a contingent payment clause, the retainage can cause significant financial distress to a subcontractor. Another problem arises when the contractor withholds from its subcontractors at a greater percentage than the owner has withheld from them. The owner is to pay retainage to the contractor when substantial completion has occurred, however, in this abusive, over-withholding scenario, the contractor will already have been paid a portion of the subcontractors' funds, meaning that the contractor will have to fund the balance of the payment from its own cash flow. This could cause a delay in the project closeout. The contractor may feel that it is more advantageous to keep the project incomplete, than by never being paid its retainage and making the argument that the subcontractors are therefore not due their portion of the retainage. Federal retainage policy In 1974, Congress established the Office of Federal Procurement Policy to provide a uniform government-wide procurement policy. Since the mid-1970s, there has been an overall trend in the reduction of percentage withheld on federal construction projects. The current Federal Acquisition Regulation (F.A.R.) continues to support this trend. Paragraph 32.103 of the regulation states, " . . . 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 officers 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." Currently, federal agencies such as the Department of Defense, the General Services Administration, and the US Department of Transportation have 'zero' retainage policies. Alternatives to retainage Several alternatives exist to standard retainage provisions that provide the same benefits and protections. For example, parties can agree to establish a trust account. A trust account provides the contractor with some control over its money, even if it is being held by the owner. In a trust account, retainage is withheld by the owner, placed in a trust account with a trustee that has a fiduciary relationship to the contractor. The trustee can invest the retainage at the contractor's direction, thereby allowing the contractor to "use" the retained funds that normally would sit idle in an escrow account. Other alternatives to retainage are to allow the contractor to supply substitute security to the owner in the form