Highway improvement contracts may provide for partial payments.

1. (1) Construction and preventive maintenance contracts. Construction contracts and preventive maintenance contracts will provide for partial payments of an amount not exceeding 95% of the value of the work done, except as provided in paragraph (2) of this section. The department will retain 5.0% of the contract price until the entire work has been completed and accepted, except as provided in paragraphs (2) and (3) of this section.
2. (2) Construction and preventive maintenance contracts involving the use of nonhazardous recycled materials. Construction contracts and preventive maintenance contracts involving the use of nonhazardous recycled materials approved by the department will provide for partial payments of an amount not exceeding 96% of the value of the work done. Prior to beginning of work, the contractor must identify the quantities of nonhazardous recycled materials to be used in the contracted work. Once the contractor's commitment to utilize nonhazardous recycled materials has been established, the department will retain 4.0% of the contract price until the entire work has been completed and accepted, except as provided in paragraph (3) of this section.
3. (3) Construction and preventive maintenance contracts involving separate vegetative establishment, maintenance, or performance periods. The department may release a portion of the amount retained under paragraph (1) or (2) of this section when the work is completed, provided a sufficient amount of the contract price is retained to ensure satisfactory completion of the separate vegetative establishment, maintenance, or performance period.

4. (4) At the request of a contractor and with the approval of the department and the comptroller of public accounts, the retained amount may be deposited under the terms of a trust agreement with a state or national bank that has its main office or a branch office in Texas as selected by the contractor, provided that the contract price exceeds $300,000. The trust agreement shall provide that:

   1. (A) interest earned on deposited funds will be paid to the contractor unless otherwise specified under the terms of the agreement;
   2. (B) all expenses incident to the deposit and all charges made by the escrow agent for custody of the securities and forwarding of interest shall be paid solely by the contractor;
   3. (C) the department may, at any time and with or without reason, demand in writing that the bank return or repay, within 30 days of the demand, the retainage or any investments in which it is invested; and
   4. (D) any other terms and conditions prescribed by the department and the comptroller of public accounts as necessary to protect the interests of the state.
5. (5) Routine maintenance and professional services contracts. The department will not retain funds for routine maintenance contracts or contracts for the making of all necessary plans and surveys preliminary to construction, reconstruction, or maintenance.

Source Note:The provisions of this §9.20 adopted to be effective September 22, 1995, 20 TexReg 7085; amended to be effective December 12, 1999, 24 TexReg 10901.