At their most recent meeting the State Administrative Board (Ad Board) approved two resolutions that significantly change (in very positive ways) the processes required of all state departments to get Ad Board approval for contracts and contract revisions on state construction and services contracts.
Resolution 2011-1 raised the Ad Board approval threshold for contracts to $250,000, and for contract amendments to $125,000. Under the previous resolution these thresholds were set at only $25,000. The increase in the threshold for contract amendments requiring Ad Board approval should expedite the payment for contract revisions to contractors who build projects let and administered by various state departments such as the Department of Technology, Management and Budget, the Department of Environmental Quality, and the Department of Natural Resources.
Resolution 2011-2 removes the Ad Board contract and contract amendment approval controls from the Michigan Department of Transportation (MDOT) contracting procedures. This removal of Ad Board supervisory control is predicated on MDOT’s implementation of internal procedures that will assure the proper expenditure of state and federal funds, and would be subject to financial and performance audits by the Office of Commission Audits. In essence, MDOT is now allowed to internally approve, with some exceptions, contracts, and extra work and contract overruns so contractors can be paid for contract revisions in a timely manner.
These changes in the Ad Board oversight and approval process are good news for all contractors who work in the federal and state funded publics works arena. MITA for years has been aggressive in advocating for these changes and transparency in this bureaucratic process that historically has delayed payments to contractors for work that was approved and accepted by the owner agency, paid for by the contractor, and often open for use by the public.
“Contractors will no longer have to wait months, sometimes years, for the bureaucratic process to play out in order to get paid for work completed under a contract revision” said Mike Nystrom, MITA’s Executive Vice President, “MDOT leadership stepped out boldly on this issue and we in the industry appreciate that effort.”
The State Administrative Board, by law, has general supervisory control over the administrative activities of all state departments and agencies, including, but not limited to, the approval of contracts. Resolutions approved by the Ad Board have immediate effect.
MITA continues to push for similar changes in the State Transportation Commission approval process, which would improve the payment stream for contract revisions even further. Watch for future MITA bulletins and articles about the new MDOT internal contract approval procedures as we will keep you informed of those details as they develop.
If you have any questions or comments, contact Glenn Bukoski at glennbukoski@mi-ita.com or Doug Needham at douglasneedham@mi-ita.com or call them at the MITA office at 517-347-8336.
