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25 Prime contractors must return retainage within 30 days to perform the compliance review. For the DBE program of satisfactory completion. portion of contract compliance the following contractor doc- 3. Withhold on the prime contractor, but conduct incre- umentation is used for preliminary review: mental acceptance inspections ("mini-finals"). If work is found to be satisfactory, the retainage for the prime Copy of the currently approved Schedule of DBE Uti- contractor is returned and the prime contractor would be lization (AAP 19), expected to return retainage to the subcontractor within List of all DBE firms the contractor contacted as possi- 30 days. Satisfactory completion is when all tasks called ble subcontractors, for in the subcontract have been accomplished and AAPHC 89s (Part 1--D/M/WBE Utilization Work- documented as required by the state. sheet; Part 2--Approval to Subcontract) for all cur- rently approved DBEs participating in this contract, Without an intermediate acceptance process, retainage List of all non-DBE vendors and material suppliers, can be held for the duration of the project. Incremental accep- Copies of invoices for DBE subcontractor materials, and tance allows for acceptance of that portion of the work sub- Documentation of all back charges to DBE sub- contracted and completed to be paid in full to the prime con- contractors. tractor. Before the 1999 regulation change, 12 of the 36 STAs had a prompt return of retainage to subcontractors as part of The second phase was the actual field visit, where inter- their prompt payment requirements. After the legislation, views and analysis of project-level documentation would be 32 STAs indicated that they require prompt payment of retain- conducted. The two sets of data are compared as a method of age to subcontractors. Fourteen STAs, based on this investiga- cross-checking for contract compliance. Other questions on tion, have a "zero" retainage policy for both prime contractors the New York DBE Compliance Data Report Addendum are and for subcontractors. The responses imply, therefore, that indicators of the compliance analysis considerations. 18 STAs withhold retainage on their prime contractors, but 1. Have all DBEs maintained a workforce and supervi- require prompt payment to subcontractors. Only four respon- sion separate and independent from that of the con- dents specifically indicated that the prime contractors could tractor, other subcontractors, or their affiliates? withhold retainage on their subcontractors. STA prompt pay- 2. Have all DBEs performed a commercially useful ment provisions reviewed in detail indicate that when incre- function? mental acceptance included all the work of the subcontractor, 3. Have DBE subcontractors obtained more than 50% of the prime contractor would need to pay the retained amounts the equipment used to complete their work from the to the subcontractor in the next payment. If there was work contractor, other subcontractors, or their affiliates? still in dispute, the contractor could retain a fair value of the 4. Have DBE subcontractors documented the cost of any work disputed until the dispute was resolved and then they equipment obtained from the contractor, other sub- had to comply with prompt payment time provisions. contractors, or their affiliates? 5. Were the materials used by the DBE subcontractors Although a policy of zero retainage for prime contractors ordered and paid for by the DBEs? and subcontractors is the easiest to administer, there are some 6. Have DBEs performing off-site trucking provided at drawbacks to zero retainage and early release of retainage. least 20% of the equipment and manpower required? The following contractual issues were noted in regard to zero 7. Have DBEs performing off-site trucking obtained any retainage (numbers represent the number of times the issue equipment or manpower from the contractor, other sub- was identified by the STAs in the questionnaire): contractors, or their affiliates? Resulted in overpayment to contractor (7), Limited ability to recall subcontractors (7), and COMMERCIALLY USEFUL FUNCTION Limited ability to obtain final contract documentation from prime contractor (4). Section 26.55 (c) describes how actual DBE participation is counted toward contract goals and forms the basis for defin- ing commercially useful function (CUF). CONTRACT COMPLIANCE REVIEWS (c) Count expenditures to a DBE contractor toward DBE goals There was no consistency among the responses to provide a only if the DBE is performing a commercially useful func- general process approach to the issue of contract compliance tion on that contract. (1) A DBE performs a commercially useful function when it reviews. Depending on the STA administrative organization, is responsible for execution of the work of the contract construction field personnel, EEO representatives, central and is carrying out its responsibilities by actually per- office staff, and compliance specialists can be involved in forming, managing, and supervising the work involved. To perform a commercially useful function, the DBE conducting field audits. New York has a detailed procedural must also be responsible, with respect to materials and guide for conducting contractor compliance reviews ("New supplies used on the contract, for negotiating price, deter- York State . . ." 2002). The STA uses compliance specialists mining quality and quantity, ordering the material, and