Chapter 16 — Administer Construction Contracts

FHWA → Caltrans → LPA — three conditions of delegation

For delegated projects, FHWA has assigned the responsibility of contract administration to Caltrans. Conveyed to the LPA through E-76, Master Agreement (per LPA), and Program Supplements (per project).

Delegation to the LPA is conditioned on:

1. An employee of the LPA is in responsible charge AND is a full-time employee of the LPA
2. All federal requirements are met
3. The LPA adequately staffs and equips the project team to properly administer

Such delegation does not relieve Caltrans of overall project responsibility. Caltrans performs periodic process reviews and oversight.

Off-SHS: follow LAPM Chs 9, 15, 16, 17. On-SHS: follow Caltrans Construction Manual (CTCM), Construction Manual Supplement for Local Agency REs, Local Assistance Structure Representative Guidelines, and Bridge Construction Records & Procedures Manual.

These manuals are not contract documents — they are procedures and guidelines. Contract documents prevail. However, if mandated Federal-aid requirements were inadvertently omitted from the contract, the LPA must amend the contract via change order to correct.

Person in Responsible Charge vs RE vs Consultant CE

Federal statutes require a full-time LPA employee accountable for the project — the person in responsible charge. Does not need to be an engineer. One employee may have responsible charge over multiple projects simultaneously.

Person in Responsible Charge duties (7): administers inherently governmental activities (cost, time, contract requirements, quality, scope); maintains familiarity with day-to-day operations including safety; makes/participates in changed-condition decisions; visits the project commensurate with magnitude/complexity; reviews financial processes for fraud/waste/abuse safeguards; directs LPA staff/consultants for project administration and contract oversight; maintains awareness of qualifications and on-the-job performance.

Resident Engineer (RE) — designated qualified engineer empowered to administer the construction contract. Off-SHS, the RE is not required to be registered; if not registered, must work under the supervision of a registered engineer. LPA furnishes support staff for surveys, soils/foundation tests, measurement, materials testing, shop drawings, progress payments, as-builts. For structures, a structures representative may be necessary.

LPA may employ a consultant as RE — but must provide a full-time public employee as person in responsible charge.

Document project staff — list names, titles, contact numbers of all LPA and hired consultant staff. Do not include contractor's staff. "This documentation is essential for auditors to determine the adequacy of the LPA's staffing."

Contractor's authorized representative — prime contractors must designate in writing a person authorized to supervise the work and act for the contractor. Must be present at the jobsite while work is in progress.

3-year retention, "if you can't produce it, it didn't happen"

The LPA must establish a separate record file for each Federal-aid highway project.

The 14-category file structure: (1) Award Package [Exhibits 15-A, 15-B, 15-M, LAPM 3-A]; (2) Project Personnel; (3) Correspondence; (4) LAPM 16-A WSWD; (5) Quality Assurance [QA Plan, IA certs, lab accreditation, equipment calibration, Buy America Certificates of Compliance, Source Inspection]; (6) Engineer's Daily Reports [16-C1 Asst, 16-C2 RE, Structures]; (7) Photographs; (8) Contract Item Pay Quantity Documents; (9) Change Orders [CO, CO Memo, Written Prior Approval, Force Account Calcs, Time Extension Justification, Extra Work Reports]; (10) Progress Pay Estimates and Status of Funds; (11) Labor/EEO [Certified Payrolls, LAPM 16-B, Posters photo doc, Labor Interviews, FHWA-1391]; (12) DBE [Exhibits 15-G, 15-H, 16-Z1, termination/replacement docs, 9-F/9-P, 17-F, LAPM 9-J]; (13) Environmental docs; (14) Project Complete [LAPM 16-E, 16-F, contract acceptance correspondence].

Retention: 3 years from when the final voucher is submitted by Caltrans to FHWA. Files at a single location for reviews and audits.

Required attendees, required topics, partnering option

For all construction projects, the LPA must schedule a pre-construction conference.

Required Attendees: LPA Representative; Resident Engineer (if different); Contractor.

Possible/Recommended: DLAE; LPA Labor Compliance Officer; LPA Safety Officer; other affected agencies (CDFW, Parks/Rec); Emergency Services; Public Utilities; FHWA Project Oversight Manager.

Required Topics: Safety; EEO; Labor Compliance; Subcontracting (incl. LAPM 16-B requirement); DBE; NEPA, Permits, Environmental Mitigation Commitments; Potential Traffic/Pedestrian Handling Issues.

Recommended Topics: Progress Schedule; Work Plans; QC/QA; Certificates of Compliance; Materials to be Used; Buy America Certificates; Buy America De Minimis Cost requests; Contract Training (Apprentice) Goals; Change Order Process; Dispute Process; Potential Utility Conflicts.

Written record of attendance and items discussed kept in project files.

Partnering — relationship between LPA and contractor to effectively complete the contract. Not a Federal-aid requirement, but eligible for CE participation; costs shared. Not a substitute for a contract dispute resolution process.

Working days, calendar days, and inclement weather

Contract time is the maximum time allowed for completion. The LPA must maintain a written record — commonly the Weekly Statement of Working Days (WSWD). LAPM 16-A is acceptable; LPAs may use their own form. Forward original to contractor no later than the end of the following week; retain copy in project file. Most contracts give the contractor 15 days to protest the determinations.

Calendar days vs Working days. Both Greenbook and CTSS define a "day" as every calendar day regardless of weekends/holidays/weather. Calendar day projects are rare — usually reserved for emergencies. For calendar day projects, the RE must still record the controlling operation and record each day as a working day. The definition of a working day may vary from project to project — don't assume previous-project rules apply.

The Controlling Activity Doctrine

The most significant difference between Greenbook and Caltrans Standard Specifications is that CTSS grants a non-working day only if the controlling activity was affected. The controlling activity is the construction activity that will extend the scheduled completion date if delayed — determined from the project schedule critical path. If the progress schedule does not accurately represent current conditions, request the contractor update.

When completing a WSWD, record the controlling activity (determined by current schedule), not what work was performed that week.

Inclement Weather

Do not just assume rain = non-working day and sun = working day. Under CTSS, if the controlling activity is not dependent on weather (concrete curing, embankment settlement), a working day must be charged during inclement weather.

Loss of time may extend beyond actual inclement weather — grade too wet to work, access needs reestablishment, saturated material to be removed from slopes. Inclement weather can be other than wet or cold — e.g., too hot for concrete to meet specified temperatures.

Time Extensions and Liquidated Damages

Contract time extensions must have written approval by the administering agency — generally via change order. Provide justification (Time Impact Analysis or detailed narrative) in project files. Failure to do so can result in loss of federal funds.

Events that do NOT warrant time extension (considered under contractor's control): maintenance shutdowns; breakdowns; suspensions or stop work orders due to safety/permit/pollution violations; shutdowns due to construction accidents; material delays.

Liquidated damages: If contractor exceeds construction days specified (plus those added by CO), liquidated damages in the dollar amount specified in the contract must be deducted from monies owed. Failure to do so may result in loss of federal funds.

Fair Practices Act, DBE commitment, four-step approval

All subcontracts should be in the form of a written agreement and contain all pertinent provisions of the prime contract, including all required Federal-aid contract language.

The RE must focus on:

• Knowing which subcontractors are working and on which items
• Ensuring the prime uses the subcontractors listed in bid documents
• Ensuring the prime performs at least 30% of total contract work with own forces (or higher % specified in Special Provisions)
• Ensuring subcontractors listed in bid documents are used for the work specified — not removed or replaced without prior written authorization
• Ensuring the prime does NOT subcontract work they are required to perform with own forces, that exceeds more than half a percent of the total bid or $10,000, whichever is greater

Fair Practices Act — PCC §§4100-4114

Designed to prevent bid shopping for subcontractors after bids are opened. Subcontracted work exceeding 0.5% of the total bid OR $10,000, whichever is greater, must be listed in the prime's bid proposal (Exhibit 12-B).

When a prime contractor fails to list a subcontractor in its bid, the law requires the prime contractor must perform the work with its own forces. The prime may not add an unlisted subcontractor by requesting a substitution. Exceptions: PCC 4107(c) and 4109.

Common violations: subcontracting additional work to a listed sub where work wasn't originally listed (over threshold); using unlisted sub over threshold; substitution without LPA consent; prime performing work designated to a sub.

Substitution of a listed subcontractor requires written request based on reasons in PCC 4107: insolvency, failure to furnish bonds, unlicensed, failure to pay prevailing wages, failure to execute subcontract. Process: written notice by certified mail; 5 business days to submit written objection.

30% Own Forces Rule (23 CFR 635.116): Prime must perform at least 30% with own organization. "Own forces" = workers employed and paid directly by the prime AND only utilize equipment owned or rented by the prime, with or without operators. LPA may raise the % via contract specifications.

FHWA-1273, certified payrolls, FHWA-1391, and the CUF rule

Daily Reports (§16.8)

Assistant RE Daily Report (LAPM 16-C1) — must document what work was performed, where and how, and who performed it. Details sufficient for force-account reconstruction by someone unfamiliar with the project.

For each person: full name; labor classification; employer; hours worked by item and/or CO work. For each piece of equipment: make/model (or ID number); hours by item/CO. Narrative: contractor's operation; location (stations, offsets, depths); statements pertinent to work; activities ensuring compliance with specs; sampling; acceptance testing; measuring; Certificates of Compliance; Contract Item Quantity supporting info.

"Workers must be classified and paid according to the work they actually perform, regardless of union affiliation, other titles, or designations."

RE Daily/Weekly Report (LAPM 16-C2) — RE may report on a daily or weekly basis. Not required when the RE is also acting as field inspector. Include: important discussions/agreements with contractor; general statement about work done including controlling operation; weather (max/min temps, precipitation); other important facts not covered elsewhere.

Labor Compliance — Davis-Bacon (§16.9.1)

State and federal laws require contractors on public works contracts to pay prevailing wages (basic hourly + fringe benefits). Annually, each LPA must designate a Labor Compliance Officer.

The RE's 10 labor compliance tasks:

1. Review labor provisions at preconstruction meeting (use Federal-aid Contract Prejob Checklist)
2. Prepare Daily Reports documenting presence of employees and owner-operators
3. Obtain certified payrolls weekly. Optional Form WH-347. Statement of Compliance signed. The prime is responsible for submission of all payrolls by all subcontractors.
4. Check all certified payrolls. When state and federal wage rates differ, contractor must pay the HIGHER. Overtime: 1.5x regular plus fringe for hours over 8/day, over 40/week, or the first 8 on the seventh consecutive workday.
5. Conduct minimum 2 employee interviews per contract per month (LAPM 16-N English / LAPM 16-N ESP Spanish), incl. at least one from prime and each sub. Interview individually, away from supervisors. Don't disclose interviewee identity to employer.
6. Maintain written evidence of apprentices. Apprentices may receive less than prevailing only if registered in a bona fide program (DAS-1 state, ETA-671 federal). Apprentices lacking registration evidence and apprentices exceeding allowable ratios must be paid the journeyman wage.
7. Cross-check daily reports, interviews, payrolls, wage rates monthly
8. Document posters and wage rates displayed. Photograph the display. Laminated all-in-one posters many contractors purchase do not contain all required information.
9. Compare all force account billings to certified payrolls — do not approve payment until any discrepancy is corrected
10. Take action for payroll delinquencies (see below)

Who is covered: every laborer or mechanic employed at the job site, including employees of equipment rental firms, owner-operators of general equipment (graders/cranes/excavators), firms furnishing engineering services (construction inspection, materials testing, land surveying — regardless of who hired them), suppliers/fabricators who install manufactured products, corporate officers/supervisors/foremen who regularly perform journeyman work for a substantial period.

"Job site" is not limited to actual geographic limits. Includes facilities established for the sole or primary purpose of contributing to the project — material sites, processing plants, fabrication yards, garages, staging sites.

EEO (§16.9.2)

RE EEO activities: discuss at preconstruction; perform employee interviews (Task 5); verify posters placed (Task 8) — the contractor's EEO Officer must be listed by name in the posted policy; review Form FHWA-1391; countersign and submit to DLAE.

If violation of EO 11246 or 41 CFR 60 observed, RE has authority and responsibility to notify OFCCP.

DBE Construction Monitoring (§16.9.3)

The contractor is bound to utilize all listed DBE subcontractors or suppliers regardless of whether the commitment is below, at, or above the contract goal.

10 RE DBE activities: (1) review at preconstruction; (2) compare 15-G to 16-B before approving Subcontracting Request; (3) ensure 16-B approval before DBE sub begins work; (4) verify CUF per 49 CFR 26.55(c); (5) ensure running tally — Exhibit 9-P submitted by 15th of following month (post-9/1/2023 awards; pre-9/1/2023 used 9-F); (6) ensure prompt payments — contractor pays DBE/subs within 7 days of receiving progress payment for their work or take performance failure withhold; (7) submit Exhibit 17-O (DBE Certification Status Change); (8) obtain Exhibit 17-F Final Report — withhold $10,000 if not submitted within 90 days of contract acceptance; (9) compare 17-F to commitment; (10) withhold payment if commitments not met (only amount necessary to meet goal; if failure was beyond contractor's control, no funds withheld; "subcontractor refusing to show up or not coordinating with the Prime contractor's schedule does not qualify as 'beyond the contractor's control,' as the contractor should have requested a substitution").

CUF — Commercially Useful Function (49 CFR 26.55(c))

A DBE performs a CUF when it:

• Performs at least 30% of the total cost of its contract with its own work force and does not subcontract portions greater than normal industry practices
• Performs, manages, and supervises the work involved
• Negotiates prices, determines quantity/quality, orders materials, pays for materials, installs materials where applicable
• Trucking DBE must own and operate at least one fully licensed, insured operational truck used on the contract

DBE Trucking Verification: Exhibit 16-Z1 submitted by the 15th of the month for previous month's trucking activities. Administrative deduction for missing submission.

DBE materials/transportation credit (Table 16-1): Supplier as manufacturer = 100%; as regular dealer (incl. bulk) = 60%; as neither = reasonable fees/commissions only. Trucking owned/operated by DBE = 100%; leased from another DBE = 100%; leased from non-DBE with DBE drivers = 100%.

CO structure, 25% rule, participating vs nonparticipating

A change order is a legally binding document used to make changes to the original construction contract — affects cost, time, design, or specification requirements, or a combination. Authority: CTSS Section 4-1.05; Greenbook Section 3.

Required CO documents: CO itself; explanatory memorandum; PE-stamped revised plan sheets and specs (when applicable); cost estimate calculations performed by the LPA, not the contractor; time impact analysis justifying time extensions.

Prior authorizations to proceed: RE may order contractor to start work before CO is approved using a written authorization. When prior authorizations granted, the full change order must be immediately written and submitted to the contractor within 7 working days of the authorization to proceed. The change order (extra work) bills must not be paid until the change order is fully executed and funded.

Four Methods of Payment — In Order of Preference

Agreed price negotiation: Perform independent force account cost estimate including markups → request contractor's price → analyze for errors → if estimate supports it, write CO; if not, discuss differences, and if no agreement, perform at force account. "It is not sufficient to just review a contractor's proposed price and decide it is reasonable without performing your own independent cost estimate calculations."

Documentation: all calculation pages signed and dated by the person performing AND the person checking. Subject to audit. Loss of federal funding can occur if the LPA has not fully justified and documented any agreed prices.

Time adjustments: If controlling operation is unaffected, no extension is warranted. For larger projects, contractor submits Time Impact Analysis (TIA). Failure to justify and document a contract time adjustment can result in loss of federal funding. RE may NOT unilaterally decrease time unless permitted by specifications.

Participating vs Nonparticipating

A CO may be declared Participating, Participating in Part, or Nonparticipating. Common nonparticipating items: work before federal authorization; work beyond environmental document scope; work outside project limits; utility work not a result/purpose of road work; work by unapproved subcontractor; plant establishment over 3 years; private facility adjustments (signs, fences, sprinklers) absent R/W agreement; non-programmed/already-compensated R/W; maintenance work (except Demonstration Programs); work over amount programmed; deviations from design standards; nonconforming materials; equipment rental rates over Equipment Rental Rate book; excessively expensive treatments not in public interest.

"Federal requirements cannot be circumvented by classifying work as non-participating." The LPA cannot avoid Buy America by declaring steel/iron non-participating.

Quantity balancing change orders — accounting mechanism updating contingency balance. Not required but permissible.

Equipment rental rates: California guide is the Caltrans Labor Surcharge and Equipment Rental Rates book. Rates in excess of the guide are not eligible for Federal-aid reimbursement.

QAP, Materials Acceptance, Independent Assurance per 23 CFR 637

For federal construction projects, the LPA is required to have a QAP. Caltrans will not process a Request for Authorization for Construction without verification of an approved QAP. Signed by the LPA public works director (or if not registered, delegated to next highest registered Engineer). Updated at least every 5 years.

QAP is not part of the contract — it is a commitment by the LPA to FHWA. Two main elements per 23 CFR 637: Materials Acceptance Program + Independent Assurance Program.

Off-SHS: may adopt Caltrans QAP or develop own per 23 CFR 637. Off-SHS but on NHS: must use current Caltrans or Greenbook Standard Plans and Specifications. Test methods may be CTM, ASTM, AASHTO, or other nationally recognized — but must be specified in contract documents.

Materials Acceptance Program — determines quality and acceptability. Consists of frequency guide schedules; identification of specific location for verification sampling/testing; identification of specific attributes to be inspected. RE keeps test data and a test results summary log. Whenever failing tests occur, sufficient additional acceptance tests must be taken to isolate affected work. Documentation must include corrective measures.

Independent Assurance Program — unbiased evaluation of sampling and testing procedures used in acceptance. Per 23 CFR 637: testing equipment evaluated by calibration checks and proficiency samples; testing personnel evaluated by observation and proficiency samples. "An acceptance program tests the material, while an IA program tests the testers."

Certification of sampling and testing personnel: all samplers and testers must possess current certificate of proficiency. JTCP covers HMA, soils/aggregates, and Portland cement concrete. For CTMs not covered, Caltrans provides certification. For non-CTM methods, certifications from acceptable organizations (e.g., ACI) or a second IA lab.

IA sampling and testing is NOT used for determining quality/acceptability of incorporated material — only for determining reliability of testing personnel.

Laboratory qualification: all California labs must possess current certificate of qualification; be under California-registered PE management; maintain equipment per national calibration standards; participate in AASHTO re:source Proficiency Sample Program, CCRL inspection programs, or Caltrans Reference Sample Program. Caltrans IA staff issues Form TL-0113 valid for one year.

Equipment calibration: Field construction lab and portable field test equipment calibrated prior to use and re-calibrated as frequently as required. Maximum interval: 1 year. Nuclear gauges calibrated on NIST traceable blocks with current calibration stickers. Plants producing HMA, concrete, cement-treated bases, etc., must have current CEM-4204 Material Plant Quality Program Acceptance Sticker or California Test 109 approval.

The post-CO procedural framework

§16.12 Environmental Stewardship

The RE is responsible for ensuring environmental commitments in the project environmental document (PED), permits, and mitigation requirements are implemented during construction. Any change in environmental mitigation commitments, permit conditions, agreements with resource agencies, or introduction of new social/environmental/economic issues must be referred to Caltrans District Local Assistance for further action. Changes in scope for ATP projects require Caltrans/CTC approval.

§16.13 Progress Payments

Progress pay estimates support reimbursement requests. The RE approves quantities and amounts. Estimate must agree with the Detail Estimate basis (Exhibit 15-M or LAPM 3-A). Caltrans verifies federal pro rata share authorized for the construction phase remains as originally authorized at award (unless 90-day post-award adjustment was made per Ch 15).

§16.14 & §16.15 Safety and Traffic Safety

Standard work zone traffic control per the California Manual on Uniform Traffic Control Devices (CA MUTCD). The RE must monitor work zone safety per the contract. Cal/OSHA citations are noted in the project file. Information memoranda are issued for serious safety issues affecting the public.

§16.16 Contract Disputes and Claims

Claims avoidance is preferred to claims resolution. Claim procedures and contract provisions: contractor must follow contract-specified procedures (typically initial notice, supplemental documentation, full and final claim record per Exhibits 16-UI, 16-US, 16-UF).

Federal-aid participation in claims: based on merit of individual case. "Under no circumstances shall federal funds participate in anticipated profit for work not performed." All Federal-aid invoiced amounts subject to audit. Recovery of compensatory damages — LPA may recover compensatory damages from the contractor for failures to perform.

False statements: 18 USC §1020 prohibits false statements concerning highway projects, with penalties including fines, imprisonment, debarment.

§16.17 Final Inspection and Contract Acceptance

The RE schedules a final inspection upon contractor's notification that work is complete. Use LAPM 16-F: Final Inspection Form to document the inspection and any punch-list items. After all punch-list items are resolved, the LPA accepts the contract and records the acceptance.

See LAPM Ch 17: Project Completion for the post-acceptance close-out process including the FROE and final voucher.

§16.18 Construction Oversight Program

Caltrans Construction Oversight Engineers (COEs) perform periodic process reviews on LPA-administered Federal-aid construction projects. Two types of reviews: Project Reviews (specific project) and Process Reviews (broader procedural compliance).

Common review findings: missing/incomplete daily reports; inadequate cost estimate documentation on agreed-price COs; missing or inadequate certified payrolls; missing FHWA-1391; lack of evidence the RE performed CUF evaluation; DBE commitment shortfall without documented force-majeure justification; missing or untimely Exhibit 17-F; equipment rental rates over Equipment Rental Rate book.

Sanctions for unremediated findings are documented in LAPM Ch 20: Audits and Corrective Actions.