108.01 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.
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:
- Subcontractor is MDOT prequalified in the work categories identified in the subcontract.
- Compliance with the 65 percent maximum subcontracting limit.
- Compliance with the 50 percent maximum sub-subcontract limit.
- DBE participation sheets have been provided.
- Submittal of subcontracts to the Engineer prior to the commencement of the subcontracted work.
- Designated and/or specialty subcontractors are utilized if applicable.
- Required attachment documentation is incorporated and/or included with the subcontracts (required attachments are outlined in Form 1302).
- Compliance of subcontract language with MDOT and federal specifications, rules, policies, processes, procedures, etc.
- 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.