FAR PART 36 Construction Contracting with the Federal Government Presentation Overview Construction and A/E contracts are significantly different from other government contracts. Special laws enacted dealing with Section 36 Miller Act. (requires bonds) Davis Bacon Act. (requires payment of prevailing wages) Brooks Act. (Controlling AE services) This presentation will be a fast-paced review of the general requirements of MOST construction contracts It is focused on the unique attributes of construction contracts and does not address many of the more standard government contract terms and conditions
What is Construction? Construction means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. For purposes of this definition, the terms buildings, structures, or other real property include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels. Construction does not include the manufacture, production, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property (except that for use in subpart 22.5, see the definition at 22.502). Demolition may be considered construction If contract is mixed construction with other services the clauses used shall be for the predominant part of the effort.
Types of construction projects Design Bid Build. Project is conducted in two distinct phases by two separate firms with (usually) a separate competition for the design followed by a (usually sealed bid) competition for the build. Design Build. Typically done by a team that proposes a design which is selected followed by a negotiated price with the team for the second (build) phase. We will focus on Design-Bid-Build in this presentation General Characteristics of a Govt
Construction Project Typically a design-bid-build using a set of plans and specifications developed by or provided by the Government. Often a sealed bid (FAR Part 14) competition Government prepares Independent Estimate of cost that is used in determining fair and reasonable price Small business 8a awards are usually a negotiated (FAR Part 15) award. FBO Announcement
30 day posting required Must announce magnitude of effort Magnitude of Effort must be disclosed in solicitation (a) Less than $25,000. (b) Between $25,000 and $100,000. (c) Between $100,000 and $250,000. (d) Between $250,000 and $500,000. (e) Between $500,000 and $1,000,000.
(f) Between $1,000,000 and $5,000,000. (g) Between $5,000,000 and $10,000,000. (h) More than $10,000,000. General Construction Contract Attributes The Contract is usually fixed price Overall price submitted for the total effort May require breakout of various elements or phases
Balanced pricing required May require per-unit pricing if quantity is uncertain May permit economic price adjustment Certain contract items are negotiated Change orders
Payment schedule (progress payments) The Sealed Bidding Process General Announcement FBO Commercial sources Interested bidders obtain a set of plans and specifications
Electronic distribution / web download taking precedence Some old school projects will provide drawing sets and some may be at contractors expense. The Bid Process Inspection of site Usually accomplished via a scheduled site visit
May include a bidders meeting with a Question & Answer session It is the responsibility of the bidder to be aware of the prevailing conditions at the site and to understand the requirements of the plans and specifications before submitting their bid. Submittal of bids per FAR Part 14 (Sealed Bids)
Usually requires a bid bond Public Opening and abstracting of bids Announcement of low bidder Solicitation Site Inspection Requests for Information Bid Preparation and Submittal Bid Opening and Award The Award Process Prior to award of the contract the CO will: Review the submitted bids vs.
the Independent Government Estimate and may request an analysis/explanation if there are significant differences. Examine all bids in context to determine if there has been collusion Inspect bid contents Balanced, reasonable and realistic compared to IGE Due diligence (EPLS, SAM, examine financials, etc.) Notice of award Request bonds (10 days) Certificate of Insurance
When you get the contract RTFC . Read The Full Contract When in doubt ask questions or seek clarifications Comply with the contract requirements Inform the CO of specific issues or conditions Delays Perceived changes Submit proper invoices Pay your subs Be Sure to Read Your (Full) Contract Pre-construction meeting
Review of the technical aspects of the project Review/approval of schedule Discussion of special contract requirements Subcontracting plan Safety Labor Laws Role of the COR etc. Know the Applicable Labor Laws Davis Bacon Act 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements (Construction) ... applies to
Contracts in excess of $2,000 for construction, alteration, or repair of public buildings or public works within the United States, Contains a clause that no laborer or mechanic employed directly upon the site of the work shall receive less than the prevailing wage rates as determined by the Secretary of Labor. The Copeland (Anti-Kickback) Act (18 U.S.C. 874 and 40 U.S.C. 3145) Makes it unlawful to induce, by force, intimidation, threat of procuring dismissal from employment, or otherwise, any person to give up any part of the compensation to which that person is entitled under a contract of employment. Requires each contractor and subcontractor to furnish weekly a statement of compliance with respect to the wages paid each employee during the preceding week. More in following presentation Expect Compliance Checking The contracting officer shall make checks and investigations on all contracts covered
by this subpart as may be necessary to ensure compliance with the labor standards requirements of the contract. Regular compliance checks. Regular compliance checking includes the following activities: (1) Employee interviews to determine correctness of classifications, rates of pay, fringe benefits payments, and hours worked. (See Standard Form 1445.) (2) On-site inspections to check type of work performed, number and classification of workers, and fulfillment of posting requirements. (3) Payroll reviews to ensure that payrolls of prime contractors and subcontractors have been submitted on time and are complete and in compliance with contract requirements. (4) Comparison of the information in this paragraph (b) with available data, including daily inspectors report and daily logs of construction, to ensure consistency. General Ground Rules Implied Warranty by government that specifications and drawings are
suitable for their intended use and will result in an acceptable outcome if followed Implied duty by both parties to cooperate and not to hinder performance by the other Duty of good faith and fair dealing. Duty for timely approvals and inspections Donald E. Shannon dba The Contract Coach Albuquerque NM (505) 259-8485 [email protected] http://www.contract-coach.com
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