The grantee assumes responsibility for the following activities during the construction phase of a CDBG construction contract:
- Issuance of a Contract Award
- DLG / OEDIT notify the CDBG Program Coordinator, DOH contact Asset Manager of the Bid Opening Date, Contract Award and Amount and Preconstruction Conference Date.
- Development & Execution of the Construction Contract
- Holding the Preconstruction Conference (Exhibit VIII-Q)
- Issuing a Notice to Proceed (Exhibit VIII-R)
- Monitoring Contractor Performance (Exhibit VIII-W)
- Investigating Possible Labor Standards Violations
- Maintaining Labor Standards Files
Contract Award Procedures
The grantee should make the contract award as soon as all due diligence is completed and the lowest responsive/responsible bid has been determined. Exhibit VIII-R provides an example of a Form for the Notice of Contract Award. This is usually done within 30 days of the bid opening unless total funds are not yet available or the project requires some legislative action.
Development & Execution of the Construction Contract
The contract should consist of an executed contract document as contained in Exhibit VIII-J with the following additional attachments: all items included in the Bid Package; Contractor's Bid Proposal; Contractor Certifications; Bond and Insurance Forms, and any amendments to the bid package.
Hold Preconstruction Conference
The preconstruction conference should be held prior to issuing the Notice to Proceed. Confirm date, time and location of pre-construction meeting in advance of sending Exhibit VIII-Q to the contractor. The following people should attend the preconstruction conference: the prime contractor; his/her foreman or construction superintendent; the person on his/her staff who will be preparing payrolls; representatives of all identified subcontractors; and, representatives of telephone and public utilities companies. At the preconstruction conference, you should:
- Explain to the contractors their responsibilities with respect to Labor Standards and Equal Opportunity requirements as well as the technical job requirements.
- Contractor should inform grantee if they will be making any additional hires. Explain to the contractors their responsibilities with respect to Section 3 requirements. For more information see Section V, Civil Rights.
- Contractor should inform grantee if any additional job classifications are required. If so contractor should provide description of position and propose an hourly wage and fringe to the grantee. The grantee should then relay that request to the DOLA program manager who will complete Exhibit VIII-E.
- Explain that the contractor must submit weekly certified payrolls, (only weekly payrolls are acceptable) Exhibit VIII-S.
The prime contractor is responsible for:
- securing payrolls
- reviewing subcontractor’s payroll for compliance
Payrolls and Statements of Compliance must be signed by a principal of the company OR a signatory authority. Exhibit II-E.1
- Explain that wages paid must conform to those in the wage rate decision which are contained in the contract.
- Indicate that copies of the Davis-Bacon Wage Rate Decision, Wage Rate Notice related to prevailing wages, EEO related to Executive Order 11246, and Notice to Employees, Exhibit VIII-U – U.4, must be posted on the job site.
- Explain that apprentice rates cannot be paid unless the apprentice program is certified by either the State Bureau of Apprenticeship and Training within the State Division of Labor or the regional office of the federal Department of Labor. If apprentices are to be used, the contractor must, therefore, provide you with a copy of the certification of his/her program. All Apprentice certifications must be approved by DOLA prior to working on the project.
Office of Apprenticeship Training, Employer and Labor Services, Colorado Apprenticeships
USDOL/ETA/OA
U.S. Custom House
721 19th Street -
Room 465, Denver,
Colorado 80202-2517
303/844-6362
E-Mail: noon.charles@dol.gov
Information from the U.S. Department of Labor Youth Programs
Apprenticeship Registration - Explain that workers must be paid overtime if they work more than 40 hours in one week. Only a waiver from the Secretary of Labor can override the Work Hours and Safety Standards law.
- Indicate that failure to pay workers at least time and a half each time they work in excess of 40 hours in one week violates the Work Hours and Safety Standards law and restitution must be made. Failure to pay correct wages should result in the contractor's payments being withheld.
- Explain that no payroll deductions can be made that are not specifically provided for in either the wage rate decision or the Copeland Antikickback provisions. Any deductions, other than these, are permissible only with the express consent of the Secretary of Labor. An unidentified payroll deduction is a method used by unethical contractors to get their workers to "kick back" a portion of their pay. This is a particularly common problem in times of high unemployment and in areas of minority concentrations. Unspecified payroll deductions should be treated as a serious discrepancy and should be resolved prior to contractor payments.
- Explain that employee interviews will be made, Exhibit VIII-V – V.I.
- Explain that debarment proceedings may be held if contractor is found to be in violation of Labor Standards and Equal Opportunity requirements.
- Describe the compliance review that you will undertake and indicate that discrepancies and underpayments discovered as a result of compliance monitoring must be resolved prior to making payment to the contractor. Labor Standards provisions are as legally binding as the technical specifications. Failure to pay specified wages should result in contractor payments being withheld until all such discrepancies are resolved.
- Explain contractor and subcontractor responsibilities regarding equal opportunity and correct any deficiencies that have developed to this point any subcontractors not identified in the bid should provide that data necessary to verify eligibility, and sign required certifications. The objective is to have everything in order at the conclusion of the preconstruction conference.
At the preconstruction conference, a discussion should be held on construction time tables, pay requests, change orders, utilities, construction staking, logistics and other construction items.
At the conclusion of the preconstruction conference, you must prepare a preconstruction conference report which is basically minutes of the meeting. Minutes of the preconstruction conference should be placed in the contract file and crossreferenced in the civil rights and labor standards files.
A Preconstruction Checklist for Contractors may be used by the contractor as a guide to meeting the labor standard requirements, Exhibit VIII-W.
A Notice to Proceed Issuance
Upon execution of the contract and holding the preconstruction conference, the grantee may then provide the prime contractor(s) with a Notice to Proceed, Exhibit VIII-R. This Notice establishes the construction starting date, the estimated date of completion, and the basis for assessing liquidated damages.
In the event a contractor is unable to complete a construction project, the grantee may assess the contractor for the costs the grantee must incur in order to complete the project. This assessment generally takes into account the work actually performed by the original contractor and the total amount of any contracts to subsequent contractors to satisfactorily complete the construction. These provisions must be consistent with the corresponding elements of the contract document.
A copy of the notice to proceed must be sent to the CDBG Program Manager OR DOH Asset Manager. Additionally, the Program Manager should receive written notice of the date which construction actually started. These dates become part of your permanent Labor Standards file and are important. All payrolls must be kept on file and must start from the date the construction began.
Monitoring Contractor Performance
Throughout the construction period, the grantee must monitor the contractor for both performance in line with the project's technical specifications and for compliance with all federal, state, and local standards.
Performance monitoring should also be done by the architect or engineer. The performance monitoring should consist of the following elements:
- General Supervision: Includes identifying the need for any construction adjustments and preparation of contract amendments. Also, involves ongoing monitoring of the estimated schedule for completion.
- Quality Control: To ensure compliance with technical specifications and conformance with codes and standards and to ensure that the contractor is providing materials and products consistent with the quantities identified in the design and specifications.
- Davis Bacon / Labor Standards Provisions: On site inspections to ensure that all required notices have been posted. These notices include Notice to Employees, Davis Bacon Poster, (WH-1321), Exhibit VIII-U.1, EEO Poster, Exhibit VIII-U.2, and a copy of the wage determination and wages for additional classifications. Review of Weekly Certified Payroll and the completion of the Statement of Compliance, Exhibit VIII-S, (the state recommends that contractors and subcontractors use Form WH-347, but its use is optional). All contractors and subcontractors must submit payroll forms weekly to the grantee for review. The use of HUD Form 4720, The Project Wage Sheet, Exhibit -VIII-T, is optional. Grantees must ascertain that workers are being paid properly and in accordance with the prevailing wage rate and with information gathered in on-site interviews, Exhibit VIII-V. On-site interviews with construction employees must be conducted at least once a month with a minimum of at least 10 percent of each job classification in the work force. Apprentice certification must be pre-approved by DOLA.
- Certification of Pay Estimates: To be used by the fiscal officer to verify estimated costs for partial payments. The architect or engineer should also obtain evidence that the contractor has made partial payments to any subcontractors.
In instances where the project was awarded based on a fixed price bid, the grantee may want the contractor to prepare a cost breakdown showing the amount of funding associated with each element of the construction contract.
This information can be used by the architect or engineer for performance monitoring and by the local CDBG fiscal officer for determining the accuracy of requests for payments.
Partial payments may be made up to 95 percent of the total amount of compensation in the contract. The remaining five percent is held by the state (retainage) pending the final inspection and acceptance of work, final reports and final monitoring.
Grantees sometimes fail to meet all of the requirements of the law. Common errors, which the grantee should avoid, include:
- Failure to include Labor Standards provisions in bid specifications/contracts
- Use of incorrect or outdated wage and rate determinations. Wage rates are not properly “locked-in” with DOLA.
- Failure to award contract within 90 days of bid opening. If this occurs, wage decisions need to be re-checked and locked in with DOLA.
- Failure to obtain verification of contractor/subcontractor eligibility (debarment check)
- Failure to obtain Certification of Contractors and subcontractors
- Labor Standards File not established
- Weekly payrolls not obtained
- Weekly payrolls not checked
- Onsite interviews not checked against payroll
Investigate Possible Labor Standards Violations
Violations of labor standards requirements may surface as the result of either monitoring by the grantee, monitoring by the State, or through a specific complaint by a construction worker. In each case the grantee is responsible for investigating and documenting the alleged violation.
If a violation is evident, the grantee may work with the contractor on an informal basis to resolve the finding. Where the contractor refuses to address the violation or continues to violate the labor standards provision, the grantee must report the violation to the Contract Monitor. The contractor should be informed that an unresolved finding could result in disbarment and make the contractor ineligible for further federally assisted construction projects. In either event, the grantee should cease payments to a contractor until the contractor has corrected the violation.
(Similarly, if the grantee is found to have willfully ignored labor standards provisions, it may be disbarred or have other sanctions applied against it.) The State will work with appropriate agencies to determine what actions are required.
Maintain Labor Standards File
The Labor Standards File should contain at a minimum the following:
- evidence that the contract documents contained actual wage rates used and which were included in the solicitation and award documents;
- evidence that the contracts contained the proper and applicable Labor Standards Provisions (file may also include certification from the contractor);
- evidence that the grantee inquired and was informed that the successful bidder and all subcontractors were not on the debarred list;
- evidence that actual payrolls were submitted and were reviewed in a timely manner;
- evidence that worker interviews were conducted;
- evidence that an enforcement report was submitted to the State and HUD where restitution of $1,000 or more was required; and
- evidence that a preconstruction conference was held.
In addition to the information listed above, the grantee should maintain a file for each prime contractor, with the following documentation:
- Design and Cost Estimates
- Bid Documents
- Evidence of Bid Advertising
- Minutes of Bid Opening Including Tabulation of Bids
- Evidence of Low Bid Review
- Notice of Bid Opening, Contract Award and Pre-Construction Conference
- Executed Contract Documents with Attachments
- Minutes of PreConstruction Conference
- Copy of Notice to Proceed
- Notice of Construction start date
- Monitoring and Inspection Reports
- Evidence of the Final Inspection
- Notice of Acceptance of Work
- Lien Waiver Certificate (Exhibit VIII-Y)
- Evidence of Disposition of Outstanding Claims
- Evidence of Section 3 Compliance (Monitored in Section V)