Rhode Island Retainage Guide and FAQs

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Rhode Island Retainage FAQs

Rhode Island Retainage Overview

Rhode Island Retainage Requirements


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Retainage Unregulated Icon
Retainage Limit

Not Regulated by State Law


Payment Period Not Regulated Icon
Pay Period

Not Regulated by State Law


NO
PROCESS
There's No Process to Recover

Not specified


No Escrow Icon
Not Held In Escrow

In Rhode Island, contractors and owners do not need to hold retainage funds in a separate escrow account.

Retainage 5% Icon
5 Percent

Retainage cannot exceed 5% unless there is a dispute or another amount set out by the contract.


90
DAYS
90 Day Pay Period

Retainage must be released within 90 days of final acceptance of the work.


NO
PROCESS
There's No Process to Recover

Not specified

Retainage serves two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) To give the owner some protection against problems like liens, contractual defaults, delays, and more. In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others. The following are resources, legal information, and frequently asked questions about Rhode Island’s retainage requirements. The Rhode Island retainage statutes are reproduced below on this page.

Rhode Island Retainage Frequently Asked Questions

Rhode Island Retainage Private Projects FAQs

Does Rhode Island limit the amount of retainage that can be withheld from a contractor?

Yes. In Rhode Island, for projects where the mechanics lien statutes apply (generally, private projects), retainage is capped at 5% of progress payments.

How long can a party withhold retainage in Rhode Island?

Withheld retainage must generally be released to the prime contractor within 90 days of final acceptance of the work. If funds are not released on time, interest accrues at 10% per year.

Contractors must pay their subs within 7 days of receipt of payment, subs must pay their subs within 7 days of receiving payment, and so on down the chain.

Does Rhode Island require retained funds be deposited in a special account? Can securities be substituted for retainage?

Securities may be substituted for retainage. They must be deposited with the general treasurer.

How can I make a claim to recover retainage in Rhode Island?

60 days after the substantial completion of the project, a contractor may submit a written application for payment of retainage.

Is there a specific notice required to recover retainage in Rhode Island?

The prime contractor must make a written application for retainage, but the Rhode Island retainage statute does not specify a specific form for that notice.

Rhode Island Retainage Public Projects FAQs

Does Rhode Island limit the amount of retainage that can be withheld from a contractor?

Retainage is limited to 5% unless there is a dispute or another amount is agreed upon in the contract.

How long can a party withhold retainage in Rhode Island?

Withheld retainage is required to be released within 90 days of final acceptance of the work. If funds are not released on time, interest accrues at 10%/year.

Does Rhode Island require retained funds be deposited in a special account? Can securities be substituted for retainage?

Securities may be substituted for retainage. They must be deposited with the general treasurer.

How can I make a claim to recover retainage in Rhode Island?

This is not specified for public projects in the Rhode Island retainage statute.

Is there a specific notice required to recover retainage in Rhode Island?

This is not specified for public projects in the Rhode Island retainage statute.

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RI Private Construction retainage

What is maximum retainage in RI for a private construction contract

Rhode Island Retainage Statute FAQs

Getting informed about prompt payment laws is important. An examination of Rhode Island’s retainage laws, the rules and regulations related to the amount and timing of allowable retained payments, is important to know your rights and responsibilities as a party on a construction project. Rhode Island’s specific laws can be found in: R.I. Gen. Laws § 37-12-10; and are reproduced below.

Retainage Statute on Private Projects

§ 37-12-10.1: Contractor/subcontractor retainage

(a) No contract for construction, as defined in § 5-65-1, or for state or municipal public works projects, as defined in this title, excluding contracts under § 37-12-10, shall include retainage that exceeds five percent (5%) of any progress payment.

(b) Not later than fourteen (14) days after reaching substantial completion, as defined in § 5-65-1, the prime contractor shall submit to the project owner a notice of substantial completion, substantially in the form provided in this subsection, stating the date on which the project was substantially complete.

FORM FOR NOTICE OF SUBSTANTIAL

COMPLETION NOTICE OF SUBSTANTIAL COMPLETION

For [project name]

To [project owner]:

The undersigned hereby gives notice that the project was substantially complete, as defined under § 5-65-1(18), or for state or municipal public works projects, as defined in title 37 of the general laws on [date of substantial completion]. This notice is certified as made in good faith on [date of notice].

By ………………..

[prime contractor]

Accepted:

By ………………..

[project owner]

Dated: ……….

(c) The project owner shall accept or reject the notice of substantial completion within fourteen (14) days of receipt of the notice. The project owner shall indicate its acceptance by signing the notice in the space provided, and shall deliver the notice to the prime contractor within the same fourteen-day (14) period. If the project owner fails to deliver the notice to the prime contractor within the fourteen-day (14) period, the notice shall be deemed accepted. If the project owner rejects the notice of substantial completion, the project owner shall, within fourteen (14) days of receipt of the notice described in subsection (b), notify the prime contractor in writing of the rejection, and include in the rejection the factual and contractual basis for the rejection, and a certification that the rejection is made in good faith. A rejection of the notice shall be subject to the dispute resolution provisions of the contract for construction, which, notwithstanding any provision in the contract to the contrary, shall be commenced by the prime contractor within seven (7) days of receipt of the rejection of the project owner. The prime contractor and project owner shall prosecute the dispute resolution procedures diligently, expeditiously, and in good faith. A notice of substantial completion not rejected by the project owner within fourteen (14) days of receipt of the notice and in accordance with this subsection shall be deemed accepted by the project owner. Upon an express or deemed acceptance of a notice of substantial completion, the date of substantial completion shall be the date stated in the prime contractor’s notice for all purposes, and the acceptance shall be final and binding on the project owner and its successors and assignees.

(d) Not later than fourteen (14) days after the express or deemed acceptance of the notice of substantial completion or, in the case of a dispute, final and binding resolution of the dispute, the project owner shall submit to the prime contractor a written list describing all incomplete or defective work items and deliverables required of the prime contractor under the prime contractor’s contract for construction. The list shall be certified by the project owner as made in good faith. Not later than twenty-one (21) days after the express or deemed acceptance of the notice of substantial completion, or, in the case of a dispute, final and binding resolution of the dispute, the prime contractor shall submit to each person from whom the prime contractor is withholding retainage, a written list describing all incomplete or defective work items and deliverables required by the person under the person’s contract for construction, which list may include items beyond those on the project owner’s list. The list shall be certified by the prime contractor as made in good faith.

(e) The project owner and prime contractor shall fulfill their obligations pursuant to subsections (b), (c) and (d) of this section in good faith and in a timely manner. Except where the contract for construction shall provide for an earlier submission, following the expiration of sixty (60) days after substantial completion or, in the case of a dispute under subsection (c), final and binding resolution of the dispute, a person may submit a written application for payment of retainage in the form required by the person’s contract for construction. An application for payment of retainage shall be accompanied by a written list identifying the incomplete or defective work items and deliverables on its received list that the person has completed, repaired, and delivered. The list shall be certified by the person submitting the application for payment of retainage as made in good faith. Subject to subsection (f), an application for payment of retainage shall be paid not later than thirty (30) days following submission of the application, or on the next payment cycle in accordance with the established state revolving fund (SRF) payment schedule; provided, however, that the time period for payment of an application for retainage by the person at each tier of contract below the owner of the project may be extended by seven (7) days longer than the time period applicable to the person at the tier of contract above the person.

(f) Not more than the following amounts may be withheld from the payment of retainage:

(1) For unknown or foreseeable defects that may become known in the first year after substantial completion, one-half percent (1/2%) may be held for up to one year following the date of substantial completion;

(2) For incomplete, incorrect, or missing deliverables, either the value of the deliverables as mutually agreed upon in writing by the parties to the contract for construction of the person seeking payment of retainage pursuant to the contract or if no value has been agreed upon in writing by the parties, the reasonable value of the deliverables which shall not exceed two and one-half percent (2.5%) of the total adjusted contract price of the person seeking payment of retainage;

(3) One hundred fifty percent (150%) of the reasonable cost to complete or correct incomplete or defective work items; and

(4) The reasonable value of claims and any costs, expenses, and attorneys’ fees incurred as a result of the claims if permitted in the contract for construction of the person seeking the payment of retainage. No amount shall be withheld from the payment of retainage unless the person seeking payment has received, before the date that the payment is due, a description, in writing, of the incomplete or defective work items and incomplete, incorrect, or missing deliverables, the factual and contractual basis for the claims, and the value attributable to each incomplete or defective work item, deliverable, and claim. The writing shall be certified as made in good faith. A person may submit additional applications for payment of retainage in the form required by the person’s contract for construction following completion or correction of incomplete or defective work items, the furnishing of deliverables, or the resolution of claims. The additional applications shall be paid, and amounts may be withheld from payment, in accordance with subsection (f).

(g) Retainage held by the project owner on account of the prime contractor’s self-performed labor, materials, and equipment shall be eligible for payment to the same extent as if the labor, materials, and equipment had been provided by a person under a contract for construction with the prime contractor.

(h) If the prime contractor has not been declared in default under the requirements of the contract for construction with the project owner and subject to this section, the project owner shall not withhold any part of the retainage of a person under a contract for construction with the prime contractor or the prime contractor’s proportional retainage calculated thereon for a claim that the project owner asserts against the prime contractor that is not based on the performance of the person or a default of the person’s contract for construction.

(i) A contract for construction may establish the date of the month for submission of an application for payment of retainage; provided, however, that the contract may not restrict the submission to less frequently than one application per calendar month. An application submitted prior to the date established in the contract for construction shall be deemed submitted as of the date established in the contract. A rejection of an application for payment of retainage and a dispute regarding incomplete or defective work items, deliverables, or claims shall be subject to the applicable dispute resolution procedure. A provision in a contract for construction that requires a person to delay commencement of the applicable dispute resolution procedure for more than thirty (30) days after either the rejection of an application for payment of retainage or written notice of the dispute is provided, whichever first occurs, shall be void and unenforceable. The payment of retainage shall be subject to subsection (e).

(j) A communication required by this section to be in writing may be submitted in electronic form and by electronic means.

(k) A provision in a contract for construction that purports to waive, limit, or subvert this section or redefine or expand the conditions for achievement of substantial completion for payment of retainage shall be void and unenforceable.

(l) Any contract under this section, as defined by § 37-13-1, that exceeds twelve (12) months in duration shall allow those subcontractors who are substantially complete within the first third (1/3) of the project to request from the prime contractor release of retainage pursuant to subsections (b), (c), (d) and (e).

(m) The Rhode Island department of transportation (RIDOT) shall be exempt from the provisions of this section and may deduct from any payments required pursuant to any construction contract an amount reasonably sufficient to secure satisfactory performance of contractual work which amount shall not exceed five percent (5%) of the contract price.

§ 5-65-1. Definitions.

As used in this chapter:

(1) “Board” means the contractors’ registration and licensing board established pursuant to the provisions of § 5-65-14 or its designees.

(2) “Claim for retainage” means an allegation that a person seeking payment of retainage breached the person’s contract for the project; provided, however, that a “claim” related to a project with a contract value of not less than two hundred fifty thousand dollars ($250,000) shall be subject to the applicable dispute resolution procedure, notice, and other requirements in the contract for construction.

(3) “Commission” means the building code commission supportive of the contractors’ registration and licensing board.

(4)(i) “Contractor” means a person who, in the pursuit of an independent business, undertakes or offers to undertake or submits a bid, or for compensation and with or without the intent to sell the structure arranges to construct, alter, repair, improve, move over public highways, roads, or streets or demolish a structure or to perform any work in connection with the construction, alteration, repair, improvement, moving over public highways, roads, or streets or demolition of a structure, and the appurtenances thereto. For the purposes of this chapter, “appurtenances” includes the installation, alteration, or repair of wells connected to a structure consistent with chapter 13.2 of title 46. “Contractor” includes, but is not limited to, any person who purchases or owns property and constructs, or for compensation arranges for the construction of, one or more structures.

(ii) A certificate of registration is necessary for each “business entity” regardless of the fact that each entity may be owned by the same individual.

(5) “Contract for construction” means a contract for which a lien may be established under chapter 28 of title 34 or for state or municipal public works projects as defined in title 37 on a project for which the person on whose contract with the project owner has an original contract price of not less than two hundred fifty thousand dollars ($250,000); provided, however, that “contract for construction” shall not include a project containing, or designed to contain, at least one, but not more than four (4), dwelling units.

(6) “Deliverable” means a project close-out document that shall be submitted by the person seeking payment of retainage under the person’s contract for construction; provided, however, that a lien waiver or release, which is a deliverable, shall comply with chapter 28 of title 34; provided, further, that “deliverable” shall not include any document affirming, certifying, or confirming completion or correction of labor, materials, or other items furnished or incomplete or defective work.

(7) “Dwelling unit” means a single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation.

(8) “Hearing officer” means a person designated by the executive director to hear contested claims or cases, contested enforcement proceedings, and contested administrative fines, in accordance with the “administrative procedures act”, chapter 35 of title 42.

(9) “Incomplete or defective work” means labor, materials, or any other item required for full performance by a person seeking payment of retainage that remains to be furnished by the person under the person’s contract for construction or that has been furnished by the person but requires correction, repair, further completion, revision, or replacement; provided, however, that “incomplete or defective work” shall not include deliverables or labor, materials, or any other item to be repaired or replaced after substantial or final completion pursuant to a warranty, guarantee, or other contractual obligation to correct defective work after substantial or final completion.

(10) “Monetary damages” means the dollar amount required in excess of the contract amount necessary to provide the claimant with what was agreed to be provided under the terms of the contract reduced by any amount due and unpaid to the respondent inclusive of any and all awards and restitution.

(11) “Person” means any natural person, joint venture, partnership, corporation, or other business or legal entity who or that enters into a contract for construction.

(12) “Prime contractor” means a person who or that enters into a contract for construction with the project owner.

(13) “Retainage” means a portion or percentage of a payment due pursuant to a contract for construction that is withheld to ensure full performance of the contract for construction.

(14) “Staff” means the executive director for the contractors’ registration and licensing board, and any other staff necessary to carry out the powers, functions, and duties of the board including inspectors, hearing officers, and other supportive staff.

(15) “State” means the state of Rhode Island.

(16) “Structure” means (i) Any commercial building; or (ii) Any building containing one or more residences and their appurtenances. The board’s dispute resolution process shall apply only to residential structures containing dwelling units, as defined in the state building code, or residential portions of other types of buildings without regard to how many units any structure may contain. The board retains jurisdiction and may conduct hearings regarding violations against all contractors required to be registered or licensed by the board.

(17) “Substantially” means any violation that affects the health, safety, and welfare of the general public.

(18) “Substantial completion” means the stage in the progress of the project when the work required by the contract for construction with the project owner is sufficiently complete in accordance with the contract for construction so that the project owner may occupy or utilize the work for its intended use; provided, further, that “substantial completion” may apply to the entire project or a phase of the entire project if the contract for construction with the project owner expressly permits substantial completion to apply to defined phases of the project.

Retainage Statute on Public Projects

§ 37-12-10: Retainers relating to Contracts for Public Works, Sewer, or Water Main Construction

(a) Upon substantial completion of the work required by a contract aggregating in amount less than five hundred thousand dollars ($ 500,000) with any municipality, or any agency or political subdivision thereof, for the construction, reconstruction, alteration, remodeling, repair, or improvement of sewers and water mains, or any public works project defined in § 37-13-1, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the contract price unless otherwise agreed to by the parties. Upon substantial completion of the work required by a contract aggregating in an amount of five hundred thousand dollars ($ 500,000) or greater with any municipality, or any agency or political subdivision thereof, for the construction, reconstruction, alteration, remodeling, repair, or improvement of sewers and water mains, or any public works project defined in § 37-13-1, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the contract price. In the case of periodic payments with respect to contracts less than the aggregate amount of five hundred thousand dollars ($ 500,000), the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the approved amount of any periodic payment unless otherwise agreed to by the parties. In the case of periodic payments with respect to contracts in the aggregate amount of five hundred thousand dollars ($ 500,000) or greater, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the approved amount of any periodic payment.

(b) The retainage shall be paid to any contractor or subcontractor within ninety (90) days of the date the work is accepted by the awarding authority unless a dispute exists with respect to the work. If payment is not made within ninety (90) days for any reason other than a dispute, which, if resolved and it is not the fault of the contractor, interest shall be assessed at the rate of ten percent (10%) per annum on all money which is to be paid to the contractor or subcontractor.

(c) The retainage shall be paid to any contractor or subcontractor within ninety (90) days of the date his or her work is completed and accepted by the awarding authority. If payment is not made, interest shall be assessed at the rate of ten percent (10%) per annum.

(d) There shall also be deducted and retained from the contract price an additional sum sufficient to pay the estimated cost of municipal police traffic control on any public works project. Municipalities shall directly pay the officers working traffic details and shall bill and be reimbursed by the withholding authority for which the contract is being performed every thirty (30) days until the project is complete.

(e) Notwithstanding the foregoing, with respect to projects located within the town of Warren, the withholding authority shall hold an amount from the contract price which shall be reasonably sufficient to pay the estimated cost of municipal police traffic control. The withholding authority shall pay to the town of Warren within seventy-two (72) hours of written demand the actual costs of police traffic control associated with said project on an ongoing basis.

§ 37-12-10.1: Contractor/subcontractor retainage

(a) No contract for construction, as defined in § 5-65-1, or for state or municipal public works projects, as defined in this title, excluding contracts under § 37-12-10, shall include retainage that exceeds five percent (5%) of any progress payment.

(b) Not later than fourteen (14) days after reaching substantial completion, as defined in § 5-65-1, the prime contractor shall submit to the project owner a notice of substantial completion, substantially in the form provided in this subsection, stating the date on which the project was substantially complete.

FORM FOR NOTICE OF SUBSTANTIAL

COMPLETION NOTICE OF SUBSTANTIAL COMPLETION

For [project name]

To [project owner]:

The undersigned hereby gives notice that the project was substantially complete, as defined under § 5-65-1(18), or for state or municipal public works projects, as defined in title 37 of the general laws on [date of substantial completion]. This notice is certified as made in good faith on [date of notice].

By ………………..

[prime contractor]

Accepted:

By ………………..

[project owner]

Dated: ……….

(c) The project owner shall accept or reject the notice of substantial completion within fourteen (14) days of receipt of the notice. The project owner shall indicate its acceptance by signing the notice in the space provided, and shall deliver the notice to the prime contractor within the same fourteen-day (14) period. If the project owner fails to deliver the notice to the prime contractor within the fourteen-day (14) period, the notice shall be deemed accepted. If the project owner rejects the notice of substantial completion, the project owner shall, within fourteen (14) days of receipt of the notice described in subsection (b), notify the prime contractor in writing of the rejection, and include in the rejection the factual and contractual basis for the rejection, and a certification that the rejection is made in good faith. A rejection of the notice shall be subject to the dispute resolution provisions of the contract for construction, which, notwithstanding any provision in the contract to the contrary, shall be commenced by the prime contractor within seven (7) days of receipt of the rejection of the project owner. The prime contractor and project owner shall prosecute the dispute resolution procedures diligently, expeditiously, and in good faith. A notice of substantial completion not rejected by the project owner within fourteen (14) days of receipt of the notice and in accordance with this subsection shall be deemed accepted by the project owner. Upon an express or deemed acceptance of a notice of substantial completion, the date of substantial completion shall be the date stated in the prime contractor’s notice for all purposes, and the acceptance shall be final and binding on the project owner and its successors and assignees.

(d) Not later than fourteen (14) days after the express or deemed acceptance of the notice of substantial completion or, in the case of a dispute, final and binding resolution of the dispute, the project owner shall submit to the prime contractor a written list describing all incomplete or defective work items and deliverables required of the prime contractor under the prime contractor’s contract for construction. The list shall be certified by the project owner as made in good faith. Not later than twenty-one (21) days after the express or deemed acceptance of the notice of substantial completion, or, in the case of a dispute, final and binding resolution of the dispute, the prime contractor shall submit to each person from whom the prime contractor is withholding retainage, a written list describing all incomplete or defective work items and deliverables required by the person under the person’s contract for construction, which list may include items beyond those on the project owner’s list. The list shall be certified by the prime contractor as made in good faith.

(e) The project owner and prime contractor shall fulfill their obligations pursuant to subsections (b), (c) and (d) of this section in good faith and in a timely manner. Except where the contract for construction shall provide for an earlier submission, following the expiration of sixty (60) days after substantial completion or, in the case of a dispute under subsection (c), final and binding resolution of the dispute, a person may submit a written application for payment of retainage in the form required by the person’s contract for construction. An application for payment of retainage shall be accompanied by a written list identifying the incomplete or defective work items and deliverables on its received list that the person has completed, repaired, and delivered. The list shall be certified by the person submitting the application for payment of retainage as made in good faith. Subject to subsection (f), an application for payment of retainage shall be paid not later than thirty (30) days following submission of the application, or on the next payment cycle in accordance with the established state revolving fund (SRF) payment schedule; provided, however, that the time period for payment of an application for retainage by the person at each tier of contract below the owner of the project may be extended by seven (7) days longer than the time period applicable to the person at the tier of contract above the person.

(f) Not more than the following amounts may be withheld from the payment of retainage:

(1) For unknown or foreseeable defects that may become known in the first year after substantial completion, one-half percent (1/2%) may be held for up to one year following the date of substantial completion;

(2) For incomplete, incorrect, or missing deliverables, either the value of the deliverables as mutually agreed upon in writing by the parties to the contract for construction of the person seeking payment of retainage pursuant to the contract or if no value has been agreed upon in writing by the parties, the reasonable value of the deliverables which shall not exceed two and one-half percent (2.5%) of the total adjusted contract price of the person seeking payment of retainage;

(3) One hundred fifty percent (150%) of the reasonable cost to complete or correct incomplete or defective work items; and

(4) The reasonable value of claims and any costs, expenses, and attorneys’ fees incurred as a result of the claims if permitted in the contract for construction of the person seeking the payment of retainage. No amount shall be withheld from the payment of retainage unless the person seeking payment has received, before the date that the payment is due, a description, in writing, of the incomplete or defective work items and incomplete, incorrect, or missing deliverables, the factual and contractual basis for the claims, and the value attributable to each incomplete or defective work item, deliverable, and claim. The writing shall be certified as made in good faith. A person may submit additional applications for payment of retainage in the form required by the person’s contract for construction following completion or correction of incomplete or defective work items, the furnishing of deliverables, or the resolution of claims. The additional applications shall be paid, and amounts may be withheld from payment, in accordance with subsection (f).

(g) Retainage held by the project owner on account of the prime contractor’s self-performed labor, materials, and equipment shall be eligible for payment to the same extent as if the labor, materials, and equipment had been provided by a person under a contract for construction with the prime contractor.

(h) If the prime contractor has not been declared in default under the requirements of the contract for construction with the project owner and subject to this section, the project owner shall not withhold any part of the retainage of a person under a contract for construction with the prime contractor or the prime contractor’s proportional retainage calculated thereon for a claim that the project owner asserts against the prime contractor that is not based on the performance of the person or a default of the person’s contract for construction.

(i) A contract for construction may establish the date of the month for submission of an application for payment of retainage; provided, however, that the contract may not restrict the submission to less frequently than one application per calendar month. An application submitted prior to the date established in the contract for construction shall be deemed submitted as of the date established in the contract. A rejection of an application for payment of retainage and a dispute regarding incomplete or defective work items, deliverables, or claims shall be subject to the applicable dispute resolution procedure. A provision in a contract for construction that requires a person to delay commencement of the applicable dispute resolution procedure for more than thirty (30) days after either the rejection of an application for payment of retainage or written notice of the dispute is provided, whichever first occurs, shall be void and unenforceable. The payment of retainage shall be subject to subsection (e).

(j) A communication required by this section to be in writing may be submitted in electronic form and by electronic means.

(k) A provision in a contract for construction that purports to waive, limit, or subvert this section or redefine or expand the conditions for achievement of substantial completion for payment of retainage shall be void and unenforceable.

(l) Any contract under this section, as defined by § 37-13-1, that exceeds twelve (12) months in duration shall allow those subcontractors who are substantially complete within the first third (1/3) of the project to request from the prime contractor release of retainage pursuant to subsections (b), (c), (d) and (e).

(m) The Rhode Island department of transportation (RIDOT) shall be exempt from the provisions of this section and may deduct from any payments required pursuant to any construction contract an amount reasonably sufficient to secure satisfactory performance of contractual work which amount shall not exceed five percent (5%) of the contract price.

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