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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.1

FAR 32.103 Progress payments under construction contracts.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section addresses retainage on progress payments in construction contracts. If a contractor has not made satisfactory progress, the contracting officer may withhold a percentage of the progress payment, but not more than 10 percent of the approved estimated amount. Once all contract requirements are complete, any retained amounts must be paid promptly.

Applies to: Construction contracts using progress payments

What it requires

  • Pay retained amounts promptly upon completion of all contract requirements

Key terms: progress payment · retainage · contracting officer · approved estimated amount · completion

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

When satisfactory progress has not been achieved by a contractor during any period for which a progress payment is to be made, a percentage of the progress payment may be retained. Retainage should not be used as a substitute for good contract management, and the contracting officer should not withhold funds without cause. Determinations to retain and the specific amount to be withheld shall be made by the contracting officer on a case-by-case basis. Such decisions will be based on the contracting officer's assessment of past performance and the likelihood that such performance will continue. The amount of retainage withheld shall not exceed 10 percent of the approved estimated amount in accordance with the terms of the contract and may be adjusted as the contract approaches completion to recognize better than expected performance, the ability to rely on alternative safeguards, and other factors. Upon completion of all contract requirements, retained amounts shall be paid promptly.

← 32.102 Description of contract financing methods. · 32.104 Providing contract financing. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.103 Progress payments under construction contracts · SpendQuery