CONSTRUCTION & EPC

What federal construction and EPC work asks for that commercial work does not

A construction or EPC firm that already performs well commercially is not automatically ready for federal work. The differences are specific and mostly administrative: bonding capacity, wage determinations, a cost accounting structure that can survive an audit, and a set of FAR clauses that shift risk in ways commercial contracts do not. This page names them.

THE SHORT ANSWER

The construction is usually not the hard part. Federal construction adds bonding above $150,000, Davis-Bacon wage and certified-payroll obligations that begin at $2,000, a written safety program that must be in place before mobilization, and stricter limits on how much you may subcontract. If you pursue cost-reimbursable work, it also adds an accounting system that can survive an audit. Small businesses are exempt from Cost Accounting Standards entirely, which most firms do not know.

What actually changes when the government is your customer

What changes is everything around the work: how you are paid, what you must prove about your costs, what wage you must pay and how you document it, and how much you may subcontract. You must also have a written safety program in place before mobilization.

Most of that is administrative and most of it is knowable in advance. The firms that struggle are usually the ones that discovered it in the middle of a contract rather than before bidding.

This page names the specific differences, with citations, so you can judge your own readiness rather than guess at it.

Bonding is the first gate, and the threshold is lower than you think

On federal construction, performance and payment bonds are required above $150,000 of contract price, at 100 percent of the price. Between $35,000 and $150,000 the government must still obtain alternative payment protections, which is a different mechanism most contractors have never encountered.

Bonding capacity is usually the binding constraint. Federal projects are frequently larger than the firm's commercial backlog, and the surety looks at the same balance sheet. SBA's Surety Bond Guarantee program exists for exactly this gap: it guarantees a share of the bond to the surety, which lets a surety write a bond it would otherwise decline.

The details matter more than the headline. The guaranteed amount is $9 million, rising to $14 million only when a federal contracting officer signs a certification. The guarantee percentage is 90 percent for contracts at or below $100,000, and for firms in certain socioeconomic categories including service-disabled veteran-owned, veteran-owned, HUBZone, and socially and economically disadvantaged-owned. It is 80 percent otherwise, stepping down slightly as contract value rises. There is a fee of 0.6 percent of contract price, and no fee on bid bonds.

One caution: SBA's own consumer-facing page states the $14 million figure without the contracting-officer certification condition, and its partner page describes the guarantee percentages without listing two of the regulatory categories. Read 13 CFR Part 115 rather than the summary page.

Performance and payment bonds above $150,000: Required at 100 percent of contract price. The statute says $100,000 and the FAR says $150,000; 41 U.S.C. 1908(b)(2)(D) freezes the FAR figure, so the FAR governs. acquisition.gov/FAR/28.102-1.
Alternative payment protections, $35,000 to $150,000: A band most contractors do not know exists. The contracting officer must obtain one of several protections rather than full bonds.
Bid guarantees: At least 20 percent of the bid price, capped at $3 million, on sealed-bid construction. acquisition.gov/FAR/28.101-2.
SBA Surety Bond Guarantee: $9 million maximum, or $14 million with a signed federal contracting-officer certification. Guarantee is 90 percent only in defined cases, 80 percent otherwise. Fee 0.6 percent; bid bonds are free. 13 CFR Part 115.

Wage requirements start at $2,000, not $150,000

Davis-Bacon wage requirements apply to construction contracts over $2,000. That is not a typo, and it is the single most common threshold mistake in this space: people conflate it with the bond threshold.

What it means in practice is that on almost any federal construction project, you must pay the wage determination rates in the contract, including fringe benefits, and you must document it. Certified payrolls are not optional paperwork; they are the evidence, and they are audited. The obligation flows down to subcontractors, which means you need to be collecting and reviewing their payrolls, not just your own.

The clause was renamed in 2018. It is now "Construction Wage Rate Requirements" rather than "Davis-Bacon Act", which matters when you are searching for it.

52.222-6 — Construction Wage Rate Requirements (AUG 2018): The Davis-Bacon clause. Applies above $2,000 and is prescribed at FAR 22.407(a), not 22.403. Certified payroll and posting obligations follow from it. acquisition.gov/FAR/22.407.
52.222-11 — Subcontracts (Labor Standards): Flow-down of the labor standards to subcontractors, and the prime's responsibility for their compliance. This is where most documentation failures actually occur. acquisition.gov/FAR/52.222-11.
Davis-Bacon thresholds are expressly exempt from inflation adjustment: The October 2025 inflation rule that moved the simplified acquisition and other thresholds could not touch Davis-Bacon, service-contract, bond, or trade-agreement thresholds. They will not drift upward on their own. 90 FR 41872.

Safety is a contract requirement, and the prime owns it

Federal construction safety is not only an OSHA question. USACE and NAVFAC contracts incorporate their own safety requirements, and those are contractual conditions you must satisfy in writing before work starts.

The USACE manual was retitled in March 2024 to "Safety and Occupational Health (SOH) Requirements". It is no longer the "Safety and Health Requirements Manual" that older templates reference. The accompanying forms and paragraph numbering changed with it, so a safety plan built from a 2014-era template will cite clauses that no longer exist.

The point that catches primes most often: subcontracting the work does not subcontract the duty. OSHA's construction standards state explicitly that the prime remains responsible for compliance, and a prime that assumed its subcontractor's safety program covered the site has a finding waiting for it.

EM 385-1-1, retitled March 2024: Now "Safety and Occupational Health (SOH) Requirements". The Accident Prevention Plan requirement sits at paragraph 2-7.b and the Activity Hazard Analysis at 2-6, with a mandatory ENG Form 6293. References to "01.A/01.B" are 2014 numbering. USACE EM 385-1-1.
The prime remains responsible: 29 CFR 1926.16(b) makes the controlling contractor responsible for compliance on the site, regardless of how the work is divided. A subcontractor's program does not transfer the obligation. 29 CFR 1926.16.
UFGS 01 35 26: Titled "Governmental Safety Requirements". Incorporated into USACE and NAVFAC specifications, and where it applies it governs over a generic corporate safety manual.

Cost accounting is what separates fixed-price from cost-reimbursable

A firm that has only done fixed-price commercial work has never needed an accounting system that separates direct from indirect costs, allocates them under a disclosed method, and produces data an auditor can trace. If you intend to pursue cost-reimbursable or larger negotiated federal work, that system is a prerequisite, not an improvement.

Two regimes are worth understanding precisely because the published summaries are wrong so often. Cost Accounting Standards apply to certain negotiated contracts, but small businesses are exempt from CAS entirely, which many firms do not realize, and the thresholds are in the middle of changing. The basic applicability threshold is defined by reference to the certified-cost-or-pricing-data threshold. A final rule moves it to $35 million effective 1 October 2026, with the full-coverage and Disclosure Statement trigger rising from $50 million to $100 million. The FAR has not yet been conformed to the statutory figures, so regulation and statute currently disagree.

The practical implication is straightforward: if you are a small business doing fixed-price construction, CAS is almost certainly not your problem today. It becomes your problem the moment you win work large enough to leave the size standard behind. That is a planning question, and it is much cheaper to plan than to retrofit.

Small businesses are exempt from CAS: 48 CFR 9903.201-1(b)(3) exempts small business concerns from Cost Accounting Standards in full. Growth past the size standard ends the exemption. 48 CFR 9903.201-1.
Thresholds moving 1 October 2026: Basic CAS coverage to $35 million; full coverage and Disclosure Statement to $100 million; the $7.5 million trigger exemption eliminated. Confirm which text your solicitation points to. 48 CFR Part 9903 (eCFR).
Certified cost or pricing data: FAR says $2.5 million; the DoD statute says $10 million for contracts after 30 June 2026; the civilian statute says $2 million. Adequate price competition generally removes the requirement entirely. acquisition.gov/FAR/15.403-4.

The construction clauses that move risk

Construction contracts carry a set of clauses that allocate risk in ways commercial contracts typically do not. The two that decide the most money are the site conditions clause and the site investigation clause, and they interact.

The differing site conditions clause gives you an equitable adjustment if you encounter conditions that differ materially from what the contract indicated. The site investigation clause says you are expected to have visited the site and to have drawn reasonable conclusions from what you saw and from the contract documents. Read together, they mean the value of a site visit is not diligence theater; it is the boundary of your entitlement later. The firms that recover on a differing-site-conditions claim are the ones whose pre-bid file shows what they reasonably concluded and why.

One live caution: a September 2026 proposed rule would remove and reserve several construction clauses, including 52.236-1, -4, -19, -26, -27 and -28. It is a proposal, not a rule, but it means the construction clause set is actively in flux and should be read from your solicitation rather than a template.

52.236-2 — Differing Site Conditions: The equitable-adjustment mechanism for materially different site conditions. Notice requirements are strict and short. acquisition.gov/FAR/52.236-2.
52.236-3 — Site Investigation and Conditions Affecting the Work: Establishes that you are expected to have investigated the site. This is the clause that defines what you are deemed to have known. acquisition.gov/FAR/52.236-3.
52.236-15 — Schedules for Construction Contracts: Requires a project schedule in a specified form and makes it a contract deliverable, not an internal tool. acquisition.gov/FAR/52.236-15.
52.219-14 — the subcontracting limits are stricter for construction: General construction primes may not pay more than 85 percent of the amount the Government pays for contract performance, EXCLUDING the cost of materials, to subcontractors that are not similarly situated entities. Special trade contractors are capped at 75 percent. Two details get lost when this is summarized: it limits payments to non-similarly-situated firms rather than imposing a self-performance floor, and the base excludes materials. So it is not simply 85 percent of contract price, which matters when you are pricing a bid. acquisition.gov/FAR/52.219-14.
Subcontracting plans for construction start at $2,000,000: Higher than the $900,000 general threshold, and not required of small businesses at all. acquisition.gov/FAR/19.702.

Where the work is actually advertised

One practical note that saves time. USACE does not run a separate public solicitation portal of its own any more; opportunities are advertised through SAM.gov, along with those of the rest of the federal government. Older links to service-specific business-opportunity pages are dead ends.

What is genuinely useful is knowing which districts and which programs buy the work you do, which is a research question rather than a portal question. That is the part worth doing properly before you spend proposal dollars.

SAM.gov is the single source: Contract opportunities, entity registration, and the representations that make you eligible for award. An expired registration makes everything else moot. SAM.gov.

Check this against the source, not against us

Every rule above is published by an agency, not by us. Thresholds and clause numbers change, and a summary written today can be wrong next year. Read the primary source before you act on any of it; that is the standard we would hold our own work to.

Nothing on this page is legal, accounting, or tax advice, and reading it creates no engagement.

Where we fit

Construction and EPC is the sector we know best, so we have already mapped this territory rather than researching it on your dime. ORIENT looks at where your firm stands on bonding capacity, wage compliance, safety documentation, accounting structure, and the subcontracting limits, then gives you a costed sequence for the gaps that would block an award. We are not a surety and we do not place bonds. What we do is make sure that when you walk into that conversation, the rest of the file is not what loses it.

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