MITA and MDOT Collaborate on FA Revisions
In a process improvement effort, MITA and MDOT have collaborated on revisions to two parts of the MDOT 2012 Standard Specifications, Force Account (FA) provisions.
Recently, it has become increasingly tedious for contractors to satisfactorily document their “costs” for bond premium, insurance and payroll taxes on FA work, as required in subsection 109.05.D.4. Bond Premium, Insurance, and Payroll Taxes. The documentation demands imposed by the government auditors and overseers (necessary to prove the amounts paid for each of these required costs) quickly became a very significant administrative burden for the contractor.
To eliminate this growing “paper chasing” hardship, MITA and MDOT leadership agreed to follow the lead of several other state DOTs who compensate contractors for the cost of bond premium, insurance and payroll taxes on FA work by the application of a “factor” on the FA labor component.
After much analysis and discussion regarding payroll tax, insurance and bond premium information provided by MITA members representing a diverse cross-section of industry disciplines (underground, dirt, paving, bridge, electrical), MITA and MDOT leadership agreed on the following two “labor cost recovery factors”:
Road Work = 55% Bridge Work = 60%
Effective with the October 2016 bid letting, all project proposals will include the Special Provision for Force Account Mark-up for Bond Premium, Insurance and Payroll Taxes. This special provision deletes subsection 109.05.D.4 Bond Premium, Insurance, and Payroll Tax, and it changes subsection 109.05.D.3 Labor, to include these two new cost recovery factors to compensate the contractor for the costs of field and home office overhead, bond premium, insurance and payroll taxes, and to provide a reasonable profit on FA work.
With the implementation of the Special Provision for Force Account Mark-up for Bond Premium, Insurance and Payroll Taxes, contractors will no longer be plagued with the tedious administrative burden of documenting the costs of bond premium, insurance and payroll taxes on FA work.
If you have any questions or comments contact Glenn Bukoski at glennbukoski@mi-ita.com or call him at the MITA office at 517-347-8336.
