§103-32.1  Contract provision for retainage;subcontractors.  [Repeal and reenactment on July 1, 2011.  L 2009, c175, §14(2).]  (a)  Any retainage provided for in this section or requestedto be withheld by the contractor shall be held by the procurement officer.

(b)  A dispute between a contractor andsubcontractor of any tier shall not constitute a dispute to which the State orany county is a party, and there is no right of action against the State or anycounty.  The State and a county may not be interpleaded in any judicial oradministrative proceeding involving such a dispute.

(c)  Any public contract may include aprovision for the retainage of a portion of the amount due under the contractto the contractor to ensure the proper performance of the contract; providedthat:

(1)  The sum withheld by the procurement officer fromthe contractor shall not exceed five per cent of the total amount due thecontractor and that, after fifty per cent of the contract is completed andprogress is satisfactory, no additional sum shall be withheld; provided furtherthat if progress is not satisfactory, the procurement officer may continue towithhold, as retainage, sums not exceeding five per cent of the amount due thecontractor; and

(2)  The retainage shall not include sums deducted asliquidated damages from moneys due or that may become due the contractor underthe contract.

(d)  Where a subcontractor has providedevidence to the contractor of:

(1)  A valid performance and a payment bond for theproject that is acceptable to the contractor and executed by a surety companyauthorized to do business in this State;

(2)  Any other bond acceptable to the contractor; or

(3)  Any other form of collateral acceptable to thecontractor,

the retention amount withheld by the contractor fromits subcontractor shall be not more than the same percentage of retainage asthat of the contractor.  This subsection shall also apply to the subcontractorswho subcontract work to other subcontractors.

(e)  This section shall not be construed toimpair the right of a contractor or a subcontractor at any tier to negotiate,and to include in their subcontract, provisions that:

(1)  Permit the contractor or subcontractor to retain,without cause, a specified percentage of no more than ten per cent of eachprogress payment otherwise due to a subcontractor for satisfactory performanceunder the subcontract, without incurring any obligation to pay a late paymentinterest penalty, in accordance with terms and conditions agreed to by theparties to the subcontract, giving such recognition as the parties deemappropriate to the ability of a subcontractor to furnish a performance bond anda payment bond, subject however, to the limitations of subsection (d); and

(2)  Permit the contractor or subcontractor to make adetermination that part or all of the subcontractor's payment request may bewithheld by the procurement officer in accordance with the subcontractagreement, without incurring any obligation to pay interest or a late paymentpenalty if a written notice of any withholding is issued to a subcontractor,with a copy to the procurement officer, specifying the following:

(A)  The amount to be withheld;

(B)  The specific causes for the withholdingunder the terms of the subcontract; and

(C)  The remedial actions to be taken by thesubcontractor to receive payment of the amounts withheld.

(f)  A contractor may not request payment fromthe procurement officer of any amount withheld or retained in accordance withsubsection (e) until such time as the contractor has determined and certifiedto the procurement officer that the subcontractor is entitled to the payment ofsuch amount.

(g)  The provisions of this section shall notbe construed to require payment to subcontractors of retainage released to acontractor pursuant to an agreement entered into with the procurement officermeeting the requirements of section 103-32.2. [L 1976, c 167, pt of §1; am L1999, c 149, §7; am L 2000, c 222, §2; am L 2006, c 291, §3; am L 2009, c 175, §8]

 

Note

 

  L Sp 1993, c 8, §54 purports to amend this section.