WITHHOLDING OF FUNDS FROM CONSTRUCTION CONTRACT PROGRESS PAYMENTS
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP85B01152R000600730059-0
Release Decision:
RIPPUB
Original Classification:
K
Document Page Count:
3
Document Creation Date:
December 21, 2016
Document Release Date:
June 2, 2008
Sequence Number:
59
Case Number:
Publication Date:
May 6, 1983
Content Type:
LETTER
File:
Attachment | Size |
---|---|
CIA-RDP85B01152R000600730059-0.pdf | 158.06 KB |
Body:
Approved For Release 2008/06/02 :CIA-RDP85B01152R000600730059-0
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Room 140.--Bldg.
Phone No,
011104A1_ FORM 41 (Rev. 7-76)
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OFFICE OF FEDERAL
PROCUREMENT POLICY
AMY 6 t'3
POLICY LETTER NO. 83-1
TO THE HEADS OF EXECUTIVE AGENCIES AND DEPARTMENTS
SUBJECT: Withholding of Funds from Construction Contract
Progress Payments
1. Purpose. This Policy Letter is intended to provide
uniform policy guidance regarding the retention or with-
holding of funds from progress payments made under
Federal construction contracts.
2. Background. Most construction contracts provide for
monthly progress payments to be made to contractors. The
progress payments are based on the contracting officer's
estimate of the work completed by the contractor and the
value of delivered materials. The general provisions for
Federal construction contracts, Standard Form 23A, pre-
viously required contracting officers to withhold 10%
from progress payments made to a contractor prior to the
contractor's completion of 50% of the contract work.
This requirement for mandatory withholding has, however,
been superseded (see CFR 1-16.401(h)). Present practice,
as reflected in the Federal Procurement Regulations
(1-7.602-7) and the Defense Acquisition Regulation
(7-602.7), is that in making progress payments on con-
struction contracts: (1) 10% of the estimated amount
shall be retained until final completion and acceptance
of the contract work; and (2) if the contracting officer
finds that satisfactory progress is achieved during any
period for which a progress payment is to be made, the
payment may be made in full without retention of a per-
centage. These regulations are subject to varying inter-
pretations. Some agencies - routinely withhold a
percentage of each progress payment. Others, such as the
Department of Defense, have recently stated that retain-
age will not be used as "a routine administrative
practice."
3. Policy. Retainage should not be used as a substitute for
good contract management, and contracting officers
should not withhold funds without cause. Determinations
regarding the use of retainage and the specific levels to
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Approved For Release 2008/06/02 : CIA-RDP85B01152R000600730059-0
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EXECUTIVE OFFICE OF THE PRESIDENT [T3 2- 4
Approved For Release 2008/06/02 : CIA-RDP85BO1152R000600730059-0
Approved For Release 2008/06/02 : CIA-RDP85B01152R000600730059-0
be withheld shall be made by contracting officers on a
case-by-case basis. Such decisions will be based on the
contracting officer's assessment of past performance and
the likelihood that such performance will continue. The
level of retainage withheld, if any, should not exceed
ten percent of the amount billed by a contractor in
accordance with the contract terms and may be adjusted as
contracts approach completion to recognize better than
expected performance, the ability to rely on alternative
safeguards, and other factors. Upon completion of all
contract requirements, retained amounts shall be paid
promptly.
4. Responsibilities. This policy shall be implemented
through the Defense Acquisition Regulation (DAR) and the
Federal Procurement Regulations (FPR). Appropriate
changes shall be made to these regulations to accommodate
the policy. Agencies that do not use the DAR and FPR
shall make appropriate procurement regulatory changes to
implement the policy.
5. Applicability. This policy is applicable to Federal
contracts. It is not applicable to Federal grants.
6. Information Contact. Information about this policy may
be obtained by contacting Charles W. Clark, Office of
Federal Procurement Policy, (202) 395-3254.
7. Effective Date. This policy is to be effective 60 days
after issuance.
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Approved For Release 2008/06/02 : CIA-RDP85B01152R000600730059-0