Construction Contracting Under Self-Determination 25 CFR Chapter V Subpart J – Construction

Construction Contracting Under Self-Determination

25 CFR Chapter VSubpart J – Construction

Presented by Sandy Parks

What Does this Subpart Cover?

• Requirements for fixed-price or cost-reimbursable construction contracts to provide:– Design, construction, repair, improvement,

expansion, replacement, erection of new space, or demolition and other related work for Federal facilities;

– Design, construct and/or renovate, or make improvements to tribal facilities;

Coverage (Cont’d)

• Design and architectural/engineering services, construction project management, and the actual construction of a building or facility in accordance with the construction documents, including all labor, materials, equipment, and services necessary to complete the work defined

– May include movable equipment, telecommunications and data processing equipment, furnishings (including works of art), and special purpose equipment when part of a construction contract.

– Planning services found in Section 900.113 of the contracting regulations may be contracted separately using the model agreement in Section 108 of the ISDEA.

Coverage (Cont’d)

Construction Phases

• Preplanning: When initial assessment of need is being made and supporting information is being collected for presentation.

• Planning: Conducting and preparing a detailed needs assessment, justification documents, completing or verifying master plans, predesign site investigations, developing budget cost estimates, conduction feasibility studies, and developing a Program of Requirements (POR).

Phases (Cont’d)

Phases (Cont’d)

• Design: Licensed professional(s) using the POR as the basis for design;– Prepare project plans, specifications, and

other documents that are a part of the construction documents being used to build.

– Site investigations and selection activities being completed in this phase if not a part of the Planning Phase.

Phases (Cont’d)

• Construction Phase: Actual construction of the project.– Labor, materials, equipment, and services

necessary to complete the work.

Things that can be a part of the Planning Phase, Design Phase, and Construction Phase:

– Management; and– Environmental, archeological, cultural

resource, historic preservation, and similar assessments and associated activities.

Phases (Cont’d)

Construction Contracts are NOT Procurement Contracts

• Self-Determination Construction contracts are not traditional Procurement Contracts.– Except that: Office of Federal Procurement Policy

Act and its Federal Acquisition Regulations may apply if:

• The FPP Act and its Regulations are necessary to ensure the contract is carried out in a successful manner; e.g., within industry standards;

• The FPP Act and its Regulations are directly related to the construction activity; and

• The provisions of the FPP Act are not inconsistent with the ISDEA.

• Which procurement laws and regulations are not specified in the ISDEA or its implementing regulations, so they are subject to negotiation and must become an attachment to the contract upon award.

• If there is a Federal Procurement Act that specifies that it is applicable to a tribe/tribal organization, that Act must be followed.

Construction Contracts are NOT Procurement Contracts (Cont’d.)

• Self-Determination Construction contracts are not traditional Procurement Contracts.– Construction contracts are construed in favor of

the Indian tribe or tribal organization.

Construction Contracts are NOT Procurement Contracts (Cont’d.)

Secretary’s Responsibility

• Before the Secretary spends any funds for planning, construction or renovation, the Secretary shall consult with the tribe or tribal organization being affected by the proposed contract.

• The Secretary is required to follow tribal preferences to the greatest extent feasible concerning the size, location, type, and other characteristics of the project.

Secretary’s Responsibilities (Cont’d)

• Within 30 days after the Secretary receives his/her allocation of funds for any of the planning, design or construction phases associated with a specific project, the Secretary is to notify a tribe that may benefit from the allocation by Registered Mail and offer technical assistance.

• The Secretary is required to furnish, within 30 days of receipt of a request for information, ALL information about the project including any construction drawings, maps, engineering reports, and including any cost estimates that the Fed. Govt. may have devised, etc. BUT…

Secretary’s Responsibilities (Cont’d)

• A tribe or tribal organization is not required to request the information prior to submitting a notification of intent to contract or a contract proposal.

Secretary’s Responsibilities (Cont’d)

Types of Contracts

Fixed Price means:• The Contractor (tribe or tribal organization) will do

the entire project for a fixed fee; i.e., you estimate the contract to be $1 million, but…

– What’s the risk involved? Asks yourself:• Can you reasonably complete the project within

the time and costs you propose?

• What about escalating materials costs you might experience in building out a project; i.e., steel costs, cement costs including necessary fly ash?

• Escalating costs of consultants you might hire, especially if you contract with them on a cost-reimbursable basis?

• Escalating costs of FF&E expenses?

Types of Contracts (Cont’d)

– In negotiated fixed-price contracting clauses need to be negotiated to allocate the contract risks between the Government the tribe/tribal organization.

– If you choose a fixed-price contract method, you may make a ‘reasonable’ profit; e.g., what’s the going rate of profit for the industry in your area?• You build that profit feature into the fixed-price

that you propose to the Secretary.

Types of Contracts (Cont’d)

– If you’re unsure of your risk in proposing a fixed-cost contract, cost-reimbursement may be the way to contract.

Types of Contracts (Cont’d)

Cost-Reimbursable Contract means:– You propose to contract for the project, or

portion thereof, based solely on the costs you expect to incur; i.e., labor, materials, equipment (purchase or rental), and the like.

– You cannot make a profit; but…– You can negotiate contingency funds;

Types of Contracts (Cont’d)

– You can negotiate price escalation clauses as may be needed;

– If negotiated costs escalate during the term of contract, you must continually advise the Secretary of funding status; especially if you think you’re going to need more money to complete

Types of Contracts (Cont’d)

– You can propose a General and Administrative Cost that is ‘reasonable’ for the type of activity you are proposing to contract for, but it must be linked to the project itself and ensure that there are no duplicative costs

– The costs proposed must be reasonable based on the issues of allowability, allocability as found in OMB Circular A-87 or as noted in the ISDEA regulations at Sect. 900.45 and 900.127;

Types of Contracts (Cont’d)

Cost Reimbursement

• For some of the activities, NOT direct construction, you may receive Contract Support Costs/Indirect Costs if you haven’t negotiated a General and Administrative Cost feature.– Again you have to make sure costs projected

are not duplicative of other costs you may have negotiated in the IDC rate.

• Savings under a cost reimbursement contract may be used by the tribe/tribal organization to provide additional services or benefits under the contract.

• Unexpended contingency funds obligated to the contract and remaining at the end of the contract, are savings.

Cost Reimbursement (Cont’d)

• No additional approvals or justifying documentation shall be required to continue to expend these funds.

Cost Reimbursement (Cont’d)

Construction Grants

• In addition to fixed-price and cost reimbursement contracts, the Secretary may award a grant or cooperative agreement for construction.

• A grant or cooperative agreement must be mutually agreed to by the Secretary and the tribe or tribal organization.

• Tribe/Tribal Organization’s responsibilities:– Assume full responsibility and accountability

for design and construction performance within the funding limitations;

– Manage and administer the work with minimal involvement of the Secretary; and

– Shall have acceptable management systems for finance, procurement, and property.

Construction Grants (Cont’d)

Construction Grants (Cont’d)

• The Secretary may issue Federal construction guidelines and manuals that are applicable to his/her construction programs.

• The Secretary shall accept tribal proposals for alternative guidelines or manuals which are consistent with or exceeds Federal guidelines or manuals applicable to construction programs.

What Happens if You Don’t Meet Negotiated Standards?

• Can the Secretary decline?

Yes. Sect. 900.122 and 900.123 apply to the proposal when the proposal is for a new project, a new phase or discreet stage of a project resulting from additional funding.

What Happens if You Don’t Meet Negotiated Standards?

• Can the Secretary Reassume or Suspend?

Yes, based on Section 102(a)(2) and 102(b) of the Act and Sect. 900.247 (Emergency Reassumption) or 900.248 (Non-Emergency Reassumption).

What Happens if You Don’t Meet Negotiated Standards?

• Can the tribe or tribal organization appeal?

Yes, based on Section 102(b) of the Act and portions of Subpart L – Appeals, except that Sect’s. 900.170-176 apply specifically to re-assumptions or suspensions or withholding or delaying payment of an S-D contract.

What Happens if You Don’t Meet Negotiated Standards?

• Does the Contracts Disputes Act apply?

Yes.

Questions??

Thank you!