102 STAT. 2462
PUBLIC LAW 100-496—OCT. 17, 1988
"(5) notify the Government, upon— "(A) reduction of the amount of any subsequent certified application for payment; or "(B) payment to the subcontractor of any withheld amounts of a progress payment, specifying— "(i) the amounts of the progress payments withheld under paragraph (1) of this subsection; and "(ii) the dates that such withholding began and ended; and "(6) be obligated to pay to the Government an amount equal to interest on the withheld payments (computed in the manner provided in section 3903(c) of this title), from the 8th day after receipt of the withheld amounts from the Government until— "(A) the day the identified subcontractor performance deficiency is corrected; or "(B) the date that any subsequent payment is reduced under paragraph (5)(A). "(fKD If a prime contractor, after making payment to a first-tier subcontractor, receives from a supplier or subcontractor of the firsttier subcontractor (hereafter referred to as a 'second-tier subcontractor') a written notice in accordance with section 2 of the Act of August 24, 1935 (40 U.S.C. 270b), asserting a deficiency in such firsttier subcontractor's performance under the contract for which the prime contractor may be ultimately liable, and the prime contractor determines that all or a portion of future payments otherwise due such first-tier subcontractor is subject to withholding in accordance with the subcontract agreement, then the prime contractor may, without incurring an obligation to pay an interest penalty under subsection (e)(6) of this section— "(A) furnish to the first-tier subcontractor a notice conforming to the standards of subsection (g) of this section as soon as practicable upon making such determination; and "(B) withhold from the first-tier subcontractor's next available progress payment or payments an amount not to exceed the amount specified in the notice of withholding furnished under subparagraph (A) of this paragraph. "(2) As soon as practicable, but not later than 7 days after receipt of satisfactory written notification that the identified subcontract performance deficiency has been corrected, the prime contractor shall pay the amount withheld under paragraph (I)(B) of this subsection to such first-tier subcontractor, or shall incur an obligation to pay a late payment interest penalty to such first-tier subcontractor computed at the rate specified by section 3902(a) of this title. "(g) A written notice of any withholding shall be issued to a subcontractor (with a copy to the Government of any such notice issued \}y a prime contractor), specifying— "(1) the amount to be withheld; "(2) the specific causes for the withholding under the terms of the subcontract; and "(3) the remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld. "(h) A prime contractor may not request payment from the agency of any amount withheld or retained in accordance with subsection (d) of this section until such time as the prime contractor has determined and certified to the agency that the subcontractor is entitled to the payment of such amount.
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