Early Release of Retainage on GC/CM Projects

Retainage on a GC/CM (General Contractor/Construction Manager) project in the State of Washington may be released by the public agency prior to the normal 45 days following final acceptance of the project.

The Problem for Subcontractors:  Because GC/CM projects are often multi-year projects, a subcontractor who performed work early in the project would otherwise have their retainage held by the GC/CM until the GC/CM received the retainage from the public agency a few years later.  This creates a financial burden for such subcontractors.

Early Release Formula:  RCW 60.28.011 (11) has an alternative provision that allows for early release of retainage for work performed by a subcontractor whose work was completed within the first half of the time required for the GC/CM to complete the entire project.  Thus, if the contract between the owner and the GC/CM gives the GC/CM 300 calendar days to complete the project, this provision would apply to any subcontractor who completed their work on the project within the first 150 calendar days of the project.

Retainage Release Procedures:  For subcontractors who complete their work early as noted, the public agency may go through a final acceptance process for the work applicable to such subcontractors.  The public agency must then publish a notice in the newspaper of its final acceptance of a portion of the work.  After 45 days following final acceptance of a portion of the work, the public agency is required to then release to the GC/CM the retainage related to the work performed by such subcontractors, provided the following conditions have been met:

• No claims have been filed against the retainage
• Owner has received releases from the various state agencies (Revenue, Employment Security, L&I)
• Owner has received an Affidavit of Wages Paid, approved by the Department of Labor and Industries, for the affected subcontractors and any of their lower-tier subcontractors.

Withholding Funds for Claims:  If any claims against the retainage are filed within the 45 days following final acceptance of a portion of the work, the public agency should withhold from the retainage released to the GC/CM the amount of such claims.  This is done in the event a court later orders the public agency to pay such claims from the retainage.