How can a CO invoke Retainage( FAR 52.232-5) at her discretion for unsatisfactory work at the end of construction?
It is unclear if final acceptance of the whole project was completed. FAR clause 52.232-5 is intended to be used prior to full acceptance of the whole project. If the U.S. Government gave acceptance of the whole construction project, then paragraph h of this clause would apply where final payment should have been made. Paragraph i of clause 52.246-12 states that acceptance is final except for latent defects and the Government's rights under the warranty, so if the whole project was accepted, then hopefully the contract does include this clause as well as clause 52.246-21. Note paragraph d of clause 52.246-21 does state that if the contractor has to restore any work damaged, that the warranty period specific to the work of the restoration will run for one year from the date of repair or replacement.