Iowa Code r. 27-7.1 - Interest on retained funds

(1) Scope. This rule implements Iowa Code section 573.12 regarding payment to a contractor of interest earned on retained funds. This rule does not address payment of interest under Iowa Code section 573.14.

(2) General requirements.

a. Interest shall be paid pursuant to Iowa Code section 573.12 only on state contracts awarded on or after July 1, 1990.

b. Interest shall be paid on retained funds of a contract only if the accrued interest on those funds is at least $25. This dollar threshold reflects the cost to the division of processing an interest payment on retained funds.

c. Interest shall not be paid on retained funds of a contract declared in default.

d. The provisions of this rule shall not apply if the division has entered into a contract with the federal government or accepted a federal grant which is governed by federal law or rules that are contrary to the provisions of this rule.

(3) Procedures.

a. Interest shall begin to accrue on retained funds on the date the first progress payment is issued. An interest rate shall be established on this date in accordance with Iowa Code section 12C.6. This interest rate shall apply for the duration of the contract.

b. In general, interest shall continue to accrue on retained funds until the date final payment is issued.

(1) Final payment is payment of retained funds less assessed liquidated damages, if applicable.

(2) The final payment and the interest payment shall be by separate warrants. The interest payment shall be issued within two weeks after issuance of final payment.

c. Notwithstanding paragraph "b," interest shall cease to accrue on retained funds:

(1) Upon the expiration of 90 days following field acceptance of a project if the contractor has failed to submit to the department the documentation necessary for final payment, as specified in the contract provisions.

(2) Upon payment of retained funds via a retention release voucher. A retention release voucher releases the retained funds and the interest accrued on those funds less assessed liquidated damages, twice the amount of claims on file, and the amount of possible overpayments of adjustments to contract items and change orders. A retention release voucher may be paid at any time after 30 days have expired following completion and final acceptance of the project if the contractor has submitted the required documentation.

(3) Upon the court's obtaining jurisdiction of the retained funds pursuant to Iowa Code section 573.16. Retained funds turned over to the court will include the interest accrued on those funds to the date the action was filed, if the interest has not been paid to the contractor.

This rule is intended to implement Iowa Code section 573.12.

Notes

Iowa Code r. 27-7.1

Filed 4/12/91, Notice 3/6/91-published 5/1/91, effective 6/5/91