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Section 3: Application of Contract Elements during Construction

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Overview

The Construction phase of the project is guided by the elements included in the plans, specifications and estimates (PS&E) and bid documents executed during letting. These elements are described in detail in Chapters 7 and 8. This section highlights critical contract elements applicable to the construction process and refers the local government (LG) back to the appropriate sections in previous chapters for more information.

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Change Orders

A construction project is implemented using the design and specifications provided in the bid documents or scope of work contained in a request for proposals. However, circumstances may arise during construction requiring changes to the scope of work contained in these documents. Known as “change orders,” these changes become legal documents and, therefore, must be proposed by the construction engineer and approved by the contracting agency.

The LG is responsible for coordinating closely with the TxDOT district regarding all change orders as described briefly in the Local Government Project Management Guide (LGPM Guide) Chapter 9. The state and federal statutes and requirements related to change orders are provided in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. Detailed guidelines for the procedures to be followed when implementing change orders are contained in the LGPM Guide Chapter 7.

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Designated Material Sources/Disposal Sites

The federal and state requirements for selecting materials to be used in a construction project and for disposing of surplus excavated materials are described in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. The LGPM Guide provides a brief description of the process used to comply with these requirements in Chapter 9, with a more detailed description of the required practices in the LGPM Guide Chapter 7.

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Differing Site Conditions

Conditions for construction projects may differ from the original contract documents due to changes in physical site conditions, contractor work requirements or alterations to the design. The LG is responsible for including the appropriate differing site condition language in the bid document and coordinating closely with the TxDOT district regarding changed conditions encountered during construction. The federal and state statutes specifying the requirements related to differing site conditions are described in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. The LGPM Guide provides a brief description in Chapter 9 of the process used to comply with these requirements, with a more detailed description of the required practices in the LGPM Guide Chapter 7.

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Disadvantaged Business Enterprises, Historically Underutilized Businesses, and Small Business Enterprises

The federal and state programs for disadvantaged business enterprises (DBE), historically underutilized businesses (HUB) and small business enterprises (SBE) have been developed to encourage participation in the construction industry by a wide variety of contractors and therefore expand diversity in the industry.

All federal-aid projects are subject to the DBE requirements. The U.S. Department of Transportation (USDOT) must approve each state’s DBE program and its annual goals to ensure compliance with all DBE program requirements. FHWA has determined a LG must operate under TxDOT’s DBE program even if it has its own program already approved by USDOT. Participation in TxDOT’s approved DBE program requires the execution of a memorandum of understanding (MOU) between the LG and TxDOT. This can be accomplished through reference to the MOU in the advance funding agreement (AFA) executed by both parties but eventually should be accomplished by joint execution of a MOU by the LG and TxDOT. LGs are encouraged to contact TxDOT’s Office of Civil Rights for assistance. Guidance may also be found at USDOT’s Office of Small and Disadvantaged Business Utilization.

The LG must implement an appropriate DBE program and coordinate closely with the TxDOT district. Details regarding the application of DBE, HUB and SBE programs that must be followed and properly documented during the project are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual and the LGPM Guide.

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Equal Employment Opportunity

The LG, as a contracting agency, has a responsibility to ensure all federal-aid contractors, subcontractors, vendors and material suppliers do not discriminate in employment and contracting practices based on race, color, religion (in the context of employment), sex, national origin, age or disability.

As a sub-recipient of federal funds, the LG has the responsibility to ensure the equal opportunity requirements are included in federal and federal-aid contracts and to ensure the contractors are in compliance with those requirements under the LG’s authority. The LG is responsible for implementing equal employment opportunity (EEO) policies for itself and its contractors and for coordinating closely with the TxDOT district during construction. Details regarding specific EEO requirements that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual and the LGPM Guide.

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Equipment Rental Rates

Federal regulations address participation in equipment owned or rented by the contractor and used in force account work. Specified cost accounting principles must be used to develop the rates. Ineligible costs include use of contingencies, replacement cost escalator factors and premium rental rates for rental periods less than one month.

Federal policy requires the actual costs to be used to determine extra work payments; however, actual equipment costs are usually not readily available. Therefore, FHWA permits a LG to specify the acceptable rate guides in construction contracts. The LG may also include any equipment rate schedules developed in conformance with the federal cost principles and FHWA policy.

The LG is responsible for adopting TxDOT specifications for equipment rental rates or for obtaining TxDOT approval for its own rental rates. Details regarding specific requirements related to equipment rental rates that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual and the LGPM Guide.

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Temporary Traffic Control Devices

Regulations related to temporary traffic control devices are intended to reduce the likelihood of fatalities and injuries to road users and to workers who are exposed to motorized traffic (vehicles using the highway for purposes of travel) while working on federal-aid highway projects.

Federal regulations exist concerning the use and payment of uniformed law enforcement officers, positive protection measures between workers and motorized traffic, and temporary traffic control devices on construction, maintenance and utility work zones. The regulations apply to all federal-aid highway projects, but state agencies are encouraged to adopt these on other types of projects as well.

The regulations require the LG to adopt TxDOT’s Temporary Traffic Control program or obtain TxDOT approval for an alternate program. The LG should coordinate the implementation of a temporary traffic control program closely with the TxDOT district office during construction. The state and federal regulations related to the use of temporary traffic control devices are included in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. Required practices for temporary traffic control devices that must be followed and properly documented are found in Chapter 7 of the LGPM Guide.

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Form FHWA-1273

The Form FHWA-1273, Required Contract Provisions, is a convenient collection of contract provisions and proposal notices required by regulations promulgated by FHWA and other federal agencies. The provisions contained in Form FHWA-1273 are generally applicable to all federal-aid construction projects and must be made a part of, and physically incorporated into, all contracts, as well as all appropriate subcontracts.

The LG is not permitted to modify the provisions of Form FHWA-1273. Minor additions covering other requirements may be included in a separate supplemental specification, provided they do not conflict with state or federal laws and regulations and do not change the intent of the required contract provisions. Details regarding specific requirements related to Form FHWA-1273 that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual and the LGPM Guide.

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Liquidated Damages

Liquidated damages are required as a means of recovering, at a minimum, construction engineering costs from a contractor. The LG is responsible for adopting a policy on liquidated damages and incentives/disincentives acceptable to TxDOT as described briefly in the LGPM Guide Chapter 9. Details regarding specific requirements for liquidated damages that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of both this Manual and the LGPM Guide.

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Materials

The LG is responsible for adopting TxDOT standard specifications for materials or for obtaining TxDOT approval on alternate specifications as described briefly in the LGPM Guide Chapter 9 and in more detail in LGPM Guide Chapter 7. Details regarding specific state and federal requirements for materials specifications that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual.

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Non-discrimination against Persons with Disabilities

The Americans with Disabilities Act, 42 U.S.C. Chapter 126 (ADA) requires equal opportunity for individuals with disabilities. Title II of the ADA governs public facilities including roads and sidewalks. Such opportunity prohibits discrimination against individuals with disabilities in government services, public accommodations, transportation and telecommunications. Further, “reasonable accommodation” must be provided to qualified individuals with disabilities.

Federal Requirement

  1. 28 CFR 35.151 – Provides the construction of any facility or part of a facility after January 26, 1992, for use by a public entity shall afford ready accessibility and utilization by individuals with disabilities.
  2. 49 CFR 37.41 – Provides the construction of any new transportation facility shall afford ready accessibility and utilization by individuals with disabilities.
  3. 49 CFR 37.43 – Requires the LG, when altering any existing transportation facility, to ensure the alterations are made in such a way as to afford maximum opportunity to provide ready access and utilization by individuals with disabilities.
  4. 49 CFR 37.3 – Defines a facility as “...all or any portion of buildings, structures, sites, complexes, equipment, roads, walks, passageways, parking lots, or other real or personal property, including the site where the building, property, structure,or equipment is located.”

State Requirements

  1. Texas Government Code, Chapter 469 – State law to ensure each building and facility subject to this chapter is accessible to and functional for persons with disabilities without causing the loss of function, space or facilities. This chapter relates to non-ambulatory and semi-ambulatory disabilities, sight disabilities, hearing disabilities, disabilities of coordination and aging.
  2. Texas Accessibility Standards – Sets standards for accessibility to: public buildings and facilities; privately owned buildings and facilities leased or occupied by state agencies; places of public accommodation; and commercial facilities by individuals with disabilities. Subject buildings and facilities are addressed in more detail in 16 TAC §68.20. These standards are to be applied during the design, construction and alteration of such buildings and facilities to the extent required by regulations issued by the Texas Department of Licensing and Regulation (TDLR).

Required Practices

The procedures that must be followed to obtain approval for accessibility provisions from the TDLR are described briefly in the LGPM Guide Chapter 9 – Construction and in more detail in the LGPM Guide Chapter 7 – Plans, Specifications & Estimates (PS&E) Development. Additional information on accessibility requirements during the design and PS&E phase are covered in Chapter 7 of this Manual.

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Non-segregated Facilities

The contractor cannot discriminate against any person by having segregated facilities. By entering into the contract, the contractor certifies that they maintain non-segregated facilities that conform to the requirements of 41 CFR 60.1.8. This certification is included in Form FHWA-1273. The prime contractor is required to obtain a similar certification from each subcontractor and supplier, as applicable.

The LG is responsible to ensure the contractor and subcontractors obtain the appropriate certifications and for coordinating closely with the TxDOT district office during construction. Details regarding the specific requirements for ensuring non-segregated facilities during construction that must be followed and properly documented are found in the LGPM Guide Chapter 7 – Plans, Specifications & Estimates (PS&E) Development. Chapter 7 of this Manual describes the state and federal statutes related to non-segregated facilities.

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Patented/Proprietary Products

The LG may not specify patented or proprietary products in a contract unless it obtains approval from TxDOT. The state and federal requirements regarding the use of patented or proprietary products are contained in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. Chapter 7 of the LGPM Guide provides the procedures that must be followed and documented.

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Prevailing Minimum Wage (Davis-Bacon Act)

The Davis-Bacon Act, 40 U.S.C. §3141 et seq. requires the payment of locally prevailing wages and fringe benefits to laborers and mechanics employed on federal contracts in excess of $2,000 for construction, alteration or repair (including painting and decorating) of public buildings or public works. Davis-Bacon was enacted as a means to prevent contractors from importing cheap labor from outside the area, thereby, keeping capital at home with the local labor force where it would do the most good. The LG is responsible to ensure the provisions of the Act are implemented appropriately as described in the LGPM Guide Chapter – 7 Plans, Specifications & Estimates (PS&E) Development. Details regarding the specific requirements for prevailing minimum wage that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual.

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Prison-Produced Materials

Prison-produced materials are products made by convict labor. There are limitations on using materials produced by convict labor in a federal-aid highway project. For the majority of projects in Texas, prison-produced materials are not allowed and the LG is responsible for including language prohibiting the use of prison-produced materials in the bid documents. Details regarding prison-produced materials that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual and Chapter 7 of the LGPM Guide.

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Publicly Owned Equipment

The LG should not include contract provisions requiring the use of LG publicly owned equipment unless approved in writing by TxDOT as described briefly in the LGPM Guide Chapter 9. Details regarding the use of publicly owned equipment that must be followed and properly documented are found in the LGPM Guide Chapter 7 – Plans, Specifications & Estimates (PS&E) Development. The state and federal requirements related to publicly owned equipment are listed in Chapter 7 of this Manual.

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Title VI Compliance

Title VI of the Civil Rights Act of 1964 is the federal law stating “No person in the United States shall, on the grounds of race, color, or national origin be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program to which this part applies.” Additional regulations and statutes broadened non-discrimination to include religion, sex, age, retaliation and disability.

Pursuant to Title VI of the Civil Rights Act of 1964, as amended, the Restoration Act of 1987 and other nondiscrimination authorities, it is the policy of TxDOT that discrimination based on race, color, national origin, sex, age or disability shall not occur in connection with any of its programs or activities.

The LG is responsible to ensure both the LG and its contractors comply with Title VI and remedy any existing compliance problems during construction. Details regarding specific Title VI compliance requirements that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. The procedures that should be used by the LG to ensure compliance are included in Chapter 7 of the LGPM Guide.

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Safety: Accident Prevention

As described briefly in the LGPM Guide Chapter 9, the LG has enforcement responsibilities of any applicable state and federal safety standards. Details regarding specific accident prevention requirements that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. Procedures for implementing these requirements are contained in the LGPM Guide Chapter 7.

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Trench Safety

As described briefly in the LGPM Guide Chapter 9, the Occupational Safety and Health Administration (OSHA) has established trench safety requirements as set forth in 29 CFR Part 1926, Subpart P, and the Texas Health and Safety Code, Chapter 756, Subchapter C outlines additional construction project safety requirements.

The LG is responsible for including the appropriate provisions for trench safety into the bid documents and for coordinating with the TxDOT district office during construction. Details regarding specific trench safety requirements that must be followed and properly documented are found in Chapter 7 – Plans, Specifications & Estimates (PS&E) Development of this Manual. Procedures that must be followed to implement these requirements are described in the LGPM Guide Chapter 7.

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Purchase of Equipment

General

Equipment, as defined in 2 CFR 200.33, means tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or greater per unit. All other tangible personal property is considered to be “supply.” A LG may need to purchase equipment to adequately meet the construction engineering requirements of a project. Costs may be eligible for state and federal-aid reimbursement using the procedures described in the LGPM Guide.

Federal Requirement

  1. 23 U.S.C. 302 – Requires states (and other governmental agencies) to be suitably equipped to discharge their duties.
  2. 23 CFR Part 140 – Allows for reimbursement to states (and other governmental agencies) for eligible construction engineering costs, railroad and audit work.
  3. FHWA issued the Equipment Purchases for State Construction Engineering Use policy memorandum on May 5, 1993 (now referenced in FHWA Contract Administration Core Curriculum Manual October 2014, page 103) clarifying federal participation in equipment purchased by the contractor for the LG to discharge its construction engineering responsibilities.

State Requirement

  1. No comparable statute.
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Convict (Inmate) Labor

General

Convict labor is the work of prison inmates on a construction site. Convict labor restricts competition since convict labor can be furnished at rates well below market labor costs or force account rates; therefore, federal regulations place limitations on using convict labor on a federal-aid highway project. 23 CFR 635.117(a) states:

“No construction work shall be performed by convict labor at the site or within the limits of any Federal-aid highway construction project from the time of award of the contract or the start of work on force account until final acceptance of the work by the State Transportation Agency (TxDOT) unless it is labor performed by convicts who are on parole, supervised release, or probation.”

This same principal applies to projects involving federal funding and administered by a LG.

The terms “parole, supervised release or probation” refer to the status of a person who has completed the condition of imprisonment. “Supervised release” does not include inmates currently serving their imprisonment terms while performing supervised work either inside or outside the walls of the incarcerating facility. Thus, it is not acceptable to have inmates who are currently serving the terms of their incarceration performing work on a project where convict labor is prohibited.

The Texas Transportation Code allows the use of inmate labor on highway projects involving state funding.

Federal Requirement

  1. 23 CFR 635.117(a) – Prohibits the use of convict labor for projects on roadways functionally classified above a rural minor collector.

State Requirement

  1. Texas Transportation Code §223.044 – Allows TxDOT to contract with a criminal justice agency for the provision of inmate labor on a state highway improvement project.

Required Practices

In general, the LG must obtain TxDOT concurrence before using convict or inmate labor on projects. The required practices that must be followed are described in the LGPM Guide.

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False Statements

General

A false statement notice ( Form FHWA-1022), as contained in 23 CFR 635.119, must be posted on each federal-aid highway project in one or more places where it is readily available to and viewable by all personnel concerned with the project. The LGPM Guide provides the wording for the notice and describes the required practices for posting the notice.

Federal Requirement

  1. 23 CFR 635.119 – Requires a false statements notice to be posted on all federally funded projects ( Form FHWA-1022).

State Requirement

  1. No comparable statutes
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Salvage Credits

General

Salvaged materials associated with a contract must be disposed of in accordance with the state statute requirements located at Texas Government Code Chapter 2175 – Surplus and Salvage Property. Texas Facilities Commission rules related to these statutory requirements that must be followed and properly documented are located at 1 TAC Chapter 126.

Federal Requirement

  1. 2 CFR 1201.317 – Allows non-state agency grantees to use their own procurement procedures that reflect applicable state and local laws and regulations, provided the procurements conform to applicable federal law and the standards.
  2. FHWA Policy Memorandum dated October 3, 1988 (now referenced in FHWA Contract Administration Core Curriculum Manual October 2014, page 100) – Requires a credit for material salvaged from the project unless the state agency has a procedure in place that does not require salvage credit. The process to determine salvage credit is described.

State Requirement

  1. 1 TAC, Chapter 126 – Describes a process for disposal of surplus property owned by a state agency.
  2. Texas Government Code §2175 – Describes procedures used by the Texas Facilities Commission for sale of excess state property.

Required Practices

The disposition of property must be made through competitive bidding or auction to the highest bidder. The required practices that must be followed are described in the LGPM Guide.

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