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Department of the Treasury

NO: 94-34-GSA







PHONE: 292-4724


The purpose of this circular letter is to establish procedures to be
followed by the Departments and Agencies of the State in the procurement
of architectural, engineering and construction services provided by the
Division of Building and Construction (DBC), General Services
Administration, Department of the Treasury. This circular letter
supersedes Circular Letter 92-03-GSA.


The Annual Appropriations Act empowers the Director of the Division of
Budget and Accounting to transfer or credit to the Construction Management
Services revenue account from appropriations for construction and
improvements, a sufficient sum to pay for the cost of architectural work,
superintendence and other expert services in connection with such work.
Operation fees will be assessed on all projects regardless of fund source
by the Division of Building and Construction in accordance with the
schedule listed below.


These procedures provide for fees to be assessed by various phases of
construction projects. Additionally, these procedures provide for
assessing fees for DBC services in conjunction with other activities
associated with construction, consultation and inspections projects.


The annual Appropriations Act authorizes the Director of the Division of
Budget and Accounting to credit from the various appropriations for
construction, renovations, additions to and betterment of State buildings
to the Division of Building and Construction sufficient sums to pay for
the cost of architectural/engineering and supervision of construction.
The collected fees will be deposited/credited to the appropriate revenue
account (XX-100-082-2065-3717) by Treasury's Chief Fiscal Officer and will
be considered revenue in accordance with the Appropriations Act.

The following construction management fee schedule shall be assessed on
all projects regardless of fund source and shall be in effect for design
and construction contracts awarded after November 1, 1993.

  • A fee equal to 8% of the construction cost as determined at the
    time of award of construction contracts will be assessed on all
    projects regardless of funding source. Payment of the 8% will be
    made in increments as follows:

    At the time of Project Initiation, 1% of the projected
    construction cost estimate (CCE) or $10,000, whichever is less,
    will be assessed. A fee equal to 3% of the CCE, reduced by the
    amount previously paid at Project Initiation, will be assessed
    upon award of the consultant (A/E) contract. The remaining 5% of
    the fee will be assessed at the time of award of construction
    contracts and will be adjusted as necessary, given the previous
    payment of the incremental fee.

    An 8% fee will be assessed on the contract cost of all studies,
    project support contracts and purchase orders including design
    amendments at the time of award.

    The Director of Building and Construction reserves the right, with
    the concurrence of the Director of the Division of Budget and
    Accounting, to assess a lower fee if an outside private
    construction or project management firm is engaged by DBC and
    funded by the Client Agency to monitor the project.

  • On projects with a CCE greater than $35,600 but less than or equal
    to $250,000, if the Client Agency assumes project management for
    design and construction, the 8% fee will be reduced to 3% of the
    construction cost. This fee is intended to cover the
    administrative costs incurred in providing consultant selection,
    financial management and construction bidding services.

  • An 8% fee will be assessed for all change order processing
    including agency scope changes.

  • A $500 fee will be assessed to initiate an Agency Consultant
    contract. The fee is intended to partially cover the cost of
    administering the selection of the agency consultant, processing
    invoices and monitoring the agency consultant contract.

  • A $35 per hour fee will be assessed for all DBC code inspections
    and special plan reviews related to agency consultant projects,
    annual permits, small construction projects completed under the
    DBC delegated authority provisions and special inspections
    requested by the Client Agency. The hourly rate for DBC code
    inspections and special plan reviews will be subject to review and
    adjustment annually.


A fee for outside architect/engineer services will be assessed against the
using agency for the design of buildings, facilities and other projects.
Fees shall be based upon: (1) a factor of direct salary costs; (2) cost
competitive proposals; (3) lump sum proposals; (4) negotiated fees; (5)
fees established through the A/E Term Contract. These fees are considered
a component of the overall project cost and are not part of the management
fee structure. The Director of the Division of Building and Construction
may charge a fee if a project is designed in-house by D.B.C. staff or for
DBC administrative services. This fee may be based on direct salary and
overhead costs or a percentage of the construction cost estimate not to
exceed 10%.


The Fine Arts Inclusion Act (NJSA 52:16A-25) provides for the dedication
of a fee up to 1 1/2% of the CCE for inclusion of fine arts works to
enhance the quality and aesthetic effects of State buildings by use of
sculptures, murals, monuments, frescoes, fountains and other art forms.
Whether the Act is applicable to a project or not will depend upon
recommendations of the State architect, in coordination with the New
Jersey Council of the Arts and the client agency. Unexpended balances for
this component are returned to the using agency during project close-out
or sooner.


Under current law, (P.L. 1975, c.127) the Division of Building and
Construction is required to assess 1/2% of all projects with a CCE of
$1,000,000 or more for affirmative actions programs. These funds shall be
held in a separate project obligation.


On New Construction and Alteration and Renovation Projects with a CCE
greater than $500,000 a contingency of 3% to 5% of the CCE will be
established in the project budget and will be used to cover design
amendments and change orders resulting from job-related conditions. For
Alteration and Renovation Projects with a CCE of less than $500,000 a
contingency of 6% to 10% will be used. Scope changes registered by the
Using Agency will not be included in the contingency but must be
authorized by means of a separate requisition/encumbrance. Where trust
fund accounts are involved, procedures for the transfer of funds as
required by the Bond Appropriation Act will be followed. Agencies will be
requested to provide
additional contingencies when the contingency balance reaches 33% of its
original level and the project is less than 75% complete. Unexpended
balances in the contingency funds will be returned to the Using Agency at
the completion of the project.


Accounting procedures are set forth in the New Jersey Comprehensive
Financial System (NJCFS) User Guide Procedures Manual (Section IX). If
the Using Agency requires assistance in preparation of the
Intergovernmental payment vouchers forms or documentation to support its
request for design or construction of a project, the Division of Building
and Construction should be contacted. All requisitions will be
electronically submitted by the using agencies. The Division will place
approval electronically and process through NJCFS.

The Division of Building and Construction will act only after requisitions
(RD's) have been processed through the State accounting system. The
amount of funds requisitioned should only be for those project components
of the appropriation which are the responsibility of the Division of
Building & Construction (e.g. A/E services, program planning or
construction). However, in the description section of the requisition,
the agency must indicate the total amount of funds appropriated,
regardless of source (e.g. Federal, State, other), along with costs
associated with every project component. The total appropriation may
exceed the total amount of funds encumbered to DBC in cases where other
State agencies are responsible for furniture acquisition, equipment, land
acquisition, etc. These project component costs will be reviewed by the
Office of Management and Budget prior to the time the requisition is
entered into the accounting system. Requisitions for projects which have
not been approved as part of the annual capital budget process or which
have not received prior OMB approval will be returned to the using agency
by OMB, unapproved, for further justification.

Total funds for each phase of the construction project, including
Architect/Engineer fees, construction contingencies, constructing
management services and construction contract costs must be encumbered
utilizing one sole account number prior to the initiation of work by the
Division of Building and Construction. Under normal circumstances, only
one (1) account number per project will be accepted. The primary
exception to this requirement will be for projects where multiple fund
sources are utilized and accounting/statutory regulations prohibit the
commingling of funds in one account.

Requisitions (RD's) not complying with this procedure will not be approved
and processed by the DBC. The Director, Division of Building and
Construction, will administer all funds for the design, engineering,
construction and management of projects. Using Agencies will be kept
informed on the status of projects by means of information copies of all
pertinent documents.

Brian Newman
General Services Administration
Richard F. Keevey
Division of Budget & Accounting

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