PURPOSE: This rule sets forth the DBE Program requirements for the prompt payment of contractors, subcontractors and suppliers, plus related record keeping and audit requirements, on federally-assisted contracts awarded by MoDOT or any other Missouri recipient receiving USDOT funding through MoDOT.

1. (1) Prompt Payment Requirements.

   1. (A) Missouri Department of Transportation (MoDOT) pays all contractors the sums due them, and when they are due, in compliance with state and federal law, including but not limited to section 34.057, RSMo. In turn, MoDOT and United States Department of Transportation (USDOT) in 49 CFR section 26.29(a), both require that all contractors pay all subcontractors and suppliers for their satisfactory performance of services or sale of materials and supplies, in compliance with the Missouri Prompt Payment Statute, section 34.057, RSMo. MoDOT and USDOT also require the return of all retainage withheld from any subcontractor promptly within the period allowed by section 34.057, RSMo, after that subcontractor’s work is satisfactorily completed. For the purposes of compliance with the prompt payment requirements of 49 CFR part 26:

      1. 1. A subcontractor has satisfactorily

completed its work if MoDOT has paid the contractor for all the work which the subcontractor was to (and did) perform, and MoDOT has accepted from the contractor by partial acceptance or final acceptance, those portions of the project containing all of the subcontractor’s work;

1. 2. A subcontractor has satisfactorily

completed its work if MoDOT has paid the contractor for all the work which the subcontractor was to (and did) perform, and if the subcontractor has fulfilled all of its obligations to the prime contractor and to MoDOT, for and incident to that subcontract work;

1. 3. For purposes of compliance with 49

CFR section 26.29(a), MoDOT reserves the optional and discretionary right to determine if a subcontractor has satisfactorily completed all of its subcontract work, including all of its obligations to the prime contractor and to MoDOT for and incident to that subcontract work. MoDOT shall not make such a determination of satisfactory completion unless MoDOT has received a written complaint from or on behalf of a subcontractor, and MoDOT has contacted both the subcontractor and the prime contractor for further information. MoDOT shall not make a determination of satisfactory completion unless MoDOT is firmly convinced that the subcontractor has fulfilled all of its obligations to the prime contractor and to the commission; and the subcontract work has been accepted by MoDOT or is now acceptable to MoDOT as satisfactory in all respects. The prime contractor must provide MoDOT and the subcontractor with legal justification in writing under section 34.057, RSMo as to why full payment is not yet due and owing to the subcontractor. If MoDOT determines in writing that the subcontractor has completed all of its project subcontract obligations to the prime contractor and to the commission, MoDOT shall provide copies of that written determination to the subcontractor and to the prime contractor. Within the time provided by section 34.057, RSMo, the prime contractor should then complete payment to that subcontractor. However, the final resolution of any outstanding dispute between a prime contractor and a subcontractor over the issue of whether the subcontractor was promptly and fully paid for its project work remains with Missouri’s courts, under section 34.057, RSMo;

1. 4. MoDOT has and will continue to have

a complaint process for any subcontractor (regardless of whether it is a DBE firm) which believes it has not been paid in a timely manner for its completed project work. When a written complaint is received by the MoDOT project resident engineer, MoDOT project office personnel shall conduct a review of the project work status, payments made to the prime contractor, project payments the prime contractor has made to the subcontractor, other contract and subcontract compliance by both parties, in consideration of the allegations made by the complainant. A written response shall be prepared by MoDOT and mailed or delivered to the prime contractor and the subcontractor. The MoDOT project office will continue to monitor the situation until it is apparent that both parties are satisfied. If the subcontractor has not been paid in full by the prime contractor at the time the prime contractor submits final payment documentation to MoDOT, the prime contractor’s legal justification for why the subcontractor has not been paid in full must be noted as an amendment to the assurance of satisfaction of all claims. If there is no amendment and the subcontractor’s claim for payment is not satisfied, the prime contractor will not receive final payment from MoDOT until the prime contractor has submitted to MoDOT satisfactory legal justifica- 7 CSR 10-8

tion for not paying the subcontractor, as an amendment to the final payment documentation. The final resolution of any outstanding dispute between a prime contractor and a subcontractor over the issue of whether the subcontractor was promptly and fully paid for its project work remains with Missouri’s courts, under section 34.057, RSMo.

1. (B) As USDOT requires, this prompt return of retainage to every subcontractor is not discretionary upon the contractor’s determination that the subcontractor’s work is satisfactorily completed. Instead, if MoDOT has paid the contractor for all the work which the subcontractor was to (and did) perform, and MoDOT has determined under this rule and 49 CFR part 26 that the subcontractor’s work was completed satisfactorily, then the contractor must promptly make any remaining payments to and return all retainage withheld from that subcontractor, or risk liability under the terms of section 34.057, RSMo. However, the final resolution of any outstanding dispute between a prime contractor and a subcontractor over the issue of whether the subcontractor was promptly and fully paid for its project work remains with Missouri’s courts, under section 34.057, RSMo.
2. (C) Except as modified by this rule, each contractor must comply with all other provisions and requirements of section 34.057, RSMo. These requirements apply to each contractor, regardless of whether the subcontractor or supplier involved is a DBE-certified firm or not. For the purposes of DBE Program administration, the contractor’s compliance (or not) with the provisions of this rule, shall be determined by MoDOT External Civil Rights Unit personnel.

1. (2) Record Keeping Requirements. All contractors and subcontractors must retain records of all payments made or received relating to USDOT-assisted contract work, for three (3) years from the date of final payment. These records, in all forms and in any medium, must be available for inspection and copying, upon request without prior notification during normal business hours, by any authorized representative of MoDOT or USDOT. MoDOT may also obtain and maintain records of actual payments made by contractors to DBE firms, for subcontract or supply work committed to those DBE firms at the time of the USDOT-assisted contract award.

2. (3) Compliance Audits.

   1. (A) USDOT, MoDOT, or authorized agents or representatives of either of these entities, may perform audits of contract payments to contractor, subcontractor and supplier firms. The audits may review contractors’ payments to any or all subcontractors and suppliers, whether DBE firms or not, to ensure that the actual amount paid to DBE subcontractors and suppliers equals or exceeds the dollar amounts stated in the schedule of DBE participation; that there were no kickbacks, rebates or other concealed, false or fraudulent payments made or required; and that the contractor’s payments were made promptly, in compliance with section 34.057, RSMo. The audits also may review compliance with any other provisions of this chapter or 49 CFR part 26 by any contractor, subcontractor or supplier. By participating in any USDOT-assisted contract or subcontract work, or tendering supplies as a DBE firm for such work, each contractor, subcontractor or DBE supplier firm consents to such audits, and agrees to provide all documentation and information requested during the audit for inspection and copying voluntarily and without charge.
   2. (B) USDOT, MoDOT, and other authorized agents or representatives of either of these entities, also reserve the right to audit all contractors, subcontractors, and DBE suppliers, participating in any USDOT-assisted contract awarded by the commission or MoDOT, or awarded by any recipient of USDOT funding through MoDOT, to determine their general compliance with each and every provision of this chapter and 49 CFR part 26. By participating in any USDOT- assisted contract or subcontract work, or tendering supplies as a DBE firm for such work, each contractor, subcontractor or DBE supplier firm consents to such audits, and agrees to provide all documentation and information requested during the audit for inspection and copying voluntarily and without charge.

AUTHORITY: section 226.150, RSMo 1994*; Title 49 Code of Federal Regulations part 26; section 1101(b) of the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, 112 Stat. 107, 113; and MoDOT’s approved DBE Program submittals to the U.S. Department of Transportation. Emergency rule filed May 10, 2000, effective May 20, 2000, expired Nov. 6, 2000. Original rule filed May 10, 2000, effective Nov. 30, 2000.

*Original authority: 226.150, RSMo 1939, amended 1977.