[Code of Federal Regulations]
[Title 49, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR26.29]

[Page 272]
 
                        TITLE 49--TRANSPORTATION
 
          SUBTITLE A--OFFICE OF THE SECRETARY OF TRANSPORTATION
 
PART 26--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS--Table of Contents
 
 Subpart B--Administrative Requirements for DBE Programs for Federally-
                          Assisted Contracting
 
Sec. 26.29  What prompt payment mechanisms must recipients have?

    (a) You must establish, as part of your DBE program, a contract 
clause to require prime contractors to pay subcontractors for 
satisfactory performance of their contracts no later than a specific 
number of days from receipt of each payment you make to the prime 
contractor. This clause must also require the prompt return of retainage 
payments from the prime contractor to the subcontractor within a 
specific number of days after the subcontractor's work is satisfactorily 
completed.
    (1) This clause may provide for appropriate penalties for failure to 
comply, the terms and conditions of which you set.
    (2) This clause may also provide that any delay or postponement of 
payment among the parties may take place only for good cause, with your 
prior written approval.
    (b) You may also establish, as part of your DBE program, any of the 
following additional mechanisms to ensure prompt payment:
    (1) A contract clause that requires prime contractors to include in 
their subcontracts language providing that prime contractors and 
subcontractors will use appropriate alternative dispute resolution 
mechanisms to resolve payment disputes. You may specify the nature of 
such mechanisms.
    (2) A contract clause providing that the prime contractor will not 
be reimbursed for work performed by subcontractors unless and until the 
prime contractor ensures that the subcontractors are promptly paid for 
the work they have performed.
    (3) Other mechanisms, consistent with this part and applicable state 
and local law, to ensure that DBEs and other contractors are fully and 
promptly paid.

[[Page 273]]