Meeting Contract Requirements - Guide to Successfully Completing ADOT Projects

Subcontractor

General Requirements

Because ADOT’s contract is with the prime contractor, not the subcontractor, working as a subcontractor requires less interaction with ADOT. Nevertheless, there are still some requirements and opportunities for interaction. Although subcontractors are not ultimately responsible to ADOT for the contract, it is important that subcontractors do quality work in a timely manner.  This will help ensure prompt payment and prime contractors are more likely to use your company to perform work in the future.

Communication and a good working relationship with the prime contractor is key.  

Subcontractor Approval

ADOT must approve a subcontractor before it can begin work on any project. In order for this to occur, the prime contractor must submit a completed subcontractor request form (SRF) signed by the subcontractor. The SRF form can be found in the Contractor's Information section of the ADOT website. 

Payment Reporting, Prompt Payment and Retainage

Prime contractors are required to pay their subcontractors within seven days of receiving payment from ADOT, and subcontractors are required to pay tier subcontractors within seven days as well. Similarly, prime contractors are required to make final payment to a subcontractor of all monies owed within seven days of receiving payment from ADOT. Prime contractors are required to enter payments made to all subcontractors in the ADOT DBE System each month in order to track prompt payment and so that ADOT can track and report awards, commitments and payments made to DBE and non-DBE subcontractors to federal funding sources.

ADOT pays contractors based on quantities determined by ADOT Inspectors for work completed during a specific time period. There are certain monthly cutoff dates for contractor’s work to be evaluated so that payment for work can be issued by ADOT each month.  See Contractor Cycle Dates section of the ADOT website for a list of cutoff dates for the current year.

ADOT monitors prompt payment. Subcontractors will receive an email notification when the prime contractor reports payment.  It is important for subcontractors to report to ADOT in the DBE System and to the Resident Engineer or Field Office if they have not been paid promptly.  This reporting must be done within 45 days otherwise ADOT will determine that subcontracts have been promptly paid. 

If partial and final payment (including any retention) is not made or not reported by the prime contractor within 7 days from the date ADOT pays the prime contractor, ADOT will retain two times the dollar amount not paid to each subcontractor. If full payment is made within 30 days of ADOT’s payment to the contractor, the amount withheld by ADOT will be released. If full payment is made after 30 days of ADOT’s payment to the contractor, ADOT will release 75 percent of the funds withheld. ADOT will retain 25 percent of the monies withheld as liquidated damages.

If the contractor fails to make prompt payment for three consecutive months, or any four months over the course of one project, or if the contractor fails to make prompt payment on two or more projects within 24 months, ADOT may, in addition, invoke the following remedies: Withhold monthly progress payments until the issue is resolved and full payment has been made to all subcontractors, terminate the contract for default, and/or disqualify the contractor from future bidding, temporarily or permanently, depending on the number and severity of violations.

ADOT typically does not hold retention from prime contractors. However, if the prime contract allows for retainage, then prime contractors may hold retention against a subcontractor. If the prime contract provides for retention, the prime contractor and each subcontractor of any tier must not retain a higher percentage than ADOT may retain under the prime contract.

Furthermore, if a subcontractor is performing work on multiple contracts for the same contractor or subcontractor of any tier, the contractor or subcontractor of any tier shall not withhold or reduce payment from its subcontractors on the contract because of disputes or claims on another contract.

For more information on prompt payment requirements, watch this video on the FHWA website.  For more information on payment laws, see the chapter 15 of the Department of Labor’s Field Operations Handbook in the Contractor’s Information section of the ADOT website.

Certified Payroll

Subcontractors are also required to submit payroll information for all of their employees using the ePayroll system.

Any project that received federal funding requires payroll reporting for all employees working on the project. This is done through the LCPtracker program.

When prevailing wages are being paid, payroll information must also be tracked using the LCPtracker program to generate a Certified Payroll Report (CPR). Payroll information is entered separately for each individual employee being paid. The prime contractor must submit a CPR every week.

The first time a prime adds you to a project in LCPtracker, you should be provided with an LCPtracker ID and password by the agency which awarded you the contract.

If you have any tier subcontractors, each of your subcontractors must be then be added to LCPtracker, at which point a user ID and password will be sent to them automatically, allowing them to submit payroll data for their own employees.

Required payroll information includes pay rates, hours worked, fringe benefits, and deductions. This information may be uploaded from a spreadsheet instead of being inputted manually on the website. You may also be asked to submit information about the numbers and types of employees (e.g., managers, supervisors, clerks) working on the project.

A subcontractor not completing/submitting required payroll information will cause the prime contractor to be sanctioned by ADOT and cause payment to the subcontractor to be delayed. 

You can sign up for training with LCPtracker or the ADOT DBE system in the Field Reports section of the ADOT website. 

ADOT also holds workshops on Certified Payroll reporting every month. You can learn more about Certified Payroll Reporting classes on the same website.

Subcontractor Payment Reporting

ADOT is required by law to collect contractor, subcontractor and tier subcontractor payment information (a tier subcontractor is a company that subcontracts to a subcontractor). This means that a prime contractor must enter all subcontractor payment information into the ADOT DBE System website.

Once the prime contractor has added your project to its DBE System, your first task will be to add any tier subcontractors to the project. When adding a subcontractor to the project, you will need to input some information about its role in the project and whether it counts towards the DBE goal. You will also need to attach a copy of your contract with that subcontractor.

After receiving your first payment from the prime contractor (and every month thereafter while the project is ongoing), you must submit information on the payments you have made to each of your own sub-tier subcontractors during the previous month into the DBE System by the 15th day of the current month (e.g., information for payments made in April must be submitted by May 15th). For each of your subcontractors, you will be asked to provide the amount paid, the payment date, and whether the subcontractor was paid promptly. By law, subcontractors are required to be paid within 7 days of the firm they are contracted to receiving payment themselves. If a subcontractor was not paid within 7 days, or if for some reason you cannot tell if a subcontractor was paid in that time frame, there is a space for additional explanation.

As a subcontractor, it is important for you to verify receipt of payment after the prime contractor or the company you are subcontracted to enter the payment information in the ADOT DBE System. This reporting must be done within 45 days otherwise ADOT will determine that subcontracts have been promptly paid.

A Prompt Payment Guide can be found in the Contractor Information section of the ADOT website.  A video is also available to guide you through this process.

Once a project is complete and all payments have been made and confirmed, the prime contractor must submit a Certification of Payments form for each DBE they utilized on the project. This form certifies that all payments have been made to the DBE subcontractor, and both the prime and subcontractor must sign the form. The Certification of Payments form can be found in the BECO section of the ADOT Website.

Dispute Resolution Process

It is critical that any issues that arise are addressed and resolved as quickly as possible. Ideally, all issues will be resolved informally between the parties involved. If this is not possible, the first step when a dispute has occurred is to give verbal notice to the Resident Engineer. If the Resident Engineer is unable to resolve the issue, a written notification should be submitted within two working days to ensure that the issue does not stagnate. If necessary, the issue can be escalated to the District Engineer or State Engineer’s office. Issue resolution is a key component of partnering, so for more detail on this process, see Partnering 101: A Guide to the Basics of Partnering with ADOT in the Partnering section of the ADOT website. 

Record Retention

Following completion of the project and notification of final close-out procedures, per ADOT requirements, you are required to keep all contract files, financial files and other supporting materials for the project for five years from the date that ADOT issues a final acceptance to the contractor of the construction project or the design consultant’s work is complete as defined in the contract, whichever is later.

Contact the Prime contractor for the specific retention requirements for your contract.
 
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Pursuant to Title VI of the Civil Rights Act of 1964, and the Americans with Disabilities Act (ADA), ADOT does not discriminate on the basis of race, color, national origin, age, sex or disability. Persons that require a reasonable accommodation based on language or disability should contact ADOT’s Civil Rights Office at 602.712.8946 or at civilrightsoffice@azdot.gov. Requests should be made as early as possible to ensure the State has an opportunity to address the accommodation.

De acuerdo con el título VI de la Ley de Derechos Civiles de 1964 y la Ley de Estadounidenses con Discapacidades (ADA por sus siglas en inglés), el Departamento de Transporte de Arizona (ADOT por sus siglas en inglés) no discrimina por raza, color, nacionalidad, edad, género o discapacidad.  Personas que requieren asistencia (dentro de lo razonable) ya sea por el idioma o por discapacidad deben ponerse en contacto con la Oficina de Derechos Civiles al 602.712.8946 o en civilrightsoffice@azdot.gov. Las solicitudes deben hacerse lo más pronto posible para asegurar que el equipo encargado del proyecto tenga la oportunidad de hacer los arreglos necesarios.