(a) For the purposes of this section:
(1) "subcontractor" includes a supplier;
(2) "work" includes materials that are provided by
a supplier at a location approved by the department;
(3) "satisfactory completion" occurs when:
(A) 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
or by the department and including any vegetative establishment, testing,
maintenance, and performance of other work that is the responsibility
of the subcontractor; and
(B) the work done by the subcontractor has been inspected,
approved, and paid for by the department; and
(4) "contractor" refers to a subcontractor that contracts
work to another tier of subcontractors.
(b) The department will not withhold retainage on a
contract executed and administered by the department. A contractor
that withholds retainage on a subcontractor's work shall pay that
retainage in full within 10 days after the date of satisfactory completion
of all of the subcontractor's work.
(c) Each DOT-assisted contract, subcontract, or material
purchase agreement must include provisions that substantively provide
that:
(1) within 10 days after the date that the contractor
receives payment for work performed by a subcontractor, the contractor
will pay the subcontractor for the work performed; and
(2) the contractor will pay to a subcontractor any
retainage on the subcontractor's work within 10 days after the date
of satisfactory completion of all of the subcontractor's work.
(d) The inspection and approval of work done by the
subcontractor for determining substantial completion does not eliminate
the contractor's responsibilities for all of the work, as defined
in the contract.
(e) The department may pursue actions against a contractor,
including withholding of estimates and suspending the work, for noncompliance
with the subcontract requirements of this section on receipt of written
notice with sufficient details showing the subcontractor has complied
with the subcontractor's obligations, as described in the contract.
(f) Based on the department's assessment of the construction
industry usage of joint check agreements between contractors and subcontractors
working on federal-aid construction projects, the department has implemented
procedures for the use of joint checks on the DBE contracts executed
and administered by the department. The department will accept the
use of a joint check issued by a contractor to a subcontractor and
its supplier but only if:
(1) the contractor does not require the subcontractor
to use a supplier specified by the contractor or to use the contractor's
negotiated unit price;
(2) the subcontractor earns a profit from the material
purchased;
(3) the subcontractor, not the contractor, negotiates
the quantities, price, and delivery of the materials;
(4) the contractor issuing the check acts solely as
a guarantor;
(5) the subcontractor signs the joint check and releases
it to the material supplier, not to the contractor;
(6) the subcontractor is responsible both to furnish
and install the material;
(7) the subcontractor has applied for a line of credit
with the supplier and was either denied credit or denied a sufficient
increase in its line of credit;
(8) the supplier is not the contractor or an affiliate
of the contractor; and
(9) the subcontractor's account with the supplier is
in the subcontractor's name alone.
(g) The department will conduct prompt pay audits and
prompt pay verifications to monitor compliance with this section.
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