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Local Government Programs . Randy Lane, Local Programs Manager Jeff Peyton, Local Projects Coordinator ODOT Office of Systems Planning and Program Manager . ODOT Let vs. Local Let. LPA PROJECT. ODOT $. ODOT LET & ADMINISTERED. LPA PARTICIPATION REQUIREMENTS. LPA LET & ADMINISTERED.

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Local Government Programs

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Local government programs

Local Government Programs

Randy Lane, Local Programs Manager

Jeff Peyton, Local Projects Coordinator

ODOT Office of Systems Planning and Program Manager

Odot let vs local let

ODOT Let vs. Local Let







  • Plans according to ODOT L&D Manual

  • State Estimated

  • LPA matching/overage funds deposited with ODOT prior to Award

  • Minimum 12 week letting process from point of PS&E file

  • Plans according to LPA format

  • LPA/Consultant Estimated

  • LPA matching/overage funds paid directly to the Contractor

  • Minimum 4-5 week letting process from point of PS&E file

Local let program history

Local-Let Program History

Lpa administered projects

LPA Administered Projects

Supervision and Staffing -

23 CFR 635.105 Supervising agency…

(c) ……the STD, while not relieved of overall project responsibility, may arrange for the local public agency having jurisdiction over such street or highway to perform the work with its own forces or by contract; provided the following……..

  • Compliance with all applicable Federal and State requirements.

  • The local public agency is adequately staffed and suitably equipped to undertake and satisfactorily complete the work.

  • Local public agency shall provide a full-time employee of the agency to be in responsible charge of the project.

Local government programs

Locally Administered Projects

  • “Person in Responsible charge” means:

    • Aware of day-to-day operations on the project

    • Aware of and involved in decisions about changed conditions that require change orders

    • Aware of qualifications, assignments, performance of consultant staff at all stages of the project

    • Visiting the project on a frequency that is commensurate with the magnitude & complexity of the project

Local government programs

Locally Administered Projects

Delegation of “Activities” not “Responsibilities”

23 CFR 635.105 Supervising agency…

(a) The STD has responsibility for the construction of all Federal-aid projects, and is not relieved of such responsibility by authorizing performance of the work by a local public agency or other Federal agency. The STD shall be responsible for insuring that such projects receive adequate supervision and inspection to insure that projects are completed in conformance with approved plans and specs.

  • ODOT shall assume the responsibility and representation of FHWA

  • ODOT provides oversight for each activity to ensure conformance to plans and specifications and Federal requirements.

Local government programs

Locally Administered Projects

Possible Delegated Activities:

  • Environmental Studies

  • Selection of Consultant Services

  • Design

  • Right of Way Acquisition

  • Preparation of Plans, Specifications and Estimate

  • Preparation of Bid Proposal

  • Advertisement and Award

  • Construction Contract Administration and Inspection

Local government programs

Locally Administered Projects

Non-Delegated Activities:

  • NEPA Review and Approval

  • Design Exception Approval

  • Right of Way Certification

  • DBE Goals and Waivers

  • Final Inspection and Acceptance

  • Sole Source and Proprietary Justification Approval

  • Labor Compliance Enforcement

  • Concurrence in Rejection of Bids

Local government programs

Locally Administered Projects

GAO 2009

Local government programs

Locally Administered Projects

Oversight Highlights:

  • ODOT Stewardship and Oversight Agreement for locally administered projects.

  • Dedicated Staffing – FHWA Ohio Division Local Programs Engineer, ODOT Local Projects Section, and District LPA Coordinator and Construction Monitors

  • Locally Administered Transportation Projects Manual of Procedures (LATP Manual)

  • Qualification Program for Local Agencies – LPA Participation Requirements Chapter of LATP Manual

  • ODOT Contractor and Consultant Prequalification

Local government programs

Locally Administered Projects

Process Requirements :

ODOT Oversight in the Procurement of Consultant Services

  • Advertisement of available contracts

  • ODOT Prequalified Consultant

  • Fee Analysis and Negotiation

  • Preparation of LPA / Consultant agreement

    ODOT Review and Concurrence / Approval

  • Plans, Specs and Estimates Package

  • Award to Lowest and Best Bidder / Bid Rejections

  • Change Orders

  • Materials Certification

  • Invoice Reimbursement

  • Final Acceptance

Local government programs

Locally Administered Projects

ODOT Process Requirements:

Locally Administered Transportation Projects Manual of Procedures

  • ODOT and LPA Project Responsibilities – Inception through Project Closeout

  • FHWA Ohio Division Involved in Development and Revision

    LPA Federal Project Agreement

  • Roles and Responsibilities in adherence to Federal and State requirements

    ODOT 2010 LPA Bid Proposal Template

  • Incorporated into LPA Bid Proposal and Contracts

  • Developed with FHWA to ensure incorporation of Federal requirements.

Local government programs

Locally Administered Projects

ODOT Process Requirements:

Locally Administered Transportation Projects Manual of Procedures

  • LPA Participation Requirements

  • Project Development and Design

  • Consultant Contract Administration

  • Environmental

  • Real Estate

  • Utilities

  • Railroad Coordination

  • Advertising, Sale and Award

  • Construction Contract Administration………

Local government programs

Locally Administered Projects

LATP Manual Construction Contract Administration Chapter

Roles & Responsibility of ODOT and LPA personnel

  • Guidance for: preconstruction meetings; progress meetings; monitoring project progress; monitoring for EEO, DBE & prevailing wage; documentation of payments; material quality control; change order processing; claims; billing; and project closeout.

  • Appendices contain many useful checklists and required forms

Local government programs

Locally Administered Projects

ODOT Process Requirements:

LPA Federal Project Agreement

  • Sets forth the State and Federal Requirements and Responsibilities

  • Establishes funding commitment through ODOT

  • Project Development Responsibilities

    -Environmental- Advertising / Sale / Award

    -Real Estate / Utility- Consultant / Construction Contract Administration

  • Certification and Recapture of Funds

  • Nondiscrimination

  • Termination / Default / Breach of Contract

  • Record Retention and Audit Requirements

  • Ohio Ethics Laws

Local government programs

Locally Administered Projects

ODOT Process Requirements:

  • ODOT 2010 LPA Bid Proposal Template

  • Mandatory incorporation into LPA Bid Documents and Contracts

  • Ensure compliance with State &Federal requirements.

Consultant contract administration

Consultant Contract Administration

Jeff Peyton

ODOT Local Projects

Lpa consultant contract management

LPA Consultant Contract Management

  • In accordance with Locally Administered Transportation projects Manual of Procedures and ODOT Consultant Contract Administration Manual.

  • Applicable to those projects utilizing Federal funds to acquire consultant services for any phase of the project.

Lpa consultant contract management1

LPA Consultant Contract Management

  • Revised Consultant Contract Administration Chapter for LATP Manual of Procedures February 2008

  • Consultant Services oversight in all contracts over the $50,000 small purchase threshold

    • Announcement of available contract on ODOT’s website

    • Review LPA selection documentation (QBS)

    • Performance of pre-Award evaluation

    • Fee analysis, negotiation, and acceptance

    • Preparation of Consultant / LPA Agreement

    • Encumber funds

    • Authorize agreement

Lpa consultant contract management2

LPA Consultant Contract Management

  • Contracts not involving Federal funds must be selected in accordance with State law (ORC 153.65- 153.71)

  • ODOT Prequalified Consultant

Odot policies

ODOT Policies

  • Person in Responsible Charge in accordance with Participation Requirements – LATP Manual

  • ODOT prequalified for services defined in ODOT’s Consultant Prequalification Requirements and Procedures Manual

  • ODOT Prequalification not required for services not defined however LPA still responsible to select based on QBS and applicable Federal requirements

Odot policies1

ODOT Policies

  • Separation of Interests – Consultant or sub consultant retained by an LPA may act as design engineer or perform construction contract administration / inspection but can not perform both.

  • Design consultant may be retained to provide on-going construction phase services as an extension of design,

    • Assist in pre-bid questions

    • Attendance at pre-bid and construction progress meetings

    • Visit job site to monitor critical areas of work

    • Review shop drawings and evaluate change orders or claims.

  • Waiver process available through ODOT Local Projects in consultation with Consultant Services

Odot policies2

ODOT Policies

  • Federal Authorization to Proceed prior to the performance of any work for which Federal reimbursement is requested

  • Separate Federal Authorization for Environmental Engineering and Final Engineering. Environmental Clearance required prior to Final Engineering.

  • Executing the Consultant / LPA Agreement prior to Federal Authorization will prohibit reimbursement

Odot responsibilities

ODOT Responsibilities

  • 23 CFR 172 charges ODOT with oversight responsibilities for:

    • Selection Procedures

    • Negotiation of Fair and Reasonable Fee

    • Administration of Agreement

Federal rules

Federal Rules

  • 23 CFR 172 - FHWA rules governing consultant selection and contract administration - invokes the Brooks Act; directs the contracting agency to give consideration to Disadvantaged Business Enterprises (DBEs) in the selection process

  • United States Code Title 40, Chapter 11 - Brooks Act - Requires qualifications based selection of consultants

  • 48 CFR Part 31, Contract Cost Principles and Procedures (Federal Acquisition Regulations)

Federal rules q a

Federal Rules – Q &A

  • When must qualification based procedures (Brooks Act) be used for procuring design related services?

    In general, when procuring design related services using Federal-aid highway funds and those services are directly related to a construction project. See Title 23 U.S.C. 112 for additional information.

    ODOT policy also requires that right-of-way acquisition and construction inspection/administration be treated as professional services subject to QBS rules.

Federal rules q a1

Federal Rules – Q & A

  • If there are no Federal-aid funds in the design services contract, are the federal qualifications based procurement procedures still applicable?

    No. If a State, county or city decides to fully fund the design contract; such entity may use its procedures under State law (ORC 153.65- 153.71).

Federal rules q a2

Federal Rules – Q &A

  • If a State, county or city does not use Federal-aid funds for the design contract and uses its own procurement procedures, is the related construction project(s) still eligible for Federal-aid funding?

    Yes. The rules for procuring engineering and architectural services are specific to the design contract that uses Federal-aid funds and not the total project.

Federal rules q a3

Federal Rules – Q &A

  • Do engineering services contracts have to be advertised under competitive negotiation procedures?

    Yes. The contracting agency must, by public advertisement, assure that in-state and out-of-state consultants are given a fair opportunity to be considered for award of the contract. The advertisement must include the criteria that will be used to rate the firms for their competency and qualifications to perform the type of work requested.

    ODOT policy also requires that right-of-way acquisition and construction inspection/administration follow the same procedures.

Federal rules q a4

Federal Rules – Q &A

  • Can price be a selection criterion under the competitive negotiation procedures?

    No. The cost cannot be a criterion during the evaluation phase of the selection process, unless specifically provided for in State statutes enacted and grandfathered into law prior to June 9, 1998.

Federal rules q a5

Federal Rules – Q &A

  • Can an in-state preference be used in the advertisement and selection phase?

    No. The intent of the Brooks Act is to develop a wide pool of potential service providers to select from. Therefore, the use of in-state preference as a criterion cannot be used.

    Local preferences are also prohibited by this rule, including selection factors that refer to “past experience with the local government”.

Federal rules q a6

Federal Rules – Q &A

  • Can a locality preference be used during the selection phase?

    Yes. Although a locality factor is not directly a qualification factor, a small locality preference criterion of 5, but no more that 10 percent, may be used. This criterion cannot be based on political boundaries and should be used on a project-by-project base for projects where a need has been established. Further, if a firm currently outside the locality criteria indicates as part of its proposal that it will satisfy that criteria in some manner, such as establishing a local project office, it should considered to have meet the locality criteria.

Federal rules q a7

Federal Rules – Q &A

  • Can a contract be modified to add work that was not included in the qualification based selection criteria used to evaluate proposals?

    No. Any modification of the contract to add work beyond the scope of work the contractor was qualified for would in effect circumvent the Brooks Act qualification based evaluation and selection procedures

    Example: If a firm was selected for an environmental EIS and the selection criteria related to environmental work only, the contract could not be modified to include design tasks. However, if the selection criteria also included design elements for rating of the contract, then it would be permissible to modify the contract to include some design.

Odot lpa procedures

ODOT LPA Procedures

  • ODOT’s Website Includes:

    • Sample RFPs – meet Federal requirements

    • Website posting of LPA RFPs

    • Policies for the Use of Consultants on Local Traditional Projects (When Federal Funds are Used in Consultant Contracts)

Selection procedures

Selection Procedures

  • Advertisement - Use ODOT’s Website

  • See “Policy” for RFP content

  • Use ODOT sample RFP documents

  • Document selection decision per “Policy”

Fee negotiation

Fee Negotiation

  • Negotiation must be “Fair and Reasonable”

  • Contact ODOT to confirm indirect (overhead) rates

  • Owner’s estimate must be based on sound methods: similar previous contract; internal cost of producing similar work

Consultant contracts

Consultant Contracts

  • Form of Agreement

    • Determining the most appropriate form of agreement at the outset of a project will contribute greatly to the overall success of the contract.

    • Lump sum type agreements are most easily administered but are relatively inflexible inaccommodating changes in the work.

    • Actual cost agreements (costs plus a net fee) provide more flexibility but require relatively more administrative effort.

Contract administration

Contract Administration

  • Follow ODOT’s “Consultant Contract Administration Manual”

  • Available on ODOT’s Website

    • http://www.dot.state.oh.us/CONTRACT/consultant.htm

Contract administration1

Contract Administration

  • Assign a Project Manager

    • Single Point of Contact for Consultant

    • Owner of job

    • Expediter

    • Problems Solver

    • Watchdog

Contract administration2

Contract Administration

  • Project Manager’s Responsibilities

    • Compliance with Scope of Services

    • Schedule

    • Cost

    • Quality

    • Record Keeping

Odot fhwa required contract provisions

ODOT / FHWA Required Contract Provisions

Jeff Peyton

ODOT Local Projects

Odot lpa bid document template

ODOT LPA Bid Document Template


- Increased Federal oversight of the LPA Program.

2005 LPA Contracts Quality Improvement review

performed by FHWA

- Compliance with required clauses and conditions

- Consistency for LPA / ODOT benefit


- Word document – 2010 LPA Bid Document Template


(Local-let Procedures and Documents)

Lpa template item 1

LPA Template Item 1

  • Properly incorporated

    • In most cases it has been just attached. Designed to work with LPA proposal documents.

    • Incorporated by reference in Proposal

      • “The required contract provisions for federal-aid construction contracts (contained in ODOT’s 2005 LPA template) are hereby incorporated by reference.”

    • Incorporated into Contract

      • “By signing the specified contract proposal, of which the ODOT LPA Template has been incorporated, the bidder agrees to all of the below provisions”

    • Template set up for use with C&MS

      • Table includes excluded 100 specs exclusive to ODOT.

Local government programs

LPA Template Item 1 - Specifications

  • Local Specifications

    • Acknowledge LPA specifications with LPA Participation Requirements and LPA Scope of Services document.

    • Modify the first note from the template

    • Cannot modify specific provisions that relate to Federal / State requirements

  • Refer to color-coded C&MS document on Local Projects website

    • Required (green)

    • Strongly encouraged (blue)

    • Optional (yellow)

Lpa template item 2 buy america

LPA Template Item 2 - Buy America

ODOT C&MS 106.09 -

Contains both (a.) 23 CFR 635.410 & (b.) ORC 153.011

23 CFR 635.410 – All steel and iron products incorporated permanently into the Work

  • all manufacturing processes must take place domestically

  • includes coatings on these materials

  • Minimal use = 0.1% (contract value) or $2500 (whichever is greater)

  • Covers all contract items including 100% locally funded

  • Waivers have to be given by FHWA Headquarters

Local government programs

LPA Template Item 3 – Debarment and Suspension

  • FHWA 1273

  • 49 CFR 29

  • By signing the contract, the bidder certifies that they, or any described party, are not under suspension, debarment, voluntary exclusion or determination of ineligibility by any Federal agency; have not been within past 3 years; or currently pending proposed debarment.

Local government programs

LPA Template Item 4 – Prequalification

  • Only ODOT Prequalified contractors eligible to submit for bids

  • Prequalification must be in force at time of bidding, at the time of Award, and throughout the life of the contract

  • Prime Contractor must perform no less than 30% of the total contract price (FHWA 1273 - 23 CFR 635)

  • Encourage incorporating prequalification for specific ODOT work types

  • LPA Option to enforce ODOT Prequalification for Subcontractors

Local government programs

LPA Template Item 17 – Non-Collusion

  • ODOT PN 045

  • 23 USC 112 and ORC 1331, 2921.11 and 2921.13

  • Contractor has not entered either directly or indirectly into any agreement , participated in any collusion, or otherwise taken action in the restraint of free competitive bidding in connection with the proposal.

  • Requires signature of Non-Collusion Affidavit as permitted by 28 USC 1746. No separate form needed with proper inclusion of LPA Bid Document Template.

  • Bid Rigging hotline information

Local government programs

LPA Template Item 21 – Unresolved Findings for Recovery

  • ODOT PN 038

  • OAC 9.24

  • Contractor represents to LPA that it is not subject to a finding for recovery under OAC 9.24.

  • If this representation is deemed false, the contract shall be void and any funds paid by the state hereunder shall be repaid to the LPA.

Local government programs

LPA Template Item 24, 25 & 26 – Asphalt Binder, Steel and Fuel Price Adjustments

  • ODOT PNs for price adjustments for Asphalt Binder, Steel and Fuel.

  • Encouraged not required.

  • Steel Price Adjustment ODOT PN 525

  • Fuel Price Adjustment ODOT PN 520

  • Asphalt Binder Price Adjustment

    • PN 530 – Single year projects

    • PN 535 – Multiple year projects

Local government programs

LPA Template Item 31 – DMA / Nonassistance to Terrorists

  • ORC 2909.33

  • Serves as a declaration of the provision of material assistance to a terrorist organization or organization that supports terrorism as identified by the U.S. Department of State Terrorist Exclusion List.

  • Must be completed and returned prior to entering into a contract with any political subdivision of the state of Ohio

  • Failure to submit this form prior to entering into contract will result in the bid being deemed non-responsive and ineligible for award.

Lpa template item 33 fhwa form 1273 required provisions

LPA Template Item – 33 FHWA Form 1273 - Required Provisions

Form FHWA 1273 (Required Contract Provisions)

  • Failure to include the FHWA-1273 could result in the loss of federal-aid funding

    Standardized Changed Conditions Contract Clauses

  • 23 CFR 635.109 – ODOT C&MS 104.02

    • Establishes pay factors for significant changes in character of the work

Geographical preference

Geographical Preference

  • 23 CFR §635.117(b)

    • Prohibits ODOT and local governments from enacting preferences

  • Examples

    • Local encourage or mandate the use of local employment

    • Local considers location of contractor in award process

    • Hometown plans (Cincinnati & Toledo)

    • “All contractors and subcontractors involved with the project will, to the extent practicable, use Ohio Products, materials, services, and labor in the implementation of their project.”

    • Anti-apartheid ordinances are anti-competitive

      • Northern Ireland clause (MacBride Principles)

Review restrictions to competition

Review Restrictions to Competition

  • Local mandates

    • Project Experience Statements

    • Local workforce requirement

    • Restrictive Best Bid Criteria



  • Other requirements:

    • Dispute / Claims Management process

    • Termination process (Compliance with LPA Agreement)

    • Clear method of Award / Best bid criteria (non-restrictive)

    • Bid rejection process

      • ODOT and FHWA must concur in the rejection of bids

    • Confliction between specified provisions and specifications (Public Works or HUD language)

Project labor agreements

Project Labor Agreements

  • A definition:

    • A project specific, “pre-hire” collective bargaining agreement between contractors, or project owners, and all the labor unions representing the crafts that are needed for a construction project.

    • All PLAs must still conform to FHWA Contract Regulations (i.e. no geographical preference, hiring credits/goals)

    • All proposed PLAs must be reviewed by FHWA Ohio Division and HQ prior to incorporation into the contract



  • Two acceptable methods

  • Additive Alternate Bidding (takes advantage of project’s available funding)

  • Proprietary – 100% Local funds

  • Both methods must be coordinated and approved by ODOT District

Proprietary options

Proprietary Options

  • If not done through alternate bidding:

  • Two acceptable methods:

    • Synchronization Approval (ODOT & FHWA approval) – FHWA Can participate in item.

      • Aesthetics

      • Logistics

      • Functionality

    • Public Interest Finding – Used when there are suitable alternatives available

  • Both methods must be coordinated and approved by ODOT District

Advertising sale and award

Advertising, Sale and Award

Jeff Peyton

ODOT Local Projects



  • NO advertisement without receipt of Federal Authorization

    • Project funding will be lost

  • Project advertised publicly for a minimum of 21 days

  • Enhancement / off-system project can be advertised two weeks in accordance with Local / State requirements

  • ODOT District Office must be copied on ALL addenda for concurrence – modifies approved PS&E

  • Bids must be read openly in a public forum



  • 23 CFR 635.114(a) requires Federal-aid contracts to be awarded only on the basis of the lowest responsive bid

  • Bids analyzed by LPA in accordance with LATP Manual / LPA Award Packet & Bid Analysis Checklist

  • ODOT “concurs” thru encumbrance process

  • ODOT CO must be notified of all rejections

    • ORC 10% by e-mail only

    • All others need supporting documentation

Prevailing wage compliance principles

Prevailing Wage Compliance Principles

Jeff Peyton

ODOT Local Projects

Local government programs

LPA Template Item 14 – Wage Scale on All Federal-aid Projects

  • ODOT PN 061

  • US DOL, Title 29, Subtitle A, Part 5 & FHWA 1273

  • Contractor shall use only the classifications and wage rates set forth in US DOL Davis Bacon wage decisions.

  • Latest decision at time of advertisement. Rates locked in for life of construction contract.

Prevailing wage compliance

Prevailing Wage Compliance

  • Who needs to be paid prevailing wages?

  • Site of Work

  • Trucking

  • Review of the Certified Payrolls

  • Project Site Visits

  • Reporting Requirements

Who needs to be paid prevailing wages

Who needs to be paid Prevailing Wages?

  • Prevailing Wage laws apply to all laborers and mechanics performing work on the “Site of Work”

  • Must be paid not less often than weekly

  • Correct wage determination must be posted at the job site, and readily accessible

Laborers and mechanics

Laborers and Mechanics

Are defined as:

  • Workers whose duties are manual or physical in nature - Includes apprentices

  • Does not include:

    • Executive, administrative, and professional employees (i.e. timekeepers, inspectors, architects, engineers)

    • Non-working foremen

  • Apprentices


    • 2 Key Points……….

      • Must be registered in a bona fide apprenticeship program registered with DOL or a DOL approved State apprenticeship agency

        • Must not exceed the allowable ratio of apprentices to journeymen specified in the Wage Determination or approved plan

    Site of the work

    Site of the Work

    • Two prong test to determine the “Site of Work”

      • Proximity

        • Must be located “adjacent or virtually adjacent” to the project limits

        • This has been established to be 1 mile “as the crow flies”

      • Exclusive

        • Must be dedicated exclusively to or nearly so, to the performance of the contract or project.

    Truck drivers

    Truck Drivers

    • Employee Truck drivers are covered by Davis-Bacon for time:

      • Spent moving material directly on the project

      • Hauling material on or off the project from a dedicated source or location considered to be within the “Site of Work”

      • Time spent loading or unloading materials or supplies on the “site of the work,” if such time is equal to or greater than20% of the drivers total work week

    Owner operator requirements

    Owner /Operator Requirements

    • Must demonstrate a significant and real financial commitment

      • Lease must be long term (1 year +)

      • Can not be subject to cancellation at any time.

  • Must maintain full control over the use and operation of the truck.

  • Must assume responsibility for all aspects of operating that truck.

    • Fuel

    • Repair costs

    • Vehicle insurance / Permits Fees

  • Certified payrolls

    Certified Payrolls

    • Must be submitted weekly

    • Rates of pay must meet or exceed the rate listed in the wage determination

    • Project owner / LPA must perform a review of not less than 30% of the payrolls received.

    Fringe benefit example

    Fringe Benefit Example

    • BHR $20.00

    • FB $10.00

    • Total prevailing wage $30.00

    • The contractor may comply by paying……..

      • $30.00 in cash wages

      • $20.00 in cash wages plus $10.00 for FB

      • $19.00 in cash wages plus $11.00 for FB

    Project site visits

    Project Site Visits

    • Regular project site visits should be conducted to interview employees to ensure Prevailing Wage compliance.

    • Project Bulletin Board must also be reviewed to ensure that all of the required posters are in place

    Prevailing wage reference sources

    Prevailing Wage Reference Sources

    • Federally Funded Projects

      • Davis-Bacon and Related Acts

      • 29 CFR Parts 1, 3, 5, 6, and 7

    • 100% State Funded Projects

      • ORC 4115, Wages and Hours on Public Works

    Disadvantaged business enterprises dbe commercially useful function fraud awareness

    Disadvantaged Business Enterprises (DBE), Commercially Useful Function & Fraud Awareness

    Jeff Peyton

    ODOT Local Projects

    Dbe contract compliance

    DBE Contract Compliance

    • ODOT PN 013

    • 49 CFR Part 26

    • ODOT assigned DBE Goal obtained for all projects > $500K

    • Based on availability of DBE firms to perform associated work types.

    • LPA place goal on cover of the Bid Proposal Document and identified within ‘instructions to bidders’

    • Outlines process to request partial waiver of DBE goal

    • Sanctions to be issued by the LPA if goal not met and waiver not presented

    Dbe contract compliance1

    DBE Contract Compliance

    • Goal setting

    • Must have DBE commitments before contract is executed

      • Ohio UCP certified DBE subcontractors

      • How DBE participation is counted toward the DBE goal

        • Materials and supplies

          • DBE manufacturer-100%

          • DBE regular dealer-60%

          • Brokers and packagers-fees or commissions

          • Drop shipping

    Dbe contract compliance2

    DBE Contract Compliance

    • Install-100%

      • Obtains goods and fixes in place (must spend 20% or more time on project per day)

    • Stockpiling-60% (unless DBE manufacturer)

      • Delivers materials, goods or supplies to project site

    • Tailgating-100%

      • Delivers and installs (must spend 20% or more time on project per day)

    Lpa dbe requirements

    LPA – DBE Requirements

    • Request to sublet form (ODOT C-92) and all executed subcontractor / P.O. agreements submitted to the ODOT District EEO Coordinator for review and approval -

    • Verify that the firm is certified as a DBE (ww.OhioUCP.org)

    • Verify proper NAICS code assigned for the work detailed in subcontractor

    • For material suppliers, compare type of material being supplied to NAICS code assigned

    Lpa dbe requirements cont d

    LPA – DBE Requirements Cont’d

    • Request information on proposed drop shipped items

    • No drop shipment can occur without prior approval from ODOT

    • If DBE is a regular dealer only 60% of expenditures may be counted toward goal, providing CUF

    • Entire expenditure may be counted if DBE supplier is a manufacturer that produces the goods from raw materials or substantially alters them before resale

    Dbe contract compliance continued

    DBE Contract Compliance continued

    • Waivers of Goal

      • Contractor makes request to LPA

      • LPA reviews documentation, makes recommendation and sends to ODOT District office

      • ODOT District office reviews all documentation, makes recommendation and sends entire packet to C.O. for final determination

      • C.O. sends determination to Contractor and copies all parties

    Dbe contract compliance continued1

    DBE Contract Compliancecontinued

    • Sanctions

      • Show cause meeting;

      • Immediate suspension of work;

      • Cessation or withholding project payments;

      • Require appropriate reimbursements to the DBE firm for work performed by the prime or another non-DBE subcontractor;

      • Investigation by the U.S. DOT Office of the Inspector General and/or the U.S. Attorney;

      • Revoke DBE certification; and/or

      • Pursue debarment of the DBE firm, prime contractor and/or subcontractor;

    Dbe contract compliance3

    DBE Contract Compliance

    • LPA must perform DBE On-site review

      • For contracts of $500,000 up to $1 million, the LPA must perform a Commercially Useful Function (CUF) review once/season/DBE goal subcontractor/project;

      • From $1 million up to $2 million, the LPA must perform a CUF review at least twice per season/DBE goal subcontractor/project;

      • Greater than $2 million, perform a CUF review at least monthly; and

      • Track CUF review results, negative findings and DBE goal subcontractor payments for ODOT’s process reviews.

    Dbe monitoring requirements

    DBE Monitoring Requirements

    Lpa template item 29 affidavit of subcontractor payment if dbe

    LPA Template Item 29 – Affidavit of Subcontractor Payment (if DBE)

    • ODOT PN 031

    • 49 CFR Part 26.37

    • Required before project finalization

    • Verifies that work committed to the DBE at Award is actually performed by the DBE.

    • Verifies actual payments made to DBE.

    Dot s top management challenges

    DOT’s Top Management Challenges

    • The USDOT OIG has identified DBE fraud as one of their top priorities.

    • Increased oversight of the DBE Program by numerous Federal agencies to reduce fraud and ensure the DBE Program benefits truly disadvantaged businesses.

    Commercially useful function

    Commercially Useful Function

    • DBE participation towards the established project goal is counted only ifthe DBE is performing a “Commercially Useful Function.”

    • The DBE must carry out its contract responsibilities by actuallyperforming, managing, and supervising the work they have been hired to perform.

    Red flags

    Red Flags

    • Management

    • Equipment

    • Workforce

    • Materials

    • Performance

    Management requirements

    Management Requirements

    • Scheduling work operations

    • Receive quotes and ordering of all materials

    • Preparing and submitting certified payrolls

    • Hiring and firing employees

    • Make all operational and managerial decisions

    • Supervision of daily operations

    Management red flags

    Management Red Flags

    • DBE employees supervised by another contractor

    • DBE provides little or no supervision of work

    • DBE’s superintendent is not a regular employee

    Equipment requirements

    Equipment Requirements

    • Equipment lease agreements are required to be long term (1 year +) and at competitive rates

    • A DBE firm may lease specialized equipment on an ad hoc basis from another contractor, excluding the prime contractor or subsidiary

    • Operation of the equipment must be subject to the full control of the DBE, and they are expected to provide the operator for that equipment (unless specialized)

    Equipment red flags

    EquipmentRed Flags

    • Trucks and/or equipment used by DBE firm belong to the prime contractor

    • Equipment used by the DBE belongs to a another contractor with no formal lease agreement

    • Equipment signs and markings cover another owner's identity, usually through the use of magnetic signs

    Workforce requirements

    Workforce Requirements

    • DBE firms must keep a regular workforce

    • DBE contractors cannot "share" employees with non-DBE contractors, especially the prime contractor or a subsidiary of the prime

    • DBE firm must be responsible for all payroll and labor compliance requirements for all employees within the control of the company

    Workforce red flags

    Workforce Red Flags

    • Movement of employees between contractors

    • Employee paid by both DBE and prime

    • Employee working for prime in morning and DBE in afternoon

    Materials requirements

    Materials Requirements

    • The DBE must be responsible for:

      • The ordering of all materials and negotiating cost

      • Arranging delivery and taking possession of, and

      • Paying for all materials and supplies provided

    • Materials may not be drop shipped to the project by the manufacturer unless it is standard industry practice, and written prior approval is given to do so.

    Materials red flags

    Materials Red Flags

    • Materials for the DBE are ordered and/or paid for, by the prime contractor

    • Materials for the DBE are delivered to, billed to, or paid for by another contractor.

    • Standard materials are “drop shipped” to the project by the manufacturer. DBE never takes possession of the materials.

    Performance expectations

    Performance Expectations

    • The DBE must be responsible for the performance, managementandsupervisionof all work identified in their subcontract agreement (C92)

    Performance red flags

    PerformanceRed Flags

    • Work being done jointly by DBE firm and another contractor.

    • The work to be performed outside of the DBE's known experience or capability

    • DBE works for only one prime contractor or a large portion of the firm’s contracts are with one contractor

    Local government programs

    DBE Commercially Useful Function Project Checklist

    Eeo compliance

    EEO Compliance

    Ohio Department of Transportation

    Local government programs

    LPA Template Item 6 – EEO Certification

    • Executive Orders 10925, 11114, 11246 and 41 CFR 60-1.7(b)

    • Bidder must certify compliance by circling appropriate ‘has’ or has not’

    • Requirement also contained within ODOT PN017


  • The bidder hereby certifies that he has ...., has not ...., participated in a previous contract or subcontract subject to the equal opportunity clause, as required by Executive Orders 10925, 11114, or 11246, and that he has ...., has not ...., filed with the Joint Reporting Committee, the Director of the Office of Federal Contract Compliance, a Federal Government Contract Compliance, a Federal Government contracting or administering agency, or the former President's Committee on Equal Employment Opportunity, all reports due under the applicable filing requirements. The Bidder must circle the appropriate “has or has not” above.

  • Local government programs

    LPA Template Item 8 – Non-Segregated Facilities

    • ODOT PN 026

    • 23 CFR 633A

    • By signing proposal Contractor agrees to provisions of the “Certification of Nonsegregated Facilities,” providing that the bidder does not maintain or provide for employees facilities which are segregated on a basis of race, creed, color, or national origin.

    • Provides “Notice to Perspective Subcontractors and Material Suppliers of Requirement for Certification of Nonsegregated Facilities”.

    Local government programs

    LPA Template Item 9 – EEO Special Provisions (Nondiscrimination)

    • ODOT PN 035

    • FHWA Form 1273 (II)

    • Requires designation of EEO Officer and EEO Dissemination of Policy requirements

    • EEO responsibilities associated with –

      • Recruitment / Personnel Actions / Training & Promotion

      • Unions

      • Selection of Subcontractors, Materials and Equipment Leasing.

    • Requires retention of records and reports to support number of minority and non-minority in each work classification, progress and efforts in securing , training and promoting minority and female employees and DBE contractors.

    Local government programs

    LPA Template Item 10 – Title VI Nondiscrimination

    • ODOT PN 003

    • Title VI of Civil Rights Act, and related statutes.

    • No person shall, on grounds of race, color, national origin, sex, disability or age be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity.

    Local government programs

    LPA Template Item 11 – Affirmative Action

    • ODOT PN 020 – Sufficient for the sale of projects through ODOT to meet FHWA / ODOT EEO requirements

    • Obligated under 23 CFR Part 230, 41 CFR Part 60, EO 11246, and VEVRAA (Vietnam Vet Assistance) of 1974

    • Provides for minority and female utilization obligations by craft. Census driven

    • Defines New Hire

    Preconstruction conference

    Preconstruction Conference

    • Required participants

    • Required reports

    • Prevailing wage requirements

    • EEO responsibilities

    • DBE requirements

    • Required bulletin board information

      • Publication 1321

      • Publication 1088

      • Minor Labor Laws Poster

      • FHWA 1495A

      • FHWA 1495

      • FHWA 1022

    Eeo preconstruction conference

    EEO / Preconstruction Conference

    • Required bulletin board information

    Construction contract administration

    Construction Contract Administration

    Preconstruction conference1

    Preconstruction Conference

    • Discuss the details of project construction –

      • Project Staffing / Contacts

      • Materials Management / List of Material Suppliers /PBOM

      • Plan and Proposal Notes / As Per Plan Items

      • Progress Schedule / Completion

      • Method of Payment

      • Change Order Review / Claims Process

      • Status of Utility Relocations / Railroad Coordination

      • Prevailing Wage / EEO / DBE Responsibilities

      • NEPA Commitments

      • Maintenance of Traffic

      • Erosion Control / Post BMPs

    • Invitation to ODOT CM, DEC, PW/EEO, and LPA Managers

    Progress meetings

    Progress Meetings

    • Attendance at progress meetings is required for the Contractor’s Superintendent, CPE and others including Subcontractor representatives, suppliers, utilities, and railroads.

    • The CPE must record minutes and provide them to attendees, and ODOT should the Department not be in attendance.

    • Agenda should include –

      • Outstanding Issues

      • Safety

      • Work in Progress – Look Ahead

      • Progress Schedule – Critical Path Activities / Completion Date

      • Critical / Non-Critical Delays / Time Extensions

      • RW / Utilities / Environmental Commitments

      • Testing / Materials

      • Project Submittals

      • Dispute Resolution / Claims

      • EEO / PW / DBE

    Project documentation

    Project Documentation

    Procedures for inspection & documentation

    • Construction Manual & other guidelines

    • Electronic record keeping

    • Regular review of records

      Major areas of documentation

    • Daily diaries or Inspector’s daily reports

    • Method of Measurement & Basis of Payment

    • Materials submittals

      • (certificates of compliance, test reports, etc)

    • Shop drawings

    • NPDES/environmental compliance

    • Work Zone safety & traffic control

    • Change Orders, Extensions of Time

    • Claims

    Project diaries

    Project Diaries

    • Complete, concise, accurate

    • Factual (no hearsay)

    • Signed & dated

    • Major items to include:

      • Items of work

      • Weather

      • Contractors & Equipment

      • Traffic control – MOT

      • NPDES

      • Testing

      • Compliance issues

      • Measurements

      • Pay quantities

      • Decisions made on-site

      • Force account work

    • WHY??? Disputes, claims, FOIA

    Documentation best practices

    Documentation Best Practices

    • State facts, not opinions (include digital photos)

    • Maintain supporting documents

      • Job Progress Meeting Minutes

      • Utility Meeting Minutes

      • Referenced Memos or Reports by Others

      • Referenced Specifications

      • Materials Inspection Reports

      • Inspector’s reports 

    Project administration files

    Project Administration Files

    • Contract

      • Addenda, proposal and special provisions, plans, supplemental specifications, standard drawings, standard specifications

    • Contractor

      • Prime

      • Sub

        - Request to Sublet forms needed for all subcontractors

        • Street sweepers, cranes, pumps commonly forgotten

          - DBE firms

        • Need to be ODOT certified, LPA to monitor the goal

    Project administration files1

    Project Administration Files

    • Plan Revisions

    • Right-of-Way

    • Railroad

      • Utilities

    • Other

      • Materials

      • Daily Diaries

      • Certified Payrolls

    • Schedules

    • Correspondence

    • Change Orders

    • Invoices

    • Property Owner Agreements

    • Complaint Log

    • Finalization

    Reference pay files

    Reference / Pay Files

    • Recommend individual folder for each pay item of work

    • Field Documentation Inspection Forms

      • Seven identifiers

        • Project Number, Item Number, Plan Reference Number, Work Description, Location, Date, Signature

      • Plan quantity, field measurements, calculations, pay quantity

    • Summarized final quantity

    • Funding splits

    • Non-performed items require documentation

    Field measurements

    Field Measurements

    • Ensure they concur with the plan

    • 2010 Construction & Materials Specification

      • 109.01 Measurement of Quantities. The Department will measure the quantities of Work and calculate payments based on the method of measurement and basis of payment provisions provided in these Specifications. When the following units of measure are specified, the Department will measure quantities as described below unless otherwise specified in the Contract Documents. The accuracy of individual pay item estimate payments will be one decimal more accurate than the unit of measure denoted for the pay item. (emphasis added)

    Change orders

    Change Orders

    • The intent is to build the plan you bid.

    • Change Orders can be written for the following reasons:

      • To finish the intent of the plan, when necessary

      • Changes in site conditions

      • To include work that was missed or overlooked and is required to finish the intent of the plan

      • To address plan errors

    Change orders1

    Change Orders

    • Request the Construction Monitor’s concurrence for all “significant” change orders.

      • “Significant” change orders are as follows:

        $25,000 for projects <$500,000

        Lesser of 5% of total bid contract or $100,000 for projects >$500,000

        Changes that impact project limits, scope, environmental, or structural design

    Change orders2

    Change Orders

    • CMS 109.05.B Negotiated Prices

      • Original Contract prices adjusted for increases or decreases in material costs, labor costs, or equipment costs.

      • State-wide average unit prices.

      • Average price awarded on three different projects of similar work and quantity.

      • Prices computed by Office of Estimating.

      • Cost analysis of labor, material, equipment, and allowed mark-ups.

      • Cost analysis of compensable delays.

    • CMS 105.09.C Force Account

    Materials acceptance

    Materials Acceptance

    • Any and all materials incorporated into the Work need documentation.

      • Use C&MS Section 700 for documentation guidance

      • Temporary materials are to be documented in this manner as well.

    Materials acceptance1

    Materials Acceptance

    • Systematic approach to managing materials

      • ODOT’s Office of Materials Management (OMM) Project Bill of Materials (PBOM) Appendix J

      • OMM inspection of precast/pre-stressed concrete beams

      • OMM inspection of structural steel

        • Appendix J, prior to bid

      • Encourage coordinating with ODOT District asphalt plant monitoring

    Materials acceptance2

    Materials Acceptance

    • Non-conformance Policy for Materials

      • Specification 106.07

        • Policy 27-009 (P) Acceptance of Non-specification Material on Construction Projects

        • Standard Procedures:510-009 (SP) Acceptance of Nonspecification Material on Construction Projects

    Materials acceptance3

    Materials Acceptance

    • Make sure the Contractor provides a list of materials to you at the preconstruction meeting per C&MS 108.02

    • Make sure the Contractor also provides a list of materials to be used by all of the subcontractors, too.

    Project closeout

    Project Closeout

    • Once the contractor has completes the project to the satisfaction of the CPE/Person in Responsible Charge a final inspection shall be completed within 10 days.

    • Final Inspection Team should include –

      • CPE / LPA Person in Responsible Charge

      • ODOT CM / Others as Needed

      • Contractor – Invited but not required

    • If applicable, a punch list shall be included in the final inspection report.

    • Once punch list is completed to the satisfaction of the CPE the CM will have the opportunity to verify

    • The CM will then issue a follow-up report showing acceptance of the physical completion of the contract

    Liquidated damages

    Liquidated Damages

    • The purpose is to recover agency costs for administering the contract after the completion date has passed

    • The amounts in Table 108.07-1 are determined by an analysis of ODOT CE costs every 2 years

    • Any amount in excess of this table is considered a disincentive for purposes of federal participation

    Liquidated damages1

    Liquidated Damages

    • 3 different scenarios for reimbursement of LD’s

      • If there is federal participation in the CE the project is credited at the prorata share

      • If the locals are funding CE they do not have to credit FHWA for LD’s unless #3 applies

      • If the LD daily amount exceeds C&MS Table 108.07-1 FHWA is credited for the amount above regardless of the CE funding source

    Project closeout1

    Project Closeout

    • Prepare and Audit Contract Quantities

      • Support Documentation for final quantities for each item

      • List of approved final quantities sent to Contractor for concurrence

      • Final Change Order for adjustments

    • Final Material Acceptance

      • Review project testing and acceptance records to support each final quantity

    Project closeout2

    Project Closeout

    • Final Payment and Release

      Final Report to ODOT -

      • LPA Final Program Report

      • Final Invoice which reconciles individual pay items to final quantities

      • District Construction Inspection Report

      • Affidavit of DBE/EDGE Subcontractor

      • Disposition of Materials, when applicable

    • All Reimbursements Request submitted to ODOT within 6 Months of Completion date or risk loss of funding

    Latp manual construction appendices

    LATP Manual Construction Appendices

    • Appendix A - Pre-construction Meeting Checklist

    • Appendix B - Progress Meeting Agenda Checklist

    • Appendix C – Project Documentation Checklist

    • Appendix D - EEO-Prevailing Wage Employee Interview Form

    • Appendix E - Superintendent-Supervisor Foreman Interview Form

    • Appendix F - EEO Project On-Site Visit Report

    • Appendix G - DBE Commercial Useful Function Site Review

    • Appendix H – State / Federal PW Statement of Compliance

    • Appendix I - LPA Prevailing Wage-EEO Monthly Report

    • Appendix J - Materials Management Process

    • Appendix K - LPA Change Order Process Guidance

    • Appendix L - Change Order Notification Form

    • Appendix M - Extension of Project Limits Form

    • Appendix N - LPA Invoicing Procedures

    • Appendix P - LPA Program Final Report Form

    • Appendix Q - WH-347 Payroll Form

    • Appendix R - Affidavit of DBE Subcontractor Payment

    • Appendix S - Affidavit of EDGE Subcontractor Payment

    • Appendix T - Disposition of Materials

    Fringe and overhead costs recovery

    Fringe and Overhead Costs Recovery

    Ohio Department of Transportation

    Ce cost recovery methods

    CE Cost Recovery Methods

    Three ways to recover fringe and overhead costs associated with LPA labor for CE -

    1.) Actual Cost Method

    2.) Safe Harbor Method

    3.) Cost Allocation Plan (CAP) Method

    Actual cost method

    Actual Cost Method

    • LPAs are reimbursed for the actual cost of fringe only benefits plus the actual labor cost

      • The employer share of the fringe benefits can be found on the payroll reports.

      • Note: Fringes do NOT increase for OT hours

    • LPAs do NOT recover overhead costs

    Safe harbor rate method

    Safe Harbor Rate Method

    • LPAs are reimbursed for fringe benefits and overhead costs using set rates determined by the Auditor of State

      • Fringe rate is 30% and applied to direct labor (excluding OT premium)

      • Overhead rate is 38% and is applied to direct labor (excluding OT premium) plus the fringe cost

      • Template is available on LPA Audit website

        • http://www.dot.state.oh.us/Divisions/Finance/Auditing/Pages/LocalPublicAgencies-LPA.aspx

    Local government programs

    Safe Harbor Rates Calculation Invoice Form

    Local government programs

    Safe Harbor Rates Calculation Invoice Form

    Cost allocation plan method

    Cost Allocation Plan Method

    • LPAs are reimbursed for fringe benefits and overhead costs using rates calculated in accordance with OMB Circular A-87

      • Rates are calculated based on the LPAs annual financial information

      • Most complex method

      • All CAP rates are inspected by ODOT

      • All CAP rates are subject to audit by ODOT

      • Template is available on LPA Audit website

      • http://www.dot.state.oh.us/Divisions/Finance/Auditing/Pages/


    Timekeeping requirements

    Timekeeping Requirements

    • Labor rates billed on Federal projects must be based on payrolls

      • The labor rate billed on the project must match the pay rate actually paid to the employee

      • Supporting documentation is the payroll report

  • Employees working on multiple activities must support their time for all activities on a timecard

  • Timekeeping requirements1

    Timekeeping Requirements

    • Timecards MUST:

      • Reflect an after the fact distribution of actual activity of each employee

      • Account for all hours worked plus any leave time used

      • Be prepared at least monthly and must coincide with one or more pay periods

      • Be signed and dated by the employee

    Required for all 3 methods

    Required for all 3 Methods

    • Must obtain approval from ODOT Office of External Audits – PRIOR to labor being incurred

    • Include with your CE invoices:

      • Timesheets to support number of hours worked

      • Payroll summary report(s) to support pay rate and fringe rate for each employee

      • Calculation Invoice Form executed by CPE/Person in Responsible Charge

    Approval process

    Approval Process

    • All methods must be approved by ODOT Office of External Audits

    • Actual Cost and Safe Harbor approvals are valid through 12/31

    • CAP rates must be submitted to ODOT by 3/31 and are valid through the following 3/31

    • The approved rates can NOT be applied to labor incurred prior to receiving approval

    Other resources

    Other Resources

    ODOT Website -

    • Locally Administered Transportation Projects Manual of


    • LPA Bid Doc Template

    • LPA Bid Doc Preparation Guidance and Checklist

    • Color-coded ODOT C&MS Section 100

    • Construction Inspection Manual of Procedures

    • 2010 Sampling and Testing Manual

    • FHWA Contract Administration Core Curriculum Manual




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