Subcontracting

General
Federal regulations impose limitations on the amount of work than can be subcontracted. This provision prohibits a prime contractor from “brokering” (subletting all contract work). Subcontracting limitations are included in
Form FHWA-1273
and described in the
LGPM Guide
.
FHWA requires each subcontract to be approved in writing by the LG. This allows some control to screen subcontractors that are not qualified or that may be ineligible (e.g., debarred). It also assures all federal and state requirements will be included in the subcontract. In order to reduce the amount of paper flow, the FHWA division administrator may permit the LG to satisfy the subcontract approval requirement by instituting a certification process. This process must require the contractor to certify that each subcontract arrangement will be in the form of a written agreement containing all the pertinent provisions and requirements of the prime contract. The LG must demonstrate it has an acceptable plan for monitoring such a certification.
Employee Lease Agreements
Employee lease agreements are typically not considered a subcontract and are not subject to the 30 percent subcontract limitation. Employee lease arrangements are acceptable for federal-aid projects if the leased employees are under the direct supervision and control of the contractor’s superintendent and/or supervisor. The requirements for leased employees are included in the
LGPM Guide
.
Federal Requirements
  1. 23 CFR Part 633
    – Requires contractors to include
    Form FHWA-1273
    in all subcontracts.
  2. 23 CFR §635.116
    – Requires that:
    1. contractors must perform at least 30 percent of the work on a contract; and
    2. subcontractors are not allowed to perform work on a project until the subcontract has been approved in writing by the contracting entity.
  3. 23 CFR §635.116(d)
    – Applies to design-build contracts.
    1. The contracting entity may establish a percentage of work that must be performed by the design-builder. The 30 percent limitation does not apply.
    2. The only goals that may be prescribed are those relating to the DBE program.
State Requirements
  1. 43 TAC §26.33(g)(1)
    – Requires a RMA to use specifications conforming to the latest TxDOT standard specifications on projects connecting with the state highway system.
  2. 43 TAC §27.56(c)(3)
    – Requires a RTA to use specifications conforming to the latest TxDOT standard specifications on projects with state fund participation.
  3. Texas Government Code Chapter 2269, Subchapter H
    – Allows a local governmental entity to use the design-build method for the construction, rehabilitation, alteration or repair of a civil works project.
Required Practices
The LG must follow state and federal guidelines related to subcontracting as described in the required practices outlined in the
LGPM Guide
.