FTA grantees will use their own procurement procedures that reflect applicable
state and local laws and regulations, provided that the process ensures
competitive procurement and that the procedures conform to applicable federal
law including
49 CFR Part 18, specifically Section 18.36 and
FTA C 4220.1E, “Third Party Contracting Requirements.”
Grantees will maintain a contract administration system that ensures that
contractors perform in accordance with terms, conditions, and specifications of
their contracts or purchase orders.
Grantees in urbanized areas with populations less than 200,000 that receive FTA
operating assistance must adhere to the requirements of
FTA C 4220.1E for procurements funded with these monies. That is, all
procurements funded through the grantee’s operating budget (e.g., legal,
audit, and/or management services) are subject to the requirements of
FTA C 4220.1E.
The reviewer needs to be aware of how the grantee is using FTA funds, facilities, and assets. As a general rule, where FTA funds are used in procurements for services or
supplies, or where FTA-funded facilities or assets are used in revenue
contracts,
FTA C 4220.1E applies. Furthermore, contracts funded from other FTA
sources (i.e., CMAQ, Job Access, etc.) also are subject to
FTA C 4220.1E.
A grantee that is a state agency may follow its own procurement procedures, but
at a minimum must comply with the following requirements:
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Has FTA conducted a Procurement System Review during the past two fiscal years?
If yes, when was the site visit? Is there a Procurement System Review scheduled
for the current fiscal year?
Explanation
As part of its project oversight functions, FTA periodically conducts
third-party Procurement System Reviews (PSRs) of selected grantees.
If a PSR site visit has been conducted within the past two fiscal years or if one is scheduled for the current fiscal year, (FYs 2005, 2006, and 2007), the triennial review will not review the procurement area at all.
Reason for the Question
49 CFR
Section 18.36 (g)
Sources of Information
The project oversight staff at the regional office will have information on PSR activities. Reports may be available at the regional office or from headquarters. Information should be available at the desk review.
Determination
IIf a PSR has been conducted in the past two fiscal years or if one is scheduled for the current fiscal year, a review of the procurement area is not necessary and a finding of “Not Reviewed” (NR) should be made.
.
Suggested Corrective Action
None.
Back to Questions
Part A: Policies and Procedures
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Does the grantee have procurement policies and procedures that conform to
applicable federal laws?
Explanation
Grantees and subgrantees are required to use their own procurement policies and procedures that reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal law. These policies and procedures must be followed when procuring materials and/or services using FTA funds.
Reason for the Question
49 CFR
Section 18.36 (b)(1)
FTA
C 4220.1E, 7a
Sources of Information
The site visit provides an opportunity to review the grantee’s and/or subgrantee’s procurement policies and procedures to ensure adherence to this requirement. The procurement policies and procedures are not required to be part of a single document. As such, the reviewer should request from the grantee all materials that may be relevant to the procurement area (e.g., municipal ordinances, operations manuals, employee handbooks, etc.). Procurement procedures may be included in general operating procedures. Reviewers should note the specific sections that address procurements.
Determination
If the grantee has procurement policies and/or procedures that conform to federal laws and regulations, the grantee is not deficient. If the grantee does not have procurement policies and/or procedures that conform to federal laws and regulations, the grantee is deficient. If the grantee has policies and procedures, but has not followed them for FTA-assisted procurements, the grantee is deficient. If the grantee’s policies do not include required items, or have not been updated to reflect changes in regulations, the grantee is deficient.
Suggested Corrective Action
The grantee must provide procurement policies and procedures that conform to federal laws and regulations. The grantee must cease immediately any practices that do not conform to applicable laws and regulations.
Back to Questions
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Do the procedures provide for and/or address the following:
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Contract administration system?
Explanation
Grantees are required to maintain a contract administration system that ensures contractors perform in accordance with the terms, conditions, and specifications contained in their contracts or purchase orders.
Reason for the Question
49 CFR
Section 18.36 (b)(2)
FTA
C 4220.1E, 7b
Sources of Information
At the site visit, review procurement policies and procedures and performance monitoring systems to determine if there is an adequate contract administration system. Although a grantee may not have written procedures addressing contract administration specifically, overall procurement procedures combined with a grantee’s business practices may ensure adequate contract administration. During the review of specific procurement files note any correspondence between the grantee and its contractors for evidence of on-going contract administration.
Determination
The grantee is not deficient if it can provide evidence of an adequate contract administration system. If contractors have not performed according to the terms and conditions of their contracts, the grantee may be deficient depending on the extent to which it has taken remedial action. If non-performance of contractors is a persistent problem, or the grantee cannot provide any evidence of a contract administration system, the grantee is deficient. Note: if contract administration appears to be an organizational problem (i.e., deficiencies in a contractor’s performance with respect to maintenance, procurement, ADA, drug and alcohol, etc.), a deficiency in the technical area also may be warranted.
Suggested Corrective Action
The grantee must provide documentation of an adequate contract administration system and/or evidence of remedial actions taken against contractors that have not performed in accordance with the terms and conditions of their contracts.
Back to Questions
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Written standards of conduct?
Explanation
Grantees and subgrantees are required to maintain a written code of standards of conduct governing the performance of their employees engaged in the award and administration of contracts supported by federal funds. The code of standards must preclude any employee, officer, or agent of the grantee or subgrantee from participating in the selection, award, or administration of a contract supported by federal funds if a conflict of interest, real or apparent, would be involved (e.g., accepting or soliciting gratuities, favors, or anything of monetary value from contractors, vendors, etc.). To the extent permitted by state or local law or regulations, such standards must provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the grantee’s/subgrantee’s officers, employees, or agents, or by contractors or their agents.
Reason for the Question
49 CFR
Section 18.36 (b)(3)
FTA
C 4220.1E, 7c
Sources of Information
At the site visit, review the procurement policies and procedures and any other documents relevant to the procurement area to determine if standards of conduct are addressed. Standards of conduct may be in a separate policy adopted by the grantee’s policy board or by state statute or local ordinance.
Determination
If the grantee has a written policy addressing standards of conduct in the award and administration of a contract, the grantee is not deficient. If the grantee does not have a written policy that addresses standards of conduct in the award and administration of a contract, the grantee is deficient. If any required item of such a policy is missing, the grantee is deficient.
Suggested Corrective Action
The grantee must provide a written code of standards of conduct, which includes
all the required elements.
Back to Questions
-
Review of procurement requests to avoid duplicative or
unnecessary purchases?
Explanation
Grantees’ and subgrantees’ procedures must provide for a review of procurements to avoid purchasing unnecessary or duplicative items. During such a review, consideration should be given to consolidating or breaking out procurements or any other appropriate means to obtain a more economical purchase.
The reviewer should look for definite lines of responsibility in the grantee’s procurement process. An adequate system usually restricts the authority to initiate purchases to relatively few individuals. Also, all purchase requests typically would be reviewed and/or approved by one person, designated as the purchasing agent for a given department, in the case of large grantees, or for the entire organization, in the case of small grantees. The value of a purchase may determine the procedures that the grantee follows. The level of scrutiny would be expected to increase with the dollar value of the purchase.
Reason for the Question
49 CFR
Section 18.36 (b)(4)
FTA
C 4220.1E, 7d
Sources of Information
During the site visit, the grantee’s or subgrantee’s procurement procedures should be discussed and examined in order to determine if an adequate level of review is given each procurement. Procurement files may contain documentation of review by the grantee prior to solicitation. Examples of documentation could include purchase orders, requisitions, phone logs, and inter-office communication.
Determination
If the grantee or subgrantee can provide evidence of adequate review of purchases prior to solicitation, the grantee is not deficient. If the grantee or subgrantee is lacking procedures for reviewing procurements, the grantee is deficient. If such procedures exist, but are not followed, the grantee is deficient.
Suggested Corrective Action
The grantee must provide procedures that include adequate review of procurements to avoid unnecessary or duplicative purchases. The grantee must provide evidence to the FTA that deficiencies in the implementation of such procedures have been corrected.
Back to Questions
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written record of procurement history?
Explanation
Grantees and subgrantees must maintain records sufficient to detail the significant history of a procurement. At a minimum, such records must include rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
Reason for the Question
49 CFR
Section 18.36 (b)(9)
FTA
C 4220.1E, 7i
Sources of Information
T At the site visit, the procurement files should be examined for evidence of each of the items mentioned above. For most grantees, the procurement file will be the official record of the procurement history. The reviewer should ensure that all official correspondence related to the procurement is made available by the grantee.
Determination
If the grantee’s procurement files sufficiently detail the significant history of the procurements examined, the grantee is not deficient. If the grantee’s procurement records do not contain a significant history of each procurement that was examined, the grantee is deficient.
Suggested Corrective Action
The grantee must submit evidence that the deficiencies identified in its
recordkeeping process have been corrected.
Back to Questions
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Written protest procedures?
Explanation
Grantees and subgrantees must have written protest procedures to handle and resolve disputes relating to their procurements and must in all instances disclose information regarding any protest to FTA. All protest decisions must be in writing. A protester must exhaust all administrative remedies before pursuing a protest with FTA.
Reason for the Question
49 CFR
Section 18.36 (b)(12)
FTA
C 4220.1E, 7l
Sources of Information
During the site visit, examine the grantee’s procurement policies and procedures to determine if there are written protest procedures. Solicitation documents in the grantee’s procurement files also may contain written protest procedures. Ask the grantee staff if there have been any protests during the review period. If so, request copies of all documentation described above (e.g., disclosure to FTA, written protest decisions, etc.).
Determination
If the grantee has written protest procedures, the grantee is not deficient. If the grantee does not have written protest procedures, the grantee is deficient. If written protest procedures exist, but are not followed, or if the grantee has not disclosed information regarding protests to FTA, the grantee is deficient.
Suggested Corrective Action
The grantee must provide written protest procedures. The grantee must provide FTA all information related to protests. The grantee must provide FTA evidence that it is following its protest procedures.
Back to Questions
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Written selection procedures?
Explanation
Grantees and subgrantees must have written selection procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the material, product, or services being procured as well as identify all requirements that the offerors must fulfill and all other factors to be used in evaluating bids or proposals. Descriptions must not contain features that unduly restrict competition. Detailed product specifications should be avoided. “Brand name or equal” descriptions should be avoided unless it is impractical or uneconomical to make a clear and accurate description of the technical requirements.
Reason for the Question
49 CFR
Section 18.36 (c)(3)
FTA
C 4220.1E, 8c
Sources of Information
The grantee’s selection procedures typically will be found in its procurement files (i.e., RFPs, IFBs or other solicitations). During the site visit, examine the procurement files to ensure that written selection procedures are included in procurement transactions.
Determination
The grantee is not deficient if it has included written selection procedures in its procurement transactions. If the grantee has not included written selection procedures, it is deficient. If written selection procedures exist but have not been followed, the grantee is deficient.
Suggested Corrective Action
The grantee must provide evidence to the FTA that written selection procedures have been incorporated into its procurement process. The grantee must cease any practice that violates FTA requirements.
Back to Questions
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Pre-qualification criteria?
Explanation
IIf a grantee requires prospective bidders to prequalify, it must ensure that all lists of prequalified persons, firms, or products that are used in acquiring goods and services are current and include enough sources to ensure maximum full and open competition. Grantees shall not preclude potential bidders from qualifying during the solicitation period.
Reason for the Question
49 CFR
Section 18.36 (c)(4)
FTA
C 4220.1E, 8d
Sources of Information
At the site visit, the grantee’s list of prequalified persons, firms, and products should be reviewed. The prequalification process should be discussed with those who are responsible for it. Solicitations also should be reviewed to ensure that information related to prequalification is made available to potential bidders. Note that grantees are not required to prequalify potential bidders. However, grantees that place such a requirement on potential bidders must adhere to FTA’s requirements.
Determination
If the grantee’s list of prequalified firms is current and the grantee adheres to FTA’s requirements, the grantee is not deficient. If the grantee’s list of prequalified firms or products is out-of-date, to the extent that full and open competition is impeded, the grantee is deficient. If potential bidders are precluded from qualifying during the solicitation period, the grantee is deficient.
Suggested Corrective Action
The grantee must submit documentation demonstrating that deficiencies identified
in its prequalification process have been corrected.
Back to Questions
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Do any potential conflicts of interest exist between policy
board members/ employees and consultants/vendors/ suppliers or between a
management contractor and consultants/vendors/ suppliers?
Explanation
Conflicts of interest fall into two categories – personal and organizational. Personal conflicts of interest arise when an employee, officer, or agent of the grantee or any member of his/her immediate family, his/her partner, or any organization that employs or is about to employ any of the above has a financial interest in the firm selected for a contract award.
Organizational conflicts of interest occur when a firm has a bias or an unfair competitive advantage. Bias arises when a contractor is placed in a situation in which it is potentially unable to render impartial decisions or advice to the grantee (e.g., a firm is hired to evaluate a bid, proposal, or work of a parent or subsidiary company). An unfair competitive advantage results when a contractor that participated in developing specifications or statements of work is permitted to bid on the same work. Another unfair competitive advantage may result if an incumbent firm has access to information that has not been made public and such information would enhance the incumbent firm’s competitive position. Grantees should ensure that any such information be made publicly available for a reasonable time period before the receipt of bids or proposals.
Reason for the Question
49 CFR
Section 18.36 (b)(3)
FTA
C 4220.1E, 7c
Sources of Information
Procurement files should be examined to determine if there are any potential conflicts of interest. The reviewer should keep in mind the potential conflicts for grantees whose systems are managed or operated by a private firm. For example, a potential conflict may exist if the management contractor or its parent organization is awarded a contract to conduct a planning study.
Determination
If a conflict of interest appears to exist in the procurement of goods or services, examine how the award was made. If a party involved in the decision could have benefited, a conflict of interest exists and the grantee is deficient.
Suggested Corrective Action
The grantee must provide revised procurement procedures that describe how potential conflicts of interest will be avoided. If a potential major conflict of interest is identified, contact the regional counsel for further guidance.
Back to Questions
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How does the grantee allow for full and open competition for
all transactions under the following methods of procurement?
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Micro-Purchases ($2,500 or less)
-
Small Purchases (more than $2,500 but not more than $100,000)
-
Sealed Bids/Invitation for Bid (IFB)
-
Competitive Proposals/Request for Proposals (RFP)
-
Architectural and Engineering Services (A&E)
-
Revenue Contracts
Explanation
Grantees must conduct procurement transactions in a manner providing full and open competition. Grantees are prohibited from restricting competition in federally supported procurement transactions. Some situations that restrict competition include, but are not limited to: unreasonable qualification requirements, unnecessary experience requirements, excessive bonding, noncompetitive pricing practices between firms, noncompetitive awards to firms on retainer, organizational conflicts of interest, “brand name” only specifications, or any arbitrary action in the procurement process.
Micro-purchases may be made without obtaining competitive quotations if the grantee determines that the price to be paid is fair and reasonable. These purchases should be distributed equitably among qualified suppliers in the local area, and should not be split to avoid the requirements for competition above the micro-purchase threshold.
Small purchase procedures require that price or rate quotations be obtained from an adequate number of qualified sources (at least two). The solicitations and quotations may be either oral or written.
Revenue contracts involving FTA-funded facilities or assets (e.g., advertising on buses, at bus shelters, or at transit centers) must be awarded on a competitive basis. Income derived from such contracts must be used to offset program costs.
For items exceeding the federal simplified acquisition threshold, currently fixed at $100,000, sealed bids or competitive proposals generally are required.
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Sealed Bids/IFB – Bids are publicly solicited and the award is made to the lowest (best price), responsive (meets all specifications), and responsible (is qualified to perform the work) bidder.
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Competitive Proposals/RFP – Proposals are publicly solicited from an adequate number of sources and the award is made to the firm whose offer is most advantageous to the grantee. Grantees must identify their evaluation factors and indicate the relative importance that each has towards the award.
Architectural and Engineering services (including Design-Build procurements) must be procured using a qualifications-based process. Price must not be considered during the selection phase in these procurements. Firms are selected based only on their qualifications. Price is then negotiated with the most qualified firm. If an agreement can not be reached, then the grantee may negotiate with the next most qualified firm and so on until an agreement is reached on a price that the grantee determines is fair and reasonable.
Reason for the Question
49 CFR
Section 18.36 (c)(1)
49 CFR
Section 18.36 (d)(1)(2)(3)
FTA
C 4220.1E, 8a
FTA
C 4220.1E, 9a-g
Sources of Information
TDuring the site visit, the procurement files, particularly legal notices and solicitation documents, should be reviewed to determine whether procurements have been conducted competitively. Particular attention should be paid to product specifications to ensure that “brand name” only specifications have been used appropriately (i.e., the grantee also must describe the product’s salient characteristics in the specification). While the review of procurement files should concentrate on awards that exceed the simplified acquisition threshold of $100,000, the reviewer should discuss procurement actions for micro- and small purchases with the grantee to ensure that these also have been conducted competitively. Records for phone solicitations may be examined when appropriate.
Determination
If the grantee has provided full and open competition in all procurement transactions, the grantee is not deficient. If the grantee has not provided for full and open competition (has placed restrictive requirements on prospective bidders), the grantee is deficient. If the grantee has used “brand name” only specifications inappropriately, the grantee is deficient.
Suggested Corrective Action
The grantee must provide revised procurement procedures that ensure full and open competition in all procurement transactions. The grantee must cease immediately any practice that is in violation of FTA regulations..
Back to Questions
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Has the grantee improperly imposed geographic preferences,
except when contracting for A&E services based on the Brooks Act?
Explanation
Grantees are prohibited from the use of statutorily or administratively imposed in-state or local geographical preferences in the evaluation of bids or proposals. The only exceptions are where applicable federal statutes expressly mandate or encourage geographic preference or in procurements for architectural and engineering (A&E) services provided its application leaves an appropriate number of qualified firms to compete for the contract.
Reason for the Question
49 CFR
Section 18.36 (c)(1)(2)
FTA
C 4220.1E, 8a-b
Sources of Information
During the site visit, the procurement policies and procedures should be reviewed to see if there are requirements for geographic preferences. Also, procurement files including solicitation documents should be reviewed to determine if the procurement contains geographic preferences. Although geographic preferences are permissible in procurements for A&E services, the reviewer should ensure that their use did not restrict competition (i.e., the use of geographic preference left only one or two qualified firms to bid on the contract).
Determination
If the grantee has not used geographic preferences in the evaluation of bids and/or proposals, the grantee is not deficient. If the grantee has used geographic preferences in any procurement for other than A&E services, except when mandated or encouraged by federal statute, the grantee is deficient. If the use of geographic preferences in A&E procurements restricted competition, the grantee is deficient.
Suggested Corrective Action
The grantee must provide documentation of a revised procurement process, which prohibits the use of geographic preferences in non-A&E procurements. The grantee must cease any practice that violates FTA regulations.
Back to Questions
Part B: Third-Party Contracts
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Have applicable FTA clauses been included in federally funded capital and/or
operating procurements exceeding the micro-purchase limit (except construction
contracts over $2,000)? In intergovernmental agreements, if applicable?
Explanation
Grantees are required to include specific FTA-required clauses in FTA funded procurements, including intergovernmental agreements (e.g., those involving States and other public entities). The Master Agreement identifies certain clauses that apply to third-party contracts. Clauses addressing lobbying, suspension/debarment, Title VI, and Buy America provisions are addressed in other sections of the triennial review. If a grantee is missing any of these certifications or clauses, it should be documented as a deficiency only in the applicable area of the review. It should not be a double finding in the procurement area.
FTA’s Best Practices Procurement Manual (BPPM), Appendix A, also includes
a discussion of federally required and other model contract clauses. However,
reviewers must NOT refer to the contents of the BPPM as FTA requirements. The
BPPM is a guidance document only.
Reason for the Question
49 CFR
Section 18.36 (i)(1-13)
49 CFR
Section 18.36 (j-o)
FTA
C 4220.1E, 5e
Sources of Information
Procurement files should be examined during the site visit to determine if the required clauses have been included and to ensure that procurement policies and procedures are followed. A separate checklist of required clauses is provided on the following pages in Exhibit 6.1, Part A. The checklist provides a citation from the Master Agreement for each required clause. For the convenience of reviewers, Part B of Exhibit 6.1 lists certifications, reports, and forms that are required for DBE, Buy America, and Lobbying. Part C lists other required items to assist reviewers in determining whether the grantee’s policies and procedures are actually being followed.
Reviewers should be aware that not all clauses apply to every contract. The applicability of clauses depends on the size and type of contract before reviewing the procurement files, the reviewer should determine which clauses apply to the procurements being examined.
-
Small Purchases
- These are purchases that are more than $2,500 (or more than $2,000 if a construction project), but not more than $100,000. Small purchases must include all applicable FTA clauses as part of the solicitation, purchase order, or contract. A general reference to FTA regulations is not sufficient to meet this requirement.
-
Procurements Over $100,000
- These procurements must include all clauses applicable to the particular type of procurement (e.g., professional services, A&E, construction, rolling stock purchase, etc.).
The applicability
of FTA clauses to different types of procurements is shown in Exhibit
6.2.
Determination
The grantee is not deficient if it has referenced FTA requirements and/or has included FTA clauses that the grantee has determined are applicable to the contracts examined. If the grantee missed clauses that should have been included, the grantee is not deficient. However, the reviewer should refer the grantee to the matrix in Exhibit 6.2 and any other resource that may assist the grantee in determining the applicability of clauses in the future. If the grantee has not included any reference to FTA requirements or any FTA clauses, the grantee is deficient. If the grantee is missing some of the required elements, use the deficiency code for that particular element.
Suggested Corrective Action
The grantee must provide revised procurement procedures that include all
FTA-required third-party contract clauses.
Back to Questions
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Do solicitations for ITS related projects include a specific
requirement for conformance with the National ITS Architecture?
Explanation
IIn response to TEA-21, FTA developed a National Intelligent Transportation System (ITS) Architecture that defines the framework for ensuring compatibility of information exchange and interface of ITS applications. Examples of ITS applications include integrated traffic signal systems, automatic vehicle location systems, traveler information systems, traffic management systems, etc. More detail is provided in Section 23 – ITS. FTA-assisted projects that include ITS applications must conform to the National ITS Architecture.
Reason for the Question
TEA-21, Section 5206(e),
P.L. 105-178, 112 Stat.547
Master Agreement §15.p
Sources of Information
Determine if the grantee has had any procurements for ITS applications. If so, include those projects in the files to be reviewed. Procurement files should be examined during the site visit to determine if solicitations for FTA-assisted projects involving ITS applications include a requirement that these conform to the National ITS Architecture.
Determination
The grantee is not deficient if it has included a requirement for conformity with the National ITS Architecture in applicable solicitations and contracts. If the requirement has not been included, the grantee is deficient.
Suggested Corrective Action
The grantee must provide revised procurement procedures that ensure that future, applicable procurements include the provision for conformity with the National ITS Architecture.
Back to Questions
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For a grantee that contracts for services funded with federal
monies or has passed through funding to a subrecipient, has the grantee
included competitive procurement requirements in its contract? How does the
grantee monitor the procurement process of a private contractor and/or
subrecipient to ensure that federal requirements are met?
Explanation
When a grantee has contracted out a portion of its federally funded operation or has passed through funding to a subrecipient, competitive procurement requirements may apply to the contractor and/or subrecipient operations. In such circumstances, the procurement process of the contractor/subrecipient should meet federal requirements contained in the Master Agreement, including Buy America, suspension/debarment, and lobbying requirements, which are in other areas of the review. Furthermore, a grantee needs to have a mechanism to ensure contractor/subrecipient compliance. Requiring written procurement procedures, overseeing selected procurement processes, and auditing the contractor/ subrecipient annually are measures that a grantee could use.
Reason for the Question
Master Agreement Section
2 (d) and (e)
Sources of Information
Typically, this requirement would apply to any third-party agreement or subagreement in which the contractor or subgrantee performs primary project activities normally performed by the grantee directly. In such cases, the reviewer should examine these contracts and identify procurement related requirements. Determine how these contract clauses are implemented and who on the grantee staff monitors the contractor/subrecipient operations, including procurement. Determine how the grantee monitors adherence to the requirements, and how the grantee monitors the procurement process of a contractor/subrecipient and examine written reports or audit reports of the process.
Determination
If procurement compliance is not required of contract operators or subrecipients, a determination will be based on what the contractor or subrecipient has done. For example, a contractor or subrecipient may have written procedures and be complying with federal requirements. In such cases, the grantee is not deficient. If a grantee is monitoring a contractor/ subrecipient effectively to ensure good procurement practices, the grantee is not deficient, even if a contract lacks specific procurement requirements. When a contractor or subrecipient is not following procurement standards and is not being monitored, the grantee is deficient.
Suggested Corrective Action
The grantee must change contract language to include procurement requirements when services are rebid or when a new subrecipient agreement is executed. The grantee must implement a procurement monitoring program. Evidence of the grantee’s corrective actions must be provided to FTA.
Back to Questions
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Does the grantee have any contracts for rolling stock and
replacement parts that exceed five years in total length including base and
options? If yes, identify.
Explanation
Grantees must not enter into contracts for rolling stock and replacement parts with a period of performance exceeding five years inclusive of options, extensions, or renewals. A maximum of five years’ requirements may be acquired under a single contract without prior FTA approval, even though delivery may occur beyond a five-year term. However, the maximum quantity specified in such multi-year contracts must represent the grantee’s reasonably foreseeable need. Typically, grantees use indefinite-delivery, indefinite-quantity (IDIQ) contracts for this type of purchase. While IDIQ contracts are permissible, they must meet the requirements described above.
Grantees may seek a waiver from the five-year requirement from FTA Headquarters. A copy of the written approval for this waiver must be in the applicable contract file.
Reason for the Question
49 USC
5307 (d)(1)(E)
FTA
C 4220.1E, 7m
Sources of Information
Examine procurement files for rolling stock and replacement part contracts during the site visit to ensure that these meet the five-year contract term restriction.
Determination
If the period of performance for the grantee’s rolling stock and replacement part contracts does not exceed five years in length, the grantee is not deficient. If delivery of rolling stock and replacement parts occurs beyond five years of the contract award (e.g, a multiple year bus procurement), but such contract reflects five years’ requirements, the grantee is not deficient. If a contract represents more than five years’ requirements, the grantee is deficient. If the grantee has a rolling stock and replacement parts contract with a period of performance exceeding five years and has not obtained prior FTA written approval, the grantee is deficient.
Suggested Corrective Action
The grantee must provide revised procurement procedures that include the five-year restriction on the period of performance for rolling stock and replacement part contracts supported with FTA funds. If there are unexecuted options on an existing contract that exceed the five-year restriction, the grantee must provide the FTA with an assurance that such options will not be executed.
Back to Questions
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Does the grantee perform cost or price analysis in connection
with every procurement action, including contract modification?
Explanation
Grantees must perform a cost or price analysis in connection with every procurement action, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, grantees must make independent estimates before receiving bids or proposals. The methods of analysis include cost analysis and price analysis. Cost analysis must be performed for procurements requiring the offeror to submit estimates for labor hours, overhead, and materials; procurements where adequate price competition is lacking; and sole source procurements unless price reasonableness can be established based on market prices. Price analysis (i.e., catalog or market prices) may be performed for all other procurements.
Reason for the Question
49 CFR
Section 18.36 (f)(1)
FTA
C 4220.1E, 10a-b
Sources of Information
Procurement files should be examined during the site visit to determine the extent to which the grantee conducts cost and/or price analysis. Particular attention is warranted in cases where the grantee has had a recent sole source procurement.
Determination
The grantee is not deficient if it has conducted the appropriate cost or price analysis for every procurement action. If the grantee has not conducted cost or price analyses for every procurement action, the grantee is deficient.
Suggested Corrective Action
The grantee must provide evidence that it has updated its procurement process to include cost and price analysis for every procurement action including contract modifications.
Back to Questions
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During the review period, were there any change orders to
federally funded contracts? If yes, describe in terms of numbers of change
orders and dollars. Were all change orders approved by authorized
officials?
Explanation
This question is intended to examine how contracts are administered following procurement. Of special interest are approval levels and procedures for change orders. Change orders must be approved by authorized grantee officials and supported by cost justification. Change orders are, in effect, sole source procurements. If project managers can approve change orders with minimal or no oversight, outside of normal procurement channels, potential problems may arise.
Reason for the Question
FTA C
5010.1C, Chapter I, 7b (1)(e)
FTA
Circular 4220.1E, 10a
FTA Master Agreement § 23.
Sources of Information
The grantee should provide this information during the site visit. The grantee may have written procedures for change orders. A larger grantee may have this information in a procedures manual or a procurement manual. Small grantees that have few procurements are less likely to have formal, written change order procedures, but should treat change orders like procurements. Even if formal procedures are lacking, individual project files should include approvals and justifications for any change orders.
Determination
The grantee is not deficient if it had no change orders or if the grantee has appropriate change order procedures and appears to follow such procedures. Where change orders occurred, the grantee is not deficient if the number is reasonable, it followed its procedures, and has documentation of appropriate approvals and cost justification for the change orders. If change orders occurred, and there is not supporting documentation, the grantee is deficient.
Suggested Corrective Action
If the grantee has a history of change orders without any apparent change order procedures, a process should be developed. If required approvals and justifications are missing from the files, the grantee should prepare the documentation and develop a process to ensure that files are complete.
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Has the grantee entered into any time and materials type
contracts using FTA funds? If yes, identify.
Explanation
Time and materials (T&M) type contracts are those in which the contractor charges a single rate that includes overhead and profit for labor, and materials are billed at cost. Generally, the total value of a T&M contract is an indeterminate amount. As such, grantees are not permitted to use FTA funds for time and materials type contracts unless it determines that no other type of contract is suitable for the procurement. If time and materials type contracts are used, grantees must specify a ceiling price that the contractor shall not exceed except at its own risk.
Reason for the Question
49 CFR
Section 18.36 (b)(10)
FTA
C 4220.1E, 7j
Sources of Information
If the grantee indicates that it has used time and materials contracts involving FTA funds, examine the procurement files for these contracts. The files should include documentation supporting the grantee’s decision to use a time and materials contract. The contract must specify a ceiling price.
Determination
IIf the grantee has not used FTA funds in time and materials contracts, the grantee is not deficient. If FTA funds were used in time and materials contracts and the files support the grantee’s decision and ceiling prices were specified, the grantee is not deficient. If FTA funds were used in a time and materials contract and the files do not support the grantee’s decision or if there is no ceiling price specified in the contract, the grantee is deficient.
Suggested Corrective Action
The grantee must provide evidence that it has updated its procurement process to include procedures for the proper use of FTA-assisted time and materials contracts.
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Has the grantee had any sole-source, single bid, or brand
name or equal awards during the past three years? If yes, identify. Do the
files contain the appropriate justification and/or documentation for such
awards?
Explanation
FTA requires full and open competition in procurements for goods and services and encourages grantees to award contracts to the lowest responsive and responsible bidder. However, sole-source, single-bid, and brand-name or equal awards can be used. In such situations, the grantee should have appropriate documentation for the award. In the case of a sole-source award, the documentation should be a sole-source justification, which includes a cost analysis. With a single-bid, the documentation should include a cost analysis, as well as an explanation as to why a single bid was obtained. For brand-name or equal awards, the procurement specification should list the product’s salient characteristics and allow an equal product to be offered.
A recurring problem has been the procurement of professional services. Often these services are procured with little or no competition. While such services can be procured on a sole-source basis if justified, in general, a competitive environment does exist for all professional services and the grantee needs to follow the requirements of FTA C 4220.1E when federal funds are used to pay for these services. Note that grantees cannot consider such expenses ineligible and, therefore, not subject to FTA requirements.
Reason for the Question
49 CFR
Section 18.36 (d)(4)
FTA
C 4220.1E, 9h
Sources of Information
The information to answer all of these questions will be found at the site visit in the procurement files. An examination should be made of RFPs, IFBs, and other solicitation documents, bid evaluation files, and contracts. Additionally, policy board minutes may provide additional detail on these and other types of procurements. Although the grantee is not required to obtain prior FTA approval for a non-competitive award, the grantee’s files must contain an appropriate level of justification for such awards.
Determination
The grantee is not deficient if there is adequate justification for non-competitive awards in the files. If the grantee does not have the appropriate documentation in the files to support the basis for the award, the grantee is deficient. In cases where professional services have not been bid competitively, the grantee is deficient.
Suggested Corrective Action
When an award already has been made and a contract signed, the grantee must provide the FTA a written assurance that it understands the requirements and will follow them in the future. The FTA also may require a refund of federal funds. Where a procurement is in process, the grantee must provide revised procedures that address the requirements for a noncompetitive procurement and continue the process in accordance with federal regulations. Where contracts are ongoing, the grantee should be required not to exercise any options, possibly terminate the existing contract for convenience, and rebid for the required goods and services in accordance with federal requirements. When major procurements (e.g., exceeding $100,000) have violated federal requirements, the regional counsel should be advised.
Back to Questions
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Has the grantee conducted any piggyback procurements? If yes,
identify. Is the appropriate documentation on file?
Explanation
It has become increasingly popular for grantees to acquire vehicles through the assignment of options on another grantee’s procurement. This is commonly referred to as “piggybacking.” Piggybacking is defined as the post-award use of a contractual document/process that allows someone who was not contemplated in the original procurement to purchase the same supplies or equipment through the original document/process. Piggybacking is permissible when the solicitation document and the resultant contract contain an assignability clause that provides for the assignment of all or part of the specified deliverables as originally advertised, competed, evaluated, and awarded. This includes the base and option quantities.
Vehicles added to the base or option amounts that were originally specified are called “tag-ons.” Tag-ons are not permitted. A tag-on is defined as the adding on to the contracted quantities (base and option) as originally advertised, competed, and awarded, whether for the use of the buyer or for others, and then treating the add-on portion as though it met the requirements of competition.
Regardless of the terminology used by the grantee, the reviewer should examine purchases conducted in this manner to ensure that FTA requirements have been met. For example, the reviewer should determine that the quantity of vehicles purchased by the grantee is less than or equal to the quantity that the original purchaser has remaining in its contract. Otherwise, the purchase is a "tag-on" and is considered an improper sole source procurement. The reviewer also should determine that any changes in the vehicle were within the original scope (i.e., no major changes in configuration or design).
Reason for the Question
49 CFR
Section 18.36 (d)(4)
FTA
C 4220.1E, 7e
Sources of Information
The reviewer should look for a contract and correspondence between the two agencies involved in the piggyback arrangement. In addition, the grantee must have a copy of the original solicitation and resultant contract to ensure that the original procurement contains an assignability clause and meets FTA requirements (e.g., competitive award, includes required clauses, required certifications filed, cost/price analysis conducted, five year contract term, etc.). Also, the reviewer should ask the grantee if any changes to the vehicle were required and determine if these were within the original scope.
Determination
The grantee is not deficient if it can document that the original procurement contained an assignability clause and met FTA requirements. If the grantee can not document that the original award contains an assignability clause or that FTA requirements were met, then the grantee is deficient. If the grantee conducted a “tag-on” purchase, the grantee is deficient. If the grantee’s required changes were beyond the original scope, the grantee is deficient.
Suggested Corrective Action
If an improper piggyback purchase has been made, the grantee must provide the FTA a written assurance that it understands the requirements and will follow them in the future. The FTA also may require a refund of federal funds. Where an improper piggyback procurement is in process, the grantee must provide revised procedures that address the requirements for a piggyback procurement and continue the process in accordance with federal regulations or possibly terminate the agreement for convenience. When major procurements (i.e., exceeding $100,000) have violated federal requirements, the regional counsel should be advised.
Back to Questions
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Has the grantee procured any equipment or materials using
option clauses? If yes, identify. Were options evaluated at the time of the
initial bid? If yes, were option prices established?
Explanation
Grantees may include options in contracts. If a grantee chooses to use options, the option quantities or periods in the bid must be evaluated in order to determine contract award. The price associated with exercising the option needs to be defined at the outset, either as a specific price or as a percentage increase of the base price. If the options have not been evaluated as part of the award, the exercise of the options is considered a sole source procurement. A grantee also must ensure that the exercise of an option is in accordance with the terms and conditions of the option stated in the initial contract award, and the grantee must determine that the option price is better than prices available in the market or the option is the more advantageous offer at the time it is exercised.
Note: IIf the option quantities on a rolling stock or replacement parts purchase appear to exceed the grantee’s reasonably foreseeable needs, the grantee may be in violation of the five-year limitation (see Question 10).
Reason for the Question
49 USC
5307 (d)(1)(E)
FTA
C 4220.1E, 9i
Sources of Information
Grant files and correspondence at the desk review may indicate requests for exceptions to the general requirements. At the site visit, a review of contracts and other procurement documents will indicate whether options and period of contract exceed the limits and whether options were priced, evaluated and are exercisable. In some cases, the grantee may have assigned options on a vehicle procurement to another party (i.e., “piggy-backing”). In these cases, the reviewer should ensure that the options available to the grantee have been reduced by the number assigned to the other party.
Determination
If the options were not evaluated with the initial bid and were exercised, the grantee is deficient. If options were assigned improperly to another grantee, the grantee is deficient. If options are unpriced, the grantee is deficient. If the options were established appropriately but were exercised without the requisite price analysis, the grantee is deficient. If options were assigned improperly to another party, the grantee is deficient.
Suggested Corrective Action
Where options that violate the requirements have not been exercised, the grantee must provide a written assurance that it will not exercise the options unless FTA approval is granted. If the grantee has exercised options that were not evaluated and priced initially, or were assigned improperly to another grantee, the grantee must provide FTA a written explanation of the procurement and a written acknowledgment that it understands the regulations and will include them in all future procurements. The FTA may require refund of federal funds.
Back to Questions
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Has the grantee used advance payments? If yes, identify. Was
prior, written approval obtained from FTA headquarters?
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Were progress payments used? If yes, identify. Has the
grantee obtained title of the property or taken alternative measures to protect
FTA’s interest?
Explanation
The FTA does not authorize and will not participate in funding advance payments to a contractor without prior, written approval from FTA headquarters by either the FTA Administrator or the Associate Administrator of Administration. There is no prohibition on a grantee’s using local funds for advance payments. However, advance payments made with local funds before a grant has been awarded or before the issuance of a letter of no prejudice or other pre-award authority are ineligible for reimbursement. FTA will allow progress payments if the payments are made to the contractor only for costs incurred in the performance of the contract. When progress payments are used, the grantee must obtain title to property (materials, work in progress, and finished goods) for which progress payments are made. Alternative security for progress payments by irrevocable letter of credit or equivalent means to protect the grantee’s interests in the progress payments may be used in lieu of obtaining title.
Reason for the Question
49 USC
5307 (d)(1)(E)
FTA
Circular 4220.1E, 12a-b
Sources of Information
Procurement files, especially contracts and annual audit reports, may provide
additional information.
Determination
The grantee is not deficient if it has obtained prior approval from FTA headquarters for using advance payments. If progress payments have been used and the grantee has obtained title to property as required, the grantee is not deficient. If the grantee has used advance payments without prior FTA approval, it is deficient. Where progress payments have been used, but do not meet one of the requirements outlined above, the grantee is deficient. If the grantee has made progress payments but has not taken title to property or adequately protected FTA’s interests, it is deficient.
Suggested Corrective Action
The grantee must report immediately to the regional office any improper advance or progress payments with an explanation of the circumstances surrounding the payments and a description of how these funds will be reimbursed. The grantee must cease any practice that violates FTA regulations.
Back to Questions
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Has the grantee used liquidated damage clauses in any of its
procurements? If yes, is the damage rate specified in the contract?
Explanation
Grantees are allowed to use liquidated damage clauses when there is a reasonable expectation of damages (increased costs on the project involved) from late completion and the extent or amount of such damages would be difficult or impossible to determine. The assessment for damages should be at a specific rate per day for each day of overrun in the contract time, and the rate must be specified in the contract. Any liquidated damages recovered should be credited to the project account involved unless the FTA permits otherwise. Liquidated damage clauses may not be used to impose a penalty, limit or restrict competition, or in situations where delayed performance will not affect the grantee adversely.
Reason for the Question
49 USC
5307 (d)(1)(E)
FTA
C 4220.1E, 13
Sources of Information
Procurement files (both solicitations and contract documents) may contain liquidated damage clauses. These types of clauses typically are found in large procurements of vehicles and equipment or in construction contracts. Note that a contract can contain language whereby the grantee and the contractor agree that liquidated damages are very difficult to assess, but mutually agree to a level. In such cases, grantees should have documentation of the factors considered in reaching this level.
Determination
The grantee is not deficient if the liquidated damage rate is specified in the contract and the grantee can provide a reasonable explanation regarding the adverse impacts that would be caused by late completion. If the damage rate is not specified in the contract or the grantee cannot provide a reasonable explanation regarding expected damages as a result of late completion, the grantee is deficient.
Suggested Corrective Action
The grantee must provide a written assurance indicating that it understands the use of liquidated damage clauses. If clauses are in existing contracts improperly, the grantee may modify the contract to eliminate the clause or provide a justification for the use and level of liquidated damages.
Back to Questions
Part C: Altoona Bus Testing
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Have buses been purchased or leased with FTA funds? If yes:
Do the bus models require Altoona testing? How was this determination made? If
models require testing: Was a model tested? If yes, identify model. Was a test
report issued? Was the report received prior to expenditure of FTA funds? If
models do not require testing: Does the grantee have certification(s) from the
manufacturer that the bus does not need to be tested?
Explanation
A grantee purchasing buses with funds obligated after September 30, 1989 must certify to the FTA that any new bus model has been tested at the FTA-sponsored test facility in Altoona, Pennsylvania. A new bus model is a bus design or variation of a bus design (usually designated by a manufacturer by a specific name and/or model number) that has not been in use in U.S. mass transit service prior to October 1, 1988, or that has been in service prior to that date but is being procured with a major change in configuration or components. Bus testing requirements apply to different mass transit vehicles including vans, other small vehicles, medium, and light-duty mid-size buses, and heavy-duty small and large buses. Bus testing does not apply to unmodified mass produced vans, bus prototypes, electric buses, or trolley buses (meaning genuine trolleys, not replica trolleys popularly in use today).
Reason for the Question
49 USC
5307 (n)(2)
49 CFR Part 665
FTA
C 9030.1C Ch. V 9b(4)
Sources of Information
If the grantee has conducted a recent bus purchase, determine if the bus model
was tested. A list of
buses tested as of August 2005 is included in Exhibit 6.3. A copy of
the most recent list of models tested is available at the following web site:
http://www.vss.psu.edu/BTRC/Reports/allbusses.pdf.
The procurement
files for a bus purchase should contain information from the manufacturer
regarding the particular vehicle’s testing status. If the vehicle has
been tested, the grantee should have a copy of the report in their files,
regardless of whether or not the agency was the lead agency for the purchase,
“piggy-backed” with another agency, or bought the vehicle off the
state list.
Determination
The grantee is not deficient if it has included a certification for qualified buses, required bus testing, and received a test report prior to the expenditure of FTA funds. If a grantee has not included a certification for qualified buses, has not required bus testing, or has not received a test report, it is deficient. If buses were accepted or federal funds expended prior to the receipt of the report, the grantee is deficient.
Suggested Corrective Action
The grantee must submit a certification, change its procurement procedures, and/or change its bus acceptance procedures and submit evidence of such to FTA. Where federal monies have been expended before a test report has been received, the grantee will, at a minimum, provide written assurance of its understanding of the testing requirements. The grantee may be required to reimburse FTA.
