41-2576. Contract payment retention; partial
payment
A. Ten per cent of all construction contract payments shall be retained by this
state as insurance of proper performance of the contract or, at the option of the
contractor, a substitute security may be provided by the contractor in an authorized form
pursuant to rules adopted by the director. The contractor is entitled to all interest
from any such substitute security.
B. When the contract is fifty per cent completed, one-half of the amount retained
or securities substituted pursuant to this section shall be paid to the contractor upon
the contractor's request provided the contractor is making satisfactory progress on the
contract and there is no specific cause or claim requiring a greater amount to be
retained. After the contract is fifty per cent completed, no more than five per cent of
the amount of any subsequent progress payments made under the contract shall be retained
providing the contractor is making satisfactory progress on the project, except that if
at any time the state determines satisfactory progress is not being made ten per cent
retention shall be reinstated for all progress payments made under the contract
subsequent to the determination.
C. Any retention shall be paid or substitute security shall be returned to the
contractor within sixty days after final completion and acceptance of work under the
contract. Retention of payments by a purchasing agency longer than sixty days after final
completion and acceptance requires a specific written finding by the purchasing agency of
the reasons justifying the delay in payment. No purchasing agency may retain any monies
after sixty days which are in excess of the amount necessary to pay the expenses the
purchasing agency reasonably expects to incur in order to pay or discharge the expenses
determined by the finding justifying the retention of monies.
D. This state shall not accept any substitute security unless accompanied by a
signed and acknowledged waiver of any right or power of the obligor to set off any claim
against either the state governmental unit or the contractor in relationship to the
security assigned. In any instance in which this state accepts substitute security as
provided in this section, any subcontractor undertaking to perform any part of the
contract is entitled to provide such security to the contractor.
E. Notwithstanding anything to the contrary in this section or in any other law:
1. There shall be no retention for job-order-contracting construction services
contracts and the purchasing agency may elect to have no retention for
construction-manager-at-risk and design-build construction services contracts.
2. This section applies only to amounts payable in a construction services contract
for construction and does not apply to amounts payable in a construction services
contract for design services, preconstruction services, finance services, maintenance
services, operations services or any other related services included in the contract.
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