the Contractor shall submit amended payrolls listing the driver as an employee subject to all labor provisions of the Contract. The Contractor shall issue each owner-operator a placard in a form approved by the Engineer that identifies both the truck driver and the vehicle. The placard shall be prominently displayed on the vehicle so that it is visible to scale operators and inspectors.

Not withstanding the Department’s definitions of contracting and subcontracting, the Contractor shall be responsible for determining and complying with all federal and state laws and regulations regarding contracting, subcontracting, and payment of wages. The Contractor shall promptly pay any fines or penalties assessed for violations of those laws and regulations, and shall promptly comply with the directives of any government agency having jurisdiction over those matters.

MEMORANDUM

TO: Distribution

FROM:

State of Alaska Department of Transportation & Public Facilities

Statewide Design & Engineering Services Division

DATE: February 14, 2012

TELEPHONE: 465-6958 FAX: 465-2460

SUBJECT: CE Directive - Highway Specification and Form Revisions for Prompt Payment of Subcontractors and DBE Program

Incorporate the following attached Standard Modifications to the Standard Specifications for Highway Construction in all projects with highway construction advertised after March 5, 2012:

• E 101 • E 102 • E 103 • E 104

Subsection 101-1.03 Subsection 108-1.01 Subsection 109-1.06 Subsection 618-301

Incorporate attached Special Provision S 97 in all projects using federal-aid highway funds advertised after March 5, 2012. This Special Provision affects Section 120 DBE Program and replaces S 33.

Effective March 5, 2012, use attached Construction Forms for all projects using federal-aid highway funds:

• Bidder Registration (Form 25D-6) • Federal EEO Conditions (Form 25A-301) • Commercially Useful Function (CUF) Monitoring Report (25A-298) • Disadvantaged Business Enterprise Utilization Report (25A-325C) • Monthly Summary of Disadvantaged Business Enterprise Participation (Form 25A-

336)

Please direct questions to Gary Eddy, Statewide Statewide Standard Specifications Engineer, at 465-6951.

"Get Alaska Moving through service and infrastructure"

103insurance within 10 business days after the written notice of award has been issued to the bidder shall be just cause for the cancellation of the award and forfeiture of the proposal guaranty, which shall become the property of the Commission, not as a penalty, but in liquidation of damages sustained. Award may then be made to the next lowest responsible bidder, or the work may be re-advertised and constructed under contract or otherwise, as the Commissionmay decide. The low bidder who fails to execute the Contract and submit acceptable bonds and proof of liability insurance will not be permitted to bid on any subsequent advertisement of that project.

(b) Failure to Furnish DBE Information. For contracts having DBE goals, failure to furnish the DBE information required under subsection 103.08 shall be just cause for the cancellation of the conditional award and forfeiture of the proposal guaranty. The proposal guaranty shall become property of the Commission, not as a penalty, but in liquidation of damages sustained to the DBE Program. Conditional award, re-advertisement, etc., will be handled as in (a) above.

103.08 Disadvantaged Business Enterprise (DBE) in HighwayConstruction. (a) Contract Requirements. The provisions of this subsection shall apply to all contracts administered by the Department. If there are no specific participation goals for a contract, the Contractor agrees to ensure that Disadvantaged Business Enterprises (DBEs) are provided reasonable opportunities to compete for and perform on the contract or subcontracts and shall take all necessary and reasonable steps to ensure that the policy set forth in this supplemental specification is maintained. If a Contractor on a project without a specific participation goal elects to utilize a DBE subcontractor, all payments to the DBE subcontractor must be documented in accordance with Subsection 103.08(h). If the Prime Contractor is a DBE, records must be submitted in accordance with the above referenced section for work accomplished by their own forces.

(b) Policy. It is the policy of the Department to ensure nondiscrimination in the award and administration of Departmentcontracts and to create a level playing field on which Disadvantaged Business Enterprises (DBEs) can compete fairly. Consequently, the following apply to the Contract, the DBEs listed in the Contractor'ssubmittal required by Subsection 103.06(b) to achieve a DBE goal

27

103(either on a subcontract, purchase order, or other written agreement),the DBEs that may be added to the list later as substitutes, and DBEs performing on a contract, but not used to fulfill a portion of a DBE goal:

(1) The Contractor agrees to ensure that DBEs are provided reasonable opportunities to compete for and to perform on contracts awarded by the Department. In this regard, the Contractor shall take all necessary and reasonable steps to meetthe DBE goal established in the Contract.

(2) The Contractor and any subcontractors shall not discriminate on the basis of race, color, national origin, or sex in the performance of the Contract. The Contractor shall carry out applicable requirements of 49 CFR § 26 in the award, administration and performance of contracts. Failure by the Contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as the Department deems appropriate.

(3) After a conditional award is made and the apparent successful bidder has submitted the required DBE information,the Department will determine if the DBE requirements have been met. If those requirements are met, the conditional status will be removed and the Contract will be forwarded to the bidder for execution. If those requirements are not met, the proposal guaranty will become the property of the Commission, as specified in subsection 103.08(d).

(4) The Contractor should ensure that all DBEs performing on the Contract serve a commercially useful function. To ascertain that all obligations under contracts awarded to DBEs are met, the Department will review the Contractor's DBE involvementefforts during the performance of the Contract. No work shall be performed by the Contractor or any subcontractor on itemsoriginally committed to or included in a subcontract (including purchase orders or other written agreements) with a DBE without prior written approval by the Department. Payments to the Contractor will be withheld or previous payments recovered by the Department in amounts equivalent to that portion of the subcontract with a DBE in which:

28

103a. The DBE subcontractor is found not performing a

commercially useful function as defined in subsection 103.08(f)(3); or

b. The Contractor or any subcontractor performs any portion of the work to be accomplished by a DBE without prior written approval by the Department.

Amounts that have been withheld as a result of a or b above will be retained by the Department until the Contract DBE goal is satisfied or will be withheld permanently if the Contract DBE goal is not met.

(5) The Contractor shall pay all subcontractors their respective subcontract amounts, including retainage, according to subsection 108.01. The Contractor shall inform the Departmentof any situation in which regularly scheduled progress paymentsare not made to DBE subcontractors.

Failure of the Contractor or any subcontractor to carry out the requirements set forth above shall constitute a breach of contract and, after notification by the Department, may result in withholding estimates due the Contractor, termination of the Contract by the Department, or other action as the Department deems appropriate.

(c) Definitions.(1) "Disadvantaged Business Enterprise" means a for profit

small business concern: a. which is at least 51 percent owned by one or more

individuals who are both socially and economicallydisadvantaged, or, in the case of a corporation, at least 51 percent of the stock is owned by one or more such individuals; and

b. whose management and daily business operations are controlled by one or more of the socially and economicallydisadvantaged individuals who own it.

(2) "Small Business Concern" means, with respect to firmsseeking to participate as DBEs, a small business as defined pursuant to Section 3 of the Small Business Act and SmallBusiness Administration (SBA) regulations implementing it (13 CFR § 121), that also does not exceed the cap on average annual gross receipts allowed by Federal Regulation.

29

85

109.05 C

1. all pit releases, receipts of payment, and haul road releases are on file with theDepartment; and

2. all payrolls have been submitted and are up to date; and

3. the remainingwork canbe completedwithout accrual of liquidateddamages;and

4. the Contractor is making a diligent effort to complete the work remaining onthe project;

The Engineer may prepare a semifinal estimate for the work completed and retainnot less than 1 percent of the dollar amount of work completed. The remainder,less all previous payments, will then be certified for payment.

After all original Contract work is completed and conditions 1 through 4 abovehave been met, the Engineer may prepare a semifinal estimate for the work com-pleted and retain less than one percent of the dollar amount of work completed.The actual amount of retainage must be approved by the Construction Engineer.

Payments authorized under this section shall not constitute final acceptance ofanyportionof the project. The Contractor shall be responsible for final deliveryofthe project as specified in the Contract documents, regardless of any paymentsmade.

B. Prompt Payment. The Prime Contractor must pay the Subcontractor the amountdue for work done or services rendered, less applicable retainage not to exceed 2percent, from the current progress payment within 20 calendar days of receipt ofpayment form the Department or owning agency, unless the Prime Contractor hasjust cause to not make payment. If the Prime Contractor withholds payment fromthe Subcontractor, the Prime Contractor must immediately notify the Subcon-tractor and the Project Engineer, in writing, the reasons for withholding payment.The Subcontractor may also notify the Engineer if prompt payment has not beenmade.

If the Department or owning agency determines the Prime Contractor iswithholding payment without just cause, interest will accrue at the rate providedby NDCC 1301.1--02. The Prime Contractor is responsible for paying the accruedinterest starting on the twenty-first calendar day after the Prime Contractorreceivespayment. If thePrimeContractor iswithholdingSubcontractorpaymentswithout just cause, the Department or owing agency may suspend all paymentsdue to the Prime Contractor, until the Subcontractor is properly paid and theContractor agrees to make payments as specified. If the Department or owningagency determines there is just cause for withholding payment, interest will notaccrue on the amount due.

These prompt payment procedures apply to all tiers of Subcontracts and are basedon 49 CFR 26.29

C. Retainage. The Department or owning agency will determine whether the Sub-contractor’swork hasbeen “satisfactorily completed.” A Subcontractor’s work issatisfactorily completed when all of the tasks called for in the Subcontract havebeen accomplished, documented in accordance with the Contract, and paid for on

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109.05 C

a pay estimate. To be satisfactorily complete, a Subcontractor must provide allnecessary final documentation required in theContract.Final documentationmayinclude, but is not limited to: certified payrolls, materials certification, haul roadreleases, pit receiptsofpayment, pit releases, nightwatchmanreports,warrantees,operating manuals, product literature, verification of final quantities, and theDBE Certification (SFN 14268).

If the Prime Contractor elects to use retainage on Subcontract work, prompt pay-ment shall also include the release of retainage monies that have been withheldfrom the Subcontractor within 20 days after the Subcontractor’s work issatisfactorily completed. Non-bonded Subcontractors must submit proof of pay-ment for all material bills and wages to the Prime Contractor before the PrimeContractor is required to pay the retainage. If retainage is not released as per thisprovision, interest will accrue at the rate provided by NDCC 13--01.1--02 begin-ning the twenty-firstcalendar day after the Subcontractor’s work is satisfactorilycompleted.

The release of retainage applies to all tiers of Subcontracts.

D. NoCircumvention.Onfederal-aidContracts theContractor shallnot includeanyprovision in its Subcontract that would circumvent 49 CFR Part 26.29.

109.06 PAYMENT FOR MATERIAL ON HAND.

Payment will not be made for materials delivered to, or stockpiled on, the project untilincorporated in the work in their final position, except as specified in this Section.

Requests for paymentofmaterial onhandshall be submitted inwriting to theEngineer.A delivery invoice itemizing the material must be supplied for all stockpiledmaterials,except materials manufactured by the Contractor. A statement from the Contractorcertifying that the material meets specifications, or in the case of stockpiled aggregate,that it will meet specifications at the time of placement, is required for payment of ma-terial on hand.For Contractor manufactured materials to be eligible for payment, a ful-lydocumentedstatementofproductioncosts; including the typeofmaterial, amountofmaterial stockpiled, location of stockpile and itemized breakdown of the cost for pro-ducing the material shall be submitted to the Engineer.

The Contractor shall furnish paid invoices for all stored materials that have not beenincorporated into the permanent work within 35 days of the date the Department sub-mitted the estimate for payment. An estimate submitted for payment date is shown onthe top of the detail pages. The paid invoice shall include a notarized statement fromthe supplier or fabricator certifying that payment hasbeen received. If a paid invoice isnot furnished, the quantity of any previously allowed material remaining in storagewill be deducted from the next progressive estimate, and further payment will not bemade until the material is incorporated into the work.

Payment for material on hand will be limited to the appropriate portion of the value ofthe Contract item and will not exceed the Contract Unit Price for the work item inwhich the material is used. Payment will not be made for materials in excess of Planquantities. As materials are used in the work, credits equaling the partial payments forthem will be taken on future estimates.

To be eligible for payment, the value of the stored material to be used in one item ofwork must exceed $2,000.

Section 109

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109-4 PARTIAL PAYMENTS 1

(A) General 2

Partial payments will be based upon progress estimates prepared by the Engineer at least 3 once each month on the date established by the Engineer. Partial payments may be made 4 twice each month if in the judgment of the Engineer the amount of work performed is 5 sufficient to warrant such payment. No partial payment will be made when the total 6 value of work performed since the last partial payment, excluding mobilization, amounts 7 to less than $10,000. Partial payments will be approximate only and will be subject to 8 correction in the final estimate and payment. 9

Where lump sum items are included in the contract and the applicable section of the 10 Specifications require that fixed percentages of the total amount bid included in partial 11 pay estimates, the Engineer will determine amounts due on partial pay estimate in 12 accordance with the applicable sections of the Specifications. 13

(B) Prompt Payments 14

Contractors at all levels, prime, subcontractor, or second tier subcontractor, shall within 15 7 calendar days of receipt of monies, resulting from the satisfactory completion of work 16 performed, pay subcontractors, second tier subcontractors, or material suppliers. This 17 seven-day period begins upon knowledgeable receipt by the contracting firm obligated to 18 make a subsequent periodic or final payment. This prompt payment requirement will be 19 met if each firm mails the payment to the next level firm by evidence of postmark within 20 the seven-day period. For the purposes of this section, the satisfactory completion of 21 work performed shall exist when a subcontractor, second tier subcontractor or material 22 supplier completes tasks called for in the subcontract and are in conformance with the 23 terms of the Contract as required by the Department. This specification for prompt 24 payment shall be incorporated into each subcontract or second tier subcontract issued for 25 work performed on the project or for services provided. 26

The Contractor shall not withhold any payments to a subcontractor, second tier 27 subcontractor or material supplier for any claim or action arising outside the current 28 contract with the Department. Notwithstanding the provisions of this section, the 29 Contractor may withhold up to 3% retainage if any subcontractor does not obtain 30 a payment and performance bond for their portion of the work. Additionally, this 31 retainage may be increased to a maximum of 10% where the Contractor and any 32 subcontractor have supplied to the Engineer a satisfactorily executed mutual agreement 33 for an increased amount. If any retainage is held on subcontractors, all retainage shall be 34 released within seven calendar days of satisfactory completion of all work. For release of 35 retainage, satisfactory completion is defined as completion of all physical elements and 36 corresponding documentation as defined in the subcontract, as well as agreement between 37 the parties as to the final quantities for all work performed in the subcontract. The 38 Department will provide internal controls to expedite the determination and processing of 39 the final quantities for the satisfactorily completed subcontract portions of the project. 40

Failure of any entity to make prompt payment as defined herein may result in the 41 Department: 42

(1) Withholding money from the Contractor due for work performed by that entity in the 43 next partial payment until the necessary assurances are made consistent with this 44 specification; or 45

(2) Removing an approved Contractor from the prequalified bidders’ list or the removal 46 of other entities from the approved subcontractors’ list. 47

NCDOT 2012 Standard Specifications

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instance will force account records be assembled after the fact to form a basis for an agreed lump sum or unit price for work by supplemental agreement. However, it is permissible to perform and pay for the first portion of the work by force account in order to develop a price for payment of the remainder of the work by supplemental agreement. When a Contractor is required to perform work that he considers to be extra work or to perform work which he feels justifies additional compensation and his request for additional compensation has been denied, it is the Contractor's responsibility to advise the Engineer in writing of his intention to file a request for additional compensation and to keep cost records in accordance with Article 109-3 of the Standard Specifications prior to beginning any of the affected work. In these instances the Engineer or his representative does not have the authority to direct the Contractor's operations but it is their responsibility to maintain independent cost records and continually compare them. The Resident Engineer’s staff must maintain exceedingly accurate and detailed diaries reflecting the performance of disputed work. Any differences between the records should be reconciled or, when they can not be reconciled, the Engineer should objectively document the circumstances and the points of contention. Authority to approve the performance of extra work on a force account basis is delegated to the Engineer when the estimated amount of the work does not exceed the respective amount for which they have authority to approve supplemental agreements for extra work. Approval to perform other work on a force account basis is secured from the State Construction Engineer or his delegated representative. To secure approval, the Engineer must extend the Contractor's proposed price for performing the work, and the Engineer's breakdown estimate of performing the work by force account. This may be a letter with attachments and not on a supplemental agreement form. In cases of emergency, this approval may be secured by telephone, Fax, or E-mail. Where applicable, the Engineer will secure the concurrence of the Federal Highway Administration. When approval is secured, the Engineer shall extend a Force Account Notice (see Records and Reports Section of this Manual) to the Contractor. The Contractor may proceed with the work after the Engineer has approved the base wage rates for labor to be utilized in the affected work. Payment for work performed on a force account basis must be documented in HiCAMS. A pro-rata extension in the contract completion date in accordance with Article 108-10(B)1 of the Standard Specifications will be allowed for performing the force account work. When justified by the Contractor, the completion date may be further extended as provided in Article 108-10(B)4 of the Standard Specifications. The Specifications contain specific guidelines for payment of work performed by force account. 109-4 PARTIAL PAYMENTS (A) GENERAL Partial payments will be made to the Contractor based upon progress estimates prepared by the Engineer. The Specifications provide that partial payments may be made twice each month if, in the judgment of the Engineer, the amount of work performed is sufficient to warrant such payment. If the Contractor requests an additional estimate and the amount due exceeds $100,000.00 for a one-half month period, the Engineer can approve the request. A partial payment should be made in the middle of the normal estimate period and will

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include only those items of work with a significant current amount. Payment for other items of work would be made only at the end of the estimate period. Partial payments shall be subject to correction in the final estimate; however, the Engineer should take whatever measures necessary to ensure the quantities on the monthly estimate are substantially correct and therefore compensate the Contractor for all of the work performed during the partial payment period. Under no circumstances shall the Engineer utilize the Contractor's measurements alone as the basis for partial or final payment. A good example of this is estimation of earthwork quantities. The use of Contractor’s load counts for payment of ‘Unclassified Excavation’ is not acceptable. Cross-reference verification by another acceptable method such as cross-sections, balance point computations, photogrammetry, or average end area should be employed by the Resident Engineer’s staff to ensure accurate pay quantities. These quantities determine whether or not certain administrative procedures will be implemented that have serious ramifications. For example, partial payment quantities determine whether or not a Contractor is subject to removal from the list of prequalified bidders or the withholding of anticipated liquidated damages. Accordingly, the Engineer shall take appropriate care in the preparation of the estimate and shall submit it as expeditiously as possible. The preparation of partial pay estimates should be given a top priority by the Engineer. (B) PROMPT PAYMENT This subarticle provides that all levels of contractors - prime, subcontractor, or second tier subcontractor - must make payment to the obligee (subcontractor, second tier subcontractor or material supplier) within seven days of knowledgeable receipt of payment for work performed or services rendered during the time for which a partial payment was made by the Department. Failure of any level of contractor to make prompt payment as described in the provision can result in withholding future payments until the issue is resolved and removal of an approved contractor from the prequalified bidder’s list. If a subcontractor, second tier subcontractor, or material supplier has a complaint regarding receiving payments in accordance with the prompt pay specification, he should write a letter to the Resident Engineer detailing the work performed or materials supplied and the date of services rendered. The Resident Engineer should investigate the issue to determine if the Department has made payment for work and, if so, the date payment was made. If the Department has made payment for the work and a reasonable amount of time has passed for the payment to be received, the Resident Engineer should send a certified letter to the contractor in question, requesting proof of payment or reason for nonpayment within seven calendar days of receipt of monies. (An example letter is included at the end of this section.) The Resident Engineer should notify the State Construction Engineer if the contractor fails to provide an acceptable response, within seven days. The specifications allow the Department to withhold payment from contractors who are not in compliance with prompt payment specification. However, before withholding payments the Resident Engineer should consult with the State Construction Engineer. The State Construction Engineer should be copied on all correspondence relating to prompt payment.

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STATE OF NORTH CAROLINA

DEPARTMENT OF TRANSPORTATION BEVERLY EAVES PERDUE EUGENE A. CONTI, JR.

GOVERNOR SECRETARY

October 19, 2010

CERTIFIED MAIL

Contract No.: C211111 Project: R-5678E County: Honey Description: Storm Drainage Infiltration Basins Super Contracting Company 333 Alto Road Wheatown, North Carolina 28777 Subject: Subcontractor Payment Gentlemen: The Department has been notified by Stones Unlimited of an outstanding payment due them for work performed on the above project. Subarticle 109-4(B) of the Standard Specifications requires that contractors at all levels; prime, subcontractors, or second tier subcontractors, shall within seven calendar days of receipt of monies, resulting from the satisfactory completion of work performed, pay subcontractors, second tier subcontractors or material suppliers. Please provide documentation to this office within seven (7) days of receipt of this letter, which supports that all outstanding obligations to Stones Unlimited have been met or provide justification for withholding payment. Please note that failure to make prompt payment in accordance with the Specifications may result in removing an approved contractor from the prequalified bidders list or the approved subcontractors’ list. Should you have any questions, contact I. M Resident, P. E. at 555-555-5555. Sincerely, I. M. Resident, P. E. Resident Engineer Cc: Division Engineer State Construction Engineer Bridge or Roadway Construction Engineer

SAMPLE SUBCONTRACTOR PAYMENT REQUEST LETTER

109.09

persons supplying equipment, tools, or materials; for any labor he uses in the prosecution ofthe contract work.

(b) Payment To Sub-Contractors

Upon Department payment of the subcontractor’s portion of the work as shown on themonthly progress estimate and the receipt of payment by the Contractor for such work, theContractor shall make compensation in full to the subcontractor. For the purposes of thisSection, payment of the subcontractor’s portion of the work shall mean that payment hasbeen issued for that portion of the work that was identified on the monthly progress estimatefor which the subcontractor has performed service.

The Contractor shall make payment in full for the portion of the work identified on themonthly progress estimate to the subcontractor who performed such work within seven daysof the receipt of payment from the Department in accordance with the requirements of thisSection. If the Contractor withholds any funds as part of his contract with the subcontractorto ensure satisfactory compliance and completion and the subcontractor achieves satisfacto-ry compliance and completion as verified by payment from the Department to the Contrac-tor, the Contractor shall make full payment to the subcontractor within seven days.

If the Contractor fails to make payment to the subcontractor within the time frame specifiedherein, the subcontractor shall notify the Engineer and the Contractor’s bonding company inwriting. The Bonding Company shall be responsible for insuring payment in accordancewith the requirements of this Section and Section 107.01.

(c) Retainage

If during the Engineer’s monthly review of the Contractor’s progress, the Engineer deter-mines the Contractor’s progress is unsatisfactory in accordance with the provisions of Sec-tion 108.03 or other contract specific criteria, the Engineer will send a notice of unsatisfac-tory progress to the Contractor advising him of such a determination. In addition, this notifi-cation will also advise the Contractor that 5 percent retainage of the monthly progress esti-mate is being withheld and will continue to be withheld for each month the Contractor’s ac-tual progress is determined to be unsatisfactory relative to the criteria stated herein..

When the Engineer determines that the Contractor’s progress is considered satisfactory inaccordance with these requirements, the 5 percent retainage previously withheld because ofunsatisfactory progress will be released in the next monthly progress estimate and the re-maining monthly progress estimates payments will be made in full provided satisfactoryprogress continues to be made.

109.09—Payment for Material on Hand

When requested in writing by the Contractor, payment allowances may be made for material securedfor use on the project. Such material payments will be for only those actual quantities identified in thecontract, approved work orders, or otherwise documented as required to complete the project andshall be in accordance with the following terms and conditions:

(a) Structural Units: An allowance of 100 percent of the cost to the Contractor for structuralsteel materials for fabrication not to exceed 60 percent of the contract price may be made

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106.10

the work. If it is not practical for the Contractor to remove rejected material immediately, the Engi-neer will mark the material for identification. Rejected material whose defects have been correctedshall not be used until approval has been given by the Engineer.

106.11—Material Furnished by the Department

The Contractor shall furnish all materials required to complete the work except those specified to befurnished by the Department.

Material furnished by the Department will be delivered or made available to the Contractor at thepoints specified in the Contract. The cost of handling and placing materials after delivery to the Con-tractor shall be included in the contract price for the item with which they are used.

After receipt of the materials, the Contractor shall be responsible for material delivered to him, in-cluding shortages, deficiencies, and damages that occur after delivery, and any demurrage charges.

106.12—Critical Materials

Raw, manufactured materials or supplies that are necessary for the fabrication, construction, installa-tion or completion of any item of work that is, or becomes, in extremely short supply regionally or na-tionally as substantiated by recognized public reports such as news media, trade association journals,etc. due to catastrophic events of nature, needs of national defense or industrial conditions beyond thecontrol of the Department or Contractor, will be declared Critical by the Department.

When the supply of materials becomes critical, the provisions of this Section will become applicableto the Contract.

When all items of work involving noncritical materials have been completed by the Contractor orhave progressed to a point where no further work is practicable prior to receipt of critical materials, acomplete suspension of work will be granted by the Department. Requests for partial suspension or-ders because of delays attributable to nonreceipt of critical materials will be considered on the basis ofmerit in each case.

The Department reserves the right to substitute materials by means of a work order.

Contractors, via their manufacturers or suppliers, that request relief due to critical shortage of materi-als as specified in this Section shall immediately supply information concerning the product and othersupporting data to permit the Department an opportunity to access possible alternatives or methods toavoid undue delay or expenditure.

SECTION 107—LEGAL RESPONSIBILITIES

107.01—Laws To Be Observed

The Contractor shall keep fully informed of federal, state, and local laws, bylaws, ordinances, orders,decrees, and regulations of governing bodies, courts, and agencies having any jurisdiction or authority

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107.02

that affects those engaged or employed on the work, the conduct of the work, or the execution of anydocuments in connection with the work. The Contractor shall observe and comply with such laws, or-dinances, regulations, orders, or decrees and shall indemnify and hold harmless the Commonwealthand its agents, officers, or employees against any claim for liability arising from or based on their vio-lation, whether by himself, his agents, his employees, or subcontractors. The Contractor shall executeand file the documents, statements, and affidavits required under any applicable federal or state law orregulation required by or affecting his bid or Contract or prosecution of the work there under. TheContractor shall permit examination of any records made subject to such examination by any federalor state law or by regulations promulgated there under by any state or federal agency charged with en-forcement of such law.

In accordance with the Code of Virginia (Virginia Public Procurement Act), the Contractor shall makepayment to all subcontractors, as defined in the Code, within seven days after receipt of payment fromthe Department; or shall notify the Department and subcontractor in writing of his intention to with-hold all or a part of the amount due along with the reason for nonpayment.

In the event payment is not made as noted, the Contractor shall pay interest at the rate of 1 percent permonth, unless otherwise provided in the Contract, to the subcontractor on all amounts that remain un-paid after seven days except for the amounts withheld as provided in this Section.

These same requirements shall be included in each subcontract and shall be applicable to each lower-tier subcontractor.

107.02—Permits, Certificates, and Licenses

General

The Contractor shall conform to the permit conditions as shown in the contract documents. Construc-tion methods shall confirm to the stipulations of the permit and/or certification conditions. The Con-tractor shall assume all obligations and costs incurred as a result of complying with the terms and con-ditions of the permits and certificates.

If any of the permits shown herein are applicable to the project, the contract documents will indicatesuch and the applicable permit conditions will be included in the contract documents.

(a) Department of the Army, Corps of Engineers Nationwide Permits: A nationwide permitis issued to the Department by the U.S. Army Corps of Engineers to place fill or dredge ma-terial in waters of the United States including wetlands.

(b) The State Program General Permit for Linear Transportation Projects (SPGP- 01 2A& B): The SPGP-01 2A & B is a permit issued to the Department by the U.S. Army Corpsof Engineers to proceed with linear transportation projects involving work, structures andfilling both temporary and permanent, in waters of the United States including wetlands.

(c) Letter of Permission (LOP-1): The LOP-1 is a regional permit issued to the Departmentby the U.S. Army Corps of Engineers to proceed with roadway projects involving work,structures and filling both temporary and permanent, in waters of the United States includ-ing wetlands.

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SECTION 109—MEASUREMENT AND PAYMENT

Section 109.01(a)—Measurement by Weight is amended to replace the first paragraph and second paragraph including subparagraphs 1-4 with the following:

(a) Measurement by Weight: Materials that are measured or proportioned by weight shall be weighted on accurate scales as specified in this Section. When material is paid for on a tonnage basis, personnel performing the weighing shall be certified by the Department and shall be bonded to the Commonwealth of Virginia in the amount of $10,000 for the faithful observance and performance of the duties of the weighperson required herein. The bond shall be executed on a form having the exact wording as the Weighpersons Surety Bond Form furnished by the Department and shall be submitted to the Department prior to the furnishing of the tonnage material. The Contractor shall have the weighperson perform the following:

1. Furnish a signed weigh ticket for each load that shows the date, load number, plant

name, size and type of material, project number, schedule or purchase order number, and the weights specified herein.

2. Maintain sufficient documentation so that the accumulative tonnage and distribution of

each lot of material, by contract, can be readily identified. 3. Submit by the end of the next working day a summary of the number of loads and total

weights for each type of material by contract.

Section 109.01(a)—Measurement by Weight is also amended to delete the third paragraph. Section 109.01(d)4 Asphalt is amended to replace the “formula…used in computing the volume of asphalt at temperatures other than 60 degrees F” with the following:

V1 = V x [1 – K(T – 60)]

Section 109.08(b)—Payment to Sub-Contractors of the Specifications is amended to replace the second paragraph with the following:

Payment to Sub-Contractors shall be in accordance with the provisions of §2.2-4354 of the Highway Laws of Virginia:

The Contractor shall take one of the following two actions within 7 days after receipt of payment from the Department for the subcontractor’s portion of the work as shown on the monthly progress estimate:

1. 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

2. Notify the Department and subcontractor, in writing, of his intention to withhold all or a part

of the subcontractor's payment with the reason for nonpayment. The Contractor shall be obligated to pay interest in the amount 1 (one) percent per month on all amounts owed by the Contractor to the subcontractor that remain unpaid after 7 days following receipt by the contractor of payment from the Department for work performed by the subcontractor, except amounts withheld as allowed in section 2. The Contractor shall include in

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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.

Section 109.09—Payment For Material On Hand of the Specifications is replaced with the following:

When requested in writing by the Contractor, payment allowances may be made for material secured for use on the project. Such material payments will be for only those actual quantities identified in the contract, approved work orders, or otherwise authorized and documented by the Engineer as required to complete the project and shall be in accordance with the following terms and conditions:

(a) Structural Steel or Reinforcing Steel: An allowance of 100 percent of the cost to the

Contractor for structural steel or reinforcing steel materials secured for fabrication not to exceed 60 percent of the contract price may be made when such material is delivered to the fabricator and has been adequately identified for exclusive use on the project. The provisions of this section for steel reinforcement will only apply where the quantity of steel reinforcement is identified as a separate and distinct bid item for payment. An allowance of 100 percent of the cost to the Contractor for superstructure units and reinforcing steel, not to exceed 90 percent of the contract price, may be made when fabrication is complete. Prior to the granting of such allowances, the materials and fabricated units shall have been tested or certified and found acceptable to the Department and shall have been stored in accordance with the requirements specified herein. Allowances will be based on invoices, bills, or the estimated value as approved by the Engineer and will be subject to the retainage requirements of Section 109.08 of the Specifications. For the purposes of this section fabrication is defined as any manufacturing process such as bending, forming, welding, cutting or coating with paint or anti-corrosive materials which alters, converts, or changes raw material for its use in the permanent finished work.

(b) Other Materials: For aggregate, pipe, guardrail, signs and sign assemblies, and other

nonperishable material, an allowance of 100 percent of the cost to the Contractor for materials, not to exceed 90 percent of the contract price, may be made when such material is delivered to the project and stockpiled or stored in accordance with the requirements specified herein. Prior to the granting of such allowances, the material shall have been tested and found acceptable to the Department. Allowances will be based on invoices, bills, or the estimated value of the material as approved by the Engineer and will be subject to the retainage provisions of Section 109.08 of the Specifications.

(c) Excluded Items: No allowance will be made for fuels, form lumber, falsework, temporary

structures, or other work that will not become an integral part of the finished construction. Additionally, no allowance will be made for perishable material such as cement, seed, plants, or fertilizer.

(d) Storage: Material for which payment allowance is requested shall be stored in an approved

manner in areas where damage is not likely to occur. If any of the stored materials are lost or become damaged, the Contractor shall repair or replace them at no additional cost to the Department. Repair or replacement of such material will not be considered the basis for any extension of contract time. If payment allowance has been made prior to such damage or loss, the amount so allowed or a proportionate part thereof will be deducted from the next progress estimate payment and withheld until satisfactory repairs or replacement has been made. When it is determined to be impractical to store materials within the limits of the project, the Engineer may approve storage on private property or, for structural units and reinforcing steel, on the manufacturer’s or fabricator’s yard. Requests for payment allowance for such stored material shall be accompanied by a release from the owner or tenant of such property

§ 2.2-4354. Payment clauses to be included in contracts.

Any contract awarded by any state agency, or any contract awarded by any agency of local government in accordance with § 2.2-4352, shall include:

1. 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:

a. 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

b. 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.

2. 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.

3. 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 1.

4. 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."

Any 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.

A 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.

(1990, c. 824, § 11-62.11; 1992, c. 110; 2001, c. 844.)

COMMONWEALTH OF VIRGINIA DEPARTMENT OF TRANSPORTATION

CONSTRUCTION DIRECTIVE MEMORANDUM

GENERAL SUBJECT: NON-PAYMENT CLAIMS AGAINST CONTRACTOR NUMBER: CD-2008-10

DATE: MARCH 13, 2008

SPECIFIC SUBJECT:

PROCEDURES FOR HANDLING NON-PAYMENT CLAIMS AGAINST CONTRACTORS SUPERSEDES: CD-99-12

DATE EFFECTIVE: IMMEDIATELYSUNSET/EXPIRES: MARCH 13, 2013

Original with signature on file in the office of the Scheduling & Contract Division

W. BYRON COBURN, JR., P.E. STATE CONSTRUCTION ENGINEER

DIRECTED TO - DISTRICT ADMINISTRATORS

The Contractor is responsible for payment or for making satisfactory arrangements for settling all bills for labor, materials, public utility services, rental of equipment, and all other items entering into or used in prosecution of contract work. To ensure that payments are made, the Department requires the Contractor to furnish a payment bond for contracts (with some limited exceptions). The payment bond covers all just claims for labor and material performed for or supplied to the Contractor or any Subcontractor. The following procedures shall be used in order to ensure that non-payment issues are consistently addressed on both bonded and unbonded contracts.

I. PAYMENT CERTIFICATION

Contracts Without Payment Bond – Certification Requirements

On contracts that do not have a payment bond, there are requirements for the Contractor to submit evidence of or to certify satisfactory payment.

1. The requirements of Section 109.07-Partial Payments (Section 109.08 in the 2007 Specifications), concerning contracts without a payment bond, are to be strictly enforced. If the Contractor does not furnish letters from materials suppliers and/or subcontractors that the Contractor has paid or made satisfactory arrangements for settling all bills for work that was paid on the previous monthly estimate, the dollar value of the pay items is to be withheld from payment on the current monthly estimate. Since it is a contractual requirement, the pay items will not be considered as acceptable for payment on subsequent vouchers until the letter(s) are provided.

2. The Scheduling and Contract Division Quality Control Engineer assigned to work with the particular District is to be notified immediately. A brief description of the situation and items involved should be provided.

CD-2008-10 March 13, 2008 Page 2 of 7

3. At the time of final payment, in accordance with Section 109.09-Final Payment, (Section 109.10 in the 2007 Specifications), if the Contractor does not certify that he has paid or made satisfactory arrangements for setting all bills, the final estimate is still to be processed. A letter recommending the suspension of the Contractor from the prequalified bidder’s list should accompany the final estimate submission. Payment should not be made for any pay items which the Contractor lacks a letter from a supplier or subcontractor certifying payment to them, otherwise, all other appropriate pay items should be paid in full for the accepted quantities.

Contracts with Payment Bond

On contracts that have a payment bond, the Contractor is not required to provide letters from suppliers and/or subcontractors concerning monthly payments. The Contractor is also not required to provide an overall payment certification as a prerequisite to final payment.

II. NON-PAYMENT CLAIMS

Claims alleging non-payment by the Contractor and/or subcontractor(s) are often directed to the Department by the claimant. The following procedures for handling notifications alleging non-payment are to be used for all non-payment claims (including those against subcontractors):

Contracts Without Payment Bond

1. All notifications are to be furnished to the appropriate Responsible Charge Engineer.

2. The Responsible Charge Engineer acknowledges receipt of the notification and advises the Claimant that the claim is being forwarded to the Prime Contractor for resolution. The Claimant is also advised that in the event the claim is not resolved, the Department will withhold sufficient funds from payment of the final estimate to cover the claim unless the Contractor has provided documentation to support non-payment (See Attachment No. 1)

3. The Responsible Charge Engineer transmits copy of the Claimant’s notification and copy of the acknowledgement letter to the Prime Contractor and informs the firm of its responsibility to resolve the claim. The Contractor is further advised that in the event the claim is not resolved, the Department will withhold sufficient funds from payment of the final estimate to cover the claim and may take other actions as provided for in the Specifications unless the firm can provide documentation to support non-payment (See Attachment No. 2)

4. If the claim remains outstanding at the time of payment of the final estimate, sufficient funds to cover the claim are to be withheld from monies due the Contractor.

5. Withheld funds are retained until evidence is received that the claim has been resolved, adjudicated, or until expiration of the period of Statutory Limitation, whichever is the earlier.

6. If the claim for non-payment is from a subcontractor or supplier who has previously given the Contractor a letter of satisfactory payment received or if the Contractor has supplied his certification of payment required in Section 109.09, the Scheduling and Contract Division Quality Control Engineer for the District is to be notified. The non-payment claim will be investigated and the Scheduling and Contract Division Quality Control Engineer, in consultation with the Department Inspector General, will decide what course of action(s) to take.

CD-2008-10 March 13, 2008 Page 3 of 7

Contracts With Payment Bond

1. All notifications are to be furnished to the appropriate Responsible Charge Engineer.

2. The Responsible Charge Engineer acknowledges receipt of the notification and advises the Claimant that the claim is being forwarded to the Prime Contractor for resolution. The Claimant is also advised that a payment bond has been furnished for the project and of the name and address of the Surety Company. (See Attachment No. 3)

3. The Responsible Charge Engineer transmits a copy of the Claimant’s notification and a copy of the acknowledgement letter to the Prime Contractor requesting that appropriate action be taken to resolve the claim. A copy is to be furnished to the Surety Company. (See Attachment No. 4)

4. Payment of the final estimate is not to be delayed nor funds withheld as a result of claims against the Contractor for non-payment of bills, unless directed in writing by the State Construction Engineer.

DWM

C: Commissioner Deputy Commissioner Commissioner’s Staff Division Administrators District Construction Engineers District Maintenance Engineers District Materials Engineers District Preliminary Engineering Managers District Location and Design Engineers District Civil Rights Managers District Contract Administrators Regional Operations Directors Residency Administrators Area Construction Engineers Construction Managers Project Inspectors Federal Highway Administration Office of the Attorney General Virginia Department of Minority Business Enterprise Virginia Transportation Construction Alliance Old Dominion Highway Contractors Association Virginia Asphalt Association American Concrete Pavement Association Virginia Ready-Mixed Concrete Association Precast Concrete Association of Virginia Division Library

CD-2008-10 March 13, 2008 Page 4 of 7

ATTACHMENT NO. 1Example Acknowledgement Letter To Claimant

Contract without Payment Bond

(DATE)

Route ________________ County_________________ Project ______________________________________

Name and Address of Claimant

Dear _________________________:

This is to acknowledge receipt of your letter of (Date) regarding an outstanding account in the amount of $_____________________ for (Type of Material or Services) furnished for use on the subject project.

A copy of your letter is being furnished to (Name & Address of Prime Contractor), with the request that they take the necessary action to resolve your claim. In the event your account is not resolved, the Department will withhold sufficient funds to cover the claim from payment of the final estimate unless the Contractor has provided documentation to support the reason for non-payment.

By: Responsible Charge Engineer

C: District Administrator Scheduling and Contract Quality Control Engineer Project Inspector Contractor

CD-2008-10 March 13, 2008 Page 5 of 7

ATTACHMENT NO. 2Example Letter to Contractor

Contract without Payment Bond

(DATE)

Route ________________ County_________________ Project ______________________________________

Name and Address of Contractor

Gentlemen:

Attached is a copy of a letter from (Name of Claimant) notifying the Department of an outstanding account in the amount of $________________ for (Type of Material or Services) provided for use on the subject project.

As you are aware, you are responsible for payment or making satisfactory arrangements for settling all bills for materials, labor, equipment, supplies and all other items used on the work. Your particular attention is directed to Sections 102.08 and 109.07 of the Road and Bridge Specifications. (102.08 and 109.08 if the contract is under the 2007 Specifications)

In the event this claim remains outstanding at the time of payment of the final estimate, sufficient funds to cover the claim will be withheld from monies due your firm and other actions as provided for by the Specifications may be taken unless you have provided documentation to support the reason for non-payment.

Your immediate action for settling this account is requested and please keep me informed accordingly.

By: Responsible Charge Engineer

C: District Administrator Scheduling and Contract Quality Control Engineer Project Inspector

CD-2008-10 March 13, 2008 Page 6 of 7

ATTACHMENT NO. 3Example Acknowledgement Letter To Claimant

Contract with Payment Bond

(DATE)

Route ________________ County_________________ Project ______________________________________

Name and Address of Claimant

Dear _________________________:

This is to acknowledge receipt of your letter of (Date) regarding an outstanding account in the amount of $_____________________ for (Type of Material or Services) furnished for use on the subject project.

A copy of your letter is being furnished to (Name & Address of Prime Contractor), with the request that they take the necessary action to resolve your claim. A payment bond has been provided for this project and a copy of your letter has also been sent to the Company which provided the bond, whose name and address is:

(Name and Address of Surety)

Even though we have referred your claim to the Contractor, it is still your responsibility to initiate any action against the Contractor or bonding company you may deem necessary.

By: Responsible Charge Engineer

C: District Administrator Scheduling and Contract Quality Control Engineer Project Inspector Surety

CD-2008-10 March 13, 2008 Page 7 of 7

ATTACHMENT NO. 4Example Letter To Contractor Contract with Payment Bond

(DATE)

Route ________________ County_________________ Project ______________________________________

Name and Address of Contractor

Gentlemen:

Attached is a copy of a letter from (Name of Claimant) notifying the Department of an outstanding account in the amount of $________________ for (Type of Material or Services) provided for use on the subject project. Also, a copy of our acknowledgement letter is attached.

Please note that the Claimant has been informed that a payment bond was furnished for this project and also advised of the name and address of the Surety.

Your immediate action for settling this account is requested.

By: Responsible Charge Engineer

C: Surety

canceled, the Contractor will be paid as provided in Article 1109.16. For all items, materials ordered and delivered for the unfinished portion of such canceled or omitted items, the Contracting Authority will pay cost plus 10% as an overhead charge. The Contractor's expense for work of handling or transporting this material shall be included in computing the cost. The Contracting Authority will also pay any actual expenses sustained by the Contractor by reason of such cancellation or omission and not represented by work completed or material delivered. In computation of material cost or expenses sustained, no anticipated profit will be included. Material paid for shall become the property of the Contracting Authority and shall be disposed of as directed by the Engineer.

1109.05 PARTIAL PAYMENTS.

A. Progress Payments.

1. For work extending over a period of more than one month, the Contractor will receive monthly progress estimate payments based on the amount of work completed. For Primary and Secondary projects in which the Contracting Authority is the Department or a county Board of Supervisors, these progress payments will be bi-weekly if requested by the Contractor. For late payment, the Contracting Authority will pay a penalty of 1.0% per month (or part of a month), or a minimum of $250, whichever is the greater amount, on any work completed but not processed for payment within 14 calendar days after completion of the work. Completion of the work includes physical completion of the work and submittal of all paperwork required by the contract.

2. On contracts for which the contract sum is $10,000 or more, payments may be allowed based on value of processed or fabricated materials or rolled steel products which have been delivered on the work or 90% of the value of processed or fabricated material, or rolled steel products, reserved for the project and stored elsewhere within Iowa or in other locations where there is routine inspection by Departmental personnel, provided the materials are of acceptable quality and the manner of storage is satisfactory to the Engineer.

3. Should a reasonable doubt arise as to the integrity of any part of the completed work, the payment for that portion will not be allowed until the cause for such doubt has been removed. The Engineer's estimates of work completed will result in partial payments on the contract sum, and the allowance of a progress payment by the Contracting Authority does not constitute final acceptance of the work upon which the payments are based.

4. The Contractor shall sign the final voucher certifying the quantities are just and unpaid.

B. Prompt Payment to Subcontractors.

1. The Contractor shall promptly pay each subcontractor. Any delay or postponement of payment among the parties may take place only for good cause, with written notification to the subcontractor. A payment, excluding retainage, to a subcontractor for satisfactory performance of the subcontractor's work shall be made by the Contractor no later than one of the following, as applicable: a. 7 calendar days after the Contractor receives payment for the subcontractor's work. b. 7 calendar days after the Contractor could have received payment for the subcontractor's

work, if the reason for nonpayment is not the subcontractor's fault.

2. The Contractor may withhold up to 5% of each progress estimate on work performed by subcontractors.

3. Retained funds due a subcontractor shall be payable by the Contractor within 30 calendar days after satisfactory completion of the work by the subcontractor. Subcontractor’s work is satisfactorily completed when all requirements called for in the subcontract have been accomplished and required documentation provided by subcontractor. Non-bonded subcontractors may be required to submit proof of payment for all material bills and wages to the Contractor before the Contractor is required to pay the retainage.

4. The use of joint checks for payment to subcontractors for their materials is acceptable under the following conditions: a. The request for a joint check from the prime contractor is made by the materials supplier. b. The joint check issued by the prime contractor is for an amount not to exceed the cost of

unpaid invoice(s) from the materials supplier to a subcontractor on that contract. c. The joint check is given to the subcontractor and the subcontractor must release the joint

check to the material supplier. d. The use of a joint check by the prime contractor is applicable to all their subcontractors.

C. Retainage.

1. Three percent of each progress estimate will be deducted and held as retainage on the first $1,000,000 paid on a contract. Additional retainage will be withheld to a maximum of $30,000 following retainage release if subsequent work is performed. This retainage is held exclusively for claims filed in accordance with Chapter 573 of the Code of Iowa, and shall not be considered as an encumbrance on work performed by a subcontractor.

2. Deleted.

3. The retained funds held by the Contracting Authority for the contract will not be due and payable prior to 30 calendar days after the date of final acceptance of the entire contract or following the release or adjudication of claims that may have been filed, or until the Contractor has filed the signed final voucher with the Contracting Authority.

D. Complaints.

1. Compliance with prompt payment is the responsibility of both the Contracting Authority and Contractor.

2. If the Contractor feels the Contracting Authority has not complied with the prompt payment provisions, the initial attempt to resolve the issue shall be with the Project Engineer, stating the project number, items of work, quantities, unit prices, dates work was performed, total amount owed, and signature of a representative of the Contractor.

3. If a subcontractor feels the Contractor has not complied with the prompt payment provisions, the initial attempt to resolve the issue shall occur with the Contractor. The attempt to resolve the issue shall include at least one written request to the Contractor, stating the project number, items of work, quantities, unit prices, dates work was performed, total amount owed, and signature of a representative of the subcontractor.

4. If the initial attempt to resolve the issue does not result in satisfactory payment for completed work, the Contractor or subcontractor shall submit a written complaint to the Office of Contracts OES-Civil Rights. The written complaint shall include copies of the correspondence with the Project Engineer or Contractor that provides the details stated above. The Department will investigate and provide written response to the complainant within 15 business days of receipt of the complaint.

E. Required Records. The Contractor shall maintain a system for tracking the status of subcontractor work and payments. The Contractor shall retain records that document the date of field completion, date of satisfactory completion of the work and the date of final payment (including funds retained in accordance with Article 1109.05, B, 2) to each subcontractor. Copies of the records to verify compliance with Article 1109.05, B shall be provided to the Contracting Authority, if requested.

Prior to receiving final payment, the Contractor shall provide to the Engineer the "Certification of Subcontractor Payments" (Form 518002). This form shall include the names of each approved subcontractor, the date of field completion, the date of satisfactory completion of the work, the date of final payment, the number of days between satisfactory completion and final payment, and the date of payment by the Contracting Authority. Explanations for any final payments made after the 30 calendar day period following field completion shall be included with Form 518002.

Construction Manual 01/13/12

____________________________________________________________________________________ Chapter 2 - 38

1. Traffic control is a lump sum bid item and the traffic control supplier: Furnishes the traffic control devices Delivers materials to the "first use" location Sets devices up at the "first use" location Keeps equipment operational by being on call from the contractor or through

periodic visits to the site Picks up devices when a project is completed

2. Traffic control signals are bid as furnish and install and the traffic control supplier: Furnishes the traffic control devices Delivers materials to the "first use" location Picks up devices when a project is completed

3. Traffic control bid as incidental to other work will not require a Subcontractor Request.

B. A "Subcontract Request" (Form 830231) shall be required if:

The traffic control supplier performs the entire item of traffic control (lump sum, furnish and install) and provides regular surveillance, cleaning, routine maintenance and repair of devices, or changes the system between stages.

Prompt Payment to Subcontractors

Progress Payments to Subcontractors Contractors are required to pay subcontractors for satisfactorily completed work within 7 calendar days after receiving payment (or should have received payment) from the contracting authority. Certification of Subcontractor Payment For all contracts let on or after April 18, 2006, the Contractor shall provide to the Engineer a “Certification of Subcontractor Payment” form (Form 518002) with the signed final voucher. The form shall include the names of all approved subcontractors, date the subcontractor’s work was completed, date of final payment to the subcontractor and the number of days between when the work was completed and paid. The contractor shall provide an explanation for instances that that exceed 30 days. The “Certification of Subcontractor Payment” form is not required to be submitted if there were no subcontractors on the contract. An example of the form is included in Appendix 2-23. Form 518002 is available at:

http://www.iowadot.gov/construction/contract_admin/cert_of_subcon_pmnts.html 2.26 USE OF EXCESS PROPERTY OR HIGHWAY RIGHT-OF-WAY

Contractor's Use of Excess Property A contractor who wishes to use excess property owned by the state in connection with a highway construction project must obtain a lease agreement from the Iowa DOT Office of Right of Way. Excess property is defined as property, acquired by fee title, outside of the “normal” limits of the highway right-of-way line, but excluding borrow sites. Contractor’s Use of Borrow Pits for Temporary Plant Sites Contractors occasionally request to set their temporary paving or crushing plant in the project’s borrow pit. Action required to allow use of a borrow site depends on: A. Method used to acquire borrow site (i.e. Temporary Easement vs. Fee Title) and B. Need for additional borrow material

Borrow site is acquired by Temporary Easement.

Contractor shall obtain the following two items:

Form 518002wd (12-10)

Certification of Subcontractor Payments

County

Prime Contractor

Contract ID

Letting Date

Article 1109.05 of the Iowa DOT Standard Specifications requires the prime contractor to make full payment (including retainage) when each subcontractor has satisfactorily completed their work on a contract. This form is used to document this requirement and shall be submitted with the signed final voucher.

(a) Subcontractor

(b) Completed

(c) Owner Paid

(d) Satisfactory Completion

(e) Prime Paid

(f) Days

Explanation of columns

(a) Subcontractors – List ALL approved subcontractors on this contract (b) Field Completion – List the date the field work was completed for each

subcontractor (c) Owner Paid – List the date the owner made payment in full to the prime for the

subcontractor’s work including all retainage held on the subcontractor’s work. (d) Satisfactory Completion – List the date you determined the subcontractor

completed all requirements of the subcontract, including submittal of required paperwork.

(e) Prime Paid – List the date you sent the final payment, including any withheld retainage to the subcontractor

(f) Days – Compute the number of calendar days between when the subcontractor satisfactorily completed their work (Column d) and the date when the subcontractor was paid the final payment (Column e). Attach documentation or justification for those subcontractors not fully paid within 30 calendar days.

By signing and submitting this Certification of Subcontractor Payments, I certify that the

information concerning the payment to subcontractors is correct.

Submitted by

Prime Contractor’s Signature

Date

Acknowledgment of Receipt

Project Engineer’s Signature

Date

Distribution: Project Engineer should retain a copy for their file and forward original with the final documents.

4. The use of joint checks for payment to subcontractors for their materials is acceptable under the following conditions: a. The request for a joint check from the prime contractor is made by the materials supplier. b. The joint check issued by the prime contractor is for an amount not to exceed the cost of

unpaid invoice(s) from the materials supplier to a subcontractor on that contract. c. The joint check is given to the subcontractor and the subcontractor must release the joint

check to the material supplier. d. The use of a joint check by the prime contractor is applicable to all their subcontractors.

C. Retainage.

1. Three percent of each progress estimate will be deducted and held as retainage on the first $1,000,000 paid on a contract. Additional retainage will be withheld to a maximum of $30,000 following retainage release if subsequent work is performed. This retainage is held exclusively for claims filed in accordance with Chapter 573 of the Code of Iowa, and shall not be considered as an encumbrance on work performed by a subcontractor.

2. Deleted.

3. The retained funds held by the Contracting Authority for the contract will not be due and payable prior to 30 calendar days after the date of final acceptance of the entire contract or following the release or adjudication of claims that may have been filed, or until the Contractor has filed the signed final voucher with the Contracting Authority.

D. Complaints.

1. Compliance with prompt payment is the responsibility of both the Contracting Authority and Contractor.

2. If the Contractor feels the Contracting Authority has not complied with the prompt payment provisions, the initial attempt to resolve the issue shall be with the Project Engineer, stating the project number, items of work, quantities, unit prices, dates work was performed, total amount owed, and signature of a representative of the Contractor.

3. If a subcontractor feels the Contractor has not complied with the prompt payment provisions, the initial attempt to resolve the issue shall occur with the Contractor. The attempt to resolve the issue shall include at least one written request to the Contractor, stating the project number, items of work, quantities, unit prices, dates work was performed, total amount owed, and signature of a representative of the subcontractor.

4. If the initial attempt to resolve the issue does not result in satisfactory payment for completed work, the Contractor or subcontractor shall submit a written complaint to the Office of Contracts OES-Civil Rights. The written complaint shall include copies of the correspondence with the Project Engineer or Contractor that provides the details stated above. The Department will investigate and provide written response to the complainant within 15 business days of receipt of the complaint.

E. Required Records. The Contractor shall maintain a system for tracking the status of subcontractor work and payments. The Contractor shall retain records that document the date of field completion, date of satisfactory completion of the work and the date of final payment (including funds retained in accordance with Article 1109.05, B, 2) to each subcontractor. Copies of the records to verify compliance with Article 1109.05, B shall be provided to the Contracting Authority, if requested.

Prior to receiving final payment, the Contractor shall provide to the Engineer the "Certification of Subcontractor Payments" (Form 518002). This form shall include the names of each approved subcontractor, the date of field completion, the date of satisfactory completion of the work, the date of final payment, the number of days between satisfactory completion and final payment, and the date of payment by the Contracting Authority. Explanations for any final payments made after the 30 calendar day period following field completion shall be included with Form 518002.

Failure to comply with Article 1109.05, B may result in price adjustment credits, loss of Annual Good Faith Effort points, or suspension of bidding qualification in accord with Article 1102.03, A, 2.

1109.06 PAYMENT OF RETAINED FUNDS. Retained funds may be released by one of two methods. On contracts where the progress and final payment vouchers are paid by the Department the retainage will be released according to Paragraph A. On all other contracts the retainage may be released by either Paragraph A or Paragraph B below.

A. Retainage Release. When 95% of the original contract amount has been completed to the satisfaction of the Engineer, and it is apparent that conditions beyond the control of the Contractor will delay completion of the contract for more than 60 calendar days, the Contractor may request payment of retained funds. If the Contracting Authority agrees, payment of the retained funds will be made no sooner than 30 calendar days after approval.

B. Supplemental Contract.

1. When 95% of the work has been performed to the satisfaction of the Engineer, includingconsideration of the contract period, and it is apparent that conditions beyond the control of the Contractor will delay the completion of the contract for more than 60 calendar days, the Contractor may request a supplemental contract for the uncompleted portion of work on the same terms as those of the original contract. If the Contracting Authority agrees, and the surety for the Contractor consents to the extension of the bond for the time required to complete the supplemental contract, the supplemental contract will be issued. After the contract has been entered into, full payment will be made for the work completed except under circumstances which would prejudice the rights of those who have filed claims pursuant to Chapter 573, Code of Iowa.

2. The unpaid moneys held by the Contracting Authority as a retainer of the original contract price will be due and payable to the Contractor 30 calendar days after the date of the Contracting Authority's approval of the supplemental contract, except as provided for the release and adjudication of claims in Article 1109.05.

1109.07 CERTIFIED STATEMENT OF SALES TAX AND USE TAX PAID. Contractors and approved subcontractors will be provided a Sales Tax Exemption Certification to purchase building materials, supplies, or equipment in the performance of construction contracts let by the Department.

1109.08 RESERVED.

1109.09 FINAL ACCEPTANCE AND PAYMENT.

A. Final acceptance is a written acceptance by the Contracting Authority. The Contracting Authority will make final acceptance promptly upon the satisfactory completion of the work. Final payment will be made as soon as possible following the expiration of statutory time for filing claims, or following adjudication or release of claims against the amount withheld.

B. On all Interstate and Primary System contracts, interest shall be paid in accordance with IAC Chapter 27 and Chapter 573.12, Code of Iowa. Interest shall begin to accrue on retained funds on the date of the first progress payment until the date final payment is issued. Interest shall be paid on retained funds only if the accrued interest on those funds is greater than $25. The interest payment will be issued by a separate warrant within 2 weeks after issuance of final payment. Interest will cease to accrue on retained funds if: After 90 calendar days following contract acceptance if the Contractor has failed to submit to

the Contracting Authority documentation necessary for final payment or, Upon payment of retained funds by a retention release voucher.

C. On county or city administered contracts, failure to make final payment within 50 calendar days after final acceptance of the work, and if all requirements of the contract are complete, will cause interest to accrue and additional payment to be made in accordance with provision of Chapter 573, Code of Iowa.

Certification of Subcontractor Payments

Article 1109.05.E. requires:

"The Contractor shall maintain a system for tracking the status of subcontractor work and payments. The Contractor

shall retain records that document the date of field completion, date of satisfactory completion of the work and the

date of final payment (including funds retained in accordance with Article 1109.05, B, 2) to each subcontractor.

Copies of the records to verify compliance with Article 1109.05, B shall be provided to the Contracting Authority, if

requested.

Prior to receiving final payment, the Contractor shall provide to the Engineer the "Certification of Subcontractor

Payments" (Form 518002). This form shall include the names of each approved subcontractor, the date of field

completion, the date of satisfactory completion of the work, the date of final payment, the number of days between

satisfactory completion and final payment, and the date of payment by the Contracting Authority. Explanations for any

final payments made after the 30 calendar day period following field completion shall be included with Form 518002.

Failure to comply with Article 1109.05, B may result in price adjustment credits, loss of Annual Good Faith Effort

points, or suspension of bidding qualification in accord with Article 1102.03, A, 2."

Form 518002, which must be completed and submitted by the Contractor prior to receiving final

payment, is available as a Word document.

Column (c) is the date the contracting authority made final payment to the prime contractor for the

subcontractor's work. This payment excludes retainage held by the contracting authority on the

prime contract in accordance with Article 1109.05,C,1.

The “Certification of Subcontractor Payments” form is not required when there are no

subcontractors approved for a contract.

Form 518002

SECTION 109 MEASUREMENT AND PAYMENT

79

from the date of issuance of the monthly payment (check) covering the estimate for which the payment of materials was made by the State will result in the deletion of the payment from the next estimate following the expiration of said 30-day period.

5. As stockpiled materials are incorporated into the work, proportional deductions will be made in the monthly estimate for such partial payments.

6. Partial payment for materials on hand will not constitute acceptance and any faulty material will be rejected even though previous payment may have been made. The Contractor shall be solely responsible for furnishing and incorporating acceptable materials into the work and for any loss or damage regardless of the cause, for any material on which partial payment is made.

7. Transportation charges for delivery of eligible materials to the approved storage site may be included in partial payments for stockpiled materials if properly documented. Such charges may be included in the materials invoice or handled as a separate invoice, whichever is appropriate.

The estimate, less any payments previously made, will be certified by the Director for payment provided progress and quality of work is satisfactory and in conformity with Subarticle 108.04(b).

No monthly payment will be required to be made when the amount due on the project is less than $2,500. A statement of any sum due the State or County for equipment, labor, or supplies furnished under the provisions of these Specifications will be furnished along with the estimate and the amount of same will be deducted from the estimate before payment is made by the State.

The payment of any monthly estimate for any portion of the work as provided in the Specifications shall in no way affect the obligation of the Contractor to complete the work in accordance with the contract

109.08 Payments to Subcontractors.Retainage shall not be withheld from payments owed to subcontractors or lower tier

subcontractors. The Prime Contractor shall make payment to all subcontractors, for the portion of the work

satisfactorily performed by the subcontractors, within 7 calendar days, not counting Saturdays and Sundays, of the Contractor's receipt of a partial payment from the ALDOT.

The Prime Contractor shall submit to the Project Manager a notarized certification of payment signed by an authorized company representative, for each estimate period. This certification shall read "Company's Name paid all subcontractors active on the project for Estimate Period No. within 7 calendar days, not counting Saturdays and Sundays, of the receipt of the partial payment covering said estimate period." The certification shall be submitted within sixty calendar days of the close of the estimate period for which it applies. Failure to furnish the certification in a timely manner may result in the withholding of further monthly payments or other punitive action until the delinquent certifications have been submitted. Should an ALDOT audit reveal that the Contractor did not make payments as stated in the certification, ALDOT will take punitive action against the Contractor. This action may include disqualification from bidding for a minimum period of six months.

109.09 Payment for Work.Payment for work will be made by the State by warrants drawn against State funds that are legally

available for such work.All monies payable under the contract, or any part thereof, will be paid to the Contractor in

accordance with the provisions of these specifications, and no assignment or order executed by the Contractor directing payment of any portion or all of such funds to any other person or persons will be recognized by the State unless such assignment or order specifies the amount to be so paid and the purposes for which the assignment or order is given. Such assignment or order shall have attached thereto, by endorsement or otherwise, the consent of the surety. No such assignment or order will be binding on the State.

109.10 Disputed Claims for Extra Compensation.Claims shall be handled as provided in Section 110, Claims.

109.11 Time Limit for Final Adjustment.It is understood that the Director will not be bound to consider applications for correction of

estimates and payments, including assessed liquidated damages, after the Contractor has signed his final estimate, or after 30 days from the date when the final estimate is submitted to the Contractor for his signature or approval, unless in the latter case the Contractor submits written request within the 30-day period for adjustment of estimates and payment, including assessed liquidated damages.

2004 Specifications

SPECIAL PROVISION 009---009

Measurement and Payment

For this project, Item 009, “Measurement and Payment,” of the Standard Specifications, is hereby amended with respect to the clauses cited below, and no other clauses or requirements of this Item are waived or changed hereby.

Article 9.6. Progress Payments, Section A, Retainage is voided and replaced by the following:

A. Retainage. Retainage will not be withheld on this project.

Article 9.6. Progress Payments, Section B, Payment Provisions for Subcontractors is voided and replaced by the following:

B. Payment Provisions for Subcontractors. For the purposes of this Article only, the term subcontractor includes suppliers and the term work includes materials provided by suppliers at a location approved by the department. Pay the subcontractors for work performed within 10 days after receiving payment for the work performed by the subcontractor. Also, pay any retainage on a subcontractor’s work within 10 days after satisfactory completion of all of the subcontractor’s work. Completed subcontractor work includes vegetative establishment, test, maintenance, performance, and other similar periods that are the responsibility of the subcontractor.

For the purpose of this Section, satisfactory completion is accomplished when:

• the subcontractor has fulfilled the Contract requirements of both the Department and the subcontract for the subcontracted work, including the submittal of all information required by the specifications and the Department; and

• the work done by the subcontractor has been inspected, approved, and paid by the Department.

The inspection and approval of a subcontractor’s work does not eliminate the Contractor’s responsibilities for all the work as defined in Article 7.14, “Contractor’s Responsibility for Work.”

The Department may pursue actions against the Contractor, including withholding of estimates and suspending the work, for noncompliance with the subcontract requirements of this Section upon receipt of written notice with sufficient details showing the subcontractor has complied with contractual obligations as described in this Article.

These requirements apply to all tiers of subcontractors. Incorporate the provisions of this Article into all subcontract or material purchase agreements.

1-1 009---009 04-06

9.7 to 9.7

72

B. Payment Provisions for Subcontractors. Pay the subcontractor for work performed within 10 days after receiving payment for the work performed by the subcontractor. Also, pay any retainage on a subcontractor’s work within 10 days after satisfactory completion of all of the subcontractor’s work. Completed subcontractor work includes vegetative establishment, test, maintenance, performance, and other similar periods that are the responsibility of the subcontractor. For the purpose of this Section, satisfactory completion is accomplished when: the subcontractor has fulfilled the Contract requirements of both

the Department and the subcontract for the subcontracted work, including the submittal of all information required by the specifications and the Department; and

the work done by the subcontractor has been inspected and approved by the Department and the final quantities of the subcontractor’s work have been determined and agreed upon.

The inspection and approval of a subcontractor’s work does not eliminate the Contractor’s responsibilities for all the work as defined in Article 7.14, “Contractor’s Responsibility for Work.” The Department may pursue actions against the Contractor, including withholding of estimates and suspending the work, for noncompliance with the subcontract requirements of this Section upon receipt of written notice with sufficient details showing the subcontractor has complied with contractual obligations as described in this Article. These requirements apply to all tiers of subcontractors. Incorporate the provisions of this Article into all subcontract agreements.

9.7. Payment for Material on Hand (MOH). If payment for MOH is desired, request compensation for the invoice cost of acceptable nonperishable materials that have not been used in the work before the request, and that have been delivered to the work location or are in acceptable storage places. Nonperishable materials are those that do not have a shelf life or whose characteristics do not materially change when exposed to the elements. Include only materials that have been sampled, tested, approved, or certified, and are ready for incorporation into the work. Only materials which are completely constructed or fabricated on the Contractor’s order for a specific Contract and are so marked and on which an approved test report has been issued are eligible. Payment for MOH may include the following types of Items: concrete traffic barrier, precast concrete box culverts, concrete piling, reinforced concrete pipe, and

Form 2177 (Rev. 05/11)Page 1 of 1

In accordance with the requirements of the DBE/SBE special provision and the prompt payment clause under Article 9.6.B and related special provisions, submit this certification form to the Engineer prior to the end of the month following the month payments were received from the department and the month following the month when final acceptance occurred, at the end of the project. (Final submission may be made prior to final acceptance if all subcontractor work and supplier material furnished for the project is complete and the subcontractors and suppliers final payments have been made in full.) The Engineer may withhold payments or suspend work for failure to submit this form or provide prompt payment in accordance with the contract. This certification is applicable to materials the Contractor purchases to remain as part of the final project and to first tier subcontractors on the project and associated project specific locations. (Subcontractors and suppliers are to comply with the prompt payment requirements.)

Certification "I certify that to the best of my knowledge and with the exception of those subcontractors or suppliers listed below, all subcontractors and suppliers have been paid in accordance with the contract (10 days after receiving payment for the work performed by the subcontractor) and that any retainage held on a subcontractor or supplier's work has been released within 10 days after satisfactory completion of all of the subcontractors' or suppliers' work."

Prompt Payment Certification Federal-Aid Projects and Projects with SBE Goals

The following firms have not been paid for reasons listed:

Printed Name:

Signature

YearEstimate Period:

CCSJ:Project Number:

Final Subcontractor and Supplier Payment DateMonth

DateTitle

or

Firm * Reason for Non-Payment

*Only reasons based on dispute on subcontractor or supplier noncompliance may be accepted. This certitication is for the department's information only and does not place any obligations on the part of the department with regard to any part, including but not limited to, any subcontractor and Contractor's surety.

The Texas Department of Transportation maintains the information collected through this form. With few exceptions, you are entitled on request to be informed about the information that we collect about you. Under Sections 552.021 and 552.023 of the Government Code, you also are entitled to receive and review this information. Under Section 559.004 of the Government Code, you are also entitled to have us correct information about you that is incorrect.

SPECIAL EDITION

Overview

Federal regulations and state law require contractors and their subcontractors to pay within 10days of receiving payment. This requirement includes the release of retainage when asubcontractor’s work is complete, even if final acceptance has not occurred. Article 9.6.B of thedepartment’s Standard Specifications and associated special provision states the following:

“For the purposes of this Article only, the term subcontractor includes suppliers andthe term work includes materials provided by suppliers at a location approved by thedepartment. Pay the subcontractor for work performed within 10 days after receivingpayment for the work performed by the subcontractor. Also, pay any retainage on asubcontractor’s work within 10 days after satisfactory completion of all of thesubcontractor’s work. Completed subcontractor work includes vegetativeestablishment, test, maintenance, performance, and other similar periods that are theresponsibility of the subcontractor.

For the purpose of this Section, satisfactory completion is accomplished when:

� the subcontractor has fulfilled the contract requirements of both the departmentand the subcontract for the subcontracted work, including the submittal of allinformation required by the specifications and the department; and

� the work done by the subcontractor has been inspected and approved by thedepartment and the final quantities of the subcontractor’s work have beendetermined and agreed upon.

The inspection and approval of a subcontractor’s work does not eliminate theContractor’s responsibilities for all the work as defined in Article 7.14, “Contractor’sResponsibility for Work.”

The Department may pursue actions against the Contractor, including withholding ofestimates and suspending the work, for noncompliance with the subcontractrequirements of this Section upon receipt of written notice with sufficient detailsshowing the subcontractor has complied with contractual obligations as described inthis Article.

These requirements apply to all tiers of subcontractors. Incorporate the provisions ofthis Article into all subcontract agreements.”

The DBE special provision now includes a requirement for certification of payment to allsubcontractors and suppliers, not just DBEs. Obtain these certifications from the primecontractor, monthly, following the month payment was made by the department. If no work isperformed and no payment is issued by the department, submission of the form is not required.

Published Quarterly

by the Construction

and Bridge Divisions

SPECIAL EDITION

2006Subcontractor

Prompt Payment________________Overview

1

Procedures2

ContactInformation

3

T E X A S D E P A R T M E N T O F T R A N S P O R T A T I O N

Procedures

Form 2177, Prompt Payment CertificationPrime contractors must submit Form 2177, Prompt Payment Certification, to the Area Engineer. This form certifies that allsubcontractors and suppliers were paid within 10 days of receiving payment from the department for work performed duringthe previous month and retainage was released for those subcontractors and suppliers whose work is complete. The primecontractor must submit the completed form monthly during the project and the month following final acceptance of the project.In addition, the 10-day prompt payment requirement prevails over contract language between a prime contractor and asubcontractor or supplier. Initiate the following actions for receipt and review of the required certification form:

1. Verify that the form is received by the due date and that any payments withheld are based on a dispute and file theform. (A dispute is a disagreement between the contractor and a first-tier subcontractor regarding payment as itrelates to a contractual issue. In the normal course of business, billing errors occur. Routine billing errors submittedby a subcontractor or supplier will not be considered a dispute until elevated by the contractor, subcontractor orsupplier.)

2. If payment is withheld without a stated dispute or the prime contractor fails to provide the monthly or final certifications,take necessary actions. To begin with, contact the prime contractor to remind them of their contractual obligation.Escalated actions may include suspension of work, withholding all or a portion of an estimate, withholding projectacceptance, default for breach of contract or other actions as deemed appropriate.

Prompt Payment ComplaintsFor prompt payment complaints, require subcontractors to submit complaints in writing. The complaint should identify specificsregarding the subcontract language, items of work in question, and the subcontractor’s attempts to obtain payment from theprime contractor. Do not accept a complaint until the subcontractor provides satisfactory written evidence that they havecontacted the prime contractor and their payment bond surety in an attempt to resolve the issue. If a complaint is accepted,follow the procedures outlined below:

1. Verify the work in question has been approved by the department.a. If the work or materials in question have not been approved by the department, notify the prime contractor and

subcontractor that no prompt payment issue exists. (No further department action necessary related to promptpayment.)

b. If the work was approved, determine if payment was made by the department.i) If payment was not made, make payment to the prime contractor and notify the parties involved of the

resolution. (No further department action necessary related to prompt payment.)ii) If the department paid for the work or materials, go to step 2.

2. Determine if a dispute exists by referring to prompt payment certifications and other supporting information.(Supporting information to aid in the determination of a plausible dispute or resolution of a dispute may includesubcontractor or supplier agreements, invoices, subcontract or supplier agreement revisions [change orders],cancelled checks, identification of billing errors, etc.)a. If it is determined that a dispute exists, advise the subcontractor that they may file against the payment bond surety.

Forward the subcontractor’s letter to the prime contractor with a letter advising them of their responsibility to workwith the subcontractor to resolve the dispute. Provide copies of the prime contractor letter to both thesubcontractor and payment bond surety. (No further department action necessary related to prompt payment.)

b. If it is determined that a dispute does not exist, forward the subcontractor’s letter to the prime contractor with acopy to the payment bond surety. Request payment or justification for non-payment. Set a response deadline.i) If the prime contractor makes payment or provides documentation that substantiates the dispute, forward the

response to the subcontractor and advise that payment was made or a dispute exists. Send a copy of thesubcontractor notice to the payment bond surety. In instances of a dispute, advise that it is the responsibilityof the parties involved to resolve the issue. (No further department action necessary related to promptpayment.)

ii) If the prime contractor has not made payment and does not provide justification of a dispute within thetimeframe specified, initiate the appropriate administrative action. Possible administrative actions include:suspension of work, withholding all or a portion of an estimate, withholding project acceptance, default forbreach of contract or other actions as deemed appropriate.

2

Construction and Materials Tips - Special Edition Subcontractor Prompt Payment

Second tier complaints should be forwarded to and addressed by the prime contractor with a copy of the prime contractor’snotice sent to the payment bond surety.

Ensure that notices associated with prompt payment are received by the prime contractor and subcontractor prior to the 20thcalendar day from the date of the subcontractor's written notice.

Contact Information

If you have any questions regarding this information, please contact the Construction Section at 512/416-2532.

3

Construction and Materials Tips - Special Edition Subcontractor Prompt Payment

109.10 MEASURE:tv!ENTS AND PAYMENT

• Loss of profit; • Labor inefficiencies based on published manuals of productivity, measurement,

and inefficiencies; • Home office overhead in excess of that provided in tile Contract; • Consequential damages, including, but not limited to, loss of bonding capacity,

loss of bidding opportunities. and insolvency; • Indil·ect costs or expenses of any nature; and • Attorney's fees, dailns preparation expenses, or costs of litigation.

109.11 PAYMENT TO SUBCONTRACTORS The Code of Federal Regulations requil·es that Contractors pay subcontractors,

suppliers, and vendors promptly for work perfonned or materials provided, and release retainage promptly after the subcontractor, supplier, or vendor completes the work or provides materials certifications. The Department has established that, when criteria for payments are met, 30 calendar days is a reasonable time to make payment or release retainage, and requil·es that payment be made withil1 that tilne. The 30 calendar day period for subcontracted work or materials and services provided will commence on the date the Contractor receives payment from the Department for the work. If tl1e Contractor holds retainage for subcontracted work or materials/services provided, the 30 calendar day period shall commence on the date tl1at the Resident Engineer detennil1es tl1at the subcontracted unit or pottion of the Contract has been completed in accordance with Subsection I 05.17, "Project Completion and Acceptance," or the project is deemed complete by the Depattment. Services provided to a Contractor for suppot1 of constmction operations or as deemed necessary by the Contractor for upkeep of machll1e1y or facilities used dll·ectly or indil·ectly for constmction operations shall be paid withll1 30 calendar days of the last service provided. If payment is not made for work, material or services, or if retail1age is not released witlllil the requil·ed 30 calendar day period, the subcontractor will be entitled to make a f01mal written complail1t to the Department detailil1g the amotmts and date due, and the work perfonned or material provided. The Depattment will thenillStitute a fonnalillVestigation and, if wananted, conduct a formal hearing. Upon a fmding that the Contractor failed to perfonn ill accordance with the terms of the Contract requirements, the Depattment may ilnpose sanctions as provided ill Subsection 102.04, "Refusal of Proposals," Subsection 102.14, "Rejection of Proposal," or both.

A subcontractor may initiate a request for a detetmination that a subcontracted unit or pmtion of the Contract has been completed by makillg a written request for such detennil1ation to the Resident Engil1eer, with a copy to the Contractor, as provided ill Subsection 105.17, "Project Completion and Acceptance." At the time the written request is made, the subcontractor shall have submitted to the Resident Engineer required documentationil1cludll1g material cet1ifications, payrolls, and other such documents as may be requil·ed to audit the completed work. If the Resident Engineer, upon inspection, finds that a tmit or portion of the Contract has been satisfactorily completed, the Resident Engil1eer will report the fully audited fmal quantities to the Contractor and the subcontractor. Upon receipt from tl1e Resident Engil1eer of a detennil1ation that the subcontracted work is deemed complete, the audited final quantities and payment for those quantities, the Contractor shall release any retaillage held witl1in 30 calendar days. However, if tile Contractor or Subcontractor workil1g under the dil·ection of the Contractor damages the work, the Contractor shall repail· or replace the damaged work at

102

MEASUREMENTS AND PAYMENT 109.11

no additional cost to the Depattment to the satisfaction of the Contract requirements and the Resident Engineer.

Failure of the Contractor to complete Contract work within the designated Contract Time or accumulation by the Contractor of deductions due to producing non-specification work may result in the assessment of negative progressive estimates representing the Deprutment's ovetpayment to the Contractor for a given Contract period. The assessment of negative progressive estimates does not relieve the Contractor of the requirements for prompt payment of subcontractors and for timely release of retainage. However, if the subcontractor's work is directly responsible for the liquidated damage or non-specification work deduction, such deduction may be assessed against that subcontractor. Amounts thereafter due to the subcontractor will be the balance owed for the work less the imposed deductions.

Payment disputes between the Contractor and subcontractors relating to allocation of chargeable Contract Time and any resultant Liquidated Damages, quantity or quality of items of work subject to a subcontract or other agreement shall be refened to a neutral altemative dispute resolution fonun for heruing and decision with the costs for such mediation or arbitration to be shared equally by the pruties. Ftmding for mediation of payment disputes involving Disadvantaged Business Enterprises is available from the Deprutment through the DBE Supp01tive Service Program. Such services are reimbursed by the Federal Highway Administration and are authorized by 23 CFR § 230, Subpa1t B. The Contractor shall include a clause in any subcontract notifying the subcontractor of their right to resolution of payment disputes through altemative dispute resolution mechanisms.

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109 - MEASUREMENT AND PAYMENT

from progress payments liquidated damages, reimbursement for remedial work under subsection 105.5f., excess costs for breach of contract, final cleanup work expenses, and other deducts the Contract Documents specify.

b. Contract Proceeds. Obtain the Engineer’s and Surety’s written consent to assign contract proceeds to

creditors.

c. Payment for Contract Bond. If requested and upon receiving an invoice, KDOT will make payment for the premium amount of the Contract Bond. The payment will be made with the following conditions:

The premium shall be greater than $1,500; The invoice shall list the premium for each project when the invoice includes multiple projects; Payment will be shown as "Contract Bond" on intermediate payments; and When the Contractor has earned 50% of the "Original Contract Amount", the Engineer will remove the

payment for "Contract Bond" from future progress payments. Note: The Percent of Original Contract Amount = the amount earned by the Contractor* divided by the total dollar value of the original contract (all bid items). *Do not include monies earned for "Contract Bond", "Mobilization", "Traffic Control (Lump Sum)", "Contractor Construction Staking" and "Stored Materials".

109.6 PAYMENTS TO SUBCONTRACTORS & SUPPLIERS a. Definitions. For purposes of subsections 109.6 and 109.7, use the following definitions:

"subcontract" means a contract for supplies, materials, services, or a combination thereof between a Contractor and a subcontractor; and

"subcontractor" means an entity that provides the Contractor supplies, materials, services, or a combination thereof to complete the contract.

b. Progress Payments.

(1) Within 10 calendar days after receiving payment from the Secretary for approved, subcontract work, pay subcontractors for their work. (2) Within 15 calendar days after receiving payment from the Secretary, submit to the Engineer a "Certificate for Subcontract Work and Payment", KDOT Form No. 1010, containing the following representations:

"I certify that the Contractor received payment from the Secretary on _(date)__ and, within 10 calendar days after this date, paid the subcontractors named below for the work those subcontractors completed on or before the payment voucher’s "Paid To Date"." [Signed by Contractor’s representative].

Note: More than 1 subcontractor may be shown on KDOT Form No. 1010. c. Retainage. (1) Bonded Subcontractors. Withhold no retainage from bonded subcontractors. (2) Unbonded Subcontractors. Withhold from unbonded subcontractors the percentage of retainage, if any,

the Contractor feels is necessary to protect itself. Withhold this retainage until the unbonded subcontractor has completed all its subcontract work and has provided an affidavit that the subcontractor has paid all indebtedness for supplies, materials, and labor used in performing its subcontract work. The unbonded subcontract work is considered completed when KDOT pays the Contractor 100% of the items subcontracted. After the unbonded subcontractor has provided this affidavit, pay all retainage owed within the next 5 business days.

(3) No subcontract provision shall permit the Contractor to delay subcontractors’ retainage payments until the project’s final acceptance or final payment.

d. Good Cause Exception. If the Contractor has "good cause" to withhold a subcontractor’s progress payment (bonded or unbonded subcontractors) or retainage (unbonded subcontractors), identify the cause for withheld payment, the payment amount, and the anticipated payment date, writing this information on the "Certificate for Subcontract Work and Payment", KDOT Form No. 1010. If the Engineer determines the Contractor has "good cause" for a withheld payment, the Engineer will not impose sanctions on the Contractor. A Contractor’s lack of funds to pay is not "good cause" for withheld payment.

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109 - MEASUREMENT AND PAYMENT

109.7 SANCTIONS FOR FAILURE TO PAY PROMPTLY a. If a Contractor fails to comply with the payment requirements of subsection 109.6 without good cause, pay an interest penalty to the affected subcontractor. Compute the interest penalty at the rate of 1.5% per month on the amount of money owed the subcontractor. The interest assessment will begin on the day after payment is due under subsection 109.6 and will continue until the Contractor has paid the amount of money owed the subcontractor. b. If a Contractor fails to comply with the certification requirements of subsection 109.6, the Secretary may impose liquidated damages of $50.00 per calendar day per subcontractor for each day certification is late.

c. If a Contractor submits a certification stating payment has been made but knowing payment has not been made as subsection 109.6 requires (false certification), the Secretary may impose liquidated damages of $50.00 per calendar day per subcontractor for each day the certification remains false. d. If a Contractor fails to comply with the payment requirements without good cause, submits a false certification, or repeatedly fails to comply with the certification requirements of subsection 109.6b., the Secretary may adjust a Contractor’s qualification rating, declare the Contractor is not a responsible Contractor, suspend a Contractor from bidding, or debar a Contractor from bidding. e. For each violation of subsection 109.6, a Contractor may receive one or more of the sanctions provided. 109.8 PROVISION FOR LOWER-TIER SUBCONTRACTORS

a. Definitions. Lower-tier subcontract means a contract for supplies, materials, service, or a combination thereof

between a subcontractor and a party other than the Contractor; and Lower-tier subcontractor means an entity that provides a subcontractor supplies, materials, services, or

a combination thereof to complete a subcontract.

b. Progress Payments. Include in all subcontracts a provision that requires the subcontractor to pay all lower-tier subcontractors within 10 calendar days after the subcontractor receives payment from the Contractor. Include a good cause exception clause to such prompt payment similar to the one contained in subsection 109.6d. c. Retainage. Include in all subcontracts a provision similar to subsection 109.6c. that prohibits the subcontractor from withholding retainage from bonded lower-tier subcontractors and requires the subcontractor to release retainage to all unbonded lower-tier subcontractors. d. Administration. The Contractor is responsible for administering this provision. KDOT will not monitor prompt payments to lower-tier subcontractors. KDOT may investigate payment complaints lower-tier subcontractors make to KDOT. 109.9 FINAL PAYMENT AND CORRECTIONS AFTER FINAL PAYMENT

a. Final Payment. Final payment will reflect the contract amount adjusted by approved contract adjustments (Change Orders) minus all previous payments and deductions. The Secretary will issue final payment after the following events occur:

the Engineer issues Notice of Acceptance of Contract under subsection 105.16b.; the Engineer prepares a final estimate of the value of all work; the Contractor signs the final estimate; the Contractor submits an Affidavit of Contractor, swearing that the Contractor has paid all debt the

contract requires; the Surety executes a Release of Final Estimate; and the Bureau of Construction and Maintenance reviews the final paperwork, including the signed final

estimate.

100 - 77

07-01017-R03 Sheet 2 of 2

Page 100-76, delete subsection 109.6b. and replace with the following:

b. Progress Payments. (1) Prior to the first progress payment, submit to the Engineer bid item price sheets for 1st tier

subcontractors and a copy of material purchase orders for 1st tier material suppliers. This information is needed for the Engineer to verify proper payment.

(2) Within 10 calendar days after receiving payment from the Secretary for approved, subcontract work, pay subcontractors for their work. (3) Within 15 calendar days after receiving payment from the Secretary, submit to the Engineer a "Certificate for Subcontract Work and Payment", KDOT Form No. 1010, containing the following representations:

"I certify that the Contractor received payment from the Secretary on _(date)__ and, within 10 calendar days after this date, paid the subcontractors named below for the work those subcontractors completed on or before the payment voucher’s "Paid To Date"." [Signed by Contractor’s representative].

Note: More than 1 subcontractor may be shown on KDOT Form No. 1010.

08-12-11 C&M Nov-11 Letting

Montana Supplemental Specifications Continued

- 31 -

109.06.1 BILLING CYCLE Page 74 10-8-09

Add the following subsection:

109.06.1 BILLING CYCLE In accordance with §28-2-2115, MCA, this contract provides that the Department will submit payment estimates in billing cycles other than once a month, when deemed necessary. Do not submit a request for routine payment and requests for payment of any item does not initiate any period for payment. Requests may be submitted for stockpiled material payments in accordance with 109.07.

In accordance with federal regulations, the Project Manager will issue estimates, usually monthly, for progress payments greater than $500 based on the documentation of approved work and the Project Manager�s opinion of the percentage of completion, in accordance with specifications, of each of the project�s �Schedule of Items�. The Department will review work performed for completeness, specification compliance, and quality assurance before it is given conditional approval for progress payment. Should work that was previously paid for any reason, such as stockpiled material under 109.07, be later found not to comply with quality assurance or specification, such as compliance testing or any required material certification, that part of the work will be deleted from payment approval. In such case, future monthly estimates will be lessened by the reduced amount, or the Contractor will be required to repay the previously-paid amounts until the work is performed in full compliance with specification and quality assurance.

Notice of extended payment provision: this contract allows the Department to make payment within thirty (30) days after submission of estimates by the Project Manager. The contract�s final payment will not be made until:

� The Contractor has fully completed all work under the contract; � All required documentation has been submitted to the Department�s satisfaction; and � The materials supplied and work performed has passed the Department�s quality assurance testing. Pay all subcontractors within seven days after receipt of a periodic or final payment from the Department, for

the full amount due the subcontractor under the subcontract for work performed or materials provided that were included in the periodic or final payment according to the provisions of §28-2-2103(2)(a), MCA. A subcontract may not provide for a time longer than the law�s mandated seven days. 109.07 PAYMENT FOR MATERIAL ON HAND Page 74 5-24-12

Rescind Subsection 109.07 and replace with the following:

109.07 STOCKPILED MATERIALS Materials delivered and stockpiled at the project site or other location approved by the Project Manager may

be considered for partial payment, if the following requirements are met: 1. The requirements of Subsection 108.03 have been satisfied. 2. The material meets the contract requirements. 3. The material is a manufactured end product or a fully fabricated product. Aggregate must be produced and

stockpiled to the final stage for incorporation into the specified mixture or the roadway. Riprap meeting the gradations specified in Table 701-19 for the class specified in the plans is considered a manufactured end product for this Subsection.

4. Material is stored to prevent damage and theft, without obstructing or impeding the traveling public. MDT Inspectors have access to the inventory sheets and the stockpiles at all times.

5. A written request is accompanied with an invoice(s) for all items received at least one week before the end of the monthly estimate cycle. Include the quantity for which payment is requested, the length of time the material is to be stored, the location for material stored off the project site, and sufficient detail to justify the costs. If the material is manufactured by the prime contractor, include the manufacturing costs in the request.

Submit a new request and invoice(s) to the Project Manager whenever items are added to the stockpile. Clearly identify the project number, location, designation and the entire inventory on these sheets. Keep each project�s stockpiled material separated from stockpiles belonging to other projects. Only use stockpiled material for the designated project. Steel or Iron items meeting Subsection 106.09 may be stored at property owned or leased by the Contractor

or approved Subcontractor if approved by the Project Manager. The property must be located in Montana and accessible to Department personnel at all times.

Payment made for material on hand does not constitute acceptance of the material. If stored material is lost, stolen, or damaged, the material�s value will be deducted from the subsequent

estimate or estimates. Payment of partial estimates for stored material, acceptance of the materials to be stored, or approval of the

storage method does not relieve the Contractor's responsibility for all materials and work upon which payments have

28-2-2103. Payment to contractor and subcontractor. (1) (a) Except as provided in 28-2-2115, each construction contract governed by this section must define, within the contract, a monthly billing cycle for the contractor to submit monthly progress payment requests and final payment requests to the owner. The contractor shall submit payment requests to the owner. Payment requests must be based upon actual or estimated work performed and materials supplied during the preceding monthly billing cycle. This requirement does not preclude an owner from mutually agreeing with the contractor to prepay for materials. The owner is considered to have received a payment request when the payment request is submitted to any person designated by the owner in the contract to receive the payment request. (b) Except as provided in 28-2-2115, a contractor's request for payment is considered approved by the owner 21 days after receipt of the request by the owner or the person designated in the contract by the owner to receive the payment request unless, prior to that time, the owner provides the contractor with a written statement containing specific items in the request for payment that are being disapproved by the owner. (c) The owner may disapprove the request for payment or a portion of the request based upon a claim of: (i) unsatisfactory job progress; (ii) failure to remedy defective construction work or materials; (iii) disputed work or materials; (iv) failure to comply with material provisions of the construction contract or accompanying documents, including but not limited to payroll certifications, lien releases, warranties, material certifications, and test data; (v) failure of a contractor to make timely payment for claims, including but not limited to claims for labor, equipment, materials, subcontracts, taxes, fees, professional services, rent, and royalties; (vi) damage to the owner; or (vii) the existence of reasonable evidence that the construction contract cannot be completed for the unpaid balance of the contract sum. (d) An owner may withhold from a payment only an amount that is sufficient to pay the direct expenses that the owner may reasonably expect will be necessary to correct any claim based on the items set out in subsection (1)(c). (e) A written statement by an owner must be furnished to the contractor specifying a condition that is listed in subsection (1)(c) for which approval of the request for payment or a portion of the request for payment is being withheld. If an owner disapproves only a portion of a request for payment, the remainder of the request for payment must be considered approved. (f) Except as provided in 28-2-2115, if an owner approves all or a portion of a contractor's request for payment as provided in subsection (1)(b), the owner shall pay the contractor the approved amount within 7 days after the contractor's request for payment is approved. (g) Upon written request of a subcontractor who has not been paid for work in accordance

with the provisions of subsection (2), an owner shall notify the subcontractor of a progress payment or final payment made to the general contractor. (h) Payment is not required under this subsection (1) unless the contractor provides the owner with a billing statement or estimate for the work performed or the material supplied in accordance with the terms of the contract. (2) (a) Within 7 days after a contractor receives a periodic or final payment from an owner or a state agency, the contractor shall pay the subcontractor, if any, the full amount due the subcontractor in accordance with the subcontract for work performed or materials provided in accordance with that subcontract. (b) Payment is not required under this subsection (2) unless the subcontractor provides the contractor a billing statement or invoice for work performed or materials supplied pursuant to the terms of the subcontract. (c) Prior to submitting a monthly or final pay application to the owner, the general contractor may disapprove the subcontractor's request for payment or a portion of the request based upon a written claim of any of the conditions listed in subsection (1)(c). (3) (a) Within 7 days after a subcontractor receives a periodic or final payment from a contractor, the subcontractor shall pay another subcontractor, if any, the full amount due the subcontractor under the subcontract for work performed or materials provided in accordance with that subcontract. (b) Payment is not required under this subsection (3) unless the subcontractor provides the contractor a billing statement or invoice for work performed or materials supplied pursuant to the terms of the subcontract.

History: En. Sec. 5, Ch. 470, L. 1999; amd. Sec. 2, Ch. 274, L. 2003

Montana Supplemental Specifications Continued

- 24 -

108.01.2 CONTRACT PERFORMANCE Page 57 2-23-12

Rescind Subsection 108.01.2 and replace with the following:

108.01.2 Contract Performance Perform at least 40 percent of the original contract cost with the Contractor's organization. The price of items

designated in the contract as "Specialty Items" will be subtracted from the original contract price before the amount required to be performed by the Contractor is calculated.

Where an entire item is subcontracted, the percentage of the work subcontracted is based on the original contract item unit price. When a portion of an item is subcontracted, the percentage of the work subcontracted will be based on either the subcontract item unit price or on an estimated percentage of the contract item unit price, determined by the Construction Administration Services Engineer. An item will not be considered partially subcontracted unless the prime contractor performs a portion of the work (equipment, materials or labor). If the same item is subcontracted at multiple levels, the cost is only accounted for at the first level. When an item added by change order is subcontracted, the cost of the item does not count towards the required contract performance in Subsection 108.01.1.

Do not allow a Subcontractor at any contract tier to start work until its subcontract is consented to by the Construction Administration Services Engineer. Include one executed and certified copy of the subcontract, a letter from the surety consenting to the subcontract, and the Subcontractor�s Checklist, which includes a statement that the subcontractor has a current special fuel users permit issued under 15-70-302 MCA if required. If the subcontractor does not use special fuel, include a letter stating that the �subcontractor does not use special fuel� with the subcontracts.

Inform the Subcontractor of all the contract provisions, and that the Subcontractor is bound by all terms of the prime�s contract with the Department. Provide the Subcontractor a copy of all the contract provisions including the applicable prevailing wage rates and FHWA 1273. Include in the subcontract the following language:

"The Subcontractor agrees to comply with all of the labor provisions contained in the attached Special Required Contract Provisions and Davis Bacon Wage Decision."

All subcontractors are agents of the Contractor. The Contractor is responsible for all work, material

furnished, project documentation provided by, and indebtedness incurred by its subcontractors. Written consent to subcontract, assign or transfer the contract does not release the Contractor from liability

under the contract and bond. 108.01.3 SUBCONTRACTOR PAYMENTS Page 57 4-8-10

Add the following Subsection:

Submit payment information for all Subcontractors to the Civil Rights Bureau within 30 calendar days of the payment. This information can be submitted electronically on the Department�s website.

108.03.1 GENERAL (PROSECUTION OF WORK) Page 58 9-23-10

Delete the fourth sentence of the third paragraph (that begins with �A pre-construction conference ��) and replace with the following sentences: Submit a schedule meeting all requirements of Subsection 108.03.2 or 108.03.3 at or before the pre-construction conference. No other work, except obtaining permits, may begin until the schedule requirements have been met No payments will be made on the contract until the pre-construction conference has been held and the submitted schedule reviewed. 108.03.1 GENERAL (PROSECUTION OF WORK) Page 58 1-31-08

Replace the first sentence in the third paragraph (that begins with �A pre-construction conference ��) and replace with the following:

A pre-construction conference will be held on a mutually agreed date between the Contractor, Department and other parties interested in the work before work within the project limits begins no later than twenty days after the Notice to Proceed date.

c) Jobber/Broker, 100% of the fee of any goods, equipment or services supplied to the project.

d) Contractor/Subcontractor, 100%equipment and/or personnel.

4. Prompt Payment Upon receipt of payment from MDT, the prime contractor shall pay each subcontractor the full amount due in accordance with the subcontract for work satisfactorily performed or materials provided in accordance with that subcontract as provided by 28-2-2103 MCA.

The requirements of the statute, the CFRs, and this Program apply to all subcontractors and suppliers, not merely those that are DBEs. For example, if work performed by any

is required (by CFR, Montana Statute and this DBE Program) to pay the subcontractor

If the prime contractor has a bona fide reason for not making payment to a subcontractor, written documentation must be provided to the Engineering Project Manager (EPM) with their monthly estimate request. If the affected firm is a DBE, a copy must be forwarded to the MDT CRB DBE Program Manager.

If the prime withholds payment from a subcontractor without a bona fide reason as stated in 28-2-2103 MCA, sanctions may be imposed on the prime.

Prime contractors are required to maintain records of payment to DBEs for three years following the completion of the project. These records will be made available for inspection upon request to any authorized representative of MDT or USDOT. Interim audits of contract payments may be performed. The audit may review payments to all subcontractors.

5. Subcontractor payments Per the contract, prime contractors are required to submit all subcontractor payments to the Civil Rights Bureau (CRB) upon payment to the subcontractor. Payments must be reported within 30 days of the payment. These can be remitted by mail, email or by using the following link: http://www.mdt.mt.gov/publications/docs/forms/contracting/contract_payments.pdf .

D. GOOD FAITH EFFORTS When a contract goal has been established, a bidder must, in order to be responsible and/or responsive, make good faith efforts to meet the DBE goal. MDT must decide within 48 hours of

ood Faith Efforts (GFE).

3.2 PROMPT PAYMENT

49 CFR §26.29 requires MDT to establish, as part of our DBE Program, a prompt payment provision, which includes the prompt return of retainage payments.

3.2.1) Progress Payment: The prime contractor shall pay the subcontractor within seven (7) working days of receipt of payment from MDT as provided by 28-2-2103 MCA Upon receipt of payment from MDT, the prime contractor shall pay each subcontractor the full amount due in accordance with the subcontract for work satisfactorily performed or materials provided in accordance with that subcontract.

If the prime contractor has a bona fide reason for not making payment to a subcontractor, written documentation must be provided to the Engineering Project Manager with their monthly estimate request. If the affected firm is a DBE, a copy must be forwarded to the MDT CRB – DBE Program Manager.

The requirements of the statute, the CFRs, and this Program apply to all subcontractors and suppliers, not merely those that are DBEs. For example, if work performed by any subcontractor is included in the Department’s progress payment to the prime, the prime is required (by CFR, Montana Statute and this DBE Program) to pay the subcontractor for that work within seven (7) days of the prime’s receipt of that progress payment.

If the prime withholds payment from a subcontractor without a bona fide reason or without providing prompt written documentation to the Engineering Project Manager, sanctions may be imposed on the prime. If it is determined that the prime is withholding payment without good cause, interest will accrue on the unpaid amount owed to the subcontractor(s). If a prime contractor needs to delay a subcontractor’s payment for a reason that the prime feels is justified; the prime must inform the EPM in writing before delaying the payment. An “approval” of good cause for a delay in payment (which is required by 49 CFR §26.29) affects only the relationship of the prime contractor and MDT, and cannot affect the Montana statute between the prime and the subcontractor or the accrual of interest. The effect of such an approval by MDT is only that the prime contractor is not violating the project’s specifications. If interest accrues on the amount due the subcontractor, the prime is responsible for including that total amount to the subcontractor at the time of payment.

Prime contractors are required to submit monthly records of all subcontractorpayments to the DBE Program Manager. The subcontractor payment report is available online at www.mdt.mt.gov , click on the DBE logo and look for forms.

Prime contractors are required to maintain records of payment to DBEs for three years following the completion of the project. These records will be made available for inspection upon request to any authorized representative of

15

MDT or USDOT. Interim audits of contract payments may be performed. The audit may review payments to all subcontractors. It is the DBE’s responsibility to inform MDT DBE Program Manager of any violation of the prompt payment provisions, and no threats may be made or retaliation may be taken by a prime against a DBE that makes an accurate report of such violations. This provision applies to all tiers of subcontractors.

3.2.2) Retainage: All prime contractors will return retainage payments to subcontractors upon satisfactorily completion of work performed in accordance with MDT and contract specifications. This provision applies to all tiers of subcontracting.

When a subcontractor has satisfactorily completed all work items within their subcontract (e.g., supply and/or install material according to specifications, provide all required payrolls and applicable material certifications, etc.), it is the subcontractor’s responsibility to provide the prime contractor with proof of completion.

Once proof of completion has been received, the prime contractor must provide for the prompt return of retainage to the subcontractor within 30 days of the request. If the prime contractor believes that the subcontract is not satisfactorily completed, the prime contractor must notify the Engineering Project Manager in writing prior to delaying any payment due the subcontractor. If the affected contractor is a DBE, the Project Manager must forward a copy to the MDT CRB – DBE Program Manager. The Engineering Project Manager will resolve disputes over satisfactory completion.

3.3. COMMERCIALLY USEFUL FUNCTION (CUF)

3.3.1) In general, expenditures to a DBE contractor will only be counted towards a DBE goal when it has been determined that the DBE is performing a commercially useful function on the contract.

A DBE performs a commercially useful function when it is responsible for execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved using the DBE’s own work force. To perform a commercially useful function, the DBE must also be responsible, with respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material and installing, and paying for the materials itself. To determine whether a DBE is performing a commercially useful function, MDT will evaluate (Attachment E):

a) The amount of work subcontracted;

b) The resources and work force used by the DBE;

c) Industry practices;

16

MDT Contract Payments Prime:

Contract or Project number Date of Payment Payment made to Amount of payment

Return completed form to:

Montana Department of Transportation DBE Program Manager – Civil Rights PO Box 201001 Helena, MT 59620-1001

RS 9:2784

§2784. Late payment by contractors to subcontractors and suppliers; penalties

A. When a contractor receives any payment from the owner for improvements to an immovable after the issuance of a certificate of payment by the architect or engineer, or when a contractor receives any payment from the owner for improvements to an immovable when no architect or engineer is on the job, the contractor shall promptly pay such monies received to each subcontractor and supplier in proportion to the percentage of work completed prior to the issuance of the certificate of payment by such subcontractor and supplier, or by the owner if no architect or engineer is on the job. Further, whenever a subcontractor receives payment from the contractor, the subcontractor shall promptly pay such monies received to each sub-subcontractor and supplier in proportion to the work completed.

B. If for any reason the contractor receives less than the full payment from the owner, then the contractor shall be obligated to disperse only the funds received on a prorated basis with the contractor, subcontractors, and suppliers each receiving a prorated portion based on the amount due on the payment.

C. If the contractor or subcontractor without reasonable cause fails to make any payment to his subcontractors and suppliers within fourteen consecutive days of the receipt of payment from the owner for improvements to an immovable, the contractor or subcontractor shall pay to the subcontractors and suppliers, in addition to the payment, a penalty in the amount of one-half of one percent of the amount due, per day, from the expiration of the period allowed herein for payment after the receipt of payment from the owner. The total penalty shall not exceed fifteen percent of the outstanding balance due. In addition, the contractor or subcontractor shall be liable for reasonable attorney fees for the collection of the payments due the subcontractors and suppliers. However, any claim which the court finds to be without merit shall subject the claimant to all reasonable costs and attorney fees for the defense against such claim.

D. The provisions of this Section shall not be applicable to improvements to an immovable that is used for residential purposes.

Acts 1984, No. 720, §1; Acts 1986, No. 718, §1; Acts 1986, No. 750, §1; Acts 1987, No. 698, §1.

00180.21(d)

79

proposed Subcontractor's ability to perform the Work. If the Agency approves the Contractor's request to subcontract, the Agency will provide its consent to the Contractor's request as follows:

• If the subcontractor is not providing any of the insurance coverages as permitted under 00170.70(a), the Agency will respond within 7 Calendar Days after the Engineer's receipt of the request.

• If the subcontractor is providing any of the insurance coverages as permitted under 00170.70(a), the Agency will respond within 35 Calendar Days after the Engineer's receipt of the request. (28 Calendar Days for the Agency to review and approve the Certificates of Insurance required by 00170.70(f) plus 7 Calendar Days to review and approve the subcontract request.)

(b) Submittal of Requests - The Contractor must submit requests for consent to subcontract any portion of the Contract, at any tier, on the Agency's form, available from the Engineer. The Contractor shall attach a duplicate original subcontract agreement. The Contractor must also submit in writing any amendments or modifications proposed to Agency-approved subcontract agreements, at any tier, before the affected Work begins. The Agency's written consent will be required before such amendments or modifications become effective. (c) Substitution of Disclosed Subcontractors - The Contractor may only substitute a previously undisclosed first-tier Subcontractor according to the provisions of ORS 279C.585. The Contractor shall provide the Engineer with a written notification that identifies the name of the proposed new Subcontractor and the reason for the substitution. Authorized reasons for substitution are limited to the following circumstances (see ORS 279C.585(1) through ORS 279C.585(10)):

• The disclosed Subcontractor fails or refuses to execute a written contract that is reasonably based either upon the Project Plans and Specifications, or the terms of the Subcontractor’s written Bid, after having had a reasonable opportunity to do so;

• The disclosed Subcontractor becomes bankrupt or insolvent; • The disclosed Subcontractor fails or refuses to perform the contract; • The disclosed Subcontractor fails or refuses to meet the bond requirements of the prime

Contractor that had been identified prior to the Bid submittal; • The Contractor demonstrates to the Agency that the Subcontractor was disclosed as the result

of an inadvertent clerical error; • The disclosed Subcontractor does not hold a license from the Construction Contractors Board

and is required to be licensed by the board; • The Contractor determines that the Work performed by the disclosed Subcontractor is not in

substantial compliance with the Plans and Specifications, or that the Subcontractor is substantially delaying or disrupting the progress of the Work;

• The disclosed Subcontractor is ineligible to work on a public improvement according to the applicable statutory provisions;

• The substitution is for "good cause" as defined by State Construction Contractors Board rule; or • The substitution is reasonably based on the Contract alternates chosen by the Agency.

(d) Terms of Subcontracts - Subcontracts shall provide that work performed under the subcontract shall be conducted and performed according to the terms of the Contract. All subcontracts, including Contractor's with the first-tier Subcontractors and those of the first-tier Subcontractors with their subcontractors, and any other lower tier subcontracts shall contain a clause or condition that if the Contractor or a Subcontractor fails, neglects, or refuses to make payment to an Entity furnishing labor or Materials in connection with the Contract, the Entity may file a complaint with the

00180.21(d)

80

Construction Contractors Board, unless payment is subject to a good-faith dispute as defined in ORS 279C.580. Additionally, according to the provisions of ORS 279C.580, subcontracts shall include:

(1) A payment clause that obligates the Contractor to pay the first-tier Subcontractor for satisfactory performance under its subcontract within ten Calendar Days of the Contractor’s receipt of payment from the Agency for the subcontracted Work. (2) An interest clause that obligates the Contractor, if payment is not made within 30 days after receipt of payment from the Agency, to pay to the first-tier Subcontractor interest on amounts due in the case of each payment not made according to the payment clause included in the subcontract according to paragraph (1) of this Subsection. A Contractor or first-tier Subcontractor shall not be obligated to pay interest if the only reason that the Contractor or first-tier Subcontractor did not make payment when payment was due is that the Contractor or first-tier Subcontractor did not receive payment from the Agency or Contractor when payment was due. The interest shall be for the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; and shall be computed at the rate specified in 00170.10(c). (3) A provision requiring the first-tier Subcontractor to include a payment clause and an interest clause conforming to the standards of ORS 279C.580 (see 00180.21(d-1) and 00180.21(d-2)) in each of its subcontracts, and to require each of its subcontractors to include such clauses in their subcontracts with each lower-tier subcontractor or Materials supplier. This payment clause shall require the Contractor to return all retainage withheld from the Subcontractor, whether held by the Contractor or the Agency, as specified in 00195.50(d).

As required by ORS 279C.800 through 279C.870, subcontracts shall include:

• A provision requiring the subcontractor to have a public works bond filed with the Construction Contractors Board before starting Work on the Project, unless exempt.

• A provision requiring that the workers shall be paid not less than the specified minimum hourly rate of wage.

(e) Contractor's Responsibilities - As a condition of the Agency's grant of consent to subcontract, whether or not stated in the subcontract agreement itself, the Contractor shall remain solely responsible for administration of the subcontract, including but not limited to:

• Performance of subcontracted Work; • Progress of subcontracted Work; • Payments for accepted subcontracted Work; and • Disputes and claims for additional compensation regarding subcontracted Work.

The Engineer's consent to subcontract will not create a contract between the Agency and the Subcontractor, will not convey to the Subcontractor any rights against the Agency, and will not relieve the Contractor or the Contractor's Surety of any of their responsibilities under the Contract. (f) Failure to Comply - Failure to comply with 00180.21 will be cause for the Engineer to take action reasonably necessary to obtain compliance. This action may include, but is not limited to:

• Suspension of the Work; • Withholding of Contract payments as necessary to protect the Agency; and • Termination of the Contract.

00170.10(b)

63

damages the Contractor or Agency may be obligated to pay as a result of such infringement during or after completing the Work. 00170.05 Assignment of Antitrust Rights - The Contractor irrevocably assigns to the Agency any claim for relief or cause of action the Contractor acquires during the term of the Contract, or which may accrue thereafter, by reason of any violation of:

• Title 15 (Commerce and Trade), United States Code; • ORS 646.725; and • ORS 646.730.

In connection with this assignment, it is an express obligation of the Contractor to take no action that would in any way impair or diminish the value of the rights assigned to the Agency according to the provisions of this Subsection. Further, it is the express obligation of the Contractor to take all action necessary to preserve the rights assigned. It is an express obligation of the Contractor to advise the Agency’s legal counsel:

• In advance, of its intention to commence any action involving such claims for relief or causes of action;

• Immediately upon becoming aware of the fact that an action involving such claims for relief or causes of action has been commenced by some other person or persons;

• The date on which it notified the obligor(s) of any such claims for relief or causes of action of the fact of the Contractor's assignment to the Agency according to the provisions of this Subsection; and

• Immediately upon the discovery of any such antitrust claim for relief or cause of action. In the event any payment is made to the Contractor under any such claims for relief, the Contractor shall promptly pay the full sum over to the Agency. In the event the Contractor fails to make such payment, the Agency may deduct the amount from monies due or to become due the Contractor under the Contract. 00170.10 Required Payments by Contractors - The Contractor shall comply with ORS 279C.505 and ORS 279C.515 during the term of the Contract.

(a) Prompt Payment by Contractor for Labor and Materials - As required by ORS 279C.505, the Contractor shall:

• Make payment promptly, as due, to all Entities supplying labor or Materials under the Contract; • Pay all contributions or amounts due the Industrial Accident Fund, whether from the Contractor

or a Subcontractor, incurred in the performance of the Contract; • Not permit any lien or claim to be filed against the State or any political subdivision thereof, on

account of any labor or Material furnished in performance of the Contract; and • Pay to the Department of Revenue all sums withheld from employees according to

ORS 316.167. (b) Prompt Payment by Contractor to First-Tier Subcontractor(s) - According to ORS 279C.580(3)(a), after the Contractor has determined and certified to the Agency that one or more of its Subcontractors has satisfactorily performed subcontracted Work, the Contractor may request payment from the Agency for the Work, and shall pay the Subcontractor(s) within ten Calendar Days out of such amounts as the Agency has paid to the Contractor for the subcontracted Work.

00170.10(c)

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(c) Interest on Unpaid Amount - If the Contractor or a first-tier Subcontractor fails, neglects, or refuses to make payment to an Entity furnishing labor or Materials in connection with the Contract within 30 days after the Contractor's receipt of payment, the Contractor or first-tier Subcontractor shall owe the Entity the amount due plus interest charges commencing on the date payment was due under ORS 279C.580(3) and ending upon final payment, unless payment is subject to a good-faith dispute as defined in ORS 279C.580(5)(b). As required by ORS 279C.515(2), the rate of interest charged to the Contractor or first-tier Subcontractor on the amount due shall equal three times the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district that includes Oregon on the date that is 30 days after the date when the payment was received from the Agency or from the Contractor. The amount of interest due may not be waived, but the rate of interest shall not exceed 30 percent. (d) Agency’s Payment of the Contractor’s Prompt Payment Obligations - If the Contractor fails, neglects or refuses to make prompt payment of any invoice or other demand for payment for labor or services furnished to the Contractor or a Subcontractor by any Entity in connection with the Contract as such payment becomes due, the Agency may pay the Entity furnishing the labor or services and charge the amount of the payment against monies due or to become due the Contractor under the Contract. (The Agency has no obligation to pay these Entities, and ODOT will not normally do so, but will refer them to the Contractor and the Contractor’s Surety.) The payment of a claim by the Agency in the manner authorized in this Subsection shall not relieve the Contractor or the Contractor’s Surety from obligations with respect to any such claims. (e) Right to Complain to the Construction Contractors Board - If the Contractor or a Subcontractor fails, neglects, or refuses to make payment to an Entity furnishing labor or Materials in connection with the Contract, the Entity may file a complaint with the Construction Contractors Board, unless payment is subject to a good-faith dispute as defined in ORS 279C.580(5)(b). (f) Notice of Claim Against Bond - An Entity (which by definition includes a natural person) claiming not to have been paid in full for labor or Materials supplied for the prosecution of the Work may have a right of action on the Contractor’s Payment Bond as provided in ORS 279C.600 and ORS 279C.605. The Commissioner of the Bureau of Labor and Industries (BOLI) may have a right of action on the Contractor’s and Subcontractors’ public works bonds and Payment Bonds for workers who have not been paid in full, as provided in ORS 279C.600 and ORS 279C.605.

00170.20 Public Works Bond - Before starting Work, the Contractor and subcontractors shall each file with the Construction Contractors Board, and maintain in full force and effect, a separate public works bond, in the amount of $30,000 unless otherwise exempt, as required by ORS 279C.830(3) and ORS 279C.836. The Contractor shall verify subcontractors have filed a public works bond before the subcontractor begins Work. 00170.32 Protection of Navigable Waters - The Contractor shall comply with all applicable Laws, including without limitation the Federal River and Harbor Act of March 3, 1899 and its amendments. The Contractor shall not interfere with waterway navigation or impair navigable depths or clearances, except as U.S. Coast Guard or Corps of Engineer permits allow. 00170.60 Safety, Health, and Sanitation Provisions - The Contractor shall comply with all Laws concerning safety, health, and sanitation standards. The Contractor shall not require workers to perform Work under conditions that are hazardous, dangerous, or unsanitary.

Oregon Revised Statutes (ORS) – 2011 

Chapter 279C — Public Contracting ‐ Public Improvements and Related Contracts    CONSTRUCTION CONTRACTS GENERALLY  (Required Contract Conditions)  279C.505 Conditions concerning payment, contributions, liens, withholding, drug testing.  

(1) Every public improvement contract shall contain a condition that the contractor shall: (a) Make payment promptly, as due, to all persons supplying to the contractor labor or material for the performance of the work provided for in the contract. (b) Pay all contributions or amounts due the Industrial Accident Fund from the contractor or subcontractor incurred in the performance of the contract. (c) Not permit any lien or claim to be filed or prosecuted against the state or a county, school district, municipality, municipal corporation or subdivision thereof, on account of any labor or material furnished. (d) Pay to the Department of Revenue all sums withheld from employees under ORS 316.167. 

(2) In addition to the conditions specified in subsection (1) of this section, every public improvement contract shall contain a condition that the contractor shall demonstrate that an employee drug testing program is in place. [2003 c.794 §138; 2005 c.103 §27] 

 279C.515 Conditions concerning payment of claims by public officers, payment to persons furnishing labor or materials and complaints.   

(1) Every public improvement contract shall contain a clause or condition that, if the contractor fails, neglects or refuses to make prompt payment of any claim for labor or services furnished to the contractor or a subcontractor by any person in connection with the public improvement contract as the claim becomes due, the proper officer or officers representing the state or a county, school district, municipality, municipal corporation or subdivision thereof, as the case may be, may pay such claim to the person furnishing the labor or services and charge the amount of the payment against funds due or to become due the contractor by reason of the contract. (2) Every public improvement contract shall contain a clause or condition that, if the contractor or a first‐tier subcontractor fails, neglects or refuses to make payment to a person furnishing labor or materials in connection with the public improvement contract within 30 days after receipt of payment from the contracting agency or a contractor, the contractor or first‐tier subcontractor shall owe the person the amount due plus interest charges commencing at the end of the 10‐day period that payment is due under ORS 279C.580 (4) and ending upon final payment, unless payment is subject to a good faith dispute as defined in ORS 279C.580. The rate of interest charged to the contractor or first‐tier subcontractor on the amount due shall equal three times the discount rate on 90‐day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district that includes Oregon on the date that is 30 days after the date when payment was received from the contracting agency or from the contractor, but the rate of interest may not exceed 30 percent. The amount of interest may not be waived. (3) Every public improvement contract and every contract related to the public improvement contract shall contain a clause or condition that, if the contractor or a subcontractor fails, neglects or refuses to make payment to a person furnishing labor or materials in connection with the public 

improvement contract, the person may file a complaint with the Construction Contractors Board, unless payment is subject to a good faith dispute as defined in ORS 279C.580. (4) The payment of a claim in the manner authorized in this section does not relieve the contractor or the contractor’s surety from obligation with respect to any unpaid claims. [2003 c.794 §140; 2005 c.103 §28] 

  (Retainage and Payments) 

279C.570 Prompt payment policy; progress payments; retainage; interest; exception; settlement of compensation disputes. 

 (1) It is the policy of the State of Oregon that all payments due on a public improvement contract and owed by a contracting agency shall be paid promptly. No contracting agency is exempt from the provisions of this section. (2) Contracting agencies shall make progress payments on the contract monthly as work progresses on a public improvement contract. Payments shall be based upon estimates of work completed that are approved by the contracting agency. A progress payment is not considered acceptance or approval of any work or waiver of any defects therein. The contracting agency shall pay to the contractor interest on the progress payment, not including retainage, due the contractor. The interest shall commence 30 days after receipt of the invoice from the contractor or 15 days after the payment is approved by the contracting agency, whichever is the earlier date. The rate of interest charged to the contracting agency on the amount due shall equal three times the discount rate on 90‐day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district that includes Oregon on the date that is 30 days after receipt of the invoice from the contractor or 15 days after the payment is approved by the contracting agency, whichever is the earlier date, but the rate of interest may not exceed 30 percent. (3) Interest shall be paid automatically when payments become overdue. The contracting agency shall document, calculate and pay any interest due when payment is made on the principal. Interest payments shall accompany payment of net due on public improvement contracts. The contracting agency may not require the contractor to petition, invoice, bill or wait additional days to receive interest due. (4) When an invoice is filled out incorrectly, when there is any defect or impropriety in any submitted invoice or when there is a good faith dispute, the contracting agency shall so notify the contractor within 15 days stating the reason or reasons the invoice is defective or improper or the reasons for the dispute. A defective or improper invoice, if corrected by the contractor within seven days of being notified by the contracting agency, may not cause a payment to be made later than specified in this section unless interest is also paid. (5) If requested in writing by a first‐tier subcontractor, the contractor, within 10 days after receiving the request, shall send to the first‐tier subcontractor a copy of that portion of any invoice, request for payment submitted to the contracting agency or pay document provided by the contracting agency to the contractor specifically related to any labor or materials supplied by the first‐tier subcontractor. (6) Payment of interest may be postponed when payment on the principal is delayed because of disagreement between the contracting agency and the contractor. Whenever a contractor brings formal administrative or judicial action to collect interest due under this section, the prevailing party is entitled to costs and reasonable attorney fees. (7) A contracting agency may reserve as retainage from any progress payment on a public improvement contract an amount not to exceed five percent of the payment. As work progresses, a contracting agency may reduce the amount of the retainage and the contracting agency may 

eliminate retainage on any remaining monthly contract payments after 50 percent of the work under the contract is completed if, in the contracting agency’s opinion, such work is progressing satisfactorily. Elimination or reduction of retainage shall be allowed only upon written application by the contractor, and the application shall include written approval of the contractor’s surety. However, when the contract work is 97.5 percent completed the contracting agency may, at the contracting agency’s discretion and without application by the contractor, reduce the retained amount to 100 percent of the value of the contract work remaining to be done. Upon receipt of a written application by the contractor, the contracting agency shall respond in writing within a reasonable time. (8) The retainage held by a contracting agency shall be included in and paid to the contractor as part of the final payment of the contract price. The contracting agency shall pay to the contractor interest at the rate of 1.5 percent per month on the final payment due the contractor, interest to commence 30 days after the work under the contract has been completed and accepted and to run until the date when the final payment is tendered to the contractor. The contractor shall notify the contracting agency in writing when the contractor considers the work complete and the contracting agency shall, within 15 days after receiving the written notice, either accept the work or notify the contractor of work yet to be performed on the contract. If the contracting agency does not, within the time allowed, notify the contractor of work yet to be performed to fulfill contractual obligations, the interest provided by this subsection shall commence to run 30 days after the end of the 15‐day period. (9) (a) The contracting agency shall pay, upon settlement or judgment in favor of the  

contractor regarding any dispute as to the compensation due a contractor for work performed under the terms of a public improvement contract, the amount due plus interest at the rate of two times the discount rate, but not to exceed 30 percent, on 90‐day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve district that includes Oregon on the date of the settlement or judgment, and accruing from the later of: 

(A) The due date of any progress payment received under the contract for the period in which such work was performed; or (B) Thirty days after the date on which the claim for the payment under dispute was presented to the contracting agency by the contractor in writing or in accordance with applicable provisions of the contract. 

(b) Interest shall be added to and not made a part of the settlement or judgment. [2003 c.794 §150; 2005 c.103 §33] 

  (Subcontractors)  

279C.580 Contractor’s relations with subcontractors.  (1) A contractor may not request payment from the contracting agency of any amount withheld or retained in accordance with subsection (5) of this section until such time as the contractor has determined and certified to the contracting agency that the subcontractor has determined and certified to the contracting agency that the subcontractor is entitled to the payment of such amount. (2) A dispute between a contractor and first‐tier subcontractor relating to the amount or entitlement of a first‐tier subcontractor to a payment or a late payment interest penalty under a clause included in the subcontract under subsection (3) or (4) of this section does not constitute a dispute to which the contracting agency is a party. The contracting agency may not be included as a party in any administrative or judicial proceeding involving such a dispute. 

(3) Each public improvement contract awarded by a contracting agency shall include a clause that requires the contractor to include in each subcontract for property or services entered into by the contractor and a first‐tier subcontractor, including a material supplier, for the purpose of performing a construction contract: 

(a) A payment clause that obligates the contractor to pay the first‐tier subcontractor for satisfactory performance under its subcontract within 10 days out of such amounts as are paid to the contractor by the contracting agency under the contract; and (b) An interest penalty clause that obligates the contractor, if payment is not made within 30 days after receipt of payment from the contracting agency, to pay to the first‐tier subcontractor an interest penalty on amounts due in the case of each payment not made in accordance with the payment clause included in the subcontract under paragraph (a) of this subsection. A contractor or first‐tier subcontractor may not be obligated to pay an interest penalty if the only reason that the contractor or first‐tier subcontractor did not make payment when payment was due is that the contractor or first‐tier subcontractor did not receive payment from the contracting agency or contractor when payment was due. The interest penalty shall be: 

(A) For the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; and 

  (B) Computed at the rate specified in ORS 279C.515 (2). (4) The contract awarded by the contracting agency shall require the contractor to include in each of the contractor’s subcontracts, for the purpose of performance of such contract condition, a provision requiring the first‐tier subcontractor to include a payment clause and an interest penalty clause conforming to the standards of subsection (3) of this section in each of the first‐tier subcontractor’s subcontracts and to require each of the first‐tier subcontractor’s subcontractors to include such clauses in their subcontracts with each lower‐tier subcontractor or supplier. (5) (a) The clauses required by subsections (3) and (4) of this section are not intended to 

impair the right of a contractor or a subcontractor at any tier to negotiate, and to include in the subcontract, provisions that: 

(A) Permit the contractor or a subcontractor to retain, in the event of a good faith dispute, an amount not to exceed 150 percent of the amount in dispute from the amount due a subcontractor under the subcontract without incurring any obligation to pay a late payment interest penalty, in accordance with terms and conditions agreed to by the parties to the subcontract, giving such recognition as the parties consider appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond; (B) Permit the contractor or subcontractor to make a determination that part or all of the subcontractor’s request for payment may be withheld in accordance with the subcontract agreement; and (C) Permit such withholdings without incurring any obligation to pay a late payment interest penalty if: 

(i) A notice conforming to the standards of subsection (8) of this section has been previously furnished to the subcontractor; and (ii) A copy of any notice issued by a contractor under sub‐subparagraph (i) of this subparagraph has been furnished to the contracting agency. 

(b) As used in this subsection, “good faith dispute” means a documented dispute concerning:   (A) Unsatisfactory job progress.   (B) Defective work not remedied.   (C) Third‐party claims filed or reasonable evidence that claims will be filed.   (D) Failure to make timely payments for labor, equipment and materials. 

  (E) Damage to the prime contractor or subcontractor. (F) Reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum. 

(6) If, after making application to a contracting agency for payment under a contract but before making a payment to a subcontractor for the subcontractor’s performance covered by such application, a contractor discovers that all or a portion of the payment otherwise due the subcontractor is subject to withholding from the subcontractor in accordance with the subcontract agreement, the contractor shall: 

(a) Furnish to the subcontractor a notice conforming to the standards of subsection (8) of this section as soon as practicable upon ascertaining the cause giving rise to a withholding, but prior to the due date for subcontractor payment; (b) Furnish to the contracting agency, as soon as practicable, a copy of the notice furnished to the subcontractor under paragraph (a) of this subsection; (c) Reduce the subcontractor’s progress payment by an amount not to exceed the amount specified in the notice of withholding furnished under paragraph (a) of this subsection; (d) Pay the subcontractor as soon as practicable after the correction of the identified subcontract performance deficiency; (e) Make such payment within: 

(A) Seven days after correction of the identified subcontract performance deficiency unless the funds therefor must be recovered from the contracting agency because of a reduction under paragraph (f)(A) of this subsection; or (B) Seven days after the contractor recovers such funds from the contracting agency; 

(f) Notify the contracting agency upon: (A) Reduction of the amount of any subsequent certified application for payment; or (B) Payment to the subcontractor of any withheld amounts of a progress payment, specifying: 

(i) The amounts of the progress payments withheld under paragraph (a) of this subsection; and (ii) The dates that such withholding began and ended; and 

(g) Be obligated to pay to the contracting agency an amount equal to interest on the withheld payments computed in the manner provided in ORS 279C.570 from the 11th day after receipt of the withheld amounts from the contracting agency until: 

(A) The day the identified subcontractor performance deficiency is corrected; or (B) The date that any subsequent payment is reduced under paragraph (f)(A) of this subsection. 

(7) (a) If a contractor, after making payment to a first‐tier subcontractor, receives from a supplier or subcontractor of the first‐tier subcontractor a written notice asserting a deficiency in such first‐tier subcontractor’s performance under the contract for which the contractor may be ultimately liable and the contractor determines that all or a portion of future payments otherwise due such first‐tier subcontractor is subject to withholding in accordance with the subcontract agreement, the contractor may, without incurring an obligation to pay a late payment interest penalty under subsection (6)(e) of this section: 

(A) Furnish to the first‐tier subcontractor a notice conforming to the standards of subsection (8) of this section as soon as practicable upon making such determination; and (B) Withhold from the first‐tier subcontractor’s next available progress payment or payments an amount not to exceed the amount specified in the notice of withholding furnished under subparagraph (A) of this paragraph. 

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Chapter 26 26 - 1 Updated 10/10

CHAPTER 26 – PROMPT PAYMENT / CLAIMS AGAINST CONTRACTOR’S BOND

ORS 279C.570 requires the Agency to pay the Contractor on a monthly basis for Work performed. The Agency must pay interest, as specified by the statute, if it fails to pay the Contractor within 30 Calendar Days after the end of the period covered by the progress payment, or within 15 Calendar Days after the progress payment is approved by the Contract Administration Engineer (CAE), whichever is earlier. The Agency has adopted the policy that it will make progress payments on construction contracts by the 23rd of the month. If the Project Manager (PM) wishes to arrange a cutoff date different than the last day of the month, first contact the Contract Administration Unit (CAU) to obtain permission. If a different cutoff date for the pay period is agreed to by the CAE, the PM, and the Contractor, the 23rd date must be modified accordingly. [Refer to Chapter 25 - Payments to Contractors/Retainage] Even though the Agency has agreed to make progress payments before the time required by statute, it is not required to pay interest for late payment until it exceeds the times stated in the statute. Contact the CAU if you have questions regarding late payment interest. ORS 279C.580(3)(a) obligates the Contractor to pay its Subcontractors for their Work within 10 Calendar Days after it receives payment for such Work from the Agency. That provision must be included in each subcontract. ORS 279C.580(4) requires that the same prompt payment requirement be included in all lower-tier subcontracts as well. ORS 279C.515 also states that, if the Contractor or a Subcontractor fails, neglects, or refuses to make payment to a person furnishing labor or Materials for a public improvement contract, that person may, among other things, file a complaint with the Construction Contractors Board. If the complaint is valid and proper, the Construction Contractors Board may disqualify the Contractor or the Subcontractor from holding or participating in a public improvement contract. This provision also must be included in subcontracts at all tiers. 26-1 ODOT PROMPT PAYMENT POLICY

For claims of unpaid wages by an employee, contact the Labor Compliance Officer in the Office of Civil Rights for assistance. [Refer to Chapter 19 - Labor Compliance] If a Subcontractor or Supplier says that it has not been paid for its Work, follow these guidelines:

All Marked Text Updated October, 2010

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Chapter 26 26 - 2 Updated 10/10

1. Do not order the Contractor to make payment unless the payment is shown to be justified. The PM should not be involved in analyzing whether or not the payment is justified.

2. The Agency will not make payment directly to a Subcontractor or Supplier unless ordered to do so by a Court Order.

3. ORS 279C.580(6) allows the Contractor to withhold payments, to a Subcontractor or Supplier, for cause. If that happens, ORS 279C.580(7) requires that the Contractor provide written notification prior to the due date for the payment to the Subcontractor or Supplier, with a copy to the Agency, specifying:

The amount to be withheld; The specific cause(s) for the withholding; and The remedial action(s) needed by the Subcontractor or Supplier in order to

receive payment of the amounts withheld.

4. If a Subcontractor or Supplier says that it has not been paid, the PM response should comply with the following four progressive levels:

Level 1: Ask the Subcontractor or Supplier if it has talked to the Contractor to determine why the payment has not been made. Ask if it received the required notice about why payment was being withheld. If it has not already done so, suggest that it ask the Contractor for this information. This information is very important. This may resolve the issue.

Remind the Subcontractor or Supplier of its ability to file a claim against the Contractor’s payment bond, as described in Section 26-2 below. Offer to send it the information listed below. Also remind the Subcontractor or Supplier of the ability to file a complaint with the Construction Contractors Board, as discussed above.

Level 2: If Level 1 is unsuccessful, call the Contractor’s Superintendent, state that you have heard that the Subcontractor or Supplier has not received its payment, and ask if there is a reason for withholding payment. If the payment has been knowingly held, ask the reason. Remind the Contractor

of the statutory requirement that it give written notice to the Subcontractor or Supplier of the reason, amount, and remedial action involved in the withholding of payment, and that the Contractor is required to furnish a copy of that written notice to the Agency. Remember that the Contractor can withhold payment due to a good faith dispute. DO NOT ORDER THE CONTRACTOR TO MAKE PAYMENTS. Remind the Contractor of the interest penalty clause in ORS 279C.580.

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If the Contractor is just not making the payment, remind the Contractor of its obligations under ORS 279C.580 for the prompt payment and interest obligations if prompt payment is not made. Also remind them of the possible penalties of ORS 279C.515, discussed above.

Level 3: If you do not get satisfaction under Level 2, direct the Contractor’s Superintendent to provide you a copy of its written notice to the Subcontractor or Supplier as to why it is not making payment as required by ORS 279C.580. You may wish to provide a copy of ORS 279C.580 to the Superintendent and remind the Superintendent of the possible penalties of ORS 279C.515. Again, DO NOT ORDER THE CONTRACTOR TO MAKE PAYMENTS.

If the Contractor cannot furnish an acceptable reason for the nonpayment, the Agency will include this information in its periodic evaluation of the Contractor and may also consider imposing sanctions on the Contractor.

Level 4: If the Contractor has multiple times not made payment as required and the PM and Region is unable to improve the situation, contact the CAE. The Agency may impose sanctions after consultation with legal counsel and others, as well as any action that may be warranted under the Contractor Performance Evaluation process. [Refer to Chapter 34 - Contractor Performance Evaluation]

26-2 CLAIMS AGAINST CONTRACTORS PAYMENT BOND

If a Subcontractor or Supplier has not been paid for work or Materials that it supplied to a Project, it may file a claim against the Contractor’s payment bond. In order to be binding on the surety, the claimant must file its claim against the Contractor’s payment bond within 120 Calendar Days after the claimant last furnished labor or Materials to the Project. A claim against the Contractor’s payment bond attaches the surety to the claim. The Subcontractor or Supplier still must pursue payment through negotiation with the Contractor or through legal or other action. If requested by the Subcontractor or Supplier, the PM will furnish information needed to file a claim against the Contractor’s payment bond. That information includes:

Copy of the appropriate statutes and Oregon Administrative Rule (OAR), copy of the Notice to Proceed letter for the Contract showing the Contractor’s proper name and address, as well as the Project title, name and address of the surety, and the bond number (bottom of page).

Copy of draft letter. The claimant can also draft its own letter based upon ORS 279C.605(3).

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Chapter 26 26 - 4 Updated 10/10

Have the Subcontractor or Supplier send the Agency’s copy of the claim against the Contractor’s payment bond to the CAE.

The CAU will acknowledge receipt of each Notice of Claim against the Contractor’s payment bond, with a copy to the PM. If the PM receives any such claims, send them directly to the CAU. If the Agency has notified the Contractor of receipt of a claim against the Contractor’s payment bond, the PM must include that information when completing the required Prime Contractor Performance Evaluation. [Refer to Chapter 34 - Contractor Performance Evaluation]

(b) Securities in Lieu of Standard Amount Retained. When the original contract amount exceeds $80,000, the Contractor may withdraw all or any portion of the standard amount retained if acceptable securities are assigned to the Department, and deposited as set forth in Section 24-91-105, CRS and the implementing regulations. The securities shall at all times have a market value at least equal in value to the sums withdrawn. If at any time the Department determines that the market value of the securities has fallen below the sums withdrawn, the Contractor, shall deposit additional acceptable securities in an amount sufficient to reestablish a total deposit of securities equal in value to the sums withdrawn. This security substitution shall not apply if a part of the contract price is paid from federal, or other sources, and the federal or other source has requirements which are inconsistent with this subsection.

(c) Subcontractor and Supplier Claims. In addition to a standard amount retained, the Department will withhold funds for all claims against the Contractor filed by subcontractors and suppliers, pursuant to Sections 38-26-107 and 24-91-103, CRS.

(d) No Payment. A partial payment will not be made when the total value of the work done since the last estimate amounts to less than $500.

(e) Prompt Payment. The Contractor shall pay subcontractors and suppliers for all work which has been satisfactorily completed within seven calendar days after receiving payment for that work from the Department. For the purpose of this section only, work shall be considered satisfactorily complete when the Department has made payment for the work.

The Contractor shall include in all subcontracts a provision that this requirement for prompt payment to subcontractors and suppliers must be included in all subcontracts at every tier.

The Contractor shall ensure that all subcontractors and suppliers at every tier are promptly paid.

If the Contractor fails to comply with this provision the Engineer will not authorize further progress estimates until the required payments have been made and the Contractor agrees to make payments as specified.

(f) Retainage by the Contractor. The Contractor may withhold retainage of each progress estimate on work performed by subcontractors. If during the prosecution of the project, a subcontractor satisfactorily completes all work described on CDOT Form No. 205, as amended by changes directed by the Engineer, the following procedure will apply:

1. The subcontractor may make a written request to the Contractor for the release of the subcontractor’s retainage.

2. Within ten working days of the request, the Contractor shall determine if all work described on Form 205 has been satisfactorily completed and shall inform the subcontractor in writing of the Contractor’s determination.

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◊ Know monthly partial payment estimate cutoff date? Obtain it in a copy of the preconstruction con-ference minutes from the CDOT Project Engineer (PE). Ask the prime to verify the sub’s quanti-ties against CDOT’s estimate be-fore the estimate cutoff. In the event of a discrepancy between the subcontractor’s invoice and the CDOT monthly estimate, the sub and the prime contractor should meet with the PE as soon as possi-ble.

◊ Keep daily log documenting work completed, quantities used, ver-bal agreements with prime or Project Engineer.

◊ Know the retainage rules in Sec-tion 109.06.

◊ Have you completed the work (all or billable part of it) in compli-ance with the plans or specifica-tions?

◊ Have you complied with all CDOT and federal requirements regard-ing labor and contract compliance (i.e., certified payrolls, insurance certificate, and other requested information)?

◊ Have you tried an informal reso-lution process and asked the prime why you have not been paid? Have you written a letter or requested a meeting with the prime or CDOT PE?

Phone: (303) 757-9303 Toll Free: 1-800-925-3427

Fax: (303) 757-9058 www.dot.state.co.us/eeo

Center for Equal Opportunity 4201 E. Arkansas Avenue, Room 200

Denver, CO 80222

C o l o r a d o D e p a r t m e n t o f T r a n s p o r t a t i o n

“LAWS DECLARE RIGHTS. WE WORK TO DELIVER OPPORTUNITIES.”

CDOT Center for Equal

Opportunity

PROMPT PAYMENT INFORMATION

AND RESOURCES

CONTACT INFORMATION

CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY

CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY

CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY CENTER FOR EQUAL OPPORTUNITY

Checklist Continued

03/2009

CRS 24-91-103(2) and CDOT Standard Specification 109.06 (c) generally require prime contractors to pay subcontractors and suppliers within seven calendar days of receiving payment from CDOT.

CDOT Pay Estimate Website Allows users to log into a secure website to see when the prime contractor will receive t h e i r n e x t p a y e s t i m a t e . www.dot.state.co.us/payestimates/pay.htm

The prime will typically receive actual payment within 10 days of it being posted online. Subcontractors with work included in the posted pay estimate should expect payment within approximately 17 days of the online posting date.

W e b s i t e Search Tips: • Search by the project’s sub-account

number.

• View Transportation News, the con-struction bids newsletter at: www.dot.state.co.us/Bidding/WeeklyBids.htm, for your project’s Notice of Final Settlement date.

Notice of Final Settlement The CDOT Region Finals Engineers will re-quest the CDOT Project Development Branch to advertise each project for final settlement immediately after the project has been ac-cepted. The Project Development Branch, no later than ten days before the final settle-ment is made, publishes a Notice of the Final Settlement at least twice in a newspaper of general circulation in any county where the work was contracted or performed. The No-tice is also published in The Daily Journal and the Transportation News—the electronic construction bids newsletter posted at: www.dot.state.co.us/Bidding/WeeklyBids.htm

Options for Subcontractors and Sup-pliers CRS 38-26-107 provides that a subcontractor or supplier that is not paid may file a lien containing a verified statement of the amounts due and unpaid. All verified state-ments must be submitted to: Controller, CDOT Center for Accounting, 4201 E. Arkan-sas Ave., Denver, CO 80222 on or before 5 pm of the final settlement date listed.

The CDOT Region Finals Engineer will not submit the final pay estimate to the Center for Accounting until all properly submitted liens are properly addressed. Subcontractors and suppliers may also have other legal remedies available against the prime contrac-tor and the prime contractor’s surety.

Contact the CDOT Center for Accounting at (303) 757-9571 to request copies of the documents required to perfect a lien. Per-fecting a lien is subject to various filing requirements and deadlines. Other legal remedies available to subcontractors and suppliers may also be subject to various filing requirements and deadlines. Sub-contractors and suppliers may wish to consult with an attorney to investigate their available remedies and ensure all requirements are met. CDOT will not pro-vide separate legal advice.

COLORADO PROMPT PAYMENT LAW

“LAWS DECLARE RIGHTS. WE WORK TO DELIVER OPPORTUNITIES.”

Subcontractors and Suppliers Checklist

◊ Do you have the Standard Specifications for Road and Bridge Construction publica-tion (and M&S Standards—optional)?

◊ Do you agree with the terms of your sub-contract? Do not start work until your sub-contract agreement is signed! Do not per-form any additional work without a signed Contract Modification Order!

◊ Have you signed a CDOT Form 205— Sublet Permit Application? Must be fully approved by CDOT prior to the subcon-tractor start of work on the project site. The form must reflect the price the prime contractor bid for the item, not the amount the subcontractor will receive for payment.

Checklist continues on the back

Colorado Revised Statute

24-91-103. Public entity - contracts - partial payments.

(1) (a) A public entity awarding a contract exceeding one hundred fifty thousand dollars for the construction, alteration, or repair of any highway, public building, public work, or public improvement, structure, or system shall authorize partial payments of the amount due under such contract at the end of each calendar month, or as soon thereafter as practicable, to the contractor, if the contractor is satisfactorily performing the contract. The public entity shall pay at least ninety-five percent of the calculated value of completed work. The withheld percentage of the contract price of any contracted work, improvement, or construction may be retained until the contract is completed satisfactorily and finally accepted by the public entity.

(b) The public entity shall make a final settlement in accordance with section 38-26-107, C.R.S., within sixty days after the contract is completed satisfactorily and finally accepted by the public entity.

(c) If the public entity finds that satisfactory progress is being made in any phase of the contract, it may, upon written request by the contractor, authorize final payment from the withheld percentage to the contractor or subcontractors who have completed their work in a manner finally acceptable to the public entity. Before the payment is made, the public entity shall determine that satisfactory and substantial reasons exist for the payment and shall require written approval from any surety furnishing bonds for the contract work.

(2) Whenever a contractor receives payment pursuant to this section, the contractor shall make payments to each of his subcontractors of any amounts actually received which were included in the contractor's request for payment to the public entity for such subcontracts. The contractor shall make such payments within seven calendar days of receipt of payment from the public entity in the same manner as the public entity is required to pay the contractor under this section if the subcontractor is satisfactorily performing under his contract with the contractor. The subcontractor shall pay all suppliers, sub-subcontractors, laborers, and any other persons who provide goods, materials, labor, or equipment to the subcontractor any amounts actually received which were included in the subcontractor's request for payment to the contractor for such persons, in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. If the subcontractor fails to make such payments in the required manner, the subcontractor shall pay said suppliers, sub-subcontractors, and laborers interest in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. At the time the subcontractor submits a request for payment to the contractor, the subcontractor shall also submit to the contractor a list of the subcontractor's suppliers, sub-subcontractors, and laborers. The contractor shall be relieved of the requirements of this subsection (2) regarding payment in seven days and interest payment until the subcontractor submits such list. If the contractor fails to make timely payments to the subcontractor as required by this section, the contractor shall pay the subcontractor interest as specified by contract or at the rate of fifteen percent per annum whichever is higher, on the amount of the payment which was not made in a timely manner. The interest shall accrue for the period from the required

payment date to the date on which payment is made. Nothing in this subsection (2) shall be construed to affect the retention provisions of any contract.

(3) (Deleted by amendment, L. 2011, (HB 11-1115), ch. 211, p. 912, 2, effective August 10, 2011.)

Source: L. 79: Entire article added, p. 996, 1, effective July 1. L. 91: Entire section amended, p. 904, 1, effective July 1. L. 2004: (1) amended, p. 227, 1, effective August 4. L. 2011: (1) and (3) amended, (HB 11-1115), ch. 211, p. 912, 2, effective August 10.

Editor's note: Section 3 of chapter 211, Session Laws of Colorado 2011, provides that the act amending subsections (1) and (3) applies to contracts created on or after August 10, 2011.

Cross references: For the legislative declaration in the 2011 act amending subsections (1) and (3), see section 1 of chapter 211, Session Laws of Colorado 2011.

ANNOTATION

Section requires a contractor to pay a subcontractor within seven days of the contractor actually receiving a payment from a public entity. Trial court erred by calculating the penalty interest from the date a project was completed. New Design Constr. Co. v. Hamon Contractors, Inc., 215 P.3d 1163 (Colo. App. 2008).

Penalty interest does not compound annually. To the extent there is a conflict, this section prevails over the more general default interest statute. New Design Constr. Co. v. Hamon Contractors, Inc., 215 P.3d 1163 (Colo. App. 2008).

Penalty interest continues to accrue until the outstanding contract balance is paid regardless of whether a judgment has been appealed. However, the interest should be calculated based on the contract balance and not the entire judgment amount. To the extent there is a conflict, the prompt payment section prevails over the more general postjudgment interest statute. New Design Constr. Co. v. Hamon Contractors, Inc., 215 P.3d 1163 (Colo. App. 2008).  

The Contractor shall furnish certified copies of invoices for the cost of all materials used including transportation charges. If materials used on force account work are not specifically purchased for the work, but are taken from the Contractor’s stock, the Contractor shall furnish a written statement certifying that the quantity claimed was actually used, and that the price and transportation charges claimed represent the actual cost to the Contractor.

The Engineer will calculate the cost of the force account work each month and include payment on the monthly progress estimate.

(i) The additional percentages stated in (a) through (h) above constitute full compensation for all items of expense not specifically designated, including general superintendence, use of incidental tools, field and office overhead and profit. The total payment made as provided above shall constitute full compensation for such work.

109.05 Eliminated Items. Should any items contained in the Contract be found unnecessary for the proper completion of the work, the Engineer will notify the Contractor in writing, to eliminate the item. Such action will not invalidate the Contract. The Contractor, by Contract Modification Order, will be reimbursed for actual work done and all costs incurred, including mobilization of materials and equipment prior to the elimination of the items.

109.06 Partial Payments. Partial payments will be made once each month as the work progresses, when the Contractor is performing satisfactorily under the Contract. Payments will be based upon progress estimates prepared by the Engineer, of the value of work performed, materials placed in accordance with the Contract, and the value of the materials on hand in accordance with subsection 109.07. The amount of the progress estimate paid to the Contractor will be subject to the following:

(a) Standard Amount Retained. The Department will make a deduction from the progress estimate in the amount considered necessary to protect the interests of the State, pursuant to Section 24-91-103, CRS. The amount to be retained will be 3 percent of the value of the completed work, exclusive of mobilization and payments for materials on hand, to a maximum of 1 ½ percent of the original contract amount. No further amount will be retained if the Contractor makes satisfactory progress in the contract work. The amount retained will be in effect until such time as final payment is made, with the following exception which requires the Contractor’s written request and consent of the Surety: Upon completion and acceptance of the project, after the project quantities are finalized, and the Contractor has submitted the necessary forms, the Engineer may make reduction in the amount retained.

The Contractor shall request release of retainage on work that has been partially accepted in accordance with subsection 105.21(a). The Contractor shall provide a certified invoice to the Engineer stating the percentage of the original contract amount constituted by the partially accepted work. The calculated percentage will be multiplied by the maximum retainage amount allowed to determine the retainage to be released.

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(b) Securities in Lieu of Standard Amount Retained. When the original contract amount exceeds $80,000, the Contractor may withdraw all or any portion of the standard amount retained if acceptable securities are assigned to the Department, and deposited as set forth in Section 24-91-105, CRS and the implementing regulations. The securities shall at all times have a market value at least equal in value to the sums withdrawn. If at any time the Department determines that the market value of the securities has fallen below the sums withdrawn, the Contractor, shall deposit additional acceptable securities in an amount sufficient to reestablish a total deposit of securities equal in value to the sums withdrawn. This security substitution shall not apply if a part of the contract price is paid from federal, or other sources, and the federal or other source has requirements which are inconsistent with this subsection.

(c) Subcontractor and Supplier Claims. In addition to a standard amount retained, the Department will withhold funds for all claims against the Contractor filed by subcontractors and suppliers, pursuant to Sections 38-26-107 and 24-91-103, CRS.

(d) No Payment. A partial payment will not be made when the total value of the work done since the last estimate amounts to less than $500.

(e) Prompt Payment. The Contractor shall pay subcontractors and suppliers for all work which has been satisfactorily completed within seven calendar days after receiving payment for that work from the Department. For the purpose of this section only, work shall be considered satisfactorily complete when the Department has made payment for the work.

The Contractor shall include in all subcontracts a provision that this requirement for prompt payment to subcontractors and suppliers must be included in all subcontracts at every tier.

The Contractor shall ensure that all subcontractors and suppliers at every tier are promptly paid.

If the Contractor fails to comply with this provision the Engineer will not authorize further progress estimates until the required payments have been made and the Contractor agrees to make payments as specified.

(f) Retainage by the Contractor. The Contractor may withhold retainage of each progress estimate on work performed by subcontractors. If during the prosecution of the project, a subcontractor satisfactorily completes all work described on CDOT Form No. 205, as amended by changes directed by the Engineer, the following procedure will apply:

1. The subcontractor may make a written request to the Contractor for the release of the subcontractor’s retainage.

2. Within ten working days of the request, the Contractor shall determine if all work described on Form 205 has been satisfactorily completed and shall inform the subcontractor in writing of the Contractor’s determination.

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3. If the Contractor determines that the subcontractor has not achieved satisfactory completion of all work described on Form 205, the Contractor shall provide the subcontractor with written notice, stating specifically why the subcontract work is not satisfactorily completed and what has to be done to achieve completion. A copy of this written notice shall be provided to the Engineer.

4. If the Contractor determines that the subcontractor has achieved satisfactory completion of all work described on Form 205, the Contractor shall release the subcontractor’s retainage within seven calendar days.

5. In determining whether satisfactory completion has been achieved, the Contractor may require the subcontractor to provide documentation such as certifications and releases, showing that all laborers, lower-tiered subcontractors, suppliers of material and equipment, and others involved in the subcontractor’s work have been paid in full. The Contractor may also require any documentation from the subcontractor that is required by the subcontract or by the Contract between the Contractor and the Department or by law such as affidavits of wages paid, material acceptance certifications and releases from applicable governmental agencies to the extent that they relate to the subcontractor’s work.

6. Within 14 calendar days after receiving the Contractor’s request, the Engineer will make inspection of all work described on Form 205. The Engineer will measure and furnish the final quantities to the Contractor of the items completed by the subcontractor. Agreement on these final quantities by the Contractor will not constitute the acceptance of the work described on Form 205 by the Engineer.

7. If the subcontractor performs only a portion of an item of work, the Contractor shall release retainage in accordance with the procedures stated above and when the subcontractor has completed all of the work included in the subcontract, however, final measurement of quantities will not be made until the item of work and all of the work on the associated Form 205 has been completed.

8. If additional quantities of a particular item of work are required at a later date after final measurement has been made, the Contractor shall perform this work in accordance with Contract requirements and at unit bid prices.

For this subsection only, satisfactory completion of all work described on CDOT Form No. 205 is when all tasks called for in the subcontract as amended by changes directed by the Engineer have been accomplished and documented as required by the Department.

The requirements stated above do not apply to retainage withheld by the Department from monies earned by the Contractor. The Department will continue to process the release of that retainage based upon the completion date of the project as defined in the Commencement and Completion of Work special provision.

156

109.06

9. If during the prosecution of the project a portion of the work is partially accepted in accordance with subsection 105.21(a), the Contractor shall release all subcontractors’ retainage on the portion of the partially accepted work performed by subcontractors. Prior to the Department releasing the Contractor’s retainage on work that has been partially accepted in accordance with subsection 105.21(a), the Contractor shall submit to the Engineer a certified statement for each subcontractor that has participated in the partially accepted work. The statement shall certify that the subcontractor has been paid in full for its portion of the partially accepted work including release of the subcontractor’s retainage. The statement shall include the signature of a legally responsible official for the Contractor, and the signature of a legally responsible official for the subcontractor.

10. The Contractor shall be solely responsible for all additional costs involved in paying retainage to the subcontractors prior to total project completion.

(g) Good Cause Exception. If the Contractor has “good cause” to delay or withhold a subcontractor’s progress payment, the Contractor shall notify the Department and the subcontractor in writing within seven calendar days after receiving payment from the Department. The notification shall specify the amount being withheld and provide adequate justification for withholding the payment. The notice shall also clearly state what conditions the subcontractor must meet to receive payment. “Good cause” shall include but not be limited to the failure of the subcontractor to make timely submission of required paperwork

109.07 Payment for Material on Hand (Stockpiled Material). Payments may be made to the Contractor for materials to be incorporated into the work as evidenced by invoices or cost analyses of material produced on the project subject to the following:

(1) The material has been fabricated or processed and is ready for installation into the project and conforms to the requirements of the Contract. The Contractor shall provide the Engineer with a monthly accounting of all materials stockpiled on the project for which stockpiled payment is being requested and certification of compliance that the materials conform to the requirements of the Contract. This monthly accounting shall include the specific location of materials, the amounts of materials stockpiled, the amounts of materials incorporated into the work, and the net amounts of materials for which stockpile material payment is being requested.

Payment for stockpiled structural steel (unfabricated milled plate) may be made subject to the following additional conditions:

(i) The plan quantity of structural steel shall exceed one million pounds.

(ii) The structural steel shall have been delivered to the Contractor’s fabrication plant.

(iii) The material conforms to the requirements of the Contract.

(iv) Payment shall not exceed 60 percent of the certified invoice cost of the structural steel.

157

109.07

Electronic Funds Transfer (EFT). The Prime Contractor can authorize CDOT to electronically transfer funds. Forms are available from Accounts Payable by calling 303-757-9569 or 303-757-9996. Funds are normally available in 4 to 5 days after the Resident Engineer authorizes the estimate. Funds areimmediately available after the deposit is made via EFT. With EFT, the Contractor avoids waiting on the mail and does not have to deposit the warrant.

PROMPT PAYMENT Notice to all subcontractors and suppliers

The Colorado Department of Transportation (CDOT) is committed to the principle that all members of the construction team are entitled to prompt payment for work

properly performed. It is CDOT’s intention to work in partnership with all Contractors, Subcontractors, and Suppliers to improve the prompt payment of all

parties involved in CDOT contracts.

This notice is provided to explain to all parties how CDOT makes payments for work in progress.

PARTIAL PAYMENTS Monthly Partial Payments. The Prime Contractor will be paid based on estimates prepared by the Engineer. The Prime Contractor establishes the estimate cut-off date at the Preconstruction Conference. This date is used for estimating the partial payment of work performed though that date. CDOT does not require the Prime Contractor to bill for normal contract work other that force account or stockpiled materials. Delayed Partial Payments. The Engineer shall notify the Prime Contractor, in writing, of the reason for any delay to a partial payment. All Prime Contractor requests to delay a partial payment to permit inclusion ofa specific amount of work shall be made in writing. The Prime Contractor shall notify each Subcontractor who has performed work during the payment period of the reason for the delay. Copies of Partial Payment Estimates. The Project Engineer will provide the Prime Contractor with a copy of all monthly partial payment estimates. The Prime Contractor should provide a copy of the monthly estimate to each Subcontractor that has performed work during the period covered by the estimate. If the Contractor requires the Subcontractor to bill for their work the Subcontractors may need the quantities of work paid by CDOT to prepare their billing. The Subcontractors should get a copy of the monthly estimate from the Prime Contractor. CDOT will assist Subcontractors in obtaining a copy of the monthly estimate. Copies of the monthly estimate may be found at the following website: http://www.coloradodot.info/business/payestimates

3/23/10

PROMPT PAYMENT LAW Standard Specification section 109.06(a) requires all Contractors to comply with the existing Prompt Payment Law (CRS 24-91-103(2)). This law requires the Contractor to pay all Subcontractors within seven calendar days providing the Subcontractor complies with the Prompt Payment law. Failure by the Contractor to comply with theprompt payment law may be reason to debar the Contractor.

The citation for Colorado’s Prompt Payment Act is 24-91-103(2), C.R.S. (1991), relating to public works. Following is an exact quote:

(2) Whenever a contractor receives payment pursuant to this section, the contractor shall makepayments to each of his subcontractors of any amounts actually received which were includedin the contractor's request for payment to the public entity for such subcontracts. The contractor shall make such payments within seven calendar days of receipt of payment from the public entity in the same manner as the public entity is required to pay the contractor underthis section if the subcontractor is satisfactorily performing under his contract with the contractor. The subcontractor shall pay all suppliers, sub-subcontractors, laborers, and any other persons who provide goods, materials, labor, or equipment to the subcontractor any amounts actually received which were included in the subcontractor's request for payment to the contractor for such persons, in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. If the subcontractor fails to make such payments in the required manner, the subcontractor shall pay said suppliers, sub-subcontractors, and laborers interest in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. At the time the subcontractor submits a request for payment to the contractor, the subcontractor shall also submit to the contractor a list of the subcontractor's suppliers, sub-subcontractors, and laborers. The contractor shall be relieved of the requirements of this subsection (2) regarding payment in seven days and interest payment until the subcontractor submits such list. If the contractor failsto make timely payments to the subcontractor as required by this section, the contractor shall pay the subcontractor interest as specified by contract or at the rate of fifteen percent per annum whichever is higher, on the amount of the payment which was not made in a timely manner. The interest shall accrue for the period from the required payment date to the date on which payment is made. Nothing in this subsection (2) shall be construed to affect the retentionprovisions of any contract.

NEW YORK STATE DEPARTMENT OF TRANSPORTATION STANDARD SPECIFICATIONS of May 1, 2008

As Amended to January 12May 3, 2012 Letting

In order to enable the Department to process a contract payment properly and expeditiously, the Contractor shall submit certified weekly payroll statements for the Contractor and each Subcontractor, Form AAP-21, and other required documents and submissions, as may be appropriate to this contract. Unless otherwise specified in a particular contract pay item, no progress payment will be made for any item of work until its completion in accordance with the specification. In accordance with Article 8 No Payment on Contractor s Non-Compliance of the contract agreement, no contract payment will be completed so long as any lawful or proper direction to the Contractor by the Commissioner or his/her representative concerning the work or material has not been complied with. This contract may be funded by monies from other governmental or non-governmental entities which may include municipalities, counties, towns, villages, or authorities. If the contract is funded by monies from the New York State Thruway Authority, separate payment may be made by both the State of New York and the New York State Thruway Authority. Extra work for others, including municipalities, utilities, or other entities added by order-on-contract requires funds be deposited with the State prior to approval of the order-on-contract. Funding delays for extra work by others may cause payment delays. If extra work for others is combined with Department funded work, payment for all the work may be delayed. The Contractor may opt to receive electronic payments from the State, which are generated by the Office of the State Comptroller (OSC). Information on the electronic payments program is available on the OSC website at www.osc.state.ny.us. 109-07 PROMPT PAYMENTS BY THE CONTRACTOR. Section 139-f(2) of the State Finance Law requires the Contractor to pay each Subcontractor and materialman for the value of work performed pursuant to contract no later than fifteen (15) calendar days from the receipt of each payment the Contractor receives from the State. Payment by the Contractor to Subcontractors or materialmen shall represent the value of work performed and/or materials furnished and reflect the percentage of work completed or materials furnished by the Subcontractor or materialmen and be based upon the actual value of the subcontract or purchase order. The Contractor shall not hold any retainage, but may deduct an amount necessary to satisfy any claims, liens or judgments against a Subcontractor or materialman which have not been fully discharged. The Contractor shall maintain an accounting system acceptable to the Department to track payments made by the State to the Contractor and payments made by the Contractor to each Subcontractor, Manufacturer, Fabricator or Material Supplier by item and by date, for the purpose of enabling the Department to audit the payment provisions of this subsection. The system shall be able to provide data necessary for the completion of Contractor Report of Contract Payments. Reports shall include a certification that Subcontractors, Manufacturers, Fabricators and Material Suppliers have been paid with any exceptions noted and explained. 109-07 PROMPT PAYMENTS BY THE CONTRACTOR. In accordance with Section 139-f(2) of the State Finance Law, the Contractor shall pay each Subcontractor and materialman for the value of work performed pursuant to contract no later than seven (7) calendar days from the receipt of each payment the Contractor receives from the State. Payment by the Contractor to Subcontractors or materialmen shall reflect the quantities or percentage of work completed by the Subcontractor or materials furnished by the materialmen, and paid by the State; and such payment shall be based upon the actual conditions of the subcontract or purchase order. The Contractor shall not hold any retainage, but may deduct an amount necessary to satisfy any claims, liens or judgments against a Subcontractor or materialman which have not been fully discharged. The Contractor shall maintain an accounting system acceptable to the Department to track payments made by the State to the Contractor and payments made by the Contractor to each Subcontractor, Manufacturer, Fabricator or Material Supplier by item and by date. The Contractor shall enter payment data into the current Department approved civil rights reporting system in accordance with §105-21 Civil Rights Monitoring and Reporting, with any exceptions noted and explained. 109-08 ELIMINATED MATERIALS. Materials required by the contract documents and not incorporated into the work due to changes caused by field conditions or revisions to the design by the State after the material was ordered or purchased may be eligible for reimbursement. Materials will be eligible for reimbursement if they are

Comment [cjt17]: EI08029

11/1/2011

EBO BACKGROUND

The New York State Department of Transportation, through the Office of Construction, has purchased and implemented an Internet based civil rights reporting system called EBO (Equitable Business Opportunities) to streamline and reduce the efforts required by the construction industry to satisfy the civil rights reporting requirements. EBO went into production in May 2007. The Department licenses EBO from the vendor, and the software resides on Department servers. EBO is made available to Department contractors, subcontractors and fabricators/material suppliers free of charge, and Contractors are not required to purchase or maintain any software other than a web browser. The current version of EBO is V2.8. The vendor is currently working on significant enhancements to EBO, which will allow use by the consultant community and the Federal-Aid Locally Let Program.

EBO has multiple roles and provides information to a wide range of users. An EIC/Office Engineer is able to view data/reports for their contract, a Construction Area Supervisor is able to view data/reports for all of his/her contracts, and an RCE/RCS is able to view data/reports for all the contracts in the Region. EBO has eliminated many paper reports, including the AAP 15, AAP 19, AAP 20 and AAP 21. (See Engineering Bulletin 11-011.)

EBO can be accessed by anyone having a valid ID and Password, a PC with internet access and a web browser. EBO is a very secure system, with significant safeguards employed to protect sensitive information. A vetting (verification) process is used to establish valid ID/Password combinations. Like other Department IT systems, users are issued and are required to safeguard individual ID/Passwords. Contractors and other non-Department users should read and follow the INSTRUCTIONS FOR OBTAINING A LOG-IN/PASSWORD FOR EBO and select the appropriate application page for your firm. A single primary user ID is issued per firm/Federal ID Number. Additional secondary user ID’s may be created by the firm for its staff. The Primary Log-In ID holder is responsible for all sub-users utilizing the EBO system.

After an application for a primary user ID is reviewed and processed, an e-mail is sent containing the Log-In ID. The password for the account is sent separately via US Mail.

It is recommended that the NYSDOT EBO Application be run from a Microsoft Internet Explorer browser, Version 5.x, 6.x, 7.x, 8.x, or 9.x. Non-Microsoft browser software, such as Mozilla Firefox, and others may require the Cap-Locks to be turned on and may produce unpredictable results. The recommended computer configuration includes high speed (e.g. cable or DSL) connection, 2 GHz or higher processor, with a minimum of 1024 MB (1 GB) of memory. A PC with a minimum of 512 MB of memory and 1 GHz processor would be sufficient, but dial up connections are not recommended and may result in frequent “time-out” errors.

Contractor staff will also need to be trained in the use of EBO. The software vendor has developed an online EBO Training Module that is available to Contractors for a one-time fee of $75 per firm, payable to IGS. This module is a self-tutorial, which allows all users in a firm to access the training, complete the tutorial and be certified as an EBO user. The training module may be accessed repeatedly, at your convenience and desired pace. The online EBO Training Module can be accessed at www.ebotraining.com. For questions regarding EBO online training or EBO classroom training, please contact IGS at I-866-528-4381 or 1-440-572-1499.

For additional information, please contact the EBO Team at MO-EBO@dot.state.ny.us.

WYOMING DEPARTMENT OF TRANSPORTATION Form E-139CERTIFICATION OF SUBCONTRACT PAYMENTS 12/02

Project No.: Prime Contractor/ Consultant Payment No. Federal Q State Q Subcontractor/ Subconsultant Estimate No.

Tier Subcontractor This payment is a: Q Partial Payment Q Final Payment

The undersigned Prime Contractor/ Consultant hereby certifies that payment was made as detailed below: (Attach more sheets, if necessary)

Bid Item No. Bid Item Unit Price This EstimateQuantity Paid -Previous Est. Total To Date This Estimate

Dollars Paid -Previous Est. Total To Date

Less: Retention Withheld by Contract Agreement ( ) ( ) ( )TOTALS

Q Approved Contract Adjustments $ . Q Amount withheld in accordance with Subcontract: $ .

This certification is made under Federal and State laws concerning false statement. Supporting documentation for this payment is subject to audit and should be retainedfor a minimum of three (3) years from project acceptance date. In the event the subcontractor/ subconsultant was not paid in accordance with affidavits submitted by the PrimeContractor/ Consultant, all documentation supporting the contractor/ consultant's position should be submitted.

I declare under penalty of perjury, and any other applicable state or federal laws, that the statements made on this document are true and complete to the best of myknowledge.

Prime Contractor/ Consultant Signature Date Witness Signature DateThe undersigned subcontractor/ subconsultant for the above named project hereby certifies that payments were received and/or justification by contractor/ consultant is correct.

Subcontractor/ Subconsultant Signature Date Witness Signature DateThe undersigned subcontractor/ subconsultant for the above named project hereby certifies that payments were received and/or justification by contractor/ consultant is correct.

Tier Subcontractor/ Tier Subconsultant Signature Date Witness Signature DateDistribution: Contractor Send Original and One (1) Copy to the Engineer

Engineer Original in Project File; Copy to State Construction Engineer Program - Cheyenne

FORM E-139

Certification of Subcontract Payments Instructions

A. ORIGINATED BY:

Prime Contractor

B. GUIDELINES:

The Prime Contractor will complete one E-139 for each subcontractor who workedon the project during the current period, and/or has pay items on the current E-125Engineer’s Estimate.

The Prime Contractor will submit the completed E-139 to those subcontractors.

Upon receipt of payment, each subcontractor will sign and date the E-139 andreturn the form to the Prime Contractor.

The Prime Contractor will sign and date the E-139, and submit it in duplicate to theResident Engineer.

The Resident Engineer will collect all the E-139 forms required for the currentEstimate, retain the original document in the project file, and submit the duplicatecopy to the State Construction Office.

C. DISTRIBUTION:

Original to Project FileCopy to State Construction Office

D. FORM:

Form E-139 may be obtained from the State Construction Engineer’s Office in eitherhard copy or electronic format.

12SP109(A)

MICHIGAN DEPARTMENT OF TRANSPORTATION

SPECIAL PROVISION

FOR PROMPT PAYMENT

CSD:JDM 1 of 4 C&T:APPR:JC:DBP:05-09-11

FHWA:APPR:08-01-11 Add the following subsection to Section 109, on page 106, of the Standard Specifications for Construction: 109.08 Prompt Payment. A. Definitions. Lower-tier subcontract. An agreement between a subcontractor of any tier and any individual or legal entity to perform a part of the subcontract work. Lower-tier subcontractor. The individual or legal entity that performs part of the subcontract work through a lower-tier subcontract with a subcontractor. Supplier. The individual or legal entity that agrees to provide materials or services to the prime Contractor, a subcontractor, or a lower-tier subcontractor for the performance of their contract work. Sworn Statement. A written verification under oath reflecting all persons or entities, including union fringe benefit funds, who have furnished labor, equipment or materials to a subcontractor or lower tier subcontractor for performance of work on the project and the original contract amount, current amount due, amounts paid to date and balance to finish for each person or entity. Waiver of Lien. A written release and waiver of any claim or right to payment for payments actually received for labor, equipment or materials furnished for performance of work on the project. B. Progress Payments. For the first payment, or for a one time payment, the prime Contractor agrees to pay each subcontractor for the work associated with their subcontract no later than 10 calendar days from the date the prime Contractor receives payment from the Department and a duly executed Sworn Statement from the subcontractor. For the second and subsequent payments, the prime Contractor agrees to pay each subcontractor for the work associated with their subcontract no later than 10 calendar days from the date the prime Contractor receives from the subcontractor its current Sworn Statement and Waivers of Lien from the subcontractor and the subcontractors’ lower-tier subcontractors and suppliers verifying the prior payment has been received, but no later than 30 days from the prime Contractor’s receipt of payment from the Department for said work. Proof of payment documentation, using the Department’s current form, is also required from the

12SP109(A) CSD:JDM 2 of 4 05-09-11

prime Contractor to the Engineer prior to release of the second and subsequent estimates. Release of payment from the Department for any work is confirmation that the Department has determined the work to have met the standards of satisfactory completion as defined below. If the prime Contractor has concerns about the satisfactory completion of subcontractor or lower-tier subcontractor work items, this must be brought to the Engineers attention as soon as the concern is discovered. If the work meets the requirements of satisfactory completion and the prime Contractor has been paid for that work, the Engineer must determine whether the prime Contractor has demonstrated a valid reason for withholding payment from the subcontractor or supplier, or the subcontractor has demonstrated a valid reason for withholding payment from the lower-tier subcontractor or supplier. If the prime Contractor or subcontractor has done so, the Engineer will process a negative estimate pulling back the amount involved in the complaint. If payment has not been made, the Engineer will not include those items of work on an estimate until the issue has been resolved. The prime Contractor remains responsible to make prompt payments to their subcontractors and suppliers even if the prime Contractor is in violation of other contractual obligations and the Department is withholding payment from the prime Contractor for those violations. The prime Contractor must include in all subcontracts notice of the Department’s prohibiting prime Contractors from holding retainage from subcontractors under 49 CFR 26.29. This prompt payment provision is a requirement of 49 CFR 26.29 and does not confer third-party beneficiary right or other direct right to a subcontractor against the Department. This provision applies to both DBE and non-DBE subcontractors. C. Satisfactory Completion. Progress and Partial payments for contract work are made based on this assessment; and satisfactory completion is defined for purposes of this prompt payment provision as: 1. Upon preliminary review, the Engineer finds the work completed in accordance with the

contract, plans, and specifications; and 2. Required paperwork, for Progress and Partial payments, including material certifications,

payrolls, etc., has been received and reviewed by the Engineer. The determination of whether work meets the standards of satisfactory completion is the responsibility of the Engineer and not the prime Contractor or subcontractors. D. Less than full payment release. Any delay or postponement of payment from the time frames specified herein, or partial payment from the prime Contractor to a subcontractor or supplier, or from a subcontractor to a lower-tier subcontractor or supplier, may occur only upon receipt of written approval from the Engineer. There may be circumstances where a prime Contractor or subcontractor has a valid reason to withhold payment from a subcontractor or lower-tier subcontractor or supplier. Examples of such circumstances include but are not limited to: a demonstrated failure of the subcontractor to pay, or verify payment to, its lower tier subcontractors or suppliers; a demonstrated breach of the subcontract by the subcontractor such as abandonment of the work, unacceptably tardy progress in the work resulting in delays to the project which may subject or have subjected the prime Contractor to liquidated damages; failure or refusal to correct defective work, failure or refusal to provide required submittals such

12SP109(A) CSD:JDM 3 of 4 05-09-11

as materials certifications, certified payrolls, etc. E. Non-Payment Claims. Notifications of failure to meet prompt payment provisions can be referred by the prime Contractor, subcontractor, lower-tier subcontractor or supplier to the alleged offending party and must be made in writing and sent certified mail, with a copy to the Engineer and the prime Contractor. All notifications should be mailed within 30 calendar days of the date the payment was to be received. The alleged offending party must respond in writing to the claimant, with a copy to the Engineer, the prime Contractor and the Engineer of Construction and Technology, within 10 calendar days of receipt of the notification of failure to meet prompt payment provisions. Upon receipt of the written notice and response, the Engineer must verify in writing whether grounds exist for the prompt payment complaint. If the alleged offending party provides written evidence of the circumstances outlined in subsection 109.08.D, the parties to the complaint should employ dispute resolution procedures as provided in subsection 109.08.F to resolve the prompt payment issue. At this point, and pending completion of the dispute resolution procedures, there is no basis for any negative action against the alleged offending party. Failure on the part of the alleged offending party to respond to a notification from a claimant shall be considered by the Department as an admission of the violation and may result in sanctions. Any non-payment claimant has the option of submitting a lien claim to the MDOT Contract Services Division in order to notify the project Surety of the non-payment issue. It is the responsibility of the Surety to ensure that all legitimately due payments are made. F. Dispute Resolution. The parties must attempt to agree on whether to mediate or arbitrate the dispute and agree upon a mediator or arbitrator within 10 calendar days after a written complaint has been verified by the Engineer. If, within that 10 day period, the parties agree upon a mediator or arbitrator, the entire dispute resolution process must be completed within 60 days from initiation unless, for good cause verified by the mediator or arbitrator, the proceeding will require more time to complete. The cost of the mediation or arbitration shall be borne by the parties as determined by the mediator or arbitrator. Qualified costs of mediation or arbitration, for certified DBEs, will be paid by the Department based on current procedures. The DBE must contact the Office of Business Development for information on current procedures and to receive reimbursement. Outcomes of the dispute resolution will be provided to the Engineer by the mediator or arbitrator within 10 days of the decision. Upon receipt of the status and results of the dispute resolution procedure, the Engineer shall release the disputed payment being held by the Department as outlined by the mediator or arbitrator. If the parties cannot agree upon mediating or arbitrating the dispute or upon a mediator or arbitrator within the 10 day period specified herein, the complaining party shall initiate whatever dispute resolution procedure is specified in the parties’ agreement or as available under Michigan law within 30 days of the complaint being verified by the Engineer. The result of the dispute resolution proceeding or litigation shall be provided to the Engineer promptly upon the conclusion of the proceeding and the Engineer shall release the disputed payment being held by the Department in accordance with the result. At the Engineer’s discretion, copies of documents related to prompt payment claims may be requested for inclusion in the project files. G. Sanctions. Failure to comply with any of the prompt payment requirements by the prime Contractor, subcontractor, lower-tier subcontractor, or supplier may result in sanctions against the offending party. These sanctions may include, but are not limited to: withholding of estimates on projects where prompt payment violations are confirmed; reduction or removal of

12SP109(A) CSD:JDM 4 of 4 05-09-11

prequalification; and/or suspension of bidding privileges. All provisions of this prompt payment subsection apply to all subcontracts, lower-tier subcontracts, and supplier agreements and must be included in each subcontract for the contract, including all lower-tier subcontracts and agreements.

CONSTRUCTION AND TECHNOLOGY BUILDING • P.O. BOX 30049 • LANSING, MICHIGAN 48909 www.michigan.gov • 517-322-1087

LH-LAN-0 (01/03)

DATE: October 6, 2011 TO: Region Engineers Region Delivery Engineers TSC Managers TSC Delivery Engineers Resident/Project Engineers Engineer of Construction & Technology FROM: Gregory C. Johnson, P.E. Chief Operations Officer Randel R. Van Portfliet, P.E. Bureau Director of Statewide Field Services SUBJECT: Bureau of Highway Instructional Memorandum 2011-06 Field Review of Prompt Payment Complaints Effective with the September 2, 2011, letting, a revised Special Provision for Prompt Payment, 03SP109(A) or 12SP109(A), will be placed in all federal and state funded contracts that utilize the Michigan Department of Transportation’s (MDOT’s) letting process. The prompt payment provision is a requirement of Title 49 of the Code of Federal Regulations (CFR) 26.29. These provisions apply to all prime contractors, subcontractors, and suppliers at all tiers. Attached are the special provisions contractors must follow to ensure prompt payment and the documentation required from subcontractors and suppliers before submitting a prompt payment claim. When all of the pay item work has been completed, meets the definition of satisfactory completion, and the delivery/project engineer has released payment for the work, the prime contractor, subcontractors, and suppliers at all tiers must follow the progress payment schedule below: Satisfactory Completion

Satisfactory completion is defined for purposes of the Special Provision for Prompt Payment as:

1. Upon preliminary review, the delivery/project engineer finds the work completed

in accordance with the contract, plans, and specifications.

2. Required paperwork, for progress and partial payments, including materials certifications, certified payrolls, etc., has been received and reviewed by the delivery/project engineer.

Michigan Department of Transportation OFFICE MEMORANDUM

BOH IM 2011-06 -2- October 6, 2011

The determination of whether work meets the standards of satisfactory completion is the responsibility of the delivery/project engineer and not the prime contractor or subcontractors.

Release of payment from the Department for any work is confirmation that the Department has determined the work to have met the standards of satisfactory completion as defined above. In order to protect the rights and responsibilities of all parties, the delivery/project engineer should not release payment for any work not meeting the satisfactory completion criteria.

Progress Payments

For the first payment, or for a one-time payment, the prime contractor is required to pay each subcontractor and/or supplier for the work associated with their subcontract no later than 10 calendar days from the date the prime contractor receives payment from the Department and a duly executed Sworn Statement (as defined in the Special Provision for Prompt Payment) from the subcontractor and/or supplier.

For the second and subsequent payments, the prime contractor is required to pay each subcontractor and/or supplier for the work associated with their subcontract no later than 10 calendar days from the date the prime contractor receives a current Sworn Statement and Waivers of Lien from the subcontractor and the subcontractor’s lower-tier subcontractors and suppliers verifying the prior payment has been received. If the Sworn Statement and Waivers of Lien are not received, the payment must be made no later than 30 calendar days from the prime contractor’s receipt of payment from the Department for said work. The contractor may request the delivery/project engineer to rescind payment for the work and pursue a remedy under the Less Than Full Payment Based on Issues Other Than Satisfactory Completion and the Non Payment Claims sections.

Proof of payment documentation, using the Department’s current Form 2124A, is also required from the prime contractor to the delivery/project engineer, prior to release of the second and subsequent estimates. Form 2124A will be completed by the contractor using the Monthly Employment Reporting System (MERS) Database which was previously created for American Recovery and Reinvestment Act reporting. Instructions for use of MERS will be provided to the contractors separately.

Non-Payment Based on Satisfactory Completion Issues

Prime contractor concerns about the satisfactory completion of subcontractor or lower-tier subcontractor work items must be brought to the attention of the delivery/project engineer as soon as the concern is discovered. If the work met the requirements of satisfactory completion and the prime contractor has been paid for that work, the

BOH IM 2011-06 -3- October 6, 2011

delivery/project engineer must determine whether the prime contractor has demonstrated a valid reason for withholding payment from the subcontractor or supplier or the subcontractor has demonstrated a valid reason for withholding payment from the lower-tier subcontractor or supplier. If the prime contractor or subcontractor has done so, the delivery/project engineer will process a negative estimate pulling back the amount involved in the complaint. If payment has not been made, the delivery/project engineer will not include those items of work on an estimate until the issue has been resolved.

Withholding of payment for satisfactory completion issues can only be done by the delivery/project engineer and not the prime contractor or subcontractors.

Less Than Full Payment Based on Issues Other Than Satisfactory Completion

Any delay or postponement of payment from the time frames specified herein, or partial payment from the prime contractor to a subcontractor or supplier, or from a subcontractor to a lower-tier subcontractor or supplier, may only occur upon receipt of written approval from the delivery/project engineer. There may be circumstances where a prime contractor or subcontractor has a valid reason to withhold payment from a subcontractor or lower-tier subcontractor or supplier. Examples of such circumstances include but are not limited to:

• A demonstrated failure of the subcontractor to pay or verify payment to its lower-

tier subcontractors or suppliers.

• A demonstrated breach of the subcontract by the subcontractor such as abandonment of the work.

• Unacceptably tardy progress in the work resulting in delays to the project which

may subject or have subjected the prime contractor to liquidated damages.

• Failure or refusal to correct defective work.

• Failure or refusal to provide required submittals such as materials certifications, certified payrolls, etc.

Non-Payment Claims

For prompt payment claims for issues other than satisfactory completion, the following process applies:

Notifications of failure to meet prompt payment provisions can be referred by the prime contractor, subcontractor, lower-tier subcontractor or supplier to the alleged offending party and must be made in writing and sent certified mail, with a copy to the delivery/project engineer and the prime contractor. All notifications should be mailed

BOH IM 2011-06 -4- October 6, 2011

within 30 calendar days of the date the payment was to be received. The alleged offending party must respond in writing to the claimant, with a copy to the delivery/project engineer, prime contractor, and the Engineer of Construction and Technology, within 10 calendar days of receipt of the notification of failure to meet prompt payment provisions. If the alleged violator responds with a valid reason for withholding payment, it is expected that a full explanation be provided with specific reasons in response to the accusation of non payment. Upon receipt of the written notice and response, the delivery/project engineer must verify in writing whether grounds exist for the prompt payment complaint.

If the alleged offender provides satisfactory written evidence that one or more of the circumstances including, but not limited to, those listed above exists, the parties to the claimant should employ dispute resolution procedures as provided in the Special Provision for Prompt Payment to resolve the prompt payment issue. At this point, and pending completion of the dispute resolution process, there is no basis for any negative action against the alleged offending party. Failure on the part of the alleged offending party to respond to a notification from a claimant shall be considered by the Department as an admission of the violation and may result in sanctions.

The parties must attempt to agree on whether to mediate/arbitrate and agree on a mediator/arbitrator within 10 calendar days after a written complaint is verified by the delivery/project engineer. The details and time frames for completing the dispute resolution process can be found in the Special Provision for Prompt Payment in subsection 109.10.F. (Note: Disadvantaged Business Enterprise (DBE) prompt pay contracting issues may have additional dispute resolution procedures). Upon receiving the outcomes of the dispute resolution, the delivery/project engineer will release the disputed payment being held by the department as outlined by the mediator or arbitrator.

If the parties cannot agree on mediating/arbitrating the dispute, or upon a mediator/arbitrator within the prescribed timeframes in the special provision, the complaining party shall initiate whatever dispute resolution is specified in the parties’ agreement, or as available under Michigan law within 30 calendar days of the complaint being verified by the delivery/project engineer. The delivery/project engineer is not expected to make judgment on the dispute between the parties. Release of any monies held by the Department shall only occur upon resolution of the dispute by the parties.

The delivery/project engineer should scan and e-mail copies of documents related to non-payment claims made by Disadvantaged Business Enterprises to MDOT’s Office of Business Development (OBD) at MDOT-DBE@michigan.gov. Agencies who do not have scanning capability should fax documents to OBD’s administrator at 517-335-6859.

BOH IM 2011-06 -5- October 6, 2011 Failure to Resolve a Prompt Payment Violation within the Prescribed Time Frames

When the delivery/project engineer verifies that a prompt payment violation occurred and has not been resolved within the prescribed time frames, the following procedure is to be followed:

A contract modification is to be initiated for a negative adjustment in the amount of the violation and processed on the next available estimate after approval. Specific pay item codes, units of measurement, and pay item description information for the adjustment can be found in Construction Advisory 2011-04, titled Prompt Pay, indexed under “Authorizations.” Upon full resolution of the violation, a positive adjustment contract modification is to be processed to restore the money from the negative adjustment previously processed. Payment then can be made upon approval of the contract modification.

________________________________ ___________________________________ Chief Operations Officer Bureau Director of Statewide Field Services FWHA approval 09-13-11 Attachments 03SP109(A) & 12SP109(A) BOHD:C/T:BJO:mnn Index: Payment to Contractors cc: C & T Division Staff D. Calabrese M. Chaput ACEC B. O’Brien APAM M DeLong CRAM

J. Gutting MAA P. Collins MCA C. Rademacher MITA J. Mullins MML L. Wieber

Michigan Department of Transportation

OFFICE OF BUSINESS DEVELOPMENT

Special Provisionfor

PROMPTPAYMENT

The prime contractor agrees to pay each subcontractor for the work associated with their subcontract no later than ten (10) calendar days from the date the prime contractor receives payment from the Department for said work. Release of payment from the Department for any work is confi rmation that the Department has determined the work to have met the standards of satisfactory completion as defi ned in this brochure. If the prime contractor has concerns about the satisfactory completion of subcontractor work items, this must be brought to the engineer’s attention in advance of payment to the prime contractor. This notice may give the prime contractor the option to not release all subcontractor funds within the ten (10) calendar days specifi ed. This requirement is also applicable to all sub-tier subcontractors and suppliers, and shall be made a part of all subcontracts and agreements.

MDOT: Providing the highest quality integrated transportationservices for economic benefi t and improved quality of life.

Prepared by MDOT Graphics\OEO\DBE\Prompt Payment Brochure\kh 08500 copies printed at $0.70 each for a total of $350.00

1 0 D A Y S

Questions or comments can be addressed to -

Mail:Michigan Department of TransportationOffi ce of Business DevelopmentP.O. Box 30050Lansing, MI 48909

Telephone:1-866-323-1264

Fax:517-335-0945

This prompt payment provision is a requirement of 49 CFR 26.29 and does not confi rm third-party benefi ciary right or other direct right to a subcontractor against the Michigan Department of Transportation (MDOT). This provision applies to both Disadvantaged Business Enterprise (DBE) and non-DBE subcontractors.

Satisfactory Completion Progress and partial payments for contract work are made based on satisfactory completion. For purposes of this prompt payment provision, satisfactory completion occurs under these two circumstances:

1. Upon preliminary review, the engineer fi nds the work completed in accordance with the contract, plans and specifi cations; and

2. Required paperwork, for progress and partial payments, including material certifi cations, payrolls, etc., has been received and reviewed by the engineer.

Less than full payment release Any delay or postponement of payment from this time frame, or partial payment to a subcontractor, may occur only upon receipt of written approval from the engineer.

Non-Payment Claims All notifi cations of failure to meet prompt payment provisions shall be referred by the subcontractor to the prime contractor and must be made in writing, with a copy to the project engineer. All notifi cations should be sent within thirty (30) calendar days of the date the payment was to be received. The prime contractor must respond in writing to the subcontractor, with a copy to the project engineer and the Engineer of Construction and Technology, within seven (7) calendar days of receipt of the notifi cation of failure to meet prompt payment provisions. Failure of the prime contractor to respond may result in sanctions. The subcontractor has the option of submitting a lien claim to the MDOT Contract Services Division in order to notify the project Surety of the non-payment issue. It is the responsibility of the Surety to ensure that all legitimate payments are made.

The prime contractor must include, in all subcontract agreements, notice to subcontractors of their right to prompt payment, and of the Department’s prohibiting prime contractors from holding retainage from subcontractors under federal regulation 49 CFR 26.29.

The prime contractor must include in all subcontracts, language providing that the prime contractor and subcontractor will use an approved alternative dispute resolution process to resolve prompt payment differences. The arbitration of the dispute will be handled through a member of the American Arbitration Association, 1 Town Square, Southfi eld, Michigan (248-352-5500), or another third party agreed to by both the prime contractor and the subcontractor. The parties

must agree on a mediator or arbitrator within twenty-fi ve (25) calendar days after a written complaint has been sent by the subcontractor. The cost of mediation or arbitration will be borne by the parties as determined by the mediator. Qualifi ed costs of mediation, for certifi ed DBEs, will be paid by the Department based on current procedures. The DBE must contact the Offi ce of Business Development for information on current procedures and to receive reimbursement. Outcomes of the alternative dispute resolution will be provided to the engineer within 10 days of the decision.

Copies of all documents related to prompt payment claims will be provided to the engineer by the prime contractor for inclusion in the project fi les.

Failure of the prime contractor to comply with prompt payment provisions may result in sanctions. Sanctions may include, but are not limited to: withholding of estimates on projects where prompt payment violations are confi rmed; reduction of prequalifi cation ratings; and/or withdrawal of bidding privileges.The determination of whether work meets

the standards of satisfactory completion is the responsibility of the engineer and not the prime contractor.

A link to payment information is available on the MDOT Web site at:http://mdotwas1.mdot.state.mi.us/public/trnsport/Once at this Web site, check “Project Voucher Summary” then type in the project number you are looking for payment information on and click “ok”. Now you are in the “PROJECT VOUCHER SUMMARY” screen from here you can see when the prime contractor was paid along with payment information.

July 2003 ASP-4

ADDITIONAL SPECIAL PROVISION 4 Payment to all Subcontractors. Within 10 calendar days of receipt by a contractor of a progress payment for work performed, materials furnished, or materials stockpiled by a subcontractor, the contractor shall pay that subcontractor for all work satisfactorily performed and for all materials furnished or stockpiled. The contractor agrees further to release retainage amounts to each subcontractor within 10 calendar days after the subcontractor’s work is satisfactorily completed. In addition, whenever the Department reduces the contract retainage amount, within 10 calendar days of receipt by a contractor of a retainage payment, the contractor must reduce the total amount retained from subcontractors to no more than remains retained by the Department. The contractor shall pay the subcontractor within the time frames described above unless the contractor complies with both of the following within 10 calendar days of receiving the Department’s progress payment: 1) The contractor notifies the subcontractor in writing that the work is not satisfactorily

completed. 2) The contractor requests approval from the Department to delay payment because the

subcontractor has not satisfactorily completed the work. The contractor’s request for approval should include the written notification to the subcontractor and shall provide sufficient documentation of good cause to assist the engineer in making a timely decision. If the engineer does not grant approval, the contractor shall pay the subcontractor within 10 calendar days of the Department’s decision. All subcontracting agreements made by a contractor shall include the above provisions and shall be binding on all contractors and subcontractors. The contractor certifies compliance with the requirements of this Additional Special Provision by signing the contract. This clause applies to both DBE and non-DBE subcontractors.

CMM 2.40 Prompt Payment Procedure

Wisconsin Department of TransportationConstruction and Materials Manual Chapter 2 Contract Management Section 40 Prompt Payment

2.40.1 PROMPT PAYMENT COMPLAINT AND PROCEDURE 2.40.1.1 General Prompt payment should be discussed at all pre-construction meetings. Inform contractors that ASP 4 requires contractors to pay the subcontractors for satisfactorily completed work within 10 calendar days of receiving a progress payment. If they will not be making payment to any of their subcontractors within the prescribed 10 calendar days they are required to provide a “good cause” explanation to the engineer prior to withholding payment. ASP 4 can be found at the following extranet site.

http://roadwaystandards.dot.wi.gov/hcci/bid-letting/related-info/asp-4.pdf

2.40.1.2 Procedure It is most important that you document your actions when a prompt payment complaint is received.

1. The project engineer writes a memo to the district’s central files regarding the complaint received. 2. The project engineer/ manager sends letters to all subcontractors asking if they have been paid

promptly. Try to be as specific as possible. Cite the particular estimate dates that the complaint involves. Ask the subcontractors to respond within ten days regardless if they have, or have not, been paid promptly. Copy the Bureau of Project Development field operations engineer for the region. An example letter is shown in Figure 1.

3. If the subcontractors' replies indicate that more than the complainant have payment problems, the project manager/ area supervisor sends the prime contractor a letter asking for an explanation and directing that payments be made within ten days. An example letter is shown in Figure 2. Direct the prime contractor to inform you when all payments have been made. Copy the Bureau of Project Development field operations engineer for the region.

4. If the only payment problem is with the complainant, there may be a reason for it. The Project Engineer should ask the prime contractor's superintendent about the situation and call the superintendent's attention to ASP 4.

5. If the problem is not resolved, inform (via registered mail) the prime contractor that he is in default and that you are referring the matter to the Bureau of Project Development for appropriate action. An example letter is shown in Figure 3. The Regional Project Development Chief should write this letter. Copy the Bureau of Project Development field operations engineer for the region. Copy the prime contractor's bonding company also.

6. If the problem is resolved send a closure letter to the complainant. Copy the Bureau of Project Development field operations engineer for the district.

Note: Make sure that you have good documentation regarding the complaint and that all your estimates to the prime contractor are prompt and current.

November 2006 Page 1

CMM 2.40 Prompt Payment

Figure 1

November 2006 Page 2

CMM 2.40 Prompt Payment

Figure 2

November 2006 Page 3

CMM 2.40 Prompt Payment

Figure 3

November 2006 Page 4

March 2, 2012

Page 1 of 4

WEST VIRGINIA DEPARTMENT OF TRANSPORTATION DIVISION OF HIGHWAYS

SPECIAL PROVISION

FOR

SUBCONTRACTOR PROMPT PAYMENT

1. –General:

Contractors shall pay subcontractors for work satisfactorily performed by the subcontractor within fourteen (14) calendar days of the Contractor’s receipt of Division of Highways (Division) payment for subcontracted work. Acceptance of the subcontracted work by the Division shall constitute satisfactory completion of subcontracted work. Failure and penalties for noncompliance are detailed in Section 3 below.

2. –Withholding Payment Restrictions: The contractor may delay or postpone payment to a subcontractor for good cause. This may include, but shall not be limited to, failure by the subcontractor to pay for labor, supplies, or materials, or to provide any required documentation. Prior to any delay or postponement of payment, the Contractor shall provide written documentation to the Division for Approval. The Contractor shall also provide written notification of any such good cause to the affected subcontractor at the same time it is submitted to the Division for approval. Only after written approval of the Division’s acceptance of the Contractor’s good cause, shall the Contractor be allowed to postpone or delay any payment.

If the subcontractor does not receive payment within the required 14 days, the subcontractor shall give written notice of nonpayment to the Engineer.

The notice shall: (a) State the name of the Prime Contractor, the Project Number, and the Estimate Number.,

and the quantity in dispute. (b) Provide an itemized summary on which the quantity t is based; and (c) Any additional information that may be relevant to the dispute concerning payment by

the Contractor.

March 2, 2012

Page 2 of 4

3. –Penalties for Noncompliance:

Unless otherwise provided for by Section 2 above, the Contractor shall provide the Division proof of payment for subcontracted work on the West Virginia Department of Transportation Certification of Subcontract Payments form attached at the end of this provision separately for each Subcontractor. This documentation will be provided to the Division within two Estimates of the Progress Estimate in which there is subcontracted work performed and accepted by the Division.

Failure by the Contractor to produce documentation of prompt payment within the duration listed above may result in the suspension of the third and any future progress estimates for payment to a Contractor by the Division until the Contractor can demonstrate that the issues preventing submission of documentation has been resolved and that prompt payment for subcontracted work will be maintained throughout the remaining life of the Contract. In addition to the above, continued failure to promptly pay subcontractors may result in disqualification of a contractor as non-responsible, refusal by the Division to issue a Proposal Form to a contract for future projects as provided in subsection 102.3, or such other penalty as the Division determines is appropriate. All subcontracting agreements made by the contractor as provided in subsection 108.1 shall include this special provision as incorporated in the contract.

4. Resolution of Disputes When the steps from step two above result in a dispute between the Contractor

and subcontractor the procedure for resolving the dispute is as follows: The Division will verbally contact the Contractor within 48 hours to ascertain

whether the amount withheld is an undisputed amount. If the Division determines that a part or all of the amount withheld is an

undisputed amount, the Division will instruct the Contractor to pay the subcontractor the undisputed amount within three days. The instructions will be confirmed in writing.

The Division will verbally communicate to the subcontractor the results of the discussion with the Contractor and confirm the results in writing.

If the Contractor fails to pay the subcontractor the undisputed amount with the specified three days, the subcontractor may report the nonpayment in writing to the Division.

Upon receipt of notification of nonpayment from the subcontractor, the Division will schedule a meeting to verify and discuss the nonpayment issue. This meeting will be held at the Division Office no later than 10 days after receiving notice from the subcontractor.

Invited to this meeting will be the Contractor, the subcontractor, the District Construction Engineer, FHWA Area Person, DOH Regional Construction Engineer, and

March 2, 2012

Page 3 of 4

the Engineer. The purpose of this meeting will be to establish why payment was not made to the subcontractor in the required time period. If it is determined that the Contractor is delinquent in payment to the subcontractor, further progress payments to the Contractor may be withheld until the subcontractor is paid.

4.1 - LEGAL RELATIONS AND PROGRESS

If payment is not made to the subcontractor within seven days after the

Division determines that the Contractor is delinquent in paying the subcontractor and the next progress payment becomes due, the progress payment will not be processed and a second meeting will be held at the District Office to address the dispute. The second meeting will be held not later than five days after the close of the seven day period. If the results of this second meeting reveal that payment to the subcontractor continues to be delinquent, the Division may order a suspension of work based upon the failure of the Contractor to carry out the provisions of the Contract or he may allow work to continue and withhold future progress payments as stated above.

The Contractor shall notify the Engineer when payment has been made to the subcontractor. The Engineer will verify the payment with the subcontractor to ensure payment was received.

Nothing in this provision will prevent the subcontractor from pursuing a claim with the surety under the Contractor’s payment bond at any time.

Page 4 of 4

WEST VIRGINIA DEPARTMENT OF TRANSPORTATION CERTIFICATION OF SUBCONTRACT PAYMENTS

Federal Project No.: __________________ Prime Contractor: _____________________________________ Payment No. ________________ State Project No.: ___________________ Subcontractor: ________________________________________ Estimate No. ________________ Tier Subcontractor: ____________________________________ This payment is a: Partial Payment Final Payment The undersigned Prime Contractor herby certifies that payment was made as detailed below: (Attach more sheets, if necessary)

Bid Item No.

Bid Item

Item Unit

Quantity Accepted and Paid – _______

This Estimate Previous Est. Total to Date TOTALS

Approved Contract Adjustments (qnty) _________________.

This certification is made under Federal and State laws concerning false statement. Supporting documentation for this payment is subject to audit and should be retained for a minimum of three (3) years from project acceptance date. In the event the subcontractor was not paid in accordance with affidavits submitted by the Prime Contractor, all documentation supporting the contractor’s position should be submitted.

I declare under penalty of perjury, and any other applicable state or federal laws, that the statements made on this document are true and complete to the best of my knowledge, and that all subcontractors have been paid within fourteen (14) days after receiving payment for the work performed as described above.

. ______________________________________________________________________________ ________ _______________________________________________________________ Prime Contractor Date Witness Signature Date

The undersigned subcontractor for the above named project hereby certifies that payments were received and/or justification by contractor is correct

SECTION 8 PROSECUTION AND PROGRESS

107

8-1.10B Failure to Complete Work Parts within Specified Times

The Department may deduct specified damages from payments for each day in completing a work part beyond the time specified for completing the work part.

Damages for untimely completion of work parts may not be equal to the daily amount specified as liquidated damages for the project as a whole, but the Department does not simultaneously assess damages for untimely completion of work parts and for the whole work.

Damages accrue starting the 1st day after a work part exceeds the specified time through the day the specified work part is complete.

8-1.10C Failure to Complete Work Parts by Specified Dates

The Department may deduct specified damages from payments for each day in completing a work part beyond the specified completion date for the work part.

Damages for untimely work part completion may not be equal to the daily amount specified as liquidated damages for the project as a whole, but the Department does not simultaneously assess damages for untimely work part completion and the whole work.

Damages accrue starting the 1st day after an unmet completion date through the day the work part is complete.

8-1.10D Director Days

If the work is not completed within the working days, the Director may grant director days if it serves the State's best interest.

By granting director days, the Director adds working days to the Contract. The Director may either grant enough days to eliminate the liquidated damages or fewer. In the latter case, the Department deducts liquidated damages for the remaining overrun in Contract time. The Director may deduct the Department's engineering, inspection, and overhead costs incurred during the period of extension granted as director days.

8-1.11–8-1.12 RESERVED

8-1.13 CONTRACTOR'S CONTROL TERMINATION

The Department may terminate your control of the work for failure to do any of the following (Pub Cont Code § 10253):

1. Supply an adequate workforce 2. Supply material as described 3. Pay subcontractors (Pub Cont Code §10262) 4. Prosecute the work as described in the Contract The Department may also terminate your control for failure to maintain insurance coverage.

For a federal-aid project, the Department may terminate your control of the work for failure to include "Required Contract Provisions, Federal-Aid Construction Contracts" in subcontracts.

The Department gives you and your surety notice at least 5 business days before terminating control. The notice describes the failures and the time allowed to remedy the failures. If failures are not remedied within the time provided, the Department takes control of the work.

The Department may complete the work if the Department terminates the Contractor's control or you abandon the project (Pub Cont Code § 10255). The Department determines the unpaid balance under Pub Cont Code § 10258 and the Contract.

At any time before final payment of all claims, the Department may convert a Contractor's control termination to a Contract termination.

PUBLIC CONTRACT CODE 10262. The contractor shall pay to his or her subcontractors, within seven days of receipt of each progress payment the respective amounts allowed the contractor on account of the work performed by his or her subcontractors, to the extent of each subcontractor's interest therein. The payments to subcontractors shall be based on estimates made pursuant to Section 10261. Any diversion by the contractor of payments received for prosecution of a contract, or failure to reasonably account for the application or use of the payments constitutes ground for actions prescribed in Section 10253 in addition to disciplinary action by the Contractors' State License Board. The subcontractor shall notify, in writing, the Contractors' State License Board and the department of any payment less than the amount or percentage approved for the class or item of work as set forth in Section 10261. 10262.3. To facilitate enforcement of Section 10262, the Department of General Services shall publish in the California State Contracts Register notice of progress payments made to prime contractors. 10262.5. (a) Notwithstanding any other law, a prime contractor or subcontractor shall pay to any subcontractor, not later than seven days after receipt of each progress payment, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor's interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor to a subcontractor, then the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount. Any contractor who violates this section shall pay to the subcontractor a penalty of 2 percent of the amount due per month for every month that payment is not made. In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney's fees and costs. (b) This section shall not be construed to limit or impair any contractual, administrative, or judicial remedies otherwise available to a contractor or a subcontractor in the event of a dispute involving late payment or nonpayment by a contractor or deficient subcontract performance or nonperformance by a subcontractor. (c) On or before September 1 of each year, the head of each state agency shall submit to the Legislature a report on the number and dollar volume of written complaints received from subcontractors and prime contractors on contracts in excess of three hundred thousand dollars ($300,000), relating to violations of this section.

California Department of Transportation • Construction Manual • July 2001

8-3.4 Disadvantaged Business

8-303D Monthly DBE Trucking Verification on Federal-Aid ContractsWhen DBE trucking is listed as a goal on the DBE use plan, the contractor mustsubmit to the resident engineer Form CEM-2404 (F), “Monthly DBE TruckingVerification,” before the 15th of each month. The form must show the following:• The truck owner’s name

• The California identification (CA) number issued by the California HighwayPatrol

• The truck owner’s DBE certification number

• The company name and address

• The commission or amount paid

• The date paid

• The lease arrangement

If the prime contractor fails to submit the form, the resident engineer must make onthe monthly pay estimate an administrative deduction for missing documents.In determining how much credit percentage to allow for the trucking company towardthe DBE contract goal, use the following factors:• The listed DBE must itself own and operate at least one fully licensed, insured,

and operational truck used on the contract.

• The DBE receives credit for the total value of the transportation services itprovides on the contract, using trucks it owns, insures, and operates and usingdrivers it employs.

• The DBE may lease trucks from another DBE firm, including an owner-operatorwho is certified as a DBE. The DBE that leases trucks from another DBE firmreceives credit for the total value of the transportation services the lessee DBEprovides on the contract.

• The DBE may also lease trucks from a non-DBE firm or a non-DBE owner-operator. The DBE who leases trucks from a non-DBE is entitled to credit onlyfor the fee or commission it receives as a result of the lease arrangement. TheDBE does not receive credit for the total value of the transportation servicesprovided by the lessee because a DBE is not providing these services.

• A lease must indicate that the DBE has exclusive use of and control over thetruck. This provision does not preclude the leased truck from working for othersduring the term of the lease with the consent of the DBE, so long as the leasegives the DBE absolute priority for use of the leased truck. (Generally, the leasemust be long term and not for the specific project.)

To document and confirm compliance, the resident engineer or assistant residentengineer must track the trucks in a daily report or by other means.

8-303E Prompt Payment ClausesThe prompt payment clauses of the special provisions must be emphasized duringthe preconstruction conference and enforced during construction.

California Department of Transportation • Construction Manual • July 20018-3.5Disadvantaged Business

The prompt return of retention payments applies only to federal-aid contracts. Federalregulations do not require the resident engineer to monitor prompt payments status.However, at the completion of the contract, the prime contractor must document thedate of final payment to each first-tier subcontractor and all DBE firms on FormCEM-2402 (F), “Final Report—Utilization of Disadvantaged Business Enterprises(DBE), First-Tier Subcontractors.”8-303F Final Report, Use of DBE or DVBE, First-Tier SubcontractorsThe specifications require the contractor to submit to the resident engineer eitherForm CEM-2402 (F), “Final Report – Utilization of Disadvantaged BusinessEnterprises (DBE), First-Tier Subcontractors,” or Form CEM-2402 (S), “Final Report– Utilization of Disabled Veterans Business Enterprises (DVBE) (DVBE),” uponcompletion of the contract. These forms, “the final DBE or DVBE reports,” providekey information required to initiate project closure and payment.During the contract, the contractor must maintain information regarding assignmentsto all first-tier subcontractors and all DBE or DVBE firms, regardless of tier. Whenfilling out the final DBE or DVBE report, the contractor must include the followinginformation:• The names and addresses of these firms

• The date each of these firms completed its portion of the work

• The date of final payment to these firms

• The total dollar figure paid to each firm

• All actual expenditures (not the contract item prices) paid to DBEs or DVBEs

• Any lower-tier DBEs or DVBEs that were used, even if the firms were notoriginally listed in the bid submittals for the purposes of goal attainment

If the prime contractor is a DBE or DVBE firm, the records must also show the dateof work performed by its own forces, along with the corresponding dollar value ofthe work claimed toward DBE or DVBE goals.The resident engineer must compare the contractor’s original dollar commitmentwith the final attainment shown on the final DBE or DVBE report. The residentengineer must also verify that the dollar amount reflects the actual dollar value paidto each DBE or DVBE firm. This verification should include any changes made inplanned work scheduled for each DBE or DVBE firm.If any question exists concerning the report’s accuracy, require a written explanationfrom the contractor. This narrative report must explain any differences between theinitial plan and the final summary, unless the contractor’s comments on the finalDBE or DVBE report are in sufficient detail to provide the explanation. Examplesof items the contractor would need to explain in writing include why the names oflower-tier subcontractors, the work items, or dollar figures do not match thecontractor’s initial plan. Attach the narrative report to the final DBE or DVBE report.The resident engineer must review the completed final DBE or DVBE report forcompletion and accuracy before signing.The narrative report is not required for projects that do not have specific percentagegoals for DBE or DVBE participation or final projects that show no change from theDBE or DVBE use plan.

CONTRACT ADMINISTRATION Measurement and Payment 109.05

3/22/2004

RetainmentWhen it comes to retainment, there are basically two options. The Engineer has the discretion to allow for 100 percent progress payments or require a standard retainment of 5 percent. The Contractor’s bonding company must endorse 100 percent progress payments.

With 100 percent progress payments, should the Engineer determine at any time that the work is not progressing as scheduled or in a satisfactory manner or deems the State’s interest insecure, the Engineer may stop the 100 percent progress payments. At this time the Engineer may withhold any sum as deemed necessary to ensure the work is satisfactorily completed. In order for the Engineer to exercise this contractual right of the owner, inspections, punch lists, designation of unacceptable work, corrective action required, etc., must be known and identified to the contractor.

Based on the contract, the Engineer has the option of withholding on progress payments and/or applying a deduction for retainment.

ITD policy is to allow the contractor to exercise their contractual rights under the existing standard specifications. When work is not in accordance with the plans and specifications, the Engineer is to exercise our contractual rights as explained above.

Consent of Surety for 100% progress payments Subsection 109.05 of the Specifications provides for partial release of retainage and discretionary 100% progress payments contingent upon written consent of surety. The consent letters received must guarantee repayment of any overpayment of tax claims.

To honor such requests, the consent letter shall contain the following verbiage:

As surety for the above referenced project, we consent to the release of Contract retainage (and/or 100% progress payments). In accordance with Subsection 107.02 and 109.05 of the Standard Specifications for Highway Construction, surety hereby guarantees, under it’s performance bond, to promptly repay the Idaho Transportation Department for any overpayments, and further agrees to promptly pay any tax claims made pursuant to Title 63, Chapter 15, Idaho Code.

SURETY

ATTORNEY-IN-FACT

Prompt Payment to Subcontractors The Disadvantaged Business Enterprise (DBE) program requires that all subcontractors be promptly paid by prime contractors for items of work as they are performed and accepted by ITD. The following specification is used in all contracts to ensure prompt payment is made:

The contractor shall pay each subcontractor for satisfactory performance of its contract no later than 20 calendar days from receipt of each payment the contractor receives from the department. The contractor shall return retainage to each subcontractor within 20 calendar days after the subcontractor’s work is satisfactorily completed. The contractor shall certify with each estimate payment that payment to subcontractors has been made within the prescribed time frames. The certification will be made on forms provided by the department, and returned within 20 calendar days of receiving the estimate payment.

CONTRACT ADMINISTRATION Measurement and Payment 109.05

3/22/2004

In order to enforce and monitor the prompt payment requirement, the “Certification of Payment” form ITD-02892 shall be sent to the contractor as an attachment to the progress pay estimate. This is the prescribed form referenced in the above specification.

At the pre-construction conference, the contractor shall be instructed to fill out this form and return it to the Engineer within 20 days of receiving each pay estimate.

Once the form is returned, the original is kept in the project files and a copy is sent to the EEO Contract Compliance Officer in Boise.

The ITD-02892, Certification of Payment form is attached for reference (Exhibit 109.05-1).

Full Contract Obligation Administrative policy A-11-02 Highway Development Program requires that each District Engineer insure that sufficient funds are obligated at all times to cover all current estimated costs on each project under contract. Each District must estimate the project completion cost when construction contract expenditures (CN function code) reach 85 percent of the funds that have been obligated to date. Any additional funds that may be needed must be obligated immediately.

As required by the policy, the Construction Section prepares and distributes a report each month to the District, Roadway Design, Highway Programming, the Assistant Chief Engineer (Design) and the Assistant Chief Engineer (Operations) showing compliance with the full contract obligation provision. The report is based on data from the Roadway Design project tracking system, the Construction Section construction administration management system and Financial Services oracle system.

Each Residency/Region is required to timely assess and report the estimated construction costs, and document the status of obligating any necessary additional funds to support the full contract obligation provision. Note that there may be more than one project within a construction contract. Each project must be assessed, reported and documented as a separate entity within the contract.

The Residency/Region must estimate the final construction costs when construction expenditures reach 85 percent for any project within the contract. However, estimates should be performed earlier when warranted (e.g. large cost change orders or quantity overruns). The Residency/Region Office Manager should evaluate cost percentage expended whenever an estimate is prepared, and (at a minimum) report to the Resident/Regional Engineer when expenditures are near, at or over 85 percent of the obligated funds.

Cost impacts of bid item quantity over and under runs must be assessed as well as costs associated with change order work to mitigate the potential of obligating funds less than, or in excess of, what is actually needed. The estimated construction costs should be reported within the District according to District policy. This is especially important if additional funds must be obligated.

The full contract obligation provision of Administrative Policy A-11-02 Highway Development Program specifically prohibits the approval of change orders in excess of any contingency costs unless sufficient funds are obligated to the project to cover these cost increases.

ITD 2892 (Rev. 3-10) Certification of Paymentitd.idaho.gov Idaho Transportation Department Fill out for each estimate/invoice and return within thirty (30) calendar days of receipt of ITD payment. Ref; ITD Std. Spec. 109.05 (Construction Contracts) and ITD Consultant Agreement Spec. I.5 (Consultant Agreements). Use additional pages if needed.

Key Number Project Number Project Name

Contract/Agreement Number Work Reflected in ITD Estimate/Invoice Number

List any subcontractors/subconsultants or manufacturers/suppliers not paid for work reflected on pay estimates/invoices for month being reported. Payment must be made for satisfactory performance based on the contract/agreement between the contractor/Consultant and the State. Retainage must also be paid upon satisfactory performance completion based on the contract/agreement between the Contractor/Consultant and the State.

Subcontractor/Subconsultant Manufacturer and/or Supplier Reason for Non-Payment

Amount of Non-Payment

Agreement Administrator/Resident Engineer

Approval/Disapproval

I, , Name (Printed or Typed) Title

of Contractor/Consultant

do certify that to the best of my knowledge and with the exception of those subcontractors/subconsultants or manufactures/suppliers listed above, all subcontractors/subconsultants or manufactures/suppliers have been paid in accordance with the contract (20 days after receiving payment for the work performed by the subcontractors/subconsultants or manufactures/suppliers), and that any retainage held on a subcontractor/subconsultant or manufacture/supplier’s work has been released within 20 days after satisfactory completion of all of the subcontractors/subconsultants or manufactures/suppliers’ work.Contractor/Consultant's Signature Date

ITD Distribution: Project File Page of

All Regional Engineers

Michael L. Hine

Special Provision for Payments to Subcontractors

January 13, 2006 This special provision was developed by the Bureau of Construction and Office of Chief Council to comply with 49 CFR §26.29 and Section 7 of the Prompt Payment Act, 30 ILCS 540/7. It has been revised to correspond with recent changes to the Prompt Payment Act. This special provision should be inserted into all contracts. The districts should include the BDE Check Sheet marked with the applicable special provisions for the April 28, 2006 and subsequent lettings. The Project Development and Implementation Section will include a copy in the contract. This special provision will be available on the transfer directory January 13, 2006. 80022m

PAYMENTS TO SUBCONTRACTORS (BDE) Effective: June 1, 2000 Revised: January 1, 2006 Federal regulations found at 49 CFR §26.29 mandate the Department to establish a contract clause to require Contractors to pay subcontractors for satisfactory performance of their subcontracts and to set the time for such payments. State law also addresses the timing of payments to be made to subcontractors and material suppliers. Section 7 of the Prompt Payment Act, 30 ILCS 540/7, requires that when a Contractor receives any payment from the Department, the Contractor shall make corresponding, proportional payments to each subcontractor and material supplier performing work or supplying material within 15 calendar days after receipt of the Department payment. Section 7 of the Act further provides that interest in the amount of two percent per month, in addition to the payment due, shall be paid to any subcontractor or material supplier by the Contractor if the payment required by the Act is withheld or delayed without reasonable cause. The Act also provides that the time for payment required and the calculation of any interest due applies to transactions between subcontractors and lower-tier subcontractors and material suppliers throughout the contracting chain. This Special Provision establishes the required federal contract clause, and adopts the 15 calendar day requirement of the State Prompt Payment Act for purposes of compliance with the federal regulation regarding payments to subcontractors. This contract is subject to the following payment obligations. When progress payments are made to the Contractor according to Article 109.07 of the Standard Specifications, the Contractor shall make a corresponding payment to each subcontractor and material supplier in proportion to the work satisfactorily completed by each subcontractor and for the material supplied to perform any work of the contract. The proportionate amount of partial payment due to each subcontractor and material supplier throughout the contracting chain shall be determined by the quantities measured or otherwise determined as eligible for payment by the Department and included in the progress payment to the Contractor. Subcontractors and material suppliers shall be paid by the Contractor within 15 calendar days after the receipt of payment from the Department. The Contractor shall not hold retainage from the subcontractors. These obligations shall also apply to any payments made by subcontractors and material suppliers to their subcontractors and material suppliers; and to all payments made to lower tier subcontractors and material suppliers throughout the contracting chain. Any payment or portion of a payment subject to this provision may only be withheld from the subcontractor or material supplier to whom it is due for reasonable cause. This Special Provision does not create any rights in favor of any subcontractor or material supplier against the State or authorize any cause of action against the State on account of any payment, nonpayment, delayed payment, or interest claimed by application of the State Prompt Payment Act. The Department will not approve any delay or postponement of the 15 day requirement except for reasonable cause shown after notice and hearing pursuant to Section

7(b) of the State Prompt Payment Act. State law creates other and additional remedies available to any subcontractor or material supplier, regardless of tier, who has not been paid for work properly performed or material furnished. These remedies are a lien against public funds set forth in Section 23(c) of the Mechanics Lien Act, 770 ILCS 60/23(c), and a recovery on the Contractor’s payment bond according to the Public Construction Bond Act, 30 ILCS 550. 80022

FINANCE(30 ILCS 540/) State Prompt Payment Act.

(30 ILCS 540/0.01) (from Ch. 127, par. 132.400) Sec. 0.01. Short title. This Act may be cited as the State Prompt Payment Act. (Source: P.A. 86-1324.)

(30 ILCS 540/1) (from Ch. 127, par. 132.401) Sec. 1. This Act applies to any State official or agency authorized to provide for paymentfrom State funds, by virtue of any appropriation of the General Assembly, for goods or servicesfurnished to the State. For purposes of this Act, "goods or services furnished to the State" include but are notlimited to (i) covered health care provided to eligible members and their covered dependents inaccordance with the State Employees Group Insurance Act of 1971, including coverage through aphysician-owned health maintenance organization under Section 6.1 of that Act, and (ii)prevention, intervention, or treatment services and supports for persons with developmentaldisabilities, mental health services, alcohol and substance abuse services, rehabilitationservices, and early intervention services provided by a vendor. For the purposes of item (ii), avendor includes but is not limited to sellers of goods and services, including community-basedorganizations that are licensed to provide prevention, intervention, or treatment services andsupports for persons with developmental disabilities, mental illness, and substance abuseproblems. For the purposes of this Act, "appropriate State official or agency" is defined as theDirector or Chief Executive or his designee of that State agency or department or facility ofsuch agency or department. With respect to covered health care provided to eligible members andtheir dependents in accordance with the State Employees Group Insurance Act of 1971, "appropriateState official or agency" also includes an administrator of a program of health benefits underthat Act. As used in this Act, "eligible member" means a member who is eligible for health benefitsunder the State Employees Group Insurance Act of 1971, and "member" and "dependent" have themeanings ascribed to those terms in that Act. As used in this Act, "a proper bill or invoice" means a bill or invoice that includes theinformation necessary for processing the payment as may be specified by a State agency and inrules adopted in accordance with this Act. (Source: P.A. 96-802, eff. 1-1-10.)

(30 ILCS 540/2) (from Ch. 127, par. 132.402) Sec. 2. (Repealed). (Source: Repealed by P.A. 87-1232.)

(30 ILCS 540/2.1) (from Ch. 127, par. 132.402.1) Sec. 2.1. (Repealed). (Source: Repealed by P.A. 87-1232.)

(30 ILCS 540/3) (from Ch. 127, par. 132.403) Sec. 3. (Repealed). (Source: Repealed by P.A. 87-1232.)

(30 ILCS 540/3-1) (from Ch. 127, par. 132.403-1) Sec. 3-1. The Illinois Court of Claims shall, in its investigation of payments due claimants,provide for interest penalties as prescribed in this Act; however, interest penalties in claimspursuant to the Line of Duty Compensation Act shall be paid in accordance with subsection (3) ofSection 24 of the Court of Claims Act. (Source: P.A. 95-928, eff. 8-26-08.)

(30 ILCS 540/3-2) (Text of Section from P.A. 97-72) Sec. 3-2. Beginning July 1, 1993, in any instance where a State official or agency is late inpayment of a vendor's bill or invoice for goods or services furnished to the State, as defined inSection 1, properly approved in accordance with rules promulgated under Section 3-3, the Stateofficial or agency shall pay interest to the vendor in accordance with the following: (1) Any bill, except a bill submitted under Article V

of the Illinois Public Aid Code and except as providedunder paragraph (1.05), approved for payment under thisSection must be paid or the payment issued to the payee

within 60 days of receipt of a proper bill or invoice. Ifpayment is not issued to the payee within this 60-dayperiod, an interest penalty of 1.0% of any amount approvedand unpaid shall be added for each month or fractionthereof after the end of this 60-day period, until finalpayment is made. Any bill, except a bill for pharmacy ornursing facility services or goods, and except as providedunder paragraph 1.05 of this Section, submitted underArticle V of the Illinois Public Aid Code approved forpayment under this Section must be paid or the paymentissued to the payee within 60 days after receipt of aproper bill or invoice, and, if payment is not issued tothe payee within this 60-day period, an interest penalty of2.0% of any amount approved and unpaid shall be added foreach month or fraction thereof after the end of this 60-day period, until final payment is made. Any bill forpharmacy or nursing facility services or goods submittedunder Article V of the Illinois Public Aid Code, except asprovided under paragraph (1.05) of this Section, approvedfor payment under this Section must be paid or the paymentissued to the payee within 60 days of receipt of a properbill or invoice. If payment is not issued to the payeewithin this 60-day period, an interest penalty of 1.0% ofany amount approved and unpaid shall be added for eachmonth or fraction thereof after the end of this 60-dayperiod, until final payment is made.

(1.05) For State fiscal year 2012 and future fiscal

years, any bill approved for payment under this Sectionmust be paid or the payment issued to the payee within 90days of receipt of a proper bill or invoice. If payment isnot issued to the payee within this 90-day period, aninterest penalty of 1.0% of any amount approved and unpaidshall be added for each month or fraction thereof afterthe end of this 90-day period, until final payment ismade.

(1.1) A State agency shall review in a timely manner

each bill or invoice after its receipt. If the Stateagency determines that the bill or invoice contains adefect making it unable to process the payment request, theagency shall notify the vendor requesting payment as soonas possible after discovering the defect pursuant to rulespromulgated under Section 3-3; provided, however, that thenotice for construction related bills or invoices must begiven not later than 30 days after the bill or invoice wasfirst submitted. The notice shall identify the defect andany additional information necessary to correct the defect.If one or more items on a construction related bill orinvoice are disapproved, but not the entire bill orinvoice, then the portion that is not disapproved shall bepaid.

(2) Where a State official or agency is late in

payment of a vendor's bill or invoice properly approved inaccordance with this Act, and different late payment termsare not reduced to writing as a contractual agreement, theState official or agency shall automatically pay interestpenalties required by this Section amounting to $50 or moreto the appropriate vendor. Each agency shall be responsiblefor determining whether an interest penalty is owed and forpaying the interest to the vendor. Interest due to a vendorthat amounts to less than $50 shall not be paid but shallbe accrued until all interest due the vendor for allsimilar warrants exceeds $50, at which time the accruedinterest shall be payable and interest will begin accruingagain, except that interest accrued as of the end of thefiscal year that does not exceed $50 shall be payable atthat time. In the event an individual has paid a vendorfor services in advance, the provisions of this Sectionshall apply until payment is made to that individual.

(3) The provisions of Public Act 96-1501 reducing the

interest rate on pharmacy claims under Article V of theIllinois Public Aid Code to 1.0% per month shall apply toany pharmacy bills for services and goods under Article Vof the Illinois Public Aid Code received on or after thedate 60 days before January 25, 2011 (the effective dateof Public Act 96-1501) except as provided under paragraph(1.05) of this Section.

(Source: P.A. 96-555, eff. 8-18-09; 96-802, eff. 1-1-10; 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10; 96-1501, eff. 1-25-11;96-1530, eff. 2-16-11; 97-72, eff. 7-1-11.)

(Text of Section from P.A. 97-74) Sec. 3-2. Beginning July 1, 1993, in any instance where aState official or agency is late in payment of a vendor's billor invoice for goods or services furnished to the State, asdefined in Section 1, properly approved in accordance withrules promulgated under Section 3-3, the State official oragency shall pay interest to the vendor in accordance with thefollowing: (1) Any bill, except a bill submitted under Article V

of the Illinois Public Aid Code and except as providedunder paragraph (1.05) of this Section, approved forpayment under this Section must be paid or the paymentissued to the payee within 60 days of receipt of a properbill or invoice. If payment is not issued to the payeewithin this 60-day period, an interest penalty of 1.0% ofany amount approved and unpaid shall be added for eachmonth or fraction thereof after the end of this 60-dayperiod, until final payment is made. Any bill, except abill for pharmacy or nursing facility services or goods andexcept as provided under paragraph (1.05) of this Section,submitted under Article V of the Illinois Public Aid Codeapproved for payment under this Section must be paid orthe payment issued to the payee within 60 days afterreceipt of a proper bill or invoice, and, if payment is notissued to the payee within this 60-day period, an interestpenalty of 2.0% of any amount approved and unpaid shall beadded for each month or fraction thereof after the end ofthis 60-day period, until final payment is made. Any billfor pharmacy or nursing facility services or goodssubmitted under Article V of the Illinois Public Aid Code,except as provided under paragraph (1.05) of this Section,approved for payment under this Section must be paid orthe payment issued to the payee within 60 days of receiptof a proper bill or invoice. If payment is not issued tothe payee within this 60-day period, an interest penalty of1.0% of any amount approved and unpaid shall be added foreach month or fraction thereof after the end of this 60-day period, until final payment is made.

(1.05) For State fiscal year 2012 and future fiscal

years, any bill approved for payment under this Sectionmust be paid or the payment issued to the payee within 90days of receipt of a proper bill or invoice. If payment isnot issued to the payee within this 90-day period, aninterest penalty of 1.0% of any amount approved and unpaidshall be added for each month or fraction thereof afterthe end of this 90-day period, until final payment ismade.

(1.1) A State agency shall review in a timely manner

each bill or invoice after its receipt. If the Stateagency determines that the bill or invoice contains adefect making it unable to process the payment request, theagency shall notify the vendor requesting payment as soonas possible after discovering the defect pursuant to rulespromulgated under Section 3-3; provided, however, that thenotice for construction related bills or invoices must begiven not later than 30 days after the bill or invoice wasfirst submitted. The notice shall identify the defect andany additional information necessary to correct the defect.If one or more items on a construction related bill orinvoice are disapproved, but not the entire bill orinvoice, then the portion that is not disapproved shall bepaid.

(2) Where a State official or agency is late in

payment of a vendor's bill or invoice properly approved inaccordance with this Act, and different late payment termsare not reduced to writing as a contractual agreement, theState official or agency shall automatically pay interestpenalties required by this Section amounting to $50 or moreto the appropriate vendor. Each agency shall be responsiblefor determining whether an interest penalty is owed and forpaying the interest to the vendor. Interest due to a vendorthat amounts to less than $50 shall not be paid but shallbe accrued until all interest due the vendor for allsimilar warrants exceeds $50, at which time the accruedinterest shall be payable and interest will begin accruingagain, except that interest accrued as of the end of thefiscal year that does not exceed $50 shall be payable atthat time. In the event an individual has paid a vendorfor services in advance, the provisions of this Sectionshall apply until payment is made to that individual.

(3) The provisions of Public Act 96-1501 reducing the

interest rate on pharmacy claims under Article V of theIllinois Public Aid Code to 1.0% per month shall apply toany pharmacy bills for services and goods under Article Vof the Illinois Public Aid Code received on or after thedate 60 days before January 25, 2011 (the effective dateof Public Act 96-1501) except as provided under paragraph(1.05) of this Section.

(Source: P.A. 96-555, eff. 8-18-09; 96-802, eff. 1-1-10; 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10; 96-1501, eff. 1-25-11;96-1530, eff. 2-16-11; 97-74, eff. 6-30-11.) (Text of Section from P.A. 97-348) Sec. 3-2. Beginning July 1, 1993, in any instance where aState official or agency is late in payment of a vendor's billor invoice for goods or services furnished to the State, asdefined in Section 1, properly approved in accordance withrules promulgated under Section 3-3, the State official oragency shall pay interest to the vendor in accordance with thefollowing: (1) Any bill, except a bill submitted under Article V

of the Illinois Public Aid Code, approved for payment underthis Section must be paid or the payment issued to thepayee within 60 days of receipt of a proper bill orinvoice. If payment is not issued to the payee within this60-day period, an interest penalty of 1.0% of any amountapproved and unpaid shall be added for each month orfraction thereof after the end of this 60-day period,until final payment is made. Any bill, except a bill forpharmacy or nursing facility services or goods, submittedunder Article V of the Illinois Public Aid Code approvedfor payment under this Section must be paid or the paymentissued to the payee within 60 days after receipt of aproper bill or invoice, and, if payment is not issued tothe payee within this 60-day period, an interest penalty of2.0% of any amount approved and unpaid shall be added foreach month or fraction thereof after the end of this 60-day period, until final payment is made. Any bill forpharmacy or nursing facility services or goods submittedunder Article V of the Illinois Public Aid Code andapproved for payment under this Section must be paid orthe payment issued to the payee within 60 days of receiptof a proper bill or invoice. If payment is not issued tothe payee within this 60-day period, an interest penalty of1.0% of any amount approved and unpaid shall be added foreach month or fraction thereof after the end of this 60-day period, until final payment is made.

(1.1) A State agency shall review in a timely manner

each bill or invoice after its receipt. If the Stateagency determines that the bill or invoice contains adefect making it unable to process the payment request, theagency shall notify the vendor requesting payment as soonas possible after discovering the defect pursuant to rulespromulgated under Section 3-3; provided, however, that thenotice for construction related bills or invoices must begiven not later than 30 days after the bill or invoice wasfirst submitted. The notice shall identify the defect andany additional information necessary to correct the defect.If one or more items on a construction related bill orinvoice are disapproved, but not the entire bill orinvoice, then the portion that is not disapproved shall bepaid.

(2) Where a State official or agency is late in

payment of a vendor's bill or invoice properly approved inaccordance with this Act, and different late payment termsare not reduced to writing as a contractual agreement, theState official or agency shall automatically pay interestpenalties required by this Section amounting to $50 or moreto the appropriate vendor. Each agency shall be responsiblefor determining whether an interest penalty is owed and forpaying the interest to the vendor. Except as provided inparagraph (4), an individual interest payment amounting to$5 or less shall not be paid by the State. Interest due toa vendor that amounts to greater than $5 and less than $50shall not be paid but shall be accrued until all interestdue the vendor for all similar warrants exceeds $50, atwhich time the accrued interest shall be payable andinterest will begin accruing again, except that interestaccrued as of the end of the fiscal year that does notexceed $50 shall be payable at that time. In the event anindividual has paid a vendor for services in advance, the

provisions of this Section shall apply until payment ismade to that individual.

(3) The provisions of Public Act 96-1501 reducing the

interest rate on pharmacy claims under Article V of theIllinois Public Aid Code to 1.0% per month shall apply toany pharmacy bills for services and goods under Article Vof the Illinois Public Aid Code received on or after thedate 60 days before January 25, 2011 (the effective dateof Public Act 96-1501).

(4) Interest amounting to less than $5 shall not be

paid by the State, except for claims (i) to the Departmentof Healthcare and Family Services or the Department ofHuman Services, (ii) pursuant to Article V of the IllinoisPublic Aid Code, the Covering ALL KIDS Health InsuranceAct, or the Children's Health Insurance Program Act, and(iii) made (A) by pharmacies for prescriptive services or(B) by any federally qualified health center forprescriptive services or any other services.

(Source: P.A. 96-555, eff. 8-18-09; 96-802, eff. 1-1-10; 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10; 96-1501, eff. 1-25-11;96-1530, eff. 2-16-11; 97-348, eff. 8-12-11.)

(30 ILCS 540/3-2.1) Sec. 3-2.1. Interest penalty report. The State Comptroller, in conjunction with theDepartment of Central Management Services, shall submit a report to the General Assembly no laterthan January 31, 2011. The report shall include the following information, which shall be brokendown by State agency and vendor: (1) the number and total dollar amount of interest

penalty payment vouchers submitted to the Comptroller'soffice on or after August 18, 2009 and before January 1,2011 for interest payments of less than $5;

(2) the number and total dollar amount of interest

penalty payment vouchers submitted to the Comptroller'soffice on or after August 18, 2009 and before January 1,2011 for interest payments of at least $5 but less than$50; the report shall indicate the number and total dollaramount of (i) those paid automatically and (ii) thoseinitiated by written request of the vendor; and

(3) the aggregate cost of processing the interest penalty payment vouchers referenced in items (1) and (2). The report shall also include recommendations regardingestablishing a minimum threshold for payment of interestpenalties to vendors and increased efficiencies, including, butnot limited to, consolidation of multiple payments to the samevendor. (Source: P.A. 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10.)

(30 ILCS 540/3-2.5) Sec. 3-2.5. Advance payment reimbursement and interest. If a vendor provides goods orservices to an individual and requires that individual to pay all or part of the cost of thegoods or services in advance of the vendor being paid for those goods or services by the State,then the amount of the individual's advance payment, and any interest under this Act attributableto the advance payment, that is paid by the State to the vendor is the property of the individualand, to the extent received by the vendor, must be promptly disbursed by the vendor to thatindividual. (Source: P.A. 96-1085, eff. 1-1-11.)

(30 ILCS 540/3-3) (from Ch. 127, par. 132.403-3) Sec. 3-3. The State Comptroller and the Department of Central Management Services shalljointly promulgate rules and policies to govern the uniform application of this Act. These rulesand policies shall include procedures and time frames for approving a bill or invoice from avendor for goods or services furnished to the State. These rules and policies shall provide forprocedures and time frames applicable to payment plans as may be agreed upon between Stateagencies and vendors. These rules and policies shall be binding on all officials and agenciesunder this Act's jurisdiction. These rules and policies may be made effective no earlier thanJuly 1, 1993. (Source: P.A. 92-384, eff. 7-1-02.)

(30 ILCS 540/3-4) Sec. 3-4. The State Comptroller must specify the manner in which State agencies shall recordinterest penalty payments made under this Act. The State Comptroller may require voucherssubmitted for payment, including submission by electronic or other means approved by the

Comptroller, to indicate the appropriate date from which interest penalties may be calculated asrequired under this Act. (Source: P.A. 92-384, eff. 7-1-02.)

(30 ILCS 540/4) (from Ch. 127, par. 132.404) Sec. 4. Nothing in this Act shall be construed to deprive the Comptroller of his power toexamine vouchers as specified in the State Comptroller Act. (Source: P.A. 92-384, eff. 7-1-02.)

(30 ILCS 540/5) (from Ch. 127, par. 132.405) Sec. 5. The State remittance shall indicate that payment of interest may be available forfailure to comply with this Act. (Source: P.A. 92-384, eff. 7-1-02.)

(30 ILCS 540/6) (from Ch. 127, par. 132.406) Sec. 6. A State official or agency may not request any vendor or contractor to waive hisrights, under this Act, to recover a penalty for late payment as a condition of, or inducement toenter into, any contract for goods or services. (Source: P.A. 87-773.)

(30 ILCS 540/7) (from Ch. 127, par. 132.407) Sec. 7. Payments to subcontractors and material suppliers. (a) When a State official or agency responsible for administering a contract submits avoucher to the Comptroller for payment to a contractor, that State official or agency shallpromptly make available electronically the voucher number, the date of the voucher, and theamount of the voucher. The State official or agency responsible for administering the contractshall provide subcontractors and material suppliers, known to the State official or agency, withinstructions on how to access the electronic information. When a contractor receives any payment,the contractor shall pay each subcontractor and material supplier in proportion to the workcompleted by each subcontractor and material supplier their application, plus interest receivedunder this Act, less any retention. If the contractor receives less than the full payment dueunder the public construction contract, the contractor shall be obligated to disburse on a prorata basis those funds received, plus interest received under this Act, with the contractor,subcontractors and material suppliers each receiving a prorated portion based on the amount ofpayment. When, however, the public owner does not release the full payment due under the contractbecause there are specific areas of work or materials the contractor is rejecting or because thecontractor has otherwise determined such areas are not suitable for payment, then those specificsubcontractors or suppliers involved shall not be paid for that portion of work rejected ordeemed not suitable for payment and all other subcontractors and suppliers shall be paid in full,plus interest received under this Act. (b) If the contractor, without reasonable cause, fails to make full payment of amounts dueunder subsection (a) to his subcontractors and material suppliers within 15 days after receipt ofpayment under the public construction contract, the contractor shall pay to his subcontractorsand material suppliers, in addition to the payment due them, interest in the amount of 2% permonth, calculated from the expiration of the 15-day period until fully paid. This subsectionshall also apply to any payments made by subcontractors and material suppliers to theirsubcontractors and material suppliers and to all payments made to lower tier subcontractors andmaterial suppliers throughout the contracting chain. (1) If a contractor, without reasonable cause, fails

to make payment in full as provided in subsection (a)within 15 days after receipt of payment under the publicconstruction contract, any subcontractor or materialsupplier to whom payments are owed may file a writtennotice with the State official or agency setting forth theamount owed by the contractor and the contractor's failureto timely pay the amount owed.

(2) The State official or agency, within 15 days

after receipt of a subcontractor's or material supplier'swritten notice of the failure to receive payment from thecontractor, shall hold a hearing convened by anadministrative law judge to determine whether thecontractor withheld payment, without reasonable cause, fromthe subcontractors and material suppliers and what amount,if any, is due to the subcontractors and materialsuppliers. The State official or agency shall provideappropriate notice to the parties of the date, time, andlocation of the hearing. Each contractor, subcontractor,and material supplier has the right to be represented bycounsel at the hearing and to cross-examine witnesses andchallenge documents.

(3) If there is a finding by the administrative lawjudge that the contractor failed to make payment in full,

without reasonable cause, as provided in subsection (a),then the administrative law judge shall, in writing, directthe contractor to pay the amount owed to the subcontractorsand material suppliers plus interest within 15 days afterthe finding.

(4) If a contractor fails to make full payment within

15 days after the administrative law judge's finding, thenthe contractor shall be barred from entering into a Statepublic construction contract for a period of one yearbeginning on the date of the administrative law judge'sfinding.

(Source: P.A. 94-672, eff. 1-1-06; 94-972, eff. 7-1-07.)

77

breach of any part of the contract shall not be held to be a waiver of any other or subsequent breach. The Contractor, without prejudice to the terms of the contract, shall be liable to the Department for latent defects, fraud, or such gross mistakes as may amount to fraud, or as regards the rights of the Department under any warranty or guaranty. 107.24 Governing Law This contract shall be construed by the laws of the State of Indiana. Suit, if any, 750 shall be brought in the State of Indiana. 107.25 Severability The invalidity in whole or in part of a provision of the contract shall not void or affect the validity of all other provisions.

SECTION 108 – PROSECUTION AND PROGRESS 108.01 Subletting of Contract The contract, contracts, or portions thereof; or the right, title, or interest therein shall not be sublet, sold, transferred, assigned, or otherwise disposed of without written consent. In case such consent is given, the Contractor will be permitted to sublet a portion thereof, but shall perform with its own organization, work amounting to not less than 50% of the original or revised contract amount, whichever is less. All items designated in the contract as specialty items may be performed by subcontract. The cost of such specialty items so performed by subcontracts may be 10 deduced from the total cost before computing the amount of work required to be performed by the Contractor with its own organization. No subcontracts or transfer of contracts will release the Contractor of liability under the contract and bonds. Approved subcontractors will not be permitted to further subcontract their work. The minimum wage for labor as stated in the Proposal book shall apply to all labor performed on all work sublet, assigned, or otherwise disposed of in any way. The Contractor or subcontractor may enter into leases or rental agreements for equipment with operators or trucks with drivers. When certified payrolls are 20 required, they shall be submitted for all such equipment operators and truck drivers who perform work. This payroll shall verify that these employees have been paid not less than the predetermined wage rate set out elsewhere in the contract for the classification of work performed. The subcontractor shall be in accordance with the requirements of 105 IAC 11-2-10, Subcontractors. 108.02 Release of Retainage to Subcontractors If the Contractor is withholding portions of payments due subcontractors as 30 retainage, the Contractor shall release such retainage to the subcontractor within 30

108.02

78

calendar days after satisfactory completion of the work performed by the subcontractor. For the purposes of this section, satisfactory completion will be interpreted as when the subcontractor has completed all physical work and completed other contract requirements, including the submission of all submittals required by the specifications and the Department. 108.03 Notice to Proceed 40 Unless otherwise provided, the Contractor will be expected to start active and continuous work on the contract within 15 calendar days after the date of the notice to proceed. Work shall not begin prior to the date of the notice to proceed. If a delayed starting date is indicated in the proposal, the 15 calendar day limitation will be waived. Work day charges will then begin on a date mutually agreed upon, but not later than the delayed starting date specified. If the contract is canceled after an award has been made but prior to the issuing of the notice to proceed, no reimbursement will be made for any expenses accrued relative to this contract during that period. 50 If the contract involves demolition work, the Contractor shall not enter the parcel or proceed with the demolition without written authority from the Engineer. The Contractor will be compensated only for those houses and buildings which are actually removed from the right-of-way. Time of commencing demolition work and time of completion shall be in accordance with 108.08. 108.04 Prosecution of the Work A pre-construction conference will be held at the earliest possible date, at which time it will be determined at what point the Contractor’s operations will start. 60 The Contractor shall furnish the Engineer with a bar graph type schedule which shows the estimated times required to prosecute the major or critical items of work for acceptance unless the contract has less than 60 calendar days completion time, less than 35 work days, or less than 60 days between the date of the notice to proceed and the calendar completion date. This schedule shall incorporate all contract requirements regarding the order of performance of work and each activity. The schedule shall graphically show the calendar time for which each activity is scheduled for work. The schedule may be used as the basis for establishing major construction operations and as a check on the progress of the work. Sufficient 70 materials, equipment, and labor shall be provided to guarantee the completion of the project in accordance with the plans and specifications within the specified completion time. The Engineer shall be notified at least 3 days in advance of the date on which the work is expected to begin. The schedule shall be submitted at the pre-construction conference.

108.03

09-01-11

100-C-151C

100-C-151C DBE RECORD KEEPING AND TIMELY PAY

(Revised 05-23-11)

SECTION 103, AFTER LINE 340, INSERT AS FOLLOWS: 103.02.1 Record Keeping All firms performing work on Department contracts, bidding on Department contracts, or offering quotes for subcontract or trucking services shall register with the Department, annually, by submitting the following information to the Department’s Prequalification Engineer. (a) firm’s name; (b) firm’s address; (c) firm’s status as a DBE or non-DBE; (d) the age of the firm; and (e) the annual gross receipts of the firm (f) approximately how many Department projects has the firm bid or quoted

in the past 12 months. (If none, please indicate 0) (g) in which of the following markets has the firm participated? 1. prime Contractor 2. subcontractor 3. trucking firm 4. consultant SECTION 109, AFTER LINE 792, INSERT AS FOLLOWS: Within 10 business days of receipt of payment for any such estimate, the Contractor shall make payment to all subcontractors for the value of their work performed and materials complete in place in accordance with this contract. Failure to comply with this clause shall constitute a material breach of the contract and may result in sanctions under the contract. Any delay or postponement of payment among the parties may take place only for good cause, with the Department’s written approval. The explanation from the Contractor shall be made in writing to the Department.

The purpose of the SPT system is to allow prime contractors with active INDOT contracts a means to report payment information made to assigned subcontractors online. The data collected is used for two primary purposes. First, the system will help to ensure that INDOT prime contractors comply with the ten (10) day payment provision in all INDOT contracts in accordance with INDOT Recurring Special Provision 100-C-151c. Second, the data will help to ensure compliance with the Disadvantaged Business Enterprise (DBE) Program provisions in federal aid INDOT contracts in accordance with 49 CFR § 26.29.

Where ID = Index Difference = [CAPI - 1.05(BAPI)] when the API has increased between the month of bid and month of this progress estimate.

Payment will be made on the current progress estimate to reflect the index difference at the time work was performed.

For asphalt concrete items payable by the ton, the number of gallons will be determined assuming a mix design with 6.25% liquid asphalt weighing 8.58 lb/gal.

Asphalt concrete items payable by the square yard will be converted to equivalent tons assuming a weight of 100 lb/yd2 per inch.

For Asphalt concrete items payable by the cubic yard, the number of gallons will be determined assuming a mix design with 3% liquid asphalt weighing 8.58 lb/gal.

9-2.2 Non-Duplication of Payment: In cases where the basis of payment clause in these Specifications relating to any unit price in the bid schedule requires that the unit price cover and be considered compensation for certain work or material essential to the item, the Department will not measure or pay for this same work or material under any other pay item that may appear elsewhere in these Specifications.

SUBARTICLE 9-5.2 (Page 101) is deleted and the following substituted:

9-5.2 Unsatisfactory Payment Record: In accordance with Sections 255.05 and 337.16 of the Florida Statutes, and the rules of the Department, the Department may disqualify the Contractor from bidding on future Department contracts if the Contractor’s payment record in connection with contract work becomes unsatisfactory.

SUBARTICLE 9-5.6 (Page 103) is deleted and the following substituted:

9-5.6 Certification of Payment to Subcontractors: The term “subcontractor,” as used herein, includes persons or firms furnishing materials or equipment incorporated into the work or stockpiled for which the Department has made partial payment and firms working under equipment-rental agreements. The Contractor is required to pay all subcontractors for satisfactory performance of their Contracts before the Department will make a further progress (partial) payment. The Contractor shall also return all retainage withheld to the subcontractors within 30 days after the subcontractor’s work is satisfactorily complete, as determined by the Department. Prior to receipt of any progress (partial) payment, the prime contractor shall certify that all subcontractors having an interest in the Contract were paid for satisfactory performance of their Contracts and that the retainage is returned to subcontractors within 30 days after satisfactory completion of the subcontractor’s work. Provide this certification in the form designated by the Department.

Within 30 days of the Contractor’s receipt of the final progress payment or any other payments thereafter, except the final payment, the Contractor shall pay all subcontractors and suppliers having an interest in the Contract for all work completed and materials furnished. The Department will honor an exception to the above when the Contractor demonstrates good cause for not making any required payment and furnishes written notification of any such good cause to both the Department and the affected subcontractors or suppliers within said 30 day period.

The Contractor shall indemnify and provide defense for the Department when called upon to do so for all claims or suits against the Department, by third parties, pertaining to Contractor payment or performance issues arising out of the Contract. It is expressly understood that the monetary limitation on the extent of the indemnification shall be the approved Contract amount, which shall be the original Contract amount as may be increased by subsequent Supplemental Agreements.

SUBARTICLE 9-8.1 (Pages 104 - 105) is deleted and the following substituted:

9-8.1 Acceptance and Final Payment Documents: Whenever the Contractor has completely performed the work provided for under the Contract and the Engineer has performed a final inspection and made final acceptance (as provided in 5-10 and 5-11), and subject to the terms of 8-11, the Engineer will prepare a final estimate showing the value of the work as soon as the Engineer makes the necessary measurements and computations. The Engineer will correct all prior estimates and payments in the final estimate and payment. The Department will pay the estimate, less any sums that the Department may have deducted or retained under the provisions of the Contract, as soon as practicable after final acceptance of the work, along with all executed supplemental agreements received after final acceptance.

If the Contractor fails to furnish all required Contract Documents as listed in (a) through (h) below within 90 days of the Department’s offer of final payment or request for refund of overpayment, the Department may suspend the Contractor’s Certificate of Qualification under the provisions of Florida Administrative Code 14-22.

(a) The Contractor has agreed in writing to accept the balance due or refund the overpayment, as determined by the Department, as full settlement of his account under the Contract and of all claims in connection therewith, or the Contractor, has through the use of the Qualified Acceptance Letter, accepted the balance due or refunded the overpayment, as determined by the Department, with the stipulation that his acceptance of such payment or the making of such refund does not constitute any bar, admission, or estoppel, or have any effect as to those payments in dispute or the subject of a pending claim between the Contractor and the Department. To receive payment based on a Qualified Acceptance Letter, define in writing the dispute or pending claim with full particular of all items of all issues in dispute, including itemized amounts claimed for all particulars of all items, and submit it as part of the Qualified Acceptance Letter. The Contractor further agrees, by submitting a Qualified Acceptance Letter that any pending or future arbitration claim or suit is limited to those particulars, including the itemized amounts, defined in the original Qualified Acceptance Letter, and that he will commence with any such arbitration claim or suit within 820 calendar days from and after the time of final acceptance of the work and that his failure to file a formal claim within this period constitutes his full acceptance of the Engineer’s final estimate and payment. The overpayment refund check from the Contractor, if required, will be considered a part of any Acceptance Letter executed.

(b) The Contractor has properly maintained the project, as specified hereinbefore.

(c) The Contractor has furnished a sworn affidavit to the effect that the Contractor has paid all bills and no suits are pending (other than those exceptions listed, if any) in connection with work performed under the Contract and that the Contractor has not offered or made any gift or gratuity to, or made any financial transaction of any nature with, any employee

Topic No. 700-000-000 Effective: July 1, 2002 Construction Project Administration Manual Revised: December 14, 2010 Contract Payments FA Approved: March 10, 2004

Unpaid Bills Processing 6-1-1

CHAPTER 6.1

UNPAID BILLS PROCESSING

6.1.1 Purpose

To provide a uniform standard for withholding progress payments due to nonpayment of bills by Contractors on all contracts (construction or maintenance).

6.1.2 Authority

Sections 337.11(11)(a)-(c) and 255.05, Florida Statutes

Rule 14-22, Florida Administrative Code (F.A.C.)

Section 9-5.6 of Standard Specifications for Road and Bridge Construction

6.1.3 Definitions

Prime Contractor: One that enters into a contract with the Department.

Subcontractor: One that enters into a contract with the prime Contractor; one who furnishes labor, materials or equipment and work by equipment rental under rental agreement with the prime Contractor.

Second Tier Subcontractors - a.k.a., Subordinate Subcontractor; any person who enters into a subordinate contract with a subcontractor for the performance of any part of such subcontractor’s contract.

Supplier: Any person who furnishes materials under contract to the prime Contractor for direct delivery, specially fabricated materials or off site improvement, and who performs no labor in the installation.

Second Tier Supplier: Any person who furnishes materials under subordinate contract to a subcontractor for direct delivery, specially fabricated materials or off site improvement, and who performs no labor in the installation.

6.1.4 General

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Unpaid Bills Processing 6-1-2

There are two distinct cases in this procedure. One is for subcontractors and suppliers for which the prime Contractor is required to certify previous progress payment(s). The second is for sub-subcontractors or material suppliers to subcontractors for which the prime Contractor is not required to certify previous payments. These second or more tier subs/suppliers may desire their legal counsel’s advice to protect their rights.

6.1.5 Certification Requirements

The prime Contractor is to certify that he/she has paid all subcontractors and suppliers their pro-rata share of previous progress payments. Any false certification submitted by the Contractor is grounds for denial or revocation of Certification of Qualification or determination of Contractor Non-Responsibility per Rule Chapter 14-22, F.A.C. Retain the envelope that the prime Contractor submits with the Certification.

(A) Resident Level Responsibilities

No progress payment is to be made after the initial payment until the Contractor provides the certification (Certification Disbursement of Previous Periodic Payments to

Subcontractors, Form No. 700-010-38). The certification applies to previous progress payments, less any agreed upon retainage between the Contractor and subcontractor.

The certification must be completed as per the instructions on the form or it will be deemed incomplete and non-responsive. If the Contractor’s submittal is deemed non-responsive then the matter should be discussed with prime Contractor and sent to the prime Contractor describing any deficiencies as shown in Guidance Documents for this section. The progress estimate will be held until a complete certification has been received.

An exception to the withholding of a progress estimate will be made if the Contractor:

(1) Provides detailed reasons for not making payment of the pro-rata share of progress payment and;

(2) Furnishes written notification of the same to the Department and affected

subcontractor(s) and/or suppliers. Note: a copy of this documentation MUST be attached to the certification or it is incomplete.

6.1.6 Receipt of Notice of Unpaid Bill from Subcontractor or

Supplier

(A) Resident Level Responsibilities

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Unpaid Bills Processing 6-1-3

Upon receipt of unpaid bill notice, the Resident Engineer will send a letter as shown in Guidance Documents for this section, including a copy of the unpaid bill claim, to the prime Contractor, initiating an investigation into the claim. The Resident Engineer will send a copy of the letter and claim to the District Final Estimates Manager (DFEM), The Resident Engineer will investigate any good cause of nonpayment. If the Resident Engineer considers that good cause is demonstrated then progress payments will continue. A good cause is when the prime Contractor and the subcontractor/supplier have a legitimate dispute as to whether or not the money is due and the prime Contractor is only withholding the amount in dispute. The Resident Engineer is not to decide the dispute or determine who might win the dispute. The Resident Engineer must only determine whether a legitimate dispute exists. However, if the Resident Engineer considers that good cause is not demonstrated then the next progress estimate will be withheld. During the investigation, progress payments will continue. The Project Administrator / Resident Engineer shall coordinate their review with the DFEM and the State Construction Office throughout the duration of the investigation.

If a monthly certification is not received and good cause for the same is not demonstrated, the Resident Engineer will notify the District Construction Engineer who will then determine whether to withhold payment of the next progress estimate.

Should a notification of unpaid bills be received following Final Acceptance, the Resident Office will forward it to the DFEM.

(B) District Level Responsibilities

The District Final Estimate Manager (DFEM) will record any unpaid bill claim into the tracking system.

Should a notification of unpaid bills be received following Final Acceptance, the DFEM will follow instructions provided in the Final Estimates Review and Administration Manual,

Topic No. 700-050-005.

6.1.7 Receipt of Notice of Unpaid Bill from Second Tier

Subcontractors/Suppliers

(A) Resident Level Responsibilities

The Resident Engineer will send second tier subcontractors/suppliers a letter as shown in Guidance Documents for this section, stating they do not fall within the class of claimants entitled to protection under Section 337.11, Florida Statutes, and they should consult with

Topic No. 700-000-000 Effective: July 1, 2002 Construction Project Administration Manual Revised: December 14, 2010 Contract Payments FA Approved: March 10, 2004

Unpaid Bills Processing 6-1-4

their attorney on how to further protect their rights. A copy of the letter will be sent to the DFEM.

(B) District Level Responsibilities

The DFEM will input the claim into the tracking system.

6.1.8 Notice to Contractor of Withholding

(A) Resident Level Responsibilities

The Resident Engineer must notify the Contractor of discovery by certified mail with return receipt requested of the Resident Engineer’s intent to make a recommendation to withhold payment for the lack of certification or lack of demonstration of good cause. This written notification must include the specific reasons for withholding payment and specific actions required of the Contractor to gain release of payment. A copy of this notification must be sent to the District Final Estimates Office and District Construction Office along with backup correspondence.

6.1.9 Withholding of Payments

(A) Resident Level Responsibilities

The Resident Engineer will prepare the work sheet for the disputed progress estimate and forward it to the District Construction Engineer.

After progress estimates have been computer processed, the District Construction Engineer will pull that specific estimate and hold it until he receives notice of Contractor compliance from the Resident Engineer. At that time, the progress estimate for payment will be released. The Resident Office will inform the DFEM of Contractor compliance, so that the issue may be resolved in the tracking system.

6.1.10 Processing for Falsification of Payment Certification

(A) Resident Level Responsibilities

If the Resident Engineer discovers that the Contractor does not have good cause for withholding payment to the subcontractor and/or suppliers and/or withholding sums more than the amount in dispute and in his opinion the prime Contractor has submitted a false certification of payment, the Resident Engineer must submit to the Director, Office of Construction a memorandum transmitting, on a monthly basis starting from the month a

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Unpaid Bills Processing 6-1-5

false certification may have occurred until the unpaid bill is resolved, all the appropriate documentation related to the non-payment, including copies of the unpaid bill notice and correspondence between the Department, the prime Contractor and the subcontractor/supplier, copies of monthly certifications, copies of sublet with the affected subcontractor/supplier and copies of monthly estimates highlighting payment to the prime Contractor for work performed by the subcontractor/supplier.

Guidance Document 6-1-A

SAMPLE LETTER #1

(Date) (Prime Contractor)

Certified Mail #_________________ Return Receipt Requested

SUBJECT: UNPAID BILLS TO SUPPLIERS AND/OR SUBCONTRACTORS

Financial Project ID: State Job No.: Federal Job Project ID: County/Section No.: Contract No.: Gentlemen: Section 337.11(11)(a), Florida Statutes, requires that the Department shall not make any progress payments unless the Contractor submits a certification that they have paid their suppliers and subcontractors their pro rata shares of the payment out of previous progress payments from the Department. When the Department receives a complaint from a subcontractor or a supplier that they have not received payment, we are required to monitor such claims.

We have received a notice of non-payment from ________. I have attached their letter of _______, for your review. In order to clear the issue, you are required to address the claim of non-payment by your next monthly certification. Please prepare a detailed response explaining the disposition of this claim. Your submittal shall include copies of all pertinent information (i.e. canceled checks, agreements, etc.).

Your explanation will be thoroughly reviewed to assure compliance with Section 337.11(11)(a)-(c), Florida Statutes. Non-compliance of Florida Statutes is sufficient reason for stopping future progress payments. If you, the Prime Contractor, state that subcontractors or suppliers have received their pro rata share and they did not, you have filed a false document.

If you have falsely certified payment to subcontractors, you may be subject to the penalties described in the certification document.

In order to avoid withholding of your monthly estimate, please submit your response by (prior to next estimate cut-off date).

Sincerely,

Resident Engineer initial/initial Attachment cc: _______, District Construction Engineer

_______, District Final Estimate Manager, w/ copy of claim _______, Surety _______, Claimant Sub/Supplier _______, State Construction Engineer - Mail Station 31, w/ copy of claim _______, District Compliance Officer (if DBE is involved)

Guidance Document 6-1-B

SAMPLE LETTER #2

(Date)

(Claimant)

SUBJECT: UNPAID BILLS NOTICE FROM SECOND TIER

SUBCONTRACTORS/SUPPLIERS

Financial Project ID: State Job No.: Federal Job Project ID: County/Section No.: Contract No.:

Gentlemen:

We have received your notice of nonpayment on the above referenced project.

You do not fall within the class of claimants entitled to protection under Section 337.11, Florida Statutes. Therefore, we cannot participate in the resolution of this matter.

Consult with your attorney on how to further protect your rights.

Sincerely,

Resident Engineer initial/initial Attachment

cc: _______, District Construction Engineer _______, Prime Contractor

_______, Surety _______, District Final Estimate Manager, w/ copy of claim _______, State Construction Engineer - Mail Station 31, w/ copy of claim _______, District Compliance Officer (if DBE is involved)

Guidance Document 6-1-C

SAMPLE LETTER #3

(Date) (Prime Contractor)

Certified Mail #_________________ SUBJECT: INCOMPLETE CERTIFICATION DISBURSEMENT OF PREVIOUS PERIODIC PAYMENT TO

SUBCONTRACTORS Financial Project ID: State Job No.: Federal Job Project ID: County/Section No.: Contract No.:

Gentlemen:

Per our conversation on , this letter confirms that we have received your Certification Disbursement of Previous Periodic Payment To Subcontractors and found it incomplete and/or the form instructions have not been followed. (List specific deficiencies with the submittal here). Subsequent to the receipt of a complete certification, progress payments may be processed in accordance with the contract.

Section 337.11(11)(a), Florida Statutes, requires that the Department not make any progress payments unless the Contractor submits a certification that they have paid their subcontractors and suppliers their pro rata shares of the payment out of previous progress payments from the Department.

Your certification will be thoroughly reviewed to assure compliance with Section 337.11(11)(a)-(c), Florida Statutes. Non-compliance of Florida Statutes is sufficient reason for stopping future progress payments. If you, the Prime Contractor, state that everyone has received their pro rata share and they did not, you have filed a false document.

If you have falsely certified payment to subcontractors, you may be subject to the penalties described in the certification document.

In order to avoid delays in the processing of your monthly estimate, please submit your response as soon as possible.

Sincerely,

Resident Engineer initial/initial Attachment cc: _______, District Construction Engineer

_______, District Final Estimate Manager

STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION

CERTIFICATION DISBURSEMENT OF PREVIOUS PERIODIC PAYMENT TO SUBCONTRACTORS

(As required by Florida Transportation Code, Section 337.11, Subsection (11), F.S.)

700-010-38 CONSTRUCTION

10/10

DATE

FIN PROJ. I.D. CONTRACT NO.

TO RELEASE MONTHLY PAYMENT FOR

, prime contractor for the above referenced contract, hereby certifies that all subcontractors, except for those noted below, having interest in this contract have received their pro rata share of all previous periodic payments made to date by the Department for all work, materials and equipment furnished under the contract. The term "subcontractor", as used herein, shall also include persons or firms furnishing materials, services or equipment incorporated into the work or stockpiled in the vicinity of the project for which partial payment has been made by the Department and work done under equipment-rental agreements. EXCEPTION: The following subcontractors have not been paid and a copy of the notification sent to each, explaining the good cause why payment has not been made, is attached to this form: Subcontractor name Subcontractor name Street Address Street Address City State Zip City State Zip State of Florida County of Sworn to and subscribed before me this day of , , by (Print name of person signing Certification) Notary Public Commission Expires Personally Known OR Produced Identification Type of Identification Produced

A false statement or omission made in connection with this certification is sufficient cause for suspension, revocation, or denial of qualification to bid, and a determination of non-responsibility, and may subject the person and/or entity making the false statement to any and all civil and criminal penalties available pursuant to applicable Federal and State Law. Contractor By Title

Instructions: 1. Attach copy of the notification good cause sent to each applicable subcontractor. 2. List the subcontractors which have not been paid the proportionate share of payments received by the contractor and the date

listed as exception. 3. A separate certification is required for each contract. 4. To be signed by an officer or director of the Contractor with the authority to bind the Contractor and notarized. 5. To avoid delay in payment, certification must be submitted to the Project Engineer no later than the Friday before the monthly

estimate cutoff date (generally the 3rd Sunday of the month).

SUPPLEMENTAL SPECIFICATION 

January 5, 2012 

 

PROMPT PAYMENT CLAUSE

(1) Subject to the provisions on retainage provided in Paragraph (2) below, when a subcontractor has satisfactorily performed a work item of the subcontract, the Contractor must pay the subcontractor for the work item within seven (7) calendar days of the Contractor’s receipt of payment from SCDOT. A subcontractor shall be considered to have “satisfactorily performed a work item of the subcontract” when the SCDOT pays the Contractor for that work item.

(2) The Contractor may withhold as retainage up to five (5%) percent of a subcontractor’s payment until satisfactory completion of all work items of the subcontract. “Satisfactory completion of all work items of the subcontract” shall mean when the SCDOT accepts the last work item of the subcontract. The Contractor must release to the subcontractor any retainage withheld within seven (7) calendar days from the date the Contractor receives payment from SCDOT for the last work item of the subcontract or within seven (7) days from SCDOT’s acceptance of the last work item of the subcontract, whichever is the latest to occur. However, upon documentation of good cause provided by the contractor and written concurrence by the Director of Construction, the Contractor may continue to withhold the 5% retainage.

(3) Prior to receiving payment of each monthly estimate, the Contractor shall certify to SCDOT that the construction estimate is complete and that all subcontractors have been paid for work covered by previous estimates, in accordance with sections 1 and 2.

(4) Failure to comply with any of the above provisions shall result in one or more of the following sanctions: (1) no further payments to the Contractor unless and until compliance is achieved; (2) the Contractor being placed in default; and/or (3) the Contractor being declared delinquent, such delinquency being subject to procedures and penalties provided in 108.08 of the Standard Specifications.

 

Partial payments will be made on the items of fence, guardrail, bridge rail, mobilization, signal systemsand/or highway lighting systems, cattle guards and trenching for irrigation systems as hereinafter noted providedthat materials and equipment are satisfactorily supplied:

(a) Fence. When fencing material is stored on the project, invoice prices may be paid as outlined herein.When the fence posts have been placed, 50% of the partially completed fence will be eligible for pay-ment at the contract unit bid price. The remaining 50% will be eligible for payment when the item iscomplete.

The cost of wire and posts conforming to the plans and specifications which are required to be containedand incorporated in a finished contract bid item delivered to the project and not at the time incorporatedin the work, may be included in the partial payment.

(b) Guardrail and Bridge Rail. Guardrail and bridge rail materials stored on the project according to thisSubsection may be included for stockpile payment.

When posts for guardrail or reconstruct guardrail are complete in place, 50% of the partially completedguardrail will be eligible for payment at the contract unit bid price. The remaining portion of the con-tract unit bid price will be eligible for payment when the item is complete.

(c) Mobilization. Partial payments will be made by the following schedule:

1. When 5% of the original contract amount is earned from other bid items, 50% of the amount bidfor mobilization, or 5% of the original contract amount, whichever is less, will be paid.

2. When 10% of the original contract amount is earned from other bid items, 100% of the amount bidfor mobilization, or 10% of the original contract amount, whichever is less, will be paid.

3. Upon completion of all work on the project, payment of any amount bid for mobilization in excessof 10% of the original contract amount, will be paid.

(d) Signal Systems and/or Highway Lighting Systems. The cost of materials for luminaries, poles and mastarms, controllers and cabinets, signal heads, and detector units, conforming to the plans and specifica-tions (“materials” being those which are required to be contained and incorporated in a finished con-tract bid item) delivered to the project and not at the time incorporated in the work, may also be includedfor stockpile payment. Other items will not be included for partial payment until incorporated in thework.

(e) Cattle Guards. The first progress payment after the cattle guard has been completed, but the wings notyet installed, will show this item 90% complete. The remaining 10% shall be eligible for payment onthe first progress payment after the wings have been installed.

(f) Trenching for Irrigation Systems. When trenches for irrigation pipe distribution lines have been exca-vated and the pipe has been placed but not backfilled, 50% of the partially completed irrigation pipewill be eligible for payment on the next progress payment at the contract unit price. Payment will bebased on that length of the pipe partially complete. The remaining 50% will be eligible for payment onthe first progress payment following complete installation of the pipe.

109.07 Acceptance and Final Payment. When the final inspection and final acceptance have been dulymade as provided in Subsection 105.16, and subject to the terms of Subsection 108.09, the final progress pay-ment of quantities of the various classes of work performed under the contract will be prepared. Examine suchprogress payment and give notification in writing of agreement or file a specific claim covering disputed quan-tities. Failure to give notification or file a claim within a period of 30 days after receipt of the progress pay-ment shall constitute agreement to the quantities as set forth, and shall eliminate further claim against theDepartment, except as indicated in the final progress payment of quantities. Except as hereinafter provided, finalpayment will be due and payable at the expiration of not less than 30 days nor more than 60 days from the dateof final acceptance.

Regardless of the 60 day limitation provided above, final payment of the work will be withheld until all cer-tificates, guaranties, releases, affidavits and any other documentation required by these specifications have beenfurnished.

109.08 Payments to Subcontractors. Maintain records and documents of payments to subcontractors for3 years following the final inspection and acceptance of the contract. These records must be available for inspec-

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MEASUREMENT AND PAYMENT 109

MEASUREMENT AND PAYMENT

tion upon request by any authorized representative of NDOT or FHWA. This requirement also extends to anysubcontractor.

Provide a monthly report of payments to each subcontractor on NDOT contracts on NDOT Form 052-060,Subcontractor Payment Form.

The prime contractor shall pay each subcontractor for satisfactory performance of the subcontractor’s con-tract no later than 15 days from the receipt of each payment the prime contractor receives from the NDOT. Theprime contractor agrees further to return retainage payments to each subcontractor within 15 days after the sub-contractor’s work is satisfactorily completed. Any delay or postponement of payment from the above referencedtime frame may occur only for good cause following written approval of the NDOT. This clause applies to bothDBE and non-DBE subcontractors.

The NDOT will also review payments to DBE subcontractors to ensure that the actual amount paid to sub-contractors is consistent with the dollar amounts stated in the schedule of DBE participation.

The NDOT will bring to the attention of the U.S. Department of Transportation (USDOT) any false, fraud-ulent, or dishonest conduct by the prime contractor in connection with the Federal Aid requirements and theDBE program, so that the USDOT can take the steps (e.g. referral to the Department of Justice for criminalprosecution, referral to the USDOT Inspector General, action under suspension and debarment or ProgramFraud and Civil Penalties rules) provided in Subpart F of 49 CFR, Part 26.

The NDOT will consider action under their legal authorities, including responsibility determinations in futurecontracts, for any false, fraudulent, or dishonest conduct by the prime contractor in connection with the sub-contractor information or payments.

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109

109.06 Partial Payment.

Retention on Federal-Aid projects will be in accordance with 49 CFR 26.29(b)(2).

109.08 Payments to Subcontractors. The second and third paragraphs of this Subsection of the Standard Specifications are hereby deleted and the following substituted therefore:

Provide a monthly report of payments to each subcontractor on NDOT contracts on NDOT Form 052-060, Subcontractor Payment Form by the 15th day of each month. Monthly submission of Form 052-060 is considered as a necessary portion of the work; therefore, partial payments as set forth under Subsection 109.06 may not be forthcoming until this requirement is complied with.

The prime contractor shall pay each subcontractor for satisfactory performance of the subcontractor’s contract no later than 15 days from the receipt of each payment the prime contractor receives from the NDOT. The prime contractor agrees further to return retainage payments to each subcontractor within 30 days after the subcontractor’s work is satisfactorily completed in accordance with 49 CFR 26.29(b)(2). For the purposes of this Subsection, satisfactory completion is defined as the following conditions: (a) Satisfactory completion of the subcontractor’s scope of work as described in the contract documents; (b) Receipt of payment for subcontractor’s scope of work; (c) Release of claims from subcontractor’s laborers, material and equipment suppliers, and lower tier subcontractors; (d) Payment, if applicable, of all union benefits or to employee trust accounts.

CONTRACTOR'S MONTHLY REPORT OF PAYMENTS TO SUBCONTRACTORS

The Standard Specifications for Road and Bridge Construction Section 109.08 requires each contractor to submit to NDOT a monthly report of payments to its subcontractors. This applies to all tiers of subcontracting. Monthly updates are to be submitted on this form and provided to the NDOT resident engineer overseeing the contract.

Business name and address of the contractor making payment: NDOT CONTRACT NUMBER: _____ _____ _____ _____

Date Invoiced by Subcontractor

Amount Invoiced by Subcontractor

Date Subcontractor was Paid

Amount Paid for Work or Services

Amount Paid for Supplies

Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Subcontractor name:

Total subcontract amount: $Signature of authorized representative of the contractor Date SubmittedTitle of person signing

The contractor attests that the information provided is accurate.

NDOT Form 052-060 (Rev 9/02)

STATE OF NEVADA DEPARTMENT OF TRANSPORTATION

CONSTRUCTION DIVISION

MEMORANDUM November 4, 2011 TO: Chief, Administrative Services Division Resident Engineers Contract Compliance Section Manager Construction Division Administration Section Supervisor FROM: Jeff Shapiro, P.E., Chief Construction Engineer

SUBJECT: Construction Division Policy Procedure Memo #2011-0XX Payment Disputes

This Policy Procedure is intended to provide guidance and consistency in addressing payment disputes between the prime contractor and any subcontractor or supplier on any NDOT construction contract. This Policy Procedure is effective immediately.

This policy procedure is based on the following regulations, laws and requirements:

Title 46 Code of Federal Regulations (CFR) §26.29 o Requires the state agency to establish contract clauses to require

prime contractors to promptly pay subcontractors for satisfactory performance.

Nevada Revised Statute (NRS) 408.383 o Requires prime contractor to pay subcontractors and suppliers within

15 days after receipt of payment by NDOT. o Requires NDOT to “attempt” to resolve payment disputes between the

prime contractor and subcontractor within 20 “working” days after notice of a payment dispute.

o Requires the prime contractor deposit the disputed amount in an interest bearing escrow account if the dispute is not resolved within 20 “working” days after notice of dispute.

Standard Specifications as modified by the Special Provisions

Construction Division Policy Procedure Memo #2011-0xx November 4, 2011 Subcontractor Pay Page 2 of 5

o Subsection 109.06 Standard Specifications Requires prime contractor holding retention on subcontractor

payments to adhere to Title 46 CFR §26.29(b)(2) o Subsection 109.06 Standard Specifications

Requires contractor to pay each subcontractor 15 days after receipt of payment by NDOT.

Requires prime contractor holding retention on subcontractor payments to adhere to Title 46 CFR §26.29(b)(2).

Defines satisfactory completion of subcontractor work.

For the purposes of this policy procedure a payment dispute between the prime contractor and a subcontractor or supplier is defined as any dispute in payment regardless of the reason. This could include anything from a disagreement or misunderstanding in bid item quantities paid versus quantities believed owed up to prime contractor nonpayment for reasons completely unrelated to subcontractor / supplier performance or quality of work. Any payment dispute regardless of the amount is considered to be serious and is to be addressed with a sense of urgency given the requirements in the CFR, NRS and contract specifications.

In most cases, an allegation of nonpayment will be made directly to the Resident

Engineer by the subcontractor or supplier believing monies are owed by the prime contractor. But that is not always the case. Allegations can take other paths including:

Inquiries directly to the Construction Crew’s Office Manager on bid items paid

to date and concerns expressed that not all quantities paid by NDOT have been paid by the prime contractor.

Phone inquiries or public records request to the Administrative Services Division on filing against a prime contractor’s payment bond.

Inquiries to the Construction Division’s Administration Section on bid items paid to date and concerns expressed that not all quantities paid by NDOT have been paid by the prime contractor.

Inquires to the Contract Compliance Section on filing against a prime contractor’s payment bond.

Construction Division Policy Procedure Memo #2011-0xx November 4, 2011 Subcontractor Pay Page 3 of 5

There are reasons for this. The person making the inquiry may not be directly involved with the project and may not fully understand how NDOT is organized or the roles and responsibilities of the various NDOT personal involved in the project. They also may not understand the contractual relationships between NDOT and its contractors. They may be simply contacting staff they have dealt with in the past on other issues unrelated to the alleged dispute.

If the Construction Crew’s Office Manager receives the allegation they will report it to

the Resident Engineer. If staff from the Administrative Services Division, the Contract Compliance Section, or Construction Division’s Administration Section receives an allegation they are to report it to the Chief Construction Engineer who will then forward the allegation to the Resident Engineer. The Chief Construction Engineer should also be copied on any correspondence or emails related to the allegation.

Once the Resident Engineer receives an allegation of a payment dispute the

following actions are to be taken:

1. Discuss the allegation directly with the subcontractor / supplier. Initial contact should be verbal and confidential.

Ask the subcontractor / supplier for copies of correspondence sent to the prime contractor requesting payment of the disputed amount. If the subcontractor / supplier have not requested payment in writing request that the subcontractor / supplier do so and ask to be copied on the letter.

Document the allegation discussion with the subcontractor or supplier in the Resident Engineer’s Daily Diary. Discretion should be used in the details written in the diary. State facts only.

2. Once a copy of the subcontractor’s / supplier’s request for payment has been received the 20 working day limitation in the NRS is considered to have started. Contact the prime contractor within 5 working days to discuss the allegation. Initial contact should be verbal and confidential. Focus on the contract requirements in the Standard Specifications. Be sure to inform the prime contractor of the time limitations in the NRS.

Document allegation discussion with the prime contractor in the Resident Engineer’s Daily Diary. Discretion should be used in the details written in the diary. State facts only.

Follow up with a letter within 1 Working Day to confirm the conversation. Include the following in the letter:

i. Contract Requirements on payment to subcontractors/ suppliers in Section 109 of Standard Specifications.

ii. Details on quantities of bid items paid to date.

Construction Division Policy Procedure Memo #2011-0xx November 4, 2011 Subcontractor Pay Page 4 of 5

iii. Request that written confirmation be provided that the payment

dispute has been resolved and provide a due date. Confirmation is to be received within 20 working days from the date that the subcontractor’s / supplier’s copy of the written request for payment was received. Prime contractor confirmation should also include written confirmation from the subcontractor / supplier that the matter is resolved.

iv. Copy of the most recent Contractor Payments – Final Balance Report (Report #CM02).

v. Copies of the subcontractor’s / supplier’s written request for payment.

vi. Copy of NRS 408.383 for informational purposes only. Provide copies of the follow up letter with attachments to, at a

minimum, the District Engineer, Chief Construction Engineer and the Contract Compliance Section Manager.

3. If confirmation is received that the dispute is resolved provide copies to, at a minimum, the District Engineer, Chief Construction Engineer and the Contract Compliance Section Manager.

4. If confirmation that the dispute has been resolved is not received at the end of the 20 working day time period contact the prime contractor to offer to facilitate a meeting between the prime contractor and subcontractor / supplier at a NDOT location. Do not attempt to mediate resolution of the dispute.

Document that the offer to facilitate a meeting was discussed with the prime contractor in the Resident Engineer’s Daily Diary.

Follow up with a letter within 1 Working Day to confirm the conversation. The letter should include the following:

i. Copy of the previous letter sent on the matter. ii. Notification that failure to resolve the dispute or meet to

discuss the matter may be a breach of contract and may be in violation the NRS.

iii. Request that written confirmation be provided in 5 Working days that the payment dispute has been resolved or that the disputed amount has been placed in an escrow account.

Provide copies of the follow up letter with attachments to, at a minimum, the District Engineer, Chief Construction Engineer and the Contract Compliance Section Manager.

5. If a meeting is held, attempt to facilitate a conversation between the prime contractor and subcontractor / supplier. Do not attempt to mediate a resolution or interpret the NRS or the terms of any subcontracts. Do answer questions on the Contract requirements, NDOT policies and procedures, and bid quantities paid to date. Contract the Chief Construction Engineer if further guidance is needed.

Construction Division Policy Procedure Memo #2011-0xx November 4, 2011 Subcontractor Pay Page 5 of 5

6. If confirmation is received that the dispute is resolved provide copies to, at a

minimum, the District Engineer, Chief Construction Engineer and the Contract Compliance Section Manager.

7. If the dispute still remains unresolved refer the matter to the Chief Construction Engineer for disposition. The Chief Construction Engineer will contact the Director’s Office and the Attorney General’s Office to discuss an appropriate course of action.

Please contact me at (775) 888-7065 if you have any questions. cc: Deputy Director – South

Assistant Director, Operations NDOT Chief Deputy Attorney General District Engineers Chief, Project Management Division Assistant District Engineers

Assistant Construction Engineers File

 

Page 15 of 42

The plan or provisions thereof are contrary to the requirements of Federal, State, or local laws or regulations, or otherwise inimical to public policy.

o A provision that either party may dissolve the arrangement at will by

notifying the Department.

Required Contract Clauses (§26.13, §26.29)

DelDOT will ensure that the following clause is placed in every DOT-assisted contract and subcontract:

The contractor or subcontractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. The contractor shall carry out applicable requirements of 49 CFR Part 26 in the award and administration of DOT-assisted contracts. Failure by the contractor to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy, as the recipient deems appropriate.

V. MONITORING, ENFORCEMENT AND SANCTIONS

Prompt Payment (§26.29)

DelDOT will include the following clause in all prime contracts:

The prime contractor/consultant receiving payments shall, within 30 days of receipt of any payment, file a statement with the Department on a form to be determined by the Department that all subcontractors furnishing labor or material have been paid the full sum due them at the stage of the contract, except any funds withheld under the terms of the contract as required by Chapter 8, Title 17 of the Delaware Code annotated and as amended. Any delay or postponement of payment from the above referenced time frame may occur only for good cause following written approval of DelDOT. This clause applies to both DBE and non-DBE subcontractors.

Retainage

DelDOT will include the following clause in all prime contracts:

The Department does not withhold retainage from regular payments made to the contractors. In accordance with Del Code Title 17 Chapter 8, contractors are not permitted to withhold retainage from subcontractors on contracts that do not include retainage for the contractor.

Page 16 of 42

Administrative Resolution for Prompt Payment Issues

If a prime contractor/consultant is identified as having potentially violated this section, the Civil Rights Administrator for FHWA assisted projects or the DTC DBE Liaison Officer for FTA assisted projects, in coordination with the appropriate personnel, will conduct a full investigation of the facts. Findings of fact will be reported to the DelDOT Director of Technology and Support Services and the appropriate Section head for FHWA-assisted projects or the Chief Financial Officer and Executive Director of DTC. Sanctions applied to the violations are as follows:

First Violation – The prime contractor/consultant will be closely monitored by the DBE staff for three months following the finding to note any improvements. Should this situation not occur again, the prime will remain in good standing.

Second Violation – (on the same project or on a different project) – A meeting will be held with the appropriate department representatives and the prime’s representative to fully discuss the matter and develop a written course of action to be followed. This action could consist of: • Monitoring by region or maintenance district only to identify

improvement; report to the DelDOT Director of Technology and Support Services or Chief Financial Officer of DTC as appropriate.

• A notice to monitor sent to all appropriate Department Personnel where this prime has an active contract. Progress to be tracked and reported monthly to the DelDOT Director of Technology and Support Services.

• If no improvement is made, future participation on new projects will be suspended for six months.

Third Violation – Suspension of participation in future projects for one year, and DelDOT will not approve any subcontracts for the suspended firm for the same time period.

Fourth Violation – Should it be determined by DelDOT that a prime has violated this clause and the Delaware Code, the matter will be turned over to the Office of the Attorney General for action. The firm’s privileges will be suspended until the Office of the Attorney General has reached a determination.

Monitoring and Enforcement Mechanisms (§26.37, §26.107)

Project Monitoring The DelDOT DBE program includes a monitoring and enforcement mechanism to ensure that work committed to DBEs at contract award or subsequently (e.g., as the result of modification to the contract) is actually performed by the DBEs to which the work was committed. The monitoring of this work will be accomplished in coordination with Construction Inspectors and Project Managers on the project. This mechanism includes a

TITLE 17 Highways CHAPTER 8. HIGHWAY CONSTRUCTION PAYMENTS

§ 801. Definitions.

As used in this chapter:

(1) "Contractor" includes, but is not limited to, an architect, engineer, nursery worker, landscaper, subcontractor or any other person who enters into any contract with the Department of Transportation, its agents or authorized employees for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike or toll express highway, including shoulders, median strips, parkways and islands, by such contractor.

(2) "Moneys or funds" includes, but is not limited to, the entire amount of all moneys or funds received by a contractor, as defined in this section, in connection with a contract with the Department of Transportation for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike or toll express highway, including shoulders, median strips, parkways and islands, by such contractor, and moneys or funds by way of a loan or advance for the purpose of such erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike or toll express highway, including shoulders, median strips, parkways and islands, by such contractor.

17 Del. C. 1953, § 801; 57 Del. Laws, c. 688; 60 Del. Laws, c. 503, § 18; 70 Del. Laws, c. 186, § 1.;

§ 802. Payments to contractor impressed with trust.

All moneys or funds received by a contractor in connection with the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike or toll express highway, including shoulders, median strips, parkways and islands, by such contractor shall be trust funds in the hands of the contractor.

17 Del. C. 1953, § 802; 57 Del. Laws, c. 688.;

§ 803. Use or application of money received by contractor.

(a) No contractor, or agent of a contractor, shall pay out, use or appropriate any money or funds described in § 802 of this title until they have first been applied to the payment of the full amount of all moneys due and owing by the contractor to all persons furnishing labor or material for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike or toll express highways, including shoulders, median strips, parkways and islands, by such contractor, whether or not the labor or material entered into or became a component part of any such highway right-of-way, turnpike or toll express highways, including shoulders, median strips, parkways and islands, and whether or not the same were furnished on the credit of such

highway right-of-way, turnpike or toll express highways, including shoulders, median strips, parkways and islands, or on the credit of such contractor.

(b) All general contractors or agents of any general contractor receiving funds impressed with a trust under this chapter shall, within 30 days of receipt of any payment, file a statement in a form to be determined by the Division of Highways, with the contracting state agency that the contractor or the contractor's agent has paid all subcontractors furnishing labor or material the full sum due them at that stage of the contract, except any funds withheld under the terms of the contract.

(c) In any instance where the contract stipulates that the general contractor will receive a series of prorated payments the general contractor or the general contractor's agents shall, upon the receipt of each payment, pay all subcontractors furnishing labor or materials, who have properly completed all work required of them at that stage of the contract, according to the same prorated formula which governs payments to the general contractor, i.e., if the general contractor receives 10% initially, persons furnishing labor and materials will receive 10% initially, and so through the course of the contract.

17 Del. C. 1953, § 803; 57 Del. Laws, c. 688; 59 Del. Laws, c. 174, § 1; 70 Del. Laws, c. 186, § 1.;

§ 804. Contractor's failure to use or apply money in accordance with § 803 of this title.

(a) Failure of a contractor, or an agent of a contractor, to pay or cause to be paid, in full or pro rata, the lawful claims of all persons, firms, associations of persons or corporations furnishing labor or material as required by § 803 of this title within 30 days after the receipt of any moneys or funds for the purposes of § 802 of this title shall be prima facie evidence of the payment, use or appropriation of such trust moneys or funds by the contractor in violation of this chapter.

(b) Prior to any payment made to any subcontractors for materials, workmanship and all other supplies furnished by such person, persons or corporations an inspection shall be made by the Department of Transportation of all supplies and work furnished by the subcontractors and their approval of the work shall be required before payment is made.

17 Del. C. 1953, § 804; 57 Del. Laws, c. 688; 60 Del. Laws, c. 503, § 18.;

§ 805. Penalties.

Whoever, being a contractor, or any agent of a contractor, pays out, uses or appropriates, or consents to the paying out, use or appropriation of any moneys or funds received for any of the purposes specified in § 802 of this title, prior to paying in full or pro rata to the extent of the moneys or funds so received all the lawful claims of all persons furnishing labor or materials, as prescribed by § 803 of this title, shall be fined not more than $1,000 or imprisoned not more than 3 years or both.

17 Del. C. 1953, § 805; 57 Del. Laws, c. 688.;

105 CONTROL OF WORK

the receipt of the notice regarding the claim. The decisions upon all claims by the Chief Engineer shallrepresent the findings of the Department.

105.17 Arbitration. Any claim, properly presented pursuant to Subsection 105.15, processed throughthe claims procedure, and finally decided by the Chief Engineer pursuant to Subsection 105.16, in theabsence of agreement by the Contractor and the Department as to the resolution thereof, and upon thedemand of either party delivered in writing to the other within 30 calendar days from the date of thewritten decision by the Chief Engineer, as provided in the aforesaid Subsection 105.16; shall be decidedby arbitration in accordance with the Construction Industry Arbitration Rules of the American ArbitrationAssociation then in effect; except as otherwise modified by these Specifications. The arbitrationproceeding may involve presentation of facts or such portions thereof as have previously been presentedat prior administrative hearings held pursuant to Subsection 105.15 herein or may be based entirely uponthe record, as established therein. The record established at prior administrative hearings pursuant toSubsection 105.15 shall be specifically admissible at such arbitration proceedings and such facts as havebeen established shall be specifically binding upon the parties; with the exclusion of opinions andconclusions thereon. Such arbitration shall be specifically based upon the claim presented at prioradministrative hearings and no material, information, fact, and/or claim not presented at such hearingsheld pursuant to said Subsection 105.15 shall be admissible at any arbitration conducted pursuant to thisSection. The arbitrators, in their final ruling on the claim shall include a summary of the evidence,findings of fact based upon the evidence, conclusions of law, and a concise statement of the reliefawarded. This agreement to arbitrate shall be strictly enforceable as provided under Chapter 57, Title10 of the Delaware Code, as amended.

105.18 Contractor and Subcontractor/Supplier Disputes. Any dispute arising between the Contractorand its subcontractor/supplier concerning payments held in trust, as required by Chapter 8, Title 17 ofthe Delaware Code, shall be resolved by arbitration. The Department shall not serve as the arbiter ofsuch disputes, but shall, in the absence of agreement between the parties, designate the AmericanArbitration Association to resolve the matter.

105.19 Claims. All claims shall be submitted according to the procedure established inSubsection 105.15. Submit a written claim notification a maximum of five working days after theoriginal oral notification. Provide in the written notification a brief statement of the reason and basisfor the claim and a list of the items for which additional compensation is being claimed in order topermit the Engineer to keep a strict account of actual costs incurred. Within 60 calendar days after thatportion of the work upon which the claim is based is completed, the Contractor shall submit to theDepartment an itemized list of labor, equipment, and materials used and such other costs as specificallyallowed pursuant to this Subsection. The Contractor shall not be entitled to recover any costs other thanthose contained and allowed herein. As described below, A. through G. shall cover all direct andindirect costs allowed and H. identifies all non-allowable costs.

A. Labor. In accordance with Subsection 109.04 D.1.B. Bond, Insurance, and Tax. In accordance with Subsection 109.04 D.2.C. Materials. In accordance with Subsection 109.04 D.3.D. Equipment. In accordance with Subsection 109.04 D.4.E. Percentage Markups. In accordance with Subsections 109.04 D.6. and 109.04 D.7.F. Subcontractor Claims. Any claim submitted by the Contractor on behalf of a

subcontractor shall be submitted according to Subsection 105.15 and shall be solelylimited to the list of all direct or indirect costs permitted by A. through D. above. For

36

109 MEASUREMENT AND PAYMENT

materials is paid for. However, car weights will not be acceptable for material to be passed throughmixing plants. Trucks used to haul material being paid for by weight shall be weighed empty daily atsuch times as the Engineer directs, and each truck shall bear a plainly legible identification mark.

When requested by the Contractor and approved by the Engineer in writing, material specifiedto be measured by the cubic yard (cubic meter) may be weighed and such weights will be converted tocubic yards (cubic meters) for payment purposes. Factors for conversion from weight measurement tovolume measurement will be determined by the Engineer and shall be agreed to by the Contractor beforesuch method of measurement of pay quantities is used.

Bituminous materials will be measured by the gallon (liter).Volumes will be measured at 60°F (16°C) or will be corrected to the volume at 60°F (16°C)

using ASTM D 1250 for asphalt or ASTM D 633 for tars.When bituminous materials are shipped by truck or transport, net certified weights or volume

subject to correction for loss or foaming may be used for computing quantities.Cement will be measured by the pound (kilogram).Timber will be measured by the actual thousand feet board measure, MFBM (cubic meters)

incorporated into the structure.When a complete structure or structural unit (in effect, "lump sum" work) is specified as the unit

of measurement, the unit will be construed to include all necessary fittings and accessories.When standard manufactured items are specified such as fence, wire, plates, rolled shapes, pipe

conduit, etc., and these items are identified by unit weight, section dimensions, etc., such identificationwill be considered to be nominal weights or dimensions. Unless more stringently controlled bytolerances in cited specifications, manufacturing tolerances established by the industries involved willbe accepted.

109.02 Scope of Payment. The Contractor shall receive and accept compensation provided for in theContract as full payment for furnishing all materials and for performing work under the Contract in acomplete and acceptable manner and for all risk, loss, damage, or expense of every kind arising out ofthe nature of the work or the performance thereof, subject to the provisions of Subsection 107.13.

If the "Basis of Payment" clause relating to any unit price in the Contract requires that the unitprice cover and be considered compensation for certain work or materials essential to the item, this samework or material will not be measured or paid for under any other pay item appearing in the Contract.

Under any Section or item included in the Contract, the Contractor shall be aware that whenrequirements, responsibilities, and furnishing of materials are outlined in the details and notes on thePlans and in the paragraphs preceding the "Basis of Payment" paragraph in these Specifications orSpecial Provisions, no interpretation shall be made that there is an exclusion from payment becausereiteration is not made in the "Basis of Payment" paragraph.

Contractors receiving payments shall, within 30 days of receipt of any payment, file a statementto the Department on a form to be determined by the Department that all subcontractors furnishing laboror material have been paid the full sum due them at that stage of the Contract, except any funds withheldunder the terms of the Contract as required by Chapter 8, Title 17 of the Delaware Code, AnnotatedRevised 1974, and as amended.

109.03 Compensation for Altered Quantities. When the accepted quantities of work vary from thequantities in the Contract schedule, the Contractor shall accept payment at the original Contract unitprices for the accepted quantities of work done. No allowance will be made for any increased cost,except as provided in Subsections 104.05, 104.06, 104.07, and 108.11.

54

B13.00 – UTILITY ADJUSTMENT PROCEDURES Revised: January 2004

B-31

(a) The Estimate Book is used to show the quantities to be paid on the current estimate. Nothing else should be in this book. The only exception to this is a contract with very few items. In these cases, when it is certain one book will quite adequately care for all records, the back up sketches and tabulations should be placed in the back of the Estimate Book. An effort must be made not to waste books.

(b) In addition to the Estimate Book, some projects also use computation books. When more than one book is needed on a project, they should be marked “1 of 3”, “2 of 3”, etc., or as otherwise applicable. Refer to Subsection C4.01for more information.

(c) No final figures should be shown in the Estimate Book until approved and initialed by the Construction Estimator in the office. They must remain as estimated figures only and will appear as WHOLE NUMBERS only, until such final approval, at which time will be paid up to two decimals.

When the quantities and corresponding payments for a progress estimate have been determined and entered in the Estimate Book, the Inspector will submit a field estimate form and the Estimate Books, along with any pay tickets, to the District Construction Estimator. A sample of a field estimate form is in Part H. The prescribed retainage should be deducted from the payment due as indicated on the Estimate Form. [109.07] [109.09] Liquidated damages should also be assessed and shown on each progress estimate when applicable. [108.08]

All progress estimates are reviewed and audited by the Construction Estimator and submitted to the Construction Engineer for approval. The Estimate Books are returned to the Resident Engineer/Project Supervisor for processing. The estimate is then forwarded to the Department’s Finance Section.

The Contractor’s signature is required on progress and final payment estimates. The Contractor’s signature on the estimate indicates that it is in full agreement with the number of days shown on the estimate to have expired. No estimates are to be processed without the required signature. If the signature is “qualified” in any way, or indicated as signed “under protest,” only one estimate may be processed until full reconciliation is achieved. Within 30 days of receipt of a monthly estimate payment, the Contractor must pay its subcontractors and suppliers. The Contractor is required to submit verification of this payment on form CN-91 (see Part H for a sample). B12.03 Payment for Materials Only. On occasion, the Contractor may request, in writing, partial payment for materials that have been delivered and that are to be permanently incorporated in the Project at a future date. A copy of the Contractor’s receipted invoice, as received from the supplier, and the Contractor’s cancelled check must accompany the Contractor’s request for partial payment for materials. Typical examples of materials for which payment may be requested are precast concrete beams and structural steel. Payment on this basis can only be made by written permission of the Construction Engineer. Such a letter of authority is prepared by the District Office based on recommendations from the Construction Engineer. Payment for these materials may be included in a progress estimate, equivalent to the Contractor’s actual cost for the materials, and will be entered as a new and separate item. [109.08]

The full cost of the material delivered to the Project should be entered on the estimate. Retainage will be deducted from the material costs in accordance with the Specifications. [109.08]

As materials that have been paid for are incorporated in the Project and paid for in place, a percentage of the material equal to the percentage of the Contract Item being paid should be

H – STANDARD FORMS Revised: August 2006

H-67

IMPLEMENTATION OF CN-91

Implementation of the revised CN-91 (Rev. 02-03) shall be as follows:

o The revised CN-91 shall be used on all projects starting with the 2003 construction season with estimate number one of the project.

o The revised version of the CN-91 shall be presented to the contractor at preconstruction meetings beginning April 1, 2003.

o The revised form shall be issued to the contractor when the contractor signs the estimate.

o The contractor shall properly fill in the form as required and return three copies to the District in order to receive any further payments.

o The District will make a cursory review of the completed CN-91 for any glaring errors in completion.

o A completed copy of the CN-91 shall be sent to the DBE Program for review. o Should the contractor fail to submit a properly completed CN-91, additional

payments will be withheld until a properly completed CN-91 is submitted. o Properly completed CN-91 shall mean all approved subcontractor information is

provided, the form signed by an authorized officer of the contractor, is attested to, and then notarized. Notarization will not be waived.

o The completed form will be reviewed by the DBE Program within 10 days of receipt. Should errors or inconsistencies be noted in the review, the DBE Program will contact the District with the errors that require correction. Payments shall be suspended until corrections are made and approved.

o Contract Administration will make available an Excel spreadsheet the contractors can use and submit along with the CN-91. Discrepancies between the two will be resolved by using data on the hard copy executed form.

Subcontractor approvals:

o All subcontractors requiring approval under Standard Specification 108.01 shall be approved through the Project Payment Tracking System (PPT).

o All approved DBE subcontractors and suppliers shall be added to PPT.

H – STANDARD FORMS Revised: August 2006

H-68

CN-91 (Rev. 02-03) General Contractor’s Certification of PaymentDelaware Department of Transportation

Fill out for each estimate and return within thirty (30) calendar days of receipt of DelDOT payment.

Work Reflected in DelDOT Estimate # Date Payment Received

Project #

Project Name

I, , Name (Printed) Title

of Contractor

do hereby certify that payment has been made in an amount equal to the full sum due at this state of the contract to all persons and/or subcontractors listed below furnishing labor and/or materials pursuant to the subcontracted work items identified. This payment was made within the required thirty (30) calendar days from receipt of payment to this office from DelDOT, except any funds legally withheld under the terms of the contract according to the same formula which governs payment to the undersigned.

*Payee(i.e., subcontractor, supplier, other)

Total Adjusted

Subcontract Amount

Total Completed

to Date

Retention Amount to

Date

Previously Paid to

DateTotal Amount this Payment

Actual Percent

Complete

Note: The ‘Actual Percent Complete’ column reaching 100% signifies the payment of retainage to the respective Payee.

If deductions are made from payments due subcontractors for reasons other than retainage, provide details of amounts and reasons on a separate sheet that will be made part of this certification.

The undersigned certifies that all of the provisions of Title 17, Chapter 8 of the Delaware Code have been complied with. It is further acknowledged that pursuant to 17 Del. C. §805, failure to comply with the aforesaid provisions is unlawful and may be punished by a fine not more than $1,000.00 or imprisonment not more than three (3) years or both.

H – STANDARD FORMS Revised: August 2006

H-69

*NOTE: FAILURE TO PROVIDE COMPLETE INFORMATION WILL DELAY FUTURE PAYMENTS UNTIL COMPLETE AND ACCURATE INFORMATION IS PROVIDED. IF AUDIT OF PAYMENTS MADE REVEALS INFORMATION IS INCORRECT, INCOMPLETE, OR HAS BEEN FALSIFIED, CONTRACTOR MAY BE BARRED FROM BIDDING FUTURE WORK IN ACCORDANCE WITH STANDARD SPECIFICATION SECTION 102.11, DISQUALIFICATION OF BIDDERS.

Sealed and dated this day of in the year of our Lord two thousand and ( 20 ).

Corporate Seal

_____________________________________ Name of Contractor

Attest ______________________ By: ___________________________________________ Authorized Signature

______________________________________________Title

SWORN TO AND SUBSCRIBED BEFORE ME this day of , 20 .

Notary Seal

_________________________________________________ Notary

NOTE: Submitting this document containing information that is not true may constitute additional criminal offenses, in addition to those set out in 17 Del. C. Ch. 8.

Distribution: Project File, Civil Rights (DBE)