Difference between revisions of "108.01 Subcontracting of Contract Work"

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==[[#SUBCONTRACTING OF CONTRACT WORK|SUBCONTRACTING OF CONTRACT WORK]]==
 
==[[#SUBCONTRACTING OF CONTRACT WORK|SUBCONTRACTING OF CONTRACT WORK]]==
  
The Michigan Department of Transportation (MDOT) has updated the construction project subcontracting process for current specifications and references.  The subcontracting process is effective on all state and federally funded construction projects.  Contractor requirements for subcontracting are described in [http://mdotcf.state.mi.us/public/specbook/files/2012/108%20Prosecution%20and%20Progress.pdf subsection 108.01] of the 2012 Standard Specifications for Construction.
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Subcontracting is governed by the [https://www.ecfr.gov/current/title-23/chapter-I/subchapter-G/part-635/subpart-A/section-635.116 Code of Federal Regulations (CFR) Title 23, Section 635.116].  The CFR requires the department to have a subcontracting process which must be followed when subcontracting work is performed.  The subcontracting process is required on all state and federal funded construction projects.  The Michigan Department of Transportation (MDOT) utilizes the following process for subcontracting.  
 
 
The Michigan Department of Transportation (MDOT) follows the following process for subcontracting on state funded and Federal Aid construction projects.
 
  
 
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===[[#Federal Highway Administration (FHWA) Requirements|Federal Highway Administration (FHWA) Requirements]]===
 
 
Subcontracting is governed by the [http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=4326b3462801c075d9d260366f1f811e&rgn=div5&view=text&node=23:1.0.1.7.23&idno=23#se23.1.635_1116 Code of Federal Regulations (CFR) Title 23, Section 635.116].  The CFR requires the department to have a subcontracting process which must be followed when subcontracting work is performed.
 
 
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===[[#Construction Subcontract Process|Construction Subcontract Process]]===
 
===[[#Construction Subcontract Process|Construction Subcontract Process]]===
  
MDOT requirements for contractor subcontracting are described in [http://mdotcf.state.mi.us/public/specbook/files/2012/108%20Prosecution%20and%20Progress.pdf subsection 108.01] of the
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The contractor must use its own organization to perform work amounting to at least 35 percent of the original contract amount.  Section 108.01 of the Standard Specifications refers to the department’s procedures for subcontracting, which are defined in this document.  All contractors must adhere to the following process:  
2012 Standard Specifications for Construction.  The contractor must use its own organization to perform work amounting to at least 40 percent of the original contract amount.  This section of the specifications also refers to the department’s procedures for subcontracting, which are defined in this document.  All contractors must adhere to the following process:
 
 
 
:1. Contractors must submit a signed version of [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed], Subcontract, pages 1 and 3 to the TSC construction/project engineer or the respective local agency project engineer if applicable.
 
 
 
:2. Contractors on aeronautics projects must submit [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed], Subcontract, pages 1 and 3 to the Office of Aeronautics, Project Management Section.
 
 
 
:3. [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed], pages 1 and 3, must be submitted to the engineer (or Aeronautics as applicable) prior to the start of any subcontract work for the respective subcontractor.
 
 
 
:4. Contractors are responsible for following all the subcontract requirements, including providing the required subcontract attachments outlined in the Construction Contract Package document available at:
 
::http://www.michigan.gov/documents/mdot/MDOT_Awards_Contract_Package_307478_7.pdf?20140521094354
 
 
 
:5. [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed] is also available on the MDOT forms page at:
 
::http://mdotjboss.state.mi.us/webforms/WebFormsHome.htm
 
  
:6. Contractors must retain the original signed subcontract, including all required subcontract attachments, in their office or project files (either in paper or electronic format).
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On all projects with federal participation, it is required to physically incorporate the Form FHWA-1273 into subcontracts prior to a signature.  MDOT has created two subcontract 1302 forms to meet this requirement on federal and state funded projects.
  
:7. Subcontracting requirements do not affect the required submittal of Disadvantaged Business Enterprises (DBE) Participation Sheets ([http://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=0178.pdf Form 0178]) to MDOT, Contract Services Division (CSD), for review and approval as part of the award process.
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The following subcontract forms are available on the MDOT forms page at: [https://mdotjboss.state.mi.us/webforms/WebFormsHome.htm http://mdotjboss.state.mi.us/webforms/WebFormsHome.htm]
  
Subcontracts are not approved by MDOT.  It is the engineer’s responsibility to ensure they have received pages 1 and 3 of the subcontract form prior to the start of work associated with the subcontract.  The engineer must enter the date received in the space provided and labeled as “Date Received by Engineer” located on page 1 of [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed].  The engineer must forward a copy of page 1 of [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed] to CSD for data entry.  For MDOT projects, this page must be electronically submitted to [mailto:MDOT-ConstructionSubcontracts@michigan.gov MDOT-ConstructionSubcontracts@michigan.gov] .  Local agency engineers may use the email address or fax a copy of page 1 to CSD at 517-241-4193.
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:[https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-FED]: Used on federal funded projects and meets the federal requirement of incorporating the Form FHWA-1273.
  
Active projects are randomly selected by CSD for an interim and/or post construction review of subcontracts by the Construction Field Services (CFS) subcontract compliance analyst. The review is performed to ensure the subcontracting processes are followed and documented. The following criteria are reviewed:
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:[https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-State.pdf Form 1302-State]: Meets the requirement for state funded projects only.  
  
:1. Subcontractor is MDOT prequalified in the work categories identified in the subcontract.
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Prior to the start of any subcontract work for the respective subcontractor, the contractor must submit a copy of the appropriate signed Form 1302, Subcontract, cover page and pay items page to the engineer. On aeronautics projects, the contractor must submit a copy of the signed Form 1302, Subcontract, cover page and pay items page to the Office of Aeronautics, Project Management Section.  Contractors must retain the original signed subcontract, including all required subcontract attachments, in their office or project files (either in paper or electronic format). Subcontracting requirements do not affect the required submittal of Disadvantaged Business Enterprises (DBE) Participation Sheets [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=2653.pdf (Form 2653)] to MDOT, Contract Services Division (CSD), for review and approval as part of the award process.  
:2. Compliance with the 60 percent maximum subcontracting limit.
 
:3. Compliance with the 50 percent maximum sub-subcontract limit.
 
:4. DBE Participation sheets have been provided.
 
:5. Submittal of subcontracts prior to the commencement of the subcontracted work.
 
:6. Designated and/or specialty subcontractors are utilized if applicable.
 
:7. Required attachment documentation is incorporated and/or included with the subcontracts (required attachments are outlined in [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302-Fed]).
 
:8. Compliance of subcontract language with MDOT and federal specifications, rules, policies, processes, procedures, etc.
 
:9. Other documentation as needed to assure compliance with the above criteria (this may include: certified payroll, purchase agreements, [http://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1386.pdf form 1386,] [http://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=2124A.pdf form 2124A], etc…) 
 
  
The prime contractor must certify compliance with subcontracting requirements by completing and signing [http://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1386.pdf Form 1386], Post Certification of Subcontract Compliance, prior to the issuance of the final project pay estimate.
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It is the engineer’s responsibility to ensure they have received the cover page and pay item page(s) of the subcontract form prior to the start of work associated with the subcontract.  It is also the engineer’s responsibility to check that subcontractors are prequalified in the applicable category corresponding their proposed work items prior to the start of work.  After it’s been determined that subcontractor has been prequalified, enter the date received in the space provided and labeled as “Date Received by Engineer” located on page one of either [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302]. Change the state in ProjectWise of the cover page of [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1302-FED.pdf Form 1302] and send to [mailto:ConstructionSubcontracts@Michigan.gov ConstructionSubcontracts@Michigan.gov] for data entry.  
  
Contractors must provide access to all documentation necessary for subcontract compliance reviews. Contractors must allow MDOT access to their books, records, accounts, files, sources of information, and the contractor’s facilities as may be determined by MDOT to be necessary to perform a subcontract compliance review. Contractors are required to assist MDOT staff during the review process as necessary, and will not be entitled or due any additional compensation for assisting with the compliance review. MDOT will provide a 24 hour minimum advance notification to the contractor for any planned review. The date, time, and location of the review will be mutually agreed upon by MDOT and the contractor.
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After each MDOT letting CSD will randomly select 12% of the let projects for an interim and/or post construction review of subcontracts.  The randomly selected projects will be provided to the Construction Field Services (CFS) subcontract compliance analyst to schedule and perform the interim and/or post construction reviews. The review is performed to ensure the subcontracting processes are followed and documented. The following criteria are reviewed:
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:# Subcontractor is MDOT prequalified in the work categories identified in the subcontract.
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:# Compliance with the 65 percent maximum subcontracting limit.
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:# Compliance with the 50 percent maximum sub-subcontract limit.
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:# DBE participation sheets have been provided.
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:# Submittal of subcontracts to the Engineer prior to the commencement of the subcontracted work.  
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:# Designated and/or specialty subcontractors are utilized if applicable.
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:# Required attachment documentation is incorporated and/or included with the subcontracts (required attachments are outlined in Form 1302).  
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:# Compliance of subcontract language with MDOT and federal specifications, rules, policies, processes, procedures, etc.
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:# Other documentation as needed to assure compliance with the above criteria (this may include: certified payroll, purchase agreements, [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1386.pdf Form 1386] Post Certification of Subcontract Compliance, [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=2124A.pdf Form 2124A] Prime Contractor Bi-Weekly Statement of Subcontractor/Supplier Payments, etc.).  
  
Failure to provide access to subcontracting documentation will be documented and submitted to the Contract Performance Evaluation Review (CPER) Team for evaluation and possible recommendations to the Pre-Qualification Committee up to and including the loss of bidding privileges and prequalification.  
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The prime contractor must certify compliance with subcontracting requirements by completing and signing [https://mdotjboss.state.mi.us/webforms/GetDocument.htm?fileName=1386.pdf Form 1386] Post Certification of Subcontract Compliance, prior to the issuance of the final project pay estimate.  
  
 
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Revision as of 09:27, 28 September 2021

2012 STANDARD SPECIFICATIONS FOR CONSTRUCTION - SECTION 108
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SUBCONTRACTING OF CONTRACT WORK

Subcontracting is governed by the Code of Federal Regulations (CFR) Title 23, Section 635.116. The CFR requires the department to have a subcontracting process which must be followed when subcontracting work is performed. The subcontracting process is required on all state and federal funded construction projects. The Michigan Department of Transportation (MDOT) utilizes the following process for subcontracting.

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Construction Subcontract Process

The contractor must use its own organization to perform work amounting to at least 35 percent of the original contract amount. Section 108.01 of the Standard Specifications refers to the department’s procedures for subcontracting, which are defined in this document. All contractors must adhere to the following process:

On all projects with federal participation, it is required to physically incorporate the Form FHWA-1273 into subcontracts prior to a signature. MDOT has created two subcontract 1302 forms to meet this requirement on federal and state funded projects.

The following subcontract forms are available on the MDOT forms page at: http://mdotjboss.state.mi.us/webforms/WebFormsHome.htm

Form 1302-FED: Used on federal funded projects and meets the federal requirement of incorporating the Form FHWA-1273.
Form 1302-State: Meets the requirement for state funded projects only.

Prior to the start of any subcontract work for the respective subcontractor, the contractor must submit a copy of the appropriate signed Form 1302, Subcontract, cover page and pay items page to the engineer. On aeronautics projects, the contractor must submit a copy of the signed Form 1302, Subcontract, cover page and pay items page to the Office of Aeronautics, Project Management Section. Contractors must retain the original signed subcontract, including all required subcontract attachments, in their office or project files (either in paper or electronic format). Subcontracting requirements do not affect the required submittal of Disadvantaged Business Enterprises (DBE) Participation Sheets (Form 2653) to MDOT, Contract Services Division (CSD), for review and approval as part of the award process.

It is the engineer’s responsibility to ensure they have received the cover page and pay item page(s) of the subcontract form prior to the start of work associated with the subcontract. It is also the engineer’s responsibility to check that subcontractors are prequalified in the applicable category corresponding their proposed work items prior to the start of work. After it’s been determined that subcontractor has been prequalified, enter the date received in the space provided and labeled as “Date Received by Engineer” located on page one of either Form 1302. Change the state in ProjectWise of the cover page of Form 1302 and send to ConstructionSubcontracts@Michigan.gov for data entry.

After each MDOT letting CSD will randomly select 12% of the let projects for an interim and/or post construction review of subcontracts. The randomly selected projects will be provided to the Construction Field Services (CFS) subcontract compliance analyst to schedule and perform the interim and/or post construction reviews. The review is performed to ensure the subcontracting processes are followed and documented. The following criteria are reviewed:

  1. Subcontractor is MDOT prequalified in the work categories identified in the subcontract.
  2. Compliance with the 65 percent maximum subcontracting limit.
  3. Compliance with the 50 percent maximum sub-subcontract limit.
  4. DBE participation sheets have been provided.
  5. Submittal of subcontracts to the Engineer prior to the commencement of the subcontracted work.
  6. Designated and/or specialty subcontractors are utilized if applicable.
  7. Required attachment documentation is incorporated and/or included with the subcontracts (required attachments are outlined in Form 1302).
  8. Compliance of subcontract language with MDOT and federal specifications, rules, policies, processes, procedures, etc.
  9. Other documentation as needed to assure compliance with the above criteria (this may include: certified payroll, purchase agreements, Form 1386 Post Certification of Subcontract Compliance, Form 2124A Prime Contractor Bi-Weekly Statement of Subcontractor/Supplier Payments, etc.).

The prime contractor must certify compliance with subcontracting requirements by completing and signing Form 1386 Post Certification of Subcontract Compliance, prior to the issuance of the final project pay estimate.

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