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Section 2: Payment Reporting in DMS

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Understanding the Audit Process

After a contract record has been created in DMS and TxDOT begins making payments to the prime contractor, the contract is ready for auditing. Auditing is generated on a monthly basis.

The following image represents the audit process:

 (click in image to see full-size image)

A prime contractor working on federal-aid projects is responsible for the reporting of all payments to its DBE subcontractors in DMS. DBE subcontractors are responsible for verification and confirmation of payment data received from the prime contractor in DMS. The prime contractor will include payment entries to non-DBE subcontractors whenever there is a DBE associated with a second or multi-tiered subcontract. A DBE prime contractor is responsible for reporting payments to all subcontractors in DMS.

The prime contractor will report payments, after work begins, to meet the DBE goal and for DBE race-neutral participation on projects with and without DBE goals. These reports will be due within fifteen days after the end of a calendar month. These reports will be required until all DBE subcontracting or material supply activity is completed.

See the reporting timeline example below:

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March 10th

TxDOT pays prime contractor.

March 20th

Prime contractor pays DBE subcontractor.

April 5th

DMS alerts prime contractor to report March subcontractor payments.

April 15th

Prime contractor completes entering payments.

April 22nd

DBE subcontractor confirms payment received.

April 23rd – 30th

District staff completes reporting audit.

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Prime Contractor Reports Payments

By the 5th of each month, DMS will notify the prime contractor by a system generated e-mail to report payments to subcontractors.

By the 15th of each month, the prime contractor is required to enter details regarding payments made to all subcontractors tracked in DMS.

For information on the step by step process in DMS that the prime contractor is required to complete, see Prime Contractors’ DBE Guide, Chapter 13, Section 2.

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Subcontractor Verification of Payments

DMS will notify a subcontractor when payment is reported by the prime contractor. Once notified, the subcontractor will have seven days to log into DMS and agree or disagree with payment reported by the prime contractor.

For information on the step by step process in DMS that the DBE subcontractor is required to complete, see DBE Contractors’ Guide, Chapter 13, Section 2.

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Payment Discrepancy

If a prime contractor and subcontractor disagree on an amount paid, the system creates a discrepancy. The system sends an e-mail message to the contractors to notify them of the issue and request they resolve the discrepancy. If they are unable to resolve the discrepancy, the district staff may be required to take action.

When a subcontractor selects Incorrect, a discrepancy is created and the following process is required:

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  • The monthly payment record will be sent back to the prime contractor by DMS to review the payment difference and comments that the subcontractor has made.
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  • The prime contractor may correct an error on the record and re-submit to the subcontractor for review again.
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  • The subcontractor and the prime contractor should work together to resolve any payment discrepancies. After two attempts to resolve the discrepancy, DMS will turn over the audit record to the district staff.

For the Process of Resolving a Discrepancy in DMS, go to Section 5 of this chapter.

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Processing Complete

Follow prompt payment complaint procedures in the Construction Contract Administration Manual.

Investigate the complaint and provide a timely response to the complainant. According to the DOT, “a timely response should be no more than the time required to promptly pay the subcontractor for completed work.”

If the prime contractor makes payment or provides documentation that substantiates the dispute, forward the response to the subcontractor and advise that payment was made or a dispute exists. Send a copy of the subcontractor notice to the payment bond surety. In instances of a dispute, advise the parties it is the responsibility of the parties involved to resolve the issue.

If the prime contractor has not made payment and does not provide notification of a dispute within the timeframe specified, initiate the appropriate administrative action. Possible administrative actions include suspending work, withholding all or a portion of an estimate, withholding project acceptance, placing prime contractor in default for breach of contract, or other actions deemed appropriate.

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