Prime consultants are required to pay their subconsultants within seven days of receiving payment from ADOT, and subconsultants are required to pay tier subconsultants within seven days as well. Similarly, prime consultants are required to make final payment to a subconsultant of all monies owed within seven days of receiving payment from ADOT. Prime consultants are required to enter payments made to all subconsultants in the ADOT DBE System each month in order to track prompt payment and so that ADOT can track and report awards, commitments and payments made to DBE and non-DBE subconsultants to federal funding sources.
ADOT monitors prompt payment. Subconsultants will receive an email notification when the prime consultant reports payment. It is important for subconsultants to report to ADOT in the DBE System and to ECS if they have not been paid promptly. This reporting must be done within 45 days otherwise ADOT will determine that subcontracts have been promptly paid.
If partial and final payment (including any retention) is not made or not reported by the prime consultant within 7 days from the date ADOT pays the prime consultant, ADOT will retain two times the dollar amount not paid to each subconsultant. If full payment is made within 30 days of ADOT’s payment to the consultant, the amount withheld by ADOT will be released. If full payment is made after 30 days of ADOT’s payment to the consultant, ADOT will release 75 percent of the funds withheld. ADOT will retain 25 percent of the monies withheld as liquidated damages.
If the consultant fails to make prompt payment for three consecutive months, or any four months over the course of one project, or if the consultant fails to make prompt payment on two or more projects within 24 months, ADOT may, in addition, invoke the following remedies: Withhold monthly progress payments until the issue is resolved and full payment has been made to all subconsultants, terminate the contract for default, and/or disqualify the consultant from future bidding, temporarily or permanently, depending on the number and severity of violations.
ADOT typically does not hold retention from prime consultants. However, if the prime contract allows for retainage, then prime consultants may hold retention against a subconsultant. If the prime contract provides for retention, the prime consultant and each subconsultant of any tier must not retain a higher percentage than ADOT may retain under the prime contract.
Furthermore, if a subconsultant is performing work on multiple contracts for the same consultant or subconsultant of any tier, the consultant or subconsultant of any tier shall not withhold or reduce payment from its subconsultants on the contract because of disputes or claims on another contract.
For more information on prompt payment requirements, see the Prompt Payment and Subcontracting sections of the ECS Contract template or watch this video on the FHWA website.