Capital Expenditure Projects Resource
This document describes the general process for capital expenditures. While reflective of standard practice, this process is not inclusive of all review steps and agencies may add to these steps as needed.
Definitions
Capital Expenditure (CapEx)
Expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life (2 CFR 200.1).
For projects totaling more than $1,000,000, a written justification is required describing the project need and why the capital expenditure is the best option to address that need. The justification should be maintained in the program/project files, but does not need to be submitted to the Treasury, unless it is for a non-enumerated “other” use.
For projects totaling more than $10,000,000, there are a number of additional requirements. In addition to written justification for the project, extensive labor reporting is required. This includes certification of laborers and mechanics receiving prevailing wages or detailed information on the number of contractors and subcontractors working on the project, including wages by classification, comparison to prevailing wage and records to substantiate the information. Additionally, a certification regarding a project labor agreement (pre-hire collective bargaining) should be provided, or if not available, then a project workforce continuity plan is required.
Capital Construction
Capital Construction projects are CapEx projects on state-owned land and buildings that meet the CRS 24-30-1301 definition of Capital Construction. Most of these projects were appropriated in the Long Bill, As with all capital construction by the State of Colorado, the Office of the State Architect (OSA) has statutory authority over these projects as described in CRS 24-30-1303 and related statutes.
Governing Regulations
Uniform Guidance (2 CFR 200)
All federal funds must be managed in accordance with 2 CFR 200 (Uniform Guidance). While all sections of 2 CFR 200 are required in managing federal funds, CapEx projects are addressed in Subpart D: Post Federal Award Requirements, which addresses general program management, procurement standards and performance, financial and subrecipient monitoring. Uniform Guidance also requires specific contract provisions be included in non-federal entity contracts using federal funds.
State Fiscal Rules
As with all funds distributed by the State of Colorado, funds must be managed in accordance with State Fiscal Rules and/or all applicable State policies and procedures. This includes the Procurement Code, OSC Competition Requirements for Grants Policy, Technical Guidance and FAQs, and OSC Guide for Monitoring Subrecipients.
Office of the State Architect Guidance
The Office of the State Architect (OSA) is statutorily responsible for the administration of state funded planning, construction, energy conservation and real estate transactions at state agencies and institutions of higher education. The Office of the State Architect is responsible only for state owned land and buildings.
OSA Contract - This should be the basis of all capital construction contracts.
Supplemental General Conditions: Federal Provisions - This document reflects the federal regulations that will apply to all federal programs.
Uniform Guidance
All federally funded projects must conform to Uniform Guidance. Some sections of Uniform Guidance that are specific to capital construction include:
Records Retention Requirements
Retention of records for capital construction is three years per federal requirements.
Domestic Preference
This requirement applies to most items and construction materials including iron, aluminum, steel, cement, and other manufactured products that are made of metal, plastic, aggregate (which includes optical fiber) and lumber. These requirements apply to purchases by the State and Subrecipients, and it is the purchaser’s responsibility to document how the preference was addressed. It is also the State’s responsibility to ensure that the requirements of this section are included in all subawards including all contracts and purchase orders for work or products using federal funds and to ensure compliance with 2 CFR 200.322 Domestic Preference.
Disposition Requirements
CapEx funds may be used to acquire real and personal property, supplies, and equipment. Recipients must follow the applicable provisions of the Uniform Guidance regarding property standards (2 CFR 200.310-316). When federal funds are used to acquire real and personal property, supplies, and equipment, recipients must follow the applicable provisions of the Uniform Guidance regarding property standards (2 CFR 200.310-316), when disposing of, or changing the use of, capital assets.
Period of Performance Disposition Instructions
During the period of performance, a recipient may use property, supplies, or equipment purchased or improved with funds for a purpose other than the purpose for which it was purchased or improved if such other purpose is also consistent with the eligible use.
Procurement Guidance (2 CFR 200.317-200.327)
State Agencies
Funded programs must follow 2 CFR 200.317 on procurement.
Subrecipients
Non-federal entities that are subrecipients must follow the federal procurement standards or their own policies, whichever is more restrictive. State agencies are responsible for monitoring subrecipients for compliance with federal procurement regulations.
Additional Guidance
The Davis-Bacon and related Acts apply to contractorsThe Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area.
Capital Construction Projects
For additional information contact the Office of the State Architect.
Buy America
If an infrastructure project is funded by a source that requires compliance with the Buy America Act, even if it is funded by federal AND non-federal funding sources, the entire project is subject to the Buy America provisions. If there are multiple projects within an award (i.e. an infrastructure project and a non-infrastructure project), only the infrastructure portion is subject to the provisions.