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Section 4: Contract Administration

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Overview

Contract administration and oversight involves four general processes: project/contract planning; monitoring contract performance; payment approval with required documentation; and scope changes. The goal of contract administration is to ensure the contract is performed satisfactorily and the responsibilities of both parties are properly discharged. The primary objectives of contract administration are:

  • to verify performance for the purpose of payment;
  • to identify “material breach of contract” by assessing the difference between contract performance and material non-performance;
  • to determine if corrective action is necessary; and
  • to take such action if required.

In order to achieve the goal and objectives of contract administration, a non-construction project must have a well-defined scope of work, clear communications through project meetings, a detailed plan for monitoring the progress of the project and complete documentation of the project work elements.

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Scope of Work

The scope of work developed during negotiation of the advance funding agreement (AFA) is the roadmap for contract administration. The importance of a well-defined scope of work is presented in the Local Government Project Management Guide (LGPM Guide). As described in the Introduction section of this chapter, the Statewide Transportation Improvement Program (STIP) must contain the project. The STIP is approved by TxDOT and FHWA; therefore, the LG must provide a concise scope of work that is consistent with the project described in the STIP and conforms to the project title approved in the STIP.

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Post Award Meeting

After the State Letter of Authority (or Notice to Proceed) has been issued along with transmittal of a copy of the Federal Project Authorization and Agreement to the local government (LG), a post award meeting may be held between the LG and TxDOT project oversight personnel (district or Transportation Planning and Programming Division, as applicable). This meeting is described in the LGPM Guide.

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Monitoring Performance

The LG is responsible for execution of all project elements in accordance with the AFA. The TxDOT project manager will provide oversight and contract administration for invoices and work progress. As part of this execution and oversight, both parties are responsible for monitoring the performance of the contractor/consultant throughout the project and for ensuring the project is completed in accordance with the contract terms detailed in the AFA. The procedures and responsibilities of the LG and TxDOT are described in the LGPM Guide. More detailed information on project documentation and data submittal requirements is contained in Chapter 2. Information on project close-out requirements is contained in Chapter 10.

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Supporting Documentation

With each invoice, the LG is required to submit legible and proper documentation to validate all the expenditures being claimed on the invoice. Acceptable practices associated with documentation are described in the LGPM Guide.

Federal Requirement

  1. 23 CFR 635.122 and 635.123 – For payment of stockpiled materials, requires the request for reimbursement to be supported by a paid invoice or receipt of delivery of materials as well as provide adequate assurance the quantities of completed work have been determined accurately and on a uniform basis.
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Records

Project records provide documentation and support for the payments for contract work performed. The LG and TxDOT must retain records as specified in the AFA and described in the LGPM Guide.

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Corrective Action

If TxDOT, through its project manager, determines the LG is not performing in accordance with the terms of the AFA, appropriate corrective action will be requested from the LG. Corrective action may involve improved communication, more frequent meetings between the LG and TxDOT, interim performance evaluations, contract amendments, suspending work, replacement of LG project personnel or subcontractors, or terminating the contract. TxDOT’s project manager is to document all activities leading up to and through the corrective action with a report to the project file and copies to the LG. The LGPM Guide provides details regarding suspension of work and termination.

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Supervision and Staffing

General

A LG must be suitably equipped and staffed before it can be given authority to manage federal-aid highway projects within its jurisdiction. 23 CFR 635.105 requires TxDOT to be suitably equipped and organized to carry out the federal-aid program. Therefore, TxDOT is responsible for project delivery on all types of federal-aid projects. This responsibility is formalized by the project agreement executed for each federal-aid project. FHWA and TxDOT are the two parties to the agreement.

When a federal-aid project is to be performed by a LG under TxDOT’s supervision, all of the following conditions must be met.

  • All federal requirements, including those prescribed in 23 CFR Part 635 Subpart A, are satisfied on work performed under a contract awarded by a LG.
  • Force account work shall be in full compliance with 23 CFR Part 635 Subpart B.
  • The LG is adequately staffed and suitably equipped to undertake and satisfactorily complete the work.
  • The LG shall provide a full-time employee of the agency to be in responsible charge of each federal-aid project, including those employing consultants and other service providers. The requirements for the Responsible Person In-Charge are defined in Chapter 2 – Project Initiation of this Manual.

This arrangement does not relieve TxDOT of overall responsibility for the project. While 23 CFR 1.11(b) allows TxDOT to “utilize, under its supervision, the services of well-qualified and suitably equipped engineering organizations of other governmental instrumentalities for making surveys, preparing plans, specifications and estimates, and for supervising the construction of any project,” 23 CFR 1.11(e) clearly states TxDOT is not relieved of its responsibilities under federal law and the regulations in 23 CFR if it chooses to use the services of other governmental engineering organizations.

If the LG uses the services of a consulting engineering firm, the services must be procured in compliance with 23 CFR Part 172.

The LGPM Guide provides the required practices and responsibilities associated with proper supervision and staffing of a LG project.

Federal Requirement

  1. 23 CFR 635.105 – For projects under a local public agency’s jurisdiction, authorizes TxDOT to allow the LG to directly manage projects if TxDOT has assurance the LG is adequately staffed and suitable equipped to undertake and satisfactorily complete the work.

State Requirement

  1. No state regulations related to this topic were identified.
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Termination

A typical non-construction AFA terminates upon completion of the project or termination by either party, in accordance with the terms of the AFA. Currently, a non-construction AFA requires a termination date of no more than three years after its date of execution. However, the termination date may be extended based on an amendment to the AFA executed by both parties.

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