FHWA Issues Final CM/GC Regulations

Source: AGC Highway Facts Bulletin

The Federal Highway Administration (FHWA) on December 2, 2016 issued final rules on the use of Construction Manager General Contractor (CM/GC) procurement procedures in the federal-aid highway program. This regulatory action was mandated in the MAP-21 legislation. FHWA has been allowing states to use CM/GC under the authority of its Special Experimental Project Number 14 (SEP-14) process for the past several years. MAP-21 provided the statutory authority to allow state DOTs to use CM/GC as a routine contracting practice. AGC commented extensively on the proposed rule and FHWA highlighted those comments in the background portion of the rule notification. AGC will be reviewing the rules to determine which of our comments were adopted.

One significant issue AGC raised suggested that the rule should clarify whether the CM/GC contractor’s responsibilities are limited to providing constructability and material reviews, or whether the CM/GC contractor is expected to perform design services. The AGC referenced recent legal decisions that showed a trend of liability and responsibility being assigned to CM/GC contractors related to the preconstruction phase of the contract for what have been considered professional services provided. The FHWA decided that further clarification on this issue was unnecessary.

AGC Comments on FHWA Buy America Revisions

Source: AGC Highway Facts Bulletin

AGC submitted comments to the Federal Highway Administration (FHWA) in strong support of its proposal to provide nationwide waivers of Buy America requirements for commercially available off-the-shelf (COTS) products with iron and steel components and for steel tie wire permanently incorporated in precast concrete products. AGC also urged FHWA to issue a nationwide waiver for specialized steel lifting devices that are incorporated in precast concrete products. AGC suggested that FHWA raise the dollar threshold for the minimum amount of steel products that can be exempted from Buy America requirements from $2500 to $20,000 or base it on a PPI escalator. AGC also suggested that utility relocation work required as part of a highway improvement project also be exempted.

FHWA took this action to relieve some of the burden on states in implementing Buy America requirements. While these requirements have been in place since the mid-1980s, following the ramp up of Federal highway funding under the American Recovery and Reinvestment Act (ARRA), new scrutiny was placed on how Buy America requirements were enforced on FHWA funded projects. The new scrutiny led to unreasonable requirements to obtain certification that every component of every manufactured product was Buy America compliant. The new scrutiny also led to every project component, no matter how small (nails, bolts, etc) to also meet the mandate. At AGC’s urging FHWA issued guidance relieving some of the mandate on manufactured products but this was challenged in court. The judge ruled that FHWA had not followed proper procedures in issuing this guidance. AGC along with several industry groups urged FHWA to issue a rule following the proper procedures to relieve some of the burden.

New Contractor Requirements Effective After June 30

The following new contractor requirements take effect for state and local public works contracts awarded after June 30, 2016. Exceptions include Build/Operate/Transfer, P3, Design-Build and Construction Manager as Constructor contracts.

A contractor of any tier with 10 or more employees must provide its workers with access to a training program applicable to the tasks performed by those workers. Training can be accomplished through an apprenticeship program offered by Ivy Tech or Vincennes University, a program established by or for the contractor, a program offered by an entity sponsored by the U.S. Department of Labor, Bureau of Apprenticeship and Training (US DOL-BAT), a program that results in the award of an industry recognized portable certification, or a program approved by the Federal Highway Administration (FHWA) or INDOT.

A prime or general contractor (G.C.) or a subcontractor, contracting with a prime/G.C., employs 50 or more journeymen, the contractor must also participate in an apprenticeship or training program meeting standards established by or approved by US DOL-BAT, Indiana Department of Labor, FHWA or INDOT.

A contractor in any tier must preserve payroll and related records for three years after completion of the project and make those records open to inspection by the Indiana Department of Workforce Development.

Prime/G.C. and subcontractors, contracting on local public works contracts of $150,000 or more, must now adhere to drug testing requirements that were only applicable on state contracts prior to July 1, 2016.

The new statutes also require public owners to follow new procedures regarding possible contractor violations and in contractor responsibility determinations. For violations involving E-Verify, federal or state minimum wage laws, workers compensation or unemployment compensation, the public agency will be required to refer the matter to the appropriate agency. For other violations involving the new requirements, the public agency shall require the contractor to remedy the violation within 30 days of notification. If the violation continues, the agency shall find the contractor not responsible for up to 48 months. A finding that a contractor is not responsible is subject to judicial review. However, a finding that a contractor is not responsible due to a violation of the new requirements may not be used by another public agency as the basis for finding that contractor not responsible.