NO: 96-12-GSA

ISSUING DIVISION: Division of Building & Construction

EFF DATE: 6/30/96

EXP DATE: Indefinite

SUPERSEDES: DBC-02-87

SUBJECT: Delegation of Authority -- Small Construction Projects

APPROVED BY: GSA Administrator

I. Purpose:
The purpose of this memorandum is to set forth policy and pro-
cedures for the delegation of authority to Client Agencies for
negotiating and awarding small construction projects without ad-
vertising. This also establishes procedures for plan review and
inspection of small projects to ensure compliance with the New
Jersey Uniform Construction Code, N.J.A.C. 5:23. It also covers
how the Client Agency may perform certain work under Annual Permits
issued by the Department of Community Affairs. For Client Agencies
unable or unwilling to accept this delegation of authority, the
Division of Building and Construction will continue to provide
design, award and management services for small projects as
required.

II. References/Recisions:

A. References:

1. New Jersey Statutes Annotated: N.J.S.A. 52:34-7, Purchase
of contracts without advertising
2. DBC Policy & Procedures Memorandum #602: "Inspection
Procedures for Construction", dated May 1, 1990.
3. DBC Policy & Procedures Memorandum #402: "Building Code
Plan and Specification Review", dated May 1, 1990
(revised)
4. DBC Instructions to Bidders and General Conditions, dated
January 1995
5. The Governor's biannual announcement "Adjustment to Public
Bidding Thresholds."
6. GSA Circular 94-34-GSA, Capital Construction Fees and
Contingencies and Requisitioning Procedures.
7. N.J.A.C. 17:14 et seq. Minority and Female Contractor
and Subcontractor participation in State Construction
Contracts.

B. Recisions: All references under N.J.S.A. Article 52:34-7
predating February 1986 "Public Bidding Thresholds"

III. Policy:

A. When the aggregate project cost for the erection, construc-
tion alteration or repair of any State building or facility,
including labor and construction materials, does not exceed
the amount established under N.J.S.A. 52:34-7.1, the Client
Agency may make, negotiate or award the construction contract
without advertising. However, the Client Agency must establish
procedures so that the procurement is performed in such a
manner as to promote free and fair competition whenever
competition is practicable.

B. Definitions:

1. Agency Consultant means the architectural and engineering
firms that provide consulting services for the design of
small projects of State Client Agencies. These A/E
consulting firms are selected by the Client Agency
through the DBC Consultant Selection Group on a yearly
basis.
2. Annual Permit (AP) means an annual construction permit
issued by the Department of Community Affairs (DCA) to
perform certain work at a facility that uses its own
skilled maintenance staff.
3. Architect/Engineer (A/E) means an architect, engineer or
other design professional so recognized by the appropriate
State professional licensing boards.
4. CIG means the Code Inspection Group, Division of Building
and Construction.
5. Client Agency means any department, institution, college
or other State body that uses DBC for the design, con-
struction, project management, N.J.U.C.C. Plan Review,
and inspection of buildings and facilities.
6. Contract Administration Group means the Group within DBC
charged with the receipt and opening of bids, recommen-
dations of award and classification of contractors.
7. Contractor means an individual, partnership or corporation
whose business is contracting work on one (1) or more of
the building or construction trades.
8. DCA means the New Jersey Department of Community Affairs
9. Division (DBC) means the Division of Building and
Construction, New Jersey Department of Treasury, General
Services Administration.
10. Facility (as defined in the NJ Uniform Construction Code
Regulations) for the purpose of applying for an Annual
Permit means, exclusive of a hotel/casino, a building or
group of buildings under common ownership or control and
whose maintenance work is performed under the direct
supervision of a maintenance supervisor.
11. Financial Management Group means the Group within DBC
charged with the procurement of funds and the payment of
contractor's invoices.
12. N.J.U.C.C. means the New Jersey Uniform Construction
Code, N.J.A.C. 5:23.
13. OMB means the Office of Management and Budget within the
New Jersey Department of Treasury.

IV. Responsibilities:

A. Whenever possible, Client Agencies shall seek sealed bids
from a minimum of three (3) contractors.

B. Under no circumstances shall contractors from the State's list
of Debarred, Suspended, or Disqualified contractors be used.

C. Client Agency contracting officers shall use contractors
having financial capabilities and experience in the type of
work to be performed. Use of DBC's list of classified
contractors is required.

D. Asbestos abatement may not be performed under an annual
permit. A separate permit must be secured from DCA directly
for each project. When the project includes asbestos
abatement, Client Agencies are required to use contractors
licensed by the Department of Labor and classified by the
Division of Building and Construction for performing asbestos
abatement, regardless of project dollar amount. A listing of
classified contractors is available from the DBC Contractor
Classification Group.

E. Client Agencies wishing to perform lead abatement work must
use individuals or firms licensed or qualified by the Depart-
ments of Health, Labor and Community Affairs.

F. Client Agencies and Departments may not segment projects in
an attempt to circumvent the delegation limitation. That is,
a Client Agency may not break a single project in excess of
the threshold into component parts so that each part may be
considered a separate contract of less than the threshold for
purposes of evading the dollar threshold established by law.

G. Agencies are required to ensure that any contract(s)
undertaken by them is in compliance with requirements of
statutes governing construction contracts. This includes
prevailing wages (P.L.1963 c.150), small business (N.J.S.A.
52:32-21), an other applicable statutes affecting said
contract(s).

H. Agencies are responsible to comply with provisions of N.J.
A.C. 17:14 et seq. They are required to develop plans and
procedures for meeting State set-aside goals for projects
they manage under these Delegated Authority procedures.

I. Agencies are required to adopt policies and procedures to
ensure that all construction projects are undertaken and
completed in compliance with the N.J.U.C.C. As required
herein, it is the Client Agency's responsibility to obtain
the required plan review approval and construction permits
directly from DCA or DBC prior to starting work. They are
also required to notify CIG when the construction work is
begun, and when it is ready for any required inspection as
per N.J.A.C. 5:23-2.18 of the N.J.U.C.C. Inspections can be
arranged by calling CIG at the numbers listed below:
609/777-4521 (number on outside line)
7-4521 (number on state line)

J. Construction projects that the Agency initiates with
"purchase orders" are not exempt from the N.J.U.C.C. permit
requirements if the work being undertaken is covered by the
Code. Examples of such items covered by the N.J.U.C.C. and
requiring permits are:

1. Material lifts
2. Loading dock levelers
3. Rooftop antennas more than 12' high
4. Carpeting
5. Interior landscaping partitions
6. Pre-fabricated storage sheds
7. Greenhouses
8. Elevator renovations (DCA APPROVAL ONLY)
9. Spray paint booths
10. Replacement of boiler and related equipment
11. Storage racks or shelving which:

a) exceeds 8'10" in height
b) is tied or is part of the structural frame of the
building
c) incorporates building service systems, such as
electric, plumbing, sprinklers, etc.

12. Work on fire alarm and sprinkler system
If there is a question as to whether or not a construc-
tion permit is required for any construction project,
contact DCA or DBC Plan Review at 609/984-5573 for
clarification.

K. If change orders increase the cost of the construction
contract beyond the small projects threshold, the Client
Agency must prepare a request for Waiver of Advertising and
submit it through the DBC Group Project Manager, who in turn
will forward it to the Treasurer for approval.

V. Procedures:
Client Agencies have different levels of capability in under-
taking construction work either by their in-house maintenance
staff or by contracting out to private contractors. Construc-
tion work undertaken by an in-house maintenance staff requires
an in-house construction operations capability. Letting contracts
to private contractors requires procurement, administrative, and
technical capability to develop plans and specifications as a
basis for soliciting cost proposals or bids. Some Client Agencies
have such capabilities; others do not.

NOTE: THE UNDERTAKING OF ALL CONSTRUCTION WORK REQUIRES A
SEPARATE CONSTRUCTION PERMIT OR AN ANNUAL PERMIT ISSUED BY THE
DCA PRIOR TO THE COMMENCEMENT OF WORK.

Depending upon their capabilities, Client Agencies may under-
take construction projects and maintenance work according to
the following procedures:

A. Facilities and Agencies with Annual Permits (N.J.A.C. 5:23-
2.14(e)) Client Agencies have the option of applying to DCA
for an Annual Permit for any or all of its facilities. The
Annual Permit allows the facility to perform certain main-
tenance and construction work without reapplying for separate
permits. Facilities may apply for Annual Permits directly
to the Manager, State Building Projects, at DCA. All pro-
visions of N.J.A.C. 5:23 et seq. will be enforced. However,
State facilities will have the option of employing outside
contractors to perform work under the Annual Permit
provisions as long as those contractors work under the
direct supervision of the Facility Maintenance Supervisor
named in the Annual Permit application. For those Client
Agencies that have been issued an Annual Permit by the DCA,
the procedures outlined below shall be followed:

1. The Facility Manager directs the appropriate maintenance
staff to begin the construction work under the Annual
Permit, or (s)he solicits three (3) sealed bids for the
project from contractors in the general locale of the
facility. For emergency projects, the sealed bid require-
ment is waived (refer to Section VIII).
2. The Facility Manager then electronically forwards an
agency order (AO) to the Office of Management and Budget
(OMB), Department of the Treasury, to encumber the funds
for the project. The facility's Annual Permit number must
be included on the AO.
3. The OMB applies to the order the final level of approval
that will appear on the NJCFS system.
4. The Facility Manager enters the project's work order
number,
AO account number and obligation number into the facil-
ity's Annual Permit Log.
5. The Agency awards the contract or orders the material.
6. Upon delivery of the material, or upon completion of the
project, the Facility Manager will electronically submit
an A1 (Invoice) to the OMB for payment.
7. The OMB pays the invoice.
8. CIG inspectors review the Annual Permit Log and inspect
the work at a maximum of six (6) month intervals, or
less, if the workload requires more frequent inspections.
There is an hourly charge for inspections per Circular
Letter.
9. CIG inspectors will ensure that the work meets the
N.J.U.C.C.
10. Any facility that DBC finds is not following the
established regulations and procedures regarding Annual
Permit will be referred to DCA for appropriate action.

B. Facilities and Agencies with Limited Construction
Capabilities

Those Client Agencies that have no construction operations
or limited administrative and technical capabilities may
request DBC to design and manage the project. The DBC will
administer the letting of contracts to have the work
completed and provide the requisite management, N.J.U.C.C.
plan review, approval and inspection services.

C. Construction Outside the Scope of an Annual Permit
For those Client Agencies administering their own construc-
tion projects by using their own maintenance staff, or
employing an outside contractor, the procedures outlined
below shall be followed:

1. The Facility Manager forwards a permit application,
with the description of the work including plans and/or
sketches signed and sealed in accordance with the N.J.
U.C.C. requirements, to the DCA or DBC for plan review
and approval.
2. DCA or DBC may issue a permit or reject the application
and return it to the Client Agency for corrections. If
DBC performs the plan review there is an hourly charge
per Circular Letter. DCA's plan review and permit fees
may be obtained from DCA's Bureau of Construction Project
Review.
3. The Facility Manager obtains at least three (3) cost
proposals from contractors in the general locale of the
institution concerned.
4. The Facility Manager opens sealed bids at a specified
time and place, and records the name of the person who
opened the bids and those who witnessed the opening.
5. The Client Agency electronically forwards an AO to the
OMB to encumber the funds for the project.
6. The OMB applies to the order the final level of approval
that will appear on the NJCFS system.
7. The Agency awards the contract or orders the material.
8. The Facility Manager notifies CIG at least 24 hours
before the work is started.
9. The project is started.
10. Inspections are performed by CIG during construction or
after construction depending upon the size and nature of
the job. The Facility Manager is responsible for notify-
ing CIG when the construction work is ready for any
required inspections as per N.J.A.C. 5:23-2.18 of the
N.J.U.C.C. CIG inspectors will ensure that the work meets
the N.J.U.C.C.
There is an hourly charge for inspections per Circular
Letter.
11. CIG inspectors approve or disapprove the completed work.
12. When approved, DCA issues a Certificate of Occupancy or
Approval to DBC for distribution to the Client Agency.
13. After the Agency receives a Certificate of Occupancy or
Approval, the designated representatives of the Client
Agency will sign the original invoice and forward it
directly to the OMB.
14. DBC will charge fees for plan review and code inspection
as stipulated by Circular Letter and the agency will be
billed on a monthly basis.

VI. Fees:

All fees for DCA plan review and permits must be forwarded to the
Department of Community Affairs when the applications are filed.
Construction Permit fees for projects will be based upon a fee
schedule established by DCA for State projects.

VII. Technical Assistance:

It is essential that contractors base their cost proposals on
identical plans, sketches, or specifications. Client Agencies
that administer their own construction projects must have the
in-house capability of developing their own plans, sketches and
specifications. If design assistance is required, the consultant
services of an architect or engineer may be requested from DBC.
The consultant's fees will be funded by the Client Agency.

VIII.Emergency Projects:

A. The Client Agency will occasionally encounter emergency pro-
jects as defined below. As has always been the custom, the
Client Agency may immediately retain a contractor, without
DBC approval, and without public bidding, for these emergency
projects; however, the Client Agency must apply for a permit,
if one is required, from DCA or DBC within 72 hours of
starting the emergency work. Further, if the construction
costs exceed the threshold the Agency must process a waiver
request through DBC within the 72 hour period.

B. The three (3) basic categories of emergencies are defined
as follows:

1. A hazard that is a threat to the "life or limb" of
persons. The Client Agency has the authority to directly
engage a contractor to remedy a "life or limb" hazard
without bidding.
2. A serious disruption of services that is a threat to
"health or welfare" of persons. The Client Agency has
the authority to directly engage a contractor to remedy
a "health or welfare" hazard without bidding.
3. A situation that poses a threat of serious loss or
damage to property or inability to meet critical dead-
lines on occupancy of buildings. The Client Agency has
the authority to directly engage a contractor to remedy
a "property loss or critical deadline" hazard without
bidding.

IX. Insurance:

A. Before the contractor can perform any work, the Client
Agency must obtain proof of Comprehensive General Liability
Insurance for the benefit of the contractor and any sub-
contractors to be written as broad as the standard coverage
form currently in use in the State of New Jersey that shall
not be circumscribed by any endorsements limiting the breadth
of coverage. The policy shall include an endorsement (broad
form) for contractual liability insurance, an endorsement
eliminating the explosion, collapse, and underground (XCU)
exclusion. Limits of liability for bodily injury and property
damage shall not be less than $2,000,000 per occurrence.

B. Before the contractor can perform any work, the Client
Agency must obtain proof of Comprehensive Automobile Liabil-
ity Insurance covering owned, non-owned and hired vehicles.
The limits of liability shall not be less than$2,000,000 per
occurrence for bodily injury liability and property damage
and can be written as a combined single limit.

C. Before the contractor can perform any work, the Client Agency
must obtain proof of Worker's Compensation Insurance appli-
cable applicable to the laws of the State of New Jersey and
other state or Federal jurisdiction required to protect the
employee of the contractor or any subcontractor who will be
engaged in the performance of this contract. This insurance
shall include Employers' Liability Protection with a limit
of liability not less than $500,000.