Can GC and owner hold payment for work completed to get subcontractor to sign contract he has refused to sign

Commercial SBA funded project, we allowed a subcontractor, completing two different job scopes, to proceed with work assuming we could work out the details in the contract we were asking sub to sign. We have worked with sub for 13 years and assumed we could accomplish this. The sub has refused to sign any contract. We paid his first draw request on one scope of work before firing him on that scope. He has invoiced for additional monies on that scope, we have found his work on that scope to be faulty and have not paid, nor submitted that invoice for payment. The second scope of work he continued to complete and has now invoiced for 97% completion, we as GC and the owner agree he is 90% complete, however owner will not approve his draw request until he signs a contract. Sub before we fired him from the first job scope, threatened lien, threatened to be unavailable, threatened to make this as difficult as possible, has $100,000 he will spend just to prove he is right and has now gone silent. We would like to be pro-active and not just wait for his next move. We submitted our draw request with out his invoices for the two scopes of work. We will only have one draw left before completion, however we will not be able to obtain our final inspections with out his completion. Should we send letter of faulty workmanship on job scope he was fired from? New subcontractor completing that scope. And can we hold payment until he signs contract on the second scope? Please advise