3.7.5.1 General.
1. In the event a determination is made by a
loan recipient after a construction contract is executed that changes or
modifications to the original contract are necessary or would better serve the
purpose of the loan recipient, such loan recipient may, at its discretion,
execute such change orders pertaining to the construction that are necessary
under the circumstances, as provided in the contract documents and when in
accordance with state law.
2.
Change orders must not change, vary, or alter the basic purpose or effect of
the project unless allowed by the Department. Change orders must be technically
adequate, the costs must be necessary and reasonable, and eligible/ineligible
costs must be appropriately separated.
3.7.5.2 Change Order Submittals.
1. After completion of the claims resolution
and/or change order negotiation process between the loan recipient and the
contracting party, a fully executed change order must be submitted to the
Department for review and approval, in order to obtain a DWSIRLF loan
eligibility/allowability determination.
2. If any change order is submitted to the
Department that is not complete and fully executed by the loan recipient, the
contracting party, and the registered engineer if appropriate, the Department
may return such change order without review. However, unilateral change orders
executed by the loan recipient, and the registered engineer if appropriate, and
identified as such, that are issued in accordance with the contract documents
may be submitted to the Department for review and approval, in order to obtain
a DWSIRLF loan eligibility/allowability determination.
3. The loan recipient may submit a complete
and fully executed change order which has been executed conditional upon a
DWSIRLF loan eligibility/allowability determination by the Department.
4. All change orders must be
submitted to the Department for review and approval in a timely manner. The
Department may withhold payments to the loan recipient if change orders are not
submitted in a timely manner.
5. If
possible, approval of a change order should be secured from the Department
before the work is started, particularly for change orders including time
extensions as per Rule
3.7.5.4 below. Approval may also be
secured after the work is started; however, the loan recipient must bear the
cost if the work is determined to be ineligible or unallowable.
6. When the eligible cost of a project will
be significantly reduced by a change order or change orders, the Department may
issue an amendment to the loan agreement decreasing the loan amount, and the
loan recipient must execute such amendment within the time frame established by
the Department.
3.7.5.3
Department Review.
In order to allow the Department to perform a technical
and loan allowability review, requests for change order approvals must conform
to Department guidance, requirements and regulations.
3.7.5.4 Time Extensions.
Change orders which include time extensions exceeding 30
days beyond the original contract completion date, and/or documentation that
the loan recipient is implementing all legal remedies provided in the contract
documents for failure to complete construction when required, must be submitted
to the Department as specified in Rule
3.7.7(9) of these
regulations. Justification for contract time extensions included in a change
order must be prepared, but need not be submitted to the Department unless the
total time extensions for the contract exceed 30 days after the original
contract completion date, in which case justification for all time extensions
must be submitted to the Department for an allowability
determination.
