Starting with projects let in the January 2009 letting, the Michigan Department of Transportation (MDOT) will incorporate a revised special provision for prompt payment in all project proposals.
The Michigan Infrastructure & Transportation Association (MITA) worked with MDOT in developing this new special provision which revises some requirements of the previous prompt payment provisions that were believed to be inconsistent with the requirements and intent of the federal regulations for prompt pay, 49 CFR 26.29.
Key changes/additions in the new special provision for prompt payment include:
- A revised definition of “satisfactory completion” for the purposes of prompt payment that requires (1) that the engineer find the work completed in accordance with the contract, plans and specifications; and (2) that all paperwork (material certifications, payrolls, etc.) have been received and reviewed by the engineer.
- The addition of language that makes it the responsibility of the engineer (not the contractor) to determine whether work meets the standards of satisfactory completion for the purposes of prompt payment.
- The addition of language that would allow the contractor to make less than full payment release to a subcontractor when the situation is justifiable and approved by the engineer. Situations that may warrant less than full payment release to a subcontractor could include concern about that subcontractor's satisfactory completion of its work items, documented non-payment by that subcontractor to suppliers or lower-tier subcontractors, documented damage or lien claims attributable to that subcontractor, etc. All requests for less than full payment release to a subcontractor must be brought to the attention of the engineer in advance of payment to the contractor, and less than full release of payment to a subcontractor can only occur with the written approval of the engineer.