Requesting Entity: Department of Public Works and Highways (DPWH)
Issues Concern: Release of Retention Money
Whether the retention money can be released prior to the final acceptance of works.
[T]he total "retention money" shall be due for release after the defects liability period, and upon final acceptance of the works. However, the rule admits some qualifications; thus, the contractor may request the Procuring Entity that, instead of withholding the retention money for every progress billing, the same be substituted by an irrevocable standby letter of credit; bank guarantee or surety bond callable on demand (collectively, instruments) for each progress billing. These financial instruments must be of such amounts equivalent to the retention money to be substituted and acceptable to government. They must also be valid for a duration to be determined by the concerned Procuring Entity and will answer for the purpose for which the ten percent (10%) retention is intended. The Procuring Entity, for its part, may agree to the request, provided that the project is on schedule and is satisfactorily undertaken. Otherwise, the 10% retention shall be maintained.