Releasing Retainage Prior to Final Completion of Work

How do you handle a public works project where there is a small amount of work remaining that won't be completed for a period of time? Do you continue to hold the contractor's retainage on all of the contract, or are there alternatives?

There is a provision in Washington State law that provides a process for a public agency to accept the completed work, release the retainage associated with the completed work, and then enter into a new contract with the contractor for the remaining work without advertising or bidding. The new contract, often called a "Supplemental Contract" would then be closed out in the same manner as the main contract.

RCW 60.28.011 (7) states the following: "If the public body administering a contract, after a substantial portion of the work has been completed, finds that an unreasonable delay will occur in the completion of the remaining portion of the contract for any reason not the result of a breach thereof, it may, if the contractor agrees, delete from the contract the remaining work and accept as final the improvement at the stage of completion then attained and make payment in proportion to the amount of the work accomplished and in this case any amounts retained and accumulated under this section shall be held for a period of sixty days following the completion. In the event that the work is terminated before final completion as provided in this section, the public body may thereafter enter into a new contract with the same contractor to perform the remaining work or improvement for an amount equal to or less than the cost of the remaining work as was provided for in the original contract without advertisement or bid. The provisions of this chapter are exclusive and shall supersede all provisions and regulations in conflict herewith."

If you would like a copy of a sample Supplemental Contract for use in situations as described above, please contact me.