The levelset site states that public jobs can withhold no more than 6% for public jobs in IN. The customer contract with the VA clinic in this area states the following: To determine the amount of retainage to be withheld, the board shall: 1. Withhold no more than 10% of the dollar value of all work satisfactorily completed until the public work is 50% completed, and nothing further after that; or 2. Withhold no more than 5% of the dollar value of all work satisfactorily completed until the public work is substantially completed. If upon substantial completion of the public work minor items remain uncompleted, an amount equal to 200% of the value of each item as determined by the architect-engineer shall be withheld until the item is completed. [IC 36-1-12-14(c)] Please provider further clarity. If (according to levelset info) government agencies cannot exceed 6%, however is there a contract with the VA (Public Works Law) that indicates retainage of 10%?
The retainage rules in Indiana can be a bit complicated. The amount of retainage that can be withheld on public works projects in Indiana, and the overall retainage schema, depends on the total contract value of the project and type of project. These are broken down into three categories Title 4 Projects, Title 5 Projects, and Title 36 Projects. It appears that your project falls under the category of Title 36. I'll break down each project type breifly.
Title 5 Projects
Projects that fall under this category are projects involving state-owned buildings (with the exception of university projects) with an estimated cost of $1M or more.
On these types of projects, the Public Works Division has two options.
Title 5 Projects
This category of projects encompasses projects commissioned by a state-entity where the contract value is $200K or more.
On these types of projects, the state agency has two options:
Title 36 Projects
This last category covers projects commissioned by local government entities or political subdivisions where the total contract value is $200K or more. The retainage rules on these project are essentially the same as Title 5 Projects.
On these types of projects, the political subdivision or agency also has two options:
These rules and categories of projects are broken down in the public works section of Levelset's Indiana Retainage Guide & FAQs page.
It states no more than 10% and no less than 6%. Does this mean there is room to negotiate the retainage? Can we still ask for the retainage to be placed at 6%?
It is ultimately up to the discretion of the entity contracting the work. In practice, some public entities will have a predetermined rate that they will use on every project, while others may have some wiggle room in terms of negotiation.
However, as subcontractor, the amount of retainage withheld will generally be the same percentage being withheld from the prime contractor. If the prime contract provides for 10% retainage, neogtiating a lesser amount may be futile.