FAR 52.222-7—Withholding of Funds.
Plain-English Summary
FAR 52.222-7, Withholding of Funds, gives the Government a payment-enforcement tool to ensure workers on covered contracts are paid the wages required by the contract, including prevailing wage obligations. The clause addresses when the Contracting Officer must or may withhold accrued payments or advances, the role of a written request from an authorized Department of Labor representative, the ability to reach funds under the same prime contractor across other Federal contracts and certain federally assisted contracts subject to prevailing wage requirements, and the special treatment of laborers and mechanics, including apprentices, trainees, and helpers. It also covers the Contracting Officer’s authority to act on his or her own initiative, the requirement for written notice to the contractor before suspending further payments in the event of wage-payment failures, and the duration of that suspension until violations cease. In practice, the clause is a backstop for wage compliance: it protects workers, gives DOL and contracting officials leverage to correct underpayment, and creates real cash-flow consequences for contractors and potentially affected subcontractors. Contractors should treat it as an immediate compliance risk because withholding can affect current and future payments across multiple contracts, not just the contract where the violation occurred.
Key Rules
Mandatory or requested withholding
The Contracting Officer must withhold, or cause to be withheld, funds upon his or her own action or upon written request from an authorized Department of Labor representative. This makes withholding an available enforcement mechanism even without a contractor request or consent.
Funds may come from other contracts
Withholding is not limited to the contract where the violation occurred. The Government may withhold from this contract, any other Federal contract with the same prime contractor, or any other federally assisted contract subject to prevailing wage requirements held by the same prime contractor.
Covers all covered workers
The withheld amounts are intended to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the contractor or any subcontractor. The clause is aimed at ensuring the full wages required by the contract are paid to all covered workers.
Amount limited to what is necessary
The Contracting Officer may withhold only so much of accrued payments or advances as is considered necessary to pay the required wages. The clause is a targeted remedy, not a penalty, and the amount should be tied to the wage shortfall.
Suspension after wage failure
If there is a failure to pay any laborer or mechanic, including apprentices, trainees, or helpers, all or part of the wages required by the contract, the Contracting Officer may, after written notice to the contractor, take action necessary to suspend further payment, advance, or guarantee of funds until the violations have ceased.
Written notice before suspension
Before suspending further funds for wage-payment failures, the Contracting Officer must provide written notice to the contractor. This gives the contractor notice of the problem and an opportunity to correct the violation before additional payments are stopped.
Responsibilities
Contracting Officer
Monitor wage compliance issues, withhold or cause funds to be withheld when appropriate, act on his or her own initiative or upon written request from an authorized Department of Labor representative, determine the amount necessary to cover wage deficiencies, and provide written notice before suspending further payments for wage-payment failures.
Department of Labor authorized representative
May submit a written request for withholding when wage violations are identified. The representative’s request can trigger the Contracting Officer’s withholding action.
Prime Contractor
Pay laborers and mechanics, including apprentices, trainees, and helpers, the full wages required by the contract; ensure subcontractors comply; and correct wage underpayments promptly to avoid withholding and suspension of funds.
Subcontractors
Pay covered workers the required wages and comply with prevailing wage obligations flowing down from the prime contract. Their violations can lead to withholding from the prime contractor’s payments.
Covered workers
Laborers and mechanics, including apprentices, trainees, and helpers, are the beneficiaries of the wage protections in this clause and may be affected by enforcement actions intended to secure payment of earned wages.
Practical Implications
This clause can create immediate cash-flow pressure because withholding may reach accrued payments or advances and may affect other Federal or federally assisted contracts held by the same prime contractor.
Contractors should treat wage-payment issues as urgent; once a deficiency is identified, the Government can use withholding to secure funds for back wages and may suspend further payments until the problem is fixed.
A common pitfall is assuming the issue is isolated to one contract. The clause expressly allows withholding from other contracts held by the same prime contractor, so a single violation can have broader financial consequences.
Subcontractor wage problems can still trigger withholding against the prime contractor, so primes need strong subcontract oversight, payroll review, and prompt correction procedures.
Written notice matters: contractors should respond quickly to any notice from the Contracting Officer and coordinate with DOL and payroll staff to document corrections and stop further withholding as soon as violations cease.
Official Regulatory Text
As prescribed in 22.407 (a) , insert the following clause: Withholding of Funds (May 2014) The Contracting Officer shall, upon his or her own action or upon written request of an authorized representative of the Department of Labor, withhold or cause to be withheld from the Contractor under this contract or any other Federal contract with the same Prime Contractor, or any other federally assisted contract subject to prevailing wage requirements, which is held by the same Prime Contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the site of the work, all or part of the wages required by the contract, the Contracting Officer may, after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. (End of clause)