Third Party Procurement
Frequently Asked Questions
Q = Question; A = Answer
Q. We are doing research on changing our current subsidy from a flat rate to a tiered subsidy. Are there limits on how much a van can be subsidized? Background: We provide a $400 subsidy to our vanpools, but do not exceed 50% of the lease cost of van. We work with two vanpool vendors who lease the vehicle to the participants on a monthly basis. The lease cost includes maintenance and insurance.
A. We cannot think of any limits that FTA puts on the amount of subsidy provided. FTA assistance to vanpools operated under contract is limited by the CCA policy you outline below, but the actual dollar amount is based on the cost of the contract, and the appropriate share of the actual contract cost.
Here's what Circular 9030.D says:
Capital Cost of Contracting. Some FTA recipients turn to an outside source to obtain public transportation service, maintenance service, or vehicles that the recipient will use in public transportation service. When recipient’s contract for such service, FTA will provide assistance with the capital consumed in the course of the contract. In the case of a contractor's providing vehicles for public transportation service, the capital consumed is equivalent to the depreciation of the vehicles in use in the public transportation service during the contract period. In the case of a maintenance contract, the capital consumed may be, for example, depreciation of the maintenance garage, or depreciation of the machine that lifts the vehicle. Capital consumed may also include a proportionate share of the interest the contractor might pay out as the contractor purchases and makes available to the recipient of these capital assets. FTA refers to the concept of assisting with capital consumed as the "capital cost of contracting." Only the costs attributable to the privately owned assets are eligible under this policy. With one exception, items purchased with Federal, State, or local government assistance are not eligible. The exception is a public transportation vehicle privately owned in which the recipient has invested FTA funds from the Over-the-Road Bus Accessibility Program to finance incremental capital costs of complying with ADA. Capital consumed for service or maintenance in the provision of service outside the public transportation portion of the contract, such as for charter or school bus service, is not an eligible cost. In addition, FTA provides assistance for preventive maintenance, which is defined as all maintenance. In some instances, the recipient contracts with outside sources for both maintenance and public transportation service, and the contractor provides both maintenance and vehicles. In such cases, both FTA's capital cost of contracting and preventive maintenance standards will apply. To avoid imposing burdensome accounting rules with regard to contracts for bus, paratransit, and demand-responsive related services, FTA will allow the recipient to consider a percentage of leased service or contracted maintenance capital costs without further justification and will provide assistance for 80 percent of the resultant amount. EXHIBIT III-1, below, shows the percentages and the corresponding type of contract service for bus, paratransit, and demand-responsive related services. The percentages are calculations using data from the NTD. Presented by type of contract, the calculations represent industry averages in counting capital-eligible activities as a share of total cost. The percentages apply whether the service is local, express, shuttle, paratransit, or demand-responsive service.
(Posted: July, 2010)