1. State DOT Retainage Practices Survey AASHTO Subcommittee on Construction Contract Administration Section August 2011 Prepared by: Tom Goldstein, FWHA Norm Marzano, RI DOT Jerry Yakowenko, FHWA

2. Purpose of Retainage Survey Determine the best practices other than through holding retainage, to motivate the Contractors: To perform corrective and cleanup work and Submit their closeout documentation in a timely manner.

3. What is retainage? A portion of money earned by a contractor that is withheld by financiers, owners, contractors and subcontractors until assurance is provided that the contractor’s work has been completed in accordance to the plans and specifications.

4. Prompt payment at all levels for satisfactorily completed work Concerns with cash flow at all levels Smaller subs may be impacted more Many of these subcontractors are Disadvantaged Business Enterprises Contingencies may be included Owner Concerns with Retainage

5. 1999 Regulation – required recipients to use a clause requiring primes to return all retainage within a specified number of days after satisfactory completion of the subcontractor’s work 2003 Revised Regulations: Requires recipients to use a clause requiring primes to return all retainage within 30 days of satisfactory completion, and Provides three options regarding recipient withholding of retainage. 49 Code of Federal Regulations 26.29

6. Previous Survey Results AASHTO Subcommittee on Construction Survey YearTotal States Responding States with Retainage States with Zero Retainage Prior to DBE Regs48408 Survey 2001482820 Survey 2004502129 Survey 201130921 The surveys allowed states to provide more specific responses and the results can be found at http://www.fhwa.dot.gov/programadmin/contracts/

7. Responding States (33) 2011 AASHTO SOC CA Section Retainage Survey DC DE PR

8. Do any of the following apply regarding retainage? a) Your State does not hold retainage from prime contractors and prohibits prime contractors from holding retainage from subcontractors.(7- NH, MI, CA, TN, AL, NY, TX) b. Your State does not hold retainage from prime contractors, but does allow prime contractors to hold retainage from subcontractors. (14 - WY, KS, NC, WA, OK, OH, VA, PA, IN, AR, SD, MN, AK, HI) c) Your State holds retainage from prime contractors. (9 - FL, WI, ND, IA, OR, NJ, CT, MA, ME) No response – 3 states

9. Other than through retainage, does your State have any other means to ensure Contractors provide necessary paperwork at the end of a contract and/or Contractors complete punch list items and if so, has it been successful)? States specifically mentioning the following means in their response: Limitations on payment for mobilization / de-mobilization -TX, AK, Use of contract time / liquidated damage provisions -MN, SD, NJ, TN, OH, KY, WI, FL, OK, WA, KS, NH Withholding of specific payments– MA, TN, PA, IA, OH, ID, Review contractor responsibility– IN, VA, NC Contractor Performance Rating System - FL Offset provisions (ability to withhold funds on future contracts) -SD, MI

10. Other than through retainage, does your State have any other means to ensure Contractors provide necessary paperwork at the end of a contract and/or Contractors complete punch list items and if so, has it been successful)? Under consideration: NYSDOT – Providing a pay linkage for shop drawing for structural steel Extending the surety bonding period through the closeout process. Iowa Establishment of a specific schedule of payments to be withheld the submittal of documents. A "Finalization" item to be paid upon receipt of all documentation and resolution of issues at the end of the project.

11. Other than through retainage, does your State have any other means to ensure Contractors provide necessary paperwork at the end of a contract and/or Contractors complete punch list items and if so, has it been successful? Notable responses: Ohio –Finalization Documents. Failure to submit acceptable documents results in an administrative fee of $100 per Calendar. Georgia - Closing conference held at 95% completion to discuss and provide a list of deficiencies. Michigan – Field has been more diligent in acquiring all paperwork, test results, etc. prior to paying Contractors. Also, the Department will process a negative pay estimate and withhold money from another project.