VDOT Business: Construction Division Memorandum

CONSTRUCTION DIVISION MEMORANDUM
GENERAL SUBJECT: CONTRACTORS' MONTHLY PROGRESS ESTIMATES	NUMBER: CD-94-17
	SUPERSEDES: CD-92-4
SUBJECT: PROMPT PAYMENT AND SPECIFIC WITHHOLDING OF ESTIMATES	DATE: DECEMBER 15,1994
	Original w/Signature on file in Construction Division
	C. F. GEE
	CONSTRUCTION ENGINEER
DIRECTED TO - DISTRICT ADMINISTRATORS
This memorandum is being issued to clarify instructions pertaining to the withholding of estimates. Language that has been added is in bold typed and underlined. This policy is effective upon receipt.
Section 11-62.2 of the Virginia Public Procurement Act states that every state agency that requires goods or services, or conducts any other type of contractual business with nongovernmental, privately owned enterprises shall promptly pay for the completely delivered goods or services by the required payment date. Section 11-62.5 of the Act also provides for the payment of interest on all amounts which remain unpaid after seven (7) days following the payment date.
The above noted sections of the Act are applicable to the payment of contractors monthly progress estimates for work accomplished on construction and maintenance contracts work. Also, "payment date" is defined as thirty (30) days after receipt of the goods or services and, for monthly progress estimates, the thirty (30) days are determined from the applicable date as established in Section 109.07 of the Specifications or as mutually agreed for preparing estimates.
Although the Procurement Act establishes a payment date and the Department is committed to prompt payment, we continue to receive estimates that are not paid by the payment date. We, therefore, wish to re-emphasize the importance and depth of our commitment to prompt payment of monthly estimates and request that personnel at all levels ensure that the estimates are prepared, checked and submitted to the Fiscal Division as soon after the estimate's closing date as possible.
On occasions it may be necessary to withhold payment or partial payment of the estimate in accordance with Section 109.07 of the Specifications or other provisions of the contract due to the Contractor's failure to comply with contract requirements. This can include, but is not limited to, submission of the following documentation:
1. Payrolls 2. Form C-28 - Hourly Rates Paid by Contractor 3. Form C-13 - Contractor's Progress Schedule 4. Contractor's Plan of Operation 5. Form C-57 - Contractor's Monthly E.E.O. Report 6. Form C-63 - Minority Contracting/ Procurement/Supplier Activity Report 7. Form C-62 - Contractor's Annual Training Report
With the exception of requirements concerning the progress schedule and the plan of operation, the Department's policy concerning the withholding of estimates due to late submission of documentation is to be as follows:
1. The Contractor is to be allowed a one estimate "grace period." In effect, payment will not be with held unless initial or subsequent submissions are 30 or more days delinquent.
2. The Contractor is to be given a courtesy telephone call as close as possible to the original due date advising of the late documentation.
3. If, during the course of a contract a particular contractor is continually late with submittals, he may be advised in writing (copy to appropriate Assistant Construction Engineer) that the policy concerning "grace periods" and "courtesy calls" is being rescinded and that future estimates will be withheld in strict accordance with the governing specifications or provisions.
4. In the event that the late forms or payrolls are those of a subcontractor, it may be necessary to withhold a portion of the monthly estimate. If the Contractor provides documentation of his efforts to obtain the late forms or payrolls from the subcontractor, then only work performed by that subcontractor shall be with held from payment on the monthly estimate until the forms or payrolls are submitted.
In any instance in which it becomes necessary to withhold payment of an estimate, the Contractor is to be advised, in writing, that payment is being withheld, the reason(s) for withholding payment and that payment cannot be released until such time as the specified requirement(s) has been met. After the Contractor has complied with the specified requirement(s), the estimate is to be immediately submitted to the Fiscal Division for processing. In the case where a portion of an estimate has been withheld due to late forms for payrolls by a subcontractor, that portion withheld shall be paid on the next estimate following receipt of the forms or payrolls.
As stated hereinbefore, monthly progress estimates are to be submitted to the Fiscal Division as soon as possible after the estimate closing date. However, in order to assure compliance with the payment date as established by the Procurement Act, unless withheld as indicated above, estimates are to clear (leave) the District Office within eight (8) work days after the estimate's closing date. The importance of promptly paying contractors for work performed must be recognized by all concerned and the appropriate priority assigned to the processing of estimates to assure prompt payment. Therefore, it is requested that you implement adequate procedures to assure that Contractor's Monthly Estimates are submitted to the Fiscal Division as expeditiously as possible and clear the District Office within the maximum time stated above.

DWN:er