1. Except as otherwise provided in subsections 2, 12 and 13, the Director may pay at the end of each calendar month, or as soon thereafter as practicable, to any contractor satisfactorily performing any highway improvement or construction as the work progresses in full for the work as completed but not more than 97.5 percent of the entire contract price. The progress estimates must be based upon materials in place, or on the job site, or at a location approved by the Director, and invoiced, and labor expended thereon. The remaining 2.5 percent must be retained until the remaining money is disposed of in the manner provided in subsection 3 or 4, as applicable.

2. If the work in progress is being performed on a satisfactory basis, the Director may reduce the percentage retained if the Director finds that sufficient reasons exist for additional payment and has obtained written approval from every surety furnishing bonds for the work. Any remaining money must be retained until such money is disposed of in the manner provided in subsection 3 or 4, as applicable.

3. Upon receiving notice from the contractor of the completion of all work under a contract for a project of highway improvement or construction, the Department shall perform a final inspection of such work. If the final inspection discloses that any work, in whole or in part, is unsatisfactory, the Department will provide the contractor with notice of the deficiencies in such work that require correction before the work will be considered completed satisfactorily. Upon receiving notice from the contractor that any such unsatisfactory work has been corrected, the Department shall conduct another final inspection. If a final inspection discloses that all work under a contract for a project of highway improvement or construction has been completed satisfactorily, the Director shall reduce any money being retained pursuant to subsection 1 to not more than $50,000, not later than 30 days after such final inspection. Any remaining money must be retained until the entire contract is completed satisfactorily and accepted by the Director.

4. If it becomes necessary for the Department to take over the completion of any highway contract or contracts, all of the amounts owing the contractor, including the withheld percentage, must first be applied toward the cost of completion of the contract or contracts. Any balance remaining in the retained percentage after completion by the Department is payable to the contractor or the contractor’s creditors.

5. Such retained percentage as may be due any contractor is due and payable at the expiration of the 30-day period as provided in NRS 408.363 for filing of creditors’ claims, and this retained percentage is due and payable to the contractor at that time without regard to creditors’ claims filed with the Department.

6. The contractor under any contract made or awarded by the Department, including any contract for the construction, improvement, maintenance or repair of any road or highway or the appurtenances thereto, may, from time to time, withdraw the whole or any portion of the sums otherwise due to the contractor under the contract which are retained by the Department, pursuant to the terms of the contract, if the contractor deposits with the Director:

(a) United States treasury bonds, United States treasury notes, United States treasury certificates of indebtedness or United States treasury bills;

(b) Bonds or notes of the State of Nevada; or

(c) General obligation bonds of any political subdivision of the State of Nevada.

Certificates of deposit must be of a market value not exceeding par, at the time of deposit, but at least equal in value to the amount so withdrawn from payments retained under the contract.

7. The Director has the power to enter into a contract or agreement with any national bank, state bank, credit union, trust company or safe deposit company located in the State of Nevada, designated by the contractor after notice to the owner and surety, to provide for the custodial care and servicing of any obligations deposited with the Director pursuant to this section. Such services include the safekeeping of the obligations and the rendering of all services required to effectuate the purposes of this section.

8. The Director or any national bank, state bank, credit union, trust company or safe deposit company located in the State of Nevada, designated by the contractor to serve as custodian for the obligations pursuant to subsection 7, shall collect all interest or income when due on the obligations so deposited and shall pay them, when and as collected, to the contractor who deposited the obligation. If the deposit is in the form of coupon bonds, the Director shall deliver each coupon as it matures to the contractor.

9. Any amount deducted by the State of Nevada, or pursuant to the terms of a contract, from the retained payments otherwise due to the contractor thereunder, must be deducted first from that portion of the retained payments for which no obligation has been substituted, then from the proceeds of any deposited obligation. In the latter case, the contractor is entitled to receive the interest, coupons or income only from those obligations which remain on deposit after that amount has been deducted.

10. A contractor shall disburse money paid to the contractor pursuant to this section, including any interest that the contractor receives, to his or her subcontractors and suppliers within 15 days after receipt of the money in the proportion that the value of the work performed by each subcontractor or the materials furnished by each supplier bears to the total amount of the contract between the principal contractor and the Department.

11. Money payable to a subcontractor or supplier accrues interest at a rate equal to the lowest daily prime rate at the three largest banks in the United States on the date the subcontract or order for supplies was executed plus 2 percent, from 15 days after the money was received by the principal contractor until the date of payment.

12. If a contractor withholds more than 2.5 percent of a payment required by subsection 10, the subcontractor or supplier may inform the Director in writing of the amount due. The Director shall attempt to resolve the dispute between the contractor and the subcontractor or supplier within 20 working days after the date that the Director receives notice of the amount due. If the dispute is not resolved within 20 working days after the date that the Director receives notice of the amount due, the contractor shall deposit the disputed amount in an escrow account that bears interest. The contractor, subcontractor or supplier may pursue any legal or equitable remedy to resolve the dispute over the amount due. The Director may not be made a party to any legal or equitable action brought by the contractor, subcontractor or supplier.

13. If the Director awards to a railroad company a contract for a project for the construction, reconstruction, improvement or maintenance of a highway and the project is located on property that is owned by or under the control of the railroad company, the Director may agree in the contract not to retain any portion of the contract price.

(Added to NRS by 1957, 686; A 1960, 75; 1963, 976; 1967, 348; 1969, 890; 1971, 864; 1975, 717; 1979, 1774; 1981, 265; 1999, 260, 1492; 2001, 637; 2019, 151)