PUR 602–06: Security in lieu of Retention
To allow for the use of a security deposit in place of payment retention for construction contracts
Arizona Board of Regents Policy Manual - 3-804
The university shall retain 10 percent of all payments on construction contracts until satisfactory completion of 50 percent of the project, after which time, 5 percent of the payment will be retained. Interest on the retained amount does accrue to the contractor. Final payment, including the total retention, is to be made within 60 days of completion and acceptance of the project.
The university uses a designated bank as its escrow agent. The university will accept only U.S. Government securities with a maturity at least 90 days out as security in lieu of retention. These securities must be deposited with the university’s escrow agent.
Securities shall be in an amount equal to the retention amount. All interest earned on the securities shall accrue to and be paid to the contractor.
The procedure for security in lieu of retention can be found on the Purchasing and Business Services forms site.