Federal Construction Contracting: Guide for Contractors

The federal government spends billions annually on construction, renovation, and infrastructure projects.

Major federal construction agencies:

• USACE — Army Corps of Engineers (civil and military)
• NAVFAC — Naval Facilities Engineering Command
• GSA — General Services Administration (federal buildings)
• VA — Veterans Affairs (medical facilities)
• USAF — Air Force Civil Engineering

Types of construction work:

• New construction
• Renovation and modernization
• Repair and maintenance
• Design-build projects
• Environmental remediation

Contract types:

• Firm fixed-price (most common)
• Design-build
• Multiple award construction contracts (MACC)
• Job order contracts (JOC)
• IDIQ for construction

The Davis-Bacon Act requires payment of prevailing wages on federal construction contracts over $2,000.

Key requirements:

• Pay locally prevailing wage rates
• Rates determined by Department of Labor
• Applies to laborers and mechanics
• Includes fringe benefits

Prevailing wage determination:

• DOL publishes rates by location and trade
• Wage determination included in solicitation
• Must use applicable rates for project location

Compliance requirements:

• Weekly certified payrolls
• Employee classification
• Proper documentation
• Posting of wage determination

Related acts:

• Copeland Act — Anti-kickback provisions
• Contract Work Hours — Overtime requirements

Penalties:

• Withholding of payments
• Contract termination
• Debarment for willful violations

Federal construction contracts over $150,000 require bonds under the Miller Act.

Required bonds:

Performance bond:

• 100% of contract value
• Guarantees completion
• Protects government from non-performance

Payment bond:

• 100% of contract value
• Guarantees payment to subs and suppliers
• Protects subcontractors and material suppliers

Bid bond (for competitive bids):

• Typically 20% of bid amount
• Ensures bidder will honor bid if selected
• Required with bid submission

Getting bonding:

• Work with surety company
• Build relationship with bonding agent
• Maintain financial strength
• Start with smaller bonds to build capacity

SBA Surety Bond Guarantee:

• SBA can guarantee bonds up to $6.5M
• Helps small businesses obtain bonding
• Applies to construction and service contracts

Responsibility determination:

Construction contractors must demonstrate:

• Financial capability
• Technical capability
• Past performance
• Adequate resources
• Integrity and ethics

Registration requirements:

• SAM.gov registration
• NAICS codes for construction (23xxxx)
• Proper size status
• State licenses as applicable

Experience requirements:

• Many solicitations require relevant experience
• Past performance on similar projects
• Key personnel qualifications
• Safety record

Safety requirements:

• Experience Modification Rate (EMR)
• OSHA compliance history
• Safety program documentation
• EM 385-1-1 compliance (USACE)

Security clearances:

• May be required for military installations
• Facility clearance for some projects
• Personnel clearances as specified

Small business construction opportunities:

• Many construction contracts are set aside
• Size standards vary by type of construction
• Typically $16.5M-$45M depending on NAICS

Socioeconomic set-asides:

• 8(a) construction set-asides
• SDVOSB construction
• HUBZone construction
• WOSB/EDWOSB construction

VA Veterans First:

• VA prioritizes SDVOSBs for construction
• Significant VA construction program

Joint ventures:

• Small businesses can JV for larger projects
• Mentor-protégé JVs
• 8(a) joint ventures

Subcontracting:

• Large contracts have small business goals
• Subcontracting plans required
• Path to larger roles

Sealed bidding (IFB):

• Common for construction
• Award to lowest responsive, responsible bidder
• No negotiation after bid opening
• Bid bond required

Negotiated procurement (RFP):

• Used for complex projects
• Design-build typical
• Best value evaluation
• Technical and price factors

Two-phase design-build:

1. Phase 1: Qualifications
2. Phase 2: Technical/price proposals (shortlisted firms)

Bid preparation:

• Attend site visit
• Review all documents carefully
• Price accurately
• Include all required forms

Common bid mistakes:

• Mathematical errors
• Missing required documents
• Failure to acknowledge amendments
• Late submission

Key construction contract documents:

• Contract drawings and specifications
• Quality control plan
• Safety plan
• Schedule of values
• Construction schedule

Quality control:

• Contractor QC system required
• Government QA oversight
• Three-phase control (prep, initial, follow-up)
• Documentation of inspections

Progress payments:

• Monthly progress payments typical
• Based on work completed
• Retention held (typically 10%)
• Final payment after acceptance

Changes and modifications:

• Changes clause applies
• Differing site conditions
• REA for changed work
• Document impacts promptly

Submittals:

• Shop drawings
• Product data
• Samples
• Certifications

Design-build:

• Single contract for design and construction
• A/E team with construction firm
• Best value evaluation
• Growing federal preference

Environmental construction:

• CERCLA/Superfund work
• FUDS (Formerly Used Defense Sites)
• Environmental remediation
• Specialized certifications required

Job Order Contracting (JOC):

• IDIQ for small to medium projects
• Unit price book pricing
• Quick turnaround work
• Repair and renovation

Military construction (MILCON):

• Major military facility projects
• Congressional authorization
• Large, complex projects
• Security requirements

Sustainable construction:

• LEED certification requirements
• Energy efficiency standards
• Green building practices