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MEMORANDUM
Subject: Contract Procedures Federal Participation in Premium Time
(Overtime) Payments to Contractors
Date: September 18, 1990
From: /s/ Original signed by:
Thomas O. Willett
Acting Director, Office of Highway Operations
Refer To: HHO-32
To: Mr. John G. Bestgen, Jr.
Regional Federal Highway Administrator
Albany, New York

Reference is made to your office memorandum of July 31, 1990, requesting an engineering and legal review in Headquarters relative to Federal-aid participation in "Premium Time" payments to the contractor. The payments were utilized by the Connecticut Department of Transportation on two interstate projects in downtown Hartford.

We agree with the division that the use of incentive/disincentive contract provisions is the appropriate approach to ensure timely contract completion and that negotiating with contractors after contract award to accelerate work is against the grain of conventional contract administration. However, we are also in agreement with the Assistant Regional Counsel that there are no legal impediments to prevent Federal-aid participation in accelerating construction by amending the contract. It is our position that such acceleration amendments should be only rarely utilized and then only when unusual circumstances occur and it can be clearly shown to be in the public interest. Thus, it is FHWA's policy to generally not allow participation in additional costs for the acceleration of a project, beyond what is provided for in the contract provisions, subsequent to award of the contract. This position is taken because contract time along with the scope of work are the two key elements on which bids are based in the competitive bidding process. This policy should be judiciously guarded.

The information as submitted is not adequate for this office to make a detailed engineering decision on the responsibility for the delay or the appropriate cost for acceleration on the respective projects. However, the authority to approve such a change is within the division and region's delegation if they are satisfied that such additional costs are proper and the public interest is served.

In regards to the Charter Oak bridge project, the responsibility for keeping the project on schedule should be clearly determined by the contract documents before the decision to participate in the change is made. If responsibility for the time delay is determined not to be assignable to the contractor and it's found to be in the public interest to participate in the additional costs to accelerate the construction, then the costs to bring the project back on schedule need to be analyzed. This can best be done using a resource loaded CPM. The CPM should be evaluated to determine those items on the critical path that can be accelerated and the corresponding cost to accelerate them. The approval of blanket overtime is not usually cost effective as the State does not have control over the contractor's work force and inefficiencies can not be controlled.

Again, we would like to reiterate our position that while there are no legal impediments to Federal participation in the payment of overtime to accelerate projects when warranted, we do expect that other viable approaches will be evaluated by the State on future projects with potentially similar traffic and public interest considerations. Also, the division office should be fully involved during the project development phase of all major projects to assure that techniques such as the use of incentive/disincentive provisions are utilized when appropriate.

Contact

Jerry Yakowenko
Office of Program Administration
202-366-1562
E-mail Jerry

 
 
Updated: 04/07/2011
 

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United States Department of Transportation - Federal Highway Administration