# CONSTRUCTION CONTRACT DOCUMENTS

(Plans and Specifications)

1.  Assemble contract documents as outlined in [Michigan Guide
    3EJCDC]{.underline} (Blue Cover) and [RUS Bulletin
    1780-26]{.underline}, "Guidance for the Use of EJCDC Funding Agency
    Edition Documents on Water and Waste Projects with RUS Financial
    Assistance." Most of the EJCDC documents must be purchased from
    third party. Four of the EJCDC documents are provided on the RUS
    Internet site. Michigan Guide 3EJCDC (Blue cover) provides guidance
    on what documents are needed and where to get them. As the need
    arises, Rural Development officials will work with other agency
    representatives to resolve conflicts and duplication regarding the
    contract documents. Consultants are encouraged to download USDA
    Rural Development (USDA-RD) contract documents (and the construction
    sign spec.) from the RUS Internet site:
    [www.usda.gov/rus/water/ees/englib/contract.htm](http://www.usda.gov/rus/water/ees/englib/contract.htm)
    Documents must not be modified beyond minor modifications (editing
    *italicized,* bracketed, text) and filling in the blanks. Proposed
    changes must be clearly marked or set apart **(bold type)** from the
    text and brought to the attention of the owner and Rural
    Development. *For projects using the EJCDC documents, the first page
    of the specification book shall be the consultant's certification
    statement; an example is provided in the "Blue Cover Guide."*

2.  **USDA-RD Approval**-Proposed bidding and contract documents
    (including addenda) must be approved by Rural Development prior to
    advertising for bids. One draft set of plans and specifications
    shall be sent to the RD engineer for review with a copy of the
    transmittal letter to the area office. All contracts will contain a
    provision stating that it will not be in full force and effect until
    it has been approved by USDA-RD.

3.  **Forms and Bulletins-**USDA-RD expects that all forms or bulletins
    used in the specification books and contract documents will not be
    modified beyond filling in the blanks, except to make them project
    specific. Use the contract documents as originally supplied. Do not
    retype the documents. This applies to all hard copy forms and
    bulletins, and those downloaded from the Internet:
    [www.usda.gov/rus/water/wwforms.htm](http://www.usda.gov/rus/water/wwforms.htm).
    Regulations can be obtained at
    [www.usda.gov/rus/water/regs.htm](http://www.usda.gov/rus/water/regs.htm).
    If the consultant proposes any changes as the contract documents are
    developed, they must be clearly marked or set apart from the text in
    bold type and brought to the attention of the owner and the agency
    during the review of the draft documents.

4.  **Davis Bacon**-Projects funded by Rural Development funds only, are
    not subject to the Davis-Bacon Act. If funds are provided by an
    agency subject to the Act, the entire project must meet the
    provisions of the Act.

5.  **Retainage**-Michigan Act 524, PA 1980, (MCLA 125.1561 et seq.)
    regarding contractor retainage escrow accounts does not apply to
    USDA-RD funds. There will be no escrow account for retainage or
    interest earned from our agency funds. (See RUS Bulletin 1780-14,
    Section 3.5). This shall be stated in the contract documents.

6.  **Maximum, Open & Free Competition-**Procurement procedures shall
    provide for maximum, open and free competition and shall not
    restrict or eliminate competition. Typical issues here are pipe
    materials and elevated water storage tank configurations. In most
    cases, "or equals" must be included in the specifications. If
    manufacturer's names are listed in the specifications, there must be
    a minimum of two, plus an "or equal." If there are items for which
    specifications are to be limited to one manufacturer or material,
    this must be requested and resolved prior to contract document
    preparation. Projects must be modest in size, design, and cost.

7.  **Easements-**USDA**-**RD's letter of conditions requires clear
    title or easements for *the entire system* not just in areas
    affected by the project. Early in the project, evaluate whether the
    community has clear title or easements in the areas not affected by
    the project, and if not, the community should work getting these as
    soon as possible.

8.  **Revised Estimates-** When submitting the plans and specifications
    for USDA-RD review, the engineer must prepare an estimate of
    construction costs using the bid schedule(s) included in the
    contract documents, and submit it with the plans and specifications.
    The purpose of the estimate is to re-evaluate the construction
    budget, after the design is complete.

9.  **Electrical Service**-Consider the costs of providing needed
    electrical service carefully, projects have experienced large cost
    overruns due to unanticipated charges from electrical utilities.

10. **Liquidated Damages-**Liquidated damages should be set at an amount
    adequate to recover anticipated damages, debt service, additional
    inspection, etc. but not so high as to threaten prospective bidders.

11. **Bidding-** The USDA-RD area office will authorize bidding (in
    writing) after approval of plans and specifications; when the bond
    counsel and local attorney are prepared to close; and after the
    Rural Development loan requirements have been completed. Invitation
    for bids should be publicly advertised for 30 days. If addenda are
    issued, there shall be ample time prior to bid opening for
    contractors to revise bids. Advertisements must clearly state a
    public place where and when bids can be delivered, especially in the
    case of communities with part-time office hours. Responsive bids
    shall be opened publicly at the time and place stated in the
    invitation for bids. A reasonable bid hold time must be stated in
    the specifications, usually 90 days.

12. **Bid Awards-**Bid documents should clearly state how the low bid is
    determined so all the potential bidders understand how the award
    will be made. Handling of bid alternates should be clearly
    explained.

13. **Contract Times-**The contractors must be given a reasonable amount
    of time to do the work. A definite and reasonable time of final
    completion must be included in the specifications. The time for
    contract completion and the inspection time in the engineer's
    agreement should correspond.

14. **Plans-**Engineers are highly encouraged to submit plans on 11 x 17
    paper, in a readable format.

15. **Incidental Items-**Items that are "incidental to the contract"
    should be avoided. If necessary, they should be clearly denoted on
    the plans and specifications. Avoid large "incidentals" and list
    them as bid items on the bid schedule.

16. **Seismic Requirements and Security Measures-**Structural plans for
    buildings and tanks must have a note stipulating that the seismic
    design complies with either the 1997 Uniform Building Code or the
    1995 ASCE 7 Standard. Reasonable security measures (fences, alarm
    systems) should be considered in design of water storage tanks,
    treatment facilities, and well houses.

17. **Groundwater Discharge WWTP -**Wastewater treatment systems that
    involve discharge to groundwater (sand filters, drainfields, mounds,
    infiltration galleries, etc.) must have sites evaluated by a USDA --
    NRCS Resource Soil Scientist.

18. **Service Leads/Laterals-**Construction specifications shall specify
    that work on service leads or laterals will only be conducted in the
    public right-of-way, easements, or municipality-owned land dedicated
    to the project. Services to empty lots will not be installed, except
    in the case of special assessments, or other arrangements\--one
    lateral per customer. Corporation stops (water) or wyes (sewer)
    shall be listed as separate line items on the bid schedule and shall
    correspond to the number of users. Water meters shall be used on all
    projects.

19. **Paving-**Every effort should be made in the design to minimize
    pavement, sidewalk and curb and gutter repairs. Our funds are for
    water or sewer projects, not excessive restoration. Paving repairs
    and driveway repairs shall be listed as separate items on the bid
    schedule, with units of square yards. We have had instances where
    paving repairs were listed as incidental to the lateral
    installation, and it has caused great confusion, and added
    significantly to project costs.

20. **Wellhead Protection-**For new water systems, a well abandonment
    program is warranted. A wellhead protection program is essential for
    any system that uses wells for a source. Pay attention to the water
    quality of new wells.

21. **Well Isolation Distances-** Be aware of local health department
    isolation distances for individual wells, especially with respect to
    sanitary forcemains, lift stations, and grinder pumps. This can
    sometimes be troublesome on small lots.

22. **Sewage Connections-**Sanitary Sewer laterals shall not have
    connections of sump pumps and footing drains. Inspections should be
    performed by the local plumbing inspector. Eliminate clear water
    leaks into the sewer.

23. **USDA-RD Signatures-**Prior to USDA-RD final contract approval and
    signature, [all]{.underline} other signatures, dates, bonds, etc.,
    must be completed and reviewed by the local attorney (Exhibit GC-A).

24. **USDA-RD Copies of Signed Documents-**USDA-RD will retain two
    signed, complete sets of construction contract documents. If you
    prefer, submit two complete sets for USDA-RD and the approval pages
    for the remainder of the contracts. We will execute the approval
    pages and return them to you for insertion into the remainder of the
    contract documents (Signature page from the EJCDC Standard
    Agreement).

25. **Bonds-**Surety companies executing bonds [must]{.underline} appear
    on the Treasury Department\'s most current list, Circular 570, as
    amended. Bond forms must be EJCDC versions, 2002 Edition. Ineligible
    sureties have provided bonds in Michigan. This delays contract
    approval and elevates tensions and frustrations. Performance and
    payment bonds may not have dates prior to the date of the
    contract/agreement. Dates on the \"Power of Attorney\" attached to
    the performance bond and payment bond [must]{.underline} be the same
    as the bond or later. Bonds provided in the contract documents must
    be exactly as provided in the specifications book. AIA bond forms
    are unacceptable.

26. **Reducing Retainage-**In order to reduce retainage, the project
    must be substantially complete and operational, and a pre-final
    inspection must be conducted by a USDA-RD engineer or delegated
    representative. A certificate of substantial completion setting the
    warranty date, and consent of the bonding company is also needed.

27. **Substantial Completion-**For water projects, the substantial
    completion documents should include some verification document from
    the contractor that all fire hydrant isolation valves are open and
    fire hydrants are in working order, ready for use.

28. **Additional Insured-**Section 5.04.B.5 of the general conditions
    (EJCDC C-710 2002 Edition) requires that contractor's liability
    insurance contain a provision or endorsement that coverage will not
    be canceled, materially changed, or renewal refused without at least
    30 days notice to the owner, contractor and additionally insured.
    Historically, we have accepted certificates of insurance naming the
    owner as additionally insured, however, the language of the
    certificate indicates that it doesn't amend the policy or extend
    coverage. In our opinion, a certificate of insurance, listing the
    additional insured, is insufficient evidence that such endorsements
    or provisions are in place. Engineer's are cautioned to obtain a
    copy of a rider, an endorsement or other such provision naming the
    owner at a minimum, as additionally insured.

29. **Accessibility Issues --** For projects that involve
    restoration/replacement of curb and sidewalks, plans and
    specifications should include curb ramps at street corners. We are
    required to comply with the Americans with Disabilities Act, as are
    all public entities, including our borrowers. If we are replacing
    curb and/or sidewalks anyway, curb ramps should be put in to bring
    the community into compliance.

30. **Unique Site Conditions --** Avoid differing site conditions issues
    by including as much information about unique site conditions as
    possible in the plans and specifications. The bid schedule should
    include line items with unit quantities (e.g. rock excavation per
    cubic yard, or dewatering per foot of pipe) to ensure that bidders
    account for unique site conditions in their bids. It is always
    cheaper to bid these extras, than to try to negotiate change orders
    afterward.

31. **Water Meters & Meter Pits**- It may be useful to include a few
    meter pits on the bid schedule to cover instances where gaining
    access to a home for installation of an interior meter is difficult
    or impossible. Rural Development funds may be used to install a
    meter socket and meter in an existing service lateral, however
    construction of the service lateral from the right-of-way to the
    home, and all interior plumbing is the responsibility of the
    customer.