1. A. This regulation applies to a construction contract for which a contractor has furnished 100 percent payment security and 100 percent performance security.
2. B. The percent for retainage specified in a contract under §A of this regulation may not exceed 5 percent of the contract amount.
3. C. In addition to retainage, a primary procurement unit and the Maryland Transportation Authority may withhold from payments otherwise due a contractor an amount that the unit reasonably believes is necessary to protect the State's interest.
4. D. A contractor may not retain from a payment due a subcontractor a percent of the payment greater than the percent for retainage retained by the primary procurement unit or the Maryland Transportation Authority.
5. E. A subcontractor may not retain from a payment due a lower-tier subcontractor a percent of the payment greater than the percent of payments retained from the subcontractor.
6. F. A contractor and a subcontractor are not prohibited, by §§D and E of this regulation, from withholding an amount in addition to retainage if the contractor or subcontractor determines that a subcontractor's performance under the subcontract provides reasonable grounds for withholding the additional amount.

Authority: State Finance and Procurement Article, §§12-101, 13-225, and 15-108, Annotated Code of Maryland

Effective date: July 9, 2001 (28:13 Md. R. 1216)

Regulation .01C, D amended effective April 11, 2005 (32:7 Md. R. 685)