Or. Admin. Code § 137-049-0820 - Retainage
(1) Withholding of
Retainage. A Contracting Agency shall not retain an amount in excess of five
percent of the Contract Price for Work completed. If the Contractor has
performed at least 50 percent of the Contract Work and is progressing
satisfactorily, upon the Contractor's submission of Written application
containing the surety's Written approval, the Contracting Agency may, in its
discretion, reduce or eliminate retainage on any remaining progress payments.
The Contracting Agency shall respond in Writing to all such applications within
a reasonable time. When the Contract Work is 97-1/2 percent completed, the
Contracting Agency may, at its discretion and without application by the
Contractor, reduce the retained amount to 100 percent of the value of the
remaining unperformed Contract Work. A Contracting Agency may at any time
reinstate retainage. Retainage shall be included in the final payment of the
Contract Price.
(2) Cash Retainage
- Contract Price $500,000 or Less. When the Contract Price for a Public
Improvement Contract is $500,000 or less, a Contracting Agency may reserve as
retainage from any progress payment an amount not to exceed five percent,
pursuant to ORS 279C.570(7). The Contracting Agency shall hold all retained
moneys in a Contracting Agency fund or account, and interest is not required to
accrue on the retained moneys.
(3)
Cash Retainage - Contract Price in Excess of $500,000. When the Contract Price
for a Public Improvement Contract exceeds $500,000, the Contracting Agency
shall, in the ordinary course, deposit cash retainage in an amount not to
exceed five percent from any progress payment due under the Public Improvement
Contract into an interest-bearing escrow account, pursuant to ORS 279C.570(2)
[House Bill 2415 (2019 Oregon Laws, Chapter 486)]. The Contractor under the
Public Improvement Contract is entitled to receive interest on the retained
moneys from the date the Contractor's related payment request is fully approved
by the Contracting Agency until the date the retained moneys are paid by the
Contracting Agency to the Contractor. For purposes of this section, a payment
of retainage is deemed to be "paid" by a Contracting Agency when the payment is
transmitted to the Contractor, or otherwise applied against an obligation of
the Contractor under the Public Improvement Contract.
(4) Alternatives In Lieu of Cash Retainage.
Unless a Contracting Agency that reserves an amount as retainage finds in
writing that accepting bonds, securities or other instruments described in part
(a) of this section or a surety bond described in part (b) of this section
poses an extraordinary risk that is not typically associated with the bonds,
securities, other instruments or surety bond, as applicable, the Contracting
Agency, in lieu of withholding moneys from payment, shall accept from the
Contractor:
(a) Bonds, securities or other
instruments that are deposited and accepted as provided in subsection (6)(a) of
this rule; or
(b) A surety bond
deposited as provided in subsection (6)(b) of this rule.
(5) Deposit in interest-bearing accounts.
Upon election of the Contractor and when the Contract Price in the Public
Improvement Contract is $500,000 or less, a Contracting Agency shall deposit
cash retainage in an interest-bearing account in a bank, savings bank, trust
company, or savings association, for the benefit of the Contracting Agency.
Earnings on such an account shall accrue on the cash retainage from the date
the Contractor's related payment request is fully approved by the Contracting
Agency until the date the retained moneys are paid by the Contracting Agency to
the Contractor. For purposes of this section, a payment of retainage is deemed
to be "paid" by a Contracting Agency when the payment is transmitted to the
Contractor, or otherwise applied against an obligation of the Contractor under
the Public Improvement Contract. State Contracting Agencies shall establish the
interest-bearing account through the State Treasurer. When the contractor makes
an election for deposit of retainage into an interst-bearing account and the
Contract Price in the Public Improvement Contract exceeds $500,000, the
Contractor's election shall be satisfied by the Contracting Agency's
establishment of an interest-bearing escrow account, pursuant to ORS
279C.570(2) [House Bill 2415 (2019 Oregon Laws, Chapter 486)].
(6) Alternatives In Lieu of Cash Retainage -
Requirements. In lieu of cash retainage to be held by a Contracting Agency, the
Contractor may substitute one of the following:
(a) Deposit of bonds, securities or other
instruments:
(A) The Contractor may deposit
bonds, securities or other instruments with the Contracting Agency or in any
bank or trust company to be held for the benefit of the Contracting Agency. If
the Contracting Agency accepts the deposit, the Contracting Agency shall reduce
the cash retainage by an amount equal to the value of the bonds and securities,
and reimburse the excess to the Contractor.
(B) Bonds, securities or other instruments
deposited or acquired in lieu of cash retainage must be of a character approved
by the Oregon Department of Administrative Services, which may include, without
limitation:
(i) Bills, certificates, notes or
bonds of the United States.
(ii)
Other obligations of the United States or agencies of the United
States.
(iii) Obligations of a
corporation wholly owned by the Federal Government.
(iv) Indebtedness of the Federal National
Mortgage Association.
(v) General
obligation bonds of the State of Oregon or a political subdivision of the State
of Oregon.
(vii) Irrevocable
letters of credit issued by an insured institution, as defined in ORS
706.008.
(C) Upon the
Contracting Agency's determination that all requirements for the protection of
the Contracting Agency's interests have been fulfilled, it shall release to the
Contractor all bonds and securities deposited in lieu of retainage.
(b) Deposit of surety bond. A
Contracting Agency, at its discretion, may allow the Contractor to deposit a
surety bond in a form acceptable to the Contracting Agency in lieu of all or a
portion of funds retained or to be retained. A Contractor depositing such a
bond shall accept surety bonds from its subcontractors and suppliers in lieu of
retainage. In such cases, retainage shall be reduced by an amount equal to the
value of the bond, and the excess shall be reimbursed.
(7) Recovery of Additional Costs. Pursuant to
ORS 279A.560(3), a Contracting Agency may recover from the Contractor all
additional costs incurred in the proper handling of retainage alternatives
requested by the Contractor, whether a request for the deposit of bonds,
securities or other instruments in lieu of cash retainage, a request for a
surety bond in lieu of cash retainage or an election for an interest-bearing
account. If a Contracting Agency incurs costs associated with establishing a
fund or account under section (2) of this rule or establishing an
interest-bearing escrow account under section (3) of this rule, the Contracting
Agency is not permitted to recover such costs from the Contractor.
(8) Additional Retainage When Certified
Payroll Statements Not Filed. Pursuant to ORS 279C.845(7), if a Contractor is
required to file certified payroll statements and fails to do so, the
Contracting Agency shall retain 25 percent of any amount earned by the
Contractor on a Public Works Contract until the Contractor has filed such
statements with the Contracting Agency. The Contracting Agency shall pay the
Contractor the amount retained under this provision within 14 days after the
Contractor files the certified statements, regardless of whether a
subcontractor has filed such statements (but see 279C.845(1) regarding the
requirement for both contractors and subcontractors to file certified
statements with the Contracting Agency). See BOLI rule at OAR
839-025-0010.
Notes
Statutory/Other Authority: ORS 279A.065 & ORS 279C.845
Statutes/Other Implemented: ORS 279C.560, ORS 279C.570 & ORS 701.420
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