Chapter 13: Payments

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Section 1: Payments

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Prompt Payment

49 CFR, Part 26.29 requires DBE and non-DBE subcontractors to be paid promptly. TxDOT interprets prompt payment to mean the prime contractor will pay each subcontractor for satisfactory performance of its contract no later than ten days from receipt of each payment the prime contractor receives from the LG. The prime contractor will pay any retainage on a subcontractor’s work within ten days after satisfactory completion of all the subcontractor’s work.

The prompt payment clause is referenced in the LG’s Special Provision Item 9L Measurement and Payment. The prime contractor should include in its subcontracts the same prompt payment provision.

Satisfactory completion is accomplished when:

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  • The subcontractor has fulfilled the contract requirements of both the LG and the subcontract for the subcontracted work, including the submittal of all information required by the contract and LG.
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  • The LG has inspected and approved the subcontractor’s work, and paid by the LG.

The LG may pursue actions against the prime contractor for failure to execute prompt payment requirements. The penalties imposed by the LG may include, but are not limited to: withholding all or a portion of an estimate, suspending work, withholding project acceptance, placing prime contractor in default for breach of contract, or other actions deemed appropriate.

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Prompt Payment Certification

During the course of the project, the prime contractor must submit the Prompt Payment Certification ( Form 2177) monthly and in the month following final acceptance.

The LG will initiate the following actions for receipt and review of the required certification form:

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  • Verify the form is received by the due date and any payments withheld are based on a dispute.
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  • If payment is withheld without a stated dispute or the prime contractor fails to provide the monthly or final certifications, contact the prime contractor with a reminder of its contractual obligation.
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  • When required, take administrative actions. Administrative actions may include suspending work, withholding all or a portion of an estimate, withholding project acceptance, placing contractor in default for breach of contract, or other actions deemed appropriate.
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Processing Complaints

Reference the prompt payment complaint procedures in TxDOT’s 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.”

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Final Reimbursement to Prime Contractor

The LG cannot make the final reimbursement to the prime contractor until it approves the completion of the project construction and has received and reviewed all necessary documentation, including the DBE Program requirements.

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