​​E2. Construction Changes

Change Orders

Description:

Certified Payroll (CPR), Hourly Labor Rate Worksheets: Prior to the first change order, the 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 note Section H - for Certified Payroll Information Subcontractor Directory. The Construction Administrator 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 Departmetnt of Industrial Relations (DIR); and guard against improper subcontractor substitutions.

Change Order: The Contractor shall use the Contractor Change Order Request Summary Worksheet and require its subcontractors to use the Subcontractor Change Order Request Summary for all change order requests. 

When the proposed need for a change is first known by the design professional, s/he shall prepare a change proposal, which is the conceptual approval form for the scope and cost, including Architecture & Engineering fees and should be prepared for each change as early as possible in order to reserve funds for the proposed change. 

The Construction Administrator shall determine whether or not to proceed with the proposed change. No extra services are to be incurred by the design professional prior to approval. The change proposal helps eliminate unnecessary cost proposal requests to the Contractor and to control additional construction and design costs. 

All change proposals submitted by the contractor shall be: reviewed and processed in a timely way; checked for scope, and associated costs against approved labor rate worksheets; checked for conformance to the mark-ups as specified in the General Conditions. Contractor payments are the highest project priority.

References:

• SUAM Sections 9820-9820.03;
• Construction Management Procedures Manual Section 22
  
• Allowance Procedures/Change Order Procedures
• Contract General Conditions

Forms & Templates:

• Request for Information (702.29)
  
• Field Instruction (702.22)
  
• Hourly Labor Rate Worksheet (703.33)
  
• Contractor Change Order Request Summary (703.34)
  
• Subcontractor Change Order Request Summary (703.34S)
  
• Cost Request Bulletin (702.20)
  
• Change Proposal (703.24)
  
• Change Order (703.04)
  
• Change Order Cost Summary Worksheet (703.04W)
  
• Contingency Status Report (703.04C)
  
• Change Order Log (703.04L)
  

Allowance Procedures

Description: Bid allowances are typically included in base bids or GMP proposals as estimates for work that will be completed under the base construction contract but the exact costs or scope are indeterminate at the time of bid or the scope has not yet been competitively bid at the time of the GMP proposal. 

These amounts are later adjusted to actual costs, once the work is bid to trade contractors or completed. The Trustees shall approve the scope and value for each allowance. Allowances should be specifically included and separately listed on the bid/GMP proposal form, on the schedule of values, and referenced and defined in Division One specifications (in section 01 21 00).

References:

• SUAM Section 9721.08​
• Construction Management Procedures Manual, Section 22
• Contract General Conditions
• Request for Proposals​​
  

Forms & Templates:

• Schedule of Values (702.21)​
  
• Change Order (703.04)​
  

Subcontractor Substitutions

Description: A contractor may request a substitution of a subcontractor under the Subletting and Subcontracting Fair Practices Act, Public Contract Code 4100 et seq. 

There are nine types of subcontractor substitutions that a contractor may request under the act. Upon receipt of the Contractor's written request for substitution, citing one or more reasons listed in 4107(a), the Construction Administrator shall adhere to the following procedure:

1. Read and become familiar with the Section 410​7(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). The Construction Administrator 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, the Construction Administrator shall wait three more days beyond the expiration of the five-day period to receive any such mail> The postmark on subcontractor's letter is the date the response is deemed to be received. If the subcontractor does not respond in a timely way, or responds that they do not object to the substitution, the Construction Administrator shall send a letter to all parties approving the substitution.

Protest of Substitution: If a protest is received from the subcontractor to be substituted, the Construction Administrator 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 the 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 the Construction Administrator will issue a hearing notice by certified mail. In this notice the Construction Administrator shall give the two principal participants five working days' notice (plus mailing time) of the hearing, at the time and place specified; failure to attend will waive their rights. 

Contact CPDC Construction Management or CSU Office of General Counsel for more information on the substitution hearing, as this is a formal process to which CSU staff must adhere. 

Inadvertent clerical error: Under Public Contract Code 4107(a)5 and 4107.5, if the prime contractor made an inadvertent clerical error in the subcontractor list submitted with his/her 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, the Construction Administrator shall timely call and hold a substitution hearing.

Other Basis for Substitution: Public Contract Code Cection 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: The Construction Administrator is required to police the use of subcontractors using the Subcontractor Directory. Contract General Conditions require the Contractor to submit the Subcontractor Directory with the contract award package to the Trustees and with each payment request that follows. 

The Construction Administrator 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 and 9823. 

The listed subcontractor must perform the scope of work for which it was listed. The 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 10 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. Public Contract Code (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 one-half 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 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. The 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 Department of General Services (DGS) approve the substitution in writing before the commencement of any work. Please reference Contract General Conditions for DBB Major Cap Projects, Article 4.04-c, Substitution of a Disabled Veteran Business Enterprise. Refer to the California Code of Regulations, Title 2, Section 1896.73, Substitution of a DVBE, for further information.

References:

• SUAM Sections 9821-9823
• Construction Management Procedures Manual, Section 19
• Contract General Conditions for DBB Major Projects, Article 4.04, Substitution of Subcontractors
• Law of D&C, May 2019, Section XIII, Substitution of Subcontractors
  
• Public Contract Code Section 4100 et seq. - The Subletting and Subcontracting Fair Practices Act