Infrastructure:

Construction Changes

Change Orders

Description:

CPR, Hourly Labor Rate Worksheets: Prior to the first change order, campus shall request and receive the first two weeks of certified payroll (CPR) and the Labor Rate Worksheets for all trades from the Contractor and all subcontractors. The Labor Rate Worksheets must be checked for accuracy against the CPR. Additional certified payroll may be requested as necessary. This information is required to document the Contractor’s and subcontractors’ trades billable rates. Also refer to Certified Payroll Information.

Subcontractor Directory: CA shall require the Contractor to submit a Subcontractor Directory with each pay request. This will: assist in identifying whether a listed subcontractor is a subsidiary of the Contractor or whether the subcontractor is owned or partially owned by the Contractor to help safeguard against abuse of change order mark-ups; assure that all contractors are registered with the DIR; and guard against improper subcontractor substitutions.

Change Order: Change orders are not utilized with the JOC delivery method; contractor would utilize the supplemental job orders. Refer to the Cotnract General Conditions for Job Order Contracts, March, 2019, Article 7, Changes in the Work.

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Subcontractor Substitutions

Description:

A contractor may request a substitution of a subcontractor under the Subletting and Subcontracting Fair Practices Act, PCC 4100 et seq. There are nine types of subcontractor substitutions that a contractor may request under the Act. Upon receipt of Contractor's written request for substitution, citing one or more reasons listed in 4107(a), CA shall adhere to the following procedure: 

  1. Read and become familiar with the Section 4107(a) statute requirement; 
  2. Notify the affected subcontractor of the prime contractor's request by sending her/him a letter by certified mail, and require a response within five days (refer to sample letter). CA shall act timely in issuing five working days written notice to the listed subcontractor, and tracking the five-day response period. The five-day period equates to the response time for subcontractor to mail its response. Therefore, CA shall wait three more days beyond the expiration of the five-day period to receive any such mail, and postmark on subcontractor's letter is the date the response is deemed to be received. If subcontractor does not respond timely, or responds that they do not object to the substitution, CA shall send a letter to all parties approving the substitution.

Protest of substitution: If a protest is received from the subcontractor to be substituted, CA shall expeditiously call and schedule a substitution hearing. If either or both the prime contractor and subcontractor give notice that they intend to bring their attorney, then University Counsel must also attend. It is CSU's obligation to schedule a timely hearing. If the only time when all parties are available is unreasonable or too far in the future, then CA will issue a hearing notice by certified mail. In this notice CA shall give the two principal participants five working day notice (plus mailing time) of the hearing, at the time and place specified; failure to attend will waive their rights. Contact CPDC CM or University Counsel for more information on the substitution hearing as this is a formal process to which CSU staff must adhere. Inadvertent clerical error: Under PCC 4107(a)5 and 4107.5, if the prime contractor made an inadvertent clerical error in the subcontractor list submitted with his bid, s/he has two working days after the time of the bid opening to give written notice to the CSU, the listed subcontractor and the intended subcontractor. The listed subcontractor has six working days from the time of the bid opening to submit to the awarding authority and the prime contractor its written objection. If a protest is received, CA shall timely call and hold a substitution hearing. 

Other bases for substitution: PCC section 4107, failing or refusing to meet the prime contractor's bond requirements, or refusal to execute a contract. This statute requires the prime contractor to advertise its subcontractor bond requirements. Failure to do so shall preclude the prime contractor from substituting for not meeting bond requirements. Note Contract General Conditions, Article 4.04.

Subcontractor Directory: CA is required to police the use of subcontractors using the Subcontractor Directory. CGC requires Contractor to submit the Subcontractor Directory with the contract award package to the Trustees, and with each payment request that follows. CA shall compare the Subcontractor Directory with the original Expanded List of Subcontractors. If any listed firms have been substituted without approval in accordance with PCC Section 4107(a), penalties are applicable per PCC Section 4110, and SUAM Sections 9821, 9823. The listed subcontractor must perform the scope of work for which it was listed. Contractor may use another subcontractor for new scope added via change order. For GMP proposals when all trades may not have been bid at time of award, subcontractors are subject to PCC 4100 rights once they have been bid and listed on the subcontractor directory.

Penalty: The penalty for violating the provisions of the Subletting and Subcontracting Fair Practices Act is identified in PCC Section 4110. If a ten percent penalty is assessed, the monies remain in the project funds. If the violation is egregious, then this may be used as a basis of disqualification in future prequalification.

Note:

  1. A subcontractor who was not listed in the original bid has no rights under the Subletting and Subcontracting Fair Practice Act, even though the subcontractor was legally substituted for the listed subcontractor.
  2. PCC 4106 identifies that if the general contractor does not list a subcontractor, or if it lists more than one subcontractor for the same portion of work (in excess of ½ of one percent of the general contractor’s total bid), the general contractor must perform the work itself. No subcontractor shall be employed by the contractor to perform work valued at more than one half of one percent if the original subcontractor listing indicated that the prime contractor was going to perform the work. If the general contractor subcontracts that portion of work, it will be subject to penalty provided in PCC 4110 and 4111. Failure to list a subcontractor is not a basis for rejecting the bid as nonresponsive.
  3. After award of a contract based in part on the application of the small business preference, the Non-Small Business Contractor (NSB) shall use the small business subcontractors and suppliers listed in its proposal, unless a the NSB requests a substitution in writing to the Trustees, and the Trustees approve the substitution in writing. Please reference Contract General Conditions for DBB Major Cap Projects, Article 4.04-b, Substitution of a Small Business Subcontractor. Refer to the California Code of Regulations, Title 2, Section 1896.10 for further information.
  4. Contractor shall use the Disabled Veteran Business Enterprise (DVBE) companies listed in its bid proposal, unless a substitution is requested in writing to the Trustees, and the Trustees and the Dept. of General Services (DGS) approve the substitution in writing before the commencement of any work. Please reference Contract General Conditions for Job Order Contracts, March 2019, Articles 2.12 and 5.05. Refer to the California Code of Regulations, Title 2, Section 1896.73, Substitution of a DVBE, for further information.

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