HomeMy WebLinkAboutPR 17061: AMEND SECTION 9-101 'COMPLIANCE WITH FEDERAL REQUIREMENTS' OF THE CITY OF PORT ARTHUR PROCUREMENT POLICIES AND PROCEDURES MANUAL P.R. No. 17061
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RESOLUTION NO.
A RESOLUTION TO AMEND SECTION 9 -101
`COMPLIANCE WITH FEDERAL REQUIREMENTS' OF
THE CITY OF PORT ARTHUR PROCUREMENT
POLICIES AND PROCEDURES MANUAL IN
ACCORDANCE WITH THE FEDERAL TRANSIT
ADMINSTRATION
WHEREAS, pursuant to Resolution 11 -345, the City Council of the City of Port Arthur
approved the 2011 Revised Procurement Policies and Procedures Manual; and
WHEREAS, the City Council of the City of Port Arthur City Council finds it prudent to
amend Section 9 -101 of the Manual to clarify compliance with federal requirements as it relates
to the Federal Transit Administration.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF PORT ARTHUR:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That Section 9 -101 of the Procurement Policies and Procedures Manual is
hereby amended in substantially the same form as attached hereto as Exhibit "A ".
Section 3. That a copy of this caption be spread upon the Minutes of the City
Council.
READ, ADOPTED AND APPROVED on this day of May, A.D., 2012, at a
Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote:
AYES: Mayor
Council Members
NOES:
Deloris "Bobbie" Prince, Mayor
ATTEST:
Sherri Bellard
City Secretary
APPROVED AS TO FORM:
T o LI 1-11
Val Tizeno
City Attorney
APPROVED FOR ADMINISTRATION:
John A. Comeaux, P.E.
City Manager
Deborah Echols, CPA
Director of Finance
iddia
Shawna Tubbs; CPPO, CPPB
Purchasing Manager
EXHIBIT "A"
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CITY OF PORT ARTHUR
PROCURMENT POLICIES AND PROCEDURES
SUPPLEMENT — FEDERAL TRANSIT ADMINISTRATION
THE RECIPIENT'S RESPONSIBILITIES
1. WRITTEN STANDARDS OF CONDUCT. The Common Grant Rules require each recipient
to maintain written standards of conduct governing the performance of its employees that are
engaged in or otherwise involved in the award or administration of third party contracts.
a. Personal Conflicts of Interest. As provided in the Common Grant Rules and in the
Federal Transit Administration (FTA) Master Agreement, no employee, officer, agent, or
board member, or his or her immediate family member, partner, or organization that
employs or is about to employ any of the foregoing individuals may participate in the
selection, award, or administration of a contract supported with FTA assistance if a
conflict of interest, real or apparent, would be involved. Such a conflict would arise when
any of those individuals previously listed has a financial or other interest in the firm
selected for award.
b. Gifts. The recipient's officers, employees, agents, or board members may neither
solicit nor accept gifts, gratuities, favors, or anything of monetary value from contractors,
potential contractors, or parties to subcontracts. The recipient may set minimum rules
when the financial interest is not substantial or the gift is an unsolicited item of nominal
intrinsic value.
c. Violations. To the extent permitted by State or local law or regulations, such standards
of conduct will provide for penalties, sanctions, or other disciplinary action for violation
of such standards by the recipient's officers, employees, agents, board members, or by
contractors, subcontractors, or sub - recipients or their agents.
2. SELF - CERTIFICATION. FTA expects each recipient to self - certify that its procurement
system complies with Federal requirements for any FTA assisted third party contract the
recipient undertakes and administers.
3. THIRD PARTY CONTRACTING CAPACITY. As part of an FTA recipient's obligation to
maintain adequate technical capacity to carry out its project and comply with the Common Grant
Rules, the recipient's third party contracting capability must be adequate to undertake its
procurements effectively and efficiently in compliance with applicable Federal, State, and local
requirements. The Common Grant Rules require the recipient to maintain a contract
administration system to ensure that it and its third party contractors comply with the terms,
conditions, and specifications of their contracts or purchase orders and applicable Federal, State
and local requirements. Many FTA recipients assign contracting duties to technical, financial or
management personnel. If the recipient lacks qualified personnel within its organization to
undertake the various procurement tasks, such as drafting specifications, evaluating contracts, or
performing internal audits for the recipient, FTA expects the recipient to acquire the necessary
services from sources outside the recipient's organization. When using outside sources, the
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that would result in conflicting roles that might bias a contractor's judgment or would result in
unfair competitive advantage.
a. Written Procurement Procedures. The Common Grant Rule for non - governmental
recipients requires the recipient to have written procurement procedures, and by
implication, the Common Grant Rule for governmental recipients requires written
procurement procedures as a condition of self - certification. The recipient's procurement
procedures are expected to address:
(1) Solicitations. The following standards apply to solicitations:
(a) Clear Descriptions. A clear and accurate description of the technical requirements for the
material, product, or service to be procured is required (discussed further in Chapter VI of
this circular).
(b) Nonrestrictive Specifications. In competitive procurements, the description may not
contain features that unduly restrict competition. Notably, FTA may not finance
procurements that use exclusionary or discriminatory specifications (discussed further in
Chapter VI of this circular).
(c) Quality Requirements. A description may include a statement of the qualitative nature
of the material, product, or service to be procured and, when necessary, describe
minimum essential characteristics and standards to which the property or services must
conform if it is to satisfy the recipient's intended use (discussed further in Chapter VI of
this circular).
(d) Preference for Performance Specifications. The Common Grant Rule for governmental
recipients advises the recipient that — [d]etailed product specifications should be avoided
if at all possiblell The Common Grant Rule for non - governmental recipients advises the
recipient to describe technical requirements in terms of — functions to be performed or
performance required, including the range of acceptable characteristics or minimum
acceptable standardsl1 (discussed further in Chapter VI of this circular).
(e) Brand Name or Equal. When it is impractical or uneconomical to write a clear and
accurate description of the technical requirements of the property or services to be
acquired, a —brand name or equalll description may be used to define the performance or
other salient characteristics of the property or services sought. The specific features or
salient characteristics of the named brand which must be met by offer ors of —an equallj
proposal must be clearly stated (discussed further in Chapter VI of this circular). The
Common Grant Rule for non - governmental recipients further requires (and governmental
recipients should have) written procurement procedures that address:
(2) Necessity. The recipient's need for the property or services (discussed further in Chapter VI
of this circular).
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(3) Lease versus Purchase. The use of lease or purchase alternatives to achieve an economical
and practical procurement (discussed further in Chapter IV of this circular).
(4) Metric Usage. The acceptance, to the extent practicable and economically feasible, of
products and services dimensioned in the metric system of measurement (discussed further in
Chapter IV of this circular).
(5) Environmental and Energy Efficiency Preferences. A preference, to the extent practicable and
economically feasible, for products and services that conserve natural resources, protect the
environment, and are energy efficient (discussed further in Chapter IV of this circular). The
recipient's procurement procedures should also address the following matters:
(6) Procurement Methods. What procurement methods may be used (discussed further in Chapter
VI of this circular).
(7) Legal Restrictions. Any Federal, State, or local restrictions on the recipient's acquisitions
(discussed further in Chapter IV of this circular).
(8) Third Party Contract Provisions. The specific third party contract provisions required for each
third party contract including requirements that each third party contractor extend those
provisions to its subcontractors to the extent required (discussed further in Chapter IV of this
circular).
(9) Sources. The availability and use of various sources of property and services (discussed
further in Chapter V of this circular).
(10) Resolution of Third Party Contracting Issues. Procedures to resolve third party contracting
issues (discussed further in Chapter VII of this circular).
b. Adequate Third Party Contract Provisions. The Common Grant Rules require that all
third party contracts include provisions adequate to form a sound and complete
agreement. Compliance with Federal laws and regulations will usually result in the
addition of many other contract provisions to ensure compliance with those laws and
regulations. See, Chapter IV of this circular for requirements applicable to third party
contractors and the property and services those third party contractors agree to provide.
c. Industry Contracts. The recipient should take special care when using an industry
developed contract or contract that may be provided by a bidder or offer or. Not only may
that contract lack the required Federal provisions, but its terms may also be unfavorable
to the recipient. FTA does not intend to prohibit the use of industry forms, specifications,
or contract terms when their use would benefit the recipient and would accommodate
Federal requirements. Instead, FTA intends to remind the recipient to use industry
developed forms, specifications, or contract terms cautiously.
d. Record Keeping. The Common Grant Rules require the recipient to prepare and
maintain adequate and readily accessible project performance and financial records,
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covering procurement transactions as well as other aspects of project implementation.
The Common Grant Rules require the recipient to maintain these records for three years
after the recipient and sub recipients, if any, have made final payment and all other
pending matters are closed. The recipient must also prepare, maintain, and distribute the
following documents as necessary:
(1) Procurement History. The Common Grant Rules require the recipient to maintain and make
available to FTA written records detailing the history of each procurement, as follows:
(a) Procurement Method. A governmental recipient must (and a non - governmental recipient
should) provide its rationale for the method of procurement it used for each contract,
including a sole source justification for any acquisition that does not qualify as
competitive, while a non - governmental recipient need only provide a justification for
lack of competition when it does not obtain competitive bids or proposals for contracts
exceeding the simplified acquisition threshold. See, Chapter II, Subsection 3.b for
discussion of amount of simplified acquisition threshold;
(b) Contract Type. A governmental recipient must (and a non - governmental recipient
should) state the reasons for selecting the contract type it used (fixed price, cost
reimbursement, and so forth);
(c) Contractor Selection. A governmental recipient must state its reasons for contractor
selection or rejection. FTA expects the recipient to include a justification for each
noncompetitive award. For procurements exceeding the simplified acquisition threshold
(formerly the small purchase threshold — see, Chapter II, Subsection 3.b.), a non-
governmental recipient must state its reasons for contractor selection, but need not state
its reasons for contractor rejection. Each recipient should include a written responsibility
determination for the successful contractor; and
(d) Cost or Price. Each recipient must evaluate and state its justification for the contract cost
or price.
(e) Reasonable Documentation. The extent of documentation should be reasonable.
Documents included in a procurement history should be commensurate with the size and
complexity of the procurement itself. FTA recognizes that these written records will
vary greatly for different procurements. For example, a receipt or bill accompanying a
$100 credit card purchase might contain all of the required infoimation to support that
J procurement. Procurements that are more substantial may require extensive
documentation.
(2) Access to Records. Apart from the more limited record access provisions of the Common
Grant Rules, 49 U.S.C. Section 5325(g) provides FTA and DOT officials, the U.S. Comptroller
General, or any of their representatives, access to and the right to examine and inspect all
records, documents, and papers, including contracts, related to any FTA project financed with
Federal assistance authorized by 49 U.S.C. Chapter 53.
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e. Special Notification Requirements for States. For many years, various Federal
appropriations laws imposed notification requirements on all recipients of Federal
assistance awards exceeding $500,000. Currently, notification requirements have been
limited to States, but the $500,000 threshold has been removed. Therefore, each State
must include provisions in all its requests for proposals, solicitations, Federal assistance
applications, forms, notifications, press releases, or other publications involving FTA
assistance, stating that FTA is or will be providing Federal assistance for the project, the
amount of Federal assistance FTA has provided or expects to provide, and the Catalog of
Federal Domestic Assistance (CFDA) Number of the program that authorizes the Federal
assistance. FTA interprets the statute to require that subrecipients, lessees, or third party
contractors of the State at any tier also comply with those notification requirements.
Because appropriations laws expire annually and these provisions have not been enacted
as permanent legislation or even appear consistently in the same appropriations acts, it is
necessary to review the various Federal appropriations acts for the applicable fiscal year
to determine the required level of notification. FTA`s Master Agreement incorporates the
notification requirements in effect when that Master Agreement is issued.
f. Use of Technology/Electronic Commerce. Along with other technology the recipient
may choose to employ, the recipient may use a well - structured Electronic Commerce
system to conduct third party procurements.
(1) Sufficient System Capacity. The recipient's electronic system must have sufficient system
capacity necessary to accommodate all Federal requirements, including applicable accessibility
requirements, for full and open competition.
(2) Written Procedures. The recipient must establish adequate written procedures before any
solicitation takes place. Those procedures must be sufficient to ensure that all the infolination
FTA requires for project administration is entered into the recipient's electronic system and can
be made readily available to FTA as needed.
(3) Uses. The recipient may undertake third party procurements through:
(a) Standard Bidding and Proposal Procedures. Standard procurement procedures may be
implemented through an electronic medium or resource to the extent of the system's
capacity.
(b) Electronic Bidding and Reverse Auctions. FTA recipients may use electronic bidding
and reverse auctions.
1. Value. Procurements with a value of $100,000 or less may be conducted through
electronic bidding or reverse auctions. If permitted under State or local law,
procurements with a greater value may also be conducted through electronic
bidding or reverse auctions. The recipient may acquire the services of a contractor
to manage electronic bidding and conduct reverse auctions.
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2. Procedures. Although neither FTA nor the Office of Federal Procurement Policy
have established a formal definition of — reverse auctionsi or formal procedures for
reverse auctions for Federal Government or Federal assistance purposes, the U.S.
Comptroller General has approved the following procedures for reverse auctions of
less than $100,000:
a Notification. The buyer —will notify potential participants of an upcoming
auction, specifying the time that the auction will start and close. 11
b Bid or Quote Submission. Those who choose to participate will submit bids or
quotations to the online auction Web site.
c Information Displayed During the Auction. During the auction, the Web site
will display the property to be inspected, the current lowest quotation, and the
time remaining in the auction.
d Information Not Displayed During the Auction. The Web site will not display
the names of vendors, any other identifying information, or the time at which
quotations were submitted.
e Information Displayed at the End of the Auction. At the close of the auction,
competing vendors will be able to view all submitted quotations, as well as the
winning quotation, and a purchase order will be sent to the winning vendor.
f Information Provided at the End of the Auction. The buyer will provide the
name of the winning vendor and its quotation to unsuccessful vendors, but not
the identity of the unsuccessful vendors.
4. AUDIT. A third party contract audit can be an important tool for managing procurements. In
addition to special audits FTA may initiate, the recipient may find it desirable to perform an
audit of one or more specific third party contracts as part of its own management process. The
firm performing the recipient's federally required single annual audit may also recommend the
audit of a specific third party contract.
a. The Recipient's Auditors. In some cases, the recipient has sufficient qualified
personnel to perform the third party contract audits it needs. In the alternative,
the recipient may engage a qualified independent accountant or accounting firm
to perform its audit responsibilities.
b. Independent Auditors. The recipient's personnel will not be able to perform
certain audits required by the Federal Government, such as audits required by
the Single Audit Act of 1984, as amended, 31 U.S.C. Sections 7501 et seq. and
OMB Circular A -133, — Audits of States, Local Governments, and Non - Profit
Organizations 11 as revised. If the Federal Government requires additional audits,
it may also be necessary for the recipient to engage independent auditors not
performing other work for the recipient. See also Chapter IV, subparagraph 2.b
(19) (a) of this circular.
c. Federal Audit Agencies. The Federal Government maintains a continuing
Federal audit capability at certain contractor locations. On occasion, these
auditors may be used to audit an FTA recipient's third party contracts. In other
circumstances, an audit by a Federal agency may best serve the interests of the
Federal Government and the recipient. This can be true of audits to determine a
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contractor's provisional overhead (burden) and General & Administrative
(G &A) rates that need to be verified by audit for specific contract periods.
Federal audit services, however, might not be available when needed; then the
recipient will need to obtain the services of an independent private auditing firm
that can perform the audit soon after an audit is requested.
5. FRAUD. As a reminder, 49 U.S.C. Section 5323(1) extends the criminal fraud provisions of 18
U.S.C. Section 1001 to all certificates, submissions, or statements made in connection with any
program financed under the Federal transit program. In addition, the Program Fraud Civil
Remedies Act of 1986, as amended, 31 U.S.C. Sections 3801 et seq., and DOT regulations,
— Program Fraud Civil Remedies,Ij 49 CFR Part 31, apply to any false or fraudulent statement or
claim made under the Federal transit program.
c. Procurement Size. The recipient should consider whether to consolidate or
break out the procurement to obtain a more economical purchase.
(1) Joint Procurements. It may be economically advantageous for a recipient to enter into a joint
procurement with others that have similar needs. The recipient responsible for undertaking the
joint procurement may, upon contract award, assign to the other participants responsibilities for
administering those parts of the contract affecting their property or services. Participation in a
joint procurement, however, does not relieve any participating recipient from the requirements
and responsibilities it would have if it were procuring the property or services itself, and does not
relinquish responsibility for the actions of other participants merely because the primary
administrative responsibility for a particular action resides in an entity other than in itself.
(2) Small Procurements. In other circumstances, breaking out procurements may provide greater
opportunities for Disadvantaged Business Enterprises (DBEs), small and minority firms, and
women's business enterprises to participate. As stated in paragraph 1.b(2) of this Chapter, the
FTA expects the recipient to ensure that it contracts only for its current and reasonably expected
needs. Absent efforts to foster greater opportunities for DBEs, small and minority firms, and
women's business enterprises, the recipient should not split a large procurement merely to gain
the advantages of small purchase available for federally assisted procurements of $100,000 or
less identified in 41 U.S.C. Section 403(11).
d. Options. The recipient's contracts may include options to ensure the future
availability of property or services, so long as the recipient is able to justify those
options as needed for its public transportation or project purposes. An option is a
unilateral right in a contract by which, for a specified time, a recipient may
acquire additional equipment, supplies, or services than originally procured. An
option may also extend the term of the contract. Chapter VI of this circular
contains procedures for evaluating options.
e. Lease versus Purchase. To obtain the best value, the recipient should review
lease versus purchase alternatives for acquiring property and, if necessary, should
obtain an analysis to determine the more economical alternative. The recipient
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may use FTA capital assistance to finance the costs of leasing eligible property if
leasing is more cost effective than full ownership. Before the recipient may lease
an asset, FTA regulations, — Capital Leases,II 49 CFR Part 639, Subpart C,
require the recipient to make a written comparison of the cost of leasing the asset
compared with the cost of purchasing or constructing the asset. Costs used in the
comparison must be reasonable, based on realistic current market conditions, and
based on the expected useful service life of the asset.
f. Specifications. Typically, the recipient is responsible for preparing
specifications that describe its needs while assuring that those specifications are
not exclusionary, discriminatory, unreasonably restrictive, or otherwise violate
Federal laws or regulations. In general, specifications should clearly describe the
property or services to be procured and state how the bids or proposals will be
evaluated.
(3) Some of the more typical requirements and restrictions that will affect the use of FTA
assistance to finance a recipient's third party contracts include:
a. Contractor Qualifications. The following Federal laws and regulations may affect
contractor selection:
(1) — Responsibilityll Requirements. In addition to the Common Grant Rules that require
contract awards be made only to responsible contractors, Federal transit law at 49 U.S.C. Section
5325(j) limits third party contractor awards to those contractors capable of successfully
performing under the terms and conditions of the proposed contract. Before selecting a
contractor for award, the recipient must consider such matters as contractor integrity, compliance
with public policy, record of past performance, and financial and technical resources. Moreover,
SAFETEA -LU now requires a recipient entering into a fixed guideway project contract to
consider the contractor's past performance, including information reported in FTA's required
Contractor Performance Assessment Reports,49 U.S.C. Section 5325(j)(2)(C).
(2) Debarment and Suspension. Debarment and suspension regulations and guidance include the
following:
(a) DOT Debarment and Suspension Regulations. Department of Transportation
(DOT) regulations, —Non procurement Suspension and Debarment, 2 CFR Part 120
apply to each third party contract at any tier of $25,000 or more, to each third party
each third party contract at any tier that must be approved by an FTA official irrespective
of the contract amount. See, 2 CFR Part 1200. Thus, the recipient must apply DOT's
debarment and suspension requirements to itself and each third party contractor at every
tier to the extent required by DOT's regulations that incorporate the requirements of
Office of Management and Budget (OMB),
— Guidelines to Agencies on Government wide Debarment and Suspension
(Nonprocurement),II 2 CFR Part 180.
(b) General Services Administration (GSA) Excluded Parties List System. Even though
the recipient may collect a debarment and suspension certification from the prospective
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third party contractor, or include a clause in the third party contract requiring disclosure,
FTA strongly recommends that the recipient check the Excluded Parties List System
(EPLS) maintained by the GSA and available at the Web site it maintains:
http: / /www.epls.gov/ before awarding a third party contract.
(c) State Debarment and Suspension Lists. A recipient may also treat any prospective
contractor or subcontractor listed on a centralized State government debarment and
suspension list as non responsible and ineligible for contract award.
(3) Conflict of Interest. The Common Grant Rules require the recipient to be aware of conflict of
interest issues a prospective contractor might have, including lack of impartiality, impaired
objectivity, or unfair competitive advantage, as discussed more fully in Chapter VI, paragraph
2.a(4)(h).
(4) Lobbying Certification and Disclosure. If the third party contract will exceed $100,000, the
recipient must obtain a lobbying certification before awarding the contract, and if applicable, a
lobbying disclosure from a prospective third party contractor. See, DOT regulations, —New
Restrictions on LobbyingII 49 CFR Part 20, modified as necessary by 31 U.S.C. Section 1352,
which implement the Byrd — Anti- LobbyingII Amendment, 31 U.S.C. Section 1352.
(6) Socio- Economic Development. Each FTA recipient must comply with applicable Federal
laws and regulations that provide competitive opportunities for a contractor that qualifies as a
disadvantaged business enterprise (DBE), minority owned firm, women's business enterprise, or
small business.
(a) Disadvantaged Business Enterprises (DBES). Section 451 of the — Hiring Incentives
to Restore Employment Act "(HIRE Act), Pub. L. 111 -147, Title IV, § 451, March 18,
2010, 23 U.S.C. Section 101 note, extends the Federal statutory provisions of Section
1101(b) of the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for Users, as amended
(SAFETEA -LU), to require FTA to make available at least 10 percent of its funding
under that Act for contracts with small business concerns owned and controlled by
socially and economically disadvantaged people. Each FTA recipient assists FTA in
meeting this national goal. To receive FTA assistance, each FTA recipient must comply
with applicable requirements of DOT regulations, — Participation by Disadvantaged
Business Enterprises in Department of Transportation Financial Assistance Programs,11
49 CFR Part 26. If the recipient is required to have a DBE program, the third party
contracts that the recipient has included in its DBE program determine whether the
recipient meets the DBE threshold for goal setting, and the goal if the threshold is met.
(b) Small and Minority Firms and Women's Business Enterprises. The Common Grant
Rules require each recipient and sub recipient to take steps to ensure that it uses small and
minority firms and women's business enterprises (irrespective of whether they qualify as
DBEs) to the fullest extent practicable. Notably, some potential contractors may have
established their home office in a Historically Underutilized Business Zone (HUBZone).
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A HUBZone small business is determined, qualified, and certified by the Small Business
Administration (SBA) and then added to the List of Qualified HUBZone Small Business
Concerns at SBA's website at http: / /www.sba.gov/hubzone. Although the Common
Grant Rule for governmental recipients includes labor surplus area firms in the category
of firms authorized for special treatment, this circular does not include them because
Section 7101(a) of the Federal Acquisition Streamlining Act of 1994, 15 U.S.C. Section
644 note, enacted after publication of the Common Grant Rule for governmental
recipients removed nearly all labor surplus area preferences.
1 Notice. The Common Grant Rules require each recipient to make information
about procurement opportunities available to potentially qualified firms. Each
governmental recipient is directed to include these contractors on solicitation lists
and request their participation when they are potential sources.
2 Contract Size. To foster greater participation of small and minority firms and
women's business enterprises, the Common Grant Rule for governmental
recipients directs the governmental recipient to divide its total contracting
requirements into small tasks or quantities, when economically feasible. The
Common Grant Rule for non - governmental recipients encourages the non-
governmental recipient to contract with consortia when a contract is too large
for one of these firms to handle individually.
3 Delivery Schedule. The Common Grant Rules require the recipient to specify
delivery schedules that encourage their participation.
4 Small Business Administration and the Department of Commerce Minority
Business Development Agency. The Common Grant Rules instruct the recipient
to use the services and assistance of the Small Business Administration and the
Department of Commerce's Minority Business Development Agency.
5 Subcontracting Opportunities. The Common Grant Rule for governmental
recipients directs each governmental recipient to require its prime third party
contractors to include the preceding provisions in FTA assisted subcontracts. The
Common Grant Rule for non - governmental recipients directs each non-
governmental recipient to consider whether firms competing for larger contracts
intend to subcontract with small businesses, minority -owned firms, and women's
business enterprises. In addition, DOT's — Disadvantaged Business Enterprise:
Program Improvements II amendments to its DBE regulations, effective February
28, 2011, now state that recipients may use race - neutral (and gender - neutral)
small business set - asides for prime contracts under a stated amount, although set -
asides restricted to DBEs continue to be prohibited except in limited and extreme
circumstances.
(5) Preference for U.S. Property —Buy America. FTA's —Buy Americatl law and regulations
apply to projects that involve the purchase of more than $100,000 of iron, steel, manufactured
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goods, or rolling stock to be delivered to the recipient to be used in the FTA assisted project. If
FTA funds are used for the project, Buy America requirements apply to all procurement
contracts under the project irrespective of whether a recipient decides to fund a discrete part of
the project without FTA funds. Only if an activity is outside the FTA project and is financed
entirely without funds to which FTA's Buy America regulations would apply may
the recipient disregard FTA's Buy America requirements. Property that the contractor acquires to
fabricate a deliverable for the recipient, such as tools, machinery, and other equipment or
facilities, is not subject to FTA's Buy America requirements unless the recipient intends to take
possession of that property upon completion of the project. Thus, if a third party contractor is
acquiring property for its general inventory of equipment or facilities to conduct its overall
business affairs, the recipient may enter the cost of that acquisition into its calculations of
overhead amounts applicable to the FTA assisted project irrespective of whether the property
acquired would comply with FTA's Buy America regulations. FTA's Buy America statute does
not pre -empt State laws with stricter requirements on the use of foreign articles, materials, and
supplies. FTA cautions that its Buy America regulations that apply to FTA assisted third party
procurements, published at 49 CFR Part 661, differ from Federal —Buy American ActiI
regulations that apply to direct Federal procurements, published in the FAR at 48 CFR Chapter
1, Subparts 25.1 and 25.2. FTA strongly recommends that the recipient review FTA's Buy
America regulations before undertaking any FTA assisted procurement.
h. Architectural Engineering (A &E) and Related Services— Special Requirements. Federal laws
and regulations impose the following requirements on A &E and related procurements:
(1) Qualifications -Based Requirements. For projects related to or leading to construction,
an FTA recipient must use the qualifications -based procurement procedures of 40 U.S.C.
Chapter 11 (— Brooks ActII procedures) when contracting for A &E services and other
services described in 49 U.S.C. Section 5325(b), which include program management,
construction management, feasibility studies, preliminary engineering, design,
architectural, engineering, surveying, mapping, or related services.
(2) Relation to Construction. The nature of the services to be performed and its
relationship to construction, not the nature of the prospective contractor, determines
whether qualifications -based procurement procedures may be used.
(a) Purpose of Services. FTA has long administered the requirement for using qualifications -
based procurement procedures for selection of contractors that perform A &E services, generally
associated with the construction, alteration, or repair of real property. FTA interprets 49 U.S.C.
Section 5325
(b) to authorize the use of qualifications -based procurement procedures only for those services
that directly support or are directly connected or related to construction, alteration, or repair of
real property. FTA's interpretation of 49 U.S.C. Section 5325(b) is consistent with typical
Federal policies implementing the — Brooks Act,II 40 U.S.C. Section 1102, which limits
qualifications -based procurement procedures to research, planning, development, design,
construction, alteration, or repair of real property. Thus if services, such as program
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management, feasibility studies, or mapping, are not directly in support of, directly connected to,
or directly related to, or lead to construction, alteration, or repair of real property, then the
recipient may not use qualifications-based procurement procedures to select the contractor that
p Y q p p
will perform those services.
(b) Requirements in the Context of a Construction Project. A project involving construction
(including an ITS project) does not always require the use of qualifications -based procurement
procedures. Whether qualifications -based procurement procedures may be used depends on the
actual services to be performed in connection with the construction project. For example:
1 End Products Used in Construction. The design or fabrication of message signs, signals,
and movable barriers that will become off -the -shelf items or will be fabricated and
delivered as final end products for installation in an FTA assisted construction project,
including an (ITS) construction project, are not services for which qualifications -based
procurement procedures
may be used.
2 Services Related to Design of Construction Projects. In contrast, services of a program
manager, project designer, construction manager, or engineer in which the contractor
would select the finished products to be acquired for an FTA assisted construction project
are services for which qualifications -based procurement procedures must be used.
3 Actual Construction. The actual construction or improvement to the real property to be
used in an FTA assisted construction project, however, are not services for which
qualifications -based procurement procedures may be used.
(c) Type of Contractor Not Determinative. The nature of the firm performing the services does
not determine whether it will be selected through the use of qualifications -based procurement
procedures. For example, if a well -known A &E firm offers to provide mapping services not
related to construction, alteration, or repair of real property, the recipient may not use
qualifications based procurement procedures to evaluate that contractor's offer. In contrast, if a
firm that does not generally provide A &E services offers to provide mapping services that are
directly in support of, directly connected to, or directly related to or lead to construction,
alteration, or repair of real property, the recipient must evaluate that offer using qualifications-
based procurement procedures.
i. Construction — Special Requirements. The following Federal laws and regulations impose
requirements that may affect FTA assisted construction projects:
(1) Bonding. The Common Grant Rules require bonds for all construction contracts exceeding
the simplified acquisition threshold (see, Chapter II, Subsection
3.b)unless FTA determines that other arrangements adequately protect the Federal interest.
FTA's bonding policies are as follows:
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(a) Bid Guarantee. Both FTA and the Common Grant Rules generally require each bidder to
provide a bid guarantee equivalent to 5 percent of its bid price. The —bid guaranteell must
consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument
accompanying a bid to ensure that the bidder will honor its bid upon acceptance.
(b) Performance Bond. Both FTA and the Common Grant Rules generally require the third party
contractor to obtain a performance bond for 100 percent of the contract price. A — performance
bondll is obtained to ensure completion of the obligations under the third party contract.
(c) Payment Bond. The Common Grant Rules generally require the third party contractor to
obtain a standard payment bond for 100 percent of the contract price. A — payment bondil is
obtained to ensure that the contractor will pay all people supplying labor and material for the
third party contract as required by law. FTA, however, has determined that payment bonds in the
following amounts are adequate to protect FTA's interest and will accept a local bonding policy
that meets the following minimums:
1 Less Than $1 Million. Fifty percent of the contract price if the contract\ price is not
more than $1 million,
2 More Than $1 Million but Less Than $5 Million. Forty percent of the contract price if
the contract price is more than $1 million but not more than $5 million, or
3 More Than $5 Million. Two and one half million dollars if the contract price is more
than $5 million.
(d) Acceptable Sureties. The Common Grant Rule for non - governmental recipients requires the
non - governmental recipient to obtain construction bonds from companies holding certificates of
authority as acceptable sureties under Department of the Treasury regulations, — Surety
Companies Doing Business with the United States,I1 31 CFR Part 223. For a current list of
approved sureties, see Department of the Treasury's Listing of Approved Sureties (Department
Circular 570), http: / /fms.treas.gov /c570 /c570.html. FTA encourages each governmental
recipient to require similarly acceptable sureties.
(e) Reduced Bonding. FTA recognizes that bonding costs can be expensive. FTA will accept a
local bonding policy that conforms to the minimums described in this subparagraph 2.h(1) of this
Chapter. FTA reserves the right to approve bonding amounts that do not conform to these
minimums if the local bonding policy adequately protects the Federal interest. A recipient that
wishes to adopt less stringent bonding requirements, for a specific class of projects, or for a
particular project should submit its policy and rationale to the Regional Administrator for the
region administering the project.
(f) Excessive Bonding. Compliance with State and local bonding policies that are greater than
FTA's bonding requirements do not require FTA approval. FTA recognizes that in some
situations bond requirements can be useful if the recipient has a material risk of loss because of a
failure of the prospective contractor. This is particularly so if the risk results from the likelihood
of the contractor's bankruptcy or financial failure when the work is partially completed.
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Nevertheless, if the recipient's — excessive bondind requirements would violate the Common
Grant Rules as restrictive of competition, FTA will not provide Federal assistance for
procurements encumbered by those requirements. Consequently, if the recipient's bonding
policies far exceed those described in this subsection, FTA reminds the recipient that it may find
it useful to submit its policy and rationale to the Regional Administrator for the region
administering the project.
(2) Seismic Safety. The recipient must include seismic safety provisions in its third party
contracts for the construction of new buildings or additions to existing buildings as required by
42 U.S.C. Sections 7701 et seq., and DOT regulations, — Seismic Safety,II 49 CFR Part 41 at
Sections 41.117 and 41.120, implementing the Earthquake Hazards Reduction Act of 1977, as
amended, 42 U.S.C. Sections 7701 et seq.
(3) Value Engineering. The Common Grant Rule for governmental recipients encourages them to
use value engineering provisions in contracts for construction projects, and cautions that value
engineering can be a pre- requisite for some Federal assistance awards. FTA generally will not
approve a New Starts grant application for final design funding or a full funding grant agreement
until value engineering is complete. It is important to note that some contractual arrangements
(for example, design -build contracts) may inherently include value engineering. When this is the
case, FTA does not require separate value engineering proposals, contract changes, or other
processes. From a procurement view, the concept of value engineering is more important than
the form it takes.
(4) Equal Employment Opportunity. The Common Grant Rules require that third party
construction contracts include provisions ensuring compliance with DOL regulations, — Office
of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of
Labor,II 41 CFR Chapter 60, which implement Executive Order No. 11246, —Equal
Employment Opportunity,Il September 24, 1965, as amended by Executive Order No. 11375,
— Amending Executive Order No. 11246 Relating to Equal Employment Opportunity,Il October
13, 1967.
(5) Prevailing Wages. Under 49 U.S.C. Section 5333(a), Davis -Bacon Act prevailing wage
protections apply to laborers and mechanics employed on FTA assisted construction, alteration,
or repair projects. The Common Grant Rules require third party contracts for construction,
alteration, or repair at any contract tier exceeding $2,000 to include provisions requiring
compliance with the Davis -Bacon Act, 40 U.S.C. Sections 3141 et seq., and implementing DOL
regulations —Labor Standards Provisions Applicable to Contracts Governing Federally Financed
and Assisted Constructiondj 29 CFR Part 5. The Davis -Bacon Act requires that contractors pay
wages to laborers and mechanics at a rate not less than the minimum wages specified in the wage
determination made by the Secretary of Labor. The Davis -Bacon Act also requires contractors to
pay wages not less than once a week. The recipient must include a copy of the current prevailing
wage determination issued by DOL in each contract solicitation and must condition contract
award upon the acceptance of that wage determination. These requirements are in addition to the
separate Wage and Hour Requirements addressed in paragraph 2.c(1) of this Chapter IV.
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(6) Anti- Kickback. Section 1 of the Copeland — Anti - Kickback' Act, at 18 U.S.C. Section 874,
prohibits anyone from inducing, by any means, any person employed on construction,
prosecution, completion, or repair of a federally assisted building or work, to give up any part of
his or her compensation to which he or she is otherwise entitled. Section 2 of that Act, at 40
U.S.C. Section 3145, as amended, and implementing DOL regulations, — Contractors and
Subcontractors on Public Building or Public Work Financed in Whole or in part by Loans or
Grants from the United States,II 29 CFR Part 3, impose record keeping requirement on all third
party contracts for construction, alteration, or repair exceeding $2,000. The Common Grant
Rules also require provisions for compliance with the Copeland — Anti- Kickbackll Act, as
amended, and implementing DOL regulations.
(7) Construction Safety. The Common Grant Rules require provisions to ensure safety at
construction sites so that no laborer or mechanic shall be required to work in surroundings or
under working conditions that are unsanitary, hazardous, or dangerous as prohibited by the safety
requirements of Section 107 of the Contract Work Hours and Safety Standards Act, 40 U.S.C.
Section 3704, and its implementing DOL regulations, — Safety and Health Regulations for
Construction,II 29 CFR Part 1926. Notably, Section 4104(c) of the Federal Acquisition
Streamlining Act of 1994, 40 U.S.C. Section 3701(b)(3)(A)(iii), increased the threshold for
construction safety protections to $100,000 from $2,000 as set forth in the Common Grant Rules,
so that a federally assisted construction contract must exceed $100,000 before these construction
safety requirements apply to that contract.
(8) Labor Neutrality. Executive Order No. 13502, —Use of Project Labor Agreements for
Federal Construction Projects,1I February 6, 2009, rescinds Executive Order No. 13202,
— Preservation of Open Competition and Government Neutrality Towards Government
Contractors' Labor Relations on Federal and Federally Funded Construction Projects,I1 February
17, 2001, as amended by Executive Order No. 13208, April 6, 2001, 41 U.S.C. Section 251 note.
Consequently, a recipient may now require the use of a project labor agreement (PLA) in its third
party contract, and a third party contractor or subcontractor may continue to use a PLA should it
choose to do so.
(9) Preference for U.S. Property —Buy America. For any FTA assisted project having third party
construction contracts exceeding $100,000, FTA's Buy America law and regulations require the
third party contractor to provide property produced or manufactured in the United States for use
in the construction project that the recipient acquires, unless FTA has granted a waiver
authorized by those regulations. If FTA funds are used for the project, Buy America
requirements apply to all third party procurement contracts under the project irrespective of
whether a recipient decides to fund a discrete part of the project without FTA funds. Only if an
activity is outside the FTA project and is financed entirely without funds to which FTA's Buy
America regulations would apply may the recipient disregard FTA's Buy America requirements.
FTA cautions that its Buy America regulations are complex and different from the Federal
—Buy American Act! regulations in the Federal Acquisition Regulation(FAR) at 48 CFR
Chapter 1, Subchapter D, Part 25, Subparts 25.1 and 25.2. Property that the contractor acquires
to perform its construction activities for the recipient, such as tools, machinery, and other
equipment or facilities, is not covered by FTA's Buy America requirements unless the recipient
intends to take possession of that property upon completion of the project. Thus, if a third party
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contractor is acquiring property for its general inventory of equipment or facilities to conduct its
overall business affairs, the recipient may enter the cost of that acquisition into its calculations of
overhead amounts applicable to the FTA assisted project irrespective of whether that property
would comply with FTA's Buy America regulations.
(10) Accessibility. Facilities to be used in public transportation service must comply with 42
U.S.C. Sections 12101 et seq.; DOT regulations, — Transportation Services for Individuals with
Disabilities (ADA),II 49 CFR Part 37; and Joint ATBCBDOT regulations, — Americans with
Disabilities (ADA) Accessibility Specifications for Transportation Vehicles,Ij 36 CFR Part 1192
and 49 CFR Part 38. Notably, DOT incorporated by reference into Appendix A of its regulations
at 49 CFR Part 37 the ATBCB's — Americans with Disabilities Act Accessibility Guidelineslj
(ADAAG), revised July 2004, which include accessibility guidelines for buildings and facilities.
DOT also added specific provisions to Appendix A of 49 CFR Part 37 modifying the ADAAG,
with the result that buildings and facilities must comply with both the ADAAG and the DOT
amendments.
SOURCES
A recipient will often have several sources from which to acquire the property and services it
needs as described below:
1. FORCE ACCOUNT. As used in this circular, —force account!' means the recipient's own
labor forces and equipment. The use of force account labor is a project management function,
rather than a procurement and contract administration function, except in the general sense of the
recipient's ability to perfoim work with its own forces rather than contracting with another entity
to acquire the property or services it needs, and the cost implications of the recipient's decision.
Although rarely exercised, FTA`s grant or cooperative agreement secures FTA the right to
determine the extent to which Federal assistance may be used to participate in force account
costs. FTA's concern is to assure that the recipient will have adequate technical capacity to
perform the work it undertakes reasonably economically and prudently. The third party
contracting guidance of this circular does not apply to a recipient's use of its own forces to
perform project work.
2. SHARED USE. The Common Grant Rule for governmental recipients encourages recipients
and subrecipients to enter into agreements for shared use of property and services. FTA
encourages non - governmental recipients to consider shared use if economical and feasible.
3. JOINT PROCUREMENTS. FTA uses the term —joint procurement!' to mean a method of
contracting in which two or more purchasers agree from the outset to use a single solicitation
document and enter into a single contract with a vendor for delivery of property or services in a
fixed quantity, even if expressed as a total minimum and total maximum. Unlike a State or local
government purchasing schedule, a joint procurement is not drafted for the purpose of
accommodating the needs of other parties that may later want to participate in the benefits of that
contract.
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a. Use Encouraged. The Common Grant Rules and FTA encourage recipients to procure
goods and services jointly with other recipients to obtain better pricing through larger
purchases. Joint procurements offer the advantage of being able to obtain goods and
services that may match each participating recipient's requirements better than those
likely to be available through an assignment of another recipient's contract rights. If
economical and feasible, FTA also participates in the costs of joint procurements by non-
governmental recipients.
b. All FTA and Federal Requirements Apply. When obtaining goods or services in this
manner, recipients participating in the joint procurement must ensure compliance with all
applicable FTA and Federal requirements and include all required clauses and
certifications in the joint solicitation and contract documents.
4. STATE OR LOCAL GOVERNMENT PURCHASING SCHEDULES OR PURCHASING
CONTRACTS. FTA uses the term —state or local government purchasing schedules] to mean an
arrangement that a State or local government has established with several or many vendors in
which those vendors agree to provide essentially an option to the State or local government, and
its subordinate government entities, to acquire specific property or services in the future at
established prices. These arrangements are somewhat similar to the General Services
Administration's (GSA) Cooperative Purchasing Program available for Federal Government use.
If the State or local government wishes to permit others to use its schedules, the State or local
government might seek the agreement of the vendor to provide the listed property or services to
others with access to the schedules, or it may permit the vendor to determine whether or not it
wishes to do so.
a. Use Encouraged. The Common Grant Rule for governmental recipients encourages
recipients and subrecipients to enter into State and local intergovernmental agreements
for procurements of property or services. If so permitted by State or local authorities, a
non - governmental recipient may also use State and local sources of property and
services.
b. All FTA and Federal Requirements Apply. When obtaining property or services in this
manner, the recipient must ensure all Federal requirements, required clauses, and
certifications (including Buy America) are properly followed and included, whether in
the master intergovernmental contract or in the recipient's purchase document. One way
of achieving compliance with FTA requirements is for all parties to agree to append the
required Federal clauses in the purchase order or other document that effects the
recipient's procurement. When buying from these schedules, the recipient should obtain
Buy America certification before entering into the purchase order. If the product to be
purchased is Buy America compliant, there is no problem. If the product is not Buy
America compliant, the recipient will need to obtain a waiver from FTA before
proceeding.
5. FEDERAL EXCESS AND SURPLUS PROPERTY. The Common Grant Rule for
governmental recipients encourages recipients to use Federal excess and surplus property
managed by GSA when feasible and economical rather than procuring new property. The GSA
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Federal Property Management Regulations, 41 CFR Parts 101 -42 through 101 -46, 101 -48, and
101 -49 govern the eligibility of recipients and subrecipients, as well as others, to acquire supplies
and services through GSA's personal property utilization and disposal programs.
6. FEDERAL SUPPLY SCHEDULES. A recipient must be specifically authorized by Federal
law before it may use a GSA Federal Supply Schedule.
a. Full Use of Federal Supply Schedules. Appendix B of GSA Order ADM 4800.2E,
— Eligibility to Use GSA Sources of Supply and Services,II explains that FTA recipients
eligible for full use of GSA Schedules are limited by the Federal Property and
Administrative Services Act of 1949, as amended, at 40 U.S.C. Section 502(a)(3) to the
Washington Metropolitan Area Transit Authority and the District of Columbia
Department of Mass Transportation. The Government of American Samoa, the
Government of Guam, Virgin Islands Department of Public Works, and the
Commonwealth of the Northern Marianas are similarly authorized access to GSA
schedules by 48 U.S.C. Section 1469e.
b. Limited Use of Federal Supply Schedules. Federal laws authorize State and Local
Governments (including institutions of higher education) to use Federal Supply
Schedules to acquire information technology (IT) and to purchase products and services
to facilitate recovery from a major disaster. In both circumstances, GSA defines the term
—State and Local Government11 broadly to include many FTA governmental recipients
and others as follows:
The States of the United States, counties, municipalities, cities, towns, townships, tribal
governments, public authorities (including public or Indian housing agencies under the
United States Housing Act of 1937), school districts, colleges, and other institutions of
higher education, council of governments (incorporated or not), regional or interstate
government entities, or any agency or instrumentality of the preceding entities (including
any local educational agency or institution of higher education), and including legislative
and judicial departments. GSA has determined that the term —State and Local
Government!' does not include — contractors, or grantees, of State or local governments.11
Nevertheless, under the GSA Cooperative Purchasing Program, State and local
governmental entities (including institutions of higher education) receiving Federal
assistance, either as an FTA recipient or subrecipient, are eligible users by virtue of
conforming to the definition of State or local government entities; the source of funding
for these entities is irrelevant.
(1) Information Technology. Section 211 of the E- Government Act of 2002, 40 U.S.C. Section
502(c)(1), authorizes —State and local governments,II within limits established by law, to
acquire IT of various types through GSA's Cooperative Purchasing Program, Federal Supply
Schedule 70.
(2) Major Disaster or Emergency Recovery. Since February 1, 2007, Section 833 of the John
Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109 -364, amended
40 U.S.C. Section 502(d), to authorize State and local government entities to use any GSA
Federal Supply Schedule to acquire property and services in advance of a major disaster declared
by the President of the United States, as well as in the aftermath of an emergency event. The
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State or local government is then responsible for ensuring that the property or services acquired
will be used for recovery. More information about major disaster and emergency recovery
acquisition is available at GSA`s Website:
http:// www. gsa. gov/ Portal/gsa /ep /contentView.do ?faq= yes &pageTypeId =8
9 &contentId= 22410 &contentType = GSA_OVERVIEW.
(3) Local Preparedness Acquisition. Section 2 of the Local Preparedness Acquisition Act, Pub.
L. 110 -248, June 26, 2008, amended 40 U.S.C. Section 502(c) by adding paragraph (2)
authorizing —State and local governments within limits established by law, to acquire law
enforcement, security and certain related items of various types through GSA's Cooperative
Purchasing Program Federal Supply Schedule 84 or any amended or later version of that Federal
supply classification group. Information about cooperative purchasing is available at GSA's Web
site: http:// www. gsa. gov/ PortaUgsa /ep /channelView.do ?pageTVPeId= 8 199 &channe
IPage=% 252Fep% 252Fchannel% 252FgsaOverview.jsp &channelId = 13
c. All FTA and Federal Requirements Apply. When using GSA schedules to acquire
property or services in this manner, the recipient must ensure all Federal requirements,
required clauses, and certifications (including FTA' s Buy America requirements) are
properly followed and included, whether in the master intergovernmental contract or in
the recipient's purchase document. One way of achieving compliance with FTA
requirements is for all parties to agree to append the required Federal clauses in the
purchase order or other document that effects the recipient's procurement. When buying
from these schedules, the recipient should obtain an FTA Buy America certification
before entering into the purchase order. If the property to be purchased is Buy America
compliant under FTA regulations, the recipient may proceed with its acquisition. If the
property is not Buy America compliant under FTA standards, the recipient will need to
obtain a waiver from FTA before proceeding.
d. Competition and Price Reasonableness. When using GSA schedules to acquire
property or services, a recipient will have fulfilled the Common Grant Rules' competition
requirements if it seeks offers from at least three sources. FTA expects a recipient using a
price published on a GSA schedule to consider whether the GSA price is reasonable. The
recipient may also seek a lower price than that published on the GSA schedules.
7. EXISTING CONTRACTS. Occasionally, a recipient may find it advantageous to use existing
contract rights. As used in this circular, — existing contracts) means a contract that, when formed,
was intended to be limited to the original parties thereto, and does not include State or local
government purchasing schedules or purchasing contracts as discussed in sections 4, 5, and 6 of
this Chapter.
a. Permissible Actions. Within the conditions set forth below, FTA permits a recipient to
use existing contract rights held by another recipient:
(1) Exercise of Options. A recipient may use contract options held by another recipient with the
following limitations:
ii
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(a) Consistency with the Underlying Contract. FTA expects the recipient to ensure that
the terms and conditions of the option it seeks to exercise are substantially similar to the
terms and conditions of the option as stated in the original contract at the time it was
awarded.
(b) Price. The recipient may not exercise an option unless it has determined that the
option price is better than prices available in the market, or that when it intends to
exercise the option, the option is more advantageous.
(c) Awards Treated as Sole Source Procurements. The following actions constitute sole
source awards:
1 Failure to Evaluate Options Before Awarding the Underlying Contract. If a
contract has one or more options and those options were not evaluated as part of
the original contract award, exercising those options after contract award will
result in a sole source award.
2 Negotiating a Lower Option Price. Exercising an option after the recipient has
negotiated a lower or higher price will also result in a sole source award unless
that price can be reasonably determined from the terms of the original contract, or
that price results from Federal actions that can be reliably measured, such as
changes in Federal prevailing labor rates, for example. In the circumstances
described in this paragraph, FTA assistance may be used to support a sole source
award only if that award can be justified under FTA's third party contract
standards for sole source awards.
(2) Assignment of Contract Rights. FTA expects the recipient to limit its procurements to the
amount of property and services required to meet its reasonably expected needs without adding
excess capacity simply for the purpose of assigning contract rights to others at a later date. FTA
expects the recipient to be able to justify the quantities it procures. Having written statements of
its anticipated material requirements in the recipient's contract files may prove helpful.
For example, if the supplies or services were solicited, competed, and awarded through the use of
an indefinite - delivery - indefinite- quantity (IDIQ) contract, the solicitation and also the contract
award are expected to contain both a minimum and maximum quantity that represent the
recipient's reasonably foreseeable needs. The establishment of State or local government
purchasing schedules intended to be available for future use as discussed in section 4 of this
Chapter, however, are not usually financed with FTA assistance. FTA assistance would be used
to acquire property or services listed on such a contract only to the extent needed for public
transportation purposes. Nevertheless, a recipient may find that it has inadvertently acquired
contract rights in excess of its needs. The recipient may assign those contract rights to other
recipients if the original contract contains an assignability provision that permits the assignment
of all or a portion of the specified deliverables under the terms originally advertised, competed,
evaluated, and awarded, or contains other appropriate assignment provisions. Some refer to this
process as — piggybacking. 11
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(a) Acquisition Through Assigned Contract Rights. Although FTA does not
encourage the practice, a recipient may find it useful to acquire contract rights through
assignment by another recipient. A recipient that obtains contractual rights through
assignment may use them after first determining that the original contract price remains
fair and reasonable, and the original contract provisions are adequate for compliance with
all Federal requirements. The recipient need not perform a second price analysis if a price
analysis was performed for the original contract. However, FTA expects the recipient to
determine whether the contract price or prices originally established are still fair and
reasonable before using those rights. See, FTA`s —Best Practices Procurement Manua111
for further information about procurements through assignment of another`s contract
rights. The recipient using assigned contract rights is responsible for ensuring the
contractor's compliance with FTA' s Buy America requirements and execution of all the
required Buy America preaward review and post delivery review certifications. For
further details, please refer to FTA`s Pre -Award and Post - Delivery Handbook for buses
and railcars, which contain copies of those certifications. The recipient seeking to use
assigned contract rights will not usually be able to determine whether the assigning
recipient originally procured unreasonably large quantities. Before proceeding with the
assignment, however, FTA does expect the recipient seeking the assignment to review the
original contract to be sure that the quantities the assigning recipient acquired, coupled
with the quantities the acquiring recipient seeks, do not exceed the amounts available
under the assigning recipient's contract.
(b) Alternatives to Assigned Contract Rights. Assignments limit a recipient's choices to
specific property and services acquired to meet another recipient's particular needs, and
may be less suited to the needs of the recipient seeking the assignment. More desirable
approaches may include:
1 Joint Procurements. Recipients should consider combining or —pooling lj their
procurements to obtain better pricing. In general, joint procurements are often
more desirable than procurements through assignment because an assignment
does not represent the combined buying power of more than one purchaser at the
time when prices are established. A joint procurement may also offer the
advantage of permitting the parties to acquire property and services more closely
responsive to each purchaser's material requirements than would be available
through assignment of existing contract rights. FTA cautions, however, that if two
or more parties jointly solicit and award an IDIQ contract, total minimum and
maximum quantities are expected to be stated in the solicitation and contract.
2 Intergovernmental Procurements. As discussed in sections 4, 5, and 6 of this
Chapter, Federal, State, and local governmental resources may provide attractive
procurement opportunities.
b. Impermissible Actions. A recipient may not use Federal assistance to
finance:
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(1) Improper Contract Expansion. A contract has been improperly expanded when it includes a
larger scope, greater quantities, or options beyond the original recipient's reasonably anticipated
needs. A contract has also been improperly expanded when excess capacity has been added
primarily to permit assignment of those contract rights to another entity. The Common Grant
Rules require the recipient to have procurement procedures that preclude the recipient from
acquiring property or services it does not need.
(2) Cardinal Changes. A significant change in contract work (property or services) that causes a
major deviation from the original purpose of the work or the intended method of achievement, or
causes a revision of contract work so extensive, significant, or cumulative that, in effect, the
contractor is required to perform very different work from that described in the original contract,
is a cardinal change. Such practices are sometimes informally referred to as — tag- ons.II A
change within the scope of the contract (sometimes referred to as an — in- scopeII change) is not a
— tag -onlj or cardinal change.
(a) Identifying Cardinal Changes. Although FTA has provided additional guidance in its
Best Practices Procurement Manual, FTA has not developed a finite list of acceptable
contract changes. Recognizing a cardinal change to a third party contract can be difficult.
A cardinal change cannot be identified easily by assigning a specific percentage, dollar
value, number of changes, or other objective measure that would apply to all cases.
(b) Changes in Quantity. To categorize virtually any change in quantity as a prohibited
cardinal change (sometimes referred to as an — out- of- scopell change) fails to account for
the realities of the marketplace and unnecessarily restricts a recipient from exercising
reasonable freedom to make minor adjustments contemplated fairly and reasonably by
the parties when they entered into the contract. The U.S. Supreme Court decision in
Freund v. United States, 260 U.S. 60 (1922) supports FTA's policy.
(c) Tests. Among other things, customary marketing practices can influence the
determination of which changes will be — cardinal.II Other tests involve the nature and
extent of the work to be performed, the amount of effort involved, whether the change
was originally contemplated at the time the original contract was entered into, or the
cumulative impact on the contract's quantity, quality, costs, and delivery terms.
(d) Rolling Stock. In the case of rolling stock, a major change in quantity or a substitution
of major end items not contemplated when competition for the original award took place
would generally be a cardinal change. Another cardinal change would, at this time,
include a change from a high -floor to a low -floor vehicle. Changing an engine might
result in a cardinal change depending on the circumstances surrounding the project and
whether a compatible replacement could be obtained through competition. FTA,
however, considers changes to seating, fabrics, and colors, exterior paint schemes,
signage, and floor covering, and other similar changes to be permissible changes.
(e) Federal Procurement Standards. The broader standards applied in Federal contracting
practice reflected in Federal court decisions, Federal Boards of Contract Appeals
decisions, and U.S. Comptroller General decisions provide guidance in determining
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whether a change would be treated as a cardinal change. FTA does not imply that these
Federal procurement decisions are controlling. FTA intends to consider the collective
wisdom within these decisions in determining the nature of third party contract changes
along the broad spectrum between permissible changes and impermissible cardinal
changes. Other guidance can be found in FTA's Best Practices Procurement Manual and
— Frequently Asked Questionsll at the FTA Web site:
http: / /www.fta.dot.gov/ funding /thirdpartyprocurement /grants financing6039.html.
FTA intends to monitor its recipients and oversight contractors to ensure that this concept
is well understood and uniformly applied. This approach permits greater latitude but,
because it requires analysis, it can sometimes require a greater knowledge of Federal
contracting practices. In any event, before attempting to change the terms of its contract,
the recipient should review the contract's provisions to ensure that the contract permits
the change sought.
8. THE OPEN MARKET. The recipient will probably acquire most of the property and
services it needs through procurements in the open market. The next two chapters of this
circular will address proper procedures for conducting and administering such
procurements.
PROCEDURAL GUIDANCE FOR OPEN MARKET PROCUREMENTS
1. COMPETITION REQUIRED. Except as permitted by Federal law or regulations, the
Common Grant Rules require a recipient of Federal assistance to use third party procurement
procedures that provide full and open competition. The Federal Transit Administration's (FTA)
enabling legislation at 49 U.S.C. Section 5325(a), also requires an FTA recipient to conduct all
third party procurements financed under 49 U.S.C. Chapter 53 in a manner that provides full and
open competition as determined by FTA. The recipient may make third party contract awards on
the basis of:
a. Solicitation by the Recipient. Compliance with the solicitation procedures described in
this Chapter will fulfill FTA requirements for —full and open competition.11
b. Unsolicited Proposals. A recipient may also enter into a third party contract based on
an unsolicited proposal, as defined in Chapter I of this circular, when authorized by
applicable State or local law or regulation. Receipt of an unsolicited proposal does not, by
itself, justify contract award without providing for full and open competition. Unless the
unsolicited proposal offers a proprietary concept that is essential to contract performance,
FTA expects the recipient to seek competition. To satisfy the requirement for full and
open competition, FTA expects the recipient to take the following actions before entering
into a contract resulting from an unsolicited proposal:
(1) Receipt. Publicize its receipt of the unsolicited proposal,
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(2) Adequate Description. Publicize an adequate description of the property or
services offered without improperly disclosing proprietary information or
disclosing the originality of thought or innovativeness of the property or services
sought,
(3) Interest in the Property or Services. Publicize its interest in acquiring the
property or services described in the proposal,
(4) Adequate Opportunity to Compete. Provide an adequate opportunity for
interested parties to comment or submit competing proposals, and
(5) Contract Award Based on Proposals Received. Publicize its intention to award
a contract based on the unsolicited proposal or another proposal submitted in
response to the publication. If it is impossible to describe the property or services
offered without revealing proprietary information or disclosing the originality of
thought or innovativeness of the property or services sought, the recipient may
make a sole source award to the offeror. A sole source award may not be based
solely on the unique capability of the offeror to provide the specific property or
services proposed.
c. Prequalification. Prequalification lists are most commonly used in procurements of
property involving lengthy evaluations needed to determine whether it satisfies the
recipient's standards. The Common Grant Rule for governmental recipients peituits a
recipient to prequalify people, firms, and property for procurement purposes under the
following standards:
(1) Lists. The recipient ensures that all prequalification lists it uses are current.
(2) Sources. The recipient ensures that all prequalification lists it uses include
enough qualified sources to provide maximum full and open competition.
(3) Qualification Periods. The recipient permits potential bidders or offerors to
qualify during the solicitation period (from the issuance of the solicitation to its
closing date). FTA, however, does not require a recipient to hold a particular
solicitation open to accommodate a potential supplier that submits property for
approval before or during that solicitation. Nor must a recipient expedite or
shorten prequalification evaluations of bidders, offerors, or property presented for
review during the solicitation period. Prequalification should not be confused with
reviews of technical qualifications that are an essential process in two -step
procurements and qualifications -based procurements, as discussed further in
subsections 3.e and 3.f of this Chapter, respectively.
2. SOLICITATION REQUIREMENTS AND RESTRICTIONS. The Common Grant Rules
require that each solicitation provide the following information:
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a. Description of the Property or Services. The solicitation and the contract awarded must
include a clear and accurate description of the recipient's technical requirements for the
property or services to be acquired in a manner that provides for full and open
competition.
(1) What to Include. The description may include a statement of the qualitative
nature of the property or services to be acquired. When practicable, the recipient
should describe its requirements in terms of functions to be performed or level of
performance required, including the range of acceptable characteristics or
minimum acceptable standards. The Common Grant Rules for governmental
recipients states that — Detailed product specifications should be avoided if at all
possible.II Both Common Grant Rules express a preference for performance or
functional specifications, but do not prohibit the use of detailed technical
specifications when appropriate.
(2) Quantities Limited to the Recipient's Actual Needs. FTA limits Federal
assistance to the amount necessary to support the quantity of property or extent of
services the recipient actually needs at the time of acquisition. The recipient may
not add quantities or options to contracts solely to allow assignments at a later
date. FTA will not knowingly support the additional cost of contract rights to
property or services excess to the recipient's immediate needs, even though the
recipient may assign its excess contract rights to others.
(3) Brand Name or Equal. When it is impractical or uneconomical to provide a
clear and accurate description of the technical requirements of the property to be
acquired, a —brand name or equalll description may be used to define the
performance or other salient characteristics of a specific type of property. The
recipient must identify the salient characteristics of the named brand that offerors
must provide. When using a —brand name II specification, the recipient does not
need to reverse - engineer a complicated part to identify precise measurements or
specifications in order to describe its salient characteristics. FTA's —Best
Practices Procurement Manual,l1 (BPPM) contains additional information on
preparation of specifications including examples with specific language.
(4) Prohibitions. The Common Grant Rules prohibit solicitation requirements that
contain features that unduly restrict competition. FTA recipients are also
prohibited by 49 U.S.C. Section 5325(h) from using FTA assistance to support an
exclusionary or discriminatory specification. Some situations considered to be
impermissibly restrictive of competition include, but are not limited to, the
following, all of which are identified in one or both Common Grant Rules:
(a) Excessive Qualifications. Imposing unreasonable business
requirements for bidders or offerors.
(b) Unnecessary Experience. Imposing unnecessary experience
requirements for bidders and offerors.
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(c) Improper Prequalification. Using prequalification procedures that
conflict with the prequalification standards described in subsection 1.c of
this Chapter.
(d) Retainer Contracts. Making a noncompetitive award to any person or
firm on a retainer contract with the recipient if that award is not for the
property or services specified for delivery under the retainer contract.
(e) Excessive Bonding. To encourage greater contractor participation in
FTA assisted projects, FTA does not require the recipient to impose
bonding requirements on its third party contractors other than construction
bonding specified by the Common Grant Rules and this circular for
construction. FTA discourages unnecessary bonding because it increases
the cost of the contract and restricts competition, particularly by
disadvantaged business enterprises. Bond companies exercise their
discretion and assure their profits primarily by declining to undertake
excessive risks. Consequently many bidders have limited — bonding
capacity.11 Unnecessary performance bonding requirements reduce a
prospective bidder's or offerors capability to bid or offer a proposal on
bonded work. Small businesses with short histories may have particular
difficulty obtaining bonds as may be specified. Nevertheless, even though
bonding can be expensive, FTA recognizes that a recipient might find bid,
performance, or payment bonds to be desirable. Because bonding
requirements can limit contractor participation, FTA expects the
recipient's bonding requirements to be reasonable and not unduly
restrictive. FTA, however, will not challenge State or local bonding
requirements as unreasonably restrictive of competition, even though they
might exceed Federal requirements. Nevertheless, if the recipient's
bonding policies result in such — excessive bondingjl that it would violate
the Common Grant Rules as restrictive of competition. FTA will not
provide Federal assistance for those procurements. Thus if the recipient's
bonding policies far exceed those described in this subparagraph or are
permissible under State or local law, the recipient should obtain FTA's
written concurrence to ensure the availability of Federal assistance for the
project.
(f) Brand Name Only. Specifying only a —brand named product without
allowing offers of —an equaljl product, or allowing —an equalll product
without listing the salient characteristics that the — equal11 product must
meet to be acceptable for award.
(g) In -State or Local Geographic Restrictions. Specifying in -State or local
geographical preferences, or evaluating bids or proposals in light of in-
State or local geographic preferences, even if those preferences are
imposed by State or local laws or regulations. In particular, 49 U.S.C.
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Section 5325(i) prohibits an FTA recipient from limiting its bus purchases
to in -State dealers. Exceptions expressly mandated or encouraged by
Federal law include the following:
1 Architectural Engineering (A &E) Services. Geographic location
may be a selection criterion if an appropriate number of qualified
firms are eligible to compete for the contract in view of the nature
and size of the project.
2 Licensing. A State may enforce its licensing requirements,
provided that those State requirements do not conflict with Federal
law.
3 Major Disaster or Emergency Relief. Federal assistance awarded
under the Stafford Act, 42 U.S.C. Section 5150, to support
contracts and agreements for debris clearance, distribution of
supplies, reconstruction, and other major disaster or emergency
assistance activities permits a preference, to the extent feasible and
practicable, for organizations, firms, and individuals residing or
doing business primarily in the area affected by a major disaster or
emergency.
(h) Organizational Conflicts of Interest. Engaging in practices that result
in organizational conflicts of interest as prohibited by the Common Grant
Rules: 1 Occurrence. An organizational conflict of interest occurs when
any of the following circumstances arise:
a Lack of Impartiality or Impaired Objectivity. When the
contractor is unable, or potentially unable, to provide impartial and
objective assistance or advice to the recipient due to other
activities, relationships, contracts, or circumstances.
b Unequal Access to Information. The contractor has an unfair
competitive advantage through obtaining access to nonpublic
information during the performance of an earlier contract.
c Biased Ground Rules. During the conduct of an earlier
procurement, the contractor has established the ground rules for a
future procurement by developing specifications, evaluation
factors, or similar documents.
2 Remedies. FTA expects the recipient to analyze each
planned acquisition in order to identify and evaluate
potential organizational conflicts of interest as early in the
contract award.
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(i) Restraint of Trade. Supporting or acquiescing in
noncompetitive pricing practices between firms or
between affiliated companies. Questionable
practices would include, but not be limited to
submissions of identical bid prices for the same
products by the same group of firms, or an
unnatural pattern of awards that had the cumulative
effect of apportioning work among a fixed group of
bidders or offerors.
(j) Arbitrary Action. Taking any arbitrary action in
the procurement process.
b. Evaluation Factors. The solicitation must
identify all factors to be used in evaluating
bids or proposals.
c. Contract Type Specified. The recipient's
specifications should state the type of
contract that will be awarded.
(1) Typical Contract Types. Contract types may include, but are not limited to, the
following:
(a) Firm Fixed Price. A firm fixed price contract includes a price that
remains fixed irrespective of the contractor's cost experience in
performing the contract. A firm fixed price contract may include an
economic price adjustment provision, incentives, or both.
(b) Cost Reimbursement. A cost - reimbursement contract provides for
payment of the contractor's allowable incurred costs, to the
extent prescribed in the contract. Allowable costs may include
incentives if the recipient believes they can prove helpful. Cost -
reimbursement contracts are suitable for use only when the uncertainties
involved in contract performance do not pefinit costs to be
estimated with sufficient accuracy to use any type of fixed
price contract.
(2) Prohibited or Restricted Contract Types. The Common Grant Rule for
governmental recipients provides more guidance on contract type than does the
Common Grant Rule for non - governmental recipients, which merely authorizes
the recipient to select the type of contract it will use (for example, fixed price,
cost reimbursement, purchase order, or incentive contract) if it is appropriate for
the particular procurement and promotes the best interests of the program or
project involved. The following contract types are restricted or prohibited:
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(a) Cost Plus a Percentage of Cost — Prohibited. The Common Grant Rules
expressly prohibit the use of the cost plus a percentage of cost method of
contracting.
(b) Percentage of Construction Cost — Prohibited. The Common Grant
Rules expressly prohibit the use of the percentage of construction cost
method of contracting.
(c) Time and Materials— Restricted. The Common Grant Rule for
governmental recipients permits the use of time and material contracts
only:
1 When to Use. After determining that no other contract type is
suitable; and
2 Firm Ceiling Price. If the contract specifies a ceiling price that
the contractor may not exceed except at its own risk. FTA strongly
encourages non - governmental recipients to use similar procedures.
d. Other Federal Requirements Affecting the Property or
Services to be Acquired. The solicitation and resulting
contract must identify those Federal requirements that will
affect contract scope and performance. See, Chapter IV,
subsection 2.b of this circular, and FTA's latest Master
Agreement for references to Federal requirements
established following publication of this circular.
e. Other Federal Requirements Affecting the Bidder or
Offeror and the Contractor. The solicitation and resulting
contract must identify all Federal requirements that a bidder
or offeror must fulfill before and during contract
performance. See, Chapter IV, subsection 2.a of this
circular and FTA`s latest Master Agreement that may
reference more Federal requirements.
f. Award to Other Than the Low Bidder. If the recipient
intends to reserve its right to award to other than the low
bidder or offeror, that information should be stated in the
solicitation document.
g. Rejection of All Bids or Offers. If the recipient intends to
reserve its right to reject all bids or offers, that information
should be stated in the solicitation document.
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3. METHODS OF PROCUREMENT. The recipient should use competitive procedure(s)
appropriate for the acquisition undertaken. The procedures used must comply with State and
local law as well as with Federal requirements. Federal restrictions vary with the type of
procurement method used. The following guidance is based on the requirements of the Common
Grant Rule for governmental recipients, supplemented by FTA policies that address the needs of
FTA recipients.
a. Micro - Purchases. Consistent with the Federal Acquisition Regulation (FAR), FTA
considers micro - purchases to be those purchases of $3,000 or less.
(1) When Appropriate. If permitted by State and local law, the recipient may
acquire property and services valued at $3,000 or less without obtaining
competitive quotations. These purchases are exempt from FTA's Buy America
requirements Davis -Bacon prevailing wage requirements, however, will apply to
construction contracts exceeding $2,000, even though the recipient uses micro -
purchase procurement procedures. FTA does not intend to imply that the recipient
must treat any purchase of $3,000 or less as a micro - purchase. The recipient may
set lower thresholds for micro - purchases in compliance with State and local law,
or otherwise as it considers appropriate.
(2) Procedures. The following procedures apply to micro - purchases:
(a) Competition. The recipient should distribute micro - purchases equitably
among qualified suppliers.
(b) Prohibited Divisions. The recipient may not divide or reduce the size
of its procurement merely to come within the micro - purchase limit.
(c) Documentation. FTA's only documentation requirement for micro -
purchases is a determination that the price is fair and reasonable and a
description of how the recipient made its determination. FTA does not
require the recipient to provide its rationale for the procurement method
used, selection of contract type, or reasons for contractor selection or
rejection.
b. Small Purchases. The Common Grant Rule for governmental recipients authorizes
governmental recipients to use relatively simple and informal small purchase procedures
as follows:
(1) When Appropriate. ro riate. Small purchase procedures may be used to acquire
services, supplies, or other property micro-purchase
at more than the micro - urchase
pp
threshold (currently, $3,000) but less than the Federal simplified acquisition
threshold at 41 U.S.C. Section 403(11), currently $100,000. (FTA recognizes the
small purchase threshold to be the same as the simplified acquisition threshold.)
Also see, Chapter II, Subsection 3.b. These purchases are also exempt from FTA's
Buy America requirements. FTA does not intend to imply that any purchase of
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$100,000 or less must be treated as a small purchase. The recipient may set lower
thresholds for small purchases in compliance with State and local law, or
otherwise as it considers appropriate.
(2) Procedures. When using small purchase procedures:
(a) Competition. The recipient must obtain price or rate quotations from an
adequate number of qualified sources.
(b) Prohibited Divisions. The recipient may not divide or reduce the size
of its procurement to avoid the additional procurement requirements
applicable to larger acquisitions.
c. Sealed Bids (Formal Advertising). The Common Grant Rule for governmental
recipients acknowledges sealed bidding to be a generally accepted procurement method
in which bids are publicly solicited, and a firm fixed price contract (lump sum or unit
price) is awarded to the responsible bidder whose bid, conforming to all the material
terms and conditions of the invitation for bids, is lowest in price.
(1) When Appropriate. The Common Grant Rule for government recipients states
a preference for the sealed bids procurement method for acquiring property,
construction, and other services. Sealed bid procurements should be used when
the following circumstances are present:
(a) Precise Specifications. A complete, adequate, precise, and realistic
specification or purchase description is available.
(b) Adequate Sources. Two or more responsible bidders are willing and
able to compete effectively for the business.
(c) Fixed Price Contract. The procurement generally lends itself to a firm
fixed price contract.
(d) Price Determinative. The successful bidder can be selected on the basis
of price and those price - related factors listed in the solicitation including,
but not limited to, transportation costs, life cycle costs, and discounts
expected to be taken. Apart from responsibility determinations discussed
in later sections of this Chapter, contractor selection may not be
determined on the basis of other factors whose costs cannot be measured
at the time of award.
(e) Discussions Unnecessary. Discussions with one or more bidders after
bids have been submitted are expected to be unnecessary as award of the
contract will be made based on price and price - related factors alone. This
contrasts with Competitive Proposal procedures in which discussions with
individual offerors are expected to be necessary and may take place at any
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time after receipt of proposals. However, a pre -bid conference with
prospective bidders before bids have been received can be useful.
(2) Procurement Procedures. The following procedures apply to sealed bid
procurements:
(a) Publicity. The invitation for bids is publicly advertised.
(b) Adequate Sources. Bids are solicited from an adequate number of
known suppliers.
(c) Adequate Specifications. The invitation for bids, including any
specifications and pertinent attachments, describes the property or services
sought in sufficient detail that a prospective bidder will be able to submit a
proper bid.
(d) Sufficient Time. Bidders are allowed sufficient time to prepare bids
before the date of bid opening.
(e) Public Opening. All bids are publicly opened at the time and place
prescribed in the invitation for bids.
(f) Fixed Price Contract. A firm fixed price contract is usually awarded in
writing to the lowest responsive and responsible bidder, but a fixed price
incentive contract or inclusion of an economic price adjustment provision
can sometimes be appropriate. When specified in the bidding documents,
factors such as transportation costs and life cycle costs affect the
determination of the lowest bid; payment discounts are used to determine
the low bid only when prior experience indicates that such discounts are
typically taken.
(g) Rejection of Bids. Any or all bids may be rejected if there is a sound,
documented business reason. FTA strongly encourages non - governmental
recipients to use similar procedures.
d. Competitive Proposals (Request for Proposals). The Common Grant Rule for
governmental recipients acknowledges the use of competitive proposals to be a generally
accepted procurement method when the nature of the procurement does not lend itself to
sealed bidding and the recipient expects that more than one source will be willing and
able to submit an offer or proposal.
(1) When Appropriate. Competitive proposals should be used when any of the
following circumstances are present:
(a) Type of Specifications. The property or services to be acquired are
described in a performance or functional specification; or if described in
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detailed technical specifications, other circumstances such as the need for
discussions or the importance of basing the contract award on factors other
than price alone are present.
(b) Uncertain Number of Sources. Uncertainty about whether more than
one bid will be submitted in response to an invitation for bids and the
recipient lacks the authority or flexibility under State or local law to
negotiate the contract price if it receives only a single bid.
(c) Price Alone Not Determinative. Due to the nature of the procurement,
contract award need not be based exclusively on price or price - related
factors. In different types of negotiated acquisitions, the relative
importance of cost or price may vary. When the recipient's material
requirements are clearly definable and the risk of unsuccessful contract
performance is minimal, cost or price may play a dominant role in source
selection. The less definitive the requirements, the more development
work required, or the greater the performance risk, the more technical or
past performance considerations may play a dominant role in source
selection and supersede low price.
(d) Discussions Expected. Separate discussions with individual offeror(s)
are expected to be necessary after they have submitted their proposals.
This contrasts with Sealed Bids (Formal Advertising) procedures in which
discussions with individual bidders are not likely to be necessary, as award
of the contract will be made based on price and price - related factors alone.
(2) Procurement Procedures. The following procedures apply to procurements by
competitive proposals:
(a) Publicity. The request for proposals is publicly advertised.
(b) Evaluation Factors. All evaluation factors and their relative importance
are specified in the solicitation; but numerical or percentage ratings or
weights need not be disclosed.
(c) Adequate Sources. Proposals are solicited from an adequate number of
qualified sources.
(d) Evaluation Method. A specific method is established and used to
conduct technical evaluations of the proposals received and to determine
the most qualified offeror.
(e) Price and Other Factors. An award is made to the responsible offeror
whose proposal is most advantageous to the recipient's program with price
and other factors considered.
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(f) Best Value. If permitted under its State or local law, the recipient may
award the contract to the offeror whose proposal provides the greatest
value to the recipient. To do so, the recipient's solicitation must inform
potential offerors that the award will be made on a —best value 11 basis and
identify what factors will form the basis for award. The evaluation factors
for a specific procurement should reflect the subject matter and the
elements that are most important to the recipient. Those evaluation factors
may include, but need not be limited to, technical design, technical
approach, length of delivery schedules, quality of proposed personnel, past
performance, and management plan. The recipient should base its
determination of which proposal represents the —best value11 on an
analysis of the tradeoff of qualitative technical factors and price or cost
factors. Apart from the statutory requirement that the contract must
support the recipient's public transportation project consistent with
applicable Federal laws and regulations, FTA does not require any specific
factors or analytic process. FTA strongly encourages non - governmental
recipients to use similar procedures.
e. Two -Step Procurement Procedures. If permitted by State and local law, the recipient
may use two -step procurement procedures in both sealed bid and competitively
negotiated procurements, provided the opportunity for full and open competition is
retained.
(1) Review of Technical Qualifications and Approach. The first step is a review of
the prospective contractors' technical approach to the recipient's request and
technical qualifications to carry out that approach. The recipient then may narrow
the competitive range to prospective contractors that demonstrate a technically
satisfactory approach and have satisfactory qualifications.
(2) Review of Bids and Proposals Submitted by Qualified Prospective
Contractors. The second step consists of soliciting and reviewing complete bids
(sometimes referred to as — two -step sealed bidding11) or proposals (as in
— competitive negotiationsll), including price, submitted by each prospective
contractor determined to be qualified. Absent exceptional circumstances, the
recipient should attempt to solicit bids or proposals from at least three qualified
prospective contractors. Unlike qualifications -based procurement procedures
required for A &E services, and other contracts covered by 49 U.S.C. Section
5325(b) discussed in subsection 3.f of this Chapter, FTA expects the recipient to
consider all bid or proposal prices submitted as well as other technical factors,
rather than limiting reviews to the most qualified bidder or offeror.
f. Architectural Engineering (A &E) Services and Other Services. FTA's enabling
legislation at 49 U.S.C. Section 5325(b)(1) requires the use of the qualifications -based
procurement procedures contained in the — Brooks Act,II 40 U.S.C. Sections 1101
acquire A &E services, but also for program management, construction a
h1104 to g
throu � p g
through q
management, feasibility studies, preliminary engineering, design, architectural,
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engineering, surveying, mapping and related services. The nature of the work to be
performed and its relationship to construction, not the nature of the prospective
contractor, determine whether qualifications -based procurement procedures may be used
as described below.
(1) Qualifications -Based Procurement Procedures Required. The recipient must
use qualifications -based procurement procedures not only when contracting for
A &E services, but also for other services listed in 49 U.S.C. Section 5325(b)(1)
that are directly in support of directly connected to, directly related to, or lead to
construction, alteration, or repair of real property. For example, a contractor
performing program management, project design, construction management, or
engineering services in which that contractor would select the finished products to
be acquired for an FTA assisted construction project must be selected through
qualifications -based procurement procedures.
(2) Qualifications -Based Procurement Procedures Prohibited. Unless FTA
determines otherwise in writing, a recipient may not use qualifications -based
procurement procedures to acquire other types of services if those services are not
directly in support of, directly connected to, directly related to, or do not lead to
construction, alteration, or repair of real property. Even if a contractor has
performed services listed herein in support of a construction, alteration, or repair
project involving real property, selection of that contractor to perform similar
services not relating to construction may not be made through the use of
qualifications -based procurement procedures. A project involving construction
does not always require that qualifications -based procurement procedures be used.
Whether or not qualifications -based procurement procedures may be used
depends on the actual services to be performed in connection with the
construction project. For example, the design or fabrication of message signs,
signals, movable barriers, and similar property that will become off -the -shelf
items or will be fabricated and delivered as final end products for installation in
an FTA assisted construction project are not services for which qualifications -
based procurement procedures may be used. Nor are actual construction,
alteration, or repair to real property the type of services for which qualifications -
based procurement procedures may be used.
(3) Qualifications -Based Procurement Procedures. The following procedures
apply to qualifications -based procurements:
(a) Qualifications. Unlike other two -step procurement procedures in which
price is an evaluation factor, an offerors qualifications are evaluated to
determine contract award.
(b) Price. Price is excluded as an evaluation factor.
(c) Most Qualified. Negotiations are first conducted with only the most
qualified offeror.
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(d) Next Most Qualified. Only after failing to agree on a fair and
reasonable price may negotiations be conducted with the next most
qualified offeror. Then, if necessary, negotiations with successive offerors
in descending order may be conducted until contract award can be made to
the offeror whose price the recipient believes is fair and reasonable.
(e) Effect of State Laws. To the extent that a State has, before August 10,
2005, adopted by law, an equivalent State qualifications- based-
procurement requirement for acquiring architectural, engineering, and
design services, State procedures, rather than Federal — Brooks Actil
procedures (40 U.S.C. Sections 1101 through 1104), may be used.
(4) Audits and Indirect Costs. As required by 49 U.S.C. Section 5325(b)(2), the
following requirements apply to a third party contract for program
management, architectural engineering, construction management, feasibility
studies, preliminary engineering, design, architectural, engineering, surveying,
mapping, or related services:
(a) Performance of Audits. The third party contract or subcontract must be
performed and audited in compliance with FAR Part 31 cost principles.
(b) Indirect Cost Rates. The recipient and the third party contractor, its
c ntractors and subrecipients, if any, must accept o p t FAR indirect cost p
rates for the one -year applicable accounting periods established by a
cognizant Federal or State government agency, if those rates are not
currently under dispute.
(c) Application of Rates. After a firm's indirect cost rates established as
described in subparagraph 3.f(4)(b) above are accepted, those rates will
apply for purposes of contract estimation, negotiation, administration,
reporting, and payments, not limited by administrative or de facto ceilings.
(d) Prenotification; Confidentiality of Data. Before requesting or using
cost or rate data described in subparagraph 3.f(4)(c) above, a recipient
must notify the affected firm(s). That data must be kept confidential and
may not be accessible by or provided by the agency or group of agencies
that share cost data under this subparagraph, except by written permission
of the audited firm. If prohibited by law, that cost and rate data may not be
disclosed under any circumstances. FTA recognizes that many States have
—Open Records 11 laws that may make it difficult to maintain confidential
cost or rate data. As a result, before requesting or using a firm's cost or
rate data, not only should a recipient notify the affected firm, but it must
also obtain permission to provide that data in response to a valid request
under applicable State law. The confidentiality requirements of 49 U.S.C.
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5325(b)(2)(D) cannot be waived, even if those confidentiality
requirements conflict with State law or regulations.
g. Design- Bid - Build. The design- bid -build procurement method requires separate
contracts for design services and for construction.
(1) Design Services. For design services, the recipient must use qualifications -
based procurement procedures, in compliance with applicable Federal, State and
local law and regulations.
(2) Construction. Because the recipient may not use qualifications -based
procurement procedures for the actual construction, alteration or repair of real
property, the recipient generally must use competitive procedures for the
construction. These may include sealed bidding or competitive negotiation
procurement methods, as appropriate.
h. Design - Build. The design -build procurement method consists of contracting for design
and construction simultaneously with contract award to a single contractor, consortium,
joint venture, team, or partnership that will be responsible for both the project's design
and construction. FTA's enabling legislation expressly authorizes the use of FTA capital
assistance to support design -build projects —after the recipient complies with
Government requirements,11 49 U.S.C. Section 5325(d)(2).
(1) Procurement Method Determined by Value. First, the recipient must separate
the various contract activities to be undertaken and classify them as design or
construction, and then calculate the estimated total value of each. Because both
design and construction are included in a single procurement, the FTA expects the
recipient to use the procurement method appropriate for the services having the
greatest cost, even though other necessary services would not typically be
procured by that method.
(a) Construction Predominant. The construction costs of a design -build
project are usually predominant so that the recipient would be expected to
use competitive negotiations or sealed bids for the entire procurement
rather than the qualification -based — Brooks Act11 procurement
procedures. Specifically, when construction costs will be predominant,
unless FTA determines otherwise in writing, an FTA recipient may not use
qualifications -based procurement procedures to acquire architectural
engineering, program management, construction management, feasibility
studies, preliminary engineering, design, architectural and engineering,
surveying, mapping, or related A &E services unless required by State law
adopted before August 10, 2005.
(b) Design Services Predominant. In the less usual circumstance in which
the cost of most work to be performed will consist of costs for
architectural and engineering, program management, construction
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management, feasibility studies, preliminary engineering, design,
architectural engineering, surveying, mapping, or related A &E services,
FTA expects the recipient to use qualifications -based procurement
procedures based on the — Brooks Act,II 40 U.S.C. Sections 1101 through
1104, as described in subsection 3.e of this Chapter.
(2) Selection Processes. The recipient may structure its design -build procurement
using one or more steps as described below:
(a) One -Step Method. The recipient may undertake its design -build
procurement in a single step.
(b) Two -Step Method. Another procurement method the recipient may use
for large design -build projects is a two -step selection process as authorized
for Federal Government use by 41 U.S.C. Section 253m. This method
consists of:
1 Review of Technical Qualifications and Approach. The first step
is a review of the prospective contractors' technical qualifications
and technical approach to the project. The recipient may then
narrow the competitive range to those prospective contractors with
satisfactory qualifications that demonstrate a technically
satisfactory approach.
2 Review of Complete Proposals. The second step consists of
soliciting and reviewing complete proposals, including price,
submitted by prospective contractors first determined to be
qualified. By using this two -step method, it will not be necessary
for the recipient to undertake extensive proposal reviews, nor will
prospective offerors need to engage in expensive proposal drafting.
This two -step selection procedure is separate and distinct from
prequalification and is but one procurement method available to
the recipient.
i. Other Than Full and Open Competition. Normally, the recipient must provide for full
and open competition when soliciting bids or proposals. The Common Grant Rule for
governmental recipients, however, acknowledges that under certain circumstances, a
recipient may conduct procurements without providing for full and open competition.
(1) When Appropriate. A recipient may use noncompetitive proposals only when
the procurement is inappropriate for small purchase procedures, sealed bids, or
competitive proposals, and at least one of the following circumstances are present:
(a) Adequate Competition. After soliciting several sources, FTA expects
the recipient to review its specifications to determine if they are unduly
restrictive or if changes can be made to encourage submission of more
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bids or proposals. After the recipient determines that the specifications are
not unduly restrictive and changes cannot be made to encourage greater
competition, the recipient may determine the competition adequate. A cost
analysis must be performed in lieu of a price analysis when this situation
occurs.
(b) Sole Source. When the recipient requires supplies or services available
from only one responsible source, and no other supplies or services will
satisfy its requirements, the recipient may make a sole source award.
When the recipient requires an existing contractor to make a change to its
contract that is beyond the scope of that contract, the recipient has made a
sole source award that must be justified.
1 Unique Capability or Availability. The property or services are
available from one source if one of the conditions described below
is present:
a Unique or Innovative Concept. The offeror demonstrates
a unique or innovative concept or capability not available
from another source. Unique or innovative concept means a
new, novel, or changed concept, approach, or method that
is the product of original thinking, the details of which are
kept confidential or are patented or copyrighted, and is
available to the recipient only from one source and has not
in the past been available to the recipient from another
source.
b Patents or Restricted Data Rights. Patent or data rights
restrictions preclude competition.
c Substantial Duplication Costs. In the case of a follow -on
contract for the continued development or production of
highly specialized equipment and major components
thereof, when it is likely that award to another contractor
would result in substantial duplication of costs that are not
expected to be recovered through competition.
d Unacceptable Delay. In the case of a follow -on contract
for the continued development or production of a highly
specialized equipment and major components thereof,
when it is likely that award to another contractor would
result in unacceptable delays in fulfilling the recipient's
needs.
2 Single Bid or Single Proposal. Upon receiving a single bid or
single proposal in response to a solicitation, the recipient should
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determine if competition was adequate. This should include a
review of the specifications for undue restrictiveness and might
include a survey of potential sources that chose not to submit a bid
or proposal.
a Adequate Competition. FTA acknowledges competition
to be adequate when the reasons for few responses were
caused by conditions beyond the recipient's control. Many
unrelated factors beyond the recipient's control might cause
potential sources not to submit a bid or proposal. If the
competition can be determined adequate, FTA's
competition requirements will be fulfilled, and the
procurement will qualify as a valid competitive award.
b Inadequate Competition. FTA acknowledges competition
to be inadequate when, caused by conditions within the
recipient's control. For example, if the specifications used
were within the recipient's control and those specifications
were unduly restrictive, competition will be inadequate.
(c) Unusual and Compelling Urgency. The Common Grant Rule for
governmental recipients permits the recipient to limit the number of
sources from which it solicits bids or proposals when a recipient has such
an unusual and urgent need for the property or services that the recipient
would be seriously injured unless it were permitted to limit the
solicitation. The recipient may also limit the solicitation when the public
exigency or emergency will not permit a delay resulting from competitive
solicitation for the property or services.
(d) Associated Capital Maintenance Item Exception Repealed. The Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for
Users (SAFETEA -LU) repealed the special procurement preference
previously authorized for associated capital maintenance items. Thus, any
sole source procurement of associated capital maintenance items must
qualify for an exception under the same standards that would apply to
other sole source acquisitions.
(e) Authorized by FTA. The Common Grant Rules provide Federal
agencies authority to permit a recipient to use noncompetitive proposals.
Under this authority, FTA has made the following determinations:
1 Consortium, Joint Venture, Team, Partnership. With some
exceptions, when FTA awards a grant agreement or enters into a
cooperative agreement with a consortium, joint venture, team, or
partnership, or provides FTA assistance for a research project in
which FTA has approved the participation of a particular firm or
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combination of firms in the project work, the grant agreement or
cooperative agreement constitutes approval of those arrangements.
In such cases, FTA expects the recipient to use competition, as
feasible, to select other participants in the project.
2 FAR Standards. To ensure that the recipient has flexibility equal
to that of Federal contracting officers, FTA authorizes procurement
by noncompetitive proposals in all of the circumstances authorized
by FAR Part 6.3. In addition to circumstances discussed in the
Common Grant Rules, the FAR authorizes less than full and open
competitive procurements in one or more of the following
circumstances: a Statutory Authorization or Requirement. To
comply with Department of Transportation (DOT) appropriations
laws that include specific statutory requirements, with the result
that only a single contractor can perform certain project work.
b National Emergency. To maintain a facility, producer,
manufacturer, or other supplier available to provide
supplies or services in the event of a national emergency or
to achieve industrial mobilization.
c Research. To establish or maintain an educational or other
non - profit institution or a federally funded research and
development center that has or will have an essential
engineering, research, or development capability.
d Protests, Disputes, Claims, Litigation. To acquire the
services of an expert or neutral person for any current or
anticipated protest, dispute, claim, or litigation.
e International Arrangements. When precluded by the terms
of an international agreement or a treaty between the
United States and a foreign government or international
organization, or when prohibited by the written directions
of a foreign government reimbursing the recipient for the
cost of the acquisition of the supplies or services for that
government.
f National Security. When the disclosure of the recipient's
needs would compromise the national security.
g Public Interest. When the recipient determines that full
and open competition in connection with a particular
acquisition is not in the public interest.
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(2) When Prohibited. Less than full and open competition is not justified based
on:
(a) Failure to Plan. The recipient's lack of advance planning, or
(b) Limited Availability of Federal Assistance. Concerns about the amount
of Federal assistance available to support the procurement (for example,
expiration of Federal assistance previously available for award).
(3) Procurement Procedures. When less than full and open competition is
available to the recipient, the Common Grant Rule for governmental recipients
directs the recipient to:
(a) Potential Sources. Solicit offers from as many potential sources as is
practicable under the circumstances.
(b) Sole Source Justification. If the recipient decides to solicit an offer
from only one source, the recipient must justify its decision adequately in
light of the standards of subparagraph 3.i(1)(b) of this Chapter. FTA
expects this sole source justification to be in writing.
(c) Cost Analysis. Prepare or obtain a cost analysis verifying the proposed
cost data, the projections of the data, and the evaluation of the costs and
profits.
(d) Preaward Review. Submit the proposed procurement to FTA for
preaward review if FTA so requests.
4. ELIGIBLE COSTS. Property and services must be eligible for Federal participation under the
standards of the Federal cost principles applicable to the recipient before the recipient may use
FTA assistance to support its costs (2 CFR Part 220, 2 CFR Part 225, 2 CFR Part 230, or FAR
Part 31). A recipient may use its own cost principles that comply with applicable Federal cost
principles. FTA assistance may support contract costs or prices based on estimated costs only if
the costs incurred or cost estimates included in negotiated prices comply with applicable Federal
cost principles, and the property or services are eligible for Federal assistance under the terms of
the underlying grant or cooperative agreement.
5. INCENTIVE COSTS AND PAYMENTS. SAFETEA -LU added a new amendment, 49 U.S.C.
Section 5309(1), authorizing incentive payments to contractors that provide accurate cost and
ridership estimates in connection with a new fixed guideway capital project, and to contractors
that enable a new fixed guideway capital project to be completed for less than its original
estimated cost. These incentive payments will be allowable costs in addition to other eligible
project costs and must be — necessary and reasonable. 11 See, the Questions and Answers
pertaining to incentive contracts at FTA`s Web site:
http: / /www.fta. dot.gov/ funding /thirdpartvprocurement /faq /grants financing 6148.ht ml.
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6. COST ANALYSIS AND PRICE ANALYSIS. The Common Grant Rules require the recipient
to perform a cost analysis or price analysis in connection with every procurement action,
including contract modifications. The method and degree of analysis depends on the facts and
circumstances surrounding each procurement, but as a starting point, the recipient must make
independent estimates before receiving bids or proposals.
a. Cost Analysis. The recipient must obtain a cost analysis when a price analysis will not
provide sufficient information to deteinune the reasonableness of the contract cost. The
recipient must obtain a cost analysis when the offeror submits elements (that is, labor
hours, overhead, materials, and so forth) of the estimated cost, (such as professional
consulting and A &E contracts, and so forth). The recipient is also expected to obtain a
cost analysis when price competition is inadequate, when only a sole source is available,
even if the procurement is a contract modification, or in the event of a change order. The
recipient, however, need not obtain a cost analysis if it can justify price reasonableness of
the proposed contract based on a catalog or market price of a commercial product sold in
substantial quantities to the general public or based on prices set by law or regulation.
(1) Federal Cost Principles. Federal cost principles contain many requirements
about the allowability and allocability of costs.
(2) Profit. FTA expects the recipient to negotiate profit as a separate element of
the cost for each contract in which there has been no price competition, and in all
acquisitions in which the recipient performs or acquires a cost analysis. To
establish a fair and reasonable profit, the recipient needs to consider the
complexity of the work to be performed, the risk undertaken by the contractor, the
contractor's investment, the amount of subcontracting, the quality of the
contractor's record of past performance, and industry profit rates in the
surrounding geographical area for similar work.
b. Price Analysis. If the recipient determines that competition was adequate, a price
analysis, rather than a cost analysis, is required to determine the reasonableness of the
proposed contract price. As discussed previously in subsection 3.a of this Chapter, the
price analysis for micro - purchases may be limited. Similarly, the recipient may use an
abbreviated price analysis for small purchases in most cases. One method to record this
price analysis is through the use of a preprinted form on which a contracting officer (or
other responsible person) can annotate a finding of fair and reasonable pricing and check
off the most common reasons why this would be so, such as catalog or market prices
offered in substantial quantities to the general public, regulated prices (for example, for
many utilities purchases), or a comparison with recent prices for similar goods and
services.
c. Guidance on Cost and Price Analysis. FTA recognizes that some recipients may have
difficulty obtaining the information necessary to conduct a proper cost or price analysis.
Although neither FTA nor DOT may change the Common Grant Rules' requirements for
cost or price analysis, FTA continues to seek a fair, practical solution to this problem
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consistent with the flexibility provided to Federal contracting officers under the FAR The
recipient may use the following resources as guidance in preparing cost or price analyses:
(1) FTA's —Best Practices Procurement Manual,II Chapter 5,
(2) The National Transit Institute Course, —Cost or Price Analysis and Risk
Assessment,11
(3)Pricing Guide for FTA Grantees, FTA Web
Site: http: / /www.fta. dot.gov/ documents /Helpline_Price_Guide.doc.,
(4) FAR Part 31, Contract Cost Principles and Procedures, and
(5) Defense Contract Audit Agency Audit Manual. See, the DCAA Web site:
http: / /www.dcaa.mil.
Note, however, that the requirements of FAR Part 31 and the Defense Contract
Audit Agency Audit Manual may differ from restrictions applicable to an FTA
recipient. Each FTA recipient must comply with those Federal laws and
regulations directly applicable to it.
7. EVALUATIONS. The following standards apply:
a. General. When evaluating bids or proposals submitted, FTA expects the recipient to
consider all evaluation factors specified in its solicitation documents, and evaluate the
bids or offers only on the evaluation factors included in those solicitation documents. The
recipient may not modify its evaluation factors after bids or proposals have been
submitted without re- opening the solicitation.
b. Options. In awarding the contract that will include options, the following standards
apply:
(1) Evaluation Required. In general, FTA expects the recipient to evaluate bids or
offers for any option quantities or periods contained in a solicitation if it intends
to exercise those options after the contract is awarded.
(2) Evaluation Not Required. The recipient need not evaluate bids or offers for
any option quantities when the recipient deteunines that evaluation would not be
in its best interests. An example of a circumstance that may support a recipient's
determination not to evaluate bids or offers for option quantities is when the
recipient is reasonably certain that funds will not be available to permit it to
exercise the option.
c. Evaluators. In addition to evaluators with experience in technical or public policy
matters related to the procurement, other evaluators may also include auditors and
financial experts to the extent that the recipient determines would be necessary or helpful.
Although many FTA recipients assign evaluation duties to their own personnel, a
recipient lacking qualified personnel within its organization may contract for the
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evaluation services it needs. If the recipient does contract for evaluation services, the
procurement standards of this circular will apply to those contracts and to those
contractors selected to perform procurement evaluation functions on behalf of the
recipient.
8. CONTRACT AWARD. The following provisions apply to third party contract awards:
a. Award to Other Than the Lowest Bidder or Offeror. Federal transit law at 49 U.S.C.
Section 5325(c) authorizes the recipient to award a contract to other than the lowest
bidder if the award furthers an objective consistent with the purposes of 49 U.S.C.
Chapter 53, including improved long -term operating efficiency and lower long -term
costs. The recipient may also award a contract to other than the offeror whose proposal is
lowest, when stated in the evaluation factors of the solicitation. In both cases, the
recipient should include a statement in its solicitation document reserving the right to
award the contract to other than the low bidder or offeror.
b. Award Only to a Responsible Bidder or Offeror. SAFETEA -LU amended 49 U.S.C.
Section 5325 to require FTA assisted contract awards be made only to — responsiblelt
contractors possessing the ability, willingness, and integrity to perform successfully
under the terms and conditions of the contract. Responsibility is a procurement issue that
is determined by the recipient after receiving bids or proposals and before making
contract award. FTA expects the prospective contractor to demonstrate affirmatively to
the recipient that it qualifies as — responsiblell under the standards of 49 U.S.C. Section
5325, and that its proposed subcontractors also qualify as — responsiblell To designate a
prospective contractor — responsiblell as required by 49 U.S.C. Section 5325, FTA
expects the recipient, at a minimum, to determine and ensure that the prospective
contractor satisfies the following criteria described herein. In addition to being otherwise
qualified and eligible to receive the contract award under applicable laws and regulations,
a responsible contractor must fulfill the following criteria:
(1) Integrity and Ethics. Have a satisfactory record of integrity and business
ethics, in compliance with 49 U.S.C. Section 5325(j)(2)(A),
(2) Debarment and Suspension. Be neither debarred nor suspended from Federal
programs under DOT regulations, — Nonprocurement Suspension and
Debarment, jl 2 CFR Parts 180 and 1200, or under the FAR at 48 CFR Chapter 1,
Part 9.4,
(3) Affirmative Action and DBE. Be in compliance with the Common Grant
Rules' affirmative action and FTA's Disadvantaged Business Enterprise
requirements,
(4) Public Policy. Be in compliance with the public policies of the Federal
Government, as required by 49 U.S.C. Section 5325(j)(2)(B),
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(5) Administrative and Technical Capacity. Have the necessary organization,
experience, accounting, and operational controls, and technical skills, or the
ability to obtain them, in compliance with 49 U.S.C. Section 5325(j)(2)(D),
(6) Licensing and Taxes. Be in compliance with applicable licensing and tax laws
and regulations,
(7) Financial Resources. Have, or can obtain, sufficient financial resources to
perform the contract, as required by 49 U.S.C. Section 5325(j)(2)(D),
(8) Production Capability. Have, or can obtain, the necessary production,
construction, and technical equipment and facilities,
(9) Timeliness. Be able to comply with the required delivery or performance
schedule, taking into consideration all existing commercial and governmental
business commitments, and
(10) Performance Record. Be able to provide:
(a) Current Performance. A satisfactory current performance record, and
(b) Past Performance. A satisfactory past performance record in view of its
records of long -time performance or performance with a predecessor
entity, including:
1. Sufficient Resources. Key personnel with adequate experience, a
parent firm with adequate resources and experience, and key
subcontractors with adequate experience and past perfoimance,
2. Adequate Past Experience. Past experience in carrying out
similar work with particular attention to management approach,
staffing, timeliness, technical success, budgetary controls, and
other specialized considerations as described in the recipient's
solicitation, and
3. Past Deficiencies Not the Fault of the Bidder or Offeror. A
prospective bidder or offeror that is or recently has been seriously
deficient in contract performance is presumed to be
nonresponsible, unless the recipient determines that the
circumstances were properly beyond the bidder or offerors
control, or unless the bidder or offeror has taken appropriate
corrective action. Past failure to apply sufficient tenacity,
perseverance, and effort to perform acceptably is strong evidence
of nonresponsibility. Failure to meet the quality requirements of a
contract is a significant factor to consider in determining
satisfactory performance. FTA expects the recipient to consider the
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number of the bidder or offerors contracts involved and the extent
of deficient performance in each contract when making this
determination. Before entering into a full funding contract for a
fixed guideway project, the recipient must now consider the
prospective contractor's past performance in estimating costs and
ridership as reported in the Contractor Performance Assessment
Reports, as required by 49 U.S.C. Section 5325(j)(2)(C).
c. Rejection of Bids and Proposals. Depending on the type of recipient, the following
applies:
(1) Governmental Recipients. The Common Grant Rule for governmental
recipients asserts the recipient's right to reject all bids submitted in response to an
invitation for bids or request for proposals.
(2) Non - Governmental Recipients. The Common Grant Rule for non-
governmental recipients authorizes the recipient to reject any and all bids and
proposals when it is in the recipient's interest to do so.
d. Extent and Limits of Contract Award. A selection of a contractor to participate in one
aspect of a project does not, by itself, constitute a sole source selection of the
contractor's wholly owned affiliates to perform other work in connection with the
project.