The new DOT rule requires that prime contractors pay all their subs in a certain number of days after satisfactorily completing their work. The payments must be made regardless of whether the state DOT is sitting on retainage withheld from the prime contractor. Exactly how this rule would affect the differing contractual terms under which subcontractors and prime contractors now work is not clear. Previously, pay practices for the most part had fallen under state law. The new rule shifts a significant portion of the payment risk back onto the shoulders of the prime contractors, where many subcontractors say it belongs.
Some prime contractors insist that payment risk is rightfully shared.
The irony is the major thrust of the new disadvantaged business enterprise rules has been to devolve authority on the states. On this issue, however, DOT is increasing the federal role and inserting a very heavy federal hand right into the contractual relationships between every prime and sub. Time to Join the 21st Century F or specialty contractors, the construction market couldn't be better. Even discounting the revenue gains made by the big industry consolidators, the Top 600 enjoyed their third straight year of double digit growth. But with all this growth, specialty contractors are experiencing growing pains.