What Is a Back-Charge in Construction?
By Wyatt Cooper · Published · 3 min read
Key takeaways
- A back-charge recovers a real cost the GC paid because of a subcontractor: correcting defective work, cleanup, damage to others' work, or work the sub did not do.
- It rests on notice and a chance to fix: most subcontracts require written notice and time to correct first, the same pattern as the federal inspection clause.
- Unlike retainage, a back-charge that stands is not paid back; it comes off the sub's contract for good.
A back-charge is a deduction a general contractor makes from a subcontractor's payment to recover costs it incurred because of the sub's work: fixing defects, cleanup, damage to other trades' work, or doing work the sub failed to do. The subcontract sets the notice and documentation needed; unlike retainage, a back-charge is not paid back.
Where the right to back-charge comes from
The right comes from the contract. The federal inspection clause shows the pattern GCs copy into subcontracts: the contractor "shall, without charge, replace or correct work found by the Government not to conform to contract requirements", and if it does not do so promptly, the government may "By contract or otherwise, replace or correct the work and charge the cost to the Contractor" (FAR 52.246-12). The warranty clause works the same way after completion: if the contractor fails to remedy a defect "within a reasonable time after receipt of notice", the government may remedy it "at the Contractor's expense" (FAR 52.246-21).
So a defensible back-charge has three parts: written notice to the sub, a reasonable chance to fix it, and records of what the fix cost. Photos, the daily log entry and the invoices are the backup, and the deduction shows on the sub's next pay app, as described in how a GC reviews a subcontractor's pay app.
Example
Back-charge BC-03: drywall debris left in corridors
- Notice to sub
- Written notice on May 4 with photos; 48 hours to clean up
- Sub's response
- None by May 6
- GC cleanup crew
- 2 laborers × 4 hrs × $55 = $440
- Extra dumpster haul
- $375
- Back-charge total
- $815
- Sub's pay app 5 due before back-charge
- $22,400
- Paid after back-charge
- $21,585
The arithmetic: 2 × 4 × $55 = $440; $440 + $375 = $815; $22,400 − $815 = $21,585.
Back-charge vs. retainage vs. withholding
| What it is | Paid back later? | |
|---|---|---|
| Back-charge | A cost the GC incurred because of the sub, deducted | No |
| Retainage | A percentage of every payment, held by agreement | Yes, at release |
| Withholding | A specific amount held for a specific problem | Yes, once the problem is fixed |
More on the second row in what retainage is. Many back-charges start as items on the punch list that the responsible sub never closed.
The bottom line
A back-charge passes a real cost to the sub who caused it, after notice and a chance to fix.
Give written notice, document the cost, and show it on the pay app; an undocumented back-charge becomes a dispute.
Sources
- FAR 52.246-12, Inspection of Construction — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
- FAR 52.246-21, Warranty of Construction — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
Questions
Can a GC back-charge without notice?
Subcontracts usually require written notice and a chance to correct first. Without it, a back-charge is easy to dispute; read the subcontract's clause.
Can a GC add a markup to a back-charge?
Only if the subcontract allows it. Many subcontracts allow an administrative markup on the GC's cost; others allow only the cost itself.
How should a sub respond to a back-charge?
Ask for the notice, photos and invoices, compare them with your own daily records, and dispute in writing within the subcontract's time limit if you disagree.
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