[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR28.106-7]

[Page 537]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 28_BONDS AND INSURANCE--Table of Contents
 
           Subpart 28.1_Bonds and Other Financial Protections
 
Sec.  28.106-7  Withholding contract payments.

    (a) During contract performance, agencies shall not withhold 
payments due contractors or assignees because subcontractors or 
suppliers have not been paid.
    (b) If, after completion of the contract work, the Government 
receives written notice from the surety regarding the contractor's 
failure to meet its obligation to its subcontractors or suppliers, the 
contracting officer shall withhold final payment. However, the surety 
must agree to hold the Government harmless from any liability resulting 
from withholding the final payment. The contracting officer will 
authorize final payment upon agreement between the contractor and surety 
or upon a judicial determination of the rights of the parties.
    (c) For any withholding incident to the labor standards provisions 
of the contract, see part 22.