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!Yz j&WordMicrosoft Word  / Courier New-@Times New Roman- &#2jC (&/ (&(@ʦffff33ff&-WPWin 6.0/OLE 1.0 Prefix Information MarkerWPDraw30.Drawingࡱ>  Root Entry`.@p`Ole WPG20hCompObj#t  !"$'()*+,-./0123456789:;<=>?@ABCDEFGHIWPCeYzYz"51390! !Yz j&WordMicrosoft Word  / Courier New-@Times New Roman- &#2jC (&/ (&(@ʦffff33ff&- `.@pCorel Presentations 9 Drawing Embed SourceWPDraw30.Drawing9q+ bj  +   3BOlePart%OlePres000&WPGExtentsJ 1  W 20. &WordMicrosoft Word  / Courier New-@Times New Roman- &#2jC (&/ (&(@ʦffff33ff&-   8:d METAFILEPICT+ bj  +   31  W 20. &WordMicrosoft Word  / Courier New-@Times New Roman- &#2jC (&/ (&(@ʦffff33ff&-    WPC@@!&ƚVW s&WordMicrosoft Word  Courier New-&C 9(9!3f333f333f3ffffff3f!3f3f """)))333f33333333f333333333f33ff3f3f3f3f333f3333333f3333333f3333999BBBMMMPPUUU___f3fffffff33f3ff3f3f3f3ff3ffffffffffff3fffffff3fffffff3ffffffwww|3f̙333f33̙33f3ffff̙ff3f̙3f̙3f̙ʦ3f333f3333f3ffffff̙3̙f̙̙̙̙3f3ff33f3333f3ffffff3f3f3f˃.}g6TggTgۚTW}g6}TgT}Tgg}}TTTg6TW}g6TgT.g}T66g.gg.}.}T6.+.g6g.T}}6.+6.T6T..g6..W+...66..W.g}Tg.gT66}6}g6T.}g}T}6.6gg}T6}gˬ6g...g֚}}}+}+g.gTT...TTg}6T.}66g..g.g+6W+}}}T66ggg}}gg6ggT.g++.˃˚+66gg.+Tg+ggg.փ.+g.+..+.֚+6g..6.g+}g+֚g.g}.}T6}W...փT}6}T..+.+.6gg}T˃}}.+T.}6666+g+.ˬggTgW.g.+6TT}6+g+}Wg}.66}֬TT.W6gTW6}T6W}}g..66TTg..g}}gWgg.ggTg.Wg+6.Tg6W.6g++g}g666ggg.ggT}6Tg}TT}}6.}g66+˃g}g}6}6TTg6.++.6W.6TW6.6+..+.+.Tg}T.T6}˫}+TT66W۫6.6+..6g.+.W}.gTgg}Tgۚ&-TABLE UTABLE A&0 d d [ Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  _E,X` X X-&SpXE @   Equipmentwithaunitmarketvalueof$5,000orless,orsupplieswithatotalaggregatevalueof$5,000orless,  mayberetained,soldorotherwisedisposedofwithnoobligationtoreimburseFTA,providingusefulservicelife  requirementshavebeenmet.TABLE GTable_ATABLE H8 TABLE ITABLE JZTABLE Phttp://www.ftahelpline.com/Price_Guide.docTABLE B8TABLE ATABLE ClTABLE D\jTABLE ELTABLE F  Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  _ @ `. <DL! X-&SpX`  ThesituationscoveredbytheCircularincludemorethanthoselistedabove,andgranteesneedtocarefully  reviewtheCircularinstructions.TABLE ATABLE BTABLE A  x    TABLE I   H  Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  _ @ `. <DL! X-&SpX`_  __New_ԀYorkCityTransit.ContactMike_Zacchea_,(646)2526204.Table_B6~ 4heading 1    ?%2A`Arial?     XXXS \  `&Times New RomanS  <G+J :Outline008_1   /%` ` <DL/23  ..  2( 4 <DL2  WPCpR513%)+ .-  ))̲< :endnote text    (5hCEKQW]cioAutoList11.1.1.1.1.1.1.1.TABLE A  dI., II.,Level 1Level 2Level 3Level 4Level 52[+[ 0_level9    8.<` hp x (#823  ..   8.` hp x (#8  4#9V2Quick I.  .0 6#94Quick i. u  .0 uTABLE ACheck1Table_ATable_BTable_CTable_DTable_ATable_E@TABLE QTABLE CTable_FTable_GtTABLE FTable_HTable_I Table_J TABLE ATable_K _Hlt40086878Table_L TABLE GTable_M Table_NTable_OTable_PTable_QA6_4  Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  _ @ `. <DL! X-&SpX`_  ____If_Ԁthematerialtobesolddoesnotmeetthecriteriaforcompetitivebidding,solicitationandadvertisingof  individualitemsofferedforsalewouldbearesponsibilityoftheSalesDepartment,notProcurement.Table_RTable_STABLE ATABLE H4#*&2Quick A.  .0   Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  NAsageneralrule,thecircular,alongwiththeunderlyingrequirementsintheFederaltransitlawsand  regulations,applieswheneverFederalfundsareinvolved.Thosegranteesauthorizedtouseformulafundsfor  operatingassistancemustapplythecirculartoalloperatingcontracts!eveniftheyareabletoadministratively F segregatethefederalfundstononcontractoperatingexpenses.Theabilitytouseformulafundsforoperating  L assistancehingesuponagranteestotaloperatingexpensesandtheportionofthoseexpensesnotoffsetbyoperating  income.Sincetheentirerangeofoperatingexpensesisconsideredinthiscalculation,eachsegmentofthose  operatingexpensesmustbesubjecttoFederalstandards.#N#NԀ#NX#NGranteesthatarenotauthorizedtouseformulafundsfor V operatingassistancearenotrequiredtoapplythecirculartotheiroperatingcontracts.#N#TABLE AzTABLE BTABLE Bh CEIMQUY]aAutoList522222222i)1)a)h0CEIMQUY]aAutoList622222222i)1)a)h@CEIMQUY]aAutoList722222222i)1)a)\  `&Times New RomanhPCEIMQUY]aAutoList822222222i)1)a)(~TABLE Eh`CEIMQUY]aAutoList922222222i)1)a)hEGKOSW[_cAutoList1022222222)1)a)hEGKOSW[_cAutoList1122222222)1)a)hEGKOSW[_cAutoList1222222222)1)a)hEGKOSW[_cAutoList1322222222)1)a)hEGKOSW[_cAutoList1422222222)1)a)hEGKOSW[_cAutoList1522222222)1)a)hEGKOSW[_cAutoList1622222222)1)a)http://www.forecastart.orghttp://www.americansforthearts.orghEGKOSW[_cAutoList1722222222)1)a)hEGKOSW[_cAutoList1822222222)1)a)hEGKOSW[_cAutoList1922222222)1)a)hEGKOSW[_cAutoList2022222222)1)a)6uhaF4Heading 3    g  _. r #X  h    g  _. r #XhEGKOSW[_cAutoList2122222222)1)a)6M @4Heading 4  5+ ` hp x 5     5+ ` hp x 56P C4Heading 5  5+ ` hp x 5     5+ ` hp x 5 <L+@ :Body Text I2    5+ ` hp x 523  ..  5+ ` hp x 5<XX :Body Text I1    5+` ` hp x 5   5+ ` hp x 5  0> .Header  >4X` hp x >TrhEGKOSW[_cAutoList2222222222)1)a) v:NN 8Body Text 3    5+ ` hp x 5    5+ ` hp x 5 hEGKOSW[_cAutoList2322222222)1)a)8########(35;AGMSY_21.1.1.1.1.1.1.1.########(35=EMU]em6(1)(1)(1)(1)(1)(1)(1)(1)  Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  |CongestionMitigationandAirQuality(CMAQ)andJobAccess/ReverseCommute(JARC)fundsmaybeused  foroperationsbyallgrantees.Thecircularmustbeappliedtoallcontractsthatarefunded,inpart,byCMAQor  JARCfunds.UsingCMAQorJARCfundsforaspecificoperatingcontractorcontractsdoesnottriggerthe F requirementtoapplythecirculartootheroperatingcontracts.Thisisbecausethecalculationrequiredtouseformula  L fundsforoperationscontractsisnotrequiredasaprerequisitetousingCMAQorJARCfundsforoperating  contracts.#|#5dddddddd(359=AEIMQ8 0EGMQW]cioAutoList38II!1.IIIIIIIIII########(35=EMU]em9(a)(a)(a)(a)(a)(a)(a)(a)i., ii., iii.,Level 1Level 2Level 3Level 4Level 56#d4Quick i) u  )0 u bEGMSY_ekqAutoList53A.A.A.a.A.A.A.A. jEGMSY_ekqAutoList60A.A.a.A.A.A.A.A.\  `&Times New Roman EGMSY_ekqAutoList66A.A.1.A.A.A.A.A.(EGMSY_ekqAutoList69A.A.A.A.A.A.A.A.TABLE L(EGMSY_ekqAutoList70A.A.A.A.A.A.A.A.(EGMSY_ekqAutoList75A.A.A.A.A.A.A.A.0EGMSY_ekqAutoList76I.A.I.I.I.I.I.I.(EGMSY_ekqAutoList77A.A.A.A.A.A.A.A. EGMSY_ekqAutoList79I.A.I.I.I.I.I.I.(EGMSY_ekqAutoList80I.I.I.I.I.I.I.I.  Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  Granteeswhouseformulacapitalfundsforpreventativemaintenancecontractsmustapplythecirculartothose  contracts.If,throughtheiraccountingprocedures,thesegranteesareabletoallocatetheFederalfundstodiscrete  maintenancecontracts,onlythosediscretecontractsmustadheretothecircular.Ifunabletoallocatefederalfundsto F discretemaintenancecontracts,thecircularappliestoallmaintenancecontracts. @ ##Capitalprojectsthatdontinclude  L Federalfundingarenotrequiredtoconformtothecircular.##\  `&Times New Romanh<EGKOSW[_cAutoList84)1)a)  KV'USUS.,  _8XXBestPracticesProcurementManualChapter2ProcurementPlanning&Organization#XXg#!!F#XXPage  1  ڈ  A1) xddEA  |TABLE NhLEGKOSW[_cAutoList85!!!!!!!!)1)a)(եEGMSY_ekqAutoList90IIIIIIIIIIIIIIII REGMSY_ekqAutoList92A.A.A.a.A.A.A.A. [EGMSY_ekqAutoList93A.A.a.A.a.A.A.A.0GEGMSY_cioAutoList94a.a.a.a.a.a.a.(EEGMSY_ekqAutoList971.1.1.1.1.1.1.1. UEGMSY_ekqAutoList981.1.1.1.1.1.1.1.0EGMSY_ekqAutoList99A.A.1.a.A.A.A.A.(GIOU[agmsAutoList100A.A.A.A.A.A.A.A.(fGIOU[agmsAutoList1011.1.1.1.1.1.1.1.  Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  _ForformalassistanceinimplementingateamprocessseeHoward,JenniferM.andMiller,LawrenceM.,Team  Management:CreatingSystemsandSkillsforaTeamBasedOrganization(TheMillerConsultingGroup,Inc.,  1994)or_Leinberger_,Robinetal,TheArtofBusinessProcessManagement:Aguidebook,(_KPMG_ԀPeatMarwick, F _LLP_,1993).0GIOU[agmsAutoList102A.A.A.A.A.A.A.A.(GIOU[agmsAutoList103A.A.A.A.A.A.A.A.(GIOU[agmsAutoList104A.A.A.A.A.A.A.A.(GIOU[agmsAutoList105A.A.A.A.A.A.A.A.  X X  { Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  Thelimitationisexpressedintermsofbuyingnomorethanfiveyearsrequirementseventhoughdeliverymay  occurbeyondfiveyearsfromthedateofthecontract.  Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  _Thislimitationdidnotapplytoconstructioncontractsortoleasesofrealpropertyforthelifeofthetransitasset  tobeconstructedonsuchproperty.  Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  _FTADearColleagueLetterC0802datedMay29,2002.\LTABLE A  Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __ Contact_ԀMr.John_Trotta_,VicePresident,Purchasing/Warehousing,ChicagoTransitAuthority,at_  (312)_Ԁ2226113.TABLE A  Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  _Geographicpreferenceispermittedincertainnarrowsituations,includingprincipallywherepartofalegal  licensingrequirementandforarchitectsandengineers;FTACircular4220.1E8.b.  Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  _TheCouncilofStateGovernments,NationalAssociationofStatePurchasingOfficials,LawEnforcement  AssistanceAdministration,andPeatMarwickMitchell&Co.,StateandLocalGovernmentPurchasing(1975)  p.6.2.TABLE ATABLE BTABLE A< :Comment TextXXX..O ,Title ]    99!    5+ 4 <DL!5  F Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  _UnitedStatesv.JohnC._Grimberg_ԀCo.,702F.2d1362,1367(Fed.Cir.1983)(inbanc).<TABLE A:8Page NumberTable_A Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  _FTACircular4220.1E8.c.(1).http://www.ftahelpline.com<* :Normal (Web) S =jS    =jS Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  _ FTACircular4220.1E9.h.(1).TABLE J Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  _ Id.  Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  _FTAMasterAgreementSections3(a)and3(a)(1);49_CFR_Ԁ18.36(3);FTACircular4220.1EParagraph7(c).  Inaddition,manystateandlocaljurisdictionshavelawsandregulations,whichaddressboththeconductofpublic  employeesandtherelationshipbetweenpublicentitiesandprivatebusinesses.Thesevaryinnature,andmay F imposebothcivilandcriminalsanctionsonviolators.http://www.fta.dot.gov/library/legal/buyamer/  Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  _ SeeFTAMasterAgreementSection3(a)(1). d Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  _Thisinterpretationappliestobothsubcontractorsandgeneralcontractorsprovidingprocurementrelated  servicestoagrantee. v Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  _  @  @ Apersonalconflictalsoariseswhereapersonwhosefinancialinterestsareattributedtotheemployeehasa  conflict!eitherbecausethatpersonisanemployee,prospectiveemployee,officer,director,oragentofacontractor  orcompetingentity,orbecausethatpersonhasafinancialinterestinthecontractororcompetingentity.The F financialinterestsofthefollowingareattributedtoanemployee: amemberoftheemployeesimmediatefamily,  L hispartner,orhisoutsideemployerorprospectiveemployer.FTACircular4220.1EParagraph7(c).   Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _  @  @  @ SeeFTACircular4220.1EParagraph7(c);18_CFR_Ԁ18.36(3)(iv);FTAMasterAgreementSection3(a).  However, [_t]he_ԀRecipientmaysetminimumruleswherethefinancialinterestisnotsubstantial,orthegiftisan  unsoliciteditemofnominalintrinsicvalue.FTAMasterAgreementSection3(a);seealsoFTACircular4220.1E F Paragraph7(c);18_CFR_Ԁ18.36(3)(iv).Theseareknownas de_minimus_gifts,anddonotresultineitherarealor  L apparentconflictofinterest.ForFTAandotherFederalemployees,thelevelissetat$20peroccasion,witha  maximumof$50percalendaryearfromthesamesource(includingaffiliates).Inmanycases,however,thebest  responsetoagiftofferedisasimple, Thankyou,butnothankyou.Section3(a)oftheFTAMasterAgreement V requiresthatgranteesincludeinthestandardsofconductpenalties,sanctions,orotherdisciplinaryactionsfor  \ violationsofthecode,totheextentpermittedbystateorlocallaw.  Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  _ @  @  @ SeeFTACircular4220.1EParagraph8(a)(5).TheFederalAcquisitionRegulationsalsoprovideahelpful  definitionoforganizationalconflictofinterest: Organizationalconflictofinterestmeansthatbecauseofother  activitiesorrelationshipswithotherpersons,apersonisunableorpotentiallyunabletorenderimpartialassistanceor F advicetotheGovernment,orthepersonsobjectivityinperformingthecontractworkisormightbeotherwise  L impaired,orapersonhasanunfaircompetitiveadvantage.48_CFR_Ԁ9.501. ^ Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  _Generally,anorganizationalconflictarisesbecauseapersonorentityhasorappearstohaveloyaltiesto,ora  financialinterestin,twoorganizationsthatmayhavecompetingordifferinginterestsfromeachother!oneofthem  beingthegrantee.Forexample,anorganizationalconflictwouldariseifanemployeeora_consultatn_Ԁservesasa F memberofapublicorquasipublicbodywithregulatoryauthorityoveraprojectorhasastakeinitsoutcome.This  L arisesmostoftenwherearchitectssitondesignrevieworzoningboards. e Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  _ @  @ Federaltransitlawrequiresgranteestoawardcontractsthroughaprocessoffullandopencompetition.  Organizationalconflictsofinterestthatgiveanypartyanunfaircompetitiveadvantageimpedefullandopen  competition,andthusareconsidered restrictiveofcompetitionunderParagraph8(a)(5)ofFTACircular4220.1E. TABLE B y Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  _ Mergersandacquisitionshavehadastrongeffectoncontractsintheenvironmentalarea,thuswarrantinga  separatediscussionofthistopic.http://www.arnet.gov/farhttp://www.ftahelpline.com/http://www.fta.dot.gov  Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  _  @  @ ThisisconsistentwiththeapproachusedinFederalcontractingassetforthinFAR9.504(e),whereacontract  canbeawardedinspiteofaconflictwhenthecontractingofficerdeterminesthatitisinthebestinterestofthe  Governmenttodoso.  Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  _ RecommendationoftheABAModelProcurementCode,R12202.01.  Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  _ BARTProcurementManual,AttachmentB. @   Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  _ @  @ Eachgranteealsoshouldconsultwithitscounselbeforerequiringannualfinancialdisclosurestatementsto  confirmthattherequirementcomplieswithanylaboragreementsapplicabletothegrantee. 6 Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  _Inlargeundertakings,thismayinvolvemultiple,relatedconsulting,planning,design,technicaloversightor  technicalevaluationcontracts.Granteescanworkwithpersonsexperiencedinthefieldtodecidehowtosegment  the_procurements_Ԁandwhatrestrictionstoimpose. @  [ Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  _ 40_CFR_Ԁ1506.5.Notethatifacontractorhasafinancialinterestintheoutcomeoftheproposedproject,the  contractorshouldinformthegranteeofitsinterest.Underappropriatecircumstances,thegranteemaychooseto  waivetheconflictofinterestaftercarefulconsideration(seeDiscussionSectionI).TABLE C 4 Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  _ LosAngelesCountyMetropolitanTransportationAuthority.ProcurementManualSection908(e). Bp$USUS.,<( X-&SpXX<XXXXXX  28  ڀ  _ Ibid.,Section2314.  Bp$USUS.,<( X-&SpXX<XXXXXX  29  ڀ  _ Ibid.,Section407.5.AlsoSanFranciscoBayAreaRapidTransitDistrict(BART).ProcurementManual  Section#Q#ԀII7.TABLE DTABLE ETABLE FTABLE Kx9 Z&Times New Roman$`TABLE L(TABLE M`NTABLE A Bp$USUS.,<( X-&SpXX<XXXXXX  30  ڀ  _ FAR9.202.TABLE GLTABLE O : Bp$USUS.,<( X-&SpXX<XXXXXX  31  ڀ  _ LosAngelesCountyMetropolitanTransportationAuthority.ProcurementManual,Section407.5(1)(a).}TABLE A/ 0 Bp$USUS.,<( X-&SpXX<XXXXXX  32  ڀ  _ FAR'Section#'#Ԁ9.202(e).TABLE Ox9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  33  ڀ  _]+ ` hp x  X-&SpX]   @     Manystatelawsrequireconstructioncontractstobeawardedatafirmfixedprice. J Bp$USUS.,<( X-&SpXX<XXXXXX  34  ڀ  _]+ ` hp x  X-&SpX]   @     ݄Itisimportantthatthegranteesprojectbudgetreflectanallowanceforanypotentialincreaseinvolatile  commodityprices(e.g.,steel).Table_BTable_C  Bp$USUS.,<( X-&SpXX<XXXXXX  35  ڀ  _]+ ` hp x  X-&SpX]   @     ݄TheFARpriceescalationclausesinFAR52.2162,3,4includeamaximumaggregatepriceincreaseof10  percent;however,theFARalsogivestheContractingOfficerlatitudetoincreasethismaximumpercentif  circumstanceswarrant.Table_D d Bp$USUS.,<( X-&SpXX<XXXXXX  36  ڀ  _]+ ` hp x  X-&SpX]   @     ݄Whenusingasteelescalationarticleonlythecostofmaterialisescalatedor_deescalated_Ԁandnoothercosts  suchaslaborormachinery.Table_E  Bp$USUS.,<( X-&SpXX<XXXXXX  37  ڀ  _ FAR52.216.7!AllowableCostandPayment.Table_F  Bp$USUS.,<( X-&SpXX<XXXXXX  38  ڀ  _ FAR52.2168!Fixed_Fee._  Bp$USUS.,<( X-&SpXX<XXXXXX  39  ڀ  _ FAR52.2168!Fixed_Fee._     Bp$USUS.,<( X-&SpXX<XXXXXX  40  ڀ  _ Advanceagreementscannotprovideforthe_allowability_Ԁofcoststhatthecostprincipleshavedeterminedtobe  unallowable(e.g.,interest).$TABLE ACl*TABLE AD d Bp$USUS.,<( X-&SpXX<XXXXXX  41  ڀ  _ Ifacosttypesubcontractistobeawardedbytheprime,thesubcontractorsaccountingsystemmustalsobe  adequate.Table_I   Bp$USUS.,<( X-&SpXX<XXXXXX  42  ڀ  _ Ifacosttypesubcontractistobeawardedbytheprime,thesubcontractorsaccountingsystemmustalsobe  _adequate._Table_J  `  Bp$USUS.,<( X-&SpXX<XXXXXX  43  ڀ  _ 46Comp.Gen.612(B159713)(1967).    F Bp$USUS.,<( X-&SpXX<XXXXXX  44  ڀ  _]+ ` hp x  X-&SpX]    ݀FTAhasredraftedtheparagraphrelatedtoprogresspaymentstoaccountforthepracticalrealitythattakingtitle  toworkinprogressmaynotbedesirableinsomecases.  Bp$USUS.,<( X-&SpXX<XXXXXX  45  ڀ  _]+ ` hp x  X-&SpX]    ݀Progresspaymentsinconstructioncontractsmaybemadeonapercentageofcompletionmethodinaccordance  with49_ CFR_ Ԁ18.21(d).Thispaymentmethodmaynotbeusedinnonconstructioncontracts.TABLE A Table_K   Bp$USUS.,<( X-&SpXX<XXXXXX  46  ڀ  _]+ ` hp x  X-&SpX]    ݀ Adequatesecurityshouldreflectthepracticalrealitiesofdifferentprocurementscenariosandfactual  circumstances.Forexample,adequatesecuritymayconsistoftakingtitletoworkinprogressinarollingstock  procurement,receivingadraftdocumentinaconsultingcontract,orreceivingsomeportionofrecurringservices F underaservicescontract.Granteesshouldalwaysconsiderthecostsassociatedwiththissecurity(e.g.,bondsor  L lettersofcreditmustbepurchasedinthecommercialmarketplace)andtheimpactthosecostshaveonthecontract  price,aswellastheconsequencesofincompleteperformanceastheyconsiderwhatconstitutesadequatesecurityfor  agivenprocurement.Table_L Table_M Table_N  Bp$USUS.,<( X-&SpXX<XXXXXX  47  ڀ  _]+ ` hp x  X-&SpX]    ݀Thetermprogresspaymentsdoesnotapplytocosttypecontracts,andistobedistinguishedfromadvance  payments,whicharepaymentsmadebeforeworkbegins(see_BPPM_Ԁsection4.4.4.2).Table_OTable_P 7 Bp$USUS.,<( X-&SpXX<XXXXXX  48  ڀ  _  󀀄Bothoftheconditionsnotedarealmostalwayspresentonconstructionprojects. G Bp$USUS.,<( X-&SpXX<XXXXXX  49  ڀ  _  FARClause52.2325PaymentsUnderFixedPriceConstructionContracts.dTable_Q   Table_R z Bp$USUS.,<( X-&SpXX<XXXXXX  50  ڀ  _  󀄀49_CFR_Ԁ18.21(d)authorizesthepercentageofcompletionmethodforconstructioncontractsonly.d  Bp$USUS.,<( X-&SpXX<XXXXXX  51  ڀ  _AppendixA.1,Clause_16._  Bp$USUS.,<( X-&SpXX<XXXXXX  52  ڀ  _ AppendixA.1,Clause_17._Table_StWHTABLE B  Bp$USUS.,<( X-&SpXX<XXXXXX  53  ڀ  _ _Norair_Ԁ_Eng'g_ԀCorp.,_GSBCA_Ԁ3539,751_BCA_Ԁparagraph_11,062._ 7 Bp$USUS.,<( X-&SpXX<XXXXXX  54  ڀ  _ Baileyv.SecretaryofLabor,810F.Supp.261(D.Alaska_1993)._Table_T  Bp$USUS.,<( X-&SpXX<XXXXXX  55  ڀ  _ FARClause52.2329.WPCpR513%)+ .-  )) p KV'USUS.,  __e KVUSUS.,  XXXX¿)XXBestPracticesProcurementManualChapter3Specifications!!Es#Page  1  _#XX)¿#_Ԉ  A1)  xdE A_  __#XXXX#_x9 Z6Times New Roman RegularTABLE AEx=  !USUS.,  __  XX¿)      1UnitedStatesv._Spearin_,248U.S.132(1918).TABLE AF\  `*Times New RomanTT N !USUS.,  __  XX¿)      2MonitorPlasticsCo.,_ASBCA_Ԁ14447,722_BCA_Ԁ9626at44,971.\  `*Times New RomanTTfn44 ? !USUS.,  __  XX¿)      __Mg    XX)¿XXXX  iXX      BpUSUS.,<( X-&SpXX<  3  ڀ  ic:    XX  XXJ.L.SimmonsCo.V.UnitedStates,188Ct.Cl.684,412F.d.1360(1969)at689. WPCpR513%)+ .-  ))`7i:footnote reffootnote reference9        9V:footnote texfootnote text  W\  `*Times New RomanTTW        XXXW\  `*Times New RomanTTW\  `*Times New RomanTT  !USUS.,  __  XX¿)      _4_ԀEngineeringTechnologyConsultants,_ASBCA_Ԁ43600,923_BCA_Ԁ25,133,_recons_.Denied,931_BCA_Ԁ_25,507._\  `*Times New RomanTT  !USUS.,  __  XX¿)      5J.L.SimmonsCo.,_id._\  `*Times New RomanTT u !USUS.,  __  XX¿)      6HarrisonWestern/_Franki_ԄDenys,Inc.,_ENGBCA_Ԁ5523,921_BCA_Ԁ24,582.\  `*Times New RomanTT  !USUS.,  _  XX¿)      i¿))¿      i:    ¿))¿  __ BpUSUS.,<( X-&SpXX<)¿  7  ڀ  _Hobbs_ԀConstr.&Dev.,Inc.,_ASBCA_Ԁ34890,912_BCA_Ԁ_23,755._\  `*Times New RomanTT  !USUS.,  _  XX¿)      i¿))¿      i:    ¿))¿  BpUSUS.,<( X-&SpXX<)¿  8  ڀ  MaitlandBros.Co.,_ASBCA_Ԁ23849,831_BCA_Ԁ_16,434._\  `*Times New RomanTT  !USUS.,  _  XX¿)      i¿))¿      i:    ¿))¿  BpUSUS.,<( X-&SpXX<)¿  9  ڀ  Huber,Hunt&_Nichols_,Inc.,_GSBCA_Ԁ4311,752_BCA_Ԁ_11,457._\  `*Times New RomanTT m !USUS.,  _iXX      i=:    XX  BpUSUS.,<( X-&SpXX<XXXXXX  10  ڀ  SouthernPavingCorp.,_AGBCA_Ԁ74103,772_BCA_Ԁ12,813at_62,363.XX_http://www.arnet.gov/far/  !USUS.,  __  XX¿)      BpUSUS.,<( X-&SpXX<)¿  11  ڀ  AleutianConstructors_v._ԀUnitedStates,24Cl.Ct.372_(1991)._http://data.bls.gov/labjava/outside.jsp?survey=wp\  `*Times New RomanTT z !USUS.,  __iXX        12  iM:    XX  XXԀIntercontinentalMfg.Co.V.UnitedStates,4Cl.Ct.591(1984)at595. B !USUS.,  _  XX¿)      i¿))¿        13  ڀi:    ¿))¿  _Ahern_ԀPaintingContractors,Inc.,_DOTCAB_Ԁ677,681_BCA_Ԁ_6949._\  `*Times New RomanTT \ !USUS.,  __iXX        14  iM:    XX  XXԀInletCo.,ASBCA9095,1964BCA4093.  !USUS.,  _  XX¿)      i¿))¿        15  i:    ¿))¿  ݀TransportationAcquisitionRegulation(TAR)Clause1252.20971_DisclosureofConflictsofInterest__________Ԁ(Oct__._  1994).\  `*Times New RomanTT  !USUS.,  _iXX        16  i=:    XX  XXԀPreparedbyOfficeofProcurement,TheMetropolitanTransitAuthority,HarrisCounty,Texas,datedJanuary  _1987._ B !USUS.,  __iXX        17  iM:    XX  XXԀMPC3203.  !USUS.,  _iXX        18  i=:    XX  XXԀTheGeorgeWashingtonUniversity'sNationalLawCenter'sGovernmentContractsProgramhaspublisheda  numberofexcellentbooksdealingwithGovernmentcontracting.OnesuchbookisConstructionContracting(The  GeorgeWashingtonUniversity:Washington,D.C.,1991).Foracompletecatalogueofcontractingrelatedtexts F contact:TheGWBookstore,80021st.St.,N.W.,Washington,D.C.20052,Phone:(202)9946870,Fax:(202)296  L 9445,_http://www.gwu.bkstr.com.#XX#_  !USUS.,  _  XX¿)      i¿))¿        19  i:    ¿))¿  ݀ConstructionContractAdministrationManual,PortAuthorityofAlleghenyCounty,ProcurementDepartment,  2235BeaverAvenue,Pittsburgh,PA152331080,Phone:(412)2377000,FAX:(412)2377101.ThisManual  containsmanyworthwhilethings,suchasproceduresforbiddocumentpreparation,bidding,contractaward,and F contractadministration;_GeneralContractProvisions;_Ԁ_amultitudeofformsforreporting,evaluating,administering,  L etc.___\  `*Times New RomanTT  !USUS.,  __E1` hp x (#XEiXX        20  i:    XX  XXԀ_Gorn_ԀCorp.V.U.S.,424F2d588(Ct.Cl.1970),_noted_Ԁat592.  !USUS.,  __H4X` hp x (#%XH  XX¿)      i¿))¿        21  i:    ¿))¿  ݀FTA_MA(12)_Ԁ15g.\  `*Times New RomanTT  !USUS.,  __H4X` hp x (#%XH  XX¿)      __g    XX)¿XXXX  iXX        22  i:    XX  XXԀFTA_MA(12)_Ԁ30.#XXn#\  `*Times New RomanTT  !USUS.,  __H4X` hp x (#%XH  XX¿)      __g    XX)¿XXXX  XXi        23  i:      ݀FTA_MA(12)_Ԁ_23e._\  `*Times New RomanTT  !USUS.,  __H4X` hp x (#%XHiXX      _  24  _i:    XX  XXԀFTA_MA(12)_Ԁ_25._  !USUS.,  __H4X` hp x (#%XHiXX        25  i:    XX  XXԀFTA_MA(12)_Ԁ12g.  KV'USUS.,  __XXBest_ԀPracticesProcurementManualChapter4MethodsofSolicitationandSelection#XXi#XX0  0x (# (#0 x(#x(#Page#XX#XX  1  _#XX#______ (# (# A1) xdExA__  _ $ KV'USUS.,  ': (#X'RWGCz h" p @X@E""! ""(#(#f- (#: (#-  -: (# X-f  XX  BestPracticesProcurementManual!RecentUpdatestoBPPM0 : 0 : ": (#Page_Ԁ    1  N   _#XX#f݌ " (# Ќ0: (#: (#0  f- (#: (#-  X'   X'f]  f]݌̌*: (# *  f- (#: (#-  ' 3  X'fH  X ""(#(#Q(3 3 D3  > J"USUS.,  _f$ (#X$  f=    f=|݌̌$ X X$       Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __See##Section1.3.2,"FederalContractualSphere."#(# vXXBestPracticesProcurementManualTableofContents0  f!f!E(#(#(#Page  1  #XX#Ԉ  A1) xdEsxA t XX___x9 Z&Times New Roman  KV'USUS.,  _8XXBestPracticesProcurementManualChapter1PurposeandScope#XXg#XX!!F#Page  1  #XX#Ԉ  A1) xd EA    Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  _UnitedStatesv.JohnC._Grimberg_ԀCo.,702F.2d1362,1367(FedCir.1983)(_in_Ԁbanc).##x9 Z&Times New Roman h KV'USUS.,  _8XXBestPracticesProcurementManualChapter1PurposeandScope#XXg#XX!!F#Page  1  _#XX#Ԉ  _A1) xdEA_  _______  Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __SeeChapter6foradiscussionoftheprocurementmethodscommonly_used_Ԁforeachobjectof_procurement.##_x9 Z&Times New Roman ` Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __FTACircular4220.1E_7.f.##_  Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ   @  @ Z( 4 <DL X-&SpXZ4V O  5        _|B      60DB  7 r_www.fta.dot.gov/16874_16882_ENG_HTML.htmx9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __49_CFR_Ԁ##Ԁ661.7,AppendixAto#c#Ԁ661.7,subparagraph(e).x9 Z&Times New Roman z Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  _ @  @ GranteesarerequiredtousetheFederalcostprinciplesinFARPart31todetermineallowablecostsoncosttype G contractsandwhennegotiating(fixed)pricesforcontractsandmodificationsthatarebasedonestimatedcosts.See   _BPPM_ԀSections2.4.3.1and2.4.3.2.## t Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  __Asapracticalmatter,youmaywishtoadoptthestatutorythresholdfortheDavisBaconActof$2,000asthe  micropurchasethresholdforconstructionservices.ThisiswhathasbeendonewiththeFederalAcquisition  Regulation!see,FAR##Ԁ13.60(a)whichdefinesmicropurchasesforconstructionasbeinglimitedto$2,000. F However,ifyouhavearequirementfor$2,300ofconstruction,younolongerneedcompetitivequotations,butyou  L stillneedDavisBaconwageratesubmissionsandcompliance.x9 Z&Times New Roman ` Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  __FTACircular4220.1E_8.c.##_\  `&Times New Romanx9 Z&Times New Roman # Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  __Youmustnotsplitaprocurementthatwouldbeinexcessof$2,500(threewidgetsworth$1,500apieceforatotal  of$4,500)intosmallerpurchases(threesequentialpurchasesof$1,500)inordertousethismethodofprocurement.##  Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  ____Contact_ԀMichaelFlores,_LACMTA_ԀAuditManager,at213-922-6345orfloresm@mta.net.x9 Z&Times New Roman WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))   w Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  __Althoughitiswrittenforthemoredetailed"priceanalysis"requiredincompetitive_procurements_,FAR15.805  discussespriceanalysistechniquesthatmaybeusedoradaptedtosupportyourdeterminationsforthese  _micro-purchases.##_WPCpR513%)+ .-  ))  Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __ __FAR_Ԁ2.101.x9 Z&Times New Roman Z Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  __ԀFAR_13.106(a)(3).##_x9 Z&Times New Roman   Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  __ThesechangeswerepublishedaspartofFederalAcquisitionCircular90-40inVolume61oftheFederal  Registeronpages39189through39199(61Fed.Reg.39189-39199(July26,_1996)).##_WPCpR513%)+ .-  )) WPCpR513%)+ .-  )) Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  FormFTAMA(12),October1,2005. WPCpR513%)+ .-  )) x9 Z&Times New RomanWPCpR513%)+ .-  )) v Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __!_FAR13.103(e).__#!#_x9 Z&Times New Roman Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  Id.atSection1.m.  Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __%_FAR13.106(a)(3)(i)and1.603-3(b)._ԀSeealsoSection2.1.2,"Autonomy"regardingdecentralization,  _generally.#%#_x9 Z&Times New Roman V Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  __)FAR_13.106(b).#)#_ Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  Id.atSection1.p.x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  __-GAO/_NSIAD_-96-138(8/6/96).GAOReportsareavailableontheInternetattheGovernmentPrintingOffice  website:_www.access.gpo.gov.#-#_  Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  _ 1SeeParagraph6.b.,FTACircular4220.1Efordefinitionof"State."Notethatthedefinitioninboththis  paragraphoftheCircularand49_CFR_ԀPart18.3specificallyexcludes"localgovernments"(asdefinedthereinas  well)fromthedefinitionofa"State."Thus,ifyouareacitygovernmentandarecipient/grantee,andifyourstatehas F aprocurementstatutethatappliesto"localgovernment"_procurements_,youstillmustcomplywiththeCircularand  L theprovisionsof49_CFR_ԀPart18.36(b)through(t).However,ifyouarea_subrecipient_/_subgrantee_Ԁofyourstate,you  shallfollowstatelawandprocedures.Thedifferencesbetweenthesetwoinstancesmaybesubtle,buttheyarereal  differencesthatshouldbeconsideredandaddressed.#1#x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _0Forfurtherinformation,contactMs.Sandra_Kuykendall_Ԁat42 8O  5  #0#  0skuykendall@islandtransit.orgB      6J^B  7 #0#\  `&Times New Roman(9 Z(Times New Roman mailto:skuykendall@islandtransit.org + Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  ____Id._ԀatParagraph7.a. ^ Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  __6SeeFTACircular4220.1E9.e--"Granteesshalluse[theBrooksAct]forcontractingforA&Eservices....  (_emphasis_Ԁsupplied)"SeeSection6.5,ArchitectEngineeringServicesforacomplete_discussion.#6#_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  ;Theflowdownofclausesisnotanabsoluterequirement;e.g.DrugandAlcoholTestingrequirementsapply  onlytotheworkoftheprimecontractor.#;#  Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  __:SeeSection6.5,"ArchitectEngineering_Services."#:#_x9 Z&Times New Roman(9 Z(Times New Roman  r Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  __?SeediscussionoftheserequirementsinSection8.1.3,"DavisBaconAct."#?# ; Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  _ AParagraph4,FTACircular4220.1E.#A#x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  __DA"deliveryorder"asopposedtoapurchaseorder,isissuedtypicallyunderthetermsof_arequirements_Ԁtype  contractthathasbeencompetitivelyprocuredunderformalprocedures.Thedeliveryorderissimplyanordering  mechanismunderthatcontractandisnotanindependentcontractlikeapurchaseorder.#D#(9 Z(Times New Roman   Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __GLetter_ԀfromFTAAdministratortoExecutiveDirector,DallasAreaRapidTransitdatedMarch3,1992,_Ԁpage_Ԁ2.#G#x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  __HFTACircular4220.1E_9.#H#_   E  r          S  p (9 Z(Times New Roman x9 Z&Times New Roman e Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  __LFTACircular4220.1E_9.c.(1).#L#_  Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  _OIndiscussingstatutoryandregulatoryrequirements,Paragraph16ofFTACircular4220.1Eadvisesgranteesto  contactotherFederalagenciesforspecificguidanceconcerningthecrosscuttingrequirementsofthoseagencies.  Section8.1,whichdiscussesthefederalcontractclauses,willcrossreferenceotheragenciesrequirements, F wheneverpossible.#O#x9 Z&Times New Roman e Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  __PFTACircular4220.1E_9.c.(3).#P#_(9 Z(Times New Roman x9 Z&Times New Roman Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  MA(12),datedOctober1,2005. S Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  __SeeSection4.4,"SealedBids,"andFTACircular4220.1E_9.c.(2)._ 9 Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  __SeeSection4.5,"CompetitiveProposals,"andFTACircular4220.1E9.d. X Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  YSubparagraph(1)looksprimarilytoStategovernmentcontractsthatallowsubordinategovernmentagenciesto  buyfromestablishedschedulesakintotheGSAschedulesinFederalpractice.FTAbelievesgranteesmaybuy  throughthesecontractsprovidedallpartiesagreetoappendtherequiredFederalclausesinthepurchaseorderor F otherdocumentthateffectsthegranteesprocurement.Whenbuyingfromtheseschedulecontracts,granteesshould  L obtainBuyAmericacertificationbeforeenteringintothepurchaseorder.WheretheproducttobepurchasedisBuy  Americacompliant,thereisnoproblem.WheretheproductisnotBuyAmericacompliant,thegranteewillstill  havetoobtainawaiverfromFTAbeforeproceeding.#Y#X :__PerformanceSpecifications\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  __]SeeChapter3,"Specifications"foradiscussionoftheseandotherspecificationissues.#]#  Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _Subparagraph(2)reflectsFTAsbeliefthatgranteesshouldconsidercombiningeffortsintheirprocurementsto  obtainbetterpricingthroughlargerpurchases.Jointprocurementsoffertheadditionaladvantageofbeingableto  obtaingoodsandservicesthatexactlymatcheachcooperatinggranteesrequirements.Webelievethisissuperiorto F thepracticeofpiggybackingsincepiggybackingdoesnotcombinebuyingpoweratthepricingstageandmay  L limitagranteeschoicestothoseproductsexcesstoanothergranteesneeds.#_#x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  __bTheBrooksActprocedures,requiredforArchitecturalandEngineeringservicesanddescribedinSection6.5,  goonestepfurtherbyprohibitingpricecompetitionandrequiringselectionbasedsolelyontechnicalcriteria.#b#\  `&Times New Roman 5 Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  f#f#fSubparagraph(3)reflectsgranteescontinuingabilitytoassigncontractualrightstoothers!piggybacking.  FTAbelievesitisextremelyimportantthatgranteesensuretheycontractonlyfortheirreasonablyanticipatedneeds  anddonotaddquantitiesoroptionstocontractssolelytoallowthemtoassignthesequantitiesoroptionsatalater F date#f#f.#f#x9 Z&Times New Romand _Responsibilityg\  `&Times New Roman .__Specifications _ Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  FTA'sdefinitionof"Piggybacking"in4220.1Edifferentiatesthispracticefromjointprocurementsorother  intergovernmentalagreements.  Bp$USUS.,<( X-&SpXX<XXXXXX  28  ڀ  _kIn1990,theFTApublishedProcurementGuidelinesforThirdPartyContractingwhichincluded,inChapterII,  Paragraph7.I,astatementthat"All_IFBs_Ԁshouldbeadvertisedinamannerthatpromotesparticipationinthebidding  byallqualifiedandcapablefirms.Advertisingonlyinthelocalnewsmediaisnotnormallyadequate."This F documentwascanceledbythepublicationofFTACircular4220.1Cin1995andnofurtherguidelineshavebeen  L issued.Theconceptof"allqualifiedandcapablefirms"isaviableoneunderfederallaw,andsuggeststhatyou  shouldtailoryourpublicityprogramstothesupplymarketsforyourprocurement.Thisiswhywehavediscussed  nationaland_localadvertisement_Ԁinthetextofthissubsectionandwhy,underthesubsequentdiscussionofmailing V lists,itisimportantthatallknownfirmsthatprovidetheitemorservicebeingprocuredbesolicited._#k#_x9 Z&Times New Roman ' Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  ____ oMetropolitan_ԀAtlantaRapidTransitAuthority(MARTA),contactMr.DurhamHamilton,DirectorofProgram  Management,at(404)8484409,todiscussAtlantasfiberopticcablecontracts.#o# y Bp$USUS.,<( X-&SpXX<XXXXXX  29  ڀ  __pIfyouareinterestedinmoredetailsabouttheCBDandotherfederalgovernmentpoliciesrelatingtopublicizing  contractactions,thosedetailsarespelledoutinFARPart5.FARSection5.207detailswiththespecificsof  preparingandtransmittingthenoticesforinclusionintheCBD.#p#(9 Z(Times New Roman x9 Z&Times New Roman i Bp$USUS.,<( X-&SpXX<XXXXXX  30  ڀ  __tIfyouarenotsatisfiedwiththeperformanceofthecurrentcontractor,theappropriateremedyisnotto  arbitrarilydecidenotto_issuethefirmasolicitation_Ԁforthefollow-onprocurement.Ifyourperformanceconcernsare  welldocumented,youhavetwoalternatives.First,includethefirmonthelist,addressperformancerecordunder F anyappropriatetechnicalcriteriaIfitisultimatelytheapparent_awardee_,addressyourperformanceconcernsaspart  L oftheresponsibilitydeterminations--thefirmmaybeabletoaddressyourconcernsatthistimetoyoursatisfaction.  Second,iftheperformanceconcernsareirretrievablydeep,itmayevenbepossibletoinitiatedebarmentor  suspensionatthelocal,state,orFederallevel.DebarmentsandSuspensionsaswellasResponsibility V DeterminationsarespecifictopicsthatarediscussedinsubsequentsectionsofthisManual.#t#x9 Z&Times New Roman & Bp$USUS.,<( X-&SpXX<XXXXXX  31  ڀ  __|Ifyoudoreceivenamesoffirmsfromtheconsultantthatpreparedthespecifications,itisrecommendedyoutry  toensurethere_arenoconflict_Ԁofinterestsituationsexisting(e.g.,therecommendedfirmiswholly-ownedsubsidiary  ofthespecificationpreparer)orthatthespecificationsarenotdraftedinsuchamannerastheonlyproductthatwill F meetthespecificationrequirementistheproductofthefirmtheywantaddedtothelist.Don'tletthiscaveat  L discourageyoursolicitationofrecommendationsfromthatconsultant(theyareaverygoodsource),just_be_Ԁsensitive  tothefirmsprovided.#|#x WPCpR513%)+ .-  ))z WPCpR513%)+ .-  ))x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  32  ڀ  __Whilethe_IFB_Ԁrequirementsof##Ԁ9.c.(2)aregoodpracticesforboth_IFBs_Ԁand_RFPs_,theevaluationcriteria  requirementof##Ԁ9.d.(1)isrelevantonlyto_RFPs_ԀandisdiscussedinSection4.5.1, Solicitation&Receiptof  _Proposals._fn5x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  33  ڀ  __Asamatterofinformationonly,referenceismadetotheFAR14.201-1and15.406-1forthe"Uniform  ContractFormat"andFAR14.201-9forthe"SimplifiedContractFormat"usedinbiddingfixedpricecontracts.  TheseareoptionalformatsusedbyFederaldepartmentswhichincludeagooddiscussionofwhatisincludedinthose F formatsandwhy.##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  34  ڀ  __Averyhelpfulitemtoincludewithyoursolicitationpackageisanaddresslabelwhichincludestheexact  addressyouwantoffersmailedtoandaseparateaddresslabelwhichincludesyourstreetaddressandroomnumber  foroffersthataredeliveredtoyou.Withtheselabels,_offerors_Ԁcanaffixtheapplicableonetotheirofferandyouwill F beassureditiscomingtotherightplace.Itisalsoagoodideaforyoutoincludethesolicitationnumberonthe  L labelswhichisofaidtoyour_mailroom_Ԁandyourstaffresponsibleforreceiptof_offers.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  35  ڀ  __Theserepresentationsandcertificationshavelegalsignificancethatshouldnotbeoverlookedbyeitherthe  _offeror_Ԁortheagency.The_offeror_Ԁcertifies,forinstance,thatitisnotpresentlydebarredorsuspendedbyanyfederal  agency.Thecontractingofficercanrelyonthatcertificationanddoesnothaveto"lookbehindit"indetermining F thefirm'sresponsibility.Ifitislaterdiscoveredthatthefirmwasinfactdebarredbyafederalagency,ithasmadea  L falsecertification.Thereareadministrativesanctionsthatcanbeimposed(contractterminatedfordefault)and  possiblecriminalsanctionsundereitherfederalorstatelaws(orboth)forsubmittingafalse_statement.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  36  ڀ  __ThiscertificationisdiscussedinmoredetailinSection4.3.3.2.3,"LobbyingCertification."## WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  37  ڀ  __ThiscertificationisdiscussedinmoredetailinSection4.3.3.2.1,"CertificationRegardingDebarment,  Suspension,andOtherResponsibility_Matters."##_fn6x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  38  ڀ  __ThiscertificationisdiscussedinmoredetailinSection4.3.3.2.2,"BuyAmericaCertification."##x9 Z&Times New Roman  !USUS.,  _ @ <( 4 <DLX< @ XX      39  ڀFARPart15.201(f),forexample,requirestheCOtomakeavailableto allpotential_offerors_,uponrequest,  anyinformationdistributedatapresolicitationconference.TheclearpresumptionoftheFARisthat potential  _offerors_maynotbe(andneednotbe)presentattheconference.\  `&Times New Roman H__Ԁdiscussnotificationanddateextension  Bp$USUS.,<( X-&SpXX<XXXXXX  40  ڀ  __Ifyoucannotidentifywhothe_offeror_Ԁisinthissituationwithoutopeningthebidorproposal,itisrecommended  thatyouopenitinthepresenceofawitness.Writedownthenameandaddressofthe_offeror_Ԁonly,andresealthe  envelopeorpackage.Returnittothe_offeror_Ԁwithacoverletterthatthepackagewasopenedonlysothe_offeror_ F couldbeidentified.Itisalsorecommendedthatamemorandumtothefilebemadebyyouandyourwitness  L describingwhathappenedandwhy.Youmightwanttocopy_theoutside_Ԁoftheenvelopetoshownoidentification  butitisrecommendedthatnocopiesbemadeofanyoftheoffer_documentation.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  41  ڀ  __ԀSeeSection9.2,"Changes"foramoregeneraldiscussionofthecostsofchanges.##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  42  ڀ  __SeealsothediscussionoftimelinessinSection4.4.2,"Bid_Opening."##_x9 Z&Times New Roman & Bp$USUS.,<( X-&SpXX<XXXXXX  43  ڀ  __Asamatterofreference,yourattentionisinvitedtoFAR52.214-7and52.215-10forlanguageaddressing  latesubmissions,modifications,andwithdrawalsofoffersthatisincorporatedinFAR-coveredsolicitationsfor_IFBs_  and_RFPs_Ԁrespectively.ForcommentaryintheFARitselfrelatingtothosesolicitationclauses,seeFAR14.304 F and15.412respectively.Primarilybecauseofthebodyoflawthathasdevelopedinterpretingtheseclauses,many  L transitpropertieshaveeitheradoptedthislanguageorhavemodifieditslightlytomeettheirindividual_requirements.##_x9 Z&Times New Roman % Bp$USUS.,<( X-&SpXX<XXXXXX  44  ڀ  __Somepractitionerserroneouslyrefertotheconsequencesofalateofferasoneof"non-responsiveness."Infact,  youneveropentheoffer(unlessneededtoforidentificationpurposes)andthuscannotdeterminewhetheritis  responsivetothematerialrequirementsofthesolicitation(thegeneraldefinitionofresponsiveness).Hadtheoffer F beenreceivedontime,itmaywellhavebeenresponsivebut,inthiscase,theofferisnotevenconsidered!##x9 Z&Times New Roman O Bp$USUS.,<( X-&SpXX<XXXXXX  45  ڀ  __TheserequirementsandapplicableclausesarediscussedindepthinChapter_8._  Bp$USUS.,<( X-&SpXX<XXXXXX  46  ڀ  __SeealsoChapter8,"ContractClauses,"andAppendixA.1,"FederallyRequiredModel_Clauses."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  47  ڀ  __49_CFR_ԀPart29,"DebarmentandSuspension(_Nonprocurement_)and_Governmentwide_ԀRequirementsfor  Drug-FreeWorkplace(Grants)."##x9 Z&Times New Roman Q Bp$USUS.,<( X-&SpXX<XXXXXX  48  ڀ  __"Debarment.Anactiontakenbyadebarringofficialinaccordancewiththeseregulationstoexcludeaperson  fromparticipatingincoveredtransactions.Apersonsoexcludedis'debarred'."49_CFR_Ԁ_29.105.##_x9 Z&Times New Roman ! Bp$USUS.,<( X-&SpXX<XXXXXX  49  ڀ  __"Suspension.Anactiontakenbyasuspendingofficialinaccordancewiththeseregulationsthatimmediately  excludesapersonfromparticipatingincoveredtransactionsforatemporaryperiod,pendingcompletionofan  investigationandsuchlegal,debarment,orProgramFraudCivilRemediesActproceedingsasmayensue.Aperson F soexcludedis'suspended'."49_CFR_Ԁ_29.105.##_x9 Z&Times New Roman y Bp$USUS.,<( X-&SpXX<XXXXXX  50  ڀ  __49_CFR_Ԁ_29.115(b).##_x9 Z&Times New Roman y Bp$USUS.,<( X-&SpXX<XXXXXX  51  ڀ  __49_CFR_Ԁ_29.115(a).##_x9 Z&Times New Roman ~ Bp$USUS.,<( X-&SpXX<XXXXXX  52  ڀ  __See3boftheMasterAgreement,FormFTA_MA(12).##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  53  ڀ  __Becauseitisdiscussedasanaspectofresponsibility,andcanbeobjectivelydeterminedatanytimeuptothe  timeofaward,latesubmissionofthedebarmentcertificationcanbepermitted.##x9 Z&Times New Roman A Bp$USUS.,<( X-&SpXX<XXXXXX  54  ڀ  __YoumaysubscribebywritingtheSuperintendentofDocuments,U.S.GovernmentPrintingOffice,_Washington,  DC_Ԁ20402orbycallingtheGovernmentPrintingOfficeInquiryandOrderDeskat(202)_783-3238.##_x9 Z&Times New Roman j Bp$USUS.,<( X-&SpXX<XXXXXX  55  ڀ  __Thelistcanbeaccessed7daysaweek,24hoursperdayandasidefromnormalcostsoflocalorlong-distance  telephonecalls,theaccessisfreetotheuser.Toobtainacopyoftheuser'smanualforaccessingthesystem,contact  GSAat(202)_501-4740.##_x9 Z&Times New Roman } Bp$USUS.,<( X-&SpXX<XXXXXX  56  ڀ  __ԀGSAadvisesthatresponsestotheseinquiriesshouldbefurnishedwithinoneworkingday.##x9 Z&Times New Roman ~ Bp$USUS.,<( X-&SpXX<XXXXXX  57  ڀ  __See3boftheMasterAgreement,FormFTA_MA(12).##_x9 Z&Times New Roman ) !USUS.,  _<(4 4 <DL!X< @ XX  y  i        58  i      ݀ThetextoftheregulationreferstoPart25.108,butthissectionhasbeenmovedtoPart25.104.XX  Bp$USUS.,<( X-&SpXX<XXXXXX  59  ڀ  __Thepaymenttoany"person"toinfluenceorattempttoinfluenceanofficeroremployeeofanyfederal  departmentoragency,amemberofCongress,anofficeroremployeeofCongress,oranemployeeofamemberof  Congressinconnectionwiththeawardingofanyfederalcontract,themakingofanyFederalgrant,themakingof F anyfederalloan,theenteringintoofanycooperativeagreement,andtheextension,continuation,renewal,  L amendment,ormodificationofanyfederalcontract,grant,loan,orcooperativeagreement.49_CFR_Ԁ_20.100(a).##_x9 Z&Times New Roman # Bp$USUS.,<( X-&SpXX<XXXXXX  60  ڀ  __Becausethelanguageoftheregulationsreferstoneedingthecertificationandapplicabledisclosuresattimeof  award,unlessyoursolicitationspecifiedotherwise,failuretosubmittheexecutedcertificationwiththeofferwould  probablynotbeconsideredaresponsivenessissuein_acompetitivebiddingprocurement_,andwouldnotdisqualify F the__offer.##__x9 Z&Times New Roman  ; Bp$USUS.,<( X-&SpXX<XXXXXX  61  ڀ  __The"LobbyingDisclosureActof1995"(Pub.L.104-65)madesomeamendmentsto31USC1352which  simplifiedtheinformationthatneededtobedisclosedonthisForm.Thosechangesaredetailedat61Fed.Reg.1412  (January19,1996)andwillbeeventuallyincorporatedintoanewStandardForm.ThreeitemsoftheSF-_LLL_Ԁare F impacted:Item10aisamendedbyrevising"NameandAddressofLobbyingEntity"toread"NameandAddressof  L LobbyingRegistrant";inItem10,thestatement"(attachContinuationSheet(s)SF-_LLL_-A,ifnecessary)"isremoved;  andItems11through15are_removed.##_WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  62  ڀ  __SeediscussionatSection4.3.2.5,"Amendmentof__Solicitations."##__x9 Z&Times New Roman [ Bp$USUS.,<( X-&SpXX<XXXXXX  63  ڀ  __SeediscussionatSection4.3.2.3,"Solicitation."##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  64  ڀ  _Therequirementsof15.moftheMasterAgreementmirrorthoseof11ofFTACircular4220.1Eandrefer  thegranteetotheprovisionsof49_CFR_Ԁ18.36(h). o Bp$USUS.,<( X-&SpXX<XXXXXX  65  ڀ  __SeeSection6.1,_"Construction."##_ TABLE AAx9 Z&Times New Roman s Bp$USUS.,<( X-&SpXX<XXXXXX  66  ڀ  __SeeSection6.2,"Equipmentand_Supplies."##_x9 Z&Times New Roman K Bp$USUS.,<( X-&SpXX<XXXXXX  67  ڀ  __SeeSection6.3,"RollingStock."##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  68  ڀ  __SeediscussioninSection4.5.4,"Discussionsand_Clarifications."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  69  ڀ  __Asanexampleofhowtheseandothersituationshavebeenaddressedinthefederalenvironment,seeFAR  28.101-4.##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  70  ڀ  __"SeeChapter3,"Specification,"forguidanceonspecification_development.#"#_x9 Z&Times New Roman2P+M 0_level1  , 8.4 <DL!823  ..  5+ 4 <DL!5  .UX ,Style    2( <DL!2   5+ 4 <DL!5    Bp$USUS.,<( X-&SpXX<XXXXXX  71  ڀ  __(See  Section2.4.2.1,"FullandOpenCompetitionPrinciple,"foradiscussionoffullandopencompetitionand  theeffectofrestraintson_competition.#(#_x9 Z&Times New Romana4_5_1  Bp$USUS.,<( X-&SpXX<XXXXXX  72  ڀ  __,SeediscussionofadvertisementandpublicizinginvitationsinSection4.3.2.1,"AdvertisingandPublicizing  _Solicitation."#,#_x9 Z&Times New Romana4_5_2a4_5_2_1  Bp$USUS.,<( X-&SpXX<XXXXXX  73  ڀ  __1Oneinstancerequiringdiscussionistheevaluationofapparenterrors;see Section4.4.5,"BidMistakes."#1#x9 Z&Times New Roman ~ Bp$USUS.,<( X-&SpXX<XXXXXX  74  ڀ  __5Seediscussioninsection4.4.3,"Responsive_Bidder."#5#_x9 Z&Times New Roman > Bp$USUS.,<( X-&SpXX<XXXXXX  75  ڀ  __ 8,Ԁ AsstatedintheRequirementsdiscussion,discounts,suchaspromptpaymentdiscounts,shouldonlybeusedin  thecalculationoflowbidifthehistorywithinyouragencyindicatesdiscountsofferedareusuallytakenadvantage  of.#8#x9 Z&Times New Roman j Bp$USUS.,<( X-&SpXX<XXXXXX  76  ڀ  __<ԀFTACircular4220.1E,9.c.(2)(_c_).#<#x9 Z&Times New Roman? +__BidOpening L Bp$USUS.,<( X-&SpXX<XXXXXX  77  ڀ  __CYoushouldunderstandthatifanunsuccessfulbidderdiscoversanerror,theywilllikelyfileaprotest(or_formal  query_)almostimmediately.Itisveryimportant,therefore,thatyouproceedverycarefully.Someprocedures,to  discouragefalsehopesandresultingarguments,prohibitthereadingofbidsthatareclearlydefective(e.g.,missing F _bid_guarantee__).#C#__x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  78  ڀ  __GSeetheextensivediscussionofthisinSection4.3.3.1,"ReceiptofOffers_,"_whereweaddressedthe  considerationsthataretypicallyweighedwhenpoliciesareadoptedconcerningthereceiptofoffers.TheFAR  provisiontypically_used_Ԁasa"model"isFAR_52.214-7.#G#_x9 Z&Times New Roman n Bp$USUS.,<( X-&SpXX<XXXXXX  79  ڀ  __KSee,e.g.,J.C.KimberlyCo.,Comp.Gen.B-255018.2,94-1_CPD_Ԁ18279(Abidthatwashandcarriedtothebid  openingroomsecondsafterthebidopeningofficerdeclaredthattimehadarrivedwasproperlyrejectedaslate.)One  oftheexceptionsaddressedinFAR52.214-7andelaborateduponinFAR14.304-1(a)(2)addressesthesituation F whenlatereceiptofthebidisduesolelytomishandlingbytheagencyafterreceiptattheagency_location.#K#_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  80  ڀ  __SId.Seealso,_Swinerton_Ԁ&_Walberg_ԀCo.,Comp.Gen.B-242077.3,91-1_CPD_Ԁ318.#S#O WPCpR513%)+ .-  ))R WPCpR513%)+ .-  ))x9 Z&Times New Roman , Bp$USUS.,<( X-&SpXX<XXXXXX  81  ڀ  VThisparagraphwaschangedfrompriorversionsofthecirculartoeliminatethephrase oracceptanceofa  singleproposalwhendiscussingwhatconstitutesasolesourceprocurement.FTAbelievesthat,uponreceivinga  singlebid(orproposal)inresponsetoasolicitation,thegranteeshoulddetermineifcompetitionwasadequate.This F determinationmayincludeareviewofthespecificationstodetermineiftheywereundulyrestrictiveorcontacting  L sourcesthatchosenottosubmitabidorsolicitation.Itisonlyifthegranteedeterminesthatcompetitionwas  inadequatethattheprocurementshouldproceedasasolesourceprocurement.Themerefactthatonlyonebidor  proposalwasreceiveddoesnotautomaticallymeancompetitionwasinadequatesincemanyunrelatedfactorscould V causepotentialsourcesnottosubmitabidorproposal.#V#XX#XX#\  `&Times New Roman + Bp$USUS.,<( X-&SpXX<XXXXXX  82  ڀ  _ZSection5.2CostandPriceAnalysisdiscussesvariouspriceanalysistechniques,andtheyinclude(among  others)comparisontopreviouspurchases,comparisontoavalidgranteeindependentcostestimate,andvalue  analysis.#Z#\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  83  ڀ  _Youmayhave,forexample,datafrompreviouspurchases,anindependentcostestimate,etc.withwhichto  comparethebidprice,butnothavea catalogueormarketpriceofaproductsoleinsubstantialquantitiestothe  generalpublicasrequiredbyparagraph10.aoftheCircular.  Bp$USUS.,<( X-&SpXX<XXXXXX  84  ڀ  __a"Bidresponsivenessinvolvesthequestionofwhetherthebidassubmitted,representsanunequivocaloffertodo  exactlywhatthegovernmenthasspecified,sothatacceptanceofthebidwillbindthecontractortomeetthe  government'srequirementsinallmaterialaspects."_Hankins_ԀLumberCo.,Comp.Gen.B-248101,92-2_CPD_Ԁ_;50#a#._x9 Z&Times New Roman v Bp$USUS.,<( X-&SpXX<XXXXXX  85  ڀ  __eFAR__14.301(a).#e#__x9 Z&Times New Roman u Bp$USUS.,<( X-&SpXX<XXXXXX  86  ڀ  __h_FAR14.404-2.__#h#_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  87  ڀ  __lNorthwesternMotorCo.,Comp.Gen.B-244334,91-2_CPD_Ԁ_249.#l#_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  88  ڀ  __qRecordPress,Inc.,Comp.Gen.B-229570.2,88-1_CPD_Ԁ_161.#q#_x9 Z&Times New Roman c Bp$USUS.,<( X-&SpXX<XXXXXX  89  ڀ  __y49_CFR_Ԁ661.13(b)provides: Thegranteeshallincludeinitsbidspecificationforprocurementwithinthescope  oftheseregulationsanappropriatenoticeoftheBuyAmericaprovision.Suchspecificationsshallrequire,asa  conditionofresponsiveness,thatthebidderor_offeror_ԀsubmitwiththebidacompletedBuyAmericacertificatein H accordancewith661.6or661.12ofthispart,asappropriate.(emphasisadded)#y#v WPCpR513%)+ .-  ))x WPCpR513%)+ .-  ))x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  90  ڀ  __}TheComptrollerGeneral,inStaples-Hutchinson&Associates,Inc.,Comp.Gen.B-245007,91-2_CPD_Ԁ491  stated: Whereasbidresponsivenessconcernswhetherthebiditselfasofthetimeofbidopeningunequivocallyoffers  toperforminaccordancewithallmaterialtermsandconditionsofthesolicitation,responsibilityreferstoabidder's H abilitytoperformthecontractrequirementsandisdeterminednotatbidopeningbutatanytimepriortoaward  N basedoninformationreceivedbytheagencyuptothat_time.#}#_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  91  ڀ  __EDTConstruction,Inc.,etal.,Comp.Gen.B-240343,91-1_CPD_Ԁ374.##(TABLE AQ x9 Z&Times New RomanWPCpR513%)+ .-  )) WPCpR513%)+ .-  )) & Bp$USUS.,<( X-&SpXX<XXXXXX  92  ڀ  _Althoughunusual,itispossiblethatbeforethetimeanddatesetforreceiptofbids,abiddermaydiscovera  mistakeinabidithasalreadysubmittedtoyou.Ifyouhaveincludedaclauseinthesolicitation(oradopteda  policy)assuggestedinourearlierdiscussionon"ReceiptofOffers"(seeSection4.3.3.1)andtheproblemswithlate F submissions,modificationsandwithdrawalsofoffers,theyshouldbefollowed.Essentially,thebidderisadvised  L thatmodificationofitsbidwouldbetreatedthesameastheoriginalbid--mustbereceivedtimelyandshould  clearlyidentifythebiditismodifying.__##__x9 Z&Times New Roman Y Bp$USUS.,<( X-&SpXX<XXXXXX  93  ڀ  _SeeFAR_14.406 .## _x9 Z&Times New Roman { Bp$USUS.,<( X-&SpXX<XXXXXX  94  ڀ  __ԀSeeR3-202.13(MistakesinBid),RecommendedRegulationsapprovedAugust2,1980,implementingThe  ModelProcurementCodeforStateandLocalGovernments,approvedbytheAmericanBarAssociationonFebruary  13,1979(hereinafterreferredtoastheRecommendedRegulations).##x9 Z&Times New Roman V__XXXX BpUSUS.,<( X-&SpXX<XXXXXX  95  ڀ  Forinstance,AmendmentNumber1tothesolicitationchangedthequantitiesforlineitem4ontheSchedule  from5to12.ThebidincludedaSchedulethatshowedthequantityforlineitem4tobe12.Nootheramendments  wereissuedandthebidderdidnotformallyacknowledgeAmendmentNo.1.Therewasnowayitcouldhaveused F thecorrectSchedulepageunlessithadreceivedtheAmendment--clearfromthebidthatitreceivedAmendment  L No._1.# #_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  96  ڀ  __SeediscussionatSection4.3.3.2,"FederallyRequiredSubmissionswith_Offers."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  97  ڀ  _TheRecommendedRegulationstotheModelProcurementCode[atRS202.13.4(b)]referstothistypeof  mistakeas mistakeswhereintendedcorrectbidisevident.Themistakeandtheintendedbidareclearlyevidenton  thefaceofthebiddocument.  Bp$USUS.,<( X-&SpXX<XXXXXX  98  ڀ  _TheRecommendedRegulationstotheModelProcurementCode[atR3-202.13.4(c)]referstothistypeof  mistakeas"mistakeswhereintendedcorrectbidisnotevident."##\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  99  ڀ  ___You_Ԁshouldconsiderallthe_longrun_Ԁcostofforcingthebiddertoperform_unwillingly._  Bp$USUS.,<( X-&SpXX<XXXXXX  100  ڀ  _Foranextendedtreatmentofthistopic(andalsoasthesourceformostpoliciesoftransitpropertiesonthe  matter),itisrecommendedthatyoureviewFAR14.406-4andtheRecommendedRegulationsatR3-202.13.5.##\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  101  ڀ  _SeeFAR14.406-4(e)forrecommendedprocedurestofollowintheeventthistypeofmistakehasbeen  allegedordisclosed.##\  `&Times New Roman h Bp$USUS.,<( X-&SpXX<XXXXXX  102  ڀ  _ThisisthepositiontakenintheRecommendedRegulationsatR3-202.13.5.##\  `&Times New Roman ; Bp$USUS.,<( X-&SpXX<XXXXXX  103  ڀ  _SeeFAR14.604-4(a)and(b).##\  `&Times New Roman W Bp$USUS.,<( X-&SpXX<XXXXXX  104  ڀ  __FAR_52.214-15.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  105  ڀ  __ԀW.A.Scottv.UnitedStates,44_C.Cl_.524,527_(1909).##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  106  ڀ  __See,e.g.,Section2.205oftheTexasBusinessandCommerceCodewhichprovides:2.205.FirmOffers.An  offerbyamerchanttobuyorsellgoodsinasignedwritingwhichbyitstermsgivesassurancethatitwillbeheld  openisnotrevocable,forlackofconsideration,duringthetimestatedorifnotimeisstatedforareasonabletime, F butinnoeventmaysuchperiodof_irrevocability_Ԁexceedthreemonths;butanysuchtermofassuranceonaform  L suppliedbythe_offeree_Ԁmustbeseparatelysignedbythe_offeror__.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  107  ڀ  __ԀNation-WideReportingandConventionCoverage,_GSBCA_ԀNo.8309,88-2_BCA_Ԁ20,521at103,741.##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  108  ڀ  _FTACircular4220.1E_9.d.(1)._  Bp$USUS.,<( X-&SpXX<XXXXXX  109  ڀ  _FTACircular4220.1E_9.d.(1)._  Bp$USUS.,<( X-&SpXX<XXXXXX  110  ڀ  _FTACircular4220.1E_9.d.(2)._  Bp$USUS.,<( X-&SpXX<XXXXXX  111  ڀ  _FTACircular4220.1E_7.h._  Bp$USUS.,<( X-&SpXX<XXXXXX  112  ڀ  _FTACircular4220.1E_9.d.(4)._ Bp$USUS.,<( X-&SpXX<XXXXXX  113  ڀ  _FTACircular4220.1E9.e.  Bp$USUS.,<( X-&SpXX<XXXXXX  114  ڀ  _Subparagraph(5),likeparagraph6.g.,recognizestheconceptofbestvalue.Onceagain,FTAdoesnotwish  todictateanyparticularfactorsoranalyticprocess.Solicitationsmust,ofcourse,tellpotentialcompetitorsforthe  contractwhatthebasisforawardwillbe. Bp$USUS.,<( X-&SpXX<XXXXXX  115  ڀ  _FTACircular4220.1E9.e.  Bp$USUS.,<( X-&SpXX<XXXXXX  116  ڀ  _Thisnewdefinitionwasintendedtorecognizetheconceptofbestvalue.Thelanguageisintendedneitherto  limitnordictatequalitativemeasuresgranteesmayemploy.  Bp$USUS.,<( X-&SpXX<XXXXXX  117  ڀ  _FederalRegisterVol.62,No.189,Sept.30,1997. N Bp$USUS.,<( X-&SpXX<XXXXXX  118  ڀ  _FARPart15wasreissuedbyFederalAcquisitionCircular(_FAC_)97-02datedOctober10,1997.  Bp$USUS.,<( X-&SpXX<XXXXXX  119  ڀ  _TheFARnowseeslowestpricetechnicallyacceptableproposalselectionasoneendofthebestvaluespectrum  butwehavedistinguisheditfrombestvalueforclarityofdiscussionpurposes.  Bp$USUS.,<( X-&SpXX<XXXXXX  120  ڀ  _ԀFARSubpart15.101!BestValueContinuum.  Bp$USUS.,<( X-&SpXX<XXXXXX  121  ڀ  _ԀSeeSection6.5!Architect-EngineeringServices.  !USUS.,  _ @  @ <( 4 <DLX< @ XX      122  ڀNewYorkCityTransit!formoreinformationcallMr.WilliamDeSantisat7186944339. @  G Bp$USUS.,<( X-&SpXX<XXXXXX  123  ڀ  __FTACircular4220.1E9.d.(3).##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  124  ڀ  __ԀSeediscussioninSection4.5.4,"Discussionsand_Clarifications."##_x9 Z&Times New Roman _ Bp$USUS.,<( X-&SpXX<XXXXXX  125  ڀ  __SeediscussioninSection4.5.3,"CompetitiveRange."##x9 Z&Times New Roman v Bp$USUS.,<( X-&SpXX<XXXXXX  126  ڀ  __Multipleroundsofbestandfinalstendtocreatesuspicioninthemindsof_offerors_Ԁaboutwhatthemotiveisfor  thesubsequentrequests,particularlyifdoesnotappearthatnegotiationsarebeingreopenedforadiscussionof  substantivematters.Thepreparationofproposalscanbeaverytime-consumingandexpensiveprocessanditis F possiblethat,foroneoftheseorsomeotherreason,an_offeror_Ԁmaydecidenottosubmitaresponsetoa3rdor4th  L requestforabestandfinaloffer.Also,ifyoumakeapracticeofmultiple_BAFOs_,youmaynotreceive"best"offers  inthefirstroundduringfuture_procurements.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  127  ڀ  __FTACircular4220.1E_7.h._   Bp$USUS.,<( X-&SpXX<XXXXXX  128  ڀ  __FTACircular4220.1E9.d.(4).WPCpR513%)+ .-  )) WPCpR513%)+ .-  )) * Bp$USUS.,<( X-&SpXX<XXXXXX  129  ڀ  __Averysignificantcaveatmustbeissuedatthistime.Ifyourgoverningbody(_citycouncil_,county  commissioners,boardofdirectors,etc.)hasreserveduntoitselfthesoleauthoritytorejectbidsforwhateverreason,  you,astheprocurementofficial,havenoauthoritytomakethatfinaldeterminationandnotifythebidderuntilyour F governingbodyhasconcurredwithyour_recommendation.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  130  ڀ  __See4.5.2, EvaluationofProposals. WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))  Bp$USUS.,<( X-&SpXX<XXXXXX  131  ڀ  __See,e.g.,FTACircular4220.1E8.a.:"Allprocurementtransactionswillbeconductedinamanner  providingfullandopen__competition."##__x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  132  ڀ  __SeediscussionofsmallpurchaseproceduresinSection4.2,"Small_Purchases."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  133  ڀ  __SeediscussionofsealedbiddingproceduresinSections4.3and_4.4.##_x9 Z&Times New Roman j Bp$USUS.,<( X-&SpXX<XXXXXX  134  ڀ  __SeediscussionofcompetitiveproposalsinSections4.3and4.5.##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  135  ڀ  __SeediscussionofthesubmissionofcostandpricingdatainSection5.2,"CostandPrice_Analysis."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  136  ڀ  __ԀSeediscussionofnegotiationsundercompetitiveproposalmethodatSection4.5.2,"Evaluationof__Proposals."##__x9 Z&Times New Roman i Bp$USUS.,<( X-&SpXX<XXXXXX  137  ڀ  __FTACircular4220.1E##Ԁ_9.h.(1)(e)._x9 Z&Times New Roman > Bp$USUS.,<( X-&SpXX<XXXXXX  138  ڀ  __49U.S.C.5307(a)(1).##x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  139  ڀ  __ ThisisalsothepositiontakenintheFAR,__14.502.# #__x9 Z&Times New Roman z Bp$USUS.,<( X-&SpXX<XXXXXX  140  ڀ  __SeediscussionatSection4.4.1,_"Solicitation."##_x9 Z&Times New Roman L Bp$USUS.,<( X-&SpXX<XXXXXX  141  ڀ  __Onevariationthatcouldbeusediftimeisparticularlytight,wouldbetoask,aspartofPhaseOne,thatthe  biddersincludeasealedbidinaseparateenvelopethatwouldonlybeopenedintheeventthetechnicalofferwas  consideredacceptable.Thiscreatessomeadditionalsecurityonthepartoftheprocurementstaffbecauseyouwould F wanttoensurethatthetechnicalacceptabilitydeterminationwasmadewithoutknowledgeofthepricesforthe  L differentoffers.## WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))x9 Z&Times New Roman { Bp$USUS.,<( X-&SpXX<XXXXXX  142  ڀ  __SeeSection4.3.2.5,"Amendmentof_Solicitation."##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  143  ڀ  __If,intheopinionoftheContractingOfficer,acontemplatedamendmentwouldsignificantlychangethenature  oftheprocurementtotheextentthatotherentities(whodidnotsubmitun-pricedtechnicaloffers)wouldlikely  becomeaproposed_offeror_Ԁasaresultoftheamendment,considerationshouldbegiventocancelingthesolicitation F andissueanew_solicitation.##_x9 Z&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  144  ڀ  __Documentationofanunacceptablefindingcannotbeoverstressed.Disputesoverthisdeterminationarethe  mostcommonareaofbidprotestinthemulti-stepprocess.##x9 Z&Times New Roman $ Bp$USUS.,<( X-&SpXX<XXXXXX  145  ڀ  __ԀCodifiedat40U.S.C._481(b)._ ] Bp$USUS.,<( X-&SpXX<XXXXXX  146  ڀ  __$PublicLaw104-106,4309,110Stat.186,670(1996).#$#x9 Z&Times New Roman ? Bp$USUS.,<( X-&SpXX<XXXXXX  147  ڀ  __See,e.g.,Chapter741,TexasGovernmentCode,_V.T.C.A._ ? Bp$USUS.,<( X-&SpXX<XXXXXX  148  ڀ  __See,e.g.,Chapter791,TexasGovernmentCode,_V.T.C.A._ B Bp$USUS.,<( X-&SpXX<XXXXXX  149  ڀ  __+FTACircular4220.1E7.e.#+#x9 Z&Times New Roman b Bp$USUS.,<( X-&SpXX<XXXXXX  150  ڀ  __.ԀFTACircular4220.1E_4.#.#Ԛ_x9 Z&Times New Roman & Bp$USUS.,<( X-&SpXX<XXXXXX  151  ڀ  __1Navycanbecontactedbyphoneat(215)6972850.#1#2ԀNavy_Ԁ_website_Ԁinfoforreverseauctions_is:  __http://www.abm.rda.hq.navy.mil/navyaos/acquisition_topics/contracting_/reverse_auctioning/reverse_auctioning.#2V#2#2#43 "O  5    23B      6B  7 ")Ԁ\  `&Times New Roman\  `&Times New Romanhttp://www.abm.rda.hq.navy.mil/revauct.cfm . Bp$USUS.,<( X-&SpXX<XXXXXX  152  ڀ  _  6 @  @  @  @ #6#6ArmySourceSelectionGuide,June2001,maybefoundat:47 O  5    http://www.amc.army.mil/amc/rda/rda  ap/docs/_assg_Ԅ2001._pdf_B      6B  7 .ClickonAppendixIforinformationonOnLineReverseAuctions.#6M#6Ԁ#6#\  `&Times New Romanhttp://www.amc.army.mil/amc/rda/rda-ap/docs/assg-2001.pdf - Bp$USUS.,<( X-&SpXX<XXXXXX  153  ڀ  _ContactMr.GeoffGaugeratTreasuryforadditionalinformation:(202)6220203. @   Bp$USUS.,<( X-&SpXX<XXXXXX  154  ڀ  _ElectronicBazaar!ReverseAuctionsSaveBuyersTime,MoneybyGeoffGauger.FederalTimes,November  4,2002.Thisarticlemaybeaccessedat:4< O  5    _=http://federaltimes.com/index.php?S=1264522__B      #= #6B  7 >1Ԁ#1>L#http://federaltimes.com/index.php?S=1264522\  `&Times New Roman*jp`*Bookman Old Style  Bp$USUS.,<( X-&SpXX<XXXXXX  155  ڀ  _ @  @ A4B 6O  5    http://_www.gsa.gov_/Portal/_gsa_/_ep_/_contentView.do?contentType_=_GSA_OVERVIEW_&_contentId_=10655SB      6B  7 !I#A#\  `&Times New Romanhttp://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW&contentId=10655  Bp$USUS.,<( X-&SpXX<XXXXXX  156  ڀ  _GranteesarenotrequiredtofollowtheFAR.However,theyarerequiredtofollowFTACircular4220.1E  whichwouldapplyto_ procurements_ Ԁusingreverseauctions.  Bp$USUS.,<( X-&SpXX<XXXXXX  157  ڀ  _4G 6O  5  www.firstgov.gov/index.shtml6OB  7 .http://www.firstgov.gov  Bp$USUS.,<( X-&SpXX<XXXXXX  158  ڀ  _TheStrategicNeedforRealTimeCompetitiveBiddinginthePublicSectorProcurementProcess,byDavid  C._Wyld_ԀandRandallP._Settoon_,September2002,p.18.Thispapermaybeaccessed_at:  http://learningcenter.ariba.com/wp_resource.cfm.____ 9 Bp$USUS.,<( X-&SpXX<XXXXXX  159  ڀ  _ReverseAuctions!StrategiesandLessonsLearnedfromaSuccessfulImplementationbyGillianVerga,Jan  2002.Thisarticlemaybeaccessedat:4L O  5  www.apics.org6OB  7 .http://www.apics.org W Bp$USUS.,<( X-&SpXX<XXXXXX  160  ڀ  _OԀWhentoUseanAuctionbyEd_Goetting_,September4,2002.Thisarticlemaybeaccessedat:  4P O  5  #O#  Owww.line56.com/print/default.asp?ArticleID=3983B      6B  7 . @ #O(#\  `&Times New Romanhttp://www.line56.com/print/default.asp?ArticleID=3983 < Bp$USUS.,<( X-&SpXX<XXXXXX  161  ڀ  _ԀForinformationre_LAMTA_ԀcalltheDirectorofPurchasingat2139227210. V Bp$USUS.,<( X-&SpXX<XXXXXX  162  ڀ  _UԀForinformationaboutSEPTAspilotprogramcall2155808251.#U#\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  163  ڀ  _ForinformationaboutHoustonMTAcallPaulComoat:7137394803.  KV'USUS.,  _______XXBest_ԀPracticesProcurementManualChapter5AwardofContractsf!f!E(#Page  1  _#XX#_Ԉ  ___A1) xdebExA  XX#XX8#___  Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __ԚIfFederalfundsare_notinvolvedcheck_Ԁlocalandstatelawstodeterminewhetheracontractorthathasbeen  debarredbyanagencyoftheFederalgovernmentmaybeconsidered"responsible."  Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  __ԚNormally,theprimecontractorisresponsiblefordeterminingtheresponsibilityofitssubcontractors.However,  asindicatedinFAR9.1044,itmaybenecessaryforyouastheprocurementofficialtodetermineaprospective  subcontractor'sresponsibilitysuchaswhentheprospectivecontractinvolvesurgentrequirementsorsubstantial F subcontracting.  Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __ԚAmericanPublicTransitAssociation(_APTA_)StandardBusProcurementGuidelines1.1.4.3.1Qualification  Requirements(III),January1997. e Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __  InternetaddressforCodeofFederalRegulationsis:4b RO  5    http://www.arnet.gov/far/nF  _6"6B  7 d _http://www.arnet.gov/far/ $ Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __4e O  5    http://www.acq.osd.mil/dp/cpf,F  _6B  7 v "_http://www.acq.osd.mil/dp/cpf D Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  __ԀContact_NTI_Ԁat(732)9321700oronlineat4h ,O  5    www.ntionline.comxF  6,@B  7 Dnhttp://www.ntionline.com D Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  __ԀContact_NTI_Ԁat(732)9321700oronlineat4k ,O  5    www.ntionline.comxF  6,@B  7 Dnhttp://www.ntionline.com : Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  __FTAC4220.1E_paragraph_Ԁ_10._  Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  __FTAC4220.1Eparagraph_7.i._  Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  __APPENDIXC:Negotiation&Documentation. ! Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  __FTAC4220.1Eparagraph9._i._Ԁ(1).  Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __FTAC4220.1E_paragraph_Ԁ7.i.(2). H Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __Ԛ_APTA_,StandardBusProcurementGuidelines,January1997,p.30.  Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  _zTheFederaldebriefingproceduresmaybefoundintheFARatsubpart15.505and15.506.  #z#(9 Z(Times New Roman   Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  _Asarule,proposalsshouldnotberejectedonthebasisofpastperformanceinformationwithoutallowingthe  proposeranopportunitytorespondtounfavorablereferences(frominsideoroutsidetheagency).Todosowould  almostcertainlybegroundsforprotest.  Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _Ifanoraldebriefingisconducted,itmightbeadvisabletocreateatranscripttomemorializewhatwasdiscussed  inthedebriefingintheeventthereisaprotest.  Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  __ԚFTACircular4220.1EParagraph9.d.(4).  Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  __ԚMetropolitanTransitAuthority,Houston,TX.ProcurementManual,Exhibit9,dated  August1,_1994._ S Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  __ԚBARTProcurementManual,Rev.4,datedJuly20,1994,p.297,"Price_Positions."_ * Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  __ԚMTA,Houston,TX,ProcurementManual,Exhibit10,datedAugust1,1994. O KV'USUS.,  _ KVUSUS.,  KVUSUS.,  XXXX¿)XXBestPracticesProcurementManualChapter6ProcurementObjectTypes:SpecialConsiderationsf!f!!(#Page  1  #XX)¿#Ԉ  A1)  xdE xA#XXXX#  x9 Z6Times New Roman Regular ( Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  _¿)]+ 4 <DL! X-&SpX]ThisdocumentmaybeobtainedfromFTA,OfficeofProgramManagement,EngineeringandManagement  Division,_TPM_Ԅ42,at(202)3662440.#)¿#x9 Z6Times New Roman Regular  Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  __SeeProjectandConstructionManagementGuidelines1996Update,Section3.2.2Configuration,  _Constructability_ԀReviews.  Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __TransportationResearchCircularNumber483,March1998.TransportationResearchBoard,NationalResearch  Council,NationalAcademyofSciences,2101ConstitutionAvenue,_N.W._,Washington,D.C.20418.  Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __ContactDepartmentManagerProcurement,BARTat(510)4646380. Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __Seenote1. 7 Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  __MetropolitanAtlantaRapidTransitAuthority(MARTA),GeneralConditions1988,Clause49Value  EngineeringProposals.TodiscussMARTA'sapproach,contactMr._Wayner_ԀCrowder,DirectorofContractsand  Procurement,at(404)848_Ԅ5587._ $ Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  __SanFranciscoBayAreaRapidTransitDistrict(BART),GeneralConditionsforConstructionContracts,February  1,1998,ClauseGC4.8.1Applicationof_VECP_.TodiscussBARTsapproach,contactDepartmentManager  Procurement,at(510)4646380.  Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  _  4 O  5  http://constructioninstitute.org.XX6O  7 %Ԁhttp://construction-institute.org  Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  __NewYorkCityTransit.ContactMs._Judi_ԀGibson,AssistantChiefProcurementOfficerEngineering,  Construction&CapitalDivisionofMaterielat(718)6944113. Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  __Seenote11. k Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  __Forinformation,contactthePurchasingSectionManager,at(847)228_Ԅ3573.v _TABLE AL  Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __ForinformationaboutNewYorkCitysleasingofcraneswithoperators,contactStanGrillat(718)6944350_.___ Y Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __MTA,Houston,TX.ContactDonMurphyat(713)7394843orPaul_Como_Ԁat(713)7394803.  Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  __AmericanPublicTransitAssociation,1201NewYorkAvenue,_N.W._,Suite400,Washington,D.C.  200056141.Copiesmaybeorderedbyphoneat(202)8984089.Technicalquestionsmaybeansweredat  (202)8984087.  Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  __MARTARailCarprocurement,contactMr.RobertJune,ActingDirectorofSystemsEngineering,at  (404)870_Ԅ3203._ Q Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  __Sub-paragraph(1)looksprimarilytoStategovernmentcontractsthatallowsubordinategovernmentagenciesto  buyfromestablishedschedulesakintotheGSASchedulesinFederalpractice.FTAbelievesgranteesmaybuy  throughthesecontractsprovidedallpartiesagreetoappendtherequiredFederalclausesinthepurchaseorderor F otherdocumentthat_effects_Ԁthegrantee'sprocurement.Whenbuyingfromtheseschedulecontracts,granteesshould  L obtainBuyAmericacertificationbeforeenteringintothepurchaseorder.WheretheproducttobepurchasedisBuy  Americacompliant,thereisnoproblem.WheretheproductisnotBuyAmericacompliant,thegranteewillstill  havetoobtainawaiverfromFTAbeforeproceeding.  Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  __Sub-paragraph(2)reflectsFTA'sbeliefthatgranteesshouldconsidercombiningeffortsintheir_procurements_Ԁto  obtainbetterpricingthroughlargerpurchases.Joint_procurements_Ԁoffertheadditionaladvantageofbeingableto  obtaingoodsandservicesthatexactlymatcheachcooperatinggrantee'srequirements.Joint_procurements_Ԁare F consideredsuperiortothepracticeof"piggybacking"since"piggybacking"doesnotcombinebuyingpoweratthe  L pricingstageandmaylimitagrantee'schoicestothoseproductsexcesstoanothergrantee'sneeds.  Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  __Sub-paragraph(3)reflectsgrantees'continuingabilitytoassigncontractualrightstoothers-"piggybacking."  FTAbelievesitisextremelyimportantthatgranteesensuretheycontractonlyfortheirreasonablyanticipatedneeds  anddonotaddquantitiesoroptionstocontractssolelytoallowthemtoassignthesequantitiesoroptionsatalater F date. Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  __NYStateDOT(518)4578343. ; Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  __FTAhasintroducedalimiteddefinitionof"piggybacking"and,todifferentiatevastlydifferentpolicies,has  separatedthispracticeofassigningcontractualrightsamonggranteesfromjoint_procurements_Ԁorother  intergovernmentalagreements.SeeCircular,paragraph7.e. Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  __FTAhassimilarlyattemptedtolimitthedefinitionof"tag-on"andalignitwiththeconceptofa"cardinal  change"or"out-of-scopechange."FTAbelievesthatearlierattemptstocategorizevirtuallyanychangeinquantity,  forexample,asaforbidden"tag-on,"failedtoaccountfortherealitiesofthemarketplaceandunnecessarilylimited F granteesfromexercisingreasonablefreedomtomakethoseminoradjustments"fairlyandreasonablywithinthe  L contemplationofthepartieswhenthecontractwasenteredinto."_Freund_Ԁv.UnitedStates,260U.S.60(1922).  Inapplyingtheconceptof"cardinalchange"tothirdpartycontracts,FTArecognizesthatthisisadifficultconcept, V noteasilyreducedtoapercentage,dollarvalue,numberofchanges,orotherobjectivemeasurethatwouldapplyto  \ allcases.FTAalsorecognizesthatthevariousBoardsofContractAppeals,Federalcourts,andComptrollerGeneral   havewrestledwiththeseissuesovermanyyearsandbuiltanextensivearrayofcaselawdifferentiatingin-scope    fromout-of-scopeorcardinalchanges.FTAdoesnotimplythattheBoardofContractAppealscasesare f   controlling,onlythattheywilllooktotheircollectivewisdominjudgingwherechangesingranteecontractsfall * l  alongthebroadspectrumbetweenclearlyin-scopeandclearlyout-of-scopechanges.ItisFTA'sintenttomonitorits  0  granteesandoversightcontractorstoensurethisconceptiswellunderstoodanduniformlyapplied,andtoissue   additionalguidanceasnecessarytoassistgranteesinexercisingthisauthority. v  Beforeattemptinganychangeinquantityormajoritems(e.g.,buses,railcars),granteesshouldreviewtheircontract @  clausestoensuretheyallowforsuchchanges.Forinstance,inFederalpractice,the"changes"clausefromthe   FederalacquisitionRegulationhasbeeninterpretednottoallowchangesinquantityofmajoritems.Federal   contractingofficersuseadditionalclausesspecifictothisdesiredflexibilitywhentheyanticipatethattheremaybea J needtoaddquantitiesofthesemajoritems.  Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  __ConductingPreAwardandPostDeliveryReviewsforBus_Procurements_.DocumentNo:FTADC90771393  1,Rev.B,datedMay1,1995.ConductingPreAwardandPostDeliveryReviewsforRailVehicle_Procurements_.  DocumentNo.:FTADC907713941,Rev.B,datedMay1,1995.ThesedocumentsmaybeobtainedfromFTA, F OfficeofProgramManagement,2023664020orbyemailat @  @  @ 4 O  5    _buyamerica%  @%fta.dot.govgB      6,B  7 Z.##ԀTheFTAwebsiteaddress  L forBuyAmericamattersis:4  O  5   @  @       http://www.fta.dot.gov/legal/buy_america/14328_ENG_HTML.htmnB      6OB  7 /#O#_\  `&Times New Romanmailto:buyamerica@fta.dot.govhttp://www.fta.dot.gov/legal/buy_america/14328_ENG_HTML.htm\  `&Times New Roman  Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  __FTAC9030.1C,ChapterIII,paragraph4.c.  Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  __FTAC9030.1C,ChapterV,paragraph9.b.3. ? Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  __C5010.1CinChapterIIManagementofRealProperty,EquipmentandSupplies,Subsection3.e(6). S Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  __SeegenerallyFederalAcquisitionregulationsat48_CFR_ԀSubpart46.7Warranties. " Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  __48_CFR_ԀSubpart46.7Warranties.  WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))WPCpR513%)+ .-  )) WPCpR513%)+ .-  )) ` Bp$USUS.,<( X-&SpXX<XXXXXX  28  ڀ  __Maybeaccessedat:4 B O  5  __6O B  7 B 7_¿)www.fta.dot.gov/legal/guidance/circulars/9000/433_1152_ENG_HTML.htm#)¿#_http://www.fta.dot.gov(hH  Z 6Times New Roman Regular ` Bp$USUS.,<( X-&SpXX<XXXXXX  29  ڀ  __Toorderthisbookcall_APTA_Ԁat(202)4964800.DocumentisalsoavailableviaInternetat:  4 O  5  http://www.apta.com/research/info/online/6rOB  7 __http://www.apta.com/research/info/online/  Bp$USUS.,<( X-&SpXX<XXXXXX  30  ڀ  __ԀTexasGovernmentCode,Section2254.002.  Bp$USUS.,<( X-&SpXX<XXXXXX  31  ڀ  __TexasGovernmentCode,Section2254.003(a)##@u6.#6@uM#2GJ 0_levsl1  X /%4 4 <DL/23  Ԁ  2( 4 <DL2  2DJ 0_levsl2   ," <DL,23  Ԁ  2( 4 <DL2  2AJ 0_levsl3   ) <DL)23  Ԁ  2( 4 <DL2  x9 Z&Times New Roman),h  Z (CG Times Regular2>J 0_levsl4  ` &<<DL&23  Ԁ  2( 4 <DL2   K Bp$USUS.,<( X-&SpXX<XXXXXX  32  ڀ  __TexasGovernmentCode,Section2254.004.##2;J 0_levsl5   #DL#23  Ԁ  2( 4 <DL2  28J 0_levsl6    DL 23  Ԁ  2( 4 <DL2  x9 Z&Times New Roman25J 0_levsl7  h DDL23  Ԁ  2( 4 <DL2   K Bp$USUS.,<( X-&SpXX<XXXXXX  33  ڀ  __TexasGovernmentCode,Section2254.005.##22J 0_levsl8   L23  Ԁ  2( 4 <DL2  2/J 0_levsl9    L23  Ԁ  2( 4 <DL2  x9 Z&Times New Roman2GJ 0_levnl1  X /%4 4 <DL/23   2( 4 <DL2  2DJ 0_levnl2   ," <DL,23   2( 4 <DL2    Bp$USUS.,<( X-&SpXX<XXXXXX  34  ڀ  __FTAhasexpandedthissectiontobetterexplainthebreadthofthisstatutorilyprescribedprocurementmethod.  FTArecognizesthatmostoftheserviceslisted(e.g.,surveying)arenotperformedbyarchitecturalorengineering  servicescompanies.Qualificationsbasedcompetitiveproposals(i.e.,BrooksActprocedures)stillmustbeapplied F tothese_procurements_Ԁbecauseofthestatutorydirectivein49U.S.C.5325(d).2AJ 0_levnl3   ) <DL)23   2( 4 <DL2  2>J 0_levnl4  ` &<<DL&23   2( 4 <DL2  2;J 0_levnl5   #DL#23   2( 4 <DL2    Bp$USUS.,<( X-&SpXX<XXXXXX  35  ڀ  _IfaprojectisjointlyfundedwithFTAand_FHWA_Ԁgrantfunds,granteesshouldseektheadviceofcounselsince  the_FHWA_ԀandFTAstatutesdifferinwhenandhowtheFederalrequirementsdefertostatelaws.28J 0_levnl6    DL 23   2( 4 <DL2  25J 0_levnl7  h DDL23   2( 4 <DL2  22J 0_levnl8   L23   2( 4 <DL2  2/J 0_levnl9    L23   2( 4 <DL2    Bp$USUS.,<( X-&SpXX<XXXXXX  36  ڀ  FTAaddedthisparagraphtoexplaintherequirementsthatapplytodesignbuildprocurementsbecausethey  involvesignificantarchitectural,engineering,orotherservicesthatnormallyrequirequalificationsbasedcompetitive  proposalsbutalsoincludesignificantworkthatdoesnotrequirethisextraordinaryprocurementmethod.Grantees F shoulddeterminewhichportionoftheworkispredominantandfollowthemethodforthattypeofprocurement.It  L wouldnormallybeexpectedthattheconstructionportionofadesignbuildprocurementwouldbepredominantand,  inthatcase,normalprocurementmethodscanbeusedinlieuofqualificationsbasedcompetitiveproposals(the  BrooksActmethod).<:Default ParaXXXXXX / Bp$USUS.,<( X-&SpXX<XXXXXX  37  ڀ  ¿)LetterfromG.B.McBridetoNewYorkMTA,datedFeb2,2001.Theissuesaddressedinthislettermaybe  foundontheFTAHelpLine(http://www.fta.dot.gov/ftahelpline/index.htm)undertheFrequentlyAskedQuestions  tab(seeArchitect&EngineeringContracts).#)¿#\  `*Times New RomanTTPX  !USUS.,  _?+ 4 <DL!X?  XX¿)      i¿))¿        38  i    ¿))¿  ݀_Ԅ49_Ԁ_USC_Ԁ5325(b)demandsthatBrooksactproceduresbeusedfortheseserviceseventhoughtheyarenot  routinelydonebyA&Efirms(e.g.,surveying)anddonotrequirelicensedarchitectsorengineers.XX)¿\  `*Times New RomanTT ? !USUS.,  _<(  <DL!X<  XX¿)      i¿))¿      XX)¿  39  i    ¿)XX  #¿))¿H#ԀTheTransportationEquityActforthe21stCentury(TEA21)imposedregulationsaffectingtheadministration  ofcontractsawardedbygranteesforarchitecturalandengineeringservices.TheregulationsaffectingtheFederal  HighwayAdministration(_FHWA_)maybefoundin23U.S.C.112andthecorrespondingregulationsforFTA F granteesmaybefoundin49U.S.C.5325(b)._FHWA_ԀimplementedtheTEA21requirementsitsfinalrule,  L "AdministrationofEngineeringandDesignRelatedServicesContracts,"datedJune12,2002  (4 O  5    http://_frwebgate.access.gpo.gov_/cgibin/_getdoc.c%  g%i?dbname_=2002_register&_docid_=0214751filedB  6  7 ).Thisfinalrule  hadbeenprecededbyaNoticeofProposed_Rulemaking_,"AdministrationofEngineeringandDesignRelated V ServicesContracts"publishedin65FR44486,July18,2000(4 O  5    http://_frwebgate.access.gpo.gov_/cgi  \ bin/_getdo%  c%.cgi?dbname_=2000_register&_docid_=0017774filedB  6  7 ).BecausethelanguageinFTA'ssectionoftheCode   wassubstantiallysimilartothatof_FHWA_,FTA'sOfficeofChiefCounselhasinterpretedthelanguageof49U.S.C.    5325(b)inamannerthatisconsistentwiththeprovisionsadoptedby_FHWA_ԀinitsNoticeofProposed_Rulemaking_ f   anditsfinalrule.Thereareseveralimportantaspectsofthesecontractingrequirementsthataffectthegrantee's * l  administrationofA&Econtracts:y    XX)¿XXXX  __  0    XX¿)      XX)¿\  `*Times New RomanTThttp://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2002_register&docid=02-14751-filedhttp://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2000_register&docid=00-17774-filed A !USUS.,  _?+ 4 <DL!X?  XX ¿)        i ¿)) ¿       XX) ¿  40  i     ¿)X X  # ¿)) ¿W#ԀFAR53.301330. XX) ¿ \  `*Times New RomanTT A !USUS.,  _?+ 4 <DL!X?  XX¿)        i¿))¿      XX)¿  41  i    ¿)XX  #¿))¿W#ԀFAR53.301330.XX)¿\  `*Times New RomanTT  !USUS.,  _?+ 4 <DL!X?  XX¿)      i¿))¿      XX)¿  42  i    ¿)XX  #¿))¿K#ԀGranteesshouldconsiderusingatwostepprocedureinordertonarrowthenumberoffirmsallowedtosubmit  designproposals(tothosewitharealisticchanceofsuccess))andthustocontrolthecosttothegrantee.Stepone  mightbebasedonqualificationsstatementssuchasarenormallyusedtoselectA&Efirms,fromwhichalimited F numberoffirmswouldbeselectedandrequestedtosubmitdesignproposalsinsteptwo.XX)¿\  `*Times New RomanTT  !USUS.,  _?+ 4 <DL!X?  XX¿)      i¿))¿      XX)¿  43  i    ¿)XX  #¿))¿K#ԀForadditionalinformation,contactMs.Ann_Geter_,CentralOhioTransitAuthority,at6142755903.XX)¿\  `*Times New RomanTT  Bp$USUS.,<( X-&SpXX<XXXXXX  44  ڀ  _Foranexampleofagrantee'sthirdpartycontractInsuranceSpecifications,contactMr.Harry_Hower_,Manager  ofInsurance,MARTA,at(404)8484504.  !USUS.,  _XXXX @  @ <( 4 <DLX<  XX¿)       @ XX)¿#XXXX=#XXXXiXX        45  i    XX  #XX6##x#Ԁ_S____ee_Ԁ_footnote_Ԁ_above____._\  `&Times New Roman\  `*Times New RomanTT  !USUS.,  _XXXX<( 4 <DLX< @  @  @  @  @  @   XX¿)       @ XX)¿#XXXX=#XXXXiXX        46  i    XX  #XXb###ԀTransportationInfrastructure:AdvantagesandDisadvantagesofWrapUpInsuranceforLargeConstruction  Projects,B281480,June1,1999.TheGAOreportmaybeaccessedat  _http://www.gao.gov/archive/1999/rc99155.pdf##________________________._ԀOrdersmayalsobeplacedbycalling(202)5126000.\  `&Times New Roman\  `*Times New RomanTT s !USUS.,  _<( 4 <DLX< @  @   XX"¿)       @ "XX)"¿#XXX"Xi#X#X        47  iU    #XX#  ##X#X##"¿)#6##)"¿ԀSomeprojectownerssharetheinsurancerebateswiththeircontractors.Forexample,theBostonArteryproject  willshare20percentofanysavingswithcontractorsintheformofsafetyincentiveawards. @ \  `*Times New RomanTT\  `&Times New Roman ~ !USUS.,  _<( 4 <DLX< @  @  @  @   XX&¿)       @ &XX)&¿'XXX&Xi'X'X        48  ik    'XX'  #'X'X-##&¿)'L#')&¿ԀGAOalsonotesthatin1998anFTATransitConstructionRoundtablestudyof18membersindicatedthat  savingsof28percentwererealizedbypurchasingwrapupinsuranceformajorprojects. @ \  `*Times New RomanTT\  `&Times New Roman T !USUS.,  _<( 4 <DLX< @  @   XX*¿)       @ *XX)*¿,XXX*Xi,X,X        49  iU    ,XX,  #,X,X##*¿),6#,)*¿ԀGAOnotedthatlargelaborintensiveprojectswithconstructioncostsbetween$50millionand$100million  wouldbeinabetterposition(i.e.,buyingpower)toobtainwrapupinsurance.\  `*Times New RomanTT\  `&Times New Roman  !USUS.,  _<( 4 <DLX< @  @  @  @  @  @   XX1¿)       @ 1XX)1¿2XXX1Xi2X2X        50  i    2XX2  #2X2XC##1¿)2b#2)1¿ԀTheBostonArteryprojectcitedalossratioof23percentcomparedtoahistoricnationalaverageofabout65  percentforthattypeofproject.TheMichiganBlueWaterBridgeprojectcitedalossratioof10percentcompared  toanationalaverageof50percentforthattypeofproject. @ \  `*Times New RomanTT\  `&Times New Roman + !USUS.,  _<( 4 <DLX< @  @   XX5¿)       @ 5XX)5¿6XXX5Xi6X6X        51  iU    6XX6  #6X6X##5¿)66#6)5¿ԀWorkerscompensationinsurancepaysclaimantsincaseofinjury,disability,ordeathofemployeesresulting  fromworkonthejob. @ \  `*Times New RomanTT\  `&Times New Roman  !USUS.,  _8XXXX<( 4 <DLX< @  @   8X8X9¿)8       @ 9XX)9¿#XXX9X=#8XXXXi8X8X        52  i    8XX8  #8X8X6##8x#8ԀAccordingtoa1997GSAstudyofwrapupinsurance,NorthDakota,Ohio,Washington,WestVirginia,and  Wyominghaveastatefundintowhichallcontractorsmustpayandaprojectownercannotobtainseparateworkers  compensationinsurancecoverage.\  `&Times New Roman\  `*Times New RomanTT U !USUS.,  _<XXXX<( 4 <DLX< @  @   <X<X=¿)<       @ =XX)=¿#XXX=X=#<XXXXi<X<X        53  i    <XX<  #<X<X6##<x#<ԀForFTARegion1experiencewiththeCentralArteryProjectinBoston($11B),contactMr.RichardColeat  (617)4942395.\  `&Times New Roman\  `*Times New RomanTT X Bp$USUS.,<( X-&SpXX<XXXXXX  54  ڀ  __GranteesmayaccessthisCircular_at:_ihttp://www.fta.dot.gov/legal/guidance/circulars/9000/433_1313_ENG_HTML.htm#i'#4A #O  5  6OB  7 #http://www.fta.dot.gov  Bp$USUS.,<( X-&SpXX<XXXXXX  55  ڀ  __Thesecasestudiesmaybefound_at:_4D ^O  5  __6%O9B  7 ^g  __http://www.fta.dot.gov/transit_data_info/reports_publications/reports/art_in_transit/2260_ENG_HTML.htm.http://www.fta.dot.gov ^ Bp$USUS.,<( X-&SpXX<XXXXXX  56  ڀ  ___LAMTA_,_NYMTA_,SEPTA,MetropolitanCouncilofMinneapolis,MN.  Bp$USUS.,<( X-&SpXX<XXXXXX  57  ڀ  __ForfurtherinformationaboutthispublicartprogramcontactMr.DavidAllen,MetropolitanCouncil_Hiawatha_  PublicArtandDesignManagerat(612)2158221.  Bp$USUS.,<( X-&SpXX<XXXXXX  58  ڀ  __Forfurtherinformation,contactElizabeth_Mintz_,ManagerofSEPTAsArtInTransitprogram,at  (215)5803633.  Bp$USUS.,<( X-&SpXX<XXXXXX  59  ڀ  __R.S.MeansCompany,SquareFootCosts,23rdEdition,p.438.However,artistsmaynotnecessarilybasetheir  compensationratesonprovidingthesametypesofprofessionaldesignservicesaspracticedinanarchitectural  office,butbythetrackrecordofunique,oneofakindcommissionsthatrespondtocuratorialforcesoperatinginthe F curatorialworldofthegallery,themuseumandthebroaderartmarket.  KV'USUS.,  _XXBestPracticesProcurementManualChapter7DisadvantagedBusinessEnterprise   x  Page  1  #XXY#  A1) xdExA  f  X   ! f    KV'USUS.,  _ KVUSUS.,  XXBestPracticesProcurementManualChapter7DisadvantagedBusinessEnterprise   x _0 Page_Ԁ  1  _#XX# (# (# _A1) xdExA  __f  X   ! f>   Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  _AsofApril1,1999. __ BpUSUS.,<( X-&SpXX<XXXXXX  2  ڀ  _http://osdbu.dot.gov/__     E  r   _ ) Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __http://_www.fta.dot.gov_/office/civil $ Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  ____As_ԀofApril1,1999. j Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __Foranexampleofaclause,seeBARTClauseSC7.1.10 _Ombudsperson_.ContactBARTat(510)4646380. 8 Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  _ @ `. <DL! X-&SpX`ForfurtherinformationcontactMr.Donald_Mayes_,Manager,_DBE_ԀContractComplianceat3126647200,ext.  3519.(jXX u Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  _ @ `. <DL! X-&SpX`Wewouldnotethatfivebusinessdaystopaysubcontractorsmaynotberealisticinallcasesandcouldleadto  complaintsfromsubcontractorsthatthegranteeenforcethis_timeframe_._XX_  Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  _ @ `. <DL! X-&SpX`Othertransitagencieshaveimposeda30dayrequirementforpaymentof_retainage.XX_  Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  _ @ `. <DL! X-&SpX`Thefivedayrequirementmaynotberealistic.Someagenciesrequiresubcontractswith_DBEs_Ԁwithin60daysof  contractawardifthecontracttermislessthanoneyear,orwithin30daysofcommencementofworkforacontract  thatisforoneyearormore.Thecommencementofworkratherthaninitialcontractawardismorerealisticinthe F caseof_multiyear_Ԁcontractswhereworkmaynotstartforanotheryearorso. LXX h Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  _The_TVM_Ԁmustcertifythatithascompliedwiththe_DBE_Ԁgoalrequirementsof26.49.  Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  _Seethe_APTA_ԀGuidelinessections1.1.3.5forthesolicitationprovisionand1.1.5.7forthe_DBE__certification.XX#XX礞#_  Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __TheInternetaddressforProNetis:http://pro-net.sba.gov/  Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __ContactKingElliott,MetroDadeTransitAgency,111_N.W._ԀFirstSt.,Suite910,Miami,FL33128at(305)  3753634.  Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  __NewYorkCityTransit.ContactStanGrillat(718)6944350. Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  _49CFR26.53(b)(3). S Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _ForfurtherinformationcontactMr.DonaldMayes,Manager,DBEContractComplianceat312-664-7200,ext.  3519.  Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  __Paragraph_(d)_ 3 Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  _ @ `. <DL! X-&SpX`_ __ __For_ԀfurtherinformationcontactMr.Donald_Mayes_,Manager,_DBE_ԀContractComplianceat3126647200,ext.  _3519._ N. <DL! X!N_XX_  Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  _ @ `. <DL! X-&SpX`The_CTA_Ԁrequirementismorerestrictivethanthe_CFR_.dXX  KV'USUS.,  __ KVUSUS.,  XXBestPracticesProcurementManualChapter8ContractClauses C"Page  1  #XX#Ԉ  __A1)  xdO(E -A_  _ z Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __Althoughtherelevanceofthatlawwillvaryfromstatetostate,mostindividualstateswillnothaveinterpreted  federalstatutesandclausesandwillfrequentlylooktothefederalcommonlaw,asinterpretedbytheComptroller  GeneraloftheUnitedStatesandthevariousboardsandcourts,forguidanceininterpretingthatlawandthose F clauses. 1 Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  __ԚTheModelProcurementCodeandrecommendedRegulationsmaybeavailableinyourlocalpubliclibraryor  maybepurchasedfromtheAmericanBarAssociation.Itisrecommendedthatyoucontactthefollowingforfurther  information:MemberServices,P.O.Box10892,Chicago,Illinois60612-0892. Z Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __ԚActofMarch3,1931,46Stat.1491,asamended;_codifiedat40U.S.C.276aetseq._Ԛ S Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __ԚForathoroughdiscussionofthelaborstandardsforcontractsinvolvingconstruction,seeFARSubpart22.4 = Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __ԚSeegenerally,FAR22.404-2fordiscussionofthedifferenttypesofconstruction.  Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  __ԚInaFederalRegisterNoticeofJune14,1996,theChief,BranchofConstructionWageDeterminationsadvised  thatwagedeterminationsissuedundertheDavis-BaconandrelatedActsareavailableelectronicallybysubscription  tothe_FedWorld_ԀBulletinBoardSystemoftheNationalTechnicalInformationService(_NTIS_)oftheU.S. F DepartmentofCommerce.Atelephonecontactis(703)487-4630.  Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  __ԚThesameNoticeadvisedthathardcopysubscriptionsmaybepurchasedfromtheSuperintendentofDocuments,  U.S.GovernmentPrintingOffice,_Washington,DC_Ԁ20402withatelephonecontactat(202)5121800.  Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  __ԚThecostofthehard-copysubscription(between$440and$830pervolume)isaminusculeinvestmentforyour  projectlibrarywhenconsideringthecontractualimpactsofthewagedeterminationswhichwillbediscussedbelow.  Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  __ԚTheprocedurestobefollowedinrequestingthesedeterminationsarefoundin29_CFR_ԀPart1andinFAR  22.404-3. * Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  __ԚInthiscase,thegranteehasthediscretion,dependinguponthetermsoftheirsolicitationdocuments,toeither  awardtothelowbidderatthepricebid,ortoequitablyadjustthecontractpriceforanyincreasedordecreasedcost  ofperformanceresultingfromanychangedwagerates. D Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  __ԚRulesrelatingtoexpirationofwagedeterminationsarediscussedindetailatFAR22.404-5.  Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __ԚIfawardofthecontractisnotmadewithin90daysafterbidopening,themodificationbecomeseffectiveunless  theWageandHourDivisionAdministratorextendsthe_90day_Ԁperiod.Ifanextensionisnotgranted,the  modification_istreated_Ԁthesameasanewwagedeterminationandthesameproceduresasdiscussedaboveapply.  Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __ԀRulesrelatingtoactionstobetakenbythecontractingofficerintheeventwagedeterminationsaremodified  _maybe_ԀfoundinFAR22.404-6.  Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  _TheMillerActdoesnotapplytograntees.Bondingrequirementsforgranteesareprescribedinthecommon  grantrule,49_CFR_Ԁ18.36(h). c Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  _TheNationalAssociationofSuretyBondProducers(_NASBP_)websiteaddressis:4 O  5    www.nasbp.org*  6MaB  7 .http://www.nasbp.org P  Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  _Anunforeseenbankruptcybythecontractorisespeciallytroublesome,inthatthebankruptcycourtcouldfreeze  thefundscommittedbytheLOC,renderingtheLOCofnovaluetothegrantee.Thegranteemustbediligentto  monitorthecontractorscondition,andcallthefundsundertheLOCiffinancialtroubleisexpected.Thereisno F suchdangerwithsuretybonds. , Bp$USUS.,<( X-&SpXX<XXXXXX  17  ڀ  _  Itisnotuntilonegoestothe20%levelthatpremiumratesmaychange. 6 Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  _Thisappearstobetrueforbusmanufacturersinthecurrentbusinessenvironment.  Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  _TolocateastateinsurancedepartmentcontacttheNationalAssociationofInsuranceCommissionersat  4 O  5    www.naic.org*  6XlB  7 R.SeealsotheU.S.TreasuryListat4 O  5    www.fms.treas.gov/c570/index.html*  6B  7 http://www.naic.orghttp://www.fms.treas.gov/c570/index.html  Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  _TheTreasuryListmaybedownloadedontheInternetat4 O  5    www.fms.treas.gov/c570/index.htmlb*  6*B  7 bX.TheTreasury  Listidentifiesthevariousstateswherethelistedbondingcompaniesarelicensedandthestateinsurancedepartments  withtheirphonenumbers.http://www.fms.treas.gov/c570/index.html A Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  _FormoreinformationabouttheSAAsModelContractorDevelopmentProgram,contacttheSurety  AssociationofAmericaat2024630600ortheirWebsite:4 2O  5  www.surety.org6O"  7 R.http://www.surety.org  Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  _Forthisandothermaterials,contacttheSuretyInformationOfficeat2026867463ortheirWebsite:  4 O  5  www.sio.org6YOm"  7 .http://www.sio.org  Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  _Informationandpricesareavailableat4 8O  5    www.ambest.comR*  6B  7 H.http://www.ambest.com  Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  _Ԁ4 O  5  http://dunandbradstreet.com/us6O*  7  E  r   http://dunandbradstreet.com/us $ Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  _4 O  5    www.fitchra%  % f%  tings.com**  6B  7 http://www.fitchratings.com  Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  _4 O  5    www.mo%  odys.com**  6B  7 http://www.moodys.com B Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  ___ Ԁhttp://www2.standardandpoors.com/servlet/Satellite?pagename=sp/Page/HomePg  Bp$USUS.,<( X-&SpXX<XXXXXX  28  ڀ  _4 O  5    www.weissratings.com**  6B  7  Ԁhttp://www.weissratings.com  Bp$USUS.,<( X-&SpXX<XXXXXX  29  ڀ  ______The_ԀlanguageinthissectionhasbeenamendedfrompriorversionsofthecirculartobetterexplainthatFTAwill  acceptalocalbondingpolicythatmeetstheminimumsofparagraphsa,b,andcbutthatapolicythatdoesnotmeet  theseminimumsstillmaybeacceptedwherelocalpolicyadequatelyprotectstheFederalinterest.Granteeswho F wishtoadoptlessstringentbondingrequirementsgenerally,foraspecificclassofprojects,offoraparticularproject  L maysubmitthepolicyandrationaletotheirregionalofficeforapproval. V Bp$USUS.,<( X-&SpXX<XXXXXX  30  ڀ  _ԀSeeFTADearColleagueLetterC0104,datedJan.20,2004PerformanceandPaymentBonding  Requirements. : Bp$USUS.,<( X-&SpXX<XXXXXX  31  ڀ  _  Transitagenciesprocuringrollingstocktendtoaskfortenyearwarrantiesonparts. ~ Bp$USUS.,<( X-&SpXX<XXXXXX  32  ڀ  _At4 O  5    www.surety.org'*  _6B  7 ,clickon AbouttheIndustry,then BondAuthenticityProgram.___http://www.surety.org  Bp$USUS.,<( X-&SpXX<XXXXXX  33  ڀ  _Aconditionalletterofcreditmayrequiresomeburdenofproofbytheownerthatthecontractorhasfailedto  performbeforethebankwillpayontheletterofcredit.Mostlettersofcreditareirrevocable,whichmeansthatboth  partiesmustagreetoanychangestotheletterofcredit.Changesmustbedocumentedbyanamendmentsignedby F bothparties.  Bp$USUS.,<( X-&SpXX<XXXXXX  34  ڀ  _See_BPPM_ԀSections2.4.4.2!AdvancePaymentsand2.4.4.3!ProgressPaymentswhereadequatesecurityfor  thesepaymentsisdiscussed. @ Bp$USUS.,<( X-&SpXX<XXXXXX  35  ڀ  __BayAreaRapidTransitDistrict(BART)ProcurementManual,Rev4,July20,1994,AttachmentY.  Bp$USUS.,<( X-&SpXX<XXXXXX  36  ڀ  ___Theon_Ԁv.UnitedStates,765F.2d1110(Fed.Cir.1985);CentralOhioBldg.Co.,_PSBCA_Ԁ2742,921_BCA_Ԁ  24,399. ` Bp$USUS.,<( X-&SpXX<XXXXXX  37  ڀ  __ElectricalEnters.,Inc.,_IBCA_Ԁ972972,741_BCA_Ԁ10,400.  Bp$USUS.,<( X-&SpXX<XXXXXX  38  ڀ  ____American_ԀPublicTransitAssociation,1201NewYorkAvenue,N.W.,Suite400,_Washington,D.C._ԀStandard  BusProcurementGuidelines2.2.6.1,January1997.Phone:(202)8984089toordercopies. C Bp$USUS.,<( X-&SpXX<XXXXXX  39  ڀ  _WashingtonMetropolitanAreaTransitAuthorityProcurementProceduresManual1311.2,Dec.1994. < Bp$USUS.,<( X-&SpXX<XXXXXX  40  ڀ  __ԚSeethediscussionofhowthispublicationmaybeobtainedinNote3.underSection8.1.1. S Bp$USUS.,<( X-&SpXX<XXXXXX  41  ڀ  __WheelerBros.,_ASBCA_Ԁ20465,791_BCA_Ԁ13,642.  Bp$USUS.,<( X-&SpXX<XXXXXX  42  ڀ  __John_Cibinic_,Jr.andRalphNash,Jr.AdministrationofGovernmentContracts.ThirdEd.Washington,D.C.:  GeorgeWashingtonUniversity,1995.  KV'USUS.,  __XXBestPracticesProcurementManualChapter9ContractAdministrationf!f!E(#Page  1  #XXi#Ԉ  __A1)  xdE xA   [ Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __See7._i._,FTACircular4220.1E,anddiscussioninSection2.4.1,"FileDocumentation." p Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  _7.k.,FTACircular4220.1E.Seealsotheextensivediscussionofthedocumentationrequiredforthesettlement  ofclaimsanddisputesfoundinParagraph7,ChapterI,FTACircular5010.1C,"GrantManagementGuidelines,"  dated10/1/98.Asappropriate,someoftheserequirementswillbediscussedlaterinthe"BestPractices"portionof F thissection. Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __FAR42.302. & Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __Itisimportantthatthefilesstandontheirownbecauseatthetimeamattercomesintocontroversyoratthetime  ofapostcontractperformanceauditorreview.Thekeycharactersmaynotbeavailable(dead,movedaway,  terminatedfromemployment,etc.)torespondtothoseissues.  Bp$USUS.,<( X-&SpXX<XXXXXX  5  ڀ  __NationalTransitInstitute,120AlbanyStreet,Suite705,NewBrunswick,NJ089012163.Phone(732)932  1700._FAX_Ԁ(732)9321707.¿)Courses_include_:AnEffectiveChangeOrderProcess,ManagementofTransit  ConstructionProjectsandContractAdministration.#)¿#\  `*Times New RomanTT k Bp$USUS.,<( X-&SpXX<XXXXXX  6  ڀ  ___MPC_ԀR6101.03ChangesClause(supplies),andR5401.03ChangesClause(construction). , Bp$USUS.,<( X-&SpXX<XXXXXX  7  ڀ  ___Freund_Ԁv.UnitedStates,260U.S.60(1922). ] Bp$USUS.,<( X-&SpXX<XXXXXX  8  ڀ  ___Aragona_ԀConstr.Co._v._ԀUnitedStates,165Ct.Cl.382(1964). J Bp$USUS.,<( X-&SpXX<XXXXXX  9  ڀ  __AirAPlaneCorp._v._ԀUnitedStates,187Ct.Cl.269,408F.2d1030(1969).  Bp$USUS.,<( X-&SpXX<XXXXXX  10  ڀ  __See_Aragona_Ԁabove. O Bp$USUS.,<( X-&SpXX<XXXXXX  11  ڀ  __Peter_Kiewit_ԀSonsCo.v.SummitConstr.Co.,422F.2d242(8thCir.1969). M Bp$USUS.,<( X-&SpXX<XXXXXX  12  ڀ  __AtlanticDryDockCorp._v._ԀUnitedStates,773F.Supp.335(M.D.Fla.1991). C Bp$USUS.,<( X-&SpXX<XXXXXX  13  ڀ  __NeilGross&Co.,69Comp.Gen.247(B237434),901_CPD_Ԁ212. y Bp$USUS.,<( X-&SpXX<XXXXXX  14  ڀ  ___Coley_ԀPropertiesCorp.,_PSBCA_Ԁ291,752_BCA_Ԁ11,514.  Bp$USUS.,<( X-&SpXX<XXXXXX  15  ڀ  __RelianceIns.Co.v.UnitedStates,20Cl.Ct.715(1990). N Bp$USUS.,<( X-&SpXX<XXXXXX  16  ڀ  __J.D._Hedin_ԀConstr.Co.v.UnitedStates,171Ct.Cl.70,347F.2d235(1965). __ BpUSUS.,<( X-&SpXX<XXXXXX  17  ڀ  ___Liebert_ԀCorp.,70Comp.Gen.448(B232234.5),911_CPD_Ԁ413. i Bp$USUS.,<( X-&SpXX<XXXXXX  18  ڀ  __ ¿)AmericanAirFilterCo.,781_CPD_Ԁ136.#) ¿#\  `*Times New RomanTT $ Bp$USUS.,<( X-&SpXX<XXXXXX  19  ڀ  ___MPC_ԀR5401.03ChangesClause. E Bp$USUS.,<( X-&SpXX<XXXXXX  20  ڀ  __A66501,15Comp.Gen.573(1935);_B95069,30Comp._ԀGen.34(1950). / Bp$USUS.,<( X-&SpXX<XXXXXX  21  ڀ  __Saddler_v._ԀU.S.,287F.2d411(Ct.Cl.1961).  Bp$USUS.,<( X-&SpXX<XXXXXX  22  ڀ  __GeneralContracting&Constr.Co.v.U.S.,84Ct.Cl.570(1937);_McMasters_Ԁv.State,15_N.E._Ԁ417(N.Y.  1888). w Bp$USUS.,<( X-&SpXX<XXXXXX  23  ڀ  __ABAModelProcurementCodeclauseR5401.06DifferingSiteConditionsClause.FAR52.2362Differing  SiteConditions. o Bp$USUS.,<( X-&SpXX<XXXXXX  24  ڀ  __KennyConstr.Co.v.MetropolitanSanitaryDist.,309_N.E._Ԁ2d221(Ill._1974)._  Bp$USUS.,<( X-&SpXX<XXXXXX  25  ڀ  __CoursesofthisnatureareofferedbyManagementConcepts,Inc.,theU.S.AgricultureDepartment(888/744  GRAD),andtheNationalTransitInstituteatRutgersUniversity(732/9321700).   < Bp$USUS.,<( X-&SpXX<XXXXXX  26  ڀ  __FAR52.2362DifferingSiteConditionsClause,andFAR52.2434ChangesClause.  Bp$USUS.,<( X-&SpXX<XXXXXX  27  ڀ  __FAR52.242_Ԅ14._ T Bp$USUS.,<( X-&SpXX<XXXXXX  28  ڀ  __ModernFoods,Inc.,_ASBCA_Ԁ2090,571_BCA_Ԁ1229.  Bp$USUS.,<( X-&SpXX<XXXXXX  29  ڀ  ___Noblebrook_ԀContractors,Inc.,_ASBCA_Ԁ9736,1964_BCA_Ԁ4283,1964_BCA_Ԁ4408. S Bp$USUS.,<( X-&SpXX<XXXXXX  30  ڀ  __S.N.NielsenCo.,_v._ԀU.S.,141Ct.Cl.793_(1958)._  Bp$USUS.,<( X-&SpXX<XXXXXX  31  ڀ  __BECKChristensen_Raber_Ԅ_Kief_Ԁ&_Assocs_.,_ASBCA_Ԁ16467,731_BCA_Ԁ_9884._ , Bp$USUS.,<( X-&SpXX<XXXXXX  32  ڀ  __Gregory&ReillyAssoc.,Inc.,_FAACAP_Ԁ6530,652_BCA_Ԁ4918._Holtzen_ԀConstr.Co.,_AGBCA_Ԁ413,752  _BCA_Ԁ_11,378._ : Bp$USUS.,<( X-&SpXX<XXXXXX  33  ڀ  __BruceConstr.Corp.v.U.S.,324F.2d516(Ct.Cl._1963)._ 1 Bp$USUS.,<( X-&SpXX<XXXXXX  34  ڀ  __L.G._Lefler_,Inc.v.U.S.,6Cl.Ct.514(1984). u Bp$USUS.,<( X-&SpXX<XXXXXX  35  ڀ  ___Nager_ԀElec.Co.v.U.S.,442F.2d936(Ct.Cl.1971)._S.W._Ԁ_Elecs_.&Mfg.Corp._ASBCA_Ԁ20698,772_BCA_Ԁ  12,631(1977),_affd_,655F.2d1078(CtCl._1981)._  Bp$USUS.,<( X-&SpXX<XXXXXX  36  ڀ  __BruceConstr.Corp.v.U.S.,324F.2d.516(CtCl.1963).  Bp$USUS.,<( X-&SpXX<XXXXXX  37  ڀ  ___Wunderlich_ԀContractingCo.v.U.S.,351F.2d956(Ct.Cl.1965)._Turnbull_,Inc.v.U.S.,389F.2d1007(Ct.Cl.  _1967)._ [ Bp$USUS.,<( X-&SpXX<XXXXXX  38  ڀ  __Paul_Hardeman_,Inc.v.U.S.,406F.2d1357(ct.Cl._1969)._ z Bp$USUS.,<( X-&SpXX<XXXXXX  39  ڀ  __Clarke_Baridon_,Inc.v._Meritt_ԄChapman&ScottCorp.,311F.2d389(4thCir.1962). ] Bp$USUS.,<( X-&SpXX<XXXXXX  40  ڀ  __Laburnum_Contrs_.Corp.v.U.S.,325F.2d451(ct.Cl._1963)._ 4 Bp$USUS.,<( X-&SpXX<XXXXXX  41  ڀ  ___CFR_Ԁ18.22_(b)._  Bp$USUS.,<( X-&SpXX<XXXXXX  42  ڀ  __FAR31.105andFAR_31.2._ E Bp$USUS.,<( X-&SpXX<XXXXXX  43  ڀ  __FTACircular4220.1E_paragraph_Ԁ_10.d._ ; Bp$USUS.,<( X-&SpXX<XXXXXX  44  ڀ  __Thismethodisnamedafterthelandmark1960decisionin_Eichleay_ԀCorp.,_ASBCA_Ԁ5183,602_BCA_Ԁ2688,  _affd_,611_BCA_Ԁ_2894._ : Bp$USUS.,<( X-&SpXX<XXXXXX  45  ڀ  __CapitalElec.Co.V.U.S.,729F.2d743(Fed.Cir._1984)._ a Bp$USUS.,<( X-&SpXX<XXXXXX  46  ڀ  __TheformulaasstatedinConstructionContracting,TheGeorgeWashingtonUniversity,_1991._ % Bp$USUS.,<( X-&SpXX<XXXXXX  47  ڀ  __FTACircular4220.1Eparagraph_10.e._ ? Bp$USUS.,<( X-&SpXX<XXXXXX  48  ڀ  __FAR52.21118._MPC_ԀR5_Ԅ401.04._  Bp$USUS.,<( X-&SpXX<XXXXXX  49  ڀ  ___Brezina_ԀConstr.,Inc.,_ENGBCA_Ԁ3215,751_BCA_Ԁ10,_989._  Bp$USUS.,<( X-&SpXX<XXXXXX  50  ڀ  _VictoryConstr.Co.v.U.S.,510F.2d1379(Ct.Cl.1975).  Bp$USUS.,<( X-&SpXX<XXXXXX  51  ڀ  __BayAreaRapidTransitDistrict(BART),GeneralConditions_For_ԀConstructionContracts,ArticlesGC4.5  IncreasedorDecreasedQuantities,andGC9.3Force_Account._ : Bp$USUS.,<( X-&SpXX<XXXXXX  52  ڀ  __FAR52.24910,Default(FixedPrice_Construction)._  Bp$USUS.,<( X-&SpXX<XXXXXX  53  ڀ  ___Dicon_,Inc.v._Marben_ԀCorp.,618F.2d40(8thCir._1980).___  Bp$USUS.,<( X-&SpXX<XXXXXX  54  ڀ  __SouthernFlooring&InsulationCo.,_GSBCA_Ԁ1360,1964_BCA_Ԁ_4480._  Bp$USUS.,<( X-&SpXX<XXXXXX  55  ڀ  __Kaufman_DeDell_ԀPrinting,Inc.,_ASBCA_Ԁ19268,751_BCA_Ԁ_11,042._ x Bp$USUS.,<( X-&SpXX<XXXXXX  56  ڀ  ___Panzieri_ԄHoganCo.V.Bender,143_N.E._Ԁ739(N.Y._1923)._ C Bp$USUS.,<( X-&SpXX<XXXXXX  57  ڀ  __BART,ClauseGC.8.5.1.4AnticipatedNonWorkWeather_Days._  Bp$USUS.,<( X-&SpXX<XXXXXX  58  ڀ  __Peter_Kiewit_ԀSonsCo.v.SummitConstr.Co.,422F2d242(8thCir._1969).___  Bp$USUS.,<( X-&SpXX<XXXXXX  59  ڀ  ___Davho_ԀCo.,_VACAB_Ԁ1005,722_BCA_Ԁ9683at_45,214._  Bp$USUS.,<( X-&SpXX<XXXXXX  60  ڀ  __U.S.ex.Rel.HellerElec.Co.v.WilliamF._Klingensmith_,Inc.,670F2d1227,1231(D.C.Cir._1982)._  Bp$USUS.,<( X-&SpXX<XXXXXX  61  ڀ  __AetnaCasualty&Sur.Co.v.ButteMeadeSanitaryWaterDist.,500F.Supp.193,197(_D.S.D._Ԁ1980).____ v Bp$USUS.,<( X-&SpXX<XXXXXX  62  ڀ  __CanonConstr.Corp.,_ASBCA_Ԁ16142,721_BCA_Ԁ_8622._ t Bp$USUS.,<( X-&SpXX<XXXXXX  63  ڀ  __Contracting&MaterialCo.v.CityofChicago,314_N.E._Ԁ2d598(IllApp.Ct._1974)._  Bp$USUS.,<( X-&SpXX<XXXXXX  64  ڀ  ___Norair_Ԁ_Engg_ԀCorpv.U.S.,666F.2d546(Ct.Cl._1981).___  Bp$USUS.,<( X-&SpXX<XXXXXX  65  ڀ  __William_Lagnion_,_ENGBCA_Ԁ3778,782_BCA_Ԁ13,260.LewisConstr.Co.,_ASBCA_Ԁ5509,602_BCA_Ԁ_2732._  Bp$USUS.,<( X-&SpXX<XXXXXX  66  ڀ  ___Pathman_ԀConstr.Co.,_ASBCA_Ԁ14285,711_BCA_Ԁ8905.__  Bp$USUS.,<( X-&SpXX<XXXXXX  67  ڀ  __ElectricalEnters.,Inc.,_IBCA_Ԁ971872,741_BCA_Ԁ_10,528._ t Bp$USUS.,<( X-&SpXX<XXXXXX  68  ڀ  __PanPacificCorp.,_ENGBCA_Ԁ2479,652_BCA_Ԁ_4984._ m Bp$USUS.,<( X-&SpXX<XXXXXX  69  ڀ  ___Varo_,Inc.,_ASBCA_Ԁ15000,722_BCA_Ԁ9717.  Bp$USUS.,<( X-&SpXX<XXXXXX  70  ڀ  _ThegranteemayfindithelpfultoreviewtheFederalpoliciesandproceduresconcerningsubcontractinginthe  FARPart44.GranteesarenotrequiredtofollowtheseFederalprocedures. Bp$USUS.,<( X-&SpXX<XXXXXX  71  ڀ  _FAR44.2011. m Bp$USUS.,<( X-&SpXX<XXXXXX  72  ڀ  _AcopyofthisQualificationStatementisincludedinthisManualasAppendixB.17Statementof  QualificationofSubcontractor.  Bp$USUS.,<( X-&SpXX<XXXXXX  73  ڀ  _ForacompletecontractclauseandfurtherinformationdealingwithSubcontracts,contactStanGrillof_NYCT_Ԁat  (718)6944350.  Bp$USUS.,<( X-&SpXX<XXXXXX  74  ڀ  _Somestatesorjurisdictionshaveestablishedminimumrequirements.  KV'USUS.,  _ KVUSUS.,  XXBestPracticesProcurementManualChapter10Closeoutf!f!E(#Page  1  #XX#Ԉ  __A1)  xdEG xA H __iXX B Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __TheFederalpolicyistoretainthesereportsfornotmorethatthreeyears[FARPart42.1503(e)]  Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  __ԀSeeFTAMasterAgreement_MA(12),__Ԁ101_Ԅ05,_ԀSection10forSingleAnnualauditrequirements.  KV'USUS.,  __XXBestPracticesProcurementManualChapter11Disputes0  0p(#(#0p(#p(#0 (#(#0x (# (#0 x(#x(#0@ x(#x(#0@ x(#x(#0@ x(#x(#Page  1  #XXi# (# (# A1) xd&EGxA_ H ___iXX K Bp$USUS.,<( X-&SpXX<XXXXXX  1  ڀ  __PriorversionsoftheCircularcontainedthelanguageinthisparagraphrelatedto"_disclos[ing_]information  regardingproteststoFTA."FTAnotedthatthisprovisionallowedforwidelydifferinginterpretationsbutfound H itselfboundbytheCommonGrantRule.FTAbelievesthisprovisionrequiresgranteesto,ataminimum,informally   notifytheirFTAregionalofficeswhentheyreceiveaprotestrelatedtoacontractrequiredtocomplywiththe L Circularandtosimilarlykeeptheirregionalofficesapprisedofthestatusofthoseprotests.Regionalofficesmay  requiregranteestoforwardcopiesofparticularprotestsorallprotestsforinformationorreviewpurposesatany X time.__ : Bp$USUS.,<( X-&SpXX<XXXXXX  2  ڀ  __ThisparagraphhasbeenalignedwiththeCommonGrantRuleandpracticebyadding"violationsofFederallaw  orregulation"tothebasisofFTAprotestjurisdiction.FTAwillcontinuetolimititsreviewofgranteeprotest H decisionsandwillreadthisCommonGrantRuleprovisioninconjunctionwiththeprovisionsthatexpressitsintent   toavoidsubstitutingFTA'sjudgmentforthoseofitsgrantees.FTAwillnotconsidereachandeveryappealof L grantees'protestdecisionssimplybecauseafederallaworregulationmaybeinvolved.Instead,FTAwillexercise  discretionaryjurisdictionoverthosecasesdeemedtoinvolveissuesimportanttotheoverallthirdpartycontracting X _program._ 7   Bp$USUS.,<( X-&SpXX<XXXXXX  3  ڀ  __Additionally,wehavenotedthatrequiringanappealtobefiledwithinfivedaysof"theviolation"yetalso  requiringprotestorstoextinguishtheirlocalremediesbeforefilingwithFTAledtosomeconfusion.FTAhas H attemptedtoclarifythisstandardbystartingtheprotestor'sclockwhenitreceivesactualorconstructivenoticeofan   adversedecisionorthatagranteefailedtohaveorfollowitsproceduresorreviewacomplaint. * Bp$USUS.,<( X-&SpXX<XXXXXX  4  ڀ  __MARTAresidentEngineersManual,Section5.17ContractorClaims.  KV'USUS.,  _ KVUSUS.,  KVUSUS.,  XXBestPracticesProcurementManualAppendixAf!f!E(#Page  1  #XX#Ԉ  A1)  xdEG xA H   KV'USUS.,  _ KVUSUS.,  KVUSUS.,  XXBestPracticesProcurementManualAppendixA.1  WPCpR513%)+ .-  ))@  WPCpR513%)+ .-  )) TABLE WCTABLE AMTABLE AK  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))fn169fn113,fn132Ęfn145Table_A  KV'USUS.,  _$: (#X$R5 WGCz h" p @X@E"X"X! ""(#(#f* (#: (#*  *: (# X*f%  -  T4 o_[$~Rp@"0 dx RE$RRAV-  6 lXXBestPracticesProcurementManual!RecentUpdatesto_BPPM0 : 0@: "(#Page_Ԁ    1     _#6 XXln#_f%݌X: ": (# Ќ*: (#: (#*  f* (#: (#*  X'   X'f  f݌̌': (# '  f* (#: (#*  X' 3  X'f  __  ""(#(# > J"USUS.,  _f$ (#X$  f=    f=|݌̌$ X X$     (9 Z6Times New Roman Regular9  WPCpR513%)+ .-  ));  WPCpR513%)+ .-  ))H  WPCpR513%)+ .-  ))P  WPCpR513%)+ .-  ))R  WPCpR513%)+ .-  ))V  WPCpR513%)+ .-  ))Z  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))  KV'USUS.,  _$: (#X$R WGCz h" p @X@E"X"X! ""(#(#f* (#: (#*  *: (# X*f%  -  T o_[$~Rp@"0 dx RE$RRAV-   lXXBestPracticesProcurementManual!RecentUpdatesto_BPPM0 : 0@: "(#Page_Ԁ    1     _# XXln#_f%݌X: ": (# Ќ*: (#: (#*  f* (#: (#*  X'   X'f  f݌̌': (# '  f* (#: (#*  X' 3  X'f  __  ""(#(# > J"USUS.,  _f$ (#X$  f=    f=|݌̌$ X X$     (9 Z6Times New Roman Regular  WPCpR513%)+ .-  ))  WPCpR513%)+ .-  ))TABLE G WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))% WPCpR513%)+ .-  ))M WPCpR513%)+ .-  )) WPCpR513%)+ .-  )) WPCpR513%)+ .-  ))WPCpR513%)+ .-  )) !USUS.,  _ _iXXtc@0,bz0X `|@EX|X|bt U.S.Department0 0 (# (#0< (# (#0<(#<(#0(#(#0D(#(#  0D(#D(#400SeventhSt.S.W.(#(# OfTransportation  0 < 0<(#<(##XXi^#XXAdministrator#XX@#iXX0D(#(#0D(#D(#0(#(#Washington,D.C.20590#XXi#XX\(#(# #J#FederalTransit0 0 (# (#0< (# (#0<(#<(#0(#(#0D(#(#0D(#D(#0(#(#0L(#(#   ! #XX+#XX pL(#L(# Administration#XX#0 0 (# (#0< (# (#0<(#<(#XXԀ0(#(#0D(#(#0D(#D(#0(#(###C1301#XXx#XX 4(#(# Ѐ0 4 0 4(#4(#0 (# (#0< (# (#0<(#<(#0(#(##XXA#November6,2001#XXXX`#XXXX (#(#  4    <      D     (#(#K(##XXXXl#XXXX 4   #XXXXM#XXXX 4    < \LHz ^` p%.@X@E ` `   4    <   DearColleague: T #XXXX礨#?+ 4 <DL!X?WelcometotheFederalTransitAdministrationsBestPracticesProcurementManual ,| website. h SincetheoriginalpublicationofthemanualonMay7,1996,wehaveaddedanumberof @ newtopicsandhaveidentifiedavarietyofadditionalbestpractices.Manythankstoallof , youwhohavecontributedideas,topics,and bestpracticecontent,aswellasthosewho    havehelpedtomakethisdocumentas customerfriendlyaspossible. !! Wecontinuetoactivelyseekgranteeandindustrycomments,suggestionsfornewtopics,and ##  bestpracticeproposals,sothemanualcanbekeptuptodateandrelevanttoyourneeds. x$$ YourthoughtfulcontributionswillhelpensurethatAmericastransitsystemskeepour d% % communitiessafeandmoving.XXXX P&!& #XXXX#XXXX 4    <     Sincerely,20XX ((x#(  4    < #XX02#Ԁ0 < 0<(#<(#0(#(#`PLz^gAp.<@X@E<)gAgA,)a<)$+(#(#  4    <   0  JenniferL.Dorn#XXXXf#  O)XX ,',(#(# FEDERALTRANSITADMINISTRATION#XX O)#  BESTPRACTICESPROCUREMENTMANUAL :  Preface   , Purpose    ThisManualprovidesrecipientsofFederalTransitAdministration(FTA)fundssuggestions r  onconductingthirdpartyprocurementstoassisttheminmeetingthestandardsofFTA ^  Circular4220.1E(theCircular). J   TheManualconsistsofsuggestedprocedures,methods,andexampleswhichFTA "r  encourages. ^  ThesearebasedontheFederalacquisitionprocess,ComptrollerGeneraldecisions,and"Best 6  Practices"ofgranteesandothersintheindustry. "    PleaseNote,SuggestedProceduresAreNotMandatory.   qTheManualisenvisionedasanongoingandexpandingdocument.Itwillbeupdated  periodicallywithbothnewsubjectsaswellasadditionsorchangestoexistingsubjects.The n additions/changeswillbebasedon:(1)changesinstatutes,(2)theresultofrecentcourt Z decisions,(3)theneedforfurtherclarification,and(4)neworinnovativepracticesof F grantees. 2 TheManualislocatedontheInternetWorldWideWebundertheFTAHomepage.The  Z internetlocationenablesFTAtoprovideitscustomerswiththelatestandnewestinformation F usingthefastestmeanspossible.Additionally,FTAsolicits"bestpractices"ofitsgrantees 2 andothersintheindustry.AfterreviewbyFTA,newandorinnovativepracticeswillbe  addedtothemanual.FTAisbeingassistedinthisendeavorbyLeonSnead&Company,P.C.   TheirInternetaddressis:[leonsnead.companypc@erols.com].Allproposed"bestpractices"   shouldbesenttothisInternetAddress. !  Scope  j#! TheManualconsistsof11chaptersandAppendicesasfollows: B% # 1.PurposeandScope .&~!$ 2.ProcurementPlanning&Organization 'j"% 3.Specifications (V#& 4.MethodsofSolicitationandSelection (B$' 5.AwardofContracts ).%( 6.ProcurementObjectTypes:SpecialConsiderations *&) 7.DisadvantagedBusinessEnterprise +'* 8.ContractClauses ,'+ 9.ContractAdministration -(, 10.Close-Out  11.Disputes  AppendixA:GoverningDocuments t AppendixB:Examples ` AppendixC:[Reserved] L  AppendixD:AnnotatedFTACircular4220.1E.ForacopyofthisCircular,goto 8  www.fta.dot.gov/ftahelpline/fta_c4220_1E.doc.4 O  5  6=OQ  7  $ t  Format   L  TheManualisdividedinto11ChaptersandAppendices(seeabove).Thisformatwillallow $  FTAtosendupdatesasnecessaryandallowsyoutolocatethemeasily.Assectionsofthe   Manualareupdated,thelastrevisiondateisindicatedforthatsectioninparentheses.    Introduction    Youareresponsibleforensuringfullandopencompetitionandequitabletreatmentofall \ potentialsourcesintheprocurementprocess.Youarealsoresponsibleforplanning, H solicitation,award,administrationanddocumentationofallFederallyfundedcontracts. 4 Duringtheprocurementprocess,theProcurementOfficerisresponsibleformaking  \ comprehensivebusinessjudgmentsbasedupontheapplicationofsoundprocurementpolicies H andprocedures. 4 ThisManualwillnotmakebusinessjudgmentsfortheProcurementOfficer.Itwillaid   him/herinperformingthestepsnecessarytoensurepublicfundsareexpendedproperlyand  willprotecttheintegrityofthegrantees'procurementprocess.      XX     8XXdd8XXXXXX     #  BESTPRACTICESPROCUREMENTMANUAL#1$݌ L Ќ  XX  XXXXXX     $  $n%݌̌  XX  XXXXXX     %  RECENTUPDATESTOBPPM%g&݌ $  Ќ  XX  XXXXXX     "'  "''݌̌  XX    #XX7##   ! ,XXX!RevisionDate SectionNo. h   Subject   6 eXm X (#,XX6 October20050 ` 0m ` (#` (#1.3.3.100m (#m (#DispositionofSurplus(Revised) t(#(# October2005 ` 0 m 4.6.4  UnsolicitedProposals(New)L m (#m (#   October2005 ` 0 m 7.2.4  PromptPaymentMechanisms(Revised)p$ m (#m (# H em X (# eXm X (#HOctober2005 m 7.3.5.4  GoodFaithEffortstoMeetContractGoals(Revised) H  @XXXXXXXX   @r+  @r++݌̌XXXX  October2005 m 7.3.5.5  CountingDBEParticipationtowardtheGoal(Revised)    October20050 m AppendixA.10m (#m (#FederallyRequiredandOtherModelContractClauses(#(#    m   #28(Revised)  April2005 m 2.3.2  IndependentGranteeCostEstimate(Revised) p April2005 m 2.4.3.1  FixedPriceContracts(Revised) H April2005 m 2.4.4.3  ProgressPayments(Revised) l  April2005 m 5.3.2  DebriefingofOfferors(Revised) D @XXXXXXXX   @/  @/|/݌̌XXXX  April2005 m 6.1.7  Partnering(Revised) ! @XXXXXXXX   @50  @500݌̌XXXX  April2005 m 8.2  SuretyBonds(Revised) " April2005 m 8.2.1  PerformanceBonds(Revised) $  @XXXXXXXX   @1  @1 2݌̌XXXX  April2005 m 10.3  RecordRetention(Revised) &X" @XXXXXXXX   @2  @2'3݌̌XXXX  April2005 m AppendixB.20  IndependentCostEstimate(ICE)Form(New) |(0!$  March2004 m 1.3.3.5  IntergovernmentalAgreements,JointProcurements, T*#&   0 m 0m (#m (#Piggybacking/Assignments(Revised)@+#'(#(# March2004 m 4.4.3  SingleBid(Revised) -%) ЇMarch20040 m 6.50m (#m (#ArchitectEngineeringServices(Revised)L(#(#  March2004 m AppendixA.2  DearColleagueLetters(Revised) $  November2003 m 1.1.1  FTACircular4220.1E(Revised)   November2003 m 1.1.7  FTAProcurementSystemReviews(PSRs)(Revised)   November2003 m 1.1.9  ProcurementSystemSelfAssessmentGuide(New) ` November2003 m 1.3.3.4  RealEstateContracts(Revised) 8  November2003 m 1.3.3.11  OperatingAssistance,PreventiveMaintenance, \    0 m 0m (#m (#CMAQandJARCProject(Revised)H (#(# November2003 m 4.1.2  ConsolidationofMicroPurchases(Revised)    November2003 m 4.3.2.4  PreBidandPreProposalConferences(Revised)  November2003 m 4.3.3.2.2  BuyAmericaCertification(Revised)  November2003 m 4.5.2  EvaluationofProposals(Revised) \ November2003 m 6.6.  Insurance(Revised) 4 November2003 m 9.4  ApprovalofSubcontractors(formerlySection5.1.5) X    "    O)XXFEDERALTRANSITADMINISTRATION#XX O);#   BESTPRACTICESPROCUREMENTMANUAL E: TABLEOFCONTENTS    ; 1PurposeandScope   < X  em X (#<  1.1Assistance,GuidanceandRequirements(5/98)     3X" X  X 3   ` 1.1.1  " FTACircular4220.1E(11/03)      ` 1.1.20 " FTAWaiversandApprovals(6/03) " (#" (#    ` 1.1.30 " MasterAgreement(6/03)}r " (#" (#    ` 1.1.40 " FederalAcquisitionRegulation(FAR)(6/03)i^ " (#" (#    ` 1.1.50 " FTADearColleagueLetters(6/03)UJ " (#" (#    ` 1.1.60 " LocatingFTADocuments(6/03)A6 " (#" (#    ` 1.1.70 " FTAProcurementSystemReviews(PSRs)(11/03)-"" (#" (#    ` 1.1.80 " FTAHelpLine(6/03)" (#" (#    ` 1.1.90 " ProcurementSystemSelfAssessmentGuide(11/03)" (#" (#   1.2IdentifyingaContract(5/98)      ` 1.2.1Offer,Acceptance,Consideration(5/98)     ` 1.2.2Oralv.Written(5/98)     ` 1.2.3MutualandUnilateralMistakes(5/98)     ` 1.2.4ProcurementsOftenOverlooked(5/98) yn    `  "   1.3ApplicabilityofFederalRequirements(5/96) QF    ` 1.3.1RecipientandSubrecipient(5/96) )!    ` 1.3.2FederalContractualSphere(5/96) "     ` 1.3.3TypesofContractActions(5/98) #    `  " 1.3.3.1Supplies,Services,EquipmentandConstruction(5/98) $     `  " 1.3.3.2LegalandAssociatedServices(5/98) %!    `  " 1.3.3.3EmploymentContracts(5/98) &"    `  " 1.3.3.4RealEstateContracts(11/03) ' #    `  " 1.3.3.5IntergovernmentalAgreements,JointProcurements, (~!$    `  "   Piggybacking/Assignments(3/04) u)j"%    `  " 1.3.3.6Subgrants(6/03) a*V#&    `  " 1.3.3.7EquipmentLeases(5/98) M+B$'    `  " 1.3.3.8RevenueContracts(1/02) 9,.%(  0  0` (#(#0" ` (#` (# 1.3.3.9TransitOrientedJointDevelopmentProjects(7/02)%-&)" (#" (#    `  " 1.3.3.10DispositionofSurplus(10/05)  .'*    `  " 1.3.3.11OperatingAssisrance,PreventiveMaintenance,CAMQ      `  "   andJARCProjects(11/03)     `  " 1.3.3.12ECommerce(6/03)   2ProcurementPlanning&Organization     }(s3  2.1OrganizationofProcurementFunctions(5/96)      `  "    h      p      ` 2.1.1ScopeofResponsibility(5/96) k`    ` 2.1.2Autonomy(5/96) WL    2.2LongTermPlanning(5/96) /$     ` 2.2.1ContractPeriodofPerformanceLimitation(6/03)      ` 2.2.2Multiyearvs.MultipleYearContracting(7/02)     2.3AnnualPlanning(5/96)     ` 2.3.1SourcesandContents(5/96)     ` 2.3.2IndependentGranteeCostEstimate(4/05)    2.4SourceSelectionPlan(5/96) g\    ` 2.4.1FileDocumentation(5/96) ?4    ` 2.4.2FullandOpenCompetition(5/96) +     `  " 2.4.2.1FullandOpenCompetitionPrinciple(5/96)     `  " 2.4.2.2RestraintsonCompetition(5/96)     `  "   2.4.2.2.1BrandNames(6/03) !    `  "   2.4.2.2.2WrittenStandardsofConductandConflictsof "    `  "    h 󀀀Interest:PersonalandOrganizational(6/03) #    `  "   2.4.2.2.3GeographicRestrictions(6/03) $     `  "   2.4.2.2.4Prequalification(5/98) w%l!    ` 2.4.3FixedPricev.CostReimbursement(5/98) O'D #      `  " 2.4.3.1FixedPriceContracts(4/05) ')"%    `  " 2.4.3.2CostReimbursementContracts(6/03) *#&    `  " 2.4.3.3TimeandMaterialsContracts(5/98) *#'    `  " 2.4.3.4LaborHourContacts(5/98) +$(    `  " 2.4.3.5CostPlusPercentageofCostContracts(6/03) ,%)   .'+    ` 2.4.4Payments(5/98)      `  " 2.4.4.1PaymentofthePrice(5/98)     `  " 2.4.4.2AdvancedPayments(6/03)      `  " 2.4.4.3ProgressPayments(4/05)      `  " 2.4.4.4WithholdingandFinalPayment(5/98)      ` 2.4.5IndefiniteDeliveryContracts(10/99)  t      `  " 2.4.5.1DefinitequantityContracts(10/99) WL     `  " 2.4.5.2RequirementContracts(6/03) C8     `  " 2.4.5.3IndefinitequantityContracts(6/03) /$   3Specifications      3.0Overview(6/03)   0  3.1TypesOfSpecificationsandRisks(1/98)(#(# 8  0`   3.1.1DesignSpecifications(1/98)` `  0  0` (#(#3.1.2PerformanceSpecifications(1/98)` (#` (# 0  0` (#(#3.1.3BrandNameorEqual(1/98){p` (#` (# 0  3.2UsingConsultantstoPrepareSpecifications(1/98)SH(#(# 0  3.3SpecificationsforEquipmentandSupplies(1/98)?4(#(# 0  3.4SpecificationsforConstruction(1/98)+ (#(# 0  3.5StatementsofWorkforServices(1/98) (#(#  4MethodsofSolicitationandSelection     4.0Overview(5/96) !   4.1MicroPurchases(6/03) "    ` 4.1.1PurchaseCardsBART(6/98) $     ` 4.1.2ConsolidationofMicroPurchases(11/03) w%l!   4.2SmallPurchases(5/96) O'D #   4.3CompetitiveProcurementMethods(5/96) ;(0!$    ` 4.3.1OverviewSealedBidsv.CompetitiveProposals(5/96) *#&    ` 4.3.2CommonElementsofSolicitationProcess(5/96)  *#'     `  " 4.3.2.1AdvertisingandPublicizingSolicitation(5/96) ,%)    `  " 4.3.2.2SolicitationMailingList(5/96) -&*    `  " 4.3.2.3Solicitation(5/96) .'+    `  " 4.3.2.4PreBidandPreProposalConferences(11/03)      `  " 4.3.2.5AmendmentofSolicitations(5/96)     ` 4.3.3CommonElementsofOffers(5/96)      `  " 4.3.3.1ReceiptofOffers(5/96)      `  " 4.3.3.2FederallyRequiredSubmissionswithOffers(5/96)   6,XXXX" X 6   `    4.3.3.2.10  CertificationRegardingDebarment,Suspension,and k` OtherResponsibilityMatters(5/96)WL (#(#    `    4.3.3.2.2BuyAmericaCertification(11/03) C8     `    4.3.3.2.3LobbyingCertification(6/03) /$     `     `  4.3.3.3OtherSubmissions(5/96) p        `    4.3.3.3.1AcknowledgmentofSolicitationAddenda(5/96)      `    4.3.3.3.2BidGuarantee(5/96)    4.4SealedBids(InvitationforBids)(5/96)     ` 4.4.0Overview(5/96) {p    ` 4.4.1Solicitation(5/96) g\    ` 4.4.2BidOpening(5/96) SH    ` 4.4.3SingleBid(3/04) ?4    ` 4.4.4ResponsiveBidder(5/96) +     ` 4.4.5BidMistakes(5/96)      ` 4.4.6BidWithdrawal(5/96)    4.5CompetitiveProposals(RequestforProposals)(5/96)      ` 4.5.1Solicitation&ReceiptofProposals(5/96) "    ` 4.5.2EvaluationofProposals(11/03) #    ` 4.5.3CompetitiveRange(5/96) $     ` 4.5.4DiscussionsandClarifications(5/96) w%l!    ` 4.5.5AdditionalSubmissions(5/96) c&X"    `  4.5.5.1RequestforRevisedProposals(5/96) ;(0!$    `  4.5.5.2RequestforBestandFinalOffer(5/96) ')"%    ` 4.5.6AwardBasedonInitialProposals(5/96) *#'    ` 4.5.7WithdrawalofProposals(5/96) +$(    ` 4.5.8DebriefingUnsuccessfulOfferors(5/96) ,%)   .'+   4.6NonCompetitive(SoleSource)Proposals(5/96)      ` 4.6.1JustificationforUse(5/96)     ` 4.6.2NegotiationofContract(5/96)      ` 4.6.3AssociatedCapitalMaintenanceItem(5/96)      ` 4.6.4UnsolicitedProposals(9/05)     4.7SpecialProcurementMethods(5/96)  t    ` 4.7.1MultiStepProcurements(5/96) WL     ` 4.7.2GovernmentalPricesandContracts(5/96) C8  9,XX[IX,XXX9   `  4.7.2.10 [ ProcurementsfromGeneralServicesAdministration [(#[(#    `   [ Schedules(5/96)      `  4.7.2.2StateandLocalSchedules(6/03)      `  4.7.2.3StateversusFTARequirements(5/96)      ` 4.7.30 ECommerce:ReverseAuctions(6/03) (# (#  5AwardofContracts    5.0Overview(1/98)  g\   5.1ResponsibilityofContractor(5/98) SH    ` 5.1.1GeneralStandardsofResponsibility(5/98) +     ` 5.1.2SpecialStandardsofResponsibility(5/98)      ` 5.1.3ObtainingInformationforDeterminationofResponsibility(5/98)     ` 5.1.4DeterminationandDocumentation(5/98)      5.2CostandPriceAnalysis(6/03) !   5.3AwardProcedures(5/98) "    `    ` 5.3.1PublicAnnouncementsofContractAwards(5/98) $     ` 5.3.2DebriefingofOfferors(4/05) w%l!   5.4DocumentationofProcurementAction(5/98) O'D #      ` 5.4.1SealedBidProcurements(5/98) ')"%    `  5.4.1.1AbstractofBids(5/98) *#'    `  5.4.1.2DocumentationofAwardDecision(5/98) +$(    ` 5.4.2NegotiatedProcurements(5/98) -&*  .'+    `  5.4.2.1FileDocumentationofSelectionDecision(5/98)      `  5.4.2.2PreNegotiationPlan(5/98)     `  5.4.2.3MemorandumofNegotiations(5/98)   6ProcurementObjectTypes:SpecialConsiderations    0  6.1Construction(10/98) (#(#   0 ` 6.1.1TheTraditionalConstructionProcessDesign/Bid/Build(10/98)k`` (#` (#   0 ` 6.1.2ConstructionManagement("CM")(10/98)WL ` (#` (#   0 ` 6.1.3"FastTracking"PhasedDesign,AwardandConstruction(10/98)C8 ` (#` (#   0 ` 6.1.4"Turnkey"Design/BuildContracting(10/98)/$ ` (#` (#   0 ` 6.1.5ValueEngineering(6/03) ` (#` (#   0 ` 6.1.6FacilitiesMaintenanceJobOrderContracts(10/98) ` (#` (#   0 ` 6.1.7Partnering(4/05) ` (#` (#   0 ` 6.18CompetitiveProposalsvs.SealedBids(10/98) ` (#` (#   0 ` 6.1.9IncentivestoReduceProjectCompletionTime(10/98)` (#` (#    ` 6.1.10SpecialContractProvisions(10/98)  0  6.2EquipmentandSupplies(2/00)(#(#   0 ` 6.2.1Lease/MaintenanceofVehicles(2/00)g\` (#` (# 0  0` (#(#0 ` (#` (#6.2.1.1LeaseofHeavyEquipmentwithOperators(2/00)?4 (# (# 0  6.3RollingStock(10/98) (#(#   0 ` 6.3.1Buses(10/98)` (#` (#    ` 0 6.3.1.1CompetitiveProposalsvs.SealedBids(10/98)! (# (#    ` 0 6.3.1.2APTAStandardBusProcurementGuidelines(10/98)" (# (#   0 ` 6.3.2RailCars(10/98)$ ` (#` (#    ` 6.3.3JointProcurementsofRollingStockand Piggybacking(6/03) w%l! 0  0` (#(#6.3.4PreAwardandPostDeliveryReviewsforBuyAmericaActc&X"` (#` (#    ` Compliance(10/00) O'D #    ` 6.3.5Warranties(6/03) ;(0!$ 0  6.4ProfessionalServices(5/96)*#&(#(# 0  6.5ArchitectEngineeringServices(3/04)*#'(#(# 0  6.6Insurance(11/03)+$((#(# 0  6.7Artwork(6/03),%)(#(#   .'+ 7-DisadvantagedBusinessEnterprisev XX    #XX v]#  7.1ComparisonofOldvs.NewDBERules(6/99)v XX    #XX v# ` 7.1.1ApplicabilityofDBERulestoGranteePrograms(2/00)      ` 7.1.2DefinitionofTerms(2/00)v XX   #XX v#  7.2AdministrativeRequirements(6/99)v XX   #XX v蓊#   ` 7.2.1WhoMustHaveaDBEProgram(6/99)      ` 7.2.2DBELiaisonOfficer(6/99)       ` 7.2.3RequiredEffortsonBehalfofDBEFinancialInstitutions(6/99)      ` 7.2.4PromptPaymentMechanisms(9/05)      ` 7.2.5DBEDirectory(6/99)      ` 7.2.6BiddersList(6/99)      ` 7.2.7MonitoringContractors'Performance(2/00)     7.3GoalsforDBEParticipation(6/99) t    ` 7.3.1DOTNationalGoalof10%(6/99) WL    ` 7.3.2UseofQuotasandSet-Asides(6/99) C8    ` 7.3.3EstablishingOverallGoals(2/00) /$    ` 7.3.4EstablishingOverallGoalsforTransitVehicleManufacturers(6/99)     ` 7.3.5MeansofMeetingOverallGoals(6/99)     `  7.3.5.1Race-NeutralMeans(6/99)     `  7.3.5.2UsingContractGoals(6/99)     ` 0 7.3.5.3EvaluationofContractorProposalsforDBEParticipation(2/00) (# (# 0  0` (#(# 7.3.5.4GoodFaithEffortstoMeetContractGoals(9/05)` (#` (#    `  7.3.5.5CountingDBEParticipationtowardtheGoal(9/05)     7.4Certification:StandardsandProcedures(2/00) g"\   7.5ExemptionsandWaivers(6/99) S#H   8ContractClauses  +% "   8.1FederalRequirements(1/98) '$   0 ` 8.1.1SourcesofModelFederalClausesandApplicability(1/98)(!&` (#` (#    ` 8.1.2DavisBaconAct(1/98) )"'   0 ` 8.1.3CargoPreferences(1/98)*#(` (#` (#   0 ` 8.1.4BuyAmerica(6/03)+$)` (#` (#   0 ` 8.1.5FlyAmerica(1/98), ,XX,%*` (#` (#   w-l&+ 0  #XX,,  #8.2SuretyBonds(4/05) (#(#    ` 8.2.1PerformanceBonds(4/05)    0 ` 8.2.2Options(1/98) ` (#` (#   0 ` 8.2.3LiquidatedDamages(1/98) ` (#` (# 0  0` (#(#0 ` (#` (#8.2.3.1RelationshipwithDefaultTermination(1/98)  (# (#   0 ` 8.2.4IntellectualPropertyRights(1/98)k`` (#` (#    ` 0 8.2.4.1DisclosureofTradeSecrets(1/98)C8  (# (#    ` 0 8.2.4.2ContractWorkProducts,PatentsandCopyrights(1/98)/$  (# (#    `    0 ` 8.2.5Termination(1/98) ` (#` (# 0  0` (#(#0 ` (#` (#8.2.5.1TerminationforConvenience(1/98)  (# (# 0  0` (#(#0 ` (#` (#8.2.5.2PartialTerminations(1/98) (# (# 0  0` (#(#0 ` (#` (#8.2.5.3TerminationforDefault(1/98) (# (#  9ContractAdministration     T1` hp x (#,XX[IXT    9.1DocumentationofContractAdministration(1/96) g\ 0    9.2Changes(2/99)SH(#(# H.4` hp x (#,` XH 4 0 ` 9.2.1ContractScopeandCardinalChanges(10/99)+ ` (#` (#  4 0 ` 9.2.2Cost/PriceAnalysisofChanges(2/99) ` (#` (# 0 4  ` 9.2.3ConstructionChanges(2/99)4(#4(# E+  hp x (#4` XE 0 9.2.3.1DifferingSiteConditions(2/99)  (# (# 0  9.2.3.2FieldChangeOrders(2/99)! (# (#  0 9.2.3.3PricingofConstructionChanges(2/99)" (# (#  0 9.2.3.4VariationsinEstimatedQuantities(2/99)# (# (#   9.2.3.5Delays(2/99) $   0 9.2.3.6Acceleration(2/99)w%l! (# (# - X X-  9.3ImprovingVendorDeliveryPerformance(10/00) O'D # -, X X-    9.4ApprovalofSubcontractors(11/03) ;(0!$  10Closeout *#& * X, X*   10.1CloseoutProcedures(7/99) +$(   10.2Audits(7/99) ,%)   10.3RecordRetention(4/05) -&*  .'+  11Disputes      11.1Protests(6/03)    11.2Claims,GrievancesandOtherDisputeswithContractors(6/99)   H.` hp x (# XH             AppendixAGoverningDocuments        A.1FederallyRequiredandOtherModelContractClauses  x   A.2DearColleagueLetters od   AppendixBExamples  G<    B.1ExampleEvaluationProcess     B.2Specification/ScopeofServiceGuide      B.3LiquidatedDamagesChecklist     B.4BidAbstractForm     B.5BARTPurchaseCardSystem    B.6PrenegotiationPosition    B.7OfferandAcceptanceForm    B.8Award/ContractForm    B.9MemorandumofNegotiations t   B.10DisclosureofConflictsofInterest k`   B.11BiddersQualificationQuestionnaire WL   B.12NegotiationMemorandumSampleFormat C8   B.13Warranty&GuaranteeRegister /$   B.14ContractCloseoutCheckList  0  B.15RequestforProposal(#(# 0  B.16PiggybackingWorksheet(#(#    B.17ExampleofStatementofQualificationofSubcontractor     B.18HiawathaLinePublicArtandDesignBudget p    !   B.19MandatoryProcurementStandardsWorksheet "   B.20IndependentCostEstimate(ICE)Form #  AppendixCReserved {%p! AppendixDAnnotatedFTACircular4220.1E .ForacopyofthisCircular,goto S'H # www.fta.dot.gov/ftahelpline/fta_c4220_1E.doc. C(8!$   /)$"%   *#& 8 (lxs} [  Chapter1  k  PurposeandScope  C   1.1Assistance,GuidanceandRequirements(10/02)   Ѐ$,X XX$ ` 1.1.1 FTACircular4220.1E(11/03)    ` 1.1.2 FTAWaiversandApprovals(6/03)  t  ` 1.1.3 MasterAgreement(6/03)  `  ` 1.1.4 FederalAcquisitionRegulation(FAR)(6/03) L   ` 1.1.5 FTADearColleagueLetters(6/03) 8   ` 1.1.6 LocatingFTADocuments(6/03) $   ` 1.1.7 FTAProcurementSystemReviews(PSRs)(11/03) {   ` 1.1.8 FTAHelpline(6/03) g   ` 1.1.9.0 ProcurementSystemSelfAssessmentGuide(11/03)S  # # ( X,X X{(  1.2IdentifyingaContract(5/98) +    ` 1.2.1 Offer,Acceptance,Consideration(5/98)     ` 1.2.2 Oralv.Written(5/98)     ` 1.2.3 MutualandUnilateralMistakes(5/98) p    ` 1.2.4 ProcurementsOftenOverlooked(5/98) \   1.3ApplicabilityofFederalRequirements(5/96) 4    ` 1.3.1 RecipientandSubrecipient(5/96) w     ` 1.3.2 FederalContractualSphere(6/03) c    ` 1.3.3 TypesofContractActions(5/98) O ',XXX'  0 `  1.3.3.1  Supplies,Services,EquipmentandConstruction(5/98)'!` #` #   0 `  1.3.3.2  LegalandAssociatedServices(5/98)"` #` #   0 `  1.3.3.3  EmploymentContracts(5/98)"` #` #   0 `  1.3.3.4  RealEstateContracts(11/03)# ` #` #   0 `  1.3.3.5  IntergovernmentalAgreements,JointProcurements,$l!` #` # 0  0` ##0 ` #` #0 # #Piggybacking/Assignments(3/04)%X"##    `  1.3.3.6  Subgrants(6/03) &D #    `  1.3.3.7  EquipmentLeases(5/98) '0!$    `  1.3.3.8  RevenueContracts(1/02) ("%    `  1.3.3.9  TransitOrientedJointDevelopmentProjects(7/02) s)#&    `  1.3.3.100  DispositionofSurplus(10/05)_*#'##   0 `  1.3.3.110` #` #OperatingAssistance,PreventiveMaintenance,CMAQK+$(##   0 ` 0 ` #` #0 # #andJARCProjects(11/03)7,%)##    `  1.3.3.12  ECommerce(6/03) #-&* + X,XXw+  .'+ GG 1.1ASSISTANCE,GUIDANCEANDREQUIREMENTS   ThetopicsaddressedbythisManualaredevelopedaccordingtoastandardizedformat,which  consistsofthreeparts:(1)Requirements,(2)Discussionand(3)BestPractices.  *1ddd Xdd Xdd X##,dd +      REQUIREMENT    Wherearequirementexistsinthethirdpartyprocurementregulationswhichgranteesmust r  follow,atableentitledREQUIREMENTwillsetforththepertinentsectionsoftheFTA ^ l Circulars,theMasterAgreement(MA),theCodeofFederalRegulations(CFR's)oranFTA JX  DearColleagueLetter.Whenthereisamandatoryrequirementitwillbeclearlysetforthas 6D  such. "0    DISCUSSION *8  Followingthestatementoftherequirement,orifthereisnorequirementassuch,therewill  beadiscussionsectiongivingsomedefinitionandguidanceconcerningthemeaningor  purposeofthetopicbeingpresented.  BestPractices   InthosesituationswheretheFederalorgranteepracticeshaveproventobeeffective,theManual  willpresentthesebestpracticesfortheassistanceandguidanceofthegrantee.Theprocedures v andpracticespresentedarenotmandatoryunlesssoidentified.Thesebestpracticesaremeantto bp beinformativeandhelpfultothegranteecommunity.Theyareofferedfortheguidanceand N\ assistanceofthegrantee,butitisalsorecognizedthatagranteemayhaveauniquesituationthat :H precludesitfromadoptingtheproceduresofanothergranteeinacertainarea. &4  1.1.1  FTACircular4220.1E    ThisCircularsetsforththerequirementsagranteemustadheretointhesolicitation,awardand ! administrationofitsthirdpartycontracts.TheCircularcontains54mandatoryprocurement " standardsthatgranteesmustmeetintheirprocurementoperations.These54standardsareset # forthinAppendixB.19MandatoryProcurementStandardsWorksheet.The"Worksheet" $  providescrossreferencestospecificparagraphsintheCircularwherethestandardsmaybe %! found,andacolumnforgranteestocrossreferencethestandardstotheirownpoliciesand r& " procedures.Granteesareencouragedtoreviewtheirwrittenprocurementpoliciestoensurethat ^'l!# theycovereachofthe54mandatorystandards. J(X"$ TherequirementsoftheCirculararebasedonthecommongrantrulesfoundat49CFRPart18 "*0$& (StateandLocalGovernments)and49CFRPart19(InstitutionsofHigherEducation,Hospitals, +%' andOtherNonProfitOrganizations),andtheFederalTransitLaws.TheBestPractices +&( ProcurementManualwillstatetherequirementsofthisCircularwherevertheypertaintoatopic ,&) beingcoveredbytheManual.SincethisCircularisupdatedperiodically,granteesmustensure -'* thattheyconsultthelatesteditionoftheCircular. .(+ ЇThisCircularreplaces4220.1Ddated41596andChange1,dated8498.TheCircular  incorporatespolicyupdatescontainedinseveralDearColleaguelettersissuedsince1996.  AnnotatedCircular󀄀FTAhasalsopublishedanannotatedversionofthisCircularwith  interpretivecomments.Thesecommentsweredevelopedtohelpavoidincorrectinterpretationsof   theCircularthathaveevolvedovertime.ThecommentsexplainwhatFTAbelievesthelawand   regulationsconveyedthroughtheCircularactuallyrequireofitsgrantees.Asapplicablelaws, z  regulationsandcontractingpracticesevolve,FTAwillusetheannotatedCirculartoconveyits f t viewstoFTAgranteesandthetransitindustryasawhole.Aschangesaremadeinthecomments, R ` adatewillbeinsertedwiththechangetonotifythereaderofwhenthechangewasmade.The >L  AnnotatedCircularisavailableonlineat: www.fta.dot.gov/ftahelpline/fta_c4220_1E.doc . *8  1.1.2  FTAWaiversandApprovals    GranteesarerequiredtoprocesstheirrequestsforwaiversandapprovalsrequiredbyCircular   4220.1EthroughtheirregionalFTAoffices.TheregionalFTAofficeswillinstructgranteesas   totherequiredcontentandformatoftheserequests.TheFTAAdministratorhasestablishedthe  FTAsignatorylevelsforgrantingwaivers,andfortheapprovalofactionswhichrequireFTA  approvalintheCircular,asfollows:    AuthoritytograntwaiversAdministrator ft   AuthoritytograntapprovalsAssociateAdministratorforAdministration >L Waiverspertaintothosethirdpartycontractactionswhichagranteeisnotauthorizedtotakeunder $ theCircular,butforwhichFTAhasauthoritytomakeexceptions.  Approval/disapprovalcoversthirdpartycontractactionswhichagranteeisauthorizedtotake  undertheCircularonlyafterreceivingFTAapproval.Anexamplewouldbetheuseofadvance  paymentsforanindividualprocurement.    1.1.3  MasterAgreement  " TheFTAMasterAgreementcontainsstandardtermsandconditionsgoverningtheadministration b$p! ofaProjectsupportedwithFederalassistanceawardedbytheFTAthroughaGrantAgreement N%\" orCooperativeAgreementwiththeRecipient.TheFTAMasterAgreementisupdatedannually :&H # atthestartofeachfiscalyear(October1)andpublishedontheFTAwebsite. C  1      TheMaster &'4!$ AgreementcontainsprocurementrequirementsthatmaybereferencedintheBestPractices ( "% ProcurementManual. ( #&   *$( 1.1.4  FederalAcquisitionRegulation(FAR)   ThisManualwillfrequentlycontainreferencestotheFAR.Thesereferencesare,withone  exception,alwaysforinformationpurposesandarenotintendedtosuggestthatgranteesmust  followtheFAR. C  2      NeithergranteesnortheircontractorsarerequiredtofollowtheFAR.The   FARcitationsaregiveninordertoinformgranteeshowtheFederalgovernmenttreatsa   particularissuebuttheFederalpracticesarenotbindingongrantees. z  TheFederalAcquisitionRegulationisavailableatthefollowinginternetaddress: R ` 4O  5  http://www.arnet.gov/far6Ocyu  7p B. >L   1.1.5  FTADearColleagueLetters  $  TheFTAAdministratorperiodicallyissuesDearColleagueLetterstotheFTAgrantee   community.WhentheselettersaffectgranteeprocurementoperationsbyimposingnewFTA   requirementsorclarifyingearlierFTApolicystatements,theManualwillbeupdatedtoreflect   thenewDearColleagueLetter.ThoseLettersthataffectgranteeprocurementoperationsare  containedinAppendixA.2oftheManual.   1.1.6  LocatingFTADocuments  v TheFTAHelpLinewebsite(see1.1.8below)containsalinktoimportantFTAdocuments,suchas N\ Circulars,DearColleagueLetters,etc.YoumayaccessthesedocumentsbyusingtheOnline :H Tools&ResourcestabatthefollowingInternetaddress:www.fta.dot.gov/ftahelpline/index.htm.44#O  5  6Ocyu  74# &4 YoumayalsoaccessFTAdocumentsattheFTAwebsiteaddress:4O  5  http://www.fta.dot.gov6Ocyu  7 Ԁunder   the granteepagetab.    1.1.7  FTAProcurementSystemReviews(PSRs)   FTAconductsperiodicreviewsofitsgranteesprocurementsystems.Thesereviewsare   conductedinaccordancewiththeGuideforProcurementSystemReviewswhichFTAhas ! developedinordertoevaluatethegranteescompliancewiththerequirementsofFTACircular " 4220.1E.GranteesnowhaveaccesstothisGuideandcaneffectivelyevaluatetheirown r#  procurementsystemscompliancewith4220.1EusingtheGuide.SectionIII.2oftheGuide ^$l! containschecklistsforeachtypeofcontracttobereviewedaswellasfortheprocurementsystem J%X" wideelementsthatFTAalsoevaluates.TheGuideisnowavailableontheInternetatthefollowing 6&D # FTAwebsiteaddress:  XXwww.fta.dot.gov/grant_programs/fta_oversight/4022_8480_ENG.HTML.htm.#XX  N# "'0!$   ("% BestPractices   AuditFollow-UpandTrackingSystem-Granteesshouldconsideradoptingatrackingsystemfor  followinguponthefindingsgeneratedbyFTAProcurementSystemReviews(PSRs),FTA  TriennialReviews,andotherpublicauditsorinternalauditsconductedbytheagency'sown   managementstaff.TheLosAngelesCountyMetropolitanTransportationAgency(LACMTA)has   developedanin-house,MSAccess-baseddatabasetomanageauditfindingsandtrackcorrective z  actionstoensuretheyareimplementedasproposed.Thistrackingsystem-theFindingsand f t RecommendationsManagementSystem(FARMS)-isacentralrepositoryforallaudits,findings, R ` recommendations,auditresponses,proposedcorrectiveactions,andauditfollow-upandclose-out >L  information.Informationcanbesortedinavarietyofwayssuchasbyexecutivearea,audit *8  source,findings,dates,orrecommendationstatus(e.g.,open,closed).Ticklerreportsareroutinely $  routedtoinformappropriatepartiesofapproachingormisseddeadlinesandquarterlyreportsof   implementedactionsareroutedtomanagement.Thissystemenablestheagencytotrackwho   proposedtodowhatbywhen.Thesystemisespeciallyvaluablewhenagencymanagement   changes(usuallywithvotingcycles)andincomingmanagersneedtobemadeawareof   commitmentsmadebytheirpredecessors.LACMTAhasseenanumberofbenefitsfromtheir  trackingsystem:  "3"  r'rXXX'32l3  0    Minimizeslikelihoodofrecurringfindingsthatcanleadtofines,scheduledelays,fraud, v waste,orabuse.3L݌bp## Ќ   (lxx"3"  32l3  0    AssuresManagementcorrectiveactionhasbeentaken.3݌:H## Ќ  "3"  32l3  0    Maximizesauditvaluebytrackingeachfindingandrecommendationthroughresolution.3݌ ## Ќ  "3"  32l3  0    AutomaticallycompilesLessonsLearnedandBestPracticesandgreatlyenhances  reportingoptions.3݌## Ќ   (lxxUr+ XrXX%+LACMTAhasagreedtomaketheirsystemavailabletoanyagencythatwishestoimplementan   auditfollow-upandtrackingsystemcapability.  C  3       !  1.1.8  FTAHelpline  r#  FTAhasinitiatedaThirdPartyProcurementHelpLinetoprovideameansforFTAcustomersto J%X" getanswerstotheirprocurementquestions.Thegoalistoanswerquestionswithin48hoursof 6&D # receivingthem.ThewebsitealsocontainsatopicalindextoFrequentlyAskedQuestionsand "'0!$ helpfullinkstoimportantFTAdocuments,theFAR,theBPPM,etc.TheInternetaddressis: ("% www.fta.dot.gov/ftahelpline/index.htm. (#&   )#' 1.1.9  ProcurementSystemSelfAssessmentGuide   FTAhasdevelopedaProcurementSystemSelfAssessmentGuideforgrantees.ThisGuideis  providedforassessingthoseparticularareasofprocurementthathavehistoricallybeenthemost  problematic,asdeterminedbyoversightreviewsoftransitagencyprocurementsystems(the   ProcurementSystemReviewsconductedbyFTA).TheGuidediscussesthetoptenareasof   deficiencyconsistentlyfoundduringtheProcurementSystemReviews.ThisGuidemaybe z  accessedonlineat:&%XXwww.fta.dot.gov/ftahelpline/Cover_SelfAssessment_Guide.htm#XX%&#. f t  1.2IDENTIFYINGACONTRACT  >L  AsdefinedbytheFederalAcquisitionRegulation,a"contract"meansamutuallybindinglegal $  relationshipobligatingthesellertofurnishthesuppliesorservices(includingconstruction)andthe   buyertopayforthem.Contractswouldincludebilateralinstruments,awardsandnoticesof   awards;jobordersortaskassignmentlettersissuedunderbasicorderingagreements;letter   contracts;orders,suchaspurchaseorders,underwhichthecontractbecomeseffectivebywritten   acceptanceorperformance;andbilateralcontractmodifications.Contractsdonotincludegrants  andcooperativeagreements. C  4        Thepartiestoacontractmustpossessthelegalcapacitytoenterintothecontract,andtheymust v assenttothetermsofthecontract.Thetermsoftheagreementmustnotrequiretheperformance bp ofanillegalactbytheparties.Contractsmaybeeitheroralorwritteninform.Thesubject N\ matterofacontractdetermineswhichprimarylawapplies.Generally,CommonLawrulesapply :H forcontracts.However,theUniformCommercialCode(UCC)Article2applieswhenthe &4 contractisforthesaleofgoods.    1.2.1Offer,Acceptance,Consideration   Offer,acceptanceandconsiderationarethreeessentialelementsofacontract.  Offer󀄀Theoffertoenterintoacontractcanbemadebyeitherpartytothecontract.Inthird ! partycontracting,theofferisnormallymadebythecontractor.Thegranteeissuessolicitationsfor " offerseitherbyanInvitationforBid(IFB)oraRequestforProposal(RFP).Theofferis r#  madewhenthecontractorsubmitsasignedbidorproposalinresponsetothegrantee'ssolicitation. ^$l! Insmallpurchases,however,therolesarereversed.Thegranteeissuesapurchaseorder,whichis J%X" anoffer,tobuysuppliesorservicesataspecifiedprice(usuallyobtainedbyaRequestfor 6&D # Quotationthatthegranteehasissuedearlier). "'0!$ Thepartytowhomtheofferismade,theofferee,mayaccepttheofferuntilitisterminatedby (#& theofferor.Terminationofanoffercanoccurinoneofmanydifferentways: )#' *,XX XX*  *$( "3"  94 X,XX X93Q2l3  0 4   Expiration.Theofferisnotacceptedwithinthespecifiedtimeperiodorwithina  reasonabletime,ifnotimeperiodisstated.Theoffereemayagreetoextenditsoffer  beyondthespecifiedtimeperiodwithoutanychangesorqualifyingtermstoitsoffer.3Q݌4#4# Ќ  "3"  3z2l3  0 4   Revocation.Theofferormaywithdrawtheoffer.Thewithdrawaliseffectivewhen   receivedbytheofferee.Generally,therevocationmayoccuratanytimepriorto z  acceptancebytheofferee.3z݌f t4#4# Ќ   (lxx"3"  32l3  0 4   Rejection.Theoffereemayrejecttheoffer,andtherejectioniseffectivewhenreceived >L  bytheofferor.3݌*8 4#4# Ќ   (lxx (lxx"3"  3 2l3  0 4   Counteroffer.Theoffereeproposesnewterms,notaninquiryregardingthepossibility   ofnewterms.Theofferee'scounteroffertotheofferoriseffectivewhenreceivedby   theofferor.3  ݌ 4#4# Ќ   (lxxU  (lxx"3"  3x 2l3  0 4   Death.Theofferisterminatedwheneithertheofferororoffereedies.However,the  offerpassestothepersonalrepresentativeoftheofferee'sestateinanoptioncontract.3x  ݌4#4# Ќ   (lxx  (lxx"3"  32l3  0 4   Illegality.Theofferisvoidifthesubjectmatterisillegal.3'݌v4#4# Ќ   (lxxy (lxx"3"  32l3  0 4   Destruction.Theofferisterminatedifthesubjectmatterisdestroyed.3$݌N\4#4# Ќ   (lxxvAcceptance󀄀Theoffermustbeacceptedunequivocally.Theoffereemustaccepttheofferwithout &4 changingorqualifyingthetermsoftheoffer.Ifthetermsarechanged,theofferisrejectedanda   counterofferismade.Thisterminatestheoriginaloffer.   Theoffermaybeacceptedbyanyreasonablemeansofcommunication(i.e.,fax,telephone,etc.)  unlesstheofferorindicatesaspecificmethodofacceptance.Asageneralrule,theacceptanceis  effectivewhenmailedbytheofferee,exceptwheretheofferorspecifiestheacceptancemustbe   receivedbyaspecificdateandtime. ! Granteeprocurementsinvolvetwoprocessesforacceptanceofoffers.Whenthegranteehas r#  issuedanIFBorRFP,acceptanceoccurswhenthegranteeassentstothetermsmadebythe ^$l! bidderorofferorinitsbidorproposal.Thegranteeacceptstheofferbysigningthecontractand J%X" issuingtheofferoranoticeofaward.Forsmallpurchasesthecontractoracceptstheoffermadeby 6&D # thegranteeinitspurchaseorderbyeithersigningtheorder(contract),ifsorequiredbythe "'0!$ purchaseorder,orbyactuallyperforminginaccordancewiththetermsofthepurchaseorder. ("% Consideration󀄀Eachpartymustgiveconsiderationforanagreementtobeacontract. )#' Considerationexistswhensomethingofvalueisgivenupinabargainedforexchange.The *$( followingmustexist: +%)  (lxx"3"  32l3  0 4   Legalbenefit.Someonereceivessomethingtheyhadnopriorlegalrighttoreceive.3݌-'+4#4# Ќ   (lxx.  .(,  (lxx"3"  32l3  0 4   Legaldetriment.Someonegivesupsomethingtheydidnothavetorelinquish.This  detrimentdoesnothavetoinvolveatangibledetriment,onlyalegaldetriment.3݌4#4# Ќ   (lxxb 1.2.2Oralv.Written    StatuteofFrauds󀄀Generally,theStatuteofFraudsdictateswhethercontractsshouldbeoralor z  written.Inordertobeenforceable,theStatuteofFraudsrequirescertaincontractstobewritten f t andsignedbythepartychargedwithperformingthecontract.Thefollowingcontractsmustbe R ` inwriting: >L   (lxx"3"  3(!2l3  0 4   Anagreementinwhichtheperiodofperformanceisgreaterthanoneyear.Thetime $  periodstartsthedatethecontractismade,notonthedatetheperformance3(!c!݌ 4#4# Ќ   4 commences.    (lxx  (lxx"3"  3#2l3  0 4   Contractsregardingrealproperty;i.e.,mortgages,easements,saleofrealestate,etc.3##݌ 4#4# Ќ   (lxxQ# (lxx"3"  3%2l3  0 4   Contractsofguaranty;i.e.,wheresomeoneguaranteestopaytheobligationofanother  (sendthedeliverableitemtoX,andifXdoesnotpay,Iwill).3%&݌4#4# Ќ   (lxxf% (lxx"3"  3O(2l3  0 4   Contractsinvolvingthesaleofinvestmentsecurities.3O(|(݌bp4#4# Ќ   (lxx' (lxx"3"  3B*2l3  0 4   Promisesbyanexecutor/administratortobeheldpersonallyliableforthedebts :H incurredbyanestate.3B*o*݌&44#4# Ќ   (lxx) (lxx"3"  3z,2l3  0 4   Contractsforthesaleofgoodsinexcessof$500.3z,,݌ 4#4# Ќ   (lxx+Consultyourstatelawforapplicablerequirements.   1.2.3MutualandUnilateralMistakes    Ifamaterialmistakehasbeenmadebyoneorbothparties,thereisapossibilitythecontractis " voidable.Ifamaterialmistakewasmadebybothparties(mutualmistake),eitherpartyhasthe r#  optiontovoidthecontract.Ifamaterialmistakewasmadebyoneparty(unilateralmistake),the ^$l! contractremainsvalid.However,iftheotherpartyisawareoforshouldhavebeenawareofthe J%X" mistake,thecontractisvoidable. 6&D #  1.2.4ProcurementsOftenOverlooked  ("% Manyorganizationsmaybeoverlookingprocurementswhichcouldbenefitfromtheapplication )#' oftheproceduresoutlinedinthismanual.Theseoverlookedareaswouldinclude:utility *$( services,mailing/shippingservices,telephoneservice,electricandgasservice.Inthepastthese +%) areashavebeenunderthecontrolofasinglesourcesupplier,butrecentderegulationhas,orwill ,&* soon,openupmanyoftheseareastocompetitiveprocurementpossibilities. -'+   .(, GG1.3APPLICABILITYOFFEDERALREQUIREMENTS  i OneoftheprinciplesofcontractingwithFederalfundsreceiveddirectlyorindirectlyfromFTA A isarecognitionthat,asaconditionofreceivingthefunds,certainspecificFederalrequirements -  mustbemetnotonlybytherecipientofthefunds(thegrantee)butalsobysubrecipientsanda   granteesthirdpartycontractors.TheFederalrequirementstobemetbythegranteesthirdparty   contractorswillbedefinedbytheclausesincludedinthegranteesthirdpartycontracts.It   shouldalsobenotedthatthirdpartycontractorsarenotrequiredtofollowFTACircular  t 4220.1Eintheirsubcontractingactivities.  ` ThespecificrequirementsforyourparticulargrantoffundswillbefoundintheMasterAgreement 8  incorporatedintotheGrantAgreementorCooperativeAgreementthatwasexecutedbyyouasa $  grantrecipient.Differentrulesapplydependinguponwhetheryou,astherecipientor y  subrecipient,areastate,local,orIndiantribalgovernmentalentityorwhetheryouarean e  institutionofhigherlearning,ahospital,oranothernonprofitorganization.Also,depending Q  uponthetypeofFederalfundsyoureceive(e.g.,operatingassistance)orthenatureofthecapital =  projectyouareinvolvedin,thecontractualsphereofFederalrequirementsmayincludeyour ) procurementsregardlessofwhetherFederalfundsareactuallydrawndowntofundpaymentsina  particularprocurement.  Asthepersonresponsibleforprocurementwithinyouragency,youmustbeawarethatcompliance p withFederalrequirementsisaconditionofreceiptofFederalfunds.Failuretocomplywiththese \ provisionsmay,inaccordancewiththetermsofyourGrantorCooperativeAgreement,begrounds H fordefaultofthatagreementandresultinthelossofthefunds. 4  1.3.1RecipientandSubrecipient  u   DEFINITIONS  M TheMasterAgreement C  5      providesthefollowingdefinitionsfor"Recipient"and"Subrecipient". %! Recipient󀄀AnyentitythatreceivesFederalassistancedirectlyfromFTAtoaccomplishthe " project.Theterm"Recipient"includeseachFTA"Grantee"aswellaseachFTARecipientofa #  CooperativeAgreement.ExceptasFTApermitsotherwise,theRecipientistheentirelegalentity $l! eventhoughonlyasingleorganizationwithinthatentityisdesignatedastheRecipientin %X" theGrantAgreementorCooperativeAgreement."T C  6       &D #   ("% Subrecipient󀄀AnyentitythatreceivesFederalassistanceawardedbyanFTArecipientrather i thanfromFTAdirectly.Theterm"subrecipient"alsoincludestheterm"subgrantee,"butdoes U notinclude"thirdpartycontractor"or"thirdpartysubcontractor."' C  7       A  DISCUSSION   Itisimportanttodeterminewhetheryouragencyisarecipientorsubrecipientsoasto   determinewhatthirdpartycontractingrulesundertheCircularand49CFRParts18and  t 19(the"commongrant"rules)areapplicabletoyourprocurements.  ` WhatThirdPartyContractingRequirementsUnder49CFRParts18and19andFTA 8  Circular4220.1EareApplicabletoRecipientsandSubrecipients?   Section15oftheMasterAgreementcontainstherequirementstocomplywithapplicable ]  procurementstandardsof49CFRPart18.36(state,local,andtribalgovernments)or49 I  CFRPart19.40through19.48andAppendixA(hospitals,nonprofits,andinstitutionsof 5  higherlearning).Forpurposesofthisdiscussion,itisimportanttorecallthat"recipient" ! includes"grantee,"and"subrecipient"includes"subgrantee"otherthanthirdparty   contractorsandsubcontractors.  Paragraph4oftheFTACircular4220.1Eoutlinesfourdistinctrulesrelatingtothe h applicabilityoftheprocurementrequirementstorecipients/granteesorsubrecipients/ T subgrantees: @ <,X'S X4 X< ' 0 S ' 1. S IfatransitauthorityisbothadirectrecipientofFederalfundsandasubrecipientof  aState,theStatemaypermitthetransitauthoritytofollowtherequirementsofthe m CircularinsteadofStateprocurementrequirements,althoughitisnotobligatedto Y doso.Ifyourtransitauthorityisinthissituation,makesurethattheprocurement E requirementsyouareobligatedtofollowforFederallyassistedprocurementsare 1  clearlystated,preferablybyboththeStateandFTA.!S#S# 0 ' 0S'#'# ' 2. S Whena"State"+T C  8      ׀procurespropertyorservicesunderagrantorcooperative " agreementwithFTA,itwillfollowthesameprocurementpoliciesandproceduresit #x  usesforprocurementsusingnonFederalfunds.Statesmust,however,complywith $d! therequirementsofparagraphs8.a(FullandOpenCompetition)andb(Prohibition %P"S#S# 0 ' 0S'#'#AgainstGeographicPreferences),and9.d(ProcurementofArchitecturaland&%XX i #XX%&CL#EngineeringServices(A&E))oftheCircularandmustincludeinallpurchase U ordersandcontractsexecutedbyit,orasubgranteeusingFederalfunds,allclauses A requiredbyFederalstatutes,executiveordersandtheirimplementingregulations. -  Subgranteesofa"State"(exceptasindicatedinsubparagraph(4)below)shall   followStatelawandprocedureswhenawardingandadministeringcontracts. S#S#  ' 0 ' 0S'#'# ' 3. S ForthepurposesofthisCircular,regionaltransitauthoritiesarenotStateagencies  t orinstrumentalities. `S#S# 0 ' 0S'#'# ' 4. S SubgranteesofStateswhichareinstitutionsofhighereducation,hospitalsorother 8  nonprofitorganizationsandallotherFTArecipients/granteeswilladminister $  contractsinaccordancewiththerequirementsoftheCircular.Granteesand y  subgranteesthatfallwithinthiscategoryshallusetheirownprocurement e  proceduresthatreflectapplicableStateandlocallawsandregulationsprovidedthat Q  theprocurementsconformtoapplicableFederallaw.3 C  9      = S#S# 1.3.2FederalContractualSphere   *l1dddd 1##l,dd +    REQUIREMENT  Q "...theRecipientagreestoincludeappropriateclausesineachthirdpartycontractstatingthe h thirdpartycontractor'sresponsibilityunderFederallaw,regulation,ordirective,includingany T necessaryprovisionsrequiringthethirdpartycontractortoextendapplicablerequirementsto @ itssubcontractorstothelowesttiernecessary." ,   MasterAgreement,2.e.(2)(a). m $U"ThisCircularappliestoallFTAgranteesandsubgranteesthatcontractwithoutsidesources E  underFTAassistanceprograms.FTAgrantrecipientswhoutilizeFTAformulafundsfor 1! operatingassistancearerequiredtofollowtherequirementsofthisCircularforalloperating " contracts.Theserequirementsdonotapplytoprocurementsundertakeninsupportofcapital  # projectscompletelyaccomplishedwithoutFTAfundsortothoseoperatingandplanning #  contractsawardedbygranteesthatdonotreceiveFTAoperatingandplanningassistance." $x!   FTACircular4220.1E,Paragraph4. &P # X"Projectmeansactivityoractivities(taskortasks),listedintheProjectDescription,the (("% ApprovedProjectBudget,andanymodificationsstatedintheConditionstotheGrant })#& AgreementorCooperativeAgreementapplicabletotheproject." i*$'   MasterAgreement,1.1"A,%)   "YThereareseveralaspectsofyourgrantagreementwhichtogetherestablishthesphereof i procurementstowhichFederalrequirementsmayapply.Ingeneralyoumayundertakecapital U projectswhollywithoutFederalfunds,andbeconfidentthatyourgrantagreementswillnot A affectthoseprocurements.However,Federalgrantrequirementsapplytomanycontractsin -  additiontothecontractsbetweenyouandyoursuppliersforwhichyouintendtodrawdown   Federalpayments.Generally,theconceptisthatsolelybecauseofthereceiptofFederalfunds   byagrantee,certainclausesandfederalrequirementsarerequiredtobeincludedincontracts   withinthecontractualsphere.Therearefourprocurementcontextstowhichtheconceptis  t important:  ` 0 ,XX,X'S X0-,XX4 X,XX-  1. 4 Thegeneral"flowdown"ofFederalrequirementsincontracts; 8    2.0 4 TheinclusionofallFederalrequirementsifthetransitpropertyreceivesoperating y  assistance;e 4#4#   3. 4 TheinclusionofallFederalrequirementsinallelementsandactivitiesiftheoverall =  0  04##   4 capitalproject(asdefinedinafullfundinggrantagreement)includesFederalfunds; ) and,   4#4#   4. 4 Theconceptofa"minimaloperablesegment."  1 ,XX,XX4 X]1Theseconceptsarehighlightedbelowsoyoucanbeawareoftheminyourcapitalproject \ planningandprocurementplanningprocesses.EachFederalrequirementhasapplicabilitycriteria H derivingfromstatute,regulation,orpolicy.Thesphereofcontractstowhichtherequirements 4 apply,iftheyareotherwiseapplicable,isaffectedbythesefourconcepts:   -,XX4 X,XX-  1.0 4 FlowDown󀄀Perhapstheeasiestdeterminantofthespheretovisualizeistheconcept a of"flowdown."Federallyrequiredclausesandrequirements,asageneralrule,are M requiredtobeincludedineachthirdpartycontractateverytierandineachsubrecipient 9  agreementateverytier.7 C  10      Whenclausesarerequiredtoflowdown,theclausesand %! requirementsflowdowntoalllevelsoftheFederalfundingchainbeginningwiththe " grantee."4#4#   2.0 4 InclusionofFederalRequirementswhenReceivingOperatingAssistance󀄀Thesecond $l! exampleofthesphereinvolvesgranteesreceivingoperatingassistance.Inthis %X" instance,allgranteeprocurementsexceptforcapitalprojectsundertakenwithout &D # Federalfunds,mustincludealloftheFederalrequirementsthatwouldbeincludedif '0!$ theoperatingbudgetwerefullyFederallyfundedandmustcomplywiththeCircular.= C  11       ("% FTAmaintainsthatonedollarofFederaloperatingassistanceconvertstheoperating (# 0@(#4#4# q)#& fundsofthetransitpropertysothatallsuchfundsofthepropertythereforebecome i subjecttoFederalrequirements.Therulesonthisdimensionofthesphereareclear U ifyoureceiveoperatingassistance,therequirementsoftheCircularapply,evenifyou A donotintendtousethatassistanceinsupportofanyprocurementaction(e.g.,you -  intendtoapplyalltheoperatingassistancetopaysalariesofyourdirecthirebus   operators). 4#4#   3.0 4 InclusionofFederalRequirementsinFederallyFundedCapitalProjects󀄀FTAhas  t recentlytakenthepositionthat,whenacapitalprojectrequiresafullfundinggrant  ` agreement,L 4#4# 9,X, X,XX4 X9    0 4 0 4#4#...theFederal'undertaking'inaFullyFundedGrantAgreement(FFGA)will $  nolongerbesegmentedintoProjectandLocalActivities.Allactivitiesrelated y  toaFederalundertakingwillbeidentifiedastheFederalProject.TheFederal e  fundswillbedistributedamongalltheactivitiesintheprojectatalevel Q  fundingratioequaltothepercentageofFederalfinancialparticipationinthe =  entireproject.Thus,alltheelementsandactivitiesoftheproject,asdescribed ) intheFFGAwillbefunded,inpart,withFederalfunds;and,therequirements  attachedtotheuseofFederalfundswillapplytoeachsuchtask,unless  otherwiseexemptedasprovidedintheapplicablelaws,regulationsand  policies.C C  12      p # # 0    04##RegardlessofhowlargeorsmallthepercentageofFederalfundingis,whereafull (# 0@(#4#4# H fundinggrantagreementwiththeFTAisexecuted,allelementsoftheprojectidentified 4 intheagreementarewithinthesphereandmustbeprocuredincompliancewith   Federalrequirements.u 4#4#   0  04##  4. 4 MinimalOperableSegment󀄀Inthecaseofamultitaskcapitalundertaking,thesphere M includesasegregableportionoftheundertaking,oraprojectportionthathas 9  independentfunctionalutility.Underthisconcept,FTAandyouragencyidentifya %! segmentoftheoverallundertakingthatrepresentstheminimalsegmentthatcanbe " feasiblyoperatedindependently.ImagineyouareabletoovermatchFederalfundsto " constructabadlyneedednewfuelingstationwith85%stateandlocalmoney.FTA's #  policiesmaynotapplytoeveryrelatedexpenditureofthesestateandlocalfunds,e.g., $l! landscapingoranearbytirestoragestructure;however,neitherwillFTAapplyits %X" policiestothemathematicallyminimumportionoftheprojectwithnoindependent &D # utility(e.g.,applyingFTApoliciestotheroof,alone);ratheryoumustdefinea '0!$ segregableprojectwithFTAtowhichtheFederalrequirementsapply,andyoumay ("% thenhaveadditionallatitudeintheremainingportionsundertakenwithoutFederal q)#& funds.Thefullfundinggrantagreementwillcoverallofthenecessaryelementsto ]*#' buildandoperatethesegmentastationateachendofthesegment,landtobuildthe I+$( stationson,railcarstorunonthesegment,systemstosupporttherailcars,railon 5,%)4#4# 0  0##04##whichthecarswillrun,etc.FederalrequirementsoftheCircularapplytoallofthe i individualcontractsrelatingtotheseelementsbecausetheyarepartoftheminimal U operablesegmentandwithintheFederalcontractualsphere.K C  13      A4#4#  1.3.3  TypesofContractActions    DetailsandBestPracticesformeetingtherequirementsforvarioustypesofcontractactionsthat   aredescribedbelowcanbefoundinothersectionsofthemanual.  t  1.3.3.1Supplies,Services,EquipmentandConstruction  L  *l1 dddd 1##l,dd +  $ $   REQUIREMENT    FTACircular4220.1Edefinestherequirementsagranteemustadheretointhesolicitation, q  awardandadministrationofitsthirdpartycontracts.Suchcontractswouldincludethe ]  procurementofsupplies,services,equipmentandconstruction. I  , ,XX 5  XX,,  1.3.3.2  LegalandAssociatedServices  ^ *l 1 dddd 1 ##l,dd +  66  REQUIREMENT   TherequirementsofFTACircular4220.1Eapplytotheprocurementoflegalandassociated  services,suchasparalegals,investigators,expertwitnesses,etc.ifFederalfundsarebeing o usedtofundthesecontracts(i.e.,ifreceivingoperatingfundsorifthelegalservicesarefunded [ byacapitalgrant). G , ,XX 3  XX,,  , ,XXXX,, DISCUSSION ;  Asnotedabove,therequirementsofFTACircular4220.1Eapplytotheprocurementof " legalandassociatedservices,suchasparalegals,investigators,expertwitnesses,etc.if " Federalfundsarebeingusedtofundthecontractsforlegalservices.FTACircular4220.1E # wouldnotapplyifthelegalservicesarefundedentirelywithlocalfunds.TheCircular $n  requiressuchservicestobeprocuredcompetitively,aswithothertypesofservices. %Z! However,theremaybecaseswherethegranteehaspendinglitigationwhichmightbe &F " jeopardizedthroughapublicdisclosurewhichwouldresultfromadvertisingthe '2!# procurementbeforehand.Insuchcasesthegranteemayhavevalidgroundsforlimitingthe  ("$ Ecompetitiontothedegreeofnotpubliclyadvertisingtheprocurement.Insuchcasesa i waiverrequestshouldbesubmittedtotheFTA. U 1.3.3.3EmploymentContracts -   Thesearecontractswithindividualsthatresultinthoseindividualsbecoming employeesofthe   agency.Thesearenot"thirdpartycontracts"withinthemeaningofFTACircular4220.1E,and   thustherequirementsofthatCirculardonotapplytoemploymentcontracts.Theterm  t  employmentcontractdoesnotrefertoacontractthatretainsaconsultanttoperformtemporary  ` servicesfortheagency.Theindividualretainedontheseconsultantservicescontractsremains L  anindependentcontractoranddoesnotbecomeanemployeeoftheagency;thusthesecontracts 8  arenot employmentcontracts,andtheyaresubjecttotherequirementsofFTACircular $  4220.1E. y   1.3.3.4RealEstateContracts  Q  *l 1 dddd  1 ##l,d +  ))  REQUIREMENT  $ Requirementsrelatedtotheacquisition,useanddisposalofrealpropertymaybefoundinthe   followingregulations:  9Fr,N X,X, X9 r   9@, XFr,N X9(a)FTACircular5010.1C,GrantManagementGuidelines,ChapterII2RealProperty. h  r   ThisCirculardefinestherequirementsoftheFederalTransitLawswhicharecodified T  r   at49U.S.C.Chapter53. @ =Fr,N X@, X]= r   (b)49CFR18.31RealProperty,and49CFRPart24,SubpartBRealProperty   r   Acquisition. m  r   (c)MasterAgreementMA(12)Section19. E    DISCUSSION M" Theacquisitionofrealproperty,eitherbypurchaseorlease,isnotsubjecttothe %$ requirementsofFTACircular4220.1E.Realpropertyisdefinedin49CFR18.3as land, %  includinglandimprovements,structuresandappurtenancesthereto,excludingmovable %! machineryandequipment.Theacquisitionofeasementsandrightsofwayareconsidered & " realestateacquisitionsandtherequirementsdiscussedhereinpertaintothesetypesof 'l!# acquisitions. (X"$ Realpropertyacquisition,useanddisposalisalsocoveredbyFTACircular5010.1C, *0$& ChapterII2;49CFRPart18.31;49CFRPart24SubpartB;andbytheFTAMaster +%' Agreement,Section19.Q C  14      Itisimportantthatthegranteebefamiliarwiththerequirements  q,&( establishedbyFTAinCircular5010.1C,ChapterII2.Thiscircularestablishes i procedurestobefollowedbygranteesinthefollowingareas: U "3"  32l3  0 4   TheconductofHazardousWasteSiteAssessmentsbeforeacquiringreal -  property.30݌ 4#4# Ќ  "3"  32l3  0 4   Theconductofanindependentappraisalbyacertifiedappraiser. x 3J݌ 4#4# Ќ  "3"  3!2l3  0 4   Therequirementforareviewappraisaloftheinitialappraisal.3!N݌ `4#4# Ќ  "3"  32l3  0 4   FTAreviewandconcurrencerequirementsrelatedtothegrantee'soffertobuy 8  theproperty.3E݌$ 4#4# Ќ  "3"  3>2l3  0 4   Incidentaluseofacquiredrealpropertyasameanstosupplementtransit e  revenues.3>k݌Q 4#4# Ќ  "3"  3\2l3  0 4   Dispositionofexcessrealpropertybysale,transfertootherprograms,etc.3\݌)4#4# Ќ  "3 "  3`2l3  0 4   Therequirementtoprepareanexcesspropertyutilizationplanforallreal  propertynolongerusedforitsoriginalpurpose.  3`݌4#4# Ќ  1.3.3.5InterGovernmentalAgreements,JointProcurements,Piggybacking \  *l1ddd  1 ##l,dd +  44  REQUIREMENT   FTACircular4220.1E,paragraph7.e.encouragesintergovernmentalprocurements:   @ e.IntergovernmentalProcurementAgreements. Y 0 @ 0l@<#@<#(1)0l<#l<#Granteesareencouragedto XXXXutilizeavailablestateandlocalintergovernmental 1! agreementsforprocurementoruseofcommongoodsandservices.Whenobtaining " goodsorservicesinthismanner,granteesmustensureallfederalrequirements,  # requiredclauses,andcertifications(includingBuyAmerica)areproperlyfollowed #  andincluded,whetherinthemasterintergovernmentalcontractorinthegrantee's $x! purchasedocument.#XXX X # XXXXU C  15      #XXX X?# XXXX , ,X X%d"<#<#  &P #   XX, ,   K(!$ *l$ 1% dddd 1##l,dd +  ii  0 @ 0l@<#@<#(2)0l<#l<#Granteesarealsoencouragedtojointlyprocuregoodsandserviceswithother d grantees.Whenobtaininggoodsorservicesinthismanner,granteesmustensureall P federalrequirements,requiredclauses,andcertificationsareproperlyfollowedand < includedintheresultingjointsolicitationandcontractdocuments.#XXX X# XXXX[ C  16       (<#<#  0 @ 0l@<#@<#(3)0l<#l<#Granteesmayassigncontractualrightstopurchasegoodsandservicestoother i  granteesiftheoriginalcontractcontainsappropriateassignabilityprovisions. U  Granteeswhoobtainthesecontractualrights(commonlyknownas'piggybacking') A  mayexercisethemafterfirstdeterminingthecontractpriceremainsfairand -  reasonable.#XXX X# XXXX  ad C  17      # <#<# #DISCUSSION %  Piggybacking󀄀YourAgencymaybeabletotakeadvantageofexistingcontractsawarded   byothergovernmentalentitiesforgoodsandserviceswhichyoucurrentlyneed.This   practicehasbecomeknownas piggybacking.PiggybackingisdefinedbyFTACircular l 4220.1E,paragraph6.e,asfollows: X 0  X   0## Piggybackingisanassignmentofexistingcontractrightstopurchasesupplies, 0 equipmentorservices.h<  C  18      ##   Theuseofpiggybacking,whichinvolvesassignmentofcontractsorportionsofcontracts U fromtheoriginalpurchasingagencytoanotheragency,isdiscussedintheBPPM,Section A 6.3.3JointProcurementsofRollingStockand Piggybacking.AppendixB.16ofthe - BPPMcontainsaPiggybackingWorksheetthatwillassistagranteewishingtopiggyback  anotheragencyscontracttoworkthroughtheFTArequirementsthatmustbemetin  orderforpiggybackingtobepermissible.  8#XXX X礪# XXXXAddingFederalClausestoExistingContracts#XXX X# XXXXԀ#XXX XY# XXXXFTAspolicyregardingtheadditionof  ` FederalclausestoexistingcontractsdistinguishesbetweenStateGSAtypecontractsand  !L contractsawardedbyothergrantees.Forexample,intherecentlyissuedCircular4220.1E, i paragraph7.e.(1),#XXX X礞# XXXXFTAallowsgranteestomodifyStateGSAtypecontractsandadd U Federallyrequiredclausesandcertificationswhenthegranteeissuesthefirstpurchaseorder A againstthecontract.#XXX X# XXXXԀ#XXX X2# XXXXHowever,FTAhastakenthepositionthatgranteesmaynotaddFederal )  clausesandcertificationstotheirowncontractsorthoseofothergranteesinorderto   purchaseagainstthesecontractswithFederalfunds.#XXX Xy# XXXXԀTherationaleisthat,inaStateGSA   typecontract,thepurchaseorderisthetransitcommunitysinitialworkonthecontract!   muchasanybuyofftheFederalGSAITschedulewillbewhenagranteechoosestouse  l thisFederalcontract.Inothercases(liketransitagencyAbuyingofftransitBscontract),  X thetransituniquerulesareinplaceandknownfromthebeginning,thereisnoexpressed D  intentinthecommongrantrule(aswithStateschedules)tobalancetherulesagainsteach 0  other,anditwouldinferthatatransitagencycouldessentiallyavoidmostFederalrulesby   placingordersthroughanothertransitagency.Inshort,theintegrityofthesystemwould q  bethreatenedbyextendingtheafterthefactoptionbeyondschedulepurchases.#XXX X礹# XXXX ]  JointProcurements󀄀Youmayalsowishtoplanprocurementsinadvancewithother 5  agenciesorgovernmentalusers,andcompetitivelyawardcontractsthatseveral ! governmentalentitiescandrawupontomeettheirneeds.Suchanapproachwouldcreate   economiesofscale,reduceprocurementleadtimesinthecaseofbeingabletouseexisting  contracts,andreduceadministrativeeffortandexpense.Anythirdpartycontracts | resultingfromorutilizedbygranteesunderintergovernmentalagreementsaresubjectto h therequirementsofFTACircular4220.1E.Intergovernmentalagreementsnotinvolving T thirdpartycontractswouldnotbesubjecttoFTACircular4220.1E.Thetopicofjoint @ procurementsthatmakesuseofadvanceplanningbyseveralagenciesisdiscussedinthe , BPPM,Section6.3.3JointProcurementsofRollingStockand Piggybacking.  BestPractices Y  Piggybacking󀄀Ifitappearsthattheremaybeanexistinggovernmentalcontractwhichmaybe 1  usedforaspecificneed,youwillfirstwanttoobtainacopyoftheentirecontractandreviewit ! carefullytodetermineifitcontainstheprovisionsrequiredbyFTACircular4220.1E.Thisisan  " importantfirststep,becausetherequirementsoftheCircularapplytoprocurementsmade " throughintergovernmentalcontractsandassignments.Ifthecontractlacksrequiredprovisions, #x  youmaybeabletohaveitmodifiedbytheawardingAgencytoincludethenecessaryFederal $d! clauses.Amongthestepsyoumaywanttotakearethefollowing: %P" 6,X, XFr,N X60  1.04(#(#Determinethatthecontractisstillineffectorcanbemodifiedbytheawarding '(!$ AgencytopermitsufficientleadtimetomaketherequireddeliveriestoyourAgency.}("%4(#4(# 0  2.04(#(#Determinethatthespecificationsintheexistingcontractwillmeetyourneeds.U*#'4(#4(# 0  3.04(#(#Reviewthetermsandconditionscarefullytodeterminethattheyareacceptableto -,%) you;e.g.,warrantyprovisions,insurancerequirements,etc.-&*4(#4(#   .'+ 0  4.04(#(#DeterminethattherequirementsneededbyyourAgencywillnotbebeyondthescope i oftheexistingcontract,creatingasolesource(noncompetitive)addontothecontract U whichwillhavetobejustifiedinaccordancewithFTACircular4220.1EParagraph A 9.f.Generally,ifyouareworkingwithanindefinitequantitycontractyoushould -  havetheneededflexibilitytoorderadditionalquantitieswithouthavinga"new   procurement"actionrequiringasolesourcejustification. 4(#4(# 0  5.04(#(#Determinethatthecontractwasawardedcompetitively,eitherthroughsealedbidsor  t competitiveproposals.Ifthecontractwasasolesourceaward,youwillhaveto  ` justifyasolesourceawardinaccordancewithFTACircularParagraph9.f.andyour L  Agency'sprocurementprocedures.8 4(#4(# 0  6.04(#(#Youarenotrequiredtodoasecondpriceanalysisifonewasoriginallyperformed. y  However,youmustdeterminethatthecontractpricesoriginallyestablishedarestill e  fairandreasonable.Circumstancesshoulddictatethestepstobetaken.Forexample, Q  iftheoriginalawardwasmadesometimeago,youmaywanttodoamarketsurvey =  and/orperformpriceanalysistoensurethatthepricesarestillfairandreasonable ) (eveniftheoriginalawardwascompetitiveandapriceanalysiswasperformed  initially).SeeBPPMSection5.2CostandPriceAnalysisforadiscussionofprice  analysistechniques.4(#4(#   7.0 4 Determinethatthecontractorhassubmittedallfederallyrequiredcertificationstothe \ awardingAgency;e.g.,BuyAmerica,debarment,restrictionsonlobbying,etc.See H paragraphabove,AddingFederalClausestoExistingContractsandBPPMSection 4 4.3.3.2FederallyRequiredSubmissionswithOffers. 4(#4(#   8.0 4 WorkthroughtheitemsinthePiggybackingWorksheetinAppendixB.16(anda4(#4(#   0 4 explainedinSection6.3.3JointProcurementsofRollingStockandPiggybackingof M theBPPM).NotethatsomeoftheitemsonthisWorksheetmayoverlapwithitems 9  alreadymentionedabove.%!4(#4(#   9.0 4 YoushouldprepareaMemorandumfortheRecorddocumentingyouranalysisofthe " variousitemsmentionedabove.ThiswillconstitutetheWrittenRecordof #  ProcurementHistoryrequiredbyParagraph7.i.ofFTACircular4220.1E.$l!4(#4(# JointProcurements󀄀Whenitappearsthatyouragencyhasacommonrequirementwithanother &D # governmentaluser,andthatajointprocurementisfeasible,youwillwanttocarefullyconsider '0!$ whetherajointprocurementwillresultinobtainingthebestpriceforallofthepartiestothe ("% procurement.Itisquitepossiblethatsubstantialdifferencesintherequirements(delivery q)#& schedule,quantities,location,etc.)ofonepartytothejointprocurementwillresultinincreased ]*#' coststotheotherpartiesandtherebynegateotherbenefitsofajointprocurementsuchaslower I+$( solicitationcosts.Youmustalsodeterminewhetherthedifferentfundingsourceshavedifferent 5,%) procurementregulations,especiallywherethereareFederalandnonFederalrequirements  !-&* affectingcontractclauses,etc.Shouldconflictsoccur,granteesshouldconsulttheirrespective i legalcounselsorrequestFTApreawardreviewoftheirprocurement(aspermittedbyFTA U Circular4220.1E,Paragraph5.b.)#XXX X礝# XXXX h  A  1.3.3.6Subgrants    *l1dddd $ 1% (#(#l,xdd +      REQUIREMENT  U  FTACircular4220.1E,paragraph4,definestheapplicabilityoftheCirculartosubgrants:6S4 X,X, X6  l  S #XXX X# XXXX4. 4 APPLICABILITY.ThiscircularappliestoallFTAgranteesandsubgranteesthat D   S  4 contractwithoutsidesourcesunderFTAassistanceprograms.... 0  9S4  XS4 X9 S  4 a.0 States.Whenprocuringpropertyandservicesunderagrant,aStatewill q  followthesameprocurementpoliciesandproceduresthatitusesfor ]  acquisitionsthatarenotpaidforwithFederalfunds.Statesmust,asa I  minimum,complywiththerequirementsof7m,8aandb,and9eofthis 5 circularandensurethateverypurchaseorderandcontractexecutedbyitusing ! FederalfundsincludesallclausesrequiredbyFederalstatutesandexecutive   ordersandtheirimplementingregulations. " "  S  4 b.0 AllOtherRecipients.SubgranteesofstatesandallotherFTAgrantees(to h includeregionaltransitauthorities)willadministercontractsinaccordance T withthiscircular.@ " " 49CFR18.37SubgrantsrequiresStatesandallothergranteestoensurethattheir  subgranteescomplywithcertainrequirements.Theserequirementsarediscussedbelow. m    &%X X XX% &DISCUSSION u  Subgrantsthemselvesarenot"thirdpartycontracts"withinthemeaningofFTACircular M" 4220.1E,andthustherequirementsofthatCirculardonotapplytothesubgrantawards. 9# However,totheextentthatthesubgranteecontractswiththirdparties,theFTACircular %$ appliestosuchcontractsawardedbythesubgrantee. %  AllsubgranteesarerequiredtoincludeintheircontractstheclausesrequiredbyFederal & " statutesandexecutiveordersandtheirimplementinginstructions.SeeBPPMAppendix 'l!# A.1FederallyRequiredandOtherModelContractClauses. (X"$ Subgranteeswhichareinstitutionsofhighereducation,hospitalsorothernonprofit *0$& organizations,andallsubgranteesofgranteeswhicharenotStates,arerequiredto +%' administertheircontractsinaccordancewithalloftherequirementsoftheFTACircular m,&( 4220.1EThirdPartyContractingRequirements.Subgranteesofstates(excludinginstitutions  Y-&) ofhighereducation,hospitalsorothernonprofitorganizations)areauthorizedtofollow i statelawandprocedureswhenawardingandadministeringcontracts. U IfyouareagranteeawardingsubgrantswithFTAfunds,youwillwanttohavean -  overviewsysteminplaceforperiodicreviewsofyoursubgranteestoensurethattheyarein   compliancewiththerequirementsofFTACircular4220.1Eandtherequirementsof49   CFRPart18.37.TheFederalgovernmentpractice(FTA)istoperformperiodic   ProcurementSystemReviews(PSR's)ofitsgrantees,evaluatingtheirprocurement  t activitiesagainsttherequirementsofthecircular.FTAhasdevelopedaProcurement  ` SystemsReviewGuideforitsreviewteams,andyoumaywanttoobtainacopyofthisguide L  foryourreviewofsubgrantees.(SeeBPPMSection1.1.7FTAProcurementSystem 8  Reviewsabove).Youshouldnotethat49CFRPart18.37imposesaresponsibilityonall $  granteestoensurethattheirsubgranteeshaveincludedallFederallyrequiredclausesin y  theircontractsandthatthesubgranteesareawareofrequirementsimposedonthemby e  Federalstatuteandregulation,includingthoserequirementsimposedby49CFRPart18. Q  49CFRPart18.37(a)(3)specificallymentionsaresponsibilitytoincludeaclauseinallcost =  reimbursementsubgrantsthatthesubgranteecomplywithPart18.42,whichdealswith ) retentionandaccessrequirementsforrecords.  1.3.3.7EquipmentLeases   *l1ddxdd x1(#(#l,xdd +  \\  REQUIREMENT  ) Requirementsrelatedtotheleaseofequipmentandfacilitiesmaybefoundinthefollowing @ regulations: ,  S (a)FTACircular4220.1Egenerally,andParagraph7.dwhichrequires,where 4!  m  S appropriate,ananalysisofleaseversuspurchasealternativestodeterminethemost Y  S economicalapproach. E   S (b)FTACircular5010.1C,GrantManagementGuidelines,ChapterII3(d)Leasing "  S OutAgreements.Theseguidelinescontainseveralrequirementswhichgrantees 4!   #  S mustincorporateintheirleaseagreements. #   S (c)FTAMasterAgreementMA(12),Section16,Leases. %d"  S (d)CapitalLeases(49CFRPart639). 'E.4 <DL!X!E-F Xf!X!-  "#" > XB%4 4 <DLF Xf!B  X (X!44Xj(-F Xf!X!-  > X X# # _ f#2  3      # XX _ӄ##XXX X# XXXXCompetitivebiddingproceduresformaterialsthatareregularlygenerated,regularly q  removed,highvolume,andlowunitpricesuchasscrapsteelormotoroil.#H݌ ]  Ќ 0F Xf!F Xf!0 >>   1  "# " > XB%4 4 <DLF Xf!B  XP (X!44X(-F Xf!X!- ń > X X# # _#U2  3      # XX _u##XXX X㷈# XXXXDevelopmentofspecificationsbytheMaterialsManagementDepartmentin   coordinationwiththeUserDepartment(s)forthesurplusitemstobeofferedforsale  andreviewbythePurchasingDepartment.#Uֈ݌ t Ќ 0F Xf!F Xf!0 >>   H "# " > XB%4 4 <DLF Xf!B  X (X!44X((-F Xf!X!- g > X X# u# _#2  3      # XX _<##XXX X~# XXXXPreparationofasolicitationandadvertisingoftheitemsbeingofferedforsalebythe  PurchasingDepartmentwhencompetitivebidsarebeingsolicited.#݌ q Ќ 0F Xf!F Xf!0 >>   E "# " > XB%4 4 <DLF Xf!B  X (X!44X(-F Xf!X!- . > X X# <# _#2  3      # XX _##XXX X# XXXXIssuanceofa"InvitationtoQuote"lettertoprospectivebiddersbythePurchasing  Department,oraletterinviting offerstopurchasebytheSalesDivisionwhenthe  sellingpriceofthematerialisexpectedtobebelowthesmallpurchasethreshold.i X X      i atio     XX   /T C  24      i h X      iatio     XX,   ##݌  Ќ 0F Xf!F Xf!0 >>   \ "#" > XB%4 4 <DLF Xf!B  X? (X!44Xu(-F Xf!X!-  > X X# # _#d2  3      # XX _##XXX Xƕ# XXXXAnalysisofbidsbythePurchasingDepartment,withawrittenrecommendationfor 0 awardtothewinningbidder.#d݌  Ќ 0F Xf!F Xf!0 >>  >v 1X!F Xf!71 Y  (x8n######### f4! ! (xx "3"    -F Xf!X!-#XXX X礄# XXXX3T23  0 4   #XXX X# XXXXInternalagencyapprovalstoawardacontractforthesaleofAuthoritypropertyor -  servicesparallelsthatoftheapprovalprocesstoawardacontractfortheprocurement ! ofgoodsandservices.3T ݌"4(#4(# Ќ  1X!F Xf!1#XXX Xu# XXXX    1.3.3.11OperatingAssistance,PreventiveMaintenance,CMAQandJARCProjects  #t! *l{1/ddxdd x1 (#(#l,xdd +  #%L#%L K# REQUIREMENT %&$#K# K%* X4!X!*FTACircular4220.1E,paragraph4,addressestheissueoftheCircularsapplicabilityto(a) '0!% operatingcontracts,(b)contractsutilizingCongestionMitigationandAirQuality(CMAQ)and ("& JobAccess/ReverseCommute(JARC)projectfunds,and(c)preventivemaintenancecontracts q)#' whicharefundedwithFTAformulacapitalfunds:!]*#(  #K# !*l91<ddxdd x{1/(#(#l,xdd +  ii  l`  ' lX X4!'ThiscircularappliestoallFTAgranteesandsubgranteesthatcontractwithoutside d sourcesunderFTAassistanceprograms.FTAgrantrecipientswhoutilizeFTAformula P fundsforoperatingassistancearerequiredtofollowtherequirementsofthiscircularfor < alloperatingcontracts.Theserequirementsdonotapplytoprocurementsundertakenin  ( supportofcapitalprojectscompletelyaccomplishedwithoutFTAfundsortothose }  operatingandplanningcontractsawardedbygranteesthatdonotreceiveFTAoperating i  andplanningassistance.i X X      isub     XX   ݀A C  25      #XXX X!# XXXX U  CongestionMitigationandAirQuality(CMAQ)andJobAccess/ReverseCommute -  (JARC)projectfundsmaybeusedforoperations.Althoughgranteesmustfollow   circularrequirementsforanyspecificcontractsthatutilizeCMAQorJARCfunds,the   useof#XXX XO# XXXXCMAQandJARCfundsforoperationsdoesnottriggertheapplicabilityofthe   circulartoallotheroperatingcontracts.i X X      isub     XX   ݀p C  26       t  Granteesthatutilizeformulacapitalfundsforpreventivemaintenancecontractsare L  subjecttothefollowingrequirementsofthecircular:IfFTAformulacapitalfundsare 8 fullyallocatedtodiscretepreventivemaintenancecontracts,thentherequirementsofthis $ circularwillapplyonlytothosediscretecontractsandmustbeidentifiedandtrackedby y thegrantee.IftheFTAformulafundsarenotallocatedtodiscretecontractsthenall e preventivemaintenancecontractsaresubjecttotherequirementsofthecircular.i X X      isub     XX     C  27       Q  =  DISCUSSION  E  IfatransitpropertyreceivesFTAformulafundsforoperatingassistance,allgrantee  procurementsmustcomplywithFTACircular4220.1Eexceptforcapitalprojects   undertakenwithoutFederalfundsorthoseoperatingandplanningcontractsawardedby i granteesthatdonotreceiveFTAoperatingandplanningassistance.Granteeswhosenet U operatingdeficitisfinancedbyFederalfundscannotsegregateanyoftheiroperatingor A planningcontractssothattheyareexemptfromtherequirementsoftheCircular.The -  Circularmustbeappliedtoallsuchcontracts.   WhengranteesreceiveCMAQandJARCfundsforoperationsprojects,theCircular   requirementsmustbefollowedforthosespecificcontractsusingCMAQandJARCfunds.  t However,theuseoftheseparticularfundsforoperationsdoesnottriggertheapplicability  ` oftheCirculartoalloperatingcontractsasisthecasewithFTAformulafunds. L  1.3.3.12ECommerce  $  *l1ddxdd x91<(#(#l,xdd +  e e   REQUIREMENT  `  FTACircular4220.1E,paragraph7.q.recognizesECommerceasanallowablemeansto I  conductprocurements.IfagranteechoosestoutilizeECommerce,writtenproceduresmust 5 bedevelopedandallrequirementsforfullandopencompetitionmustbemet. !   DISCUSSION ) TheBestPracticesProcurementManual(BPPM)intendstocoverthetopicofECommerce  atalaterdatewhenindustryexperiencehasbeensufficienttoindicatesome"best  practices"forthetransitindustry.Inthemeantime,theDearColleagueLetterofMay29, p 2002remindsgranteesthatECommerceisanallowablemeanstoconductprocurements. \ IfagranteechoosestoimplementanECommercesystem,writtenproceduresmustbe H developedandalltherequirementsofFTACircular4220.1Emustbemet,includingthe 4 requirementfor"fullandopencompetition"asstatedinFTACircular4220.1E,   Paragraph8a.  u    %$ !   Chapter2     2ProcurementPlanning&Organization    X2.1OrganizationofProcurementFunctions(5/96)    X 2.1.1ScopeofResponsibility(5/96)   2.1.2Autonomy(5/96)  t   X2.2LongTermPlanning(5/96) eL   X 2.2.1ContractPeriodofPerformanceLimitation(6/03) =$  2.2.2MultiYearvs.MultipleYearContracting(7/02) )   X   2.3AnnualPlanning(5/96)    X 2.3.1SourcesandContents(5/96)  2.3.2IndependentGranteeCostEstimate(4/96)    X 2.4SourceSelectionPlan(5/96)   X 2.4.1FileDocumentation(5/96) u\ 2.4.2FullandOpenCompetition(5/96) aH   2.4.2.1FullandOpenCompetitionPrinciple(5/96) 9  2.4.2.2RestraintsonCompetition(5/96) %    ` 2.4.2.2.1BrandNames(6/03)   `  N E.` hp x (#lXE2.4.2.2.2WrittenStandardsofConductandConflictsofInterest:  PersonalandOrganizational(6/03)    `  N E.` hp x (#X(#E2.4.2.2.3GeographicRestrictions(5/98) ! 2.4.2.2.4Prequalification(5/98) "  `  2.4.3FixedPricev.CostReimbursement(5/98) $l!  X q%X"  X2.4.3.1FixedPriceContracts(4/05) ]&D # 2.4.3.2CostReimbursementContracts(5/98) I'0!$ 2.4.3.3TimeandMaterialsContracts(5/98) 5("% 2.4.3.4LaborHourContacts(5/98) !)#& 2.4.3.5CostPlusPercentageofCostContracts(5/98)  *#'    ,&*  -'+  .(, Ї2.4.4Payments(5/98)     2.4.4.1PaymentofthePrice(5/98)  2.4.4.2AdvancedPayments(6/03)  2.4.4.3ProgressPayments(4/05)   2.4.4.4WithholdingandFinalPayment(5/98)       X XE.` hp x (#X(#E2.4.5IndefiniteDeliveryContracts(10/99)  t  X XE.` hp x (#X(#E 2.4.5.1DefinitequantityContracts(10/99) eL  2.4.5.2RequirementsContracts(10/99) Q8  2.4.5.3IndefinitequantityContracts(10/99) =$    %  %@   `     h 2.1ORGANIZATIONOFPROCUREMENTFUNCTION    %  %2.1.1ScopeofResponsibility    *] ddxdd x1(#(#],jj+  :111'  :dd REQUIREMENT N1111;#5  111  NddFTACircular4220.1E,paragraph5a!GranteeSelfCertification,statesthatFTAintendsto x relyongrantees'[annual]"selfcertifications"thattheirprocurementsystemmeetsFTA }d requirementstosupporttherequiredfinding[byFTA]thatagranteehasthetechnicalcapacity iP tocomplywithFederalprocurementrequirements. U< FTACircular4220.1E,paragraph7b!ContractAdministrationSystem,requiresgranteesto - maintainacontractadministrationsystemthatensuresthatcontractorsperforminaccordance  withtheterms,conditions,andspecificationsoftheircontractsorpurchaseorders.  3)'   1111 3 DEFINITIONS       `  Centralize-Toconcentrateprocurementactionsanddecisionsinonepersonorgroupwithinan "  organization. #! ContractingOfficer-Aprocuringofficialwhohasdelegatedauthority,usuallyincluding q%X# authoritytosigncontractsandamendmentsonbehalfoftheprocuringagencyforoneormore ]&D $ specificcontracts. I'0!% ContractingOfficer'sTechnicalRepresentative(COTR)-Arepresentativeoftheprocuring !)#' agencywhohasmorelimitedauthoritythanthecontractingofficer,usuallyincludingproviding  *#( technicaldirectiontothecontractor. *$)   .(- DISCUSSION    AsaContractingOfficeryouareresponsiblebothforyourcontractscost-effectiveness  anditscompliancewithFederalandstaterequirements.Itiseasiertofulfillthese  responsibilitiesifmostofthedecisionsandcontractualactionsconcerningprocurementare   focusedinoneormoreindividualswhoarefamiliarwithprocurementrequirementsand   procedures.Theseactionsbeginwithplanningandsolicitationofoffers,include   communicationwithofferorsandcontractors,andcontinuethroughcontractacceptance  t andwarrantyenforcement.Exceptinverysmallorganizations,thecontracting y ` responsibilitieswilloftenresidewithdifferentindividualsthantheindividualswhowould eL  bestunderstandthefunctionalandperformancerequirementsofthegoodsorservices. Q8  Theselatterpersonsareyourinternalcustomers.  =$   Purpose    Youandtheleadershipofyourorganizationneedtoclearlyunderstandthescopeofthe   procurementfunctionandorganizeresponsibilitiestoaccomplishseveralobjectives:   (lxx "3"  32l3  0 `   toobtainthebestbuyforyouragencywhichrequiresanevaluationofallthe  servicequality,safety,cost,schedule,andotherobjectivesoftheagency's  operatingfunctions;3݌p` (#` (# Ќ   ?(` ` hp x (#X(#? u\ "3"   E.` hp x (#` ` X(#E32l3  0 `   tocomplywithFederal,state,local,andagencyprocurementrequirements;3@݌aH` (#` (# Ќ   ?(` ` hp x (#X(#? M4 "3"     E.` hp x (#` ` X(#E32l3  0 `   toensureanunderstandingofthepreciseauthorityofyouandyouragencyteam 9  membersindealingwithsupplierswho,whilepartnersinmanyrespects,have %  someintereststhatconflictsharplywithyouragency's;and3݌` (#` (# Ќ     ?(` ` hp x (#X(#?  "3"     E.` hp x (#` ` X(#E3#2l3  0 `   tocontrolthroughfinite,professionalboundaries,thepossibilityofcorruptionor  unethicalpractices.3#݌ ` (#` (# Ќ    Theseobjectivesrequirethecleardefinitionandassignmentofprocurementresponsibilities.A " specificaspectofthatassignment,theneedforautonomy,isdiscussedinmoredetailinthe #  followingsectionoftheManual. $l!  BestPractices  ]&D # IdentificationofNeed-Theinitialidentificationofneedisoneaspectoftheprocurementcycle 5("% thatisgenerallythesoleresponsibilityofyourinternalcustomers(i.e.,programortechnical !)#& personnelforwhomyouareprocuringgoodsorservices).However,youmaybeinapositionto  *#' facilitatetheconsolidationofprocurementsofdifferentinternalcustomerswiththesameneed. *$(  .(, ProcurementPlanning!Preparationofprocurementplanning,ontheotherhand,shouldbe  exclusivelyaprocurementfunction.Ifyouragencyhasnotconductedformalplanning,this  processisawaytoestablishtheneedforaseparateprocurementfunctionanddemonstrateits  valuetotheorganization.Specificsuggestionsforusefulplanningactivitiesarediscussedbelow  underlongrangeandannualplanningcycles.   PreparationofSpecifications!Preparingspecificationsorstatementsofworkisusuallya   customerfunction.Generally,customershavethegreatestunderstandingoffunctionaland  t performancerequirements;however,theprocurementfunctionshouldplayatleastanadvisory y ` roleinordertoavoidexclusionaryspecificationsandtoencouragefreeandopencompetition. eL  SolicitationofOffers!Thesolicitationofoffers(includinginvitationforbidsandrequestfor =$  proposals)isusuallythefirstimportantpublicactiontheagencytakes,anditshouldclearlybe )  theresponsibilityatthispointoftheprocurementstaff.Customerteammembersareoften   helpfulincompilinglistsofpotentialofferors,andshouldparticipateintheprocurementprocess,   butcommunicationswithofferorsandtheofficialactionofsolicitingoffersisaprocurement   function.  Communications!Ifcommunicationwithofferorsisdecentralized,oneofferormayobtainmore  informationabouttheagency'spreferencesorevaluationprocessthantheothers.Itisageneral  practice(exceptatthesmallestagencies)torestrictcommunicationwithofferorstoonly p procurementpersonnelsothatnoofferorcouldgainanadvantageorapparentadvantageover u\ another. aH EvaluationofOffers!Procurementpersonnelwillusuallyrequestandrelyupontheirtechnical 9  customerstoevaluatethetechnicalmeritsofproposalsandassesstheofferorsabilitytoperform %  thecontractsuccessfully.TheProcurementOfficermustoverseethetechnicalevaluationto  ensureitisconsistentwiththeevaluationcriteriapublishedintheRFPandthatthecontractfile  isadequatelydocumentedtoreflecttherelativestrengths,deficiencies,weaknessesandrisksof  thevariousproposals.Itisimportantthatthetechnicalevaluationprovideaclearnarrativeofthe   proposalsrelativemeritsandnotmerelyanumericalratingoftheproposals.Tomaintainthe ! overallintegrityoftheprocurement,theprocurementfunctionnormallymustatleastapprovethe " selectionand(ifitdoesnothavesufficientauthority)willoftenpresenttherecommendationto #  thefinalauthority. $l! Administration!Youshouldplayacontinuingroleintheadministrationofthecontracts, ]&D # particularlyinchangesanddisputes.Acceptanceofgoodsandservicesandpaymentapprovals I'0!$ alwaysrequireyourreview.Insimplerorroutinesituations,areceivingreportorCOTR 5("% acceptancecanbematchedtoyouroriginalpurchaseordertoensurepropercontrol. !)#& Centralization/Decentralization!Manyorganizationsfinditmoreefficienttopermitcustomer *$( groups,particularlythosewithalargenumberofsimilar,smallprocurements,toperformsome +%) ofthefunctionsnormallyperformedbytheprocurementoffice(e.g.,solicitationandevaluation  ,&* ofoffersuptoaspecificdollaramount).However,inthesecases,procurementpersonnelcan  provideavaluableoversightrole,providingforms,procedures,andtechnicalassistance.  Althoughdecentralizedprocurementcanreducetheadministrativecostoftheprocurementand  bemoreresponsivetoacustomers'needs,ifitisuncontrolled,itcouldeventuallyresultin  situationsinvolvingnon-compliance,unwisecontracting,orunethicalpractices.Itisabest   practicetoensurethatnoemployeeundertakesanyoftheprocurementfunctionswithoutclear   authorityandguidelines.    %  %2.1.2Autonomy  y `  DISCUSSION  Q8   Autonomyoftheprocurementfunction,oritsindependencefrominternalcustomers,is )  importanttocarryingoutprocurementresponsibilitieswithoutundueinfluencebythe   customersandusersofthegoodsandservicesprocured.Whilethedegreeofautonomy   andorganizationalreportingrelationshipswillvarywiththesizeoftheorganizationand   itspolicies,autonomyenablesprocurementpersonneltogiveunbiasedconsiderationto  procurementprinciplesandrequirements,aswellastotheschedule,budget,functional  andotherrequirementsoftheinternalcustomers.  Purpose  p Adebatehasragedforyearsbetweenthosewhoareprocessoriented(procurementofficialsand aH compliancedepartmentssuchaslegal,internalaudit,orgrants)andthosewhoareprogram M4 oriented(maintenancemanagers,engineers,projectmanagers). 9  "3"    3v2l3  0 `   Shouldtheprocurementfunctionsdescribedintheprevioussectionbecontrolled  bytheprogramfunctions?Afterall,itistheprogramofficewhoseneedsaretobe  met,and,inmostaccountingsystems,theprogramtowhosebudgetthepurchase  willbecharged.3v݌ ` (#` (# Ќ  "3"  32l3  0 `   Shouldtheprocurementofficialbeentirelyautonomousandevaluatetheneedsof " theprogram(e.g.,forimmediateservices)againstthelegalorprocedural #  requirementsofthefundingsource(e.g.,FTACircular4220.1EifFederalfunds)?3݌$l!` (#` (# Ќ  ! ! (lxx  E.` hp x (#X(#ESomedegreeofautonomyoftheprocurementfunctionisnecessaryorganizationallyand ]&D # functionallysothatprocurementpersonnelwillbefreefromundueinfluenceorpressureinthe I'0!$ awardandadministrationofcontracts.Theobvioussolutiontotheconflictbetween"process" 5("% and"program"istohaveateaminwhicheachmemberrecognizesthestrengthsandcapabilities !)#& oftheotherteammembersandappreciatestheroleeachsidebringstothecontracttable.This  *#'    .(, soundseasytoaccomplishbut,inmostpracticalsituations,isverydifficulttoachieve. C  1      Failure  toachieveunityandteamworkwithintheagencyintheawardingandadministrationofpublic  contractscreatesfrequentopportunitiesforacontractortotakeadvantageofacontentiousstaff  relationshiptoitsfinancialadvantage(andtheagency'sfinancialdisadvantage).Achieving  properbalancebetweengroupsrequiresdelicatebalancingofpersonalitiesandcorporate   objectives,astrongexecutive,andawell-trainedstaff.Itmustalsoberecognizedthatthereisno   textbookanswerthatwillworkineverysituationandineveryagency.     Inadditiontobalancingtherolesofprogramandprocessinterestsinmakingprocurement y ` decisions,thepaymentofyouragency'sfundstocontractorsgenerallyrequiresthreeindependent eL  concurringactions.Therequirementforindependentconcurringactionsissometimescalled Q8  "internalcontrol,"asitisamethodfortheagencytocontroltheproprietyofitsactionsinternally, =$  ratherthanrequiringexternalreviewsandcontrol.Whilebestpracticesdiffer,allauthorities )  recognizeafundamentalneedforasystemofchecksandbalancesintheoverallprocurement   process.Inanorganizationwithnochecksandbalances,ifanindividualperceived   aneedforastaffcar,thatpersoncoulddraftthespecificationsforthecar,preparethesolicitation   document,orderthecar,approvethecontract,inspectthepreparationofthecar,administerthe  contract,acceptthecarafterdelivery,signtheagencychecktopaythedealer,andusethecarina  mannerthepersondeemedappropriate.Itshouldbeobviousthatanorganizationand  procurementprocesssuchasthiswouldnotbecredibleandwouldbesubjecttogreatabuse,  actualorperceived.Asaresult,mostpublicandprivateagenciesdividethosefunctionsamong, p atleast,threedistinctelementswithinitsorganization. u\ "3"   E.` ` hp x (#X(#E3z2l3  0 `   Therequiringactivityisrepresentedbytheprogrammanagerwhoisresponsible M4 fordeterminingtherequirement,preparingthespecificationsand,then,actingas 9  thetechnicalrepresentativeoradvisortothecontractingofficerduringcontract %  performance.3z݌` (#` (# Ќ  H+` ` hp x (#` ` X(#H  "3"  H.` ` hp x (#` ` X(#H332l3  0 `   Theprocurementactivityisrepresentedbythecontractingofficerwhois  responsibleforensuringspecificationsarenotrestrictive,preparingthe33݌ ` (#` (# Ќ   ` solicitationdocumentinaccordancewiththelawandrulesandregulationsofthe ! agencyandtheFTA,solicitingtherequirement,andawardingthecontractin " accordancewiththesolicitation.Contractadministrationfunctionsareusually #  sharedwiththerequiringactivityandinvolvesuchfunctionsasapproving $l! payment,acceptingthegoodsorservicesbought,andclosingoutthecontract. q%X"  ]&D #  I'0!$  5("%   XH+ ` hp x ` ` X(#H  ?+ ` hp x (#X?     ݌ X-` ` X(#` X(#-     *#' "3"  K.` ` hp x (#` ` X(#K3 2l3  0 `   Thepaymentactivityisrepresentedbyathirdparty(thefinancedepartment)who   ensuresthatallapprovalsareobtainedandthatthepaymentiswithinthedollar  amountofthecontract.Often,theaccountspayablefunctioninfinanceeither  physicallyorelectronicallymatchesthreedocumentsissuedbythreedifferent  employees(thepurchaseorder,receivingreport,andapprovedinvoice)before   releasingfunds.3  ݌ ` (#` (# Ќ   K.` hp x (#` ` X(#KTheprocurementandpaymentactivitiesare"process"functionsensuringthatthegoodsare  t boughtandpaidforinaccordancewiththetermsofthecontract.The"program"activityisto y ` determinewhatisneededandthatitisobtainedwithinthetimerequiredandbudgetallocated. eL   BestPractices =$   DegreeofAutonomy-Fromanarrowprocurementperspective,theprocurementactivitywould   enjoythehighestdegreeofautonomywhereitreportsdirectlytothegoverningpolicyboardof   yourorganization.Mosttransitorganizationshavetoomuchdirectoperatingresponsibilityto   permitthisdegreeofautonomy.Threesolutionsare:  "3"   H1` ` hp x (#X(#H3>2l3  0 `   Procurementandcontractingcanreporttoachiefexecutive.3>݌` (#` (# Ќ  K.` ` hp x (#` X(#K  "3"  H1` ` hp x (#` X(#H32l3  0 `   Mosttypically,theprocurementdepartmentreportstoanadministrativeor p financialfunctionthatisindependentoftheprimaryinternalcustomers(facility u\ equipmentandoperatingfunctions).3i݌aH` (#` (# Ќ  K.` ` hp x (#` X(#K M4 "3"  H1` ` hp x (#` X(#H3<2l3  0 `   Somedegreeofautonomycanbepreservedevenwithinanoperatingor 9  implementationfunctionifprocurementisseparatedfromtheprogramdelivery %  subgroups.3<݌` (#` (# Ќ   K.` hp x (#` X(#KB+ ` hp x X(#B  h  Inmediumandlargesystems,ifthecontractingfunctionisnotseparatedfromtheprogramh݌  Ќ! X(#X!  B+ ` hp x X(#B    office,thereisaninadequatesystemofchecksandbalancesontheprocurementprocess.&݌   Ќ! X(#X!  B+ ` hp x X(#B    Overall,procurementpersonnelshouldhaveenoughautonomyorchecksandbalancestoachieve ! aqualityproductatafairandreasonablepricewithoutrealorapparentconflictsofinterestinthe " solicitation,evaluationoraward.u݌ #  Ќ! X(#X!  B+ ` hp x X(#B      x݌̌! X(#X!  %  %2.2LONGTERMPLANNING  q%X"  DISCUSSION M'4!$ Longtermprocurementplanning(i.e.,planningmorethanoneyearinadvance)isone %) #& optiontobeconsideredbylargetransitsystemsandbysystemsplanningamajortransit *#' investment,complexcapitalproject,orasubstantialnumberofoperatingcontractsthat *$( willspanseveralyears.Systemswithoutcurrentmajorcapitalprojectsmayfindthat +%) annualplanningisadequate. ,&*  .(, Purpose   Procurementplanscoveringseveralyearsmaybeanimprovementoverpartitioningor  consolidationinmajorprojectsasawaytofacilitatethemostcost-effectiveprojectmanagement  anddelivery.Theplanscanidentifymajorchangesinprocurementworkload,andcanobviate   anytendencytorushprocurementdecisionsoractivitiesinwaysthatresultinwaste(e.g.,   throughfailuretoconsolidatemajorprocurements)orrisknon-compliance(e.g.,through   inadequatenoticeandnon-competitiveawards).  t PlanContents-Alongtermprocurementplanwouldidentifythemajorprocurementsprojected eL  overthenexttwotofiveyears.Themulti-yearelementoftheTransportationImprovement Q8  Program(TIP)isagoodstartingpointforidentifyingfuturecapitalprojectsandtheir =$  correspondingprocurementrequirements.Typically,theprocurementplanincludesanyfixed )  guidewayprojects,revenuerollingstockreplacementsorfleetexpansions,andmajor   constructionprojects.Inthecaseoffixedguidewayandotherconstructionprojects,where   multipleprocurementsmaybeinvolved,theplanwouldidentifytheinitialstrategyforpackaging   thedesign,construction,andequipment.Considerationwouldalsobegiventoturnkey  procurementsandtolongtermprojectsthatarenotpublicworks.Thelatterwouldincludemajor  softwaresystems,fleetoverhaulandADAoperationalservice.  MajorProjects-Oftenmajordesign/constructionandrailvehicleprocurementsareplanned p seventotenyearsinadvanceofneededcompletionbecauseseveralinterdependentcontractsmay u\ havetobeawardedinordertoaccomplishtheproject.Thetimeintervalstypicallyrequiredto aH accomplishthesecontractawardsmightinclude: M4 "3"    3*2l3  0 `   OneyearadvanceplanningbeforeRequestforProposals(RFP)forthe3*%+݌% ` (#` (# Ќ   ` engineeringservices;  "3"  3*,2l3  0 `   FourmonthsfromRFPtoawardoftheengineeringservices;3*,W,݌` (#` (# Ќ     E.` ` hp x (#X(#E   "3"     E.` hp x (#` X(#E3-2l3  0 `   Twoyearstopreparetechnicalspecifications;3-6.݌!` (#` (# Ќ     E.` ` hp x (#X(#E " "3 "     E.` hp x (#` X(#E3o/2l3  0 `   ThreemonthsfromcompletionofspecificationstosystemRFP;3o/ 0݌# ` (#` (# Ќ     E.` ` hp x (#X(#E $l! "3 "     E.` hp x (#` X(#E3Q12l3  0 `   SixmonthsfromsystemRFPtoaward;and3Q11݌q%X"` (#` (# Ќ     E.` ` hp x (#X(#E ]&D # "3 "     E.` hp x (#` X(#E332l3  0 `   Threeyearsforsystemconstruction.333݌I'0!$` (#` (# Ќ      Theplanninganddesignprocessescanchangethisschedulesignificantly,andfewprocurements !)#& requirethislengthoftime.Whenmajorprojectsareundertaken,acomprehensiveprocurement  *#' planthatoutlinesthesemajorprojectsalongwiththerestofyourprocurementworkloadwillbe *$( extremelyhelpful.Busprocurementsandmajorelectronic/datasystemsgenerallyrequireatleast +%) threeyearsofadvanceplanning. ,&*    .(, 7 x   2.2.1ContractPeriodofPerformanceLimitation  *l  ddjj(#(#l,xbb+  :' :  REQUIREMENT N;#    N  49USC5326(b)limitstheprocurementofrollingstockandreplacementpartstonomore   thanfiveyearsrequirementsunderasinglecontract,eventhoughdeliverymaytakeplace   beyondfiveyearsfromthedateoftheinitialcontract.   FTACircular4220.1E,paragraph7.m,addressesthefiveyearcontracttermlimitationfor  p  rollingstockandreplacementparts.Italsorequiresthatcontractstermsforallothertypesof u\  contractsbebasedonsoundbusinessjudgment. aH  FTACircular4220.1E,paragraph8!Competition,requiresallprocurementtransactionstobe 9  conductedinamannerprovidingforfullandopencompetition. %  FTACircular4220.1E,paragraph7i!WrittenRecordofProcurementHistory,requires   granteestomaintainrecordsdetailingthehistoryofaprocurement.  3)'     3  DISCUSSION      OnMay29,2002,theFTAAdministratorissuedDearColleagueLetterC0802rescinding t FTAslongstandingfiveyearcontracttermlimitationforallcontractsexceptthosefor y` rollingstockandreplacementparts.Thelimitationonrollingstockandreplacementparts eL remainsineffectsincethelimitationisastatutoryrequirementandnotanFTApolicy.  C  2        Q8 ThenewFTApolicyisnowexpressedinFTACircular4220.1E,paragraph7.mContract =$ TermLimitation. )  Priortothisletter,FTACircular4220.1D,paragraph7mContractPeriodofPerformance  Limitation,hadlimitedtheperiodofperformanceofDOTassistedsupplyandservice   contractstofiveyears,inclusiveofoptions,withoutpriorFTAapproval. C  3      ׀Asaresultof ! thisrescissionofthecontracttermlimitation,granteeswillnolongerberequiredtoobtain " priorFTAapprovalforcontracttermslongerthanfiveyears. C  4      ׀Therescissionofthefive #  yeartermlimitappliesnotonlytonewcontractawards,buttoexistingcontractsaswell.  $!   GranteeprocurementswillcontinuetobereviewedbyFTAforcompliancewiththe full  %l" andopencompetitionprinciplestatedinFTACircular4220.1Eparagraph8a,and  granteeswillcontinuetoberesponsibleforconductingtheirprocurementsinaccordance  withsoundbusinesspractices.Granteesareexpectedtobejudiciousinestablishingand  extendingtheircontractterms.    BestPractices        AlthoughFTAnolongerrequirespriorapprovalforcontracttermslongerthanfiveyears,  t granteesremainresponsibleforconductingtheirprocurementtransactionsinaccordancewiththe y `  fullandopencompetitionprincipleexpressedinFTACircular4220.1E,paragraph8a.As eL  withanyprocurementaction,granteesshouldensurethattheirprocurementfilesadequately Q8  documenttheirdecisionmakingprocess.Thisrecordshouldincludetherationaleforthe =$  contractperiodofperformance. )  PeriodofPerformanceCriteria!Periodicrecompetitionofcontractspreservescompetitionand   keepspricescompetitive.Withoutperiodiccompetitiontheincumbentwillnothavethe   pressuresofacompetitivemarkettokeeppricesreasonableoranincentivetomaintain  satisfactoryperformance.Thereare,however,criteriathatthegranteecanemploywhen  decidinguponthetermofacontract.Someofthesecriteriaaresuggestedbelow.  RevenueContracts!ItisFTApolicytoaffordallpersonsanequalopportunitytoaccessFTA p fundedassets.FTAalsoencouragesitsrecipientstomaximizenonfareboxrevenues.Thiscan u\ bedonethroughcontractualorotherappropriatearrangements,whichinvolvetheuseofFTA aH fundedassetswithoutinterferingwithitstransituse.FTAhadpreviouslyinvokedafiveyear M4 termlimitasonewaytobalancethesepotentiallyconflictingpolicies.Itisimportantfor 9  granteestodocumenttheirrevenuecontractfileswithaneconomicanalysisthatdemonstrates %  howthesedualobjectiveswereaccomplished.Ifthecontractopportunitiesallowforfreeand  opencompetition,thentheGranteesprocurementpolicieswilladdressFTAsequalopportunity  policy.Wherehowever,thereisalimittothenumberoffirmswhowillbeawardedcontracts,  thenthegranteeshouldincludeaneconomicanalysisinthecontractfiletojustifythecontract   term.Theeconomicanalysisshouldexplainwhythespecificperiodofperformancewas ! necessaryfortherecoveryofthecontractorsinvestmentandareasonableeconomicreturn.In " performingthisanalysis,granteesmaywishtoconductamarketsurveytoobtaininformation #  andrecommendationsfromprospectiveofferorstodeterminewhatthetypicalupfront $l! investmentwillbeandwhatkindofcontractperiodwouldberequiredfortheofferorstorecover q%X" thatinvestmentandrealizeareasonableeconomicreturnonthatinvestment.Granteesshould ]&D # documenttheirfileswiththisinformation,showingtheconclusionsreachedwithrespecttothe I'0!$ contractperiodofperformancefinallyselected. 5("% Supplies!Typicallythecontractperiodofperformanceforsupplieswillbedictatedbythe  *#' granteesforeseeableneedsandsuchfactorsaseconomicquantitybreaks,warehousingspace, *$( shelflife,technologyconcerns,etc.Whenthegranteeperceivesthattheremaybeanopportunity +%) toincreasecompetitionthroughalargerpurchase,thegranteemaywishtoconductamarket ,&* survey#XXX Xܥ# XXXXԀofpotentialsupplierstodetermineiftheywouldmakeanofferunderadifferent  -'+ contractingscenario.Forexample,itmaybethattheywerediscouragedfrombiddingbecause  theupfrontinvestment(nonrecurringcostsoftooling,etc.)wouldbeprohibitiveovera  relativelyshortcontractperiod/limitedquantitybuy.However,iftheperiodwereextendedand  thequantityincreased,thesepotentialsuppliersmightbeinducedtoparticipate.Thisisineffect  whatonelargetransitagencyhasdonesuccessfully. C  5      ׀Thus,theshortestcontractperiod/   minimumquantitybuymaynotnecessarilybetheoptimumdecision.Granteeswillneedto   exercisesomediligenceindeterminingiflonger/largercontractsmightbeintheirbestinterests.   Iftheydecidetodothat,theyshoulddocumenttheirfilesshowingthebenefitsobtainedfromthe  t longercontractperiods. y ` Whendecidingthebestperiodofperformanceforongoingservicescontracts,granteesneedto Q8  considertheupfrontinvestmentbypotentialofferorsforspecializedpersonneltrainingandother =$  nonrecurringstartupcosts(e.g.,relocation)thatmustberecoveredoverthelifeofthecontract. )  Onceagain,granteesshouldconsiderapresolicitationindustryoutreachtodiscusswith   individualsintheindustrywhattheymayseeasupfrontinvestmentsthatmustberecovered   fromtheprofitsanticipatedbythecontract.Thesediscussionsshouldrevealwhattheindustry   needsintermsofacontractlifeinordertosubmitcompetitivepricesagainsttheincumbent.  Thesefactsneedtobedocumentedinyourcontractfilesasyoureachanagencydecisiononthe  properperiodofperformanceoftheservicescontract.    2.2.2MultiYearvs.MultipleYearContracting p DISCUSSION aH Granteesareauthorizedtoprocurerollingstockorothersuppliesandservicesbya 9  numberofmethods.Theseincludebuyingonanannualoronanasneededbasis,andalso %  onamultiyearormultipleyearbasis.Thedistinctionbetweenthemultiyearand  multipleyearmethodsisasfollows:  MultiYearContracting󀄀multiyearcontractingisamethodbywhichthegranteeprocures   itsneedsfortheentirelifeofthecontract,eventhoughfundingfortheentirecontractis ! notavailableatthetimeofcontractaward.Thecontractrequiresthecontractortodeliver " theentirerequirementsofthecontract.Optionprovisionsareunnecessary.Becausethe #  granteedoesnothavesufficientfundsfortheentirecontractattheoutsetofthecontract,it $l! willbenecessarytorecognizeinthecontractthatthegranteemayhavetocancelthe q%X" contractatsomepointifadditionalfundsarenotforthcoming.Granteesmayhaveto ]&D # includecancellationcostsinthecontractintheformofanadvanceagreementforany I'0!$ programyearorportionthereofcanceledbythegrantee(butcancellationcostsarenot 5("% requiredtobeincludedifthecontractorwillacceptacontractwithoutthem).  !)#& Additionalinformationonmultiyearcontracting,whilenotbindingongrantees,is  discussedintheFederalAcquisitionRegulation(FAR),Subpart17.1MultiYear  Contracting.  MultipleYearContracting󀄀multipleyearcontractingisamethodbywhichthegrantee   awardsacontractforabaseperiodofoneormoreyears,withoptionprovisionsforfuture   years'requirements.Thebaseperiodofthecontractisafirmandfullyfunded   requirement.Beyondthebaseperiod,thegranteeusesoptionprovisions,whichmaybe  t exercisedunilaterallyatthediscretionofthegranteeasadditionalfundingbecomes y ` available.Thereisnoneedfortheinclusionofcancellationpaymentssincetheexerciseof eL  theoptionsistotallywithinthediscretionofthegrantee. Q8  Additionalinformationonmultipleyearcontracting,whilenotbindingongrantees,is )  discussedintheFederalAcquisitionRegulation(FAR),Subpart17.2Options.   TermofContracts!AsnotedaboveinSection2.2.1!ContractPeriodofPerformance   Limitation,49USC5326(b)limitstheprocurementofrollingstockandreplacementparts  tonomorethanfiveyearsunderasinglecontract,eventhoughdeliverymaytakeplace  beyondfiveyearsfromthedateoftheinitialcontract.    %  %Fi2.3ANNUALPLANNING  p  %  %i2.3.1SourcesandContents  aH  DISCUSSION  9   Everytransitorganizationcancarryoutannualplanning;largesystemsmaymaintain  multi-stepplanningprocesseswithsubstantivedocumentsthatarecarriedforwardfrom  yeartoyear.Smallsystemsmaypreparetheplansimplythroughpreparationofalistof  knownprocurementsatthebeginningofaplanningcycle(i.e.,inbudgetpreparationorin   themandatedplanningprocess).  !  Purpose  #  Abasicpurposeformaintainingformalplansregardingprocurementswellinadvanceofissuing q%X" thesolicitationsistoenablemoredeliberateandcoordinateddecision-makinginmovingforward ]&D # withtheprocurementsandrelatedactivities.Inaddition,procurementplanningisthebest I'0!$ opportunitytoidentifypotentialconsolidationofprocurements(e.g.,severalinternalcustomers 5("% purchasingfurnitureorpersonalcomputersinthesametime-frame).Largeragenciesmayfind !)#& thatprocurementconsolidationyieldssubstantialsavings.Morespecifically,anadvance  *#' procurementplanisagoodwayfortheagencytodocumentitscompliancewithparagraph7(d) *$( ofCircular4220.1Ewhichstates,"Granteeproceduresshallprovideforreviewofproposed  +%) procurementstoavoidpurchaseofunnecessaryorduplicativeitems.Considerationshouldbe  giventoconsolidatingorbreakingoutprocurementstoobtainamoreeconomicalpurchase."  Theadvanceprocurementplanalsoprovesusefulinrespondingtoprocurementchallenges.It  providesanearlyrecordofdecisionsthatweremadeforbusinesspurposesbeforethereceiptof   offersandwithoutthepossibilityofcompetitivebias.Contractingofficialsshouldrecognizethat   theplanisfluidandthattheircustomers'needswillchange,buteventhischangecanbemore   orderlyifthebaseplanhasbeendocumented.Achangeissimplyaccomplishedthroughaplan  t update,ratherthanbeingpassedaroundbywordofmouthormemorandum,whichtendstoresult y ` inconfusionandindecision. eL   BestPractices  =$  SourcesforPlans-Thepreparationofanadvanceprocurementplancanbeginwithdataalready   preparedforserviceandfinancialplanningpurposes.BothstateandlocalTransportation   ImprovementProgramslistmajorFederallyfundedprojectsforallmodesoftransportation.   WhilethepreparationoftheplansistheresponsibilityofthelocalMetropolitanPlanning  Organizationandthestate,mosttransitagenciesareinvolvedinassistingwithdevelopmentof  thetransitelementoftheplans,whichliststheirprojectsseparately.Aninternalcapitalbudgetis  anothersource,whichmayhavemoredetailedorup-to-dateinformationonplannedcapital  procurements. p Althoughprojectsfundedwithoperatingfundsareoftensmallerandtheoperatingbudgetdoes aH notusuallyofferasmuchspecificity,contractingofficialsmaybeabletoidentifymanyplanned M4 procurementsfromtheoperatingbudgetaswell.Historicalusageisanothervaluablesourcefor 9  theplan,particularlywhencomparedtotheoperatingbudget. %  Anothermethodavailabletoassistwithpreparationoftheplanistoconductasurveyofinternal  customers.Theymayprovidemoredetailonthebudgetedprojectsandmaybeabletoidentify  projectsthatarenotdifferentiatedinthebudget.Anannualsurveyofthemajorcustomerswill   encouragethecustomersthemselvestoplantheirneedsforgoodsandservices. ! Annualprocurements,whichaccountforagreatdealofactivity,suchasparts,fuel,andother #  supplies,canbeprojectedatmostagenciesbasedonhistoricalneedandagency-wideplansand $l! projects. q%X" PlanContents-Inadditiontotheidentityofeachprocurement,plansnormallyidentifythe I'0!$ customercontact(s)(atmediumandlargeagencies),timerequirements,andfundingsources. 5("% Tentativestartdates,publicationdates,openingdatesandawarddatesareusuallybasedonthe !)#& typeandsizeoftheprocurementcontemplated.Timeshouldbeallowedfor:  *#'     "3 "  3H}2l3  0 `   preparationofasourceselectionplan(ifnotalreadycompleteorinprogress), +%) whereappropriate;3H}u}݌,&*` (#` (# Ќ   -'+    E.` ` hp x (#X(#E"3 "  3~2l3  0 `   preparationofspecifications;3~%݌` (#` (# Ќ  E.` ` hp x (#` X(#E  "3"  3&2l3  0 `   assemblyofthesolicitationofoffers;3&S݌` (#` (# Ќ  E.` ` hp x (#` X(#E   "3"  3]2l3  0 `   publicationperiodandtimeforpreparationofoffers,includingpre-bid/proposal   conference,whereappropriate;3]݌ ` (#` (# Ќ  E.` ` hp x (#` X(#E  t "3"  32l3  0 `   receiptandevaluationofoffers;and3݌y `` (#` (# Ќ   eL  "3"  32l3  0 `   requiredreviewsandapprovalactions.3݌Q8 ` (#` (# Ќ   =$   K KComplexprojectswillrequiremoretimeforpreparingspecifications.Negotiatedprocurements )  willrequiremoretimeafterreceiptofoffers.Ifgoverningboardapprovalisrequired,andthe   governingboardmeetsonafixedschedule,timewouldbeaddedforthisstep.Inallmajor   procurementsandcaseswherenegotiatedprocurementisutilized,theplanningprocesscan   evolveintoasourceselectionplanforeachprocurement.  Inthecaseofprocurementofcomplexsystems,suchasrailtransitsystemsoradvancedrail  vehicles,anadvancedprocurementplanconceptincludesplanning,notonlyfortheprototype  development,testing,andacceptanceofthesystem,butalsothelifecyclesupportofthesystem, p whichincludestrainingofmaintenancepersonnel,maintenanceinfrastructure,suchaselectronic u\ designdiagramsandpartscatalogs,longtermavailabilityofparts,andtechnicalsupport. aH  2.3.2IndependentGranteeCostEstimate  9   K%  %-,X` X(#-*] ddxbbx  (#(#],xjj+  :111'  :dd REQUIREMENT N1111;#h  111  NddFTACircular4220.1E,Paragraph10providesthatgranteesmustperformacostorprice  analysisinconnectionwitheveryprocurementaction,includingcontractmodifications.The   methodanddegreeofanalysisisdependentonthefactssurroundingtheparticular !  procurementsituation,butasastartingpoint,granteesmustmakeindependentestimates "! beforereceivingbidsorproposals. #t" 3)'y$`#   1111 36,SX,X6 K DISCUSSION ]&D $ Alogicalelementofyourannualprocurementplanisacostestimateforeachmajor 5("& procurement.Itisnormallycost-effectivetohaveanindependentcostestimatethatalso !)#' satisfiestheFederalrequirementandtohavesuchanestimateatsometimebefore  *#( receivingbidsorproposals.Youmayobtainsuchestimatesfrompublishedcompetitive *$) prices,resultsofcompetitiveprocurements,orestimatesbyin-houseoroutsideestimators.  +%*  _BPPMAppendixB.20IndependentCostEstimateForm,providesaformatandguidance -', forgranteeinhouseestimatorsthatshouldbehelpful.Thisformwasdevelopedbyone .(- transitagencytoassistitsuserorganizationswiththedevelopmentofindependentcost  estimatesandstatementsofwork.  Purpose   Thefollowingarepurposesofestablishingacostestimateusingamethodindependentfromthe   prospectiveofferorsinadvanceoftheoffer:     0 ` itensuresaclearbasisforthegrantee'sdeterminationthatthebenefitsofthe y ` procurementwarrantitscost;eL ` (#` (#   0 ` itprovidesessentialprocurementandfinancialplanninginformation(see =$  "AdvanceProcurementPlan,"above);and) ` (#` (#   0 ` itprovidesabasisforpriceanalysis,whichmayassistinobviatingtheneedfora   moreburdensomecostanalysis. ` (#` (# Althoughitmayseemself-evidentthattheagencyhasatleastimplicitlypreparedacostestimate  indecidingtoproceedwithaprocurement,manyprojectscanchangeinscopewithoutclear  communicationamongthepeopleresponsible.Forexample,amanagementinformationsystem  forpartsinventorycontrolmayseemcost-effective,butmaygrowduringdiscussionstoinclude p unanticipatedelectronicimaging,scanningofrepairmanualdiagrams,unanticipateddistributed u\ processingdevices,andmulti-userprogramming.Anindependentcostestimatepreparedwhen aH theagencyfirstundertooktheprojectcouldalertallinvolvedthattheprojecthadgrownbeyond M4 thescopeoriginallyintended.Adeliberatedecisiontoreducethescopeorrevisethecost 9  estimatecanbemadeateachstepoftheproject'sdevelopment. %  Thecostestimateisessentialinformationforprocurementplanning.Itgivesthecontracting  officialsomeindicationofthecomplexityoftheprojectandthedegreeofinvestmentthat  offerorswillwanttomakeintheprocurementprocess,thusallowingplanningofprocurement   timeandpersonnel.Itisalsothebasisfordeterminingwhichprocurementproceduresapplyto ! theproject.Ifthecostestimateexceeds$100,000,forexample,acompetitivesolicitationis " normallyrequired.(Stateorlocalrequirementsmaybestricter.)Similarly,certificationand #  bondingrequirementsimposedbyFederalregulationsaretriggeredbasedonthevalueofthe $l! contract.(See"MethodsofProcurement"FTACircular4220.1E,9;"BondingRequirements," q%X" 11;"BuyAmerica"MasterAgreement14(a);"DebarmentandSuspension"MasterAgreement ]&D # 3b.)However,theapplicationoftheseandmostotherrequirementsdependsnotonthecost I'0!$ estimate,butonthecontractamount. 5("%   Afinalpurposeoftheindependentcostestimateisforpriceanalysis.Eitheracostorprice  *#' analysisisrequiredforeverycontractandeverychangeordersothattheessentialobjectiveofa *$( reasonablepriceisassured.Theadequacyofthepriceorcostanalysisisacriticalresponsibility +%) ofthecontractingofficial.Inmanycontractawardsthebidsalonemaybeadequatetoassurea ,&*   -'+ reasonableprice.However,inallnegotiatedprocurements,mostcontractchanges,sealedbids  wherepricecompetitionwasnotsufficient,andnoncompetitiveawards,furtheranalysisis  required.Anindependentcostestimatepreparedbeforereceiptofoffersisinvaluableinthese  circumstances.Theestimatealonemay,ifpreparedwithsufficientdetailandreliabilityinthe  contractingofficial'sjudgment,besufficienttodeterminewhetherthepriceisreasonable.Itwill   atleastsupplementotherpricingdatainmakingthedetermination.Becausecostanalysiscanbe   timeconsuming,expensive,andraisedisputes,theavailabilityofanindependentpre-bid   estimate,whichallowsforpriceanalysisandobviatescostanalysis,isworthmaterialpre-bid  t effort. y `   Inthesecircumstances,itisessentialthatthegranteescostestimatebedevelopedindependently Q8  fromtheofferorspricingsubmissions.Ifabuspurchaseisbeingprepared,forexample,the =$  prospectiveofferorsshouldnotberelieduponfortheindependentcostestimate,exceptinthe )  formofpriorbidssubmittedwithadequatecompetition.   Anypriceanalysisordatacollectionperformedafterreceiptoftheoffers,inadditionto   consumingvaluabletimeduringthelimitedvalidityoftheoffers,willnotbeasprobativeasdata  collectedbeforethereceiptoftheoffers.Anindependentcostestimatepreparedbeforethe  receiptoftheoffersdoesnotraisethequestionofwhethertheparticulardataandanalysiswas  consciouslyorunconsciouslyintendedtojustifytheaward.   BestPractices  u\ Construction-Insomecases,costestimatesmaybedifficulttoobtainormaylieoutsidethe M4 competenceofagencypersonnel.Inthecaseofconstructionprojects,adesignfirmmayalready 9  beundercontractandmayperformthisservice.Insomecases,theagency'sin-housepersonnel %  whohaveparticipatedindesignorpastconstructioneffortsmaybethemostprofessionaland  reliablecostestimators.  SuppliesandEquipment-Equipmentestimatescanoftenbepreparedfrompublishedpricelists   orfrompastcompetitiveprocurementsupdatedwithinflationfactors.Granteesmayfind ! relevantpricingdatabycontactingotheragenciesthatobtainedcompetitivebidsforthesame " equipmentorsupplies.Inthecaseofspecializedequipment,caremustbetakenthatthesource #  oftheestimatesisnotdisproportionatelyobtainedfromonesupplier. $l! Services-Professionalservicesoftenrangewidelyinbothpriceandquality,andareoftenbeing ]&D # acquiredpreciselybecausetheagencypersonnelareunfamiliarwiththesubjectmatter. I'0!$ Therefore,yourin-housepersonnelmaynotbequalifiedtoestimatethecostofamajor 5("% professionalservicecontract.Inthesecases,itmaybeworthobtainingaprofessionalcost !)#& estimatebyafirmnotinterestedinthefinalprocurement.Othergranteesareavaluablesource  *#' ofcostestimatinginformationiftheyhaveundertakensimilarprojects.Thecontractingofficial *$( shouldobtainand,whenappropriate,updatetheindependentcostestimateinthemannerbest +%) suitedtothecircumstancesoftheparticularprocurement.Becausereasonablepriceisakey ,&*  objectiveofeveryprocurement,andisalsoacriticalFederalinterestinFederallyfunded -'+ procurements,anindependentcostestimateshouldbepreparedforeveryactionbeforeoffersare  received.   %  %2.4SOURCESELECTIONPLAN    % ! %!O2.4.1FileDocumentation    *]$& ddxjjx(#(#],xjj+  :111' t t  :dd REQUIREMENT N1111;#    111  NddFTACircular4220.1E,Paragraph7.iWrittenRecordofProcurementHistoryrequires Y@  granteestomaintainrecordsdetailingthehistoryofaprocurement.Asaminimum,these E,  recordsshallinclude: 1   (lxx  6KrX,SX6  Therationaleforthemethodofprocurement;      Selectionofcontracttype;     Reasonsforcontractorselectionorrejection;and     Thebasisforthecontractprice.   (lxx3)'   1111 3  DISCUSSION    Aproperlydocumentedprocurementfileprovidesanaudittrailfromtheinitiationofthe u\ acquisitionprocesstothebeginningofthecontract.Thefileprovidesthecomplete aH background,includingthebasisforthedecisionsateachstepintheacquisitionprocess.A M4 welldocumentedfilespeaksforitself,withoutneedofinterpretationfromthecontract 9  administrator.Awelldocumentedfilealsosupportsactionstaken,providesinformation %  forreviewsandinvestigations,andfurnishesessentialfactsintheeventoflitigationor  legislativeinquiries.  Purpose    Documentsrecordingthekeystepsineachprocurementareimportantforanumberofreasons, "  includingthefollowing: #!   9,X` XxKrX9  0  Youaretakinglegallyandfinanciallysignificantactionsonbehalfofyouragencyq%X#(#(#   0  andthepublic.Informationrelatingtotheseactionsneedstobereadily @ 0@##retrievable ]&D $ intheeventthatcontractpersonnelarepersonallyunavailableortheirmemoryisnot I'0!% preciseenoughtoassisttheagencyinmovingforwardwiththeadministrationofits 5("& program.Youmayroutinelyexpectyourcolleaguestotakeactionsbasedonthefile.!)#'(#(#  9, X(#,X` Xx9  0 4 Thekeystepsinaprocurement,includingthoselistedunder"Requirement,"above, *$) arefrequentlymaterialelementsinfinancial(e.g.,paymentorwithholding) +%* determinationsorlegaldisputes.Writtendocumentationwillhavegreatvalueto ,&+ youragencyunderthosecircumstances.-',4(#4(#    N.` ` hp x (#, X(#N .(-    -, X(#` X(#-  0 4 Theagencysprocessmaybereviewed,audited,and/ormaybethesubjectofin-depth  investigation.Thisdocumentationisthehistoryofthepublicprocurement.Many  hoursofreconstructingeventsanddecisions,stretchingmemories,andevaluating  scenarioscanbesavedwithaconcisefilethatfactuallyanswersthequestions  typicallyraised. 4(#4(#    N.` ` hp x (#, X(#N      -, X(#` X(#-  0 4 Finally,youreducethelikelihoodofadditionalsupervisionorburdensome   restrictionsbeingplacedonyouragencyoryourprocurementprocesswithconcise  t documentationofthedecisionsyouaremaking.y `4(#4(#     Manyprocurementreviews,whilefindingfewproblemswiththeunderlyingdecisionsor Q8  procurementresults,mayreachnegativeconclusionsandmakeunwantedrecommendations =$  simplybecausewellconsidereddecisionswerenotwelldocumented.Notingbrieflywhyyou )  didwhatyoudidmayhelpyouandyouragency,aswellassatisfytherequirementsofthe Third   PartyContractingRequirementsCircular.     BestPractices   Whereappropriate,theprocurementdocumentationfileshouldcontain:    3  0 4 Purchaserequest,acquisitionplanninginformation,andotherpresolicitation p documents;u\4(#4(#   0 4 Evidenceofavailabilityoffunds;4(#4(#   0 4 Rationaleforthemethodofprocurement(negotiations,formaladvertising);~4(#4(#   0 4 Listofsourcessolicited;(4(#4(#   0 4 Independentcostestimate;4(#4(#   0 4 Statementofwork/scopeofservices;J!14(#4(#   0 4 Copiesofpublishednoticesofproposedcontractaction;"!4(#4(#   0 4 Copyofthesolicitation,alladdenda,andallamendments;l$S#4(#4(#   0 4 Liquidateddamagesdetermination;%%4(#4(#   0 4 Anabstractofeachofferorquote;'u!'4(#4(#   0 4 Contractor'scontingentfeerepresentationandothercertificationsandrepresentations;)#)4(#4(#   0 4 Sourceselectiondocumentation;*$+4(#4(#   0 4 ContractingOfficer'sdeterminationofcontractorresponsivenessandresponsibility;A,(&-4(#4(#   0 4 Costorpricingdata;-'/4(#4(#   0 4 Determinationthatpriceisfairandreasonableincludingananalysisofthecost0@!4(#4(#and  pricedata,requiredinternalapprovalsforaward;4(#4(#   0 4 Noticeofaward;}4(#4(#   0 4 Noticetounsuccessfulbiddersorofferorsandrecordofanydebriefing;' 4(#4(#   0 4 Recordofanyprotest; 4(#4(#   0 4 Bid,Performance,Payment,orotherbonddocuments,andnoticestosureties;I 0 4(#4(#   0 4 Requiredinsurancedocuments,ifany;and 4(#4(#  3  0 4 Noticetoproceed.kR 4(#4(#   Purchaseorderforms(electronicormanual)andstandardfilesforsmallpurchasescanbe C*  designedtomaketherecordingofmostoftherelevantdataforsmallpurchasesautomatic.Bid /  andproposalfiles,particularlyifyouusesealedbidsunder$100,000canalsobestandardizedto  facilitaterecordingtheappropriatedata.Forlargerprocurements,thereareoftenmemorandaor  correspondencethat,ifassembledinthefile,addressmanyofthekeyissues.  Theprocurementfileandthecontractadministrationfilecanbecoordinatedbystandardpractice,  sothatnothingbetweenbidopening(orproposalreceipt)andnoticeofawardisomitted.   2.4.2FullandOpenCompetition    % ' %' v n#(0x/ / K+: :` hp x (#, X(#K2.4.2.1FullandOpenCompetitionPrinciple f  kR *l)1*ddxjjx$&:(#:(#l,xdd +  W>W> REQUIREMENT    FTACircular4220.1E,Paragraph8.a requiresallprocurementtobeconductedinamanner  ;"  providingfullandopencompetition.ThisrequirementfindsitswayintoParagraph9.hofthe +  Circularwhichlimitstheuseofnoncompetitivecontractawardstothosesituationswhenthe ! awardofacontractisinfeasibleundersmallpurchaseprocedures,sealedbids,orcompetitive "  proposalsandatleastoneofseveralspecificallynamedcircumstancesarepresent.Thus, "! contractswithavalueofmorethan$100,000shallbeawardedbysealedbidsorcompetitive #" negotiationunlessthereisanexplicitexception. $#  %$ FTACircular4220.1E,Paragraph8.aconsidersthefollowingpracticestoberestrictiveof & % competition: 'r!&  w(^"'  3   Unreasonablerequirementsplacedonfirmsinorderforthemtoqualifytodo c)J#(  business; O*6$)    Unnecessaryexperienceandexcessivebondingrequirements; +%+    Noncompetitivepricingpracticesbetweenfirmsorbetweenaffiliated 4!  q-X'-  companies; 3 ].D(.   v H.` hp x (#::` X(#H*e1cddxdd x)1*(#(#e,xdd +    3 l  Noncompetitiveawardstoanypersonorfirmonretainercontracts; iP  l  Restrictiveuseofbrandnames;   l  Anyarbitraryactionintheprocurementprocess;and  r  3 l  Geographicpreferences. C  6          DEFINITIONS  $   Competition-Theprocessbywhichtwoormorevendorsattempttosecurethebusinessofa   thirdpartybythemostfavorableprice,quality,andservice.   Exclusionary-Tendingtolimitcompetitionforreasonsotherthanbusinessorbonafidepolicy   goals,suchasprice,quality,andservice.    DISCUSSION k Fullandopencompetitionistheguidingprincipleofprocurementrequirementsand \C practices.Youconstantlyseektopermitandencouragemeaningfulinterestandoffers H/ fromallentities.Yourpracticesshouldbeselectiveorruleoutofferorsonlyforbusiness 4 reasons(cost,quality,anddelivery).Becauseitisofteneasiernottoaccommodatea   potentialnewofferor,andeasiertodealwithfewerentities,youmustvigilantlycultivate   waystoincreasecompetitionatreasonableexpense.    Purpose   Theprincipleoffullandopencompetitionhasoneprimaryandtwosecondarypurposes.The  primarypurposeistoobtainthebestqualityandserviceatminimumcost.Inotherwords,toget  { thebestbuy.Thesecondarypurposesaretoguardagainstfavoritismandprofiteeringatpublic !g expense,andtoprovideequalopportunitiestoparticipateinpublicbusinesstoeverypotential l"S offeror. X#?  BestBuy-Theprimarypurposeoffreeandopencompetitionistoobtainforyourcustomers 0%" (andthepassengers,fundingpartners,andlocalcommunityorothervestedinterest)theoptimum & # combinationofcostwithgoodsandservices.Themostcost-effectiveprocurement,thegreatest ' $ value,andthebestbuyareallrelatedterms.Thepremiseisthatsupplierscompetingwitheach '!% otherwillmakeeffortstooptimizethepriceandqualityforyou,eventhoughitminimizestheir ("& profitpercentage. )#'   +%) Acountervailingviewisthathavingtocompeteincreasesthecostofthegoodsandservices.  Someofferorswillstate,"IfIcanhaveasolesourcecontract,Icanholdthecostdownforyou."  Thisisashort-termperspectivethatisdestructiveinthelongrun.Evenifalowerpricecanbe  obtainedinisolatedcircumstances,theoddsarethatinmostcasesyoucanobtainabetterbuy  throughopencompetition.Asinallprocurementpractices,youcanalsobenefitinthelongrun   fromestablishingahighlyconsistentexpectationonthepartofyoursuppliers;theywillcompete   morecost-effectivelyandwithlessdifficulty,iftheyareconfidentthatfreeandopencompetition   isyourconsistentpractice.Tosucceed,youshoulddiligentlyrootoutthetendencytopursue  t false,shorttermeconomiesoflimitingcompetitioninfavoroffreeandopencompetition. y ` Aprovocativeassertionisthat,"Auniquecharacteristicofgoodpublicpurchasingisthe Q8  underlyingprinciplethatmoreimportanceisultimatelyattachedtothewaysandmeansof =$    obtainingpricesthantopricesthemselves." C  7      ׀Whetherthisistrueorwhetherthebestbuyismore )  importantthanthemeansofprocurement,itiscertainlytruethatyoumaybethevoiceinyour   transitsystemforprotectingprocurementprinciples,particularlytheprincipleoffreeandopen   competition,againsttheoccasionalshort-sightedviewsofyourcustomers.     FavoritismandProfiteering-Theconcernthatsuppliersorpublicagentsmayprofitunjustlyat  publicexpensethroughpoorprocurementpracticesisaconstantthemeinthehistoryof  governmentprocurement.Whileeliminatingunjustgainsdoesservetoachievethebestprice,  theacuteconcernthatsuppliersorpubicofficialsmayexploitpublicprocurementsfortheirown p gainatpublicexpenseisofgreatsignificanceandplaysamajorroleinthepublic'soverall u\ confidenceinatransitoperatingentity. aH   Offerors'Opportunity-Scrupulouslyfairtreatmentofallofferorswillfosterthemost 9  satisfactoryrelationswiththeofferorsinthelongrun.Similarly,afirmexpectationoffreeand %  opencompetitionisgenerallyvaluedbythesuppliercommunity.However,therecanbe  circumstanceswhereasupplier'srighttoparticipateisatoddswiththeprocuringagency's  interestinthebestbuy.Examinethecaseoffailureofadeliveryagencyorthepostalserviceto  deliveraproposaldocument.Althoughmissingtheproposaldeadlinewasnotthefaultofthe   proposer,itsrighttoparticipateinpublicbusinessdoesnotprevailovertheprocuringagency's ! interestinproceedingwithpublicbusiness.Indeed,insomejurisdictions,adisappointedbidder " hasnostandingtoenforcethecompetitiveprocurementlaws.However,totheextentFederal #  precedentsapplytoyourprocurement,yourofferorshaveanimpliedcontractoffair-dealing $l! duringtheprocurementprocess. C  8      ׀Sowhileyourprimarygoalisthebestbuy,andanofferormay q%X" havenovestedrighttoparticipatenorvestedprofitinterestinthepossibilityofparticipating,the  ]&D # offerordoeshavearighttofairdealingduringthesolicitationandselectionprocess.Tothe    extentthatitisnotinconsistentwiththebestbuy,youwillwanttotreatallpotentialofferorsas  fairlyaspossible.   BestPractices    Thefollowingareillustrativeofpracticesyoucanundertaketoadvancecompetition.   PartnerInformation-Youcanundertakeoutreachprogramswithyoursupplierpartnersby y ` preparingbrochuresthatgivebackgroundinformationaboutyouragencyandcontainassistance eL  inthemostpracticalwaystoidentifyopportunitiestodobusinesswithyouragency. Q8  PartnerTreatment-Youcanestablishanethicinyourorganizationoftreatingsuppliersas )  partnersinthedeliveryoftransitservice.Everythingfromthetelephonemannerofagencystaff   totheconsiderationshowninarrangingconferencesandpresentationscancontributetoan   increaseincompetition.   Advertisement-Atraditionalpracticetoincreasecompetition,andstilloneofthemost  meaningful,iswidespreadadvertisingtotheextentpractical.Developingeconomicalmeansto  widenaccesstoyourprocurementadvertisements,suchasuseoftheinternetandprivatebid  roomservices,isanareaworthyofcontinualreviewandeffort. p  % 3 %3_2.4.2.2RestraintsonCompetition aH 2.4.2.2.1BrandNames  9  *]49 ddxdd x1c(#(#],xjj+  :111'  :dd REQUIREMENT N1111;#h  111  NddFTACircular4220.1EParagraph8.a.requires:   XE.` hp x (#X(#E"Allprocurementtransactionswillbeconductedinamannerprovidingfullandopen !  competition.Someofthesituationsconsideredtoberestrictiveofcompetition "! include,butarenotlimitedto...Specifyingonlyabrandnameproductinsteadof #t" allowinganequalproducttobeofferedwithoutlistingitssalientcharacteristics." y$`#  XE.` hp x (#X(#E  Paragraph8.c.requires: Q&8 %   XE.` hp x (#X(#E"...Allsolicitationsshall: )("'  XE.` hp x (#X(#EӀ XE.` hp x (#X(#E(1)Incorporateaclearandaccuratedescriptionofthetechnicalrequirementsforthe *#) material,product,orservicetobeprocured.Suchdescriptionshallnot,incompetitive *$* procurements,containfeaturesthatundulyrestrictcompetition....  +%+  ...Whenitisimpracticaloruneconomicaltomakeaclearandaccuratedescriptionof -'- thetechnicalrequirements,a"brandnameorequal"descriptionmaybeusedasa .(. meanstodefinetheperformanceorothersalientcharacteristicsofaprocurement.The %  specificfeaturesofthenamedbrandwhichmustbemetbyofferorsshallbeclerly  stated."  3)'   1111 3 XE.` hp x (#X(#E DEFINITIONS    ApprovedEqual-Anitemorservicewhichhasbeenapprovedbytheprocuringagencyasequal   tothebrandnameitemoriginallyspecified.  x SalientCharacteristics󀄀Thosequalitiesofanitemthatareessentialtoensurethattheintended iP  useoftheitemcanbesatisfactorilyrealized.Thetermismainlyusedinconnectionwitha 1  brandnameorequaldescription,whichshouldsetforththosesalientphysical,functional,or   othercharacteristicsofthereferencedproductthatanequalproductmusthaveinordertomeet   theAuthority'sneeds. p  BrandName-Anameofaproductorservicethatislimitedtotheproductorserviceproducedor =$ controlledbyoneprivateentityorbyaclosedgroupofprivateentities.Brandnamesmay ) includetrademarks,manufacturernames,ormodelnamesornumbersthatareassociatedwith  onlyonemanufacturer.  DesignSpecifications-Specificationsbasedonthedesignofaproductorservice.Typical  designspecificationsmayincludedimensions,materialsused,commonlyandcompetitively  availablecomponents,andnon-proprietarymethodsofmanufacturing.  PerformanceSpecifications-Specificationsbasedonthefunctionandperformanceofaproduct p orserviceunderspecifiedconditions,preferablyconditionsthatcanbereproducedfortesting u\ purposes.Performancespecificationsmayincludeusefullife,reliabilityintermsofaverage aH intervalsbetweenfailure,andcapacity. M4  DISCUSSION  %!   Brandnames(e.g."MotorolaMetrocom,""WebastoHeater")areamongthemost "  restrictivetypesofspecification.Designandperformancespecificationsarethepreferred #! alternatives.However,insomecasesusingsealedbids,youmaynotbeabletoensureyou $" willreceiveanacceptableproductwithoutmentioningabrandname.(Innegotiated %# procurementsthisislessoftennecessarybecauseaperformanceordesignspecificationcan & $ beusedandtheproposedbrandscanbereviewedduringnegotiations.)Ifyoumustusea '!% brandnameinyourspecification,youcanstillallowbidderstosubstituteanequalproduct (l"& withadifferentbrandname.Youmayreservetherighttodeterminewhetheraparticular q)X#' brandormodelisequaltotheoneyouspecified.Ifyouuseabrandnameandallowequal ]*D$( brands,youmustalsospecifythesalientcharacteristicsofthespecifiedbrandthatwillbe I+0%) amongthecriteriausedindeterminingwhetherasuggestedsubstituteisequaltothe 5,&* specifiedbrandornot. !-'+    .', Ifagranteebelievesthataspecificbrandnamemustbeusedinaspecificationandthatit   cannotacceptanyalternativeproduct;i.e.,itcannotallowavendortopropose anequal  product,thegranteemustprocessthisasasolesource(noncompetitive)procurement  actionthroughtheproperapprovingofficialswithinthegranteesorganizationpriorto  releaseofthesolicitation.   Purpose    Therestrictiononbrandnamesservesthecentralpurposeofmaximizingfreeandopen y ` competitiontoobtainthebestbuy.Ifyouspecifyabrandnamewithnoopportunityfor eL  substitution,theoriginalsupplierofthebrandnamehasaneffectivemonopoly.Thisresultsin Q8  exorbitantpricesandcessationofinnovationandproductdevelopment.Incomplexequipment =$  andconstructioncontractswherealargenumberofcomponentsarespecified,theuseofbrand )  namescanbeevenmorerestrictivethaninprocurementofindividualunitsbecausethe   proliferationofbrandnamesdiscouragestheprimecontractorfromconsideringsubstituteswhich   mightcontributetoamorecost-effectiveendproduct.Therefore,inthelongrun,youwillget   thebestbuyifyouavoidtheuseofbrandnamesasmuchaspossible.  Inprocuringcomplexsystems,however,suchasrollingstockandelectronicsystems,where  reliabilityorotherperformancestandardsaremissioncriticaltoyourtransitservice,youand  yourcustomersmaynotbeabletospecifyacomponentintermsofdesignorperformanceand p stillensurethatyourlowestresponsiveandresponsiblebidderwillofferyouasatisfactory u\ component.Inthesecases,somepriceandqualitycompetitioncanbepreservedbyallowingthe aH substitutionofequalitemswithotherbrandnames.Ifyouaretheonewhowilldeterminewhich M4 brandnamesareequaltotheonespecified,thenyouhavenotsacrificedanycontroloverthe 9  qualityoftheproduct.Thiscompetitionbysubstitutionisfacilitatedbylistingthesalient %  characteristics,suchasyouwoulduseifyouusedadesignorperformancespecification,(e.g.,  "10-yearlifeundervaryingvoltageconditionsoftransitbuselectricalsystems"),sothatbidders  willbeabletojudgewhichbrandsmaybeequaltothespecifiedbrand.   BestPractices  ! DesignandPerformanceSpecifications-Youcanworkwithyourcustomerstoseeifbrand #  namescanberemovedfromthespecificationbysubstitutingdesignorperformance $l! specifications.Likemanyofthequalitiesoffullyopenandcompetitiveprocurementpractices, q%X" thisisaneffortthatmayseemover-zealousunderthetimepressureofaspecificprocurement, ]&D # butyoucanconstantlyseektoremoverestrictionsandimprovethecompetitivenessofyour I'0!$ procurementprocessessothatyougenerallyachievethebestbuy.Ifadequatedesignand 5("% performancespecificationscannotbeprepared,listingseveralacceptablebrandnamesisfar !)#& betterthanspecifyingjustone.  *#' "OrApprovedEqual"-Wheneverbrandnamesareused,thereareseveralwaysyoucanclarify +%) beyondadoubtthatthebrandnameisusedmerelyasaspecificationandnotasastatementofa ,&*  preferenceforthespecificproductspecified.Onewayistoincludeaphrasesuchas"orequal," -'+ "orapprovedequal,"or"similarindesign,constructionandperformance"withthebrandname.  Manystandardequipmentandconstructiondocumentsalsocontainaclauseinthegeneral     provisionsthatstatesthatevenifthephrase"orapprovedequal"isinadvertentlyomitted,itis  impliedafteranybrandname.Ifyouspecify"orequal,"youshallclearlysetforththose  minimumessentialcharacteristicsandstandardstowhichthematerial,productorservicemust   conformifitistosatisfyitsintendeduse. C  9           Someoftheonusofrestrictionisliftedforalargevolumeoftransitprocurementsbythe Third  t PartyContractingRequirementsCircular'ssanctionfornoncompetitiveprocurementof y ` associatedcapitalmaintenanceitemsfromtheoriginalequipmentmanufacturer.TheCircular eL  states: Q8    Procurementbynoncompetitiveproposalsmaybeusedonlywhentheawardofa )  contractisinfeasibleundersmallpurchaseprocedures,sealedbids,orcompetitive   proposalsandatleastoneofthefollowingcircumstancesapplies:(e)theitemisan   associatedcapitalmaintenanceitemasdefinedin49U.S.C.5307(a)(1)thatisprocured   directlyfromtheoriginalmanufacturerorsupplieroftheitemtobereplaced.2 C  10            TheCircularrequires,however,that"thegranteemustfirstcertifyinwritingtoFTA;(a)that  suchmanufacturerorsupplieristheonlysourceforsuchitem;and(b)thatthepriceofsuchitem  isnohigherthanthepricepaidforsuchitembylikecustomers."n C  11       p   ApprovalProcess-Ifyouhavelistedenoughsalientcharacteristicsandthebrandnameisan aH insignificantfactorintheoverallprocurement,youmaysimplifytheprocurementbynot M4 requiringapproval.Thecontractorwouldthenhavetherighttosubstituteaproduct.The 9  ultimatedeterminationofwhetherthesubstitutewasequaltothebrandspecified,ifcontested, %  wouldbethroughthedisputeresolutionprocessculminatinginthecourts.    Thebetterpractice,however,istoprovideanapprovalprocess,preferablypriortobidopening,  sothatbidders,infinalizingtheirbidswillbeconfidentabouttheirrighttosubstituteabrand   theyconsidertobemorecost-effectivethantheonespecified.Thiswillalsogiveyou ! confidenceabouttheproductorserviceyouwillreceive.(Brandnamesmaybeusedin " competitivenegotiationforcomplexsystems,buttheapprovalprocessneedonlyrequire #  approvalpriortoawardratherthanatproposalsubmission.Approvalofequalbrandsisusually $l! simplyapartofthediscussionsornegotiations.)Youwillwanttoavoidrequiringbidderstowait  q%X" untilafterawardtoobtainapproval,becauseadisapprovalatthattimemayplaceabidder(now  contractor)infinancialjeopardyandmaypromptlitigation.    Ifyouwanttorequirepre-bidapproval,thesolicitationcanspecifyatimeandformatfor  requestingapprovalofequalbrands.Typically,thisisthesametimeandformatusedfor   requestingotherchangesinthespecifications.   Approverequestsforsubstitutionwheneveryoudeterminethattheofferedproductisequalinall  t materialrespectstotheproductsreferenced.Offersneednotberejectedbecauseofminor y ` differencesindesign,construction,orfeatures,whichdonotaffectthesuitabilityoftheproduct eL  foritsintendeduse. Q8  Determinationstypicallyidentify,orincorporatebyreference,identificationofthespecific )  products,whichthecontractoristofurnish.Suchidentificationcanincludeanybrandname,   makeormodelnumber,anddescriptivematerial.Youmaywanttoissueyourdetermination,   particularlyanyapproval,toallbiddersbyaddendumorasyourproceduresprovide.(Insome   competitivenegotiationswhereearlyandopendiscussionofcreativeintegrationofsubstitute  brandsisimportant,issuanceofapprovalstocompetingproposersisconsideredtoconstitute  levelingtheplayingfield,whichwoulddiscourageopennegotiations.Youcanconsiderkeeping  designinnovationsconfidentialbutissuingapprovalofequalbrandnamestoallproposers.)As  withothersubstantiveaddendatoasolicitation,considerextendingthebidperiodifthe p approvalsareissuedshortlybeforethescheduledbidopening,toallowallbidderstotake u\ advantageoftheinformationpriortothebidopening. aH   Evenifyouhaveapre-bidapprovalprocess,acontractorcannormallyrequestadditional 9  approvalsafteraward.Considerclarifyinginyoursolicitationthatthecontractorwhowaitsuntil %  afterawardproceedsatitsownrisk.    % @ %@9  2.4.2.2.2 &%X XԀWrittenStandardsofConductandConflictsofInterest:PersonalandOrganizational # XX% & :#    WrittenStandardsofConduct  ! *lB1Dddxjjx49(#(#l,xdd +  # #  REQUIREMENT  #! 49CFR18.36(b)(3)establishesfortheDepartmentofTransportationthegovernmentwide }%d" requirementthatstateandlocalgovernmentgrantrecipientsmusthavewrittenstandardsof i&P # conductforprocurementpersonnel. U' instances,multidisciplinaryfirmsarebeingexcludedfromenvironmentalimpactstatement C* preparationcontractsbecauseoflinkstoaparentcompanywhichhasdesignand/orconstruction / capabilities.Somequalifiedcontractorsarenotbiddingonenvironmentalimpactstatement   contractsbecauseoffearsthattheirfirmmaybeexcludedfromfuturedesignorconstruction ! contracts8.Theresultofthesemisunderstandingshasbeenreducedcompetitioninbiddingfor ! EISpreparationcontracts,unnecessarydelaysinselectingacontractorandpreparingtheEIS, " andconfusionandresentmentabouttherequirement.Thus,theCouncildoesnotprohibitan #  EIScontractorfrombiddingonworkconnectedwiththeprojectafterthecontractorhas $! completedallperformancerequiredfortheEIS,butitdoesprohibitsituationswherethe %" contractorhasaninterestintheoutcomeoftheEIS atthattimeorduringthelifeoftheEIS &v # contract. {'b!$   S):#& H.  InsistingonImpartiality   Eachgranteeisentitledtoimpartialadvicefromitsconsultants,basedsolelyonwhatisbestfor  thetransitsystemandthecommunity,andnotforthebenefitofpersonswithconflicting  financialorotherinterests.Foradditionalprotection,thegranteenotonlyshouldenforceitsown   writtenstandardsofconductbutinsist,perhapsthroughtheuseofcertifications,thateachofits   employees,boardmembers,officers,orotheragents(aswellascontractorpersonnel)observe   anyrelevantcodeofprofessionalresponsibilitygoverninghisorherconduct,suchasthecodes  t governingtheconductoflawyers,engineers,architects,planners,andaccountants.Amongother y ` things,thisrequirementwoulddemonstratetothegranteesemployeesandcontractorsthe eL  importanceplacedbythegranteeonavoidingconflictsofinterest. Q8   I.  GranteeDecisiontoProceedinSpiteofConflictofInterest. )   Finally,whenagranteehasdoneallthatreasonablycanbedonetoavoid,neutralize,ormitigate   arealorapparentconflictofinterest,andifitisinthegranteesbestinteresttoproceedwiththe   contractdespitetheconflict,thegranteeneedstodocumentitsdecision.Documentationshould  includewhatstepsweretakenorconsidered,andjustificationfortheconclusionreached,before  proceedingwiththecontract. C  21        P 'X X ' '    P  # ' 'נ# XX 'P erԌ̌ XXX X XXX X  P 'X X ' '    P  # ' 'H# XX 'BestPracticesPI er1Ԍ p Ќ XXX X XXX X    EveryAgencyemployeeinvolvedintheawardoradministrationofcontractsmustbegivena aH copyoftheAgency's(orState's)writtenstandardsofconduct,andtheyshouldberequiredto M4 signastatementthattheyarefamiliarwithandwillabidebythesestandards. C  22      ׀Thesestatements 9  shouldbesignedasaconditionofemployment.Itwouldbewelltoreviewandsignthemagain %  annuallyaspartoftheemployee'sannualperformanceevaluationasameansofreinforcingthe  importanceofethicalconductbytheAgency'semployees.      InsomeAgencies,theGeneralManagerhasissuedamemorandumtoallemployees   summarizingthemostsensitiveissuesdealingwithethicalconductandemphasizingthe ! importanceofavoidingeventheappearanceofconflictsofinterest.OnepublicAgencyhas " insertedsuchamemorandumintoitsProcurementManual,togetherwiththestandardsof #  conduct. C  23       $l!    ]&D # Oneareaofparticularsensitivityconcerns"outsideemployment."Employeesmustunderstand  whatkindsofactivitiesoroutsideemployment(actualorprospective)areinconsistentwiththeir  Agencyresponsibilities;e.g.,furnishingadviceorservicestoafirmwhichisbiddingonor  planningtobidonacontractwiththeAgency,orwhichisdoingbusinesspresentlywiththe  Agency.Onestrategyemployedbyfirmsbiddingoncontractsistoofferemploymenttocritical   procurementortechnicalpersonnelworkingontheprocurement(ifthefirmisselectedfor   award).Thiskindofsituationcreatesafinancialconflictofinterestforthoseemployeesto   whomoffershavebeenmade.Employeesneedtobeforewarnedoftheseandsimilartactics  t whichtheymayencounterinthecourseoftheirAgencywork.TheAgencymaywanttoconduct y ` trainingsessionsforallAgencypersonneldoingsensitiveworkintheacquisitionofAgency eL  equipmentorservices. Q8  ManypublicAgencieshaveadopteddisclosurestatementrequirementsforcertainpositions. )  Thesedisclosurestatementsrequirethatemployeesoccupyingdesignatedpositionswithinthe   Agencydisclosetheirinvestmentsinbusinesseswhichengageincertainactivitiesrelatedtothe   businessoftheAgency.Reportableinterestsmightincludecompaniesengagedinmanufacturing   railtransitrollingstockandrelatedcomponents,transitequipmentsuppliers,construction  companiesengagedintransitsystems,etc.  TheFTACircularrequirespenalties,sanctions,orotherdisciplinaryactionforviolationofthe  standardsofconductbythegrantee'semployeesorbycontractors.Thelackofexplicitpenalties p ingrantees'procurementpoliciesandproceduresisarecurringobservationmadeintheFTA u\ ProcurementSystemReviews.Granteesneedtoadoptexplicitwrittenpenaltiesfortheir aH employeesandcontractorswhoviolatetheirstandardsofconduct. M4  Ss9  S E+ ` hp x [X$E  9 s& I     ݌̌$[X$X$ S  @'x_ 2 'X X ' 'c 'pc     'p8x_@'  # ' '# XX 'ProceduralSuggestions erԌ x_ Ќ XXX X XXX X XXX X XXX X 2  'I9uThefollowingisanoutlineofthestepsthateachgranteeshouldconsidertakingbeforeand i duringtheprocurementprocessandduringprojectadministration.Conflictsalsocanoccureven n U beforetheprecontractingphasebegins,sogranteesshouldalwaysbevigilanttothepossibility Z!A ofaconflict.  F"- A. M THEPRECONTRACTINGPHASE $  1.  PrepareWrittenCodesofStandardsofConduct. FTArequiresthateachofits %" granteesmaintainawrittencodeofstandardsofconductapplicabletoitsemployees(including & # contractoremployees),officers,boardmembers,andagents(includingoutsideconsultants) '!$ involvedintheselection,awardoradministrationofcontracts.Eachgranteeshouldconsultwith ("% itscounsel,aswellasitsprocurementpersonnel,astowhetheritscodeofconductcomplieswith )#& FTAsrequirementsassetforthinSection3ofFTAsMasterAgreement,Paragraphs7(c)and *}$' 8(a)(5)ofFTACircular4220.1E,ThirdPartyContractingRequirements,and49CFR18.36 +i%( andPart19,asapplicable.Moreover,thegranteeshouldprovideacopyofitscodeofconductto n,U&) eachofitsemployees,boardmembers,officers,andotheragents. Z-A'*   2.  RequireFinancialDisclosureStatementsand/orNonConflictCertifications. When 2/), determininghowtodealwithpotentialconflictsofinterest,agranteemaychoose proactive  measures, reactivemeasures,oracombinationapproach. Proactivemeasuresaredesigned  toidentifyandpreventpotentialconflictsprospectively.Forexample,agranteeinterestedin  employingproactivemeasuresshouldconsiderrequiringeachofitsemployees(andothers  potentiallyinvolvedintheprocurementprocess)tofileanannualdisclosurestatement   concerninghisorherfinancialandemploymentstatusandthatofimmediatefamilymembers(to   theextentstateandlocallawpermitsuchafinancialdisclosurerequirement). C  24      ׀Withthis   informationonfile,thegranteecan proactivelydetermine,aheadoftime,whetheranyofits  t employees(etc.)haveinterestsinanyofthepotentialoractualcontractorsonaparticularproject. y ` Thegrantee,forexample,canrunasearchontheparents,subsidiaries,andaffiliatesofbidders eL  andcontractors,aswellasonanycompanieslistedonemployeedisclosurestatements,andgeta Q8  broadpictureofanypotentialconflicts.Ifaconflictisdiscovered,thegranteecanagain, =$   proactivelywalloffanyemployeewhomayhaveapotentialconflictfromaparticular )  project,thusavoidingtheneedforlateraction.     Insomecasesagranteemayrequireitscontractingpersonnel(officers,boardmembers,agents,   etc.,asapplicable)tosubmita nonconflictcertificationonaprojectbyprojectbasis,before  thatpersoncommencesworkontheselection,awardoradministrationofacontract.Such  certificationwouldstatethatneithertheemployee(etc.)noranymemberofhisorherimmediate  familyhasafinancialoremploymentinterestinanyoftherelevantbiddersorcontractorsforthe  procurementinquestion.Iftheemployeeidentifiesarealorapparentconflictofinterest,then p thegranteecantakeactiontomitigateit.Thisisadifferent,somewhat reactive,approachthan u\ requiringannualfinancialdisclosurestatements. aH Thereareprosandconstobothapproaches.Withannualfinancialdisclosurestatements,the 9  granteeattemptstoidentifyandmitigateconflictsasearlyaspossibleintheprocurement %  process;butinorderforthisapproachtobeeffective,thegranteesreviewermustbothreview  thedisclosurestatementsandperformrelevantresearchaswellasbeawareofthevarious  corporateinterconnections.Anadvantageofaprojectspecificdisclosurestatementisthatit  servesasaregularremindertoemployeesoftheimportanceofconflictavoidance,andthusmay   preventsomeconflictsofinterestfromarisinginthefirstplace.Realistically,however, ! requiringdisclosurestatementsonaprojectbyprojectbasisgenerallyistooonerousforthe " granteesthathandlemanyprocurementseveryyear.Moreover,thissomewhat reactive #  approachputsaseriousburdenontheindividualemployee(etc.)to selfcertifythathehasno $l! conflictonaparticularproject,withtheunderstandingthatthegranteewillholdhimaccountable q%X" fortheveracityofthatcertification.Itisalsopossiblethatanindividualemployee,unawareof ]&D # theownershiporotherlinksbetweenprospectivebiddersorcontractorsandthefinancial I'0!$ interestsheholds,mayunknowinglyselfcertifythatnoconflictexists. 5("% Ѐ  !)#&    *#' Thetwoapproaches,however,arenotmutuallyexclusive,andthebestapproachmaybea  combinationofproactiveandreactivetools.Ultimately,eachgranteemustdetermineforitself  thepreferableapproach,consideringthecostsinvolvedinadministeringitsprogramandany  othermatterthegranteedeemspertinenttothedecision.Asindicatedabove,anyprogram  requiringcertificationsordisclosurestatementsfromemployeesalsoshouldapplythose   requirementstotheothercategoriesofindividualslistedinFTACircular4220.1E,specifically,   officers,boardmembers,andagents,includingconsultantsandcontractorsinvolvedinthe   selection,awardoradministrationofcontracts.Finally,thegranteeshouldaskitscounselto  t reviewtheformofitsfinancialdisclosurestatementsornonconflictcertificationsfor y ` compliancewithlocal,state,andfederallawbeforetheyareissued. eL   3.  ObtainCertificationsofCompliancewithProfessionalCodesofConduct. Thegrantee =$  shouldconsiderrequiringeachofitsemployees,boardmembers,officers,andagentstoidentify -  inwritinganycodeofprofessionalresponsibilitygoverninghisorherconduct,andtocertifythat   tothebestofhisorherabilityheorshewillcomplywiththatcodewheneverconducting   businessonbehalfofthegrantee.Tobeeffective,sucharequirementmustbecoupledwitha   mechanismforreportingviolationstotheappropriateenforcemententity.   4.  PrepareWrittenProceduresforAddressingPersonalandOrganizationalConflicts  ofInterest. 󀀀Thegranteeswrittenproceduresshouldestablishnotonlyameansofidentifying  conflictsbutalsoapredictablemethodofresolvingthem.Forexample,onceapersonalconflict x hasbeenidentified,mitigatingmeasuresmayincludecreationofblindtrusts,recusalorother }d limitsonscopeofparticipation,procedurestoallowtheemployeebackinsidetheinformation iP bubbleiftheconflictends(e.g.,thecompanythattheemployeeownsstockindoesnotwinthe U< contract),etc.Thewrittenproceduresmayaddress: A( -PMX"[X$-0  a. M Responsibilityforidentifyingpotentialconflicts;(#(# 0  b. M Rangeofalternativeactions;(#(# 0  c. M Typicalsituationsandtheindicatedresponse,forexample:!(#(# Ѐ6PM` X"PMX"6  0 M i. ` Situationsthatmaywarrantadvancerestrictions:# M(#M(#  X X9X X(#PM` X"9ӄ Acontractforprocurementevaluationservices; y%`" Є Acontractforadviceoncompetingapproaches; e&L # Є Acontractfortechnicalreviewandprojectoversightservices;or Q'8!$  =($"%  ,Xii.0 ` Situationsthatmaywarrantotherconflictmitigationmeasures,orevenapossible ))#& waiver,ratherthanaprohibitionagainstacontractorsparticipationintheproject:*#'` (#` (#  +$( 6` ,hX%X X(#60 ` 0 ` (#` (#Complexdesignofintegratedelementsofastructure,pieceofequipment,or +%) system;or,&* (# (#   -'+  ` 0 Successivedevelopment/designphasesofinnovativeequipmentorsystems. (# (# N.` hp x (#` ,hX%N   , #########(8xB+ ` hp x (#X(#B  d.0 ` Participationofqualifiedpersonnelintheresolutionofconflicts;and` (#` (#   XE.` hp x (#X(#E  e. ` Reviewandapprovalofconflictresolutions.     Thegranteeshouldseektheassistanceofcounselinpreparingwrittenproceduresforresolving   conflictsofinterest.  t  B.  THEPROPOSALSTAGE eL     1.  DefinetheProjecttoAvoidPotentialConflicts. Granteesshouldanticipatepotential =$  conflictsandstructureprocurementsaccordingly.Forexample,thegranteeshouldnotallowa -  companythatpreparesthespecificationsforprocurementtosupplytheproductsaswell.Also,   thegranteeshouldbecarefultostructuretheprojectsoastoavoidconflictsamongcontractors   andsubcontractors.Forexample,onalargeproject,thegranteecouldavoidpossiblebiasby   procuringonecontractortoperformtheneededevaluationindependently,andtheninitiatinga  newprocurementtoobtainanysystemthatmayberequiredandexcludingthefirstcontractor  fromthatsecondcompetition. C  25          2.  ConsiderAdvanceRestrictions. Whenthegranteeawardsseparatecontractsonrelated t procurements,itmightconsiderplacingnoticeofanadvancerestrictioninthesolicitationwhere }d aconflictmayarise.Itisfarbettertoidentifyapotentialconflictinvolvingtwocontractsinthe iP firstsolicitationthantoawardthefirstcontractandthenaddresstheconflictwhenawardingthe U< secondcontract.Primecontractorsshouldberequiredtoinformprospectivesubcontractors(and A( togiveevidencethattheyhavedoneso)thatthesubcontractorsalsocouldbesubjecttothe - restrictionsinfuturecontracting.Thisway,eachbidder(primeandsubcontractors)forthefirst  contractwillbeawareofthesituationandcanmakeitsownchoiceaboutwhichcontractto  pursue.Whenanadvancerestrictionisdesired,considerincluding:   (lx8#########B+4 4` hp x (#X(#B  "3"  32l3  0 4   Anexplanationoftheconflictorpotentialconflict;3݌!4(#4(# Ќ   " "3"  32l3  0 4   Thenatureoftheproposedrestrictionuponfuturecontractoractivities;and3݌# 4(#4(# Ќ   $t! "3"  32l3  0 4   Thetermsofanyproposedclauseandwhetherthosetermsarenegotiable,depending y%`" onthenatureoftheacquisition.3݌e&L #4(#4(# Ќ   2#########(8x  H.` hp x (#44` X(#H   =($"% 3.  ForEnvironmentalImpactStatementContracts,ComplywithCEQRegulations.   RegulationspromulgatedbytheCouncilonEnvironmentalQualityrequireeachcontractorwho  developsanenvironmentalimpactstatementtosignadisclosurestatement(preparedbythe  grantee)certifyingthatithasnofinancialorotherinterestsintheoutcomeoftheproposed  project. C  26      Thisrequirementisintendedtopreventcontractorswhoarehiredtostudyalternatives   andpotentialenvironmentalimpactsofproposedprojectsfrompresentingandprofitingfrom   biasedrecommendations.Pursuanttotheregulations,granteesmustrequirethesubmissionofa   disclosurestatementinRFPsforconsultingservicessothatsuchconflictscanbeidentifiedearly  t inthecontractingprocess.Thegranteealsomustcomplywith40CFR1506.5and Guidance y ` RegardingNEPARegulations,48Fed.Reg.34263(July18,1983),explainedaboveinSection eL  GoftheDiscussion. Q8    4.  ConsultWithLegalCounsel. Beforedefiningthescopeofanyprojectorpublishing )  anydocumentdescribingtheproject,suchasastatementofwork,thegranteeshouldaskits   counseltoreviewtheprojectandanydescriptivedocumentationforcompliancewithconflicts   rules.    C.0  THESELECTIONANDAWARDPHASE(#(# 1.  ReviewDisclosureStatements(ifrequiredbythegrantee)forPotentialConflicts  withBidders. Ifthegranteerequiresitsprocurementstafftosubmitannualfinancialdisclosure p statementsorprojectspecificdisclosurestatements,thegranteeshouldreviewtheinformationon y` suchstatementsforpotentialconflictsbeforeanyprocurementstaffbeginsworkontheselection eL process.Iftheemployeesworkontheprojectwouldcausearealorapparentconflict,thenthe Q8 granteeshouldreassignhisorherdutiesontheprojecttoanotheremployee. =$  2.  ObtainNoConflictCertificationsfromcontractpersonnel(ifrequiredbythe  grantee). Ifthegranteerequiresitscontractpersonnelwhowillparticipateintheadministration  ofacontracttosubmitnoconflictcertifications,thenthegranteeshouldfurnishinformationon  thelikelybidderstothecontractor.Eachcontractoremployeewhowillbeassignedtoworkon   theprocurementshouldsubmithisorhercertificationtothegranteesreviewingofficialbefore ! theselectionprocessbegins.Ifacontractoremployeefailstosubmittherequirednoconflict " certification,thenthegranteeshoulddirectthecontractortoreassignthatemployeesdutiesto #  anotheremployeewhohascompliedwiththecertificationrequirement. $t!  D.  THEADMINISTRATIONPHASE e&L # 1.  MonitorContractStaff/ContractorCompliancewithConflictsRules. Duringthe =($"% administrationphaseofaproject,thegranteeshouldrequireeachofitsemployees(etc.)involved  -)#& intheprojecttoreportanychangesinhisorherfinancialholdingsorotherintereststhatmight  causeaconflictofinterest.Similarly,thegranteeshouldrequirethecontractortoreportany  changesinthecompanysfinancialholdings,newlydevelopedcontractualorotherrelationships,  orthoseofitsparents,subsidiaries,andaffiliates.Inthisway,thegranteecanmonitorthe  situationandaddresspersonalororganizationalconflictsthatmightariseduringthe   administrationphaseoftheproject.    2.  ObtainCertificationsfromContractorPersonnelGovernedbyProfessionalCodes  t ofResponsibility. Beforeacontractorbeginsworkonaproject,thegranteeshouldconsider y ` requestingawrittenstatementfromanycontractorpersonnelworkingontheprojectwhose iP  conductisgovernedbyaprofessionalcodeofresponsibility,ineachcaseidentifyingany U<  relevantcodeandcertifyingthatheorshewillcomplywithitsrulesonallgranteerelatedwork. A(   E.  THROUGHOUTTHEENTIREPROCESS   1.  ConsultwithLegalCounsel. Granteeprocurementandtechnicalpersonnelare   encouragedtoworkcloselyandproactivelywiththeirlegalcounselthroughoutthe  procurementprocesstoreviewallsituationsthatappeartohavethepotentialforaconflictof  interest.Counselcanhelpinanynumberofways,includingreviewingwrittenmaterialsfor  compliancewithconflictsofinterestrules,preparingrestrictivecontractingclausessuitablefor  theparticularsituation,andhelpingtorestructuretheprojecttoavoidconflictsituations. x CounselmayalsosuggestthatinvolvementbyFTARegionalCounselwouldbeappropriateand }d solicitRegionalCounselsadvicewhennecessary. iP  2.  MitigateConflicts. Aspotentialconflictsariseduringtheprocurementprocess,the A( granteemusttakestepstoavoidtheconflictor,ifthatisnotpossible,mitigateitseffects.For 1 example,whereagranteesboardisresponsibleforawardingcontracts,aboardmemberwithan  interestinaprojectbiddershoulddisclosehisinterestandrecusehimselffromtheselection   process.Asanotherexample,whereanemployeehasaninterestinaprojectbidder,thegrantee  couldcreatea firewallpreventingtheemployeefromprovidingthebidderwithany   informationgainedduringhisemploymentwiththegranteethatwouldgivethebidderanunfair ! competitiveadvantage.Asalways,thegranteeshouldconsultwithcounselinformulatingan " appropriateapproachtoanyconflictsituation. #       (lx82#########- 2.4.2.2.3GeographicRestrictions # 'X XJ#  b" ' }%d" *ey1zddxbbxMQ(#(#e,xdd +  'v!$'v!  # '"  b# XX 'REQUIREMENT  '!% `# 'X X # XX 'Paragraph15.hoftheMasterAgreementstates: s)Z#& 0 l h.GeographicalRestrictions.TherecipientagreestorefrainfromusingStateor K+2%( localgeographicpreference,exceptthoseexpresslymandatedorencouragedbyFederal7,&)l"l"  l statute,suchasthosesetforthinSubsection15.iofthisMasterAgreementbelow,oras #- '* Ѐ l permittedbyFTA. .'+  .(, 0 l i.Architectural,Engineering,Design,orRelatedServices....Providedasufficient}dl"l"  l numberofqualifiedfirmsareeligibletocompeteforthethirdpartycontract, iP  l geographiclocationmaybeaselectioncriterion.... U< Paragraph8.bofFTACircular4220.1Estates: -  -l X#X(#-0 l b.0l"l"ProhibitionAgainstGeographicPreferences.Granteesshallconductprocurements "" 0 l 0l"l"inamannerthatprohibitstheuseofstatutoryoradministrativelyimposedinState "" 0 l 0l"l"orlocalgeographicalpreferencesintheevaluationofbidsorproposals,exceptin  "" 0 l 0l"l"thosecaseswhereapplicableFederalstatutesexpresslymandateorencourage   geographicpreference.ThisdoesnotpreemptStatelicensinglaws.However,   geographiclocationmaybeaselectioncriterioninprocurementforarchitectural "" 0 l 0l"l"andengineering(A&E)servicesprovideditsapplicationleavesanappropriatet "" 0 l 0l"l"numberofqualifiedfirms,giventhenatureandsizeoftheproject,tocompetefory` "" 0 l 0l"l"thecontract..$"eL "" d`   . DISCUSSION    TheprohibitionagainstgeographicpreferencesasstatedinFTACircular4220.1Eisbased u\ upon49CFRPart18.36(c)(2).Theonlyexceptionnotedtothisprohibitionisinthe aH procurementofarchitecturalandengineering(A&E)services,whereknowledgeoflocal M4 conditionsandbuildingcodesisarelevantfactorinthequalityoftheA&Eservices.One 9  publicAgency,initsprocurementproceduresmanualforA&Econtracts,recognizesthe %  importanceoftheA&E'sknowledgeoflocalconditions,andrequiresthatA&Eproposals  beevaluatedintermsoftheir:    Knowledgeofthelocalityoftheproject,providedthatapplicationofthiscriterion    leavesanappropriatenumberofqualifiedfirms,giventhenatureandsizeofthe    project.  C  27          ThisAgencyhasstateditspolicyintermswhicharefocusedontheonegenerally }"d acceptedreasonforallowinggeographicalpreferencesanA&Efirm'sdemonstrated i#P knowledgeoflocalconditions,whichisafactoraffectingthequalityofthefinalproduct.  U$<  ThissameAgencyprohibitsgeographicrestrictions,exceptforthosepermittedbyFTAfor E%,! A&Eservices,notonlyforitsownprocurementsbutforthoseofitscontractorsaswell. 2 C  28       1& " Somegranteeshaveusedverylocalizedgeographicalrestrictionsintheirsolicitationsfor '!# partsorserviceswhichmustbefurnishedonashortleadtimebasis;e.g.,withinoneortwo  (!$ hoursoftherequest.Amuchbetterapproach,andonethatisnotprohibitedbytheFTA  ("% Circular,wouldbetorequireanabilitybythecontractortorespondwithinthetimeframe  needed , andnottostipulateageographicalrestrictioninthesolicitation.Thereasonisthat  manypartssuppliersmaintainastaffwhichiscapableofquickresponseeventhoughthey  arenotintheimmediatecityorcountyofthegrantee.    GranteeprocurementofficialsaresometimesconfrontedwithpressurefromtheirBoard   memberstoplacecontractswithlocalfirms,anditisnecessaryforthegranteestoinclude   explicitstatementsintheirprocurementpoliciesandproceduresthatgeographical  x restrictionsareprohibitedexceptforA&Eprocurements,citingtheFTAprohibitionsin } d FTACircular4220.1E,paragraph8.b. iP  2.4.2.2.4Prequalification  A(  *e}1~ddxdd xy1z(#(#e,xdd +      REQUIREMENT  }d  `Paragraph8.dofFTACircular4220.1Estates:   0 l d.PrequalificationCriteria.Granteesshallensurethatalllistsofprequalifiedpersons,  firms,orproductsthatareusedinacquiringgoodsandservicesarecurrentandinclude  enoughqualifiedsourcestoensuremaximumfullandopencompetition.Also,  granteesshallnotprecludepotentialbiddersfromqualifyingduringthesolicitation  period,whichisfromissuanceofthesolicitationtoitsclosingdate..$"ll"l" d`   . DISCUSSION  # 'X X} # XX 'Prequalificationofbiddersandproductshasbeenusedinseveralcircumstances,suchas | whenanAgencyisprocuringcriticalequipmentwithexactingperformancerequirements, h orcriticalserviceswhichareneededonaquickreactionbasis.Aqualifiedproductslist mT (QPL)isalistingofproductswhichhavebeentestedandfoundtohavesatisfiedallofthe Y @ specifiedrequirements.Theproductsonthelistmaybesuppliedbyanyresponsible E!, vendorbiddingontheprocurement.Thequalifiedbidderslist(QBL)isalistingofbidders 1" whoaremanufacturingmorecomplexitems,suchasbuses,requiringsophisticated # manufacturingandqualitycontrolprocedures.Thesebiddersmustbereviewedcarefully  $ todetermineiftheirinternalcontrolsandprocedureswillproducesatisfactoryend $  products.Theseprequalificationproceduresmayalsobeappropriateforcompanieswho %! wishtobidonprocurementsforfurnishingcriticalservices,suchasquickreactionservices & " forrepairs,etc.Onlythosebiddersonthequalifiedbidderslistmaysupplytheproducts '!# orservicesspecified.TheFederalgovernmenthasusedthispracticeforcriticalmilitary ("$ equipment,suchasjetengineturbineblades,orforcriticalquickreactionservicessuchas )x#% shiprepairs.TransitAgenciesusingthisprocedureofestablishingaqualifiedproductslist }*d$& (QPL)oftencitearationaleof:"Forreasonsofefficiency,economy,compatibility,or  i+P%' maintenancereliability,thereisaneedforstandardizationastovarioussupplies,  materials,andequipment."  C  29         BestPractices    DocumentingyourdecisiontoestablishaQPLorQBL 󀄀Caremustbetakentoensurethat   prequalificationproceduresarenotusedtorestrictfullandopencompetition.Towardthisgoal   FederalAgenciesarerequiredtojustifyinwritingthenecessityforestablishinga  x prequalificationrequirement. C  30      SometransitAgencieshavealsochosentofollowthispractice } d ofdocumentingthereasonswhyaparticularpartorserviceisbeingplacedonaqualified iP  productslist(QPL)oraqualifiedbidderslist(QBL),althoughtheyarenotrequiredtodosoby U<  FTA.2 C  31       A(   # 'X X礇8# XX 'Qualifyingduringsolicitationperiod # 'X XqD#Ԅ ??$= 'SomeTransitagencieshavetwodifferentpoliciesasto   bidsofferingproductswhichhavenotbeenqualifiedpriortothesolicitation.Whenusingnon +  Federalfunds,theAgencywillnotallowbidderstooffernonqualifiedproductsinresponsetoa    solicitationbiddersmustobtaincertificationoftheirproductbefore,andindependentlyof,any  solicitationforthatitem.Whenusinggrantfunds,however,granteesmustallowvendorsan  opportunitytoqualifytheirproductsduringthesolicitationperiod(FTACircular4220.1E,  EParagraph8.d).Agranteewouldnotbeexpected,however,todelayaproposedaward(extend | thesolicitationperiod)inordertoaffordavendortheopportunitytodemonstratethatitsproduct w^ meetsthestandardsinthespecification.TheFederalprocurementrulesdonotrequireFederal Y@ Agenciestodelayawards,andthestandardsapplicabletotheseAgenciesshouldbeappropriate ;" forgranteesaswell.# '$= ??D# XX '$n C  32         2.4.3FixedPricev.CostReimbursement     *e1ddxdd x}1~(#(#e,xdd +    REQUIREMENT  ' `Paragraph9.cofFTACircular4220.1EauthorizesprocurementbytheSealedBid/Invitation   ForBids(IFB)methodwhencertainconditionsarepresent.Amongthoselistedisthe !z conditionthat: "f 6l X#l X#60 l (c)  Theprocurementlendsitselftoafirmfixedpricecontractandtheselectionof @!  @!  @!  @!  @"  @" W$>!l"l"  l   thesuccessfulbiddercanbemadeprincipallyonthebasisofprice. C%*"  '!$ Paragraph9.dauthorizesprocurementbytheCompetitiveProposal/RequestforProposals }d # 'X X礲I# XX '#XXX Xyv# XXXX(RFP)methodandeitherafixedpriceorcostreimbursementtypecontractmaybeawarded. iP Paragraph7.irequiresthatgranteesdocumenttheirreasonsforselectingthecontracttypeasa A ( partofthewrittenrecordofprocurementhistory. -  Paragraph10.eprohibitsthecostplusapercentageofcostmethodofcontracting.$  d`   $ DISCUSSION  =$  Theselectionofcontracttypeisprobablythesinglemostimportantdecisionthatthe   procurementspecialistwillmakeintheacquisitionprocess.Aproperlyselectedcontract   typewillworkintheinterestsofthebuyingAgencytoprovideaproductorservicewhich   meetstheAgency'sneedsatareasonablepricewithoutundueriskstothecontractorand   withoutexcessivecontractadministrationcostsandcontractorclaims.Acontractpoorly   suitedtothecomplexityoftherequirement,andthedegreeofspecificityofthe  specificationsorstatementofwork,cancauseadisastroussituationforboththecontractor  andtheAgency.WhenAgencieshavecomplexrequirements,andperformance p uncertaintiesmakeitdifficulttopredictthecostsofperformanceinadvance,sometypeof u\ flexiblypricedcontractshouldbeconsidered.Wherethelengthofcontractperformance aH extendsoveralongperiodoftime,sometypeofeconomicpriceadjustmenttermsmaybe M4 necessary.Asrequirementsarerepetitivelyacquired,andahistoryisestablished,the 9  Agencyshouldbeabletomoreclearlydefinetherequirement,andcontractorsshouldbe %  abletoassumegreaterrisksofperformanceatfixedprices.Granteeshaveaverywide  latitudeinstructuringacontracttypewhichaffordsthebestincentivetothecontractorfor  deliveringtheparticularproductorservicebeingacquired.    Therearetwobroadcategoriesofcontracttypes:fixedpricecontractsandcost  reimbursementcontracts.Withinthesetwofamiliesofcontracttypesthereareanumber   ofsubtypesofferingdifferingdegreesofincentives.Attheextremesarethefirmfixed ! pricecontract,inwhichthecontractorhascompleteresponsibilityforthecostsof "l performanceandtheresultingprofitorloss,andthecostplusfixedfeecontract,inwhich q#X thecontractorhasvirtuallynoriskforperformancecostsandthefee(profit)isfixed. ]$D  Betweenthesetwoextremesarethevariousincentivetypecontractswherethedegreeof I%0! costriskandprofitincentivecanbetailoredtomeetalmostanyspecificprogramsituation. 5& " Allfixedpricecontracttypesimposeuponthecontractoranobligationtodeliverthe !'!# productspecifiedinthecontract,andheisnotentitledtopaymentofthestipulatedprice  (!$ unlesshedeliverstheproductanditmeetsthespecificationscalledoutinthecontract.On ("% costreimbursementcontractsthecontractorisobligatedonlytogiveits"bestefforts"in )#& ordertobepaidthecostsofperformance.(Thefee,however,isearnedforcomplete *$' performanceofthecontract,andiflessthanfullperformanceismade,thebuyingAgency  +%( isentitledtoareductionofthefixedfeebasedonthepercentageofcompletionofthe  work.)  2.4.3.1FixedPriceContracts    #XXX XN# XXXXDISCUSSION     Afirmfixedpricecontractestablishesasingleprice,oraseriesoflineitemorunitprices,  p thatarenotsubjecttoanyadjustmentonthebasisofthecontractor'scostexperiencein u \ performingthecontract.Thecontractortakesfullresponsibilityforthecostandprofit aH  outcome,andthusthecontractorhasmaximumincentivetocontrolcostsandcompletethe M4  contractonschedule.Thiscontracttyperepresentstheleastadministrativeburdenupon 9  thecontractingparties;e.g.,itisnotnecessaryforthebuyertomonitorcontractorcostsor %  toperformcontractcloseoutaudits.Insomecases,however,theremaybeaneedfor   auditsif,forexample,changeordershavebeenissuedonacostreimbursablebasis.   Ѐ1 l<` Firmfixedpricecontractsareappropriateforacquiringcommercialitems,orforsupplies  orserviceswhichcanbeclearlydefinedwitheitherperformance/functionalspecifications  ordesignspecifications,  andwhereperformanceuncertaintiesdonotimposeunreasonably  highrisksuponthecontractor.i X X       iceco     XX   ( C  33      i h X      ideco     XX,     Thisaspectofperformanceriskisimportanttojudge  realistically,forifcontractorsareputintopositionsofundueriskandtheworstcase t happens,thebuyingAgencycanlookforwardtoexcessiveclaims,possiblelitigation,a y` poorqualityproductwherethecontractorhas"cutcorners"tosavemoney,andinsome eL cases,thebankruptcyofthecontractororrefusaltocompletethecontract.Highrisk Q8 performancesituationswillalsoresultincontractorsbuildingcostlycontingenciesinto =$ theirpricesforrisksthatmayneveroccur,resultinginhigherthannecessarypricesand ) excessiveprofitsonthatcontract.  FixedPriceContractsWithEconomicPriceAdjustment󀄀Fixedpricecontractsmay  provideforpriceadjustments(upwardordownward)whenspecifiedcontingenciesoccur.   Thesecontractsaretypicallyusedwhenthereisseriousdoubtaboutthestabilityofselected ! costsorpricesoveranextendedperiodofcontractperformance.Forexample,afiveyear " fixedpricecontractmaypresentanunusuallyhighcostrisktoacontractorforcertain #  commoditypricesorlaborcosts,andthepartiesmayagreetouseaneconomicprice $p! adjustmentclause.Priceadjustmentsmaybebasedonpublishedindices,actualcost u%\" experiencesofthecontractorforcertainmaterialsorlabor,orincreasesordecreasesin a&H # publishedpricesforspecificitems.Thecontractwilldefinethecircumstancesunderwhich M'4!$ theeconomicpriceadjustmentwillbemadeandthemeanswherebyitwillbecalculated. 9( "% Usingeconomicpriceadjustmentclausesisanexcellentwaytodealwithhighrisk %) #&  situationsandavoidhavingtopricetheinitialcontractonthebasisofcontingenciesthat *#' mayneveroccur.Thistechniquemayalsobenecessarytogetcontractorstoacceptfixed  pricecontractsthathavealengthyperformanceperiod.i X X      ineco     XX   * C  34      i h X      ioeco     XX,           `     h   P    & t Pp  BestPracticesPp q  pԌ  Ќ  YoumaywanttorefertotheFederalAcquisitionRegulations(FAR),Subpart16.203Fixed   pricecontractswitheconomicpriceadjustment,andtherelatedcontractclauselanguageinFAR   52.2162,3,4.TheseFARprovisionsandcontractclausesarenotrequiredtobefollowedby  t FTAgranteesbuttheymayprovehelpfulinstructuringcontractlanguageforspecific y ` contingencies.TheFARmaybeaccessedonlineat4 O  5    http://www.arnet.gov/far/tD  6ss   7 t.'t q eL   SteelPriceEscalationClauses !Followingaretwoexamplesofsteelpriceescalationclauses =$  usedbytransitagencies.Thefirstclause(SoundTransit)usesaonetimepriceadjustment.The -  secondclause(NewYorkCityTransit)allowsformultiplepriceadjustments.   h  hv  OneTimePriceAdjustment󀄀Followingisanexampleofaneconomicpriceadjustmentcontract   clauseusedbySoundTransitonetransitagencytoprovideforonesteelpriceincreaseduringthe  periodofthecontract.Notethatthisclause:hvv݌  Ќ  h  hbx    hbxx݌̌   2#(0x"#"  ,N.4 <DL!l X#N   ,E(` ` <DL!4X!E#y2  1  .3   4   BasesthepriceadjustmentonthesteelsuppliersinvoicestotheContractorfromthe  timethebidwaspreparedtothetimethesteelwasorderedaftertheNoticeto t Proceed.#yz݌ y` Ќ 0l X#` ` X!0   "#"  ,N.4 <DL!l X#N  ,E(` ` <DL!4X!E#G|2  2  .3   4   RequiresthattheProducerPriceIndex(PPI)supportthepriceincreaseasinvoicedby  thesteelsupplier.Thisisanimportantsafeguardinestablishingthereasonablenessof  thesuppliershigherpricebycomparingittotheindustrynorm.#G|1}݌  Ќ 0l X#` ` X!0   "#"  ,N.4 <DL!l X#N  ,E(` ` <DL!4X!E#-2  3  .3   4   Limitstheincreasetothelesserofthepercentageincreaseintheinvoicedpricevs.the 3 PPI.#-݌  Ќ 0l X#` ` X!0   "#"  ,N.4 <DL!l X#N  ,E(` ` <DL!4X!E#j2  4  .3   4   RequiresadequatedocumentationfromtheContractor,andtheagencysrightto  w reviewtheContractorsbidpreparationdocumentsandsupplierinvoices.#jT݌ |!c Ќ 0l X#` ` X!0   3, X l X#3  "#"  ,K.4 <DL!, X K  ,0, X 4X!0#32  5  .3   4   Doesnotcontainamaximumpercentagebywhichthecontractpricemaybeadjusted " forsteelpriceincreases.Undernormalcircumstancesyoushouldincludeamaximum # limitonthepercentageincreaseyouwillallowbuttheinclusionhereofthelesserof $ thesuppliersincreasevs.thePPIprovidesacertaindegreeofpriceprotectiontothe %  agency.i X X      icono     XX   0@ C  35      i h X      icono     XX,   #3݌  & ! Ќ  0, X , X 0   E(` ` <DL!, X E"#"  ,H.4 <DL!` ` X!H  ,#2  6  .3   4   Theclauseprovidesfordownwardpriceadjustmentsaswellasincreases.#D݌  Ќ -` ` X!4X!-    q  XXX X XXX X XXX X XXX X        & 4 |  SP9.10 4 0 ` STEELPRICEESCALATIONk gh-Ԍv]` (#` (# Ќ   XXX X XXX X XXX X XXX X   b I  n#(002#/ / |-, X ` ` X!- XA.0 4 ApriceadjustmentclauseisincludedinthisContracttoprovideadditional J 1 compensationtotheContractororacredittoSoundTransitforfluctuationsinsteel 6  prices.Thispriceadjustmentisdependentuponeither:anincreaseordecreaseinthe "  priceofsteelusedintheproductionofproductsutilizedonthisprojectoranincrease   ordecreaseintheratiooftheBureauofLaborStatistics!ProducerPriceIndexlisted   below.Paymentorcreditforsteelpriceadjustmentswillbeevaluatedunderthe   followingconditions.PaymentorcreditwillbemadeundertheContractPayitem:   ProvisionalSum!SteelPriceEscalation.'8 vQ 4(#4(#  H+4 44 <DL!, X H   -, X 444X!-  B. 4 Theconditionsofthisprovisionareasfollows: }   i  0, Xx, X 0  0 4 1.0` 4(#4(#Thisprovisionshallonlyapplytomaterialcostchangesthatoccurbetweenthe nU dateofbidopeningandthedateofcertifiedinvoice.TheContractorisexpected ZA toordermaterialspromptlyuponNoticetoProceed(oruponshopdrawing F- approval)andtakepossessionofmaterialsasquicklyasreasonablypossible.i X X      iޔ     XX   4 C  36      i h X      i     XX,   2` (#` (#     0 4 2.0` 4(#4(#B% <DL!, XxBApriceadjustmenttoprovideadditionalcompensationtoContractorwillbe   consideredandpaidonlywherethepriceincreaseinsteelisduetomarket  conditionsbeyondthecontrolofContractoranditssuppliersorvendors.No  adjustmentisallowedunderthisprovisionforincreasesduetoanyothercauseor  peril(including,butnotlimitedto,strike,weather,vendorbacklog,delayin  fabrication,etc.).Ifapriceadjustmentissoughtunderthisprovision,Contractor  shallcertifytoSoundTransitthatthepriceincreasewasduesolelytomarket y conditionsbeyonditscontrolorthatofitssuppliersandthatContractorexercised ~e itsbesteffortstomitigateanypriceincrease.SoundTransitreservestherightto j Q verifytheaccuracyofsuchcertificationasaconditionofpayment.V!=` (#` (#   X  ?( <DL!  X!?     E+ 4 <DL!  X!E1  1 ݌̌ X  $   X!X!$   *, Xx  X!*  0 4 3.0` 4(#4(#Thispriceadjustmentclauseonlyappliestostructuralsteel,reinforcingsteel,rail, .# steelexcavationsupportelements,andoverheadcatenarystructurepoles.Tobe $  considered,thecategoryofmaterialmusthaveatotaldollarvalueof$25,000or %! greater.%"` (#` (#   X  E( <DL!, XxE     E+ 4 <DL!  X!Ef  f[݌̌ X  *, XxX!*   X-` 4` X , Xx- 4 4. ` TheContractorshallsubmitwithin5daysofNoticeofAward,thefabricatorsor '!$ suppliersmaterialpricequotesfortheitemslistedabovethatmeetthe ("% requirementsofArticle9.10B.3.TheContractormustcertifythattheyarethe  )#&  4 0 ` actualquotedpricesincorporatedintotheContractorsbidamountsubmittedto  SoundTransitfortherepresentedpayitem.SoundTransithastherighttoinspect  Contractorsbidpreparationdocumentstoverifytheaccuracyofsuch  certification.Assumingsuchcertificationisaccurate,thesecertifiedquoteswill  constitutethebaselinesteelmaterialprice.Thequotemustclearlyidentifythe   payitem(s)bynumberanddescription,describetheweightsofthesteelmaterial,   howthesteelmaterialwillbeutilizedinthefinalproject,andabreakdownofall   costsincludingmaterial,labor,equipment,overhead,andprofit.Thissteelprice  t escalationprovisionshallonlyapplytothesteelcomponentofthematerialquote. y ` Itshallnotapplytoanyothermaterialsusedinthefabricationofanitemsupplied eL  totheContractor.Q8 ` (#` (#     B( <DL!` 4` X B     E+ 4 <DL!  X!Eĥ  ĥ݌̌   '` 4` X X!'    4 5.0 ` FortheitemslistedabovethatmeettherequirementsofArticle9.10B.3,the )  increaseordecreaseinthesteelmaterialsunitcostmustbeinexcessof5percent   oftheoriginalquotedpricesorthePPIasdescribedbelow,forapriceadjustment   totheContractortobeallowed. ` (#` (#     B( <DL!` 4` X B     E+ 4 <DL!  X!Eը  ըǩ݌̌   '` 4` X X!'    4 6.0 ` ?% <DL!` 4` X ?Ifthereisanincreaseordecreaseinsteelmaterialscostinexcessof5percent  fromtheoriginalquotedunitprices(orthePPIasdescribedinArticle9.10F  below),SoundTransitwillevaluateanddetermineanincreasedordecreased  payment(s)underthisContractasfollows:p` (#` (#  u\   $ X  X!$C.  Theadjustmentwillbedeterminedbycomputingthemathematicaldifference aH betweentheunitpricethatis5percentabove(orbelowfordecreasesinprice)the M4 baseunitprice(bidquote)andtheactualinvoiceunitpriceofthesteelcomponent. 9  Thefinaldollarvaluewillbedeterminedbymultiplyingthisadjustmentbythe %  representedquantityofsteel.    D.  TheContractorshallsubmittoSoundTransitcertifiedinvoicesassoonassteel  materialispurchased.Theinvoicesshallbelistedinchronologicalorderandcontain   atabulationofquantity,theorderdate,thedateshippedfromthesteelmanufacturer, ! andthepriceperunitweight(reflectingalldeductionsforquantityshipments)witha " breakdownasstipulatedinArticle9.10B.4above.Freightchargesshallbelisted #  separatelyandarenotincludedinthispriceadjustment.Theseinvoicesshallbe $l! subjecttoauditverification. q%X"  ]&D # E.0  SoundTransitwillverifytheincreasedordecreasedpercentagebetweencertified I'0!$ originalquoteandtheactualinvoicepayment.5("%(#(#  !)#& F.  ThischangeshallbesupportedbytheU.S.DepartmentofLabor!BureauofLabor  *#' Statisticsindexentitled ProducersPriceIndex(PPI).Thevaluescontainedinthe *$( PPIaresubjecttorevision4monthsafteroriginalpublication.Thepriceadjustment +%) forsteelshallbeafunctionofthepercentageofchangeofthepriceindexfor ,&*  CarbonSteelScrapSeriesIDWPU101211.Donotuseseasonallyadjusted  -'+   indices.Thisindexisavailableontheinternetat:  4bmO  5  http://data.bls.gov/labjava/outside.jsp?survey=wp6Oted  7bmǴ.    G.  TheProducersPriceIndex(PPI)listedabovemustmeetincreaseordecreasebyat  least5percentoverthesametimeperiodforArticle9.10C.tobevalid.      H.  Forpriceincreases,iftheinvoicedpriceincreased,expressedasapercentage,   exceedsthePPIincrease,expressedasapercentage,forthesameperiod,the  t adjustmentwillbebasedonthePPIpercentincrease;iftheinvoicedpriceincrease, y ` expressedasapercentage,islessthanthePPIincrease,expressedasapercentage, eL  forthesameperiod,theadjustmentwillbebasedontheinvoicedpriceincrease. Q8   =$  I.  Forpricedecreases,ifthevalueoftheinvoicedpricedecreaseexpressedasa )  percentageisgreaterthanthecalculatedvalueofthePPIdecrease,expressedasa   percentage,forthesameperiod,theadjustmentwillbebasedonthevalueofthe   invoicedpercentdecrease.Ifthevalueoftheinvoicedpricedecrease,expressedasa   percentage,islessthanthevalueofthePPIdecreaseexpressedasapercentagefor  thesameperiod,theadjustmentwillbebasedonthePPIpercentdecrease.    J.0  IfthePPIcontrolsindeterminingthepriceadjustment,SoundTransitwillreviewthe  PPI4monthsafterinitialpublicationtoensurethatthedatahavenotbeenrevised. p Finalpaymentswillbeadjustedaccordingly.u\(#(#  aH K.0  AdjustmentFormulas:M4(#(#  9  *` ` ,X X*  1.0 IfInvoicePriceControls:%  (# (#     0 a. PriceIncrease: (# (#     0 (1)Factor=(PC/PB)!1.05)  (# (#  ! 0  0 (#(#IfFactorisequaltoorlessthan0.0,noadjustmentwillbemade." (# (# 0  0 (#(#IfFactorisgreaterthan0.0,continue:PA=Factor*Q*PB#  (# (#  $l!   0 b. PriceDecrease:q%X" (# (#  ]&D # 0  0 (#(#(1)Factor=(PC/PB!0.95)I'0!$ (# (# 0  0 (#(#0 (# (#  (# (# 0  0 (#(#IfFactorisequaltoorgreaterthan0.0,noadjustmentismade.!)#& (# (# 0  0 (#(#IfFactorisgreaterthan0.0,continue:PA=Factor*Q*PB *#' (# (#  *$( 3 " / X` ` ,X 3  Where: " PA= / Steelmanufacturingpriceadjustment,inlumpsumdollars +%) 0  0 (#(# " PB=Fabricator/supplierquotedpriceinbid(convertedtodollars,&* (# (#   0 0" (# (#perpound)-'+" (#" (# 0  0 (#(# " PC=Currentcertifiedinvoiceprice(convertedtodollarsperpound) (# (# 0  0 (#(# " Q=Quantityofmanufacturedsteel,inpounds (# (#   0  2. IfPPIControls:(#(#      0 a. " PriceIncrease:  (# (#      0 (1)Factor=(IC/IB)!1.05) t (# (#    0  0 (#(#IfFactorisequaltoorlessthan0.0,noadjustmentismade.eL  (# (# 0  0 (#(#IfFactorisgreaterthan0.0,continue:PA=Factor*Q*PBQ8  (# (#  =$    0 b. " PriceDecrease:)  (# (#    0  0 (#(#(1)Factor=(IC/IB!0.95)  (# (#    0  0 (#(#IfFactorisequaltoorgreaterthan0.0,noadjustmentismade. (# (# 0  0 (#(#IfFactorisgreaterthan0.0,continue:PA=Factor*Q*PB (# (#     Where: " PA=Steelmanufacturingpriceadjustment,inlumpsumdollars    0 0" (# (#PB=Fabricator/supplierquotedpriceinbid(convertedtodollarsper p pound)u\" (#" (#     " IB=BLSPPIindexatthetimeofbid aH   0  " IC=BLSPPIindexatthetimematerialispurchasedfrommillM4 (# (#   0 0" (# (#(invoicedate;afterfinalUSDOLBLSadjustments)9 " (#" (#     " Q=Quantityofmanufacturedsteel,inpounds %      MultiplePriceAdjustments󀄀Followingisanexampleofaneconomicpriceadjustmentclause  developedbyNewYorkCityTransitforsolicitations.Thisprovisionallowsformultipleprice  adjustmentsduringtheperiodofthecontract.Notethatthisclausereferstothe ScrapSteel   index,butanyindexcouldbeuseddependingonthematerialbeingprocured. !    S  `   SOLICITATIONPROVISION #  PRICEADJUSTMENTCLAUSEFORITEMSCONTAININGSTEEL $l! 34` X  " / X3 4 ToAllProspectiveBidders: ]&D # 0 4 NewYorkCityTransit(NYCT)issolicitingthisitem(s)utilizingapriceadjustment 5("% clause.Theclausesetforthbelowisincludedinthissolicitationbecauseofthesteel !)#& contentoftheitembeingprocuredandthedollaramountoftheitem.Forillustrative  *#' purposes,anexampleofthisformulaisprovidedbelowtoassistyouinthe *$( preparationofyourbid.+%)4(#4(# 0 4 -'+4(#4(#  (x0n#"3"  323  0 `   Inordertoapplytheadjustmentformula,NYCTwillutilizethepredetermined  percentagesteelcontentoftheitemsunitpriceassetforthbyNYCTintheBid  QuotationSheets.Thispercentageshallremainfixedforthedurationofthe  contract.3݌` (#` (# Ќ     "3"  323  0 `   Theunitprice(s)thatNYCTwillpayfortheitem(s)duringthefirstsixmonthsof   thecontractshallbetheunitpricequotedinthebidbythesuccessfulbidder.3݌ ` (#` (# Ќ    t "3"  3N23  0 `   Thereafter,theunitpricemaybeadjusted,eitherupordown,everysixmonths y ` afteraward,reflectingthechangeintheScrapSteelindexsetforthinthe eL  AmericanMetalsMarket.3N{݌Q8 ` (#` (# Ќ   =$  "3"  323  0 `   Theadjustmentwillbeintheformofapercentageandshallbedeterminedby )  NYCTbycomparingtheScrapSteelindexonthedayofbidopeningtotheindex   ineffectoneachsixmonthanniversaryofthecontractawarddatefortheduration   ofthecontract.3$݌ ` (#` (# Ќ    "3"  323  0 `   Thisadjustmentpercentageshallbeappliedtotheportionoftheunitpricethat  representsthesteelcontentofeachitemaspredeterminedbyNYCTtoarriveat  theadjustmentamount.3.݌` (#` (# Ќ   p "3"  323  0 `   Theadjustmentamountisthenappliedtotheoriginalunitpricesetforthinthe u\ successfulbidder'sbidtoarriveatthenewunitpriceforthefollowingsixmonths.3݌aH` (#` (# Ќ   M4 "3"  3323  0 `   Nopriceadjustmentshallbeinstitutedunlessthenewpriceresultsinapercentage 9  changeofatleastfive(5)percent(increaseordecrease)oftheoriginalunitprice %  quotedbythesuccessfulbidder.33`݌` (#` (# Ќ    "3"  323  0 `   Theunitpricerevertsbacktotheoriginalunitpricequotedifthepriceadjustment  calculationateachsuccessivesixmonthintervalresultsinapercentagechange   thatisnotatleastfive(5)percent(increaseordecrease)oftheoriginalunitprice ! quotedbythesuccessfulbidder.3݌"` (#` (# Ќ   #  "3"  323  0 `   Pricesforreleaseorderswillbethepriceestablishedforthesixmonthtimeframe $l! withinwhichtherelease(s)isdated,regardlessofdeliverydate.3D݌q%X"` (#` (# Ќ   ]&D # "3 "  323  0 `   If,foranyreason,theindexbeingutilizedunderthiscontractisdiscontinuedfor I'0!$ anyreason,NYCTwillselectanewindextobeapplied.3݌5("%` (#` (# Ќ   !)#& 34,X 4` X 30 ` EXAMPLEA: *#'` (#` (# 0 ` 0 ` (#` (#  (# (# 0 ` A.0 ` (#` (#SuccessfulBidder'sUnitPrice:$5.00+%) (# (# 0 ` B.0 ` (#` (#%OfItemContainingSteel:50%G-.'+ (# (# 0 ` C.0 ` (#` (#PortionoftheItem'sPricesubjecttoapriceadjustment:$2.50 (# (# 0 ` D.0 ` (#` (#ScrapSteelindexondayofbidopening:150{b (# (# 0 ` E.0 ` (#` (#ScrapSteelindexatthesixmonthanniversarydateofthebid (# (# 0 ` 0 ` (#` (#opening:180? & (# (# 0 ` F.0 ` (#` (#Percentchangecalculation:(ED)dividedbyD=percentagechange.  (# (# 0 ` 0 ` (#` (#Forexample:(180150) 150=.20   (# (#  ` G.0 FXC:$2.50x.20=$0.50eL  (# (# 0 ` H.NewUnitPricefornextsixmonths:A+G=$5.50 ` (#` (# 0 ` EXAMPLEB: ` (#` (# 0 ` A.0 ` (#` (#SuccessfulBidder'sUnitPrice:$12.00  (# (# 0 ` B.0 ` (#` (#%OfItemContainingSteel:100%cJ (# (# 0 ` C.0 ` (#` (#PortionoftheItem'sPricesubjecttoapriceadjustment:$12.00 (# (# 0 ` D.0 ` (#` (#ScrapSteelindexondayofbidopening:75' (# (# 0 ` E.0 ` (#` (#ScrapSteelindexatthesixmonthanniversarydateofthebid0@0 opening:30p (# (# 0 ` F.0 ` (#` (#Percentchangecalculation:(ED) D=percentagechange (# (# 0 ` 0 ` (#` (#Forexample:(3075) 75=0.60M4 (# (# 0 ` G.0 ` (#` (#FXC:$12.00x0.60=$7.20  (# (# 0 ` H.0 ` (#` (#NewUnitPricefornextsixmonths:A+G=$4.80" (# (# 0 ` EXAMPLEC:$` (#` (# 0 ` A.SuccessfulBidder'sUnitPrice:$24.00K!2&` (#` (# 0 ` B.0 ` (#` (#%OfItemContainingSteel:75%"( (# (# 0 ` C.0 ` (#` (#PortionoftheItem'sPricesubjecttoapriceadjustment:$18.00$* (# (# 0 ` D.0 ` (#` (#ScrapSteelindexondayofbidopening:162q%X, (# (# 0 ` E.0 ` (#` (#ScrapSteelindexatthesixmonthanniversarydateofthebid& . (# (# 0 `  opening:1945("0` (#` (# 0 ` F.0 ` (#` (#Percentchangecalculation:(ED) D=percentagechange)~#2 (# (# 0 `  Forexample:(194162) 162=.1975*$4` (#` (# 0 ` G.0 ` (#` (#FXC:$18.00x.1975=$3.555[,B&6 (# (# 0 ` H.0 ` (#` (#NewUnitPricefornextsixmonths:A+G=$27.555#XXX X礑^# XXXX# 'X X礘N# XX ' -'8 (# (#   2.4.3.2CostReimbursementContracts   *l1ddxdd x1(#(#l,xdd +    REQUIREMENT  U< Paragraph10.dofFTACircular4220.1ErequiresthatFederalcostprinciples(describedin   FARPart31)beusedtodeterminetheallowabilityofcostsincurredonthirdpartycost   reimbursementcontractsfinancedwithFederalfunds.However,granteesmayreferencetheir   owncostprinciplesiftheycomplywithFederalcostprinciples.   Paragraph10.eofFTACircular4220.1Eprohibitsthecostplusapercentageofcostmethod qX  ofcontracting.#XXX X礳##'XX#  '' XX ' ]D   #XXX X# XXXX# 'X X# XX ' DISCUSSION eL  Thecostreimbursementcontractisonethatprovidesforpaymentofallowableincurred =$  costs,totheextentprescribedinthecontract.Thesecontractsestablishanestimateoftotal ) costforthepurposeofobligatingfundsandestablishingaceilingonexpendituresthatthe  contractormaynotexceedwithouttheapprovalofthecontractingofficer.Cost  reimbursementcontractsaresuitableforusewhentheuncertaintiesofperformancedonot  permitcoststobeestimatedwithsufficientaccuracytouseafixedpricecontract.  Completionvs.TermFormTwoformsofcosttypecontractsareavailablefordescribing  thecontractor'sresponsibility:thecompletionformandthetermform.Thecompletion  formdescribesthescopeofworkbyspecifyinganendproductordefinitegoal.Thisform p requiresthecontractortocompletetheworkanddelivertheenditemasaconditionfor u\ paymentoftheentirefee.Ifthecontractorfailstocompletethecontract,thebuying aH Agencyisentitledtoareductionintheamountofthefee.Thiswouldmeanthatifthe M4 contractorexpendedalltheestimatedcostandtheworkwasnotcomplete,andtheAgency 9  decidednottoaddmorefunds(estimatedcost)tothecontract,thecontractorwouldnotbe %  entitledtofullpaymentoftheoriginalfixedfee.Thetermformofcontractdescribesthe ! workingeneraltermsandobligatesthecontractortodevoteaspecifiedlevelofeffortfora ! statedtimeperiod.Thefixedfeeispayableattheexpirationofthestatedtimeperiodifthe " contractorhasindeedfurnishedthespecifiedlevelofeffort.Extensionofthetimeperiodis # anewacquisitioninvolvingnewcostandfeeagreements(unlesstheoriginaltimeperiod $  expiresandthereremainsalevelofefforttobeprovided,inwhichcasetheAgencymay %! havetherighttoextendtheperiodofperformancesoastousetheremaininglevelof & " effort).  'l!#  FederalCostPrinciples  FTACircular4220.1EParagraph10.drequiresgranteestouse ])D#% FederalCostPrinciplestodetermineallowablecostsundercosttypecontracts.49CFR M*4$& 18.22,AllowableCosts,definestheFederalCostPrinciplesforvarioustypesofcontractors. 9+ %' ContractswithcommercialconcernsarerequiredtouseFARPart31CostPrinciples,or %, &( granteesmayusetheirowncostprinciplesiftheyareconsistentwithFARPart31.  -&)  l`  AllowableCostandPaymentClause!Costtypecontractswillneedtoincludeaclauseor  clausesaddressingseveralimportantissuesregardingthepaymentofallowablecosts.The  clauseusedinFederalcontractswouldbeusefulasaguideconcerningtheissuesthatneed  tobeaddressed.i X X      i     XX   8 C  37      ׀ThematterscoveredbytheFARclause,andthatshouldbedefinedina  granteescontract(thoughtheFARclauseitselfisnotrequired),wouldinclude:       ! !94` X(#4,X 9 3  a.0 4 Thefrequencyofcontractorbillingsforcostsincurred; 4(#4(# H%` ` <DL4` X(#H  b.0 4 Thereferencetosubpart31.2oftheFARfordeterminingallowabilityofcosts;2 4(#4(# ?%` ` <DL` ` X?  c.0 4 Whetherthecontractormusthaveactuallypaidforthesuppliesorservicesused   incontractperformancebeforeitsubmitsaninvoice,orwhetherthecontractor   mayinvoiceforcostsincurredbutnotyetpaid; 4(#4(# ?%` ` <DL` ` X?  d.0 4 Theprovisionalbillingratestobeusedduringcontractperformanceforindirect ,  costspriortoestablishmentoffinalauditedrates; 4(#4(# ?%` ` <DL` ` X?  e.0 4 Theproceduretobefollowedinsubmittingcostproposalsforestablishingfinal  indirectcostratesforthecontract;|4(#4(# ?%` ` <DL` ` X?  f.0 4 Therequirementthatfinalcosts(directandindirect)beauditedbeforefinal &  payment;4(#4(# ?%` ` <DL` ` X?  g.0 4 TheContractorsassignmenttothegranteeofanyrefunds,rebatesorcredits  accruingtotheContractorthatareallocabletocostsforwhichthecontractor v hasbeenpaid;{b4(#4(#  3?%` ` <DL` ` X?  h.0 4 Areleasedischargingthegranteefromanyfutureclaimsarisingoutofthe   contract.4(#4(# B( 4 <DL` ` XBFixedFee!Itisimportantthatthecontractcontainaclearstatementastohowthe  contractorwillbepaidthefixedfeecalledforinthecontract(i.e.,howthefeeisearned).   TheFederalclausestatesthatthecontractoristobepaidthefixedfee forperformingthis !  contract.<2 C  38      ׀GranteeCPFFcontractsshouldbeclearindefiningthecontractors "{! performanceresponsibilityforearningthefee.Forexample,ifitisacompletionform #g" contract,thenthecontractormustcompletethestatementofworkanddeliverallrequired l$S# documents.If,however,itisatermformcontract,thecontractormustfurnishthe X%?$ requiredlevelofeffortcalledforinthecontractduringtheperiodofperformanceinorder D&+ % toearnthefullfee.Itshouldbenotedthatacosttypecontract,whileitisa bestefforts 0'!& contractintermsofentitlementtopaymentofallowablecosts,doesinfactrequireactual ("' performanceforentitlementtopaymentofthefullfixedfee.Anythinglessthancomplete  )"( performanceentitlesthegranteetoacreditinthefeebasedonthepercentofactual  completionoftheworkcalledforinthecontract.InthisregardaCPFFcontractoperates  verymuchlikeafixedpricecontractinrequiringcompleteperformancebythecontractor  forfullpaymentofthefixedfee.Anexampleofapaymentoffixedfeeclauseusedbya  Federalagencythatillustratesthisprincipleofentitlementtofeeforperformanceisthatof   NASA,whichreads: Thefixedfeeshallbepaidinmonthlyinstallmentsbaseduponthe   percentageofcompletionofworkasdeterminedbytheContractingOfficer.Granteesare   encouragedtoincorporateaPaymentofFixedFeeclauseintheircontractsthatclearly  t statesthecontractorsresponsibilitytoperformthecontractinordertobepaidthefee. y ` Theclauseshouldalsostatehowthefeewillbepaidonamonthly/incrementalbasis(e.g., eL  basedonapercentageofcompletionofworkasdeterminedbytheContractingOfficer).It Q8  isalsosuggestedthatthegranteeconsiderafeewithholdingprovisionthatprovidesfora =$  certainpercentageofthefeetobewithhelduntilthecontractorcompletesanddeliversall )  documentationcalledforinthecontract.Onceagaingranteesmaywanttoreviewthe   Federalclauseforguidance.i X X      i!     XX   > C  39         AdvanceAgreements!Certaintypesofcostsmaybeallowableaccordingtothecost  principles,andyetpresentdifficultiesindeterminingafterthefactwhatisreasonablefor  theparticularcircumstancesofanygivencontract.i X X      i"!     XX   A2 C  40      Itisadvisabletoanticipatethese  areasofpotentialconflictandnegotiateadvanceagreementsbeforethecostsareincurred  (thismaybebeforeorduringthecontractbutshouldalwaysbebeforeincurrenceofthe p costsinvolved).Thetypesofcoststhattendtobeproblematic,andforwhichadvance u\ agreementswouldbeparticularlyhelpful,wouldinclude: aH      n#(1x 9%` ` <DLX9 3  a.0 4 Precontractcosts;9 4(#4(# ?%` ` <DL` ` X?  b. 4 Royaltiesandothercostsforuseofpatents;  ?%` ` <DL` ` X?  c.0 4 Compensationforpersonalservices,includinglocationallowances,hardship [B pay,offsitepay,andincentivepay;G .4(#4(# ?%` ` <DL` ` X?  d.0 4 Timechargeddirectlytothecontractbycorporateofficersandsenior ! managementpersonnelwhonormallychargetheirtimetoindirectcost @ 0@ (# (#accounts;" 4(#4(# ?%` ` <DL` ` X?  e.0 4 Compensationforprofessionalconsultants(e.g.,legal,accountingand U$<" engineering);A%(#4(#4(# ?%` ` <DL` ` X?  f.0 4 Travelandpersonnelrelocationcosts;& %4(#4(# ?%` ` <DL` ` X?  c(J"'   g.0 4 Severancepaytoemployeesonsupportservicescontracts;4(#4(# ?%` ` <DL` ` X?  h.0 4 Trainingandeducationcosts;4(#4(#  3?%` ` <DL` ` X?  i.0 4 Generalandadministrativecosts(e.g.,corporate,divisionorbranchallocations) ; " attributabletothegeneralmanagement,supervisionandconductofthe '  contractorsbusinessasawhole).Thesecostsareespeciallyimportantin   construction,jobsite,andarchitectengineercontracts. 4(#4(# B( 4 <DL` ` XBApprovalofSubcontractors!Therewillprobablybesituationswhenagranteemaywish    torequiretheirprimecontractorsonCPFFcontractstosubmitsubcontractsforthe   granteesconsentpriortoawardofthesubcontractbytheprime.Granteeswillwantto   exerciseduediligenceinthemanagementandadministrationofCPFFcontractswherethe   granteebearsmuchoftheriskofpoorperformance,includingcostoverruns,forboththe n  primecontractorandtheprimessubcontractors.Forguidanceinthisareaofgrantee sZ  reviewandconsenttosubcontracts,seetheBPPMSection9.4!ApprovalofSubcontractors. _F   (x1n#AdequacyofContractor'sAccountingSystem󀄀Itisimportanttodeterminetheadequacy 7 ofthecontractor'saccountingsystemforcosttypecontractsbeforeawardingsucha #  contract.G C  41      Caremustbetakentoassurethattheaccountingsystemcanproperlyidentify  contractcostsbysegregatingthemfromthecostsofotherjobsintheaccountingrecords.  Likewiseitisimportantthatthesystemofallocatingindirectcoststojobs/contracts  producesadistributionofcostswhichisfairandreasonable.  2.4.3.3TimeandMaterialsContracts  e*e1ddxdd x1s#s#e,dd +  jj REQUIREMENT   ` Paragraph7.jofFTACircular4220.1Estates: gN 0 l j.UseofTimeandMaterialsContracts.  Granteeswillusetimeandmaterialscontracts ?!& only:0l "  X#X00 l#l#0" # #  /"" #" #  l   1. Afteradeterminationthatnoothertypeofcontractissuitable;and $!  l 0  2. Ifthecontractspecifiesaceilingpricethatthecontractorshallnotexceed04!##0@4!t#t# @4! %#4!#4!#  l    exceptatitsownrisk. $& $ d`   $  )"% DISCUSSION    Timeandmaterials(T&M)contractsmaybeusedforacquiringsuppliesorservices.  Thesecontractsprovideforthepaymentoflaborcostsonthebasisoffixedhourlybilling  rateswhicharespecifiedinthecontract.Thesehourlybillingrateswouldincludewages,   indirectcosts,generalandadministrativeexpense,andprofit.Thereisafixedprice   elementtotheT&Mcontractthefixedhourlybillingrates.Butthesecontractsalso   operateascosttypecontractsinthesensethatlaborhourstobeworked,andpaidfor,are  t flexible.Materialsarebilledatcost,unlessthecontractorusuallysellsmaterialsofthetype y ` neededonthecontractinthenormalcourseofhisbusiness.Inthatcasethepayment eL  provisioncanprovideforthepaymentofmaterialsonthebasisofestablishedcatalogor Q8  listpricesineffectwhenthematerialisfurnished.Thesecontractsalsomayprovidefor =$  thereimbursementofmaterialhandlingcosts,whichareindirectcosts,suchas )  procurement,inspection,storage,payment,etc.Theseindirectcostsarebilledasa   percentageofmaterialcostsincurred(similartothebillingofoverheadcostsasa   percentageofdirectlabor).Suchmaterialhandlingcostsmustbesegregatedinaseparate   indirectcostpoolbythecontractor'saccountingsystemandmustnotbeincludedinthe  indirectcostsincludedaspartofthefixedhourlybillingratefordirectlabor.Itwould  alwaysbeprudenttoobtainapreawardauditofthecontractor'saccountingsystemto  determinetheadequacyofthesystemtoproperlysegregatematerialhandlingcostsfrom  otheroverheadcostsbeingbilledwiththefixedhourlyratesforlabor. p  UseOnlyWhenNoOtherTypeWillWork󀄀TheFTACircularrequiresthatyoumakea aH determination,beforeusingthistypeofcontract,thatnoothertypeofcontractissuitable. M4 Thereasonwhythistypeofcontractistheleastpreferableofallallowabletypesisthatit 9  createsadisincentiveforthecontractortocompletethecontractinatimelymanner.Since %  eachlaborhourexpendedcarrieswithitaprofit(andapredeterminedoverheadcharge)  builtintothefixedhourlyrate,thecontractorismotivatedtoworkasmanyhoursas  possible.Thereisnoincentivetocompletethecontractquickly,andthusminimizetotal  coststothebuyer.(InaCPFFcontractthefeeisfixedindollartermsattheoutsetofthe   contract,allowingthecontractortoearnthefeewhenevertheworkiscomplete,thus ! providingsomeincentivetofinishthecontractasquicklyaspossible.)  "  Subcontracts IfyourT&Mcontractwillinvolvesubcontractsforlargedollaritemsor $l! services,youwillneedtoevaluatewhetherthecontractor'smaterialhandlingcostsshould u%\" bechargedtotheselargedollarsubcontractsasanindirectcost(asanoverheadtypeof a&H # charge),becausetodosomayresultinaninequitableallocationoftheseindirectcoststo M'4!$ yourcontract.Thisisbecausethelargedollarvaluesubcontractwillabsorbafargreater 9( "% proportionoftheindirectcostpoolthanitshould,basedonareasonableassessmentofthe %) #& materialhandlingcostsactuallygeneratedbythesubcontractversusthosegeneratedbyall *#' othermaterialsprocuredbythecontractorforothercustomers.Whenthissituationarises *$( youwillwanttonegotiateanadvanceagreementwiththecontractorastothechargingof +%) materialhandlingcosts.Itmaybemoreequitabletopayforthecostofsubcontract ,&* administrationonadirectchargebasis;i.e.,thelaborcostforthesubcontractadministrator  -'+ chargeddirectly.Oryoumaywanttonegotiateareducedindirectmaterialhandlingcost  ratetobechargedtothesubcontract(whichrepresentsamoreequitableallocationofthe  materialhandlingcostsactuallygeneratedbythesubcontract).# 'X X礛#   XX 'CeilingPrice󀄀YouwillneedtospecifytheAgency'smaximumobligation(ceilingprice)in   thecontract;i.e.,thelimitationoftheAgency'sfinancialobligationwhichthetotalfunds   allottedtothecontractwillallow.Thecontractormaynotexceedthisfundinglimitation   withoutyourwrittenauthorizationintheformofacontractmodificationaddingmore   funds.   ProperAgencySurveillance󀄀ThistypeofcontractrequiresahighdegreeofAgency y`  surveillanceduringperformanceinordertoprovidereasonableassurancethatefficient eL  methodsandcostcontrolsareusedbythecontractor.# 'X X礎C# Q8   XX 'AvoidCostPlusPercentageofCostArrangements󀄀AsdiscussedbelowunderCPPC Q8  contracts,caremustbetakennottostructureanagreementwhichcompensatesthe =$ contractoratapredeterminedpercentage(foroverheadorprofit)ofactualcostsincurred.If ) youbreakouttheoverheadandprofitfromthelaborrateandcallforthemtobebilledas  separateratesbasedonactuallaborcostsincurred,youwillhaveanillegalcostplus  percentageofcostsituation.Overheadandprofitmustberecoveredasapartofthefixed  hourlybillingrateforlabor,asdiscussedabove.Youmayallowthecontractortobill  materialhandlingcostsasanindirectcostrateappliedtoactualmaterialcosts,provided  thecontractorsegregatesmaterialhandlingcostsintheaccountingsystem.Youshould  conductacontractcostcloseoutauditofthematerialhandlingcostpoolandadjustthe  ratesbilledtothoseactuallyincurred(asyouwoulddoforanoverheadrateonacost p reimbursementcontract).However,wheretheactualmaterialhandlingcostsarenotlarge, u\ AgenciesmayelecttocloseouttheT&Mcontractwithoutafinalcostauditofthematerial aH handlingcostpool. # 'X XF# M4   XX '2.4.3.4LaborHourContracts K!2 DISCUSSION ##  Laborhourcontractsareavariationofthetimeandmaterialscontract,differingonlyin $! thatmaterialsarenotsuppliedbythecontractor.Youshouldusethistypeofcontractonly %" whennootherwouldbesuitable,andyouneedtodocumentyourdeterminationifyou & # choosetousethistypeofcontract. '!$ 2.4.3.5CostPlusPercentageofCostContracts(CPPC)  )~#&  DISCUSSION  o+V%(  TheFTACircular4220.1Eclearlyprohibitstheuseofthiscontractingmethod.CPPC G-.'* contractsareprohibitedbystatuteandFTAmaynotgrantwaiversforgranteestousethis  3.(+ methodofcontracting,L C  42      Granteesmustnotonlyavoidusingthistypeofcontract  themselves,theymustalsoinsertclausesintheircosttypecontractsthatprohibittheir  primecontractorsfromusingCPPCsubcontracts.Caremustbetakentoavoidanykindof  agreementwherebythecontractor'sfeewouldbeincreasedautomaticallywithincreasesin  aparticularcostelement.Generally,anycontractualarrangementwherebythecontractor   isassuredofgreaterprofitsbyincurringadditionalcostswillbeheldillegal.Theobvious   problemwiththisformofcontractisthatprofitsincreaseinproportiontodollarsspent,   thusprovidingapositiveincentivetoinefficiency.TofallwithinthedefinitionofCPPC,the  t agreementmustprovidethatthecontractor'scompensation,orsomeportionofit,willbe y ` computedasapercentageofsomeofthecostsofperformance.Soforexample,itisnot aH  permissibletopayforoverhead(indirect)costsbyestablishingapredeterminedpercentage M4  inadvanceandstipulatingthatoverheadexpensewillbereimbursedasastatedpercentage 9  ofsomeothercostsuchasdirectlabor.Theproblemwiththisarrangementisthatsuch %  compensationmaybegreaterthanthecontractor'sactualandfinaloverheadexpenses,   whichmeansthepaymentbecomesadditionalprofit.Inthesameway,atimeandmaterials   contractwhichcalledforpaymentofoverheadandprofitatpredeterminedpercentagesof   15%and10%ofcostincurredwasheldtobeillegal.P C  43        Thisisnottoprohibitprovisionaloverheadrateswhichareauditedandadjustedtoactuals  attheendofthecontract,nordoesitprohibitprovisionalorinterimfeepaymentsbasedon  costsbeingincurred,becausethetotalfeeisfixedattheinceptionofthecontractandwill l notincreasewithincreasesinactualcosts.Itisalsopermissibletopayamaterialhandling qX chargeasapercentageofmaterialcostsincurredifthecontractorhasaseparatematerial ]D handlingcostpool.Thisindirectcostpoolshouldbeauditedaftercontractcompletion,and I0 thebilledratesshouldbeadjustedtoactualsbasedontheaudit. 5 Anotherwayofavoidingtheproblemistoincludeoverheadandprofitinfixedratesfor   labor.Thisisdoneintimeandmaterialsandlaborhourcontractswherecontractorsare  paidonerateforeachhouroflaborperformed.Thistypeofarrangementisnotillegal,but  itstilltendstooperateasadisincentivetocontrolcost(morehoursworkedequalsmore   profits),andforthisreasonshouldbeavoidedwheneverothercontractingoptionsexist. ! 2.4.4Payments  #|  Paymentisthebuyer'smostimportantcontractualobligation.Paymentsaretheprincipalsource m%T" offundsduringcontractperformanceallowingthecontractortocontinueworking.Delaysin Y&@ # paymentscanhaveaseriouseffectonthecontractor'sabilitytocontinueperformance.Whenless E',!$ thanfullpaymentismadeofacontractor'sinvoice,theterms"withholding"and"setoff"are  1("% commonlyusedtodescribetherefusaltomakefullpayment.Theterm"finalpayment"usually  impliesthatbothpartiestothecontracthavefulfilledalloftheirresponsibilities.  Therearetwomajortypesofcontractpayments:(1)paymentsforcompleteditemsofwork  (includingpartialpayments),and(2)progresspaymentsbasedoncostsincurredorupona   percentageofcompletionofthework.Anothertypeofpayment,whichisusedonlyunder   extraordinarycircumstances,ispaymentinadvanceofdoingthework(advancepayments).    2.4.4.1PaymentofthePrice  y ` Paymentofthecontractpriceisdueuponcompletionoftheworkandsubmissionofthe Q8  contractor'sinvoice.Whenthecontractauthorizesdeliveryorperformanceinincrements, =$  paymentofaportionofthecontractpricemaybemadebeforethecontractiscompleted.Such )  paymentsarereferredtoaspartialpayments.Partialpaymentsarenotconsideredtobea   financingtechniquebuttheycanbeanimportantmeansofprovidingfundsforperformance,and   theyshouldbeusedwheneverthecontractcanbestructuredintermsofincrementalstagesor   deliveriesandthereareappropriateacceptancecriteriaforthesupplies,servicesorcompleted  subsystemsofalargersystem.Inotherwords,whentheAgencycansafelyinspect,testand  accepttheseunitsandmakea"final"paymentforthoseitemsdelivered,withouthavingtoworry  abouttheirfunctioningaspartofalargersystem,thenpartialpaymentsshouldbeestablishedin  thecontract. p  2.4.4.2AdvancePayments  aH *e1dddd 1s#s#e,dd +  9 9   REQUIREMENT   `N(@ X , Xl "  X#NFTACircular4220.1E,Paragraph12.a, AdvancePayments,states:  0  0|##00|#|# FTAdoesnotauthorizeandwillnotparticipateinfundingpaymentstoacontractor  priortotheincurrenceofcostsbythecontractorunlesspriorwrittenconcurrenceis   obtainedfromFTA.Thereisnoprohibitiononagrantrecipientsuseoflocalfundsfor ! advancepayments.However,advancepaymentsmadewithlocalfundsbeforeagrant " hasbeenawarded,orbeforetheissuanceofaletterofnoprejudiceorotherpreaward #  authority,areineligibleforreimbursement..$"$x!0#0# d`   .Rl "  X#@ X , X hR DISCUSSION & " Advancepaymentsareactuallyamethodoffinancingandnotamethodofpayingforwork ("$ completedoritemsdelivered.Theyaremadepriortoacontractor'sincurrenceofcostsin )t#% ordertoenablethecontractortoperformthecontract.TheFederalGovernmentplaces y*`$& severerestrictionsonitsownuseofadvancepayments(FARcoveragemaybefoundat e+L%' FARSubpart32.4).Asindicatedbelowintheparagraph ExceptionstothePriorApproval Q,8&( Requirement,whenadvancepaymentsaregenerallyacceptedindustrypractice,FTAdoes =-$') notrequirepriorapproval. ).(* ЇTheFTACircularrequiresFTAapprovalbeforegranteesmayusethisformoffinancing  onthirdpartycontracts.However,theFTACircularclearlyrestrictstheadvancepayment  prohibitiontothosecontractswherethegranteeisusingFTAfundsfortheadvance  payment.IftheadvancepaymentsarebeingmadewithnonFTAfunds,thenFTAhasno  involvementinthedecisionandneednotapproveofit.Granteesarefreetouselocalfunds   tofinancetheircontractorsinthismanneriftheydeemitappropriate.TheCircularalso   coversthesituationwhereagranteemaywishtouselocalfundsforadvancepayments   beforeagranthasbeenawardedorbeforeFTAhasissuedaletterofnoprejudicetothe  t grantee.InthesecasesFTAwillnotreimbursethegranteelaterforsuchpayments. y ` ExceptionstothePriorApprovalRequirement󀄀TheFTArequirementforpriorapproval Q8  ofadvancepaymentsdoesnotapplytotransactionswhereitis generallyaccepted =$  industrypracticetopayinadvance.Inthesesituations,granteesmaymakeadvance )  paymentswithoutpriorFTAapproval.Thesesituationswouldinclude(butnotnecessarily   berestrictedto)thefollowingtypesoftransactions:     1.0  Rents#s#   2.0  Tuitions#s#   3.0  Insurancepremiumss#s# 0  4.0s#s#SubscriptionstoPublicationss#s#   5.0  Softwarelicensesps#s#   6.0  Constructionmobilizationcostsu\s#s#   7.0  PublicutilityconnectionsaHs#s#  P 'X X ' '    Pv  # ' 'L# XX 'BestPracticesPvw ctvԌ 9  Ќ XXX X XXX X  # 'X XJw# XX ' # 'X X'x# XX 'NewYorkCityTransit(NYCT)completedamajorprocurementforrailcarsinwhichtherewere  twopaymentschedulesintheRequestforProposals(RFP).Thefirstwasapaymentschedule  containingmilestonepaymentstotaling20%ofthepriceofcarspaidpriortotheacceptanceofthe  firsttesttrains.Asecondor"Alternate"paymentschedulehadmilestonepaymentsof42%ofthe   priceofcarspaidpriortotheacceptanceofthefirsttesttrains.Contractorswererequiredto ! submitproposalsbasedonbothpaymentscenarios,aswellasanyalternativepaymentplanthey " wishedtopropose.NYCTrequestedthattheFederalTransitAdministration(FTA)provide #  writtenconcurrencetomakeadvancedpaymentsuptoapproximately45%ofthepriceofthe $l! carsiftherewasappropriateconsiderationforgreaterpaymentsmadeupfront.Inaddition, q%X" NYCTrequiredthatanAdvancedPaymentBondorLetterofCreditbeprovidedinthefull ]&D # amountofthepriceofcarspaidpriortotheacceptanceofthefirsttesttrains.FTAprovidedtheir I'0!$ writtenconcurrencetoNYCT'srequest. 5("%  Inordertoevaluatetheproposalsreceivedfromthecontractors,NYCTperformedaNetPresent  *#' Valueanalysisofthe20%,42%andothercontractoralternativesinordertoquantifythevalueof *$( thedifferentpaymentschedules.Theanalysistookintoaccountthecostofmoneyandallaspects +%)   ,&* ofthetimingofinvoicing,startingwithreceiptoftheinvoicethroughthetimeforactualpayment.  TheNetPresentValueanalysisshowedthatappropriateconsiderationwasgiveninthewinning  proposalandNYCTacceptedit.AnAdvancedPaymentBondorLetterofCreditwasrequiredto  protectallpaymentsforcarspriortoacceptanceofthetesttrains.   ThiscaseshowsaveryconservativeapproachastowhatisdefinedasanAdvancePayment.The   AdvancePaymentisconsideredtobetheamountpaidtothecontractorforcarsuntilthefirst   trainsareacceptedbyNYCT.Thecontractorisrequiredtodesign,buildandtestthefirst18cars  t whichmeansthatthecontractorisincurringsubstantialcostsduringthisperiod.Thesecosts y ` includeengineeringanddesignhours,supervision,orderingmaterials,setupoftheproduction eL  line,etc.Thecontracthasamobilizationpaymentof3%uponawardofthecontractandapproval Q8  oftheAdvancePaymentBondorLetterofCredit.Thereafter,thecontracthasmilestone(or =$  completiontypeprogresspayments)forvarioussubmissionsofdesigns,approvalsofdesigns, )  startingoftests,completionoftests,etc.Amoreliberalapproachwoulddefinethemobilization   costof3%tobeconsideredanAdvancePaymentandtherestofthepaymentstobeconsidered   progresspayments.   0   s#s#  2.4.4.3ProgressPayments   # 'X Xwx#  XX '#XXX XY#*l1dddd 1s#s#l,dd +   REQUIREMENT     Paragraph12.bofFTACircular4220.1Estates: h ?l` X#l "  X#?0 l b.0l#l#ProgressPayments.Granteesmayuseprogresspaymentsprovidedthefollowing @"  Y@ requirementsarefollowed: S C  44      E,## ?l m  X#l` X#? l   1.0 Progresspaymentsareonlymadetothecontractorforcostsincurredinthe  performanceofthecontract.U C  45        # #  l   2.0 Thegranteemustobtainadequatesecurityforprogresspayments.Adequate   securitymayincludetakingtitle,letterofcreditorequivalentmeanstoprotect ! thegranteesinterestintheprogresspayment.\ C  46      ׀0, # #   #",#,#  # $  DISCUSSION  Progresspaymentsareameansoffinancingcontractorsthatareperformingfixedprice  contracts(a)underunusualcircumstanceswhereacontractorcannotgetprivatefinancing  atareasonablecost,or(b)wherethecommercialpracticefortheitembeingprocuredisfor   thebuyertoprovidefinancing(e.g.,rollingstockprocurements).d C  47      iXX      iVtal.    XX  ihX      i tal.    XX,  Therearetwomajor   typesofprogresspayments:thosebasedoncostsandthosebasedonapercentageof   completionofwork.Bothtypesareconsideredcontractfinancingmethods(seeFAR  t 32.102).Progresspaymentsmaybeappropriateif: y `   Q+` ` ` <DL!l m  X#Q eL  "3"   6,S` X` ` ` X!6323  0 4   Thecontractorwillnotbeabletobillforthefirstdeliveryofproducts,orother Q8  performancemilestones,forasubstantialtimeafterworkbegins.InFederal =$  contractingpractice,theusualcontractdurationforusingprogresspaymentsis )  fourmonthsormoreforsmallbusinessesandsixmonthsormoreforothers,and3݌ 4s#4s# Ќ  $   K( <DL!,S` XK   E+` ,` <DL!  X!E$   $ ݌   Ќ  6,S` X` ,` X!6   "3"  323  0 4   Thecontractor'sexpenditurespriortodeliveryofthefirstitemswillhavea   significantimpactonthecontractor'sworkingcapital.iXX      ital.    XX  i C  48      ihX      iҗtal.    XX,   k N+ ,` <DL!,S` XN3ߕ݌4s#4s# Ќ     H+ 4 <DL! ,` X!HProgresspaymentsaretobedistinguishedfrompartialpayments.Partialpaymentsare  paymentsmade,asauthorizedbythecontract,upondeliveryandacceptanceofoneormore y` completeunits(oroneormoredistinctitemsofservice)inaccordancewiththecontract A( specifications,eventhoughotherquantitiesremaintobedelivered.Notethatpartial   paymentsareforcompletedunits,whereasprogresspaymentsareforuncompletedworkin  progress.  Becausethegranteeismakingpaymentsforuncompleted,nonfunctionalunits,FTA ) requiresthatadequatesecuritybeobtainedfromthecontractorprotectingthegrantees  (andFTAs)investmentincasethecontractorfailstocompletethedeliverableunits.The  formofsecurityistobedeterminedbythegranteebasedonwhatisinthebestinterestsof h thegranteeintheparticularcircumstances.(Seefootnoteabovereadequatesecurity.) I0  ProgressPaymentsBasedonPercentageofCompletion󀄀TheFederalGovernment   authorizesprogresspaymentsonitscontractsbasedonapercentageorstageofcompletion ! ofthework.Thistypeofprogresspaymentisstandardforconstructioncontractsforall " Federalagencies.iXX      iare    XX  k2 C  49      ihX      iŠare    XX,  󀀀49CFRPart18.21(d)allowsgranteesandsubgranteestousethe #  percentageofcompletionmethodtopaytheirconstructioncontractors,whichisconsistent $p! withtheregulationsforFederalcontracts.However,granteesmaynotusethepercentageof  u%\" completionmethodfornonconstructioncontracts.Forthosecontracts,progresspayments  basedoncostsincurredmustbeused.iXX      iIare    XX  r C  50      ihX      iXare    XX,    ContractClause!GranteesshouldrefertotheFARclauseatFAR52.23216forguidance  onthespecificissuesthatneedtobeaddressedintheprogresspaymentsclauseandensure   thattheiragencysclauseadequatelycoverstheimportantissues,including:   "3"  0  3z23  0` s#s#  Computationofamounts!percentageoftotalcosts,definitionof coststobe  h includedinthecalculation(i.e.,onlythoseactuallypaidbythecontractor, m T incurredbutnotpaid,etc.).3z݌Y@ ` s#` s# Ќ  B+` ` ` <DL!X!B"3"  H+ 4 <DL!` ` ` X!H X323  0 `   Liquidation!themethodoflinkingvaluereceivedtopaymentsmade.3݌1 ` s#` s# Ќ  0 `  ` s#` s# "3"  323  0 `   Reductionorsuspensionofpayments!thecircumstancesunderwhichthe    granteemayreduceorsuspendprogresspayments.3E݌ ` s#` s# Ќ  B+` ` ` <DL!X!B0   s# s# "3"  H+ 4 <DL!` ` ` X!H3֫23  0 `   Title!thisprovisionshoulddefinethepropertyconsideredallocabletothe  contract(parts,materials,specialtooling,specialtestequipment,drawings  andtechnicaldata,etc.)andthepartythatretainstitletotheproperty/work  inprocessforwhichtheprogresspaymentsaremade.3֫Y݌x` s#` s# Ќ  0 `  ` s#` s# "3"  3k23  0 `   Riskofloss!thecontractshouldbeclearastowhichpartyassumestherisk iP oflosstocontractpropertyandworkinprogressbeforefinalacceptanceof U< theunits.IntheFederalclause,thecontractorassumestheriskoflosseven A( thoughtitletoallpropertyacquiredunderthecontractvestsintheGovernment.3k݌-` s#` s# Ќ  0 `  ` s#` s# "3"  3а23  0 `   Progresspaymentstosubcontractors!thisprovisionneedstodefinethe  circumstancesunderwhichtheprimecontractormustmakeprogress  paymentstofixedpricesubcontractors,andthesubcontracttermstobe  included(coveringthesameissuesastheprimecontractsprogresspayment   clause).3а݌!` s#` s# Ќ  0 `  ` s#` s# "3"  3223  0 `   Adequateaccountingsystem/reports!thecontractmustrequireanadequate #h  joborderaccountingsystemtobemaintainedthatproperlyaccountsforthe m$T! costsofthejobeventhoughthecontractisfixedprice.Thisprovisionshould Y%@" alsogivethegranteetherighttorequirecertainreportsorotherdatain E&, # supportofthecontractorsinvoices.32_݌1'!$` s#` s# Ќ  0 `  ` s#` s# "3 "  3ȵ23  0 `   Accesstorecordsthisprovisionmustgivethegranteetherighttoconduct )"& auditsofcostsclaimedinprogresspaymentinvoices.3ȵ݌)#'` s#` s# Ќ   *$(  X2.4.4.4WithholdingandFinalPayment  DISCUSSION  Anumberofcontractprovisionsexpresslyauthorizethewithholdingofpayments.See,for   example,theDavisBaconActClauset C  51      ortheContractWorkHoursandSafetyStandards   ActClause.v2 C  52      ThestandardFederalgovernmentclauseforthepaymentoffixedfeeon   CPFFcontractscallsfora15%withholdingofthefixedfeeuntilthecontractorsubmitsa  t certifiedfinalindirectcostrateproposalandotherwisecomplieswiththefinaldeliverable y ` documentationrequirementsofthecontract(e.g.,deliveryofthefinalreportconcerning eL  inventionsmadeunderthecontract). Q8  LimitationonWithholding󀄀Intheeventyoudecidetowithholdpaymentsonacontract, )  youmusttakecarethattheamountofmoneywithheldbearsareasonablerelationshipto   theunsatisfactorywork;inotherwords,theamountwithheldmustrepresentareasonable   estimateofthecontractor'spotentialliability.}n C  53      Moreover,theamountwithheldmustnot   besogreatthatitimpairsthecontractor'sabilitytoperform. C  54      Youmayalsowishto  consideraclauselimitingtheamountofpaymentsthatmaybewithheldintotalunderall  clausesofthecontract,asisthepracticeonFederalcontracts. C  55        FinalPayment󀄀Finalpaymentismadetothecontractorwhenithassatisfiedallofthe p deliverablerequirementscalledforbyallprovisionsofthecontract,includingallofthe u\ requireddocumentation.Finalpaymentsignifiesthattheperformanceobligationsofboth aH partiestothecontracthavebeensatisfied.Beforemakingafinalpayment,therefore,you M4 shouldobtainasignedreleasefromthecontractorreleasingtheAgencyfromanyfurther 9  claimsbythecontractor.Youshouldalsoensurethattheprogramofficehassigneda %  receivingandinspectionreportcertifyingthatalldeliverableitemshavebeenreceived,  inspected,andacceptedasbeinginconformancewiththecontractspecifications.  RetainageonConstructionContracts󀄀ForadiscussionofretainageonConstruction   Contracts,seeBPPM,Section10.1,paragraphentitled RetainageandtheProblemsof ! ContractorswhoQuitWork. "   $l! 2.4.5IndefiniteDeliveryContracts   Whentheexacttimesortheexactquantitiesoffuturedeliveriesarenotknownatthetimeof  contractaward,orwhentheshelflifeoftheproductneededisshort,granteesmaywishto  considersomeformofindefinitedelivery(ID)contract.Indefinitedeliverycontractsoffera   numberofadvantagesthatwillbediscussedbelowwitheachtypeofIDcontract.Asageneral   rule,however,IDcontractspermitthegranteetomaintaininventoriesatminimumlevelsand   provideflexibilitywithrespecttoshipmentstovarioususerlocations.Italsofacilitates  t decentralizedorderingbyusersatdifferentlocations. y ` Therearethreetypesofindefinitedeliverycontracts: Q8   2(4x E.4` <DL!X!E  1.0 4 Definitequantitycontracts,) 4s#4s#   2.0 4 Requirementscontracts,and 4s#4s#   3.0 4 Indefinitequantity(IQ)contracts(commodities)/Taskordercontracts(services). 4s#4s# H+ 4 <DL!4, XH 2.4.5.1DefinitequantityContracts   Adefinitequantitycontractisonewhichprovidesfordeliveryofadefinitequantityofspecific  suppliesorservicesduringatimeperiodwhichisfixed,withdeliveriesorperformancetobe  scheduledatdesignatedlocationsatthetimeeachorderisplacedunderthecontract.Thistype p ofcontractisappropriatewhenthegranteeknowsinadvancehowmanytotalitemsitwillneed u\ duringthecontractperiodbutisuncertainastotheexacttimeortheexactamountofitsneeded aH deliveriestoanygivenlocation.Thesuppliesorservicescalledforbythistypeofcontractmust M4 beregularlyavailablefromthesupplieroravailableafterashortleadtime. Forguidanceasto 9  orderingquantitiesabovethequantitystatedinthecontract,seeSection2.4.5.3below,paragraph ) entitledOrdersabovethestatedmaximum.   2.4.5.2RequirementsContracts   Arequirementscontractisoneinwhichthegranteecommitstoplaceallofitsrequirementsfora ! particularitemorservicewithaparticularcontractorduringaspecifiedcontractperiod,with " deliveriesorperformancetobescheduledatthetimeeachorderisplacedunderthecontract. #  Thistypeofcontractisusedwhenquantitiesand/orthetimesofneededdeliveriesareuncertain. $p! Itpermitsflexibilitytothegranteeinbothquantitiesanddeliveryschedules.Itmayalsoshorten u%\" thedeliverytimeofaproductthathasalongerproductionleadtimebecausethecontractor a&H # knowsthatthegranteewillobtainallofitsrequirementsunderitscontractandinthissituation M'4!$ contractorsmaybewillingtomaintainsomelevelofinventory.Arequirementscontractalso 9( "% allowsfortheorderingofsuppliesorservicesafterrequirementsbecomeknown.Itdiffersfrom %) #& theindefinitequantitycontractinthatitpromisesthecontractorthatallofthegrantees *#' requirementsfortheparticularitemwillbeprocuredfromthecontractor,whereastheindefinite *$( quantitycontractmakesnopromiseofthisnatureandmayinfactbeoneofseveral(multiple) +%) contractsawardedforthesameitemorservice.Therequirementscontractmayproducebetter ,&* pricesforthegranteeinthatthecontractorisassuredfromthebeginningthatallsuppliesor  -'+ servicesofthetypecalledforwillbeprocuredfromthecontractorduringastatedperiodoftime.  Thedisadvantagetothegranteeisthatitwillbecommittedtoorderallofthedesignatedsupplies  atthecontractedpriceevenifitlaterlearnsthatthesuppliescanbeorderedelsewheremore  cheaply.  ЀEstimatedtotalquantity!Whenthistypeofcontractisused,granteesshouldstatearealistic   estimatedtotalquantityinthesolicitationandintheresultingcontract.Thisestimateisnota   guaranteebythegranteethatitwillbuytheestimatedquantity,butisagoodfaithestimateof  t whattherequirementsarelikelytobe.Theestimateshouldbebasedonrecordsofprevious y ` requirementsaswellasthemostcurrentinformationavailable. eL  Maximumandminimumquantities!Thecontractshouldprotectthecontractorbystatinga =$  maximumlimitofthecontractorsobligationtodeliver.Thismaximumlimitmaybeexpressed )  fortheentirecontract,aswellasforeachindividualorderandforanyparticularperiodoftime   withinthecontractperiodofperformance.Minimumorderamountsmayalsobeexpressedfor   eachorderplacedandforthecontractasawhole.Minimumorderamounts,however,arenot   requiredforthistypeofcontractbecausethegranteescommitmenttobuyitsrequirementsfrom  thecontractorrepresentsthelegalconsiderationnecessarytomakethecontractbinding.For  guidanceastoorderingquantitiesabovethemaximumamountstatedinthecontract,seeSection  2.4.5.3below,paragraphentitledOrdersabovethestatedmaximum.Itshouldbenotedthatthe  minimumandmaximumquantitiesinarequirementscontractareforthecontractorsprotection p anddonotnecessarilylimitthegranteesprocurementauthoritytoordermoreunits(sincethe u\ granteehascontractedtoawardallofitsrequirementstothecontractor).Thusthegrantees aH authoritytoaddunitstoarequirementscontractwithoutrecompetitionisfoundedonitsinitial M4 promisetoawardallofitsrequirementstothesuccessfulcontractorandsuchadditionswouldnot 9  constituteanimpermissibleincreaseinscope(aswouldbethecasewithanindefinitequantity %  contractwhenthegranteeseekstoaddunitsabovethestatedmaximumseebelow).   2.4.5.3IndefinitequantityContracts   Anindefinitequantitycontractisonethatprovidesforanindefinitequantityofsuppliesor ! services,withinlimitsthatarestatedinthecontract,tobeprovidedduringatimeperiodthatis " fixedinthecontract.Deliveriesofthesuppliesorperformanceoftheservicesarescheduledby #  placingorderswiththecontractor.Thistypeofcontractmaybeappropriatewhenthegrantee $l! cannotpredetermine,aboveaspecifiedminimum,theprecisequantityofsuppliesorservices q%X" thatwillberequiredduringthecontractperiod,anditisinadvisableforthegranteetocommit ]&D # itselfformorethanaminimumquantity.Indefinitequantitycontractsofferseveraladvantages: I'0!$ B.4` <DL!XB  1.0 4 minimuminventorylevelsofsuppliescanbemaintained,!)#&4s#4s#   2.0 4 shipmentscanbedirecttousersinvariouslocations, *#'4s#4s#   3.0 4 theypermitflexibilityinbothquantitiesanddeliveryscheduling,*$(4s#4s#   4.0 4 suppliesorservicescanbeorderedafterrequirementsbecomeknown,+%)4s#4s#   5.0 4 thegranteesobligationislimitedtotheminimumquantityspecifiedinthecontract.,&*4s#4s# H+ 4 <DL!4, XH  .(, Minimumandmaximumquantities!Toensurethatthecontractisbinding,aminimumnumber  ofunitsmustbestatedinthecontract,anditmustbemorethananominalquantity.Theremust  alsobeastatedmaximumofunitsthatmaybeordered.Indefinitequantitycontractsshould  neverbe openended,wherenomaximumquantityisstated.Thispracticehasledtoserious  problemswhenagenciesattemptto piggybacktheopenendedcontractsofotheragenciesby   orderingquantitiesthatwereneverincludedintheoriginalcompetitiveprocess.(SeeSection   6.3.3JointProcurementsofRollingStockand Piggybacking.Thecontractmayalsostate   maximumorminimumquantitiesthatmaybeorderedundereachtaskordeliveryorderandthe  t maximumthatmaybeorderedduringaspecifiedperiodoftimewithinthecontractsperiodof y ` performance. eL  Ordersabovethestatedmaximum!Ifitbecomesnecessarytoorderquantitiesabovethe =$  maximumstatedinthecontract,(whichwouldbethenumberofunitsincludedintheoriginal )  competitiveprocess),suchordersshouldgenerallynotbeprocessedas changeorders,( change   ordersmustbewithinthescopeoftheoriginalcompetition),butshouldbeprocessedas new   procurements.Thesenewprocurementsmayeitherbecompetedor,ifcircumstanceswarrant,   processedas noncompetitiveprocurementsinaccordancewiththegranteesinternalapproval  processfornoncompetitive( solesource)procurements.Granteesshouldanticipatethe  possibilityofneedingadditionalquantitieswhentheycompetethecontractawardinitiallyand,  ifnecessary,includeoptionprovisionsforadditionalquantitiesintheoriginalcompetitive  bidding.Inthiswayifadditionalquantitiesareneededtheymaybeprocuredundertheoriginal p contractwithouthavingtojustifythemasa solesourceaddon. u\ MultipleAward/TaskOrdercontracts󀄀Granteesmaywishtoconsidermakingmultiplecontract M4 awardsforthesameorsimilarsuppliesorservicesunderasinglecompetitivesolicitation.This 9  maybeappropriateinordertoensurethequalityortimelinessofdeliveriesbynotlimitingthe %  granteetoasinglesupplierwhomaynotperformaccordingtothegranteesexpectationsor  needsorwhomaynotbeabletomeetpeakdeliveryrequirements.Inthisevent,anothersupplier  isimmediatelyavailabletoassurethatneedswillbemet.  TheFederalAcquisitionRegulations(FAR),Subpart16.504!IndefiniteQuantityContracts, ! addressestheissueofmultipleawardsin16.504(c).TheFARexpressesapreferenceformaking " multipleawardsofindefinitequantitycontractsunderasinglesolicitationforthesameorsimilar #  suppliesorservicesif(i)arecurringneedforthesuppliesorservicesisanticipated,and(ii)the $l! agencycannotpredetermineitsneedsaboveaspecifiedminimum,and(iii)whenitwouldbe q%X" inadvisablefortheagencytocommititselfformorethanaminimumquantity.TheFAR ]&D # envisionstheawardofmultipletaskordercontractsinwhichindividualtaskorderswouldbe I'0!$ issuedfollowingcompetitivesolicitationstotheoriginalawardees. 5("% Ifmultipleawardsaremade,granteesmustadviseprospectivebiddersoftheproceduresthatwill  *#' beusedinissuingorderstothecontractorsselectedforaward,includingthecriteriathatwillbe *$( usedtoprovidetheselectedcontractorswithafairopportunitytobeconsideredforeachorder +%) issued.Thecriteriamayincludesuchitemsaspastperformanceonearliertasksorordersissued ,&* underthecontract,qualityofdeliverables,timelinessofdeliveries,andotherfactorsconsidered  -'+ relevantbythegrantee.Itisimportantthatpriceorcostbeoneoftheselectionfactors  consideredforeachorderawarded.Iftheoriginalcontractdidnotestablishthepriceforthe  supplyorservice,thegranteewillhavetosolicitcostorpriceproposalsforeachorder.  TheFARdoesprovideforexceptionstotherequirementthatallawardeesbeprovidedafair   opportunityforeachorderawarded.Thesewouldincludesituationswhere!      (x 42_ 2#########(8x '4Z XX'  a)0 4 Theagencysneedsforthesuppliesorservicesaresourgentthatprovidingafair y ` opportunitywouldresultinunacceptabledelays;eL 4s#4s#   0, X4Z X0  b)0 4 Onlyoneawardeeiscapableofprovidingthesuppliesorservicesbecausetheyare =$  uniqueorhighlyspecialized;) 4s#4s#   04Z X, X0  c)0 4 Theordermustbeplacedonasolesourcebasisintheinterestofeconomyand   efficiencyasalogicalfollowontoanorderalreadyissuedunderthecontract,provided   thatallawardeesweregivenafairopportunitytobeconsideredfortheoriginalorder;  and4s#4s#   d)0 4 Itisnecessarytoplaceanordertosatisfyaminimumguarantee.4s#4s#   Multipleawardswillnotbeadvisablewhen: u\ K.4` <DL!4Z XK  a)0 4 statelawprohibits,M44s#4s#   b)0 4 morefavorabletermswillbeprovidedifasingleawardismade,% 4s#4s#   c)0 4 thecostofadministeringmultiplecontractsoutweighsanypotentialbenefitsfrom @! 0@!4s#4s#  makingmultipleawards,and4s#4s#   d)0 4 taskslikelytobeorderedaresointegrallyrelatedthatonlyasinglecontractorcan ! reasonablyperformthework."4s#4s#  (x 82#########  #  F  Chapter3 e :3Specifications =  0  3.0Overview(6/03) s#s# [0  3.1TypesOfSpecificationsandRisks(1/98) s#s# 8  04!!3.1.1DesignSpecifications(1/98) t4!4! 0  04s#s#3.1.2PerformanceSpecifications(1/98) `4s#4s# 0  04s#s#3.1.3BrandNameorEqual(1/98)L 4s#4s# 0  3.2UsingConsultantstoPrepareSpecifications(1/98)$ s#s# 0  3.3SpecificationsforEquipmentandSupplies(1/98)u s#s# 0  3.4SpecificationsforConstruction(1/98)a s#s# 0  3.5StatementsofWorkforServices(1/98)M s#s#  3.0OVERVIEW % *_ dddd 1s#s#_,x``@+  :111' OC:REQUIREMENT W1111D, C  O 111 CW8.c(1)ofFTACircular4220.1Erequiresthatallsolicitationsshall: \ 0  (1)Incorporateaclearandaccuratedescriptionofthetechnicalrequirementsforthe 4 material,product,orservicetobeprocured.Suchdescriptionshallnot,incompetitive   procurements,containfeaturesthatundulyrestrictcompetition.Thedescriptionmay   includeastatementofthequalitativenatureofthematerial,product,orservicetobe  procuredandwhennecessary,shallsetforththoseminimumessentialcharacteristics  andstandardstowhichitmustconformifitistosatisfyitsintendeduse.Detailed k productspecificationsshouldbeavoidedifatallpossible.Whenitisimpracticalor W uneconomicaltomakeaclearandaccuratedescriptionofthetechnicalrequirements, C"" 0  a"brandnameorequal"descriptionmaybeusedasameanstodefinetheperformance !/ orothersalientcharacteristicsofaprocurement.Thespecialfeaturesofthenamed " brandwhichmustbemetbyofferorsshallbeclearlystated.l# "" 15oftheMasterAgreementstatesthat: D%" 0  d.ExclusionaryorDiscriminatorySpecifications.Apartfrominconsistent ' $ requirementsimposedbyFederalstatuteorregulations,theRecipientagreestocomply (!% withtherequirementsof49U.S.C.5323(h)(2)byrefrainingfromusinganyFederal ("& assistanceawardedbyFTAtosupportprocurementsusingexclusionaryor ){#' discriminatoryspecifications.*g$("" 0  e.BusSeatSpecifications.AStateorlocalgovernmentrecipientmayuse ,?&* specificationsconformingwiththerequirementsof49U.S.C.5323(e)toacquirebus -+'+ seats.F<:|.(,""C    1111 FЇ DISCUSSION e Asarecipientofpublicfundsyouwillhavetokeepinmindthatyourepresentthe = government,whoseobjectivesinspendingtaxpayers'moneywillalwaysinclude,asoneof )  itsgoals,thegoaloffullandopencompetition.Itiseasytolosesightofthisunderthe   pressureofcompletingaprojectontime.Manyprogramsinyourdomainhavepolitical   sensitivityandmediavisibility.Thetemptationswillbegreatto"getsomethingoutnow,"   anditwillalwaysbeeasiertorespondtotheimmediatepressurethantodoacarefuland  t thoroughjobattheoutset.Buttimetakenhere,inthecarefulresearchanddraftingofthe  ` specifications,willinvariablyrewardyouwithabetterproduct,atalowercost,andwith L  farfewerclaimsanddelaysduringthelifeoftheproject.Anotherageoldprobleminthis 8  areaofdraftingspecificationsisthedesiretopushthestateofthearttoanewlevel,to $  havethebestpossiblesystem,regardlessofcost.Governmentorganizationstendtobe u  applaudedforthevisiblequalityofthethingstheydo,whetherit'stheirservices,ormajor a  transitsystems.ButagainstthesereallifepressuresstandstheFederalandState M  Governmentpolicytodefinethe"minimumneeds"andtoavoidspecificationswhichmight 9  undulyrestrictcompetition.Weneedtoremindourselvesthatourindustrialsuppliersare % alsotaxpayerswhosetaxdollarsarehelpingtofinancethisprocurement;assuchtheyareto  begiveneveryopportunitytocompetefortheworktheyarehelpingtofinance.  TechnicalSpecificationsandStatementsofWorkmustclearlydescribetheproductsand p servicestobeprocuredintermswhichwillpermitfullandopencompetitionandwhichwill \ meetthebuyingagency'sminimumessentialneeds. H 3.1TYPESOFSPECIFICATIONSANDRISKS   DISCUSSION ] Specificationsmaybeverydetailedindescribingtheproductorworktobedone,ormay 5  simplyrequireanendresult,ormaycontaincombinationsofthesetwoapproaches.There !! aredifferentlevelsofrisksandresponsibilitiesinherentinthesedifferenttypesof  " specifications.Asageneralrulethemoredesigndetailsthereareinthespecification,the " morethebuyingagencybecomesresponsiblefortheperformanceoftheproduct. #  Conversely,themorethespecificationdescribestheperformanceoftheproductinsteadof $l! itsdesignfeatures,themoreresponsiblethecontractorbecomesfortheendproduct.The %X" legaltheoryinvolvedinthesecasesistheimpliedwarrantyofspecifications.7 C  1      Followingisa &D # discussionofthevarioustypesofspecificationsandtherisksinherentineachtype. '0!$    4  E+$( 3.1.1DesignSpecifications Q DISCUSSION )  Specificationsdetailingthemannerormethodofperformanceareoftentreatedasdesign   specifications.Contrastedwiththeseareperformancespecifications,whichleavethedetails   ofperformance,andthedetailsofdesign,tothecontractor'sdiscretion.Design  t specificationsarethosewhichsetforthprecisemeasurements,tolerances,materials,in  ` processandfinishedproducttests,qualitycontrol,inspectionrequirements,drawingsand L  otherspecificinformation.Itisthisdesigntypeofspecification,dealingwiththedetailsof 8  thework,whichthecontractoris"requiredtofollowasonewouldaroadmap,"which $  givesrisetoimpliedwarranty.Underthistypeofspecification,thebuyingagency(asthe u  authorofthespecifications)willbeheldresponsiblefordesignandrelatedomissions, a  errors,anddeficienciesinthespecificationsanddrawings. C  2      ׀Thereisanimpliedwarranty M  thatthedetaileddesignsorprocesseswillresultinanenditemwhichfunctionsasrequired. 9  Conversely,thereisnoimpliedwarrantywherethespecificationsimplysetsforthan % objectiveorendresulttobeachieved,andthecontractorisfreetoselectthemeansof  accomplishingthetask,inwhichcaseheassumesresponsibilityforthatselection.2 C  3      ׀Inthose  caseswherethespecificationcontainsbothdesignandperformancerequirements,itwill  dependonwhatportionofthespecificationcausesthecontractor'sdifficulties,whetherhe p hasdiscretiontochoosehowtodothework.n C  4       \ Specificsituationsworkingtorelievethecontractorfromenditemperformance 4 responsibilitywouldinclude:   3,XX4` X4, X3,c    ,c'"0 4   Whenthecontractorisleftnodiscretionorchoiceinthematerialstobeused. C  5      ,c'(݌]4s#4s# Ќ  0    s#s# ,c  0  ,ca)"04s#s#  Whenspecificationssetforthdimensionsandtheitembuilttothedimensions 5  cannotbeusedasanticipatedbecauseofthosedimensions. C  6      ,ca))݌!!4s#4s# Ќ  0    s#s#  (lxx #'XX:#  #  ,c  0  ,c+"04s#s#  XX'Whenspecificationsdefineamethodofperformanceortheparticular e manufacturingprocessesacontractormustfollow(e.g.,detailedproceduresfor y pouringconcrete,detailedsolderingmethods,etc.) C  7      ,c+,݌e4s#4s# Ќ  0  04s#s#   4s#4s# ,c    ,c,."0 4   Whenspecifiedequipmentcannotbesuccessfullyusedinperformingthe =  contract.2 C  8      ,c,.S.݌) 4s#4s# Ќ  0    s#s# ,c  0  ,c/"04s#s#  Whendetailedspecificationsrequireperformancecontradictorytolocalcodesor   ordinances.n C  9      ,c//݌ 4s#4s# Ќ  0    s#s# ,c  0  ,cJ1"04s#s#  Whenthespecificationsprovideforalternatemethodsofperformance,andthe `  contractorselectsamethodfromamongalternativesinthespecification,the L  contractorwillnotbeliableifthealternativedoesnotaccomplishthedesired 8  results. C  10      ,cJ1q1݌$ 4s#4s# Ќ  3.1.2PerformanceSpecifications a  DISCUSSION 9 Performancespecificationsdictatetheperformanceoftheendproduct,nothowthe  contractorwilldothework.Thesearespecificationswhichgivethecontractordiscretion  inhowtoachievetheendresultcalledforbythecontract. C  11      ׀Performancespecifications  placethegreatestdegreeofresponsibilityonthecontractorandrepresentthelowestdegree p oflegalrisk(butnotnecessarilythelowestprogramrisk)tothebuyingagency.Itmustbe \ said,however,thattherearevalidreasonsforspecifying"design"typerequirementswithin H performancespecifications,aswherestandardizationisneeded,wherethereisan 4 opportunitytoavoidduplicationofdesigncostswhichhavealreadybeenincurred,etc.#'XX=,#   XX'Asageneralrule,whenaperformancetypespecificationisused,thebuyingagencywillnot   beliableforacontractor'sincreasedcostsinperformingthecontractunlessthe q!  performancespecificationembodiesrequirementswhichareimpossibletoattain." C  12      ׀#'XX7# ]" eXX'  ]$  Itshouldalsobenotedthatthefactthatthebuyingagencyspecifiesaminimum e requirementforsomecomponentorsomeaspectofperformance(e.g.,"atleast3hp";"no Q morethan2"wide")doesnotchangeaperformancespecificationintoadesign = specification;i.e.,thebuyingagencyisnotwarrantingthatanitemwhichmeetsthe )  minimumrequirementwillperformproperlywhenincorporatedintothesystem.For   example:   ,c  0  ,c<"04(#(#  Aprovisionthatsurfacesbeatacertainspecifiedminimumtemperaturewhen  t paintedwasnotawarrantythatsatisfactoryresultswouldbeobtainedatthat  ` temperature. C  13      ,c<,<݌L 4(#4(# Ќ  X ,c  0  ,c="04(#(#  Wheretheagencyspecifiedaminimumofnotlessthan14gaugesteelitwasnot $  warrantingthat14gaugewouldmeetperformancerequirements.2 C  14       ,c=>݌u 4(#4(# Ќ  3.1.3BrandNameOrEqual M  DISCUSSION % Thesearespecificationswhichrequireaparticularmanufacturer'sproduct,partnumber,  ormodel.Thespecificationmayallowforan"equal"productandshouldclearlysetforth  thesalientphysicalandfunctionalcharacteristicsofthebrandnameproduct.Underthis p typeofspecificationifthecontractorusesthebrandnameproductoranapproved \ "equal,"thebuyingagencyassumestheresponsibilityforproperperformance(assuming H thecontractorusedtheproductintheproperway).Ifthecontractorelectstomanufacture 4 anequalproductinhouse,hewillberesponsiblethattheproductperformsequallywith   thespecifiedbrandnamedproduct.TheBPPMSection2.4.2.2.1containsextensive q  guidanceontheuseof"brandnameorequal"specifications. ] 3.2USINGCONSULTANTSTOPREPARESPECIFICATIONS#'XX礯9# 5  *_ ddx``@x(#(#_,x``@+  :111'5"5" OC:XX'REQUIREMENT#'XX礵D# W1111D,E"C  O 111 CW XX'8.a.(5)oftheFTACircular4220.1Erequiresthatgranteesavoidsituationsknownas #/  "organizationalconflictsofinterest."Anorganizationalconflictofinterestariseswhena $! contractor,becauseofotheractivities,relationships,orcontracts,isunableorpotentially l%" unable,torenderimpartialassistanceoradvicetothegrantee,orwhenacontractor's X&# objectivityinperformingthecontractworkisimpaired,orwhenacontractorhasanunfair D' $ competitiveadvantage. #'XX\E# 0(!% <20)"&C    1111 < T+$' Ї8XX'DISCUSSION e TheFTACircularenvisionstwodistinctproblemswhenusingconsultantstoprepare = specificationsorstatementsofwork:(1)thattheconsultantwillbebiasedtowarda )  particularproductorfirmbecausehehasbusinessrelationshipswiththatfirmorafinancial   interestintheproduct,or(2)thattheconsultantwillhaveanunfaircompetitiveadvantage   ifheisallowedtocompeteforaproductorservicewhichhehelpedtodefineina   specificationorstatementofwork.Whenacontractorisusedtoprepareorassistinthe  t preparationofspecificationsandstatementsofwork,caremustbetakentoensurethatthe  ` contractorwillbecompletelyunbiasedinhisdecisions.Buyingagenciesmustascertainthat L  thecontractorhasnofinancialororganizationalrelationshipwithapotentialsupplierwhich 8  mightmotivatehimtoslantaspecificationtowardthatsupplier.Withrespecttotheunfair $  competitiveadvantageissue,contractorsdevelopingspecificationsshouldnotbeallowedto u  competeonprocurementsforwhichtheypreparedspecifications. a  BestPractices 9   Contractorswhoareworkingonspecificationstobeusedforcompetitiveprocurementsshouldbe  requiredtoaccepta"LimitationonFutureContracting"provisionintheircontractforthe  specification/consultingworkwhichprecludesthemfrombiddingontheresultingprocurement.  FurtherguidancemaybefoundintheBPPMSection2.4.2.2.2"OrganizationalConflictsOf p Interest."  \  Itisalsoadvisablewhenusingconsultantstodraftprocurementspecificationstoobtainaformal 4 writtencertificationwiththeirproposalwhichdescribesalloftheirpast,presentorplanned   organizational,financial,contractualorotherinterestswithorganizationswhoseproductsor q  servicesmaybeofferedinresponsetotheprocurementonwhichtheywillbeconsulting.Where ] therearesuchinterestsidentifiedbythecontractor,thecontractorshouldalsoberequiredto I describewhyitbelievesthatperformanceoftheproposedconsultingcontractcanbe 5  accomplishedinanimpartialandobjectivemanner.Anexampleofacertificationrequirement !! usedbytheFederalDepartmentofTransportationmaybefoundinAppendixB.10 C  15      .#'XX]H#  "  XX'3.3SPECIFICATIONSFOREQUIPMENTANDSUPPLIES  $  DISCUSSION %~" Plans,drawings,specificationsorpurchasedescriptionsshouldstateonlytheminimum 'V!$ needsoftheagencyanddescribethesuppliesinamannerwhichwill#'XXS#XX'Ԁencouragemaximum (B"% competition,avoidingrestrictivefeatureswhichmightrestrictoffers.#'XX&U# ).#&   *$' XX'BestPractices e  Planning󀄀Amarketsurveyshouldbeconductedtodeterminesourcesthatofferproductswhich = meettherequirements.Cautionmustbeexercisedtoavoiddisclosureofagencybudgetsorother )  informationwhichmightgiveasupplieranunfaircompetitiveadvantage.Descriptiveliterature   fromoneprospectivesuppliercannotbeusedasthesolebasisforwritingspecifications.   Determinewhatyouressentialrequirementsareandseparatetheseessentialsfromthosewhich   are"nicetohave"ordesirable.Inyourresearchdeterminewhatthestateoftheartisand  t developyourspecificationwithinthestateoftheart.  ` Content󀄀 8  86,XX4 X,XX4` X6,c  0  ,cY"04(#(#  Aperformancetypespecificationisgenerallypreferabletoadesigntypespecification u  (i.e.,don'ttellthecontractorhowtodotheworkbutratherspecifytheenditem's a  performance).Thisisinkeepingwithagoalofmaximumcontractorresponsibility M  andminimumrisktothebuyingagency.Itmaybenecessary,however,tousedesign 9  typedescriptions(asforcomponents,tolerances,etc.)incertainsituations,suchasthe % needforstandardization.,cYY݌4(#4(# Ќ  0    (#(# ,c  0  ,c\"04(#(#  Thespecificationmustsetforththeminimumessentialcharacteristicsandstandards  requiredtosatisfytheintendeduse(e.g.,"nomorethan2"wide";"atleast3hp";"at p leastoncepermonth").,c\\݌\4(#4(# Ќ  X ,c  0  ,cP^"04(#(#  When"brandnames"arebeingusedforspecificcomponents,itmaybeadvisableto 4 includeatleasttwobrandnamesfollowedbythewords"orequal".Whensoused,   thespecificfeatureswhichmustbemetbyofferorsshouldbeclearlystated.See q  BPPMSection2.4.2.2.1.,cP^w^݌]4(#4(# Ќ  X ,c  0  ,cG`"04(#(#  Thespecificationmustnotonlydescribetheproductbutmustalsoincludereliability 5  andqualityassurancerequirements(QualityControlPlan).,cG`n`݌!!4(#4(# Ќ  X ,c  0  ,ca"04(#(#  Criteriaforinspecting,testingandacceptingtheproductwillhavetobeincludedin " thespecification.,caa݌# 4(#4(# Ќ  X ,c  0  ,cb"04(#(#  Preservation,packaging,packing,andmarkingrequirementswillalsohavetobe %X" addressed.,cbb݌&D #4(#4(# Ќ  X ,c  0  ,cc"04(#(#  IncludeaContractDataRequirementsList(CDRL)totellthecontractorwhat ("% documentationisrequired,whenitistobedelivered,andwhetherthedocuments m)#& needapproval(e.g.,drawings,maintenancerecommendations,masterpartslist, Y*#' shipping/handling/storageprocedures,etc.)Whenbuyingmajorsystemsbesureto,ccd݌ E+$(4(#4(# Ќ  0  04(#(#requireacomprehensivesparepartsdatapackageasadeliverableitem.Thiswillbe e necessaryforcompetingtheprocurementofsparepartsaftertheinitialcomplementof Q spareshasbeenused.=4(#4(#  X ,c  0  ,c2g"04(#(#  Istrainingneededforusersandthosewhomustmaintaintheequipment?Are   maintenancemanualsneeded?,c2gYg݌ 4(#4(# Ќ  X ,c  0  ,c[h"04(#(#  Donotincludecontractualtermsandconditions,suchas,cost/priceinformation,  t warranties,deliveryinformation,etc.,c[hh݌ `4(#4(# Ќ  X ,c    ,ci"0 4   Writesentenceswhichareshort,conciseandsimple.,cii݌8 4(#4(# Ќ  X ,c    ,cmj"0 4   Usedecimalsinsteadoffractions.,cmjj݌u 4(#4(# Ќ  X ,c    ,c4k"0 4   Don'tuseopenendedrequirementssuchas"asdirected,""satisfactoryto,"etc.,c4k[k݌M 4(#4(# Ќ  X ,c    ,c)l"0 4   Donotuseunfamiliarwords,colloquialismsorwordswhichareambiguous.,c)lPl݌%4(#4(# Ќ  X ,c  0  ,cm"04(#(#  Whenyouhavefinished,readyourspecificationandaskyourself,"Isthereanyway  thatanyonecouldmisinterpretthisstatement?",cm>m݌4(#4(# Ќ  X ,c  0  ,c[n"04(#(#  YoumaywishtoconsiderstandardizingyourAgency'sapproachtotheformatand \ contentofspecificationsandstatementsofwork.AppendixB.2providesa H Specification/ScopeofServiceGuidewhichcontainsguidelinesand 4 recommendationsfordevelopingspecifications,datasheets,andstatementsofwork   forsupplies,equipmentandservices. C  16      ׀,c[nn݌q 4(#4(# Ќ  3.4SPECIFICATIONSFORCONSTRUCTION I DISCUSSION  !!  Thetechnicalprovisionsofconstructionspecificationsmustbeinsufficientdetailsothat, " whenusedwiththeapplicabledrawingsandthedocuments#'XXV#XX'Ԁincorporatedbyreference, #  bidscanbepreparedonafairandcompetitivebasis.Incontractingwithpublicfundsthe $l! essentialobjectiveindraftingspecificationsistosatisfythefundamentalpublicpolicy %X" requiringfullandopencompetition.ThisobjectiveisnotonlyaFederalrequirementbut &D # moststatesandlocalgovernmentshavesimilarstatutes. C  17      ׀#'XX3r# '0!$   *D$' XX'BestPractices e  Contractingbooks,manuals,etc.󀄀Volumeshavebeenwrittenabouttheforbiddingandexotic = worldofconstructioncontracting,andwewouldliketobeginbyadvisingyoutoobtainsome )  essentialroadmapsforthisjourney,beginningwithacomprehensivetextentitled,appropriately,   ConstructionContracting. C  18      ׀WewouldalsorecommendyouobtainacopyoftheConstruction   ContractAdministrationManual(whichisdevotedentirelytoconstructioncontracting)   producedbyapublicagencyworkingwithFTAgrantfunds.B C  19      ׀  t Content L  ,c  9,X X,XX4 X90  ,chx"0(#(#  Materials,equipment,componentsorsystemsshouldbedescribed,wherepossible, $  byreferencetodocumentsgenerallyknowntoindustry.Suchdocumentsinclude u  Federal,military,ornationallyrecognizedindustry,andtechnicalsociety a  specificationsandstandards.Thestandardswhichbestrepresentnomoreandno M  lessthanthebuyingagency'sminimumneedsshouldbeselectedforincorporation 9  byreferenceintotheconstructionspecifications.,chxx݌%(#(# Ќ  0    (#(# ,c  0  ,c{"0(#(#  ݀IfyouemployanA/Efirmtodevelopyourspecificationsbesuretheyarewarned  againsttheuseofproprietaryspecifications,i.e.,writingaspecification"around"a  particularmanufacturer'sproduct,effectivelyprecludingcompetition.Thisisa p commonpracticeamongA/Efirms,especiallywhenaparticularproducthasa \ proventrackrecord,butthepracticeconflictswiththeobjectiveoffullandopen H competitioninpubliccontracting.,c{{݌4(#(# Ќ  X ,c    ,ce~"0    Keepthespecificationsassimpleaspossible.Onecourtusedthesewords: #'XX礳t#,ce~~݌q (#(# Ќ  =,XX4 X,X Xx=XX'3 X,XX4 X30  0(#(#"Acontractorshouldnotberequiredtowadethroughamazeofnumbers, ] catalogues,crossreferencetablesandotherdataresemblingcrosswordpuzzlesin I ordertofindoutwhatthegovernmentrequiresinaninvitationforbids." C  20      ׀5 (#(# N1X` hp x (# XN#'XX礵#   3" XX''XX4` XXX',c  0  ,c"04(#(#  Youmaywanttoconsiderusingan"OrderofPrecedence"clausetellingbidders Q whichbiddocumentsaretobereliedonintheeventofaconflictwithinthe = documents.Youshouldchooseaclausethatplacesthemostimportantpartofthebid )  packageinthemostimportantposition.Forexample,ifyouarecertainthatthe   drawingsarecorrect,yourclausecouldgivethedrawingspriorityoverthe   specification.,c݌ 4(#4(# Ќ  X ,c  0  ,c:"04(#(#  Complexspecificationsarebestdiscussedwithbiddersataprebidconferencebutbe  ` carefultoadvisebiddersthatnoneoftheexplanationsattheconferencewillqualify L  thetermsofthespecifications,whichcanonlybemodifiedbywrittenamendments.,c:a݌8 4(#4(# Ќ  X ,c  0  ,c"04(#(#  BesuretoreviewcarefullyFTACircular4220(latestversion)andtheMaster u  Agreement(MA)forrequirementswhichmayaffectyourspecifications.Examples a  wouldinclude:,c5݌M 4(#4(# Ќ  Q4X` hp x (#%XX4` XQ X 0  0` (#(#-0 ` (#` (#Preferenceforrecycledproducts. C  21      ׀% (# (# 0    (#(# 0  0` (#(#-0 ` (#` (#Useofmetricsystem.2 C  22      ׀ (# (# 0    (#(# 0  0` (#(#-0 ` (#` (#Seismicsafetyforconstructionprojects.n C  23      ׀p (# (# 0    (#(# 0  0` (#(#-0 ` (#` (#Environmentalrequirements. C  24      H (# (#  X 0  0(#(#0` (#(#-0 ` (#` (#RequirementsoftheAmericanswithDisabilitiesAct. C  25        (# (# 0    (#(# ,c  0  ,c"0` (#(#  Describeallofthecontractor'sobligationsasfarasmeetingcodesandstandards ] thatareapplicabletotheproject(local,State,andFederal).,c݌I` (#` (# Ќ  ,c  0  ,c?"0` (#(#  ReviewthesuggestionsaboveforSuppliesandEquipment,Section3.3,for !! applicabilitytoconstructionspecifications.#'XXB#,c?f݌ "` (#` (# Ќ   " XX' 3.5STATEMENTSOFWORKFORSERVICES w DISCUSSION  O   Astatementofwork,ratherthanaspecification,isusedforservicescontracts.Astatement '  ofworkdefinestheworkrequiredofacontractor,eithertodesigntheequipmenttobe   procuredortoprovideserviceswhicharenotrelatedtotheprocurementofhardware.   BestPractices  r  Statementsofworkshouldincludethefollowingelements: J  'XX4` XXX',c  ,c "0    Whenbuyingservicesona"levelofeffort"basis,i.e.,whenspecifyingthenumberof "  laborhourstobefurnishedbythecontractor,besuretodefinethelaborcategories/hours s  foreachanddefinetheminimumyearsofexperienceandlicensingrequirements(CPA, _  PE,etc.)foreach.,c &݌K(#(# Ќ  X ,c  ,c"0    Include,ifapplicable,adetailedlistofalldata,propertyandserviceswhichwillbe # providedtothecontractorbyyourAgencyforhisuseinperformingthecontract.,c݌(#(# Ќ  X ,c  ,cS"0    Detailalltasksthecontractormustperform,andspecifycoordinationrequirements.,cSn݌(#(# Ќ  X ,c  ,c@"0    Specifythedatathatmustbesubmittedforapproval.Alsodefinetheschedulesforinitial Z submissionandthereview/approvaltimerequired.,c@[݌F(#(# Ќ  X ,c  ,c{"0    Describeallthestandardsthecontractormustfulfill,includingFederal,State,andlocal  standardsthatareapplicabletotheproject.,c{݌o (#(# Ќ    Acronyms G!    ASBCAArmedServicesBoardofContractAppeals # BCABoardofContractAppeals $! DOTCABDepartmentofTransportationContractAppealsBoard %~# ENGBCAUnitedStatesArmyCorpsofEngineersBoardofContractAppeals E' % FTAMAFederalTransitAdministrationMasterAgreement (B"' GSBCAGeneralServicesAdministrationBoardofContractAppeals  *#) MPCAmericanBarAssociationModelProcurementCodeforStateandLocalGovernments#'XX礣#  k+%+  ؚ   XX'Chapter4 i  %   %   5- 54MethodsofSolicitationandSelection -    4.0Overview(5/96)   h      p          4.1MicroPurchases(6/03)   ' XXXX4` X'   ` 4.1.1PurchaseCardsBART(6/98)  `    ` 4.1.2ConsolidationofMicroPurchases(11/03) L    4.2SmallPurchases(5/96) $    4.3CompetitiveProcurementMethods(5/96) y     ` 4.3.1OverviewSealedBidsv.CompetitiveProposals(5/96) Q     ` 4.3.2CommonElementsofSolicitationProcess(5/96)  =   'XX4 XXX'   4  4.3.2.1AdvertisingandPublicizingSolicitation(5/96)     4  4.3.2.2SolicitationMailingList(5/96)     4  4.3.2.3Solicitation(5/96)     4  4.3.2.4PreBidandPreProposalConferences(11/03) p    4  4.3.2.5AmendmentofSolicitations(5/96) \    4 4.3.3CommonElementsofOffers(5/96) 4    4  4.3.3.1ReceiptofOffers(5/96) u     4  4.3.3.2FederallyRequiredSubmissionswithOffers(5/96) a < ,XXN <*XXX4 X<   `  N  < 4.3.3.2.1CertificationRegardingDebarment,Suspension,and 9     `  N  <    * OtherResponsibilityMatters(5/96) %!    `  N  < 4.3.3.2.2BuyAmericaCertification(11/03) "    `  N  < 4.3.3.2.3LobbyingCertification(5/96) "  }(sx   `  N 4.3.3.3OtherSubmissions(5/96) p  $l!     `  N  < 4.3.3.3.1AcknowledgmentofSolicitationAddenda(5/96) &D #    `  N  < 4.3.3.3.2BidGuarantee(5/96) '0!$   4.4SealedBids(InvitationforBids)(5/96) q)#&    ` 4.4.0Overview(5/96) I+$(    ` 4.4.1Solicitation(5/96) 5,%)    ` 4.4.2BidOpening(5/96) !-&*    ` 4.4.3SingleBid(3/04)  .'+    ` 4.4.4ResponsiveBidder(5/96) i    ` 4.4.5BidMistakes(5/96) U    ` 4.4.6BidWithdrawal(5/96) A   4.5CompetitiveProposals(RequestforProposals)(5/96)      ` 4.5.1Solicitation&ReceiptofProposals(5/96)      ` 4.5.2EvaluationofProposals(11/03)  t    ` 4.5.3CompetitiveRange(5/96)  `    ` 4.5.4DiscussionsandClarifications(5/96) L     ` 4.5.5AdditionalSubmissions(5/96) 8     `  N 4.5.5.1RequestforRevisedProposals(5/96) y     `  N 4.5.5.2RequestforBestandFinalOffer(5/96) e     ` 4.5.6AwardBasedonInitialProposals(5/96) =     ` 4.5.7WithdrawalofProposals(5/96) )    ` 4.5.8DebriefingUnsuccessfulOfferors(5/96)    4.6NonCompetitive(SoleSource)Proposals(5/96)     ` 4.6.1JustificationforUse(5/96) \    ` 4.6.2NegotiationofContract(5/96) H    ` 4.6.3AssociatedCapitalMaintenanceItem(5/96) 4    ` 4.6.4UnsolicitedProposals(9/05)     4.7SpecialProcurementMethods(5/96) a    ` 4.7.1MultiStepProcurements(5/96) 9     ` 4.7.2GovernmentalPricesandContracts(5/96) %! B,XX[IX ,XXN <*XB   `  4.7.2.10 [ ProcurementsfromGeneralServicesAdministration"[(#[(#    `   [ Schedules(5/96) #     `  4.7.2.2StateandLocalSchedules(6/03) $l!    `  4.7.2.3StateversusFTARequirements(5/96) %X"    ` 4.7.3 ECommerce:ReverseAuctions(6/03) '0!$   q)#&  % ! %!E4.0OVERVIEW i *eg1"dx``@x(#(#e,xdd +  (AA (B lX|X,XX[IXBREQUIREMENT 7-<#K# K7 ThemethodsofsolicitationandselectionallowedwithintheFederalcontractualsphere C  1      4$ O  5  6OX  7 ȷԀare %  listedin9ofFTACircular4220.1E.Youmaychoose:   K"   |X lX|XK x #'XX礤#, ,'l  #',, #XX'micropurchasesonlyforcontractamountslessthan$2,500;    x #'XX`#, ,'l  #',, #XX' XXXXsmallpurchaseproceduresonlyforcontractamountslessthanthesimplifiedacquisition X   x   threshold(currently$100,000); D   x # 'X XQ# , , 'l  # ', , z##' 'p# '' XX 'sealedbidswhere   K X4 |X   |XK0 S -0S"S"youhaveacomplete,adequate,andrealisticspecificationorpurchasedescription,] "" 0 S -0S"S"twoormoreresponsiblebiddersarewillingandabletocompete,5"" 0 S -0S"S"theprocurementlendsitselftoafirmfixedpricecontractandtheselectioncanbe   madeprimarilyonthebasisofprice,and"" 0 S -0S"S"nodiscussionwithbiddersisneededafterreceiptofoffers;h"" N% wSs cX X4 |XN  # 'X X# , , 'l S # ', , # XX '#XXX X# XXXXcompetitiveproposals;or @   # 'X X# , , 'l0 S # ', , ##' '$# '' XX 'noncompetitiveproposals(solesource)procurementonlyifyoucanjustifynot  solicitingadditionalcompetitioninthemannerexplicitlydefinedinFTACircular @=!  @=!  m 4420.1E9.h.YS"S" StatelawusuallyrestrictsthemethodofprocurementmoretightlythantheseFederal 1! requirements. * "  #K# *DEFINITION %$  Solicitation-Apurchasingentity'srequestforoffers,includingatelephonerequestforprice %! quotations,aninvitationforbids,orarequestforproposals. & " Offer-Apromisetoprovidegoodsorservicesaccordingtospecifiedtermsandconditionsin (X"$ exchangeformaterialcompensation. )D#%   +%' Acceptance-Agreementtothetermsofanoffer.Inmostjurisdictions,"award"byapublic i agencycanconstituteacceptance,andmaycreateanenforceablecontract. U  DISCUSSION -  Basedonyourprocurementplansandthespecificationdevelopedwithyourcustomer,you   willgenerallyinitiatetheprocurementbysolicitingoffers.Dependingontherequirements   ofthemethodofprocurementyouchoose,youmaysolicitoffersinatelephonecallorin  t manyotherformsranginguptomulti-volumerequestsforproposals.Whenyoureceive  ` offers(whetherquotations,bids,orproposals),youmayacceptone,rejectthemall,or L  (unlessyouareusingthesealedbiddingmethod)requestadditionaloffers.Regardlessof 8  theprocurementmethod,whenyouacceptanoffer,youcreateabindingcontract $  accordingtothetermsoftheoffer. y  BestPractices Q   Whenyouandyourcustomerhavespecifiedtherequirement,youwillgenerallysolicitoffers ) fromsuppliers.Thesolicitationrangesfromatelephonecalltomakeareasonableprice  determination(inthecaseofamicro-purchase),toalengthyrequestforproposalsinthecaseofa  competitiveproposal.Thetermsinyoursolicitationofoffersaresubstantiallydeterminedbythe  methodofselectionyouwilluse.Becauseyourcontractwillultimatelybebasedonthetermsof p theoffers,theselectionofamethodofprocurementandthetermsinyoursolicitationofoffers \ areimportantandyouwillhavethemostsuccessiftheyarebasedonwell-testedpracticesand H documents. 4 Thesolicitationofoffersplacesyouinthepositionofcontrollingthecompetitiveprocess.You, u  ratherthanthesupplier,decidewhethertoacceptorrejecttheoffers.Atechnicalexceptionto a thiscompetitivemodeloccursinsomemicropurchasesandsmallpurchaseswhen,basedon M cataloguesorothersupplierinformation,youissueapurchaseorder(orsimilardocument) 9  withoutreceivingadirectoffer.Inthiscaseyouaretechnicallymakingtheoffer,andthe %! supplierisinapositiontoaccept(usuallybyperforming)orreject(usuallybynoticetoyou). " Asolicitationdoesnotbindyouragencytopurchasethegoodsorservicessolicited,althoughit #  maycreateanimpliedcontractoffairdealingwithyoursuppliers. C  2      4. O  5  6SOg݌  7ԀAlthoughyouwillwantto $l! treatsuppliersaspartnersandwithrespectforthepurposesoflongruncompetitionand %X" cost-effectivebusinessrelations,manyagenciesmakeclearintheirsolicitationsthattheyreserve &D # therighttorejectalloffers,i.e.,thattheyaremerelysolicitingoffersandthatthesolicitation '0!$ doesnotcreateanyrightsinsuppliers.Thepricequotations,bids,orproposalssubmittedby ("% suppliersshouldbefirmofferstoyouragencytosupplythegoodsorservicesuponthematerial q)#& termsinyoursolicitation. ]*#'    5,%) Insealedbidding,thereisgenerallynofurthermodificationofmaterialterms:youragencyeither i acceptsoneoftheoffersorrejectsallbids.Intheotherprocurementmethods,youmayrequest U orreceiveadditionaloffersbeforeyouacceptone. A AlthoughFTACircular4220.1Eprovidesyoubroadchoiceanddiscretion,statelawsandlocal   policyoftenrequirethatyouusesealedbidsincertainprocurementsandthatyouuse   competitiveproposalsinothers.Basedonstatelawandyourownpractice,youmayfindthe   methodofprocurementislargelydeterminedbythetypeofservicesorgoodsyouareprocuring. C  3      4/"O  5  6O݌  7"FԀ  t Iftheprocurementistoolargeformicro-purchaseorsmallpurchaseprocedures,youwill  ` generallyinvitesealedbidsforselectionprimarilybasedonprice,orrequestproposalswhich L  willbeevaluatedaccordingtoadditionalcriteriabeforeaselectionismade.Undercertain 8  restrictedcircumstances,youmaysolicitanon-competitiveproposalfromasolesource. $  PurchasesundercontractswithsisterstatesorlocalagenciesmayalsomeettheFederal y  requirements.2 C  4      40b O  5  6SOg݌  7b  e  Ifthelegalandpolicyrequirementsleaveyouwithmorethanoneavailableprocurementmethod, =  yourchoiceamongthesemethodswilldependlargelyon: ) ,c  Q" ,X,( [IX wSs cXQ,c"0    thetimeandexpenserequiredofyouandyoursuppliersfortherespectivemethods,and,c;݌(#(# Ќ  ,c  ,c"0    thelikelihoodofgettingthebestbuyforyourcustomers.,c݌(#(# Ќ  Whenyouacceptanoffer,youestablishacontract. \  % 1 4.1MICRO-PURCHASES%1 4 *l1dxdd xg1"(#(#l,xdd +  u u  REQUIREMENT  p  9.aofFTACircular4220.1Eauthorizestheuseofmicro-purchasesasamethodof Y procurement,whenappropriate.Ifused,thefollowingapply: E   (#17s}2 #1  1  .3  0 @ Micro-purchasesaredefinedasthosepurchasesunder$2,500."@"@" 2 #1  2  .3  0 @ Micro-purchasesmaybemadewithoutobtainingcompetitivequotationsifthegrantee #  determinesthatthepricetobepaidisfairandreasonable.$x!@"@" 2 #1  3  .3  0 @ Micro-purchasesareexemptfromtheBuyAmericarequirements.4~O  5  6O݌  7n C  5      #&P #@"@"  #  (X"$ *l1ddxdd x1(#(#l,xdd +  ii 2 #1  4  .3  0 @ Micro-purchasesshouldbeequitablydistributedamongqualifiedsuppliersinthelocalarea d andpurchasesshouldnotbesplittoavoidtherequirementsforcompetitionabovethe P  $2,500micro-purchasethreshold.<@"@" 2 #1  5  .3  0 @ TherequirementsoftheDavis-BaconActapplytoconstructioncontractsbetween$2,000 }  and$2,500.4 O  5  6O  7  C  6      i @"@" 2 #1  6  .3  0 @ OtherthantheDavisBaconActclausesforconstructioncontractsbetween$2,000and A  $2,500,nootherFederalclausesarerequired. - @"@"  2 #1  7  .3  0 @ Minimaldocumentationisrequired:(a)adeterminationthatthepriceisfairand   reasonableand(b)howthisdeterminationwasderived. # @"@" #DEFINITION     Micro-purchasing-Amethodofprocuringgoodsandservicesunder$2,500.Amicropurchase h doesnotrequireobtainingcompetitivequotationsifyoudeterminethatthepricetobepaidisfair T andreasonable. @  DISCUSSION   Ifpermittedbystateandlocalrequirements,purchasesunder$2,500nolongerrequire Y morethanonepricetosatisfyFederalrequirements,aslongasyoudeterminethatthe E pricepaidisfairandreasonable.Youcanincludea"fairandreasonableprice" 1 determinationinyourformsusedformicro-purchases.Rotatingthroughalistofthe  suppliersisonemethodtoequitablydistributethemicro-purchasesamongqualified   suppliers.  BestPractices  d  Athresholdquestionyoumustgetananswertoiswhetherornotyourstatelawallowsyouto "< implementamicro-purchasemethodofprocurementthatdoesnotrequire"fullandopen #( competition."Ifyouhavethelegalauthorityunderyourstatelawtoimplementamicro-purchase }$  program,youmustcomplywiththeproceduralrequirementsstatedasitems1,2,4,&5under i%! theRequirementsportionofthissection.Onceyouaresatisfiedthatyoucanlegallyhavea  U&" micro-purchaseprogramunderyourstate'slaws,youneedtodevelopaprocedureorregulation i thataddressestheFTArequirementsandprovidespracticalguidancetoyourorganization  U  LimitsandProcedures- Howwillyouguidetheuseofmicro-purchaseprocedures? In -  accordancewiththegeneralrequirementtohaveprocurementproceduresandacontract   administrationsystem(includingwrittenselectionprocedures), C  7      45O  5  6O  7reԀlargeragenciesoftenmaintain   formalwrittenproceduresthataddressthecircumstancesunderwhichmicro-purchaseprocedures   shouldbeused.Althoughthesecircumstancesshallnotincludepurchasesgreaterthan$2,500,  x youmaywishtosetyourlimitlowerdependingonstatelawandyourownexperiencewiththe  d cost-effectivenessofpricecompetitionusingsmallpurchaseprocedures.Ifyoucanefficiently P  ascertainthelowestcostsupplier,youmaynotalwayswishtousemicro-purchaseprocedures. <  Thismethodofprocurementisintendedtobeusedascreativelyaspossibleandtominimizethe }  paperworkthatisinherentinotherprocurementpractices.Inestablishingpoliciesrelatingto i  micro-purchasesatthegranteelevel,youmustalwaysbemindfulofthe"equitablydistribute" U  requirementandtheprohibitionagainstsplittingprocurements.2 C  8      46reO  5  6O  7reԀThelatterrequirementisone A  youalreadydealwithatalllevelsofyourprocurementprocesses.However,asignificant - requirementistomeetthedocumentationrequirementoftheFTA--adeterminationthatthe  priceisfairandreasonableandhowthisdeterminationwasderived.    EquitableDistribution- Howwillyouequitablydistributeyourpurchasesamonglocal t suppliers? Doyouhaveanautomatedpurchasingandmaterialsmanagementsysteminplace d thatallowsyoutotrackpurchasesbylineitemandvendortheitemwaspurchasedfrom?Ifso, T andifyouhavemultiplevendorsforthatitemorservice,youcanalternateamongthosevendors. @ Doyouhaveblanketpurchaseagreementsinplacewithmultiplevendorsformultipleproducts , whichwereestablishedasacompetitiveprocess?Ifso,micro-purchasescouldbemadefrom  thosevendors,againonarotatingbasis.Itisagoodpracticetokeeprecordsondollaramounts m awardedduringtheyeartoassistinmonitoringdistribution.  Y  BidSplitting- Howwillyoumonitorprocurementssothatrequirementsarenotbeingsplit 1! toavoidanotherprocurementmethod? Youmayhaveasysteminplacenowthatallowsyou !" tomonitoranytendencytosplitrequirementsoveryoursmallpurchasemaximumintosmall # purchases.Micro-purchasingwouldbeanadditionalmethodofprocurementaddressedinyour #  proceduresandtrainingwithinyouragency.Ifyouhaveanautomatedsystemwhichrecords $! individualprocurements,thatsystemmayhavetobereviewedperiodicallytoanalyzethe  %l" procurementpatternsforaparticularproductorservice.Manytimes,yousimplyrelyonyour i buyerorcontractingofficertomonitornotonlybidsplittingbutalsoequitabledistribution.  U  FairandReasonableDetermination- Howdoyoudocumentyourdeterminationthatthe -  priceisfairandreasonableandthebasisforthatdetermination? Youmaywanttoprepare   some"boilerplate"determinationsforsignaturethataddressspecificwaysyoubuyproductsor   services.YoumaywanttosaythatbaseduponatelephonequotefromJohnDoeCompanyfor   thewidgetandcomparingthatpricewithapricepaid6monthsagoforthesamewidget,itisfair  | andreasonable--youwouldfillintheblanksinyourform,signit,andfileintheprocurement  h file.Alternatively,youmayuseanexistingformsuchasabuyer'stabulationthatisfiled.You T  maywanttohaveanotherformthatindicatestheprocurementisbeingmadefromanexisting @  BlanketPurchaseAgreementforwhichcompetitionwasobtained.Youmaywanttopreparea ,  formthataddressessalesitems--youarebuyingthiswidgetfromXCompanybaseduponan   advertisementthatthewidgetnormallysellsfor$35eachandisonsalefor$29.50andthisisfair m  andreasonable.Finally,youmaywanttohaveaformthatsimplyaddressesastandard Y  commercialitem--thepriceisfairandreasonablebecauseitisastandardcommercialitemsold E  intheopenmarketplace.  C  9      47re O  5  6O"odo  7re P 1 InimplementingthisrequirementattheFederallevel,theregulationsrecognizethepaperwork   costofverifyingthereasonablenessofpricemaymorethanoffsetthepotentialsavings.The  priceisalsoessentiallyassumedtobereasonableunlessthecontractingofficersuspectsorhas x informationtoindicatethatthepricemaynotbereasonable(higherthanrecentpricepaidorhas d personalknowledgeofpriceforthesupplyorservice),orasupplyorserviceisbeingpurchased P forwhichthereisnotcomparablepricinginformationreadilyavailable. C  10      48reO  5  6 O odo  7re  < OtherFederalPrecedent-Inresponsetorequestsfromitsownfieldofficesformoreguidance, } theFederalGovernmentrecentlyreviseditsregulationsdealingwithdirectFederal i micropurchases. C  11      # 'X X5# XX 'ԀBecausethesechangesgivemoreflexibilitytoprocuringagencies,youmight U wanttoreviewtheseprovisionsasyouconsiderpoliciesandguidanceforyouragency's A  micropurchases.49re O  5  6 O odo  7re ԀAmongthechangeswere: -!   ,c  ,c"0    theGovernment-widecommercialpurchasecardisthepreferredmeans(butnottheonly # means)topurchaseandpayformicro-purchases; C  12      4:reO  5  6O odo  7re8,c݌# (#(#    $t!   ,c  ,c"0    # 'X X # XX '#XXX X# XXXXagenciesareencouragedtodelegatemicro-purchaseauthoritytoemployeesoftheagency i whowillactuallybeusingthesuppliesorservicesbeingpurchased;# C  13      4;reO  5  6Oodo  7re!,c"݌U(#(#     ,c  ,c"0    #XXX X礵# XXXX# 'X Xs# XX 'contractclausesarenotrequiredformicropurchases;and,c݌- (#(# Ќ    ,c  ,c2"0    # 'X X礊# XX '#XXX XH# XXXXdocumentationtosupportmicro-purchasesistobeminimized.& C  14      4<8O  5  6Oodo  78,c2M݌ (#(# Ќ  ArecentreportbytheGeneralAccountingOffice*2 C  15      4=O  5  6Oodo  7IԀthataddressesuseofcreditcardsbyFederal  t agenciesisexpectedtoresultinmorerelaxedguidancebeingissuedbytheFederalagenciesand  ` increasedusageofthecreditcard.Thereportdiscussesthesavingsintimeandmoneythatan L  agencycanrealizebyutilizingcreditcardsformicro-purchasesandthefactthattherehasbeen 8  noapparentincreaseinprocurementfraudthroughtheutilizationofthesecards. $  Thereisnoabsoluteguidancethatcanbegiveninthisareaastowhatworksbestorevenwell. e  Theauthoritytousemicro-purchasesisintendedtoprovideaveryflexibleprocurementmethod Q  whichwillallowyoutobuylow-priceditemsinacost-efficientmanner. =   4.1.1PurchaseCards    DISCUSSION    Thissectiondealswiththeuseofpurchasecardsformicropurchases,whicharethoseof \ $2,500orless.Sincemicropurchasesareexemptfromtherequirementsofpublicizingand H obtainingcompetitivequotes,theyarewellsuitedtobeingdelegatedbytheprocurement 4 departmenttotheendusersofthesuppliesorservices.Andsincepurchasecardshave   proventohavecertainadvantagesinmakingmicropurchases,thedelegationofauthority u  tousepurchasecardswillbethefocusofthissection. a Apurchasecardworkslikeapersonalcreditcard,suchasVISAorMasterCard.Purchase 9  cardsofferanumberoftangibleadvantagesoverthetraditionalpurchasingmethodsof %! issuingindividualpurchaseordersorblanketpurchaseorders,buttheyalsopresentnew " challenges,especiallyintheareaofinternalcontrolsandtheequitabledistributionofthe " agency'sbusinesstovariousvendors,includingDisadvantagesBusinessEnterprises #  (DBE's). $l!   &D # BestPractices  i TheSanFranciscoBayAreaRapidTransitDistrict(BART) institutedapilot program for A purchasecardsonJuly1,1996.TheresultsoftheBARTprogramhavegenerallybeenvery 1  positive.TheBARTexperiencehasdemonstratedanumberofimportantlessonswhichother   granteesshouldbeawareof,andthesearediscussedbelow.Thedetailedproceduresadoptedby   BARTforimplementingitspurchasecardsystemareincludedinAppendixB.13,BART   PurchaseCardSystem.  x DelegationofAuthority Allpurchasecardsshouldbecentrallycontrolledoutofthe P  ProcurementDepartment . TheProcurementDepartmentmustberesponsiblefortrainingthose @  individualswhoaretobegivenauthoritytousethepurchasecards.Inordertomaximizethe 0  benefitsofmicropurchasingwithpurchasecards,thepersonsauthorizedtousethecardshouldbe   thosewhosedepartmentwillbeusingthesuppliesorservicesbeingpurchased.Thedelegation q  ofauthoritytoendusersshouldinvolvetheappointmentinwritingoftheseendusersas ]  "contractingofficers"(orsuchothertitleasthegranteemayusetodescribethosehaving I  authoritytoawardcontracts).SuchanappointmentprocedurehasbeenadoptedbyBART,and 5 isalsofollowedbyFederalagencies(SeeFAR1.6033,Appointment).Allpurchasecard ! activitywouldfunction,therefore,asredelegatedprocurementauthorityrequiringavalid   warrant,trainingandperiodicreviewbytheProcurementDepartment.Cardholderswouldbe  subjecttothesameStandardsofConductasotherprocurementpersonnel(SeeBPPM | 2.4.2.2.2,WrittenStandardsofConduct).Theywouldalsobesubjecttotheprocurement h policiesissuedbytheProcurementDepartment.Thegrantee'swrittenprocurementprocedures T mustbeexpandedtogivespecificguidanceforpurchasecardactivity,includingtheinternal @ controlsandthebestbusinesspracticesforuserstofollow. , AdvantagesofthePurchaseCard󀄀BARThasidentifiedanumberofadvantagesinusingthe m purchasecard.Theseinclude: Y N" ,X,` [IX ,X,( [IXN  ,c  ,c+"0    #XXX X# XXXX# 'X X礞# XX 'Vendorsarenowgettingpaidmuchmorequickly;i.e.,within12days.,c++݌1!(#(# Ќ    ,c  ,c-"0    # 'X Xc,# XX '#XXX X!,# XXXXVendorsarerespondingrapidlytotheagency'sorders;i.e.,within2030minutesofan  # order.,c-3-݌# (#(# Ќ    ,c  ,c."0    #XXX X-# XXXX# 'X X礄-# XX 'Ifavendordoesnothavetheneededpart,theenduser"shops"thestreetuntiltheycan %d" findanothervendorwhohasthepart,insteadoforderingthepartfromtheinitialvendor &P # whowouldhaveto"buy"thepartandpassitthroughtheblanketpurchaseorderwithan ',c݌ D(#D(# Ќ  ,c  ,c"0 D   Firmsthatrespondedtoyouradvertisementexpressinganinterestinobtainingthe,c݌aD(#D(# Ќ   (lxs}0 D solicitationyouareissuingshouldbeaddedtothemailinglist.MD(#D(# ,c  ,c"0 D   Youmayencourageyourinternalcustomertoprovideyouwithnamesoffirmsit %! considerscapableoffillingtherequirementsoftheprocurementforinclusiononyour " list.Ifthespecificationsforyourrequirementwerepreparedbythirdpartyconsultants,c݌ "D(#D(# Ќ  0 D orcontractors,theymaybeasourceforfirmsthatareconsideredcapableoffillingthe i requirements.u C  31      4e 2 O  5  6GO[the  7 2 UD(#D(# ,c  ,c "0 D   TheDBEprogramofficewithinyouragencycanidentifyanyDBEfirmsthatmaybe -  interestedinreceivingthesolicitation.Dependinguponhowyourdatabaseis   established,youmayneedtoidentifytheStandardIndustrialClassification(SIC)Code   number(orhoweveryouragencyidentifiesfirmswithinyourdatabase)andfurnishthat   Codetotheappropriateofficetoaidintheirsearch.Anyfirmssoidentifiedcanbe  t addedtoyourlistaswell.,c %݌ `D(#D(# Ќ  ,c  ,c"0 D   National,state,andlocalagenciesmaybeabletoassistwithlists;e.g.,yourstate 8  economicdevelopmentofficeornationaltradeassociations.,c݌$ D(#D(# Ќ  ,c  ,c"0 D   Particularlyinconstructionsolicitations,youwillwanttoaddtoyourmailinglistplan e  roomsthatareoperatedbyvarioustradeassociationsorchambersofcommerceandany0@"D(#D(#0@"(#(# Q  DodgeRoomservicesinyourlocale.Theseareideallocationsforspecialty =  subcontractorstoreviewtheplansandspecificationsthatareapplicabletoonlytheir ) particularspecialtywithoutbuyingtheentiresolicitationpackage.Themore  knowledgeablemultiplesubcontractorsareaboutyourprocurement,thebetterthe  competitiontotheprimecontractorswhowillbesubmittingbidsorproposals.,c ݌D(#D(# Ќ  Ifyouwillbechargingbiddersorofferorsforyoursolicitationpackage(typicallythecasein \ constructionservicesolicitations),youmaywanttosendoutapre-solicitationnoticeindicating H thecostandhowpayment(ordeposit)istobemade.Havethatpaymentinformationreturnedto 4 youroffice.Youmaythenincludethosefirmsthathaveprovidedtherequiredpaymentor   depositinyourultimatesolicitationlist. u  Similarly,ifyourmailinglistisverylong,youmaywanttomailapre-solicitationnotificationto M allentitiesonyourlistadvisingthemoftheupcomingsolicitationandaskingiftheywantto 9  receivethesolicitationforthisprocurement.Iftheyfailtorespond,youmayassumetheydonot %! wishtoreceivethesolicitation.Thisactioncouldresultinasmaller(andthereforeless " expensive)solicitationprocess,whilestillallowingeveryoneonyourlisttheopportunityto " competeintheprocurement.Youmayalsoaskinsomeorallofthesemailingsifthefirm #  wishestowithdrawfromthelist;thequalityandmaintenanceofthemailinglistsisimportantto $l! fosteringrobustcompetition. %X"   '0!$ ManagementofSolicitationMailingLists-Youarenowreadytoissueyoursolicitationusing i thelistthathasbeendeveloped.Thereareanumberofmanagementissuesassociatedwiththe U listatthistime: A ,c  ,c  "0 D   Whenmailingthesolicitationtotheentitiesonthelist,someagenciesincludeapost   cardindicatingthatiftheentitydoesnotrespondtothesolicitation(furnishabidor   proposal)itwillberemovedfromthelistforfuturesolicitationsunlesstheyindicate(on   thepostcard)thattheywanttobeincludedonfuturelists.Thisisapracticalrecognition  t thattheissuanceofsolicitationsisanexpensiveprocessfortheagencyandonlyentities  ` thathavearealinterestintheprocurementsshouldreceivefuturesolicitations.,c  6 ݌L D(#D(# Ќ  ,c  ,c( "0 D   Ifyouhaveaseparatemailroom,thatgroupmayberesponsiblefortheactualphysical $  issuanceofthesolicitation.Youmaywishtodoublecheckthatthelistofentities y  furnishedforthesolicitationisthesameasthelistyouhavemaintained--beparticularly e  concernedthattheincumbentcontractor(ifthereisone)isonthelist.Notifythemail Q  roomthatifasolicitationisreturnedbecauseofanincorrectaddressornoforwarding =  addressisavailablefortheentity,youaretobenotifiedimmediatelysothatyoucantry ) todeterminethecauseofthereturn.,c( C ݌D(#D(# Ќ  Oncethesolicitationhasbeenissued,usingthemailinglisttoensurethatanysolicitation  amendmentsarefurnishedtoallentitiesthatreceivedtheoriginalsolicitationisimportant,as p discussedinSection4.3.2.5,"AmendmentofSolicitations." \ Afterthesolicitationprocessiscompleted,thefinaladministrativetaskassociatedwiththe 4 mailinglististoupdateit.Indicatewhichfirmsonthelistrespondedtothesolicitation,which   firmsdidnotbutaskedtoreceivefuturesolicitations(ifyouaskedforthis),andwhichfirmsdid u  notrespondnorindicatetheywantedfuturesolicitations.Anupdatedlistwillmakepreparation a ofthenextsolicitationthatmucheasiertoaccomplish. M % g 4.3.2.3Solicitation %g  %! *l 1 dxdd xm1+(#(#l,xdd +  ""  REQUIREMENT  a#  9.c(2)ofFTACircular4220.1Erequiresthatinvitationsforbidsbeissuedwithsufficient $x! timetopreparebidspriortothedatesetforopeningthebids.Further,theinvitationforbids %d" willincludeanyspecificationsandpertinentattachmentsandshallproperlydefinetheitemsor &P # servicessoughtinorderforthebiddertoproperlyrespond. ' O>   7r> ,c= ?= ݌A4(#4(# Ќ  ,c  0  ,cU? "04(#(#  Anysubmissionsrequiredbystatelaw.,cU? |? ݌ 4(#4(# Ќ  3. 0  Adocumentthatincludessolicitationinstructionsandconditions- Thesetypically   includeinstructionsrelatingto:offerpreparation;instructionsrelatingtoacknowledging  x amendmentstothesolicitation;rulesrelatingtolatesubmissions,modificationsand  d withdrawalsofoffers;instructionsrelatingtotheDBEparticipationgoalsandprogram; P  instructionsastohowthecontractwillbeawarded;adviceastoagencyandFTA <  bid/proposalprotestprocedures;adviceastoabilityofagencytocancelthesolicitation; (  andestablishmentofanorderofprecedencecoveringhowinconsistenciesbetween }  provisionsofthesolicitationaretoberesolved. i   (#(# 4. 0  Adocumentthatincludesspecialcontractrequirementsorprovisions(asopposedto A  generalprovisions)relatingtothisparticularsolicitationandcontractthatarenot0@"## 1 addressedelsewhereinthesolicitation -Theseprovisionstypicallyaddresssuchthings  asbondingrequirements;insurancerequirements;anyspecialpermitsorlicenses   required;whatpropertytheauthoritywillfurnishthecontractorandrulesrelatingtothat  property;liquidateddamages;warranties;indemnityprovisions;options;contract | administration;andrulesrelatingtoroyaltiesandpatents.Ifyouaregoingtoawarda h cost-typecontract,specialprovisionsrelatingtothosecontractsaretypicallyincludedin T thespecialprovisions. @  (#(# 5. 0  SpecialprovisionsrequiredbytheFTAthroughFTACircular4220.1E orthe  MasterAgreementwhichmustbeincludedinthesolicitationandthecontract-  q ModelclausesforcompliancewiththeserequirementsarediscussedinSection8.1and ] AppendixA.1,andincludesuchprovisionsasEEOclauses;affirmativeactionclauses; I  DBEprogramclauses;ContractWorkHoursandSafetyStandardsActprovisions; 5! Davis-BaconActprovisions;TitleVIoftheCivilRightsActof1964compliance !" provisions;CleanAirandWaterActsprovisions;EnergyPolicyandConservationAct  # provisions;CargoPreferenceActclause;BuyAmericaProvisions;OfficialsNotto #  Benefitclause,andRestrictionsonLobbyingprovisions.Somepropertiesincludethese $|! aspartofthespecialprovisionsdocument,andstatelawmayrequiresimilarprovisions. %h"  (#(# 6. 0  ThecontractualrequirementsoftheDBEprograms- (Sometimesincludedinspecial '@!$ provisions.)AlthoughtheDBEprogramsforFTAfundedprojectsmustcomplywith49 (0"% CFRPart23,thecontractuallanguagedetailsincludedinthecontractsvarybetweenthe )#& individualauthorities.Chapter8includesmodelDBEcontractclausesthatcouldbeused q*$' inyourcontract. ]+$(  I,%)(#(# 7. 0  Thelastofthe"boilerplate"formsarethegeneralprovisions. Youmayhave U differentformsforconstructionservices,A&Eservices,supplies,servicescontractsand E costtypecontracts.Itisinthegeneralprovisionsthatyouincludesuchclausesas: 1  changesclause;terminationfordefaultandconvenience;inspection;assignment;the   impactoffederal,stateandlocaltaxes;differingsiteconditions;excusabledelay;   variationinquantity;disputes;governinglaw;indemnification;orderofprecedence;   pricingofadjustments;examinationofrecords;andpaymentterms.  x  (#(# 8. 0  Eachsolicitationwillhavesomesortofspecificationorstatementofworkorscope P  ofworkdescribingwhatitisthatyouarebuying .Aswediscussedinthe @  SpecificationsectionoftheManual,thedetailfurnishedwillvaryfrom 0  contract-to-contract,butitisagainstthisdocumentthatyouwillmeasuresatisfactory   performanceofthecontractor--didthecontractorfurnishyouwithwhatyourequested? q   (#(# Thereisnoreal"best"waytocreateyoursolicitation.Wehavepresentedthecommonelements I  ofthesolicitationandhighlightedthoseissuesormattersthatsolicitationdocumentstypically 5 address.Howyoupackageitisinmanyrespectsafunctionofwhatisalreadyinplaceinyour ! organizationor,ifyouarecreatingasolicitationforthefirsttime,afunctionofwhatyourprior   procurementexperienceshavebeen.  Thebottomlineisthatyouwanttocreateadocumentthatwillgetyouthroughthesolicitation h andcontractawardprocesswithlittleornocontroversyandthroughcontractperformance T on-timeandwithinbudgetwhilecomplyingwiththetermsofyourcontract. @ % p 4.3.2.4Pre-BidandPre-ProposalConferences %pV    DISCUSSION  Y Pre-bidandpre-proposalconferencesaregenerallyusedincomplexacquisitionsasameansof 1! briefingprospectiveofferorsandexplainingcomplicatedspecificationsandrequirementstothem " asearlyaspossibleafterthesolicitationhasbeenissuedandbeforeoffersarereceived.Thisis  # alsoanopenforumforpotentialrespondentstoaddressambiguitiesinthesolicitationdocuments #  thatmayrequireclarification.Noticeoftheconferenceisincludedinthesolicitationatthetime $x! ofissuance. %d"   BestPractices  '1dxdd x1(#(#e,xdd +  (- -  (REQUIREMENT +! ( +Executivedepartmentsandagenciesshallparticipateinagovernmentwidesystemfor   nonprocurementdebarmentandsuspension.4D(O  5  6l O fma  7(  C  47      "   "DISCUSSION  Muchlikethe"commongrantrule"(49CFRPart18),thefederalgovernmenthasadopted t  a"commonrule"onthegovernment-wideeffectofdebarmentsandsuspensions.DOT's `  implementationofthatcommonruleisfoundat49CFRPart29.Thepolicybehindthis L  ruleisthatapersonorentitywhoisdebarredorsuspendedshallbeexcludedfromFederal 8  financialandnon-financialassistanceandbenefitsunderFederalprogramsandactivities. $  Asstatedintheregulations,debarment C  48      ׀4O  5  6W Ok    7 Ԁandsuspension C  49      4O  5  6d Ox    7 Ԁareseriousactionswhich y shouldbeusedonlyinthepublicinterestandfortheprotectionofthefederalgovernment e andnotforthepurposesofpunishment.~ C  50      4O  5  6( O<    7j  Q Inordertoprotectthepublicinterest,itisthepolicyofthefederalgovernmenttoconduct ) businessonlywithresponsiblepersons. C  51      ׀4O  5  6 O    7! Personswhohavebeendebarredorsuspended  arenot"responsible"and,unlessapprovedbytheFTA,contractswillnotbeawardedto  thosepersons.  C  52      ׀4n O  5  6 O    7n Thecertificationrequiredbythiscommonrulemustbesubmittedwith  theoffers,andisalsoanaidtoexpeditetheprocurementprocessbyprovidingcritical p informationastotheresponsibilitydeterminationthatthecontractingofficermust \ ultimatelymake.2  C  53      4 O  5  6 O    7   H     BestPractices i  ThedebarmentandsuspensioncertificationfoundatAppendixBofPart29(andassetforthin A AppendixA.1ofthismanual)ismandatoryforuseincontractsover$100,000involvingfederal -  funds.   Includetheinstructionsforthecertificationaswellasthecertification.Don'ttrytosavespacein   yoursolicitationbyonlyincludingthecertification--theinstructionsaretoocritical.Itis  t recommendedthatyoumakethiscertificationatopicatyourpre-bidorpre-proposalconference  ` iftheresultingcontractwillexceed$100,000. L  Eventhoughyourequestthiscertificationfromallofferors,failuretoreceiveitwithabid(inthe $  sealedbiddingmethodofprocurement)isnotaresponsivenessquestion--thisgoestoa y  contractor'sresponsibilityandmaybereceivedandtalkedaboutafterbidsarereceived.Itmust e  bereceivedpriortoaward. Q  Thecertificationandregulationsallowyoutorelyonyourcontractor'scertificationthatitisnot ) debarred,suspended,proposedfordebarment,declaredineligible,orvoluntarilyexcludedfrom  participationinyourcontractasanelementofyourresponsibility determination.However,if  youknowthatthecertificationiserroneous,youmaynotrelyonthecertification.    Thecertificationandregulationsstatethatyoumay,butarenotrequiredto,checktheListof ` PartiesExcludedfromFederalProcurementandNonprocurementProgramstodeterminethe L eligibilityofyourcontractoranditssubcontractors.TheListofPartiesExcludedfromFederal 8 ProcurementandNonprocurementProgramsisavailablefromtheGeneralServices $ Administrationineitheraprintedversionoranelectronicversion.Theprintedversionis y publishedmonthlyandmaybeobtainedbypurchasingayearlysubscription. C  54      ׀T4O  5  6 O    7fo3 heelectronic e versionisupdateddailyandprovidesaccesstothenamesoffirmsandindividualsonthelist Q throughyourcomputer. C  55      ׀G4fo O  5  6 O    7fo SAalsooffersatelephoneinquiryservicetoanswergeneral =  inquiriesaboutentriesontheListat(202)501-4873or4740. C  56      4fojO  5  60 OD    7fojr  )! AlthoughnotrequiredbytheFTA,sometransitpropertieschecktheListonalltheir # procurements,whetherornotfederallyfunded.Evenifyouareusinglocaldollars,doyouwant #  toawardacontractto,orapproveasubcontractfor,acontractor/subcontractorthathasbeen  $p! debarred,suspended,orproposedfordebarmentbythefederalgovernment?Isthatentity i responsible?Youmayatleastwanttoinquireabouttheactionpriortomakingyourfinal U responsibilitydetermination.Ifyouknowyouwouldwanttousedebarmentinformationina A non-Federallyfundedprocurement,youmaywishtomentionitinyoursolicitation's -  responsibilityclause.   Iftheapparentawardeeofyoursolicitation(e.g.,thelowestresponsivebidder)hassubmitteda   conditionedcertification,youcanusethatinformationinarrivingatyourresponsibility  t determinationandfindthefirmnon-responsible.However,thefirmmayhavesubmitted  ` informationyoubelieveisextenuatingenoughtowarrantawardconsideration.Remember,if L  youwanttoawardacontracttoafirmthathassubmittedaconditionedcertification,youcannot 8  makeanawarduntilyouhavereceivedapprovalfortheawardfromtheFTA. C  57      ׀I4fo&O  5  6 O$   7fo&R tis $  recommendedassoonasitappearsyouwillbefacedwiththissituation,younotifyyourregional y  FTAofficeforguidanceandinstructionsonwhatinformationtheyneedandsubmititpromptly. e   4.3.3.2.2BuyAmericaCertification  =  *e1xdd x>1(#(#e,xdd +  ( ( REQUIREMENT +!y +14aoftheMasterAgreementstatesthat:  0 l a.BuyAmerica.TheRecipientagreestocomplywith49U.S.C.5323(j),FTA h Regulations,"BuyAmericaRequirements,"49CFRPart661,andanyimplementing T guidanceFTAmayissue.," @l"l"  , SUMMARY H  TheBuyAmericarequirementsapplytoallcontractsforrollingstock,steel,iron,or   manufacturedproductswithavaluegreaterthan$100,000.Forthesecontracts,thegranteemust u  obtainacertificationofcomplianceornoncompliancewiththeBuyAmericarequirementswith a! eachbidoroffer.IfthebidderorofferorisnotabletocomplybyusingtherequisiteAmerican M" contentandcertifiesnoncompliance,itmayqualifyforawaiver,whichthegranteemustrequest 9# beforeaward.FTAmaygrantawaiverifitisfoundthatitisinthepublicinterest,thereareno %$ U.S.productsavailable,orthereisa25percentpricedifferencebetweentheforeignand %  domesticproducts.  %!  REQUIREMENTS 'p!#  Steelandiron:AllsteelandironmanufacturingprocessesmusttakeplaceintheU.S.These )H#% requirementsapplytoallconstructionmaterialsmadeprimarilyofsteelorironandusedin  *4$& infrastructureprojectssuchastransitormaintenancefacilities,raillines,andbridges.The i requirementsdonotapplytosteelorironusedascomponentsorsubcomponentsofother U manufacturedproductsorrollingstock.49C.F.R.661.5(a),(b),and(c). A Manufacturedproducts:TheproductitselfmustbemanufacturedintheU.S.with100percent   U.S.components;foreignsubcomponentsareallowed.49C.F.R.661.5(d).   Constructioncontracts  Exceptfortheironandsteelusedinaconstructioncontract,FTAtreats  t theprocurementofaconstructionprojectastheprocurementofa"manufacturedproduct"  d subjectto49CFR661.5(d).Finalassemblyoftheprojecttakesplaceattheconstructionsite, P  anditemsdirectlyincorporatedintotheprojectatthejobsiteareconsidered"components."For <  instance,ifthedeliverableunderaparticularcontractisthebuildingofapassengerterminal,the (  terminalitselfistheendproduct,andthemainelementsincorporatedintotheterminal,e.g., }  shelters,elevators,andplatforms,arecomponentsoftheendproduct.Thesemainelementsare i  generallyspecifiedintheconstructioncontract.However,youmustfirstsatisfythesteelandiron U  requirements,asdiscussedin661.5(b)and(c),beforeapplyingthemanufacturedproductsection A  asdiscussedabove,tothebalanceoftheconstructioncontract. - Rollingstock(includingtraincontrol,communication,andtractionpowerequipment):Thecost  ofcomponentsandsubcomponentsproducedintheU.S.mustbemorethan60percentofthe  costofallcomponentsandfinalassemblymusttakeplaceintheU.S.49U.S.C.5323(j)(2)(C) t and49C.F.R.661.11.Part661.11isaroadmapforgranteesandcontractorstofollowwhen ` determiningcompliancewiththedomesticcontentrequirementsforrollingstock.Itdiscussesin L detailwhatconstitutecomponentsandsubcomponents.Italsoillustratestraincontrol 8 equipment,communicationequipment,andtractionpowerequipment(atsubsections(t),(u),and $ (v));andprovidesalistoftypicalcomponentsofrailandbusrollingstockintheAppendix.The y March18,1997,DearColleagueletterlaysouttherequirementsforfinalassembly.TheMarch e 30,2001,DearColleagueletterdiscussescalculationofdomesticcontent,specificallynotingthat Q allitemsincludedinthelistoftypicalcomponentsintheAppendixto661.11mustbeconsidered =  components,notsubcomponents.Formorediscussion,pleaseseetheNoticeofDearColleague )! letterpublishedintheFederalRegister.66Fed.Reg.32412(June14,2001). " [Note:TheBuyAmericarequirementsaredifferentfromtheBuyAmericanrequirements.The #  latterappliestodirectfederalprocurements.TheBuyAmericaregulationsdiscussedhere,apply $p! onlytofederalassistanceprogramsfundedbytheFederalTransitAdministration.]  %\" BestPractices '4!$  Ifyouspendmuchtimeinprocurement,acopyof49C.F.R.Part661isoneofthose u) #& "mandatory"documentsforyourprocurementdeskbook.Youwillbeconstantlyreferringto a*#' theserulesthroughoutyourcareerintransit,whetheryouarebuyingbuses,railcars,computers M+$( oraconstructionproject.Becausetheserulesaresocritical,itisalsoimportantthatyoukeep 9,%) abreastofFTAguidanceandfinalrulesimpactingtheseregulationsaspublishedintheFederal %-&* Registeroronthewebsite.FTAsBuyAmericawebpageis: .'+   .(, http://www.fta.dot.gov/legal/buy_america/14328_ENG_HTML.htm#XXX Xν##'XX #XX'.4 O  5  6 O)   7 W Thewebsitehaslinksto i theregulations,allrelevantFederalRegisterpublications,waiversandlettersofinterpretation, U frequentlyaskedquestions,rollingstockhandbooks,andrelatedDearColleagueletters. A  NoticeRequirements    Whenacontractforrollingstock,steel,iron,ormanufacturedproductsisestimatedtoexceed   $100,000,49C.F.R.661.13requiresthatthesolicitationinclude"anappropriatenoticeofthe  t BuyAmericaprovision."AmodelclauseaddressingthatrequirementisincludedinAppendix  ` A.1,"FederallyRequiredModelClauses"ofthisManual.Thissuggestedlanguageiswrittenas L  apreambletothecertificationsrequiredbyParts661.6and661.12. 8  Othergranteeshavesatisfiedthisnoticerequirementintheirgeneralorspecialprovisionsby y  includinglanguagesubstantiallyasfollows: e  N" <DL ,XX4` [IXN0  BuyAmericaProvision= (#(# 0  ThissolicitationandtheresultingcontractaresubjecttotheBuyAmericarequirements ) of49U.S.C.5323(j)andtheFederalTransitAdministration'simplementingregulations  foundat49C.F.R.Part661.Theseregulationsrequire,asamatterofresponsiveness,  thatthebidderorofferorsubmitwithitsofferacompletedcertificationinaccordance  withPart661.6or661.12,asappropriate.Thesecertificationsaresetforthinthis p solicitationat[identifywherethecertificationsare].\(#(#  CertificationRequirements 4  49C.F.R.661.13(b)requiresthatyouincludeinyoursolicitationarequirement,asaconditionof u  responsiveness,thatthebidderorofferorsubmitwiththebidorofferacompletedBuyAmerica a certificateinaccordancewithPart661.6forsteel,iron,andmanufacturedproducts,orPart M 661.12,forrollingstock(includingtraincontrol,tractionpower,andcommunicationequipment). 9  Inasealedbid,thebidderisboundbyitscertificationandcannotchangeitafterbidopening, " exceptasprovidedforclericalerror.Ifthebidderdoesnotsubmitasignedcertificationwiththe " bid,submitsthewrongcertificationofcompliance,orcertifiesbothcomplianceandnon #  compliance,thatbidisnonresponsiveandcannotbeconsidered.Exceptasdiscussedbelowfor $l! clericalerror,youcannotgobackandask,inacompetitivesealedbiddingprocurement,forthe %X" biddertocompletethecertificationandsubmititafterbidsareopened. &D # Incompetitivenegotiatedprocurements(i.e.,requestsforproposals),certificationssubmittedas ("% partofaninitialproposalmaybesupersededbysubsequentcertificationssubmittedwithrevised q)#& proposals,andthecertificationsubmittedwiththeofferorsfinalrevisedproposal(orbestand ]*#' finaloffer)willcontrol.However,wherethegranteeawardsonthebasisofinitialproposals I+$( withoutdiscussion,thecertificationsubmittedwiththeinitialproposalwillcontrol. 5,%)    .'+ Theclericalerrorprovisionallowsbiddersandofferorstochangeacertificationofnon i compliancetooneofcomplianceonlyifthebidderorofferorcertifiedwronglyduetoaclerical U orinadvertenterror.49C.F.R.661.13(b).Moreexplanationofthisprovisioncanbefoundin A theFinalRulepublishedintheFederalRegister.68Fed.Reg.9797(Feb.28,2003).Ifthe -  bidderorofferorcertifiesitwillcomplywiththeBuyAmericarequirements,itwillnotbe   eligiblelaterforawaiverofthoserequirements.49C.F.R.661.13(c).   Thecertificationrequirementforprocuringsteel,iron,ormanufacturedproductsisat49C.F.R.  t Part661.6.ThiscertificationlanguagereferstosectionsoftheSurfaceTransportation  ` AssistanceActof1982(steelandmanufacturedproducts)andnottothemostrecentversionof L  thestatute,foundin49U.S.C.5323(j)(steel,iron,andmanufacturedproducts).Thecertification 8  languageinAppendixA.1,"FederallyRequiredModelClauses"accuratelyreferencesthecorrect $  statutoryprovision.YoushouldusethisuntiltheFTApublishestechnicalcorrectionstothis y  C.F.R.section.Thebidderorofferorhasachoiceoftwocertificationstocomplete,either: e  ! ! (lx7"3"  -, Xp  XL-  3' 2l3  0    itwillcomplywith49U.S.C.5323(j)(1)and49C.F.R.661.5;or3' ' ݌= (#(# Ќ    "3"    3( 2l3  0    itcannotcomplywith49U.S.C.5323(j)(1)and49C.F.R.661.5,butmayqualifyforan  exceptionunder49U.S.C.5323(j)(2)(A),5323(j)(2)(B),or5323(j)(2)(D),and49C.F.R.  661.7.3( ( ݌(#(# Ќ    Thecertificationrequirementforprocuringrollingstock(includingtractionpower,traincontrol, \ andcommunicationequipment)isatPart661.12.Thiscertificationlanguagealsorefersto H sectionsoftheSurfaceTransportationAssistanceActof1982andnottothemostrecentversion 4 ofthestatute,foundin49U.S.C.5323(j).Thecertificationlanguagefor661.12inAppendix   A.1,"FederallyRequiredModelClauses"ofthisManualaccuratelyreferencesthecorrect u  statutoryprovision.YoushouldusethisuntiltheFTApublishestechnicalcorrectionstothis a C.F.R.section.Thebidderorofferorhasachoiceoftwocertificationstocomplete,either: M "3"    3- 2l3  0    itwillcomplywith49U.S.C.5323(j)(2)(C)and49C.F.R.661.11;or3- - ݌%!(#(# Ќ    "3"    3. 2l3  0    itcannotcomplywith49U.S.C.5323(j)(2)(C)and49C.F.R.661.11,butmayqualifyfor " anexceptionunder49U.S.C.5323(j)(2)(A),5323(j)(2)(B),or5323(j)(2)(D),and49 #  C.F.R.661.7.3. . ݌$l!(#(# Ќ  WaiverRequirements  &D # Ifabidderorofferorexecutesthecertificationindicatingthatitcannotcomplybutmayqualify ("% foranexception,youmustreviewthecircumstancestodetermineifyoushouldrequestawaiver q)#& fromFTA.Ifyoudonotrequestawaiveroryourequestitanditisdenied,youmustawardtoa ]*#' compliantbidderorofferorifyouplantousefederalfunds.TheBuyAmericarequirementsmay I+$( bewaivedinthreespecificinstances: 5,%) "3"    32 2l3  0    Iftherequirementsareinconsistentwithpublicinterest󀄀Unlessageneralexceptionisset  .'+ outintheAppendixtoPart661.7oftheregulation,thiswaiverrequiresadetermination .(, bytheFTAAdministrator,onacasebycasebasis,thattorequirecomplianceis i "inconsistentwiththepublicinterest."49U.S.C.5323(j)(2)(A)and49C.F.R.661.7(b).32 2 ݌U(#(# Ќ  "3"    35 2l3  0    IfthematerialsarenotavailableinfromtheU.S.󀄀Thiswaiverrequiresadetermination -  bytheFTARegionalAdministratorthatthematerialsforwhichawaiverisrequestedare   notproducedintheU.S.insufficientandreasonablyavailablequantitiesandofa   satisfactoryquality.Ifnoresponsiveandresponsiblebidisreceivedofferinganitem   producedintheU.S.,itwillbepresumedtheconditionsexisttograntthisnon  t availabilitywaiver.Inthecaseofasolesourceprocurement,thewaiverwillbegranted  ` onlyifthegranteeprovidessufficientinformationwhichindicatesthattheitemtobe L  procuredisonlyavailablefromasinglesourceorthattheitemtobeprocuredisnot 8  producedinsufficientandreasonablyavailablequantitiesofasatisfactoryqualityinthe $  U.S.49U.S.C.5323(j)(2)(B)and49C.F.R.661.7(c).35 <5 ݌y (#(# Ќ  "3"    39 2l3  0    Ifthecostofthedomesticproductismorethan25percenthigherthantheforeignproduct Q  ЄThiswaiverrequiresadeterminationbytheFTARegionalAdministratorthatincluding =  adomesticitemordomesticmaterialwillincreasethecostofthecontractbetweenthe ) granteeanditssupplierofthatitemormaterialbymorethan25percent.Thiswaiver  cannotbeappliedtocomponentsorsubcomponents.49U.S.C.5323(j)(2)(D)and49  C.F.R.661.7(d).39 : ݌(#(# Ќ  "3"    3< 2l3  0    Generalwaivers󀄄AppendixAtoPart661.7listsspecificwaiversforwhichapplications \ arenotnecessary.Thislistincludesallwaiverspublishedin48C.F.R.25.104,iXX      i>     XX   C  58       H Chryslervans,microcomputersandsmallpurchasesunder$100,000.Ageneralwaiver 4 hasalsobeengrantedundertherollingstockrequirementsofPart661.11atAppendixA.   Underthiswaiver,theprovisionsofthissectiondonotapplywhenforeignsourcespare u  partsforbusesandotherrollingstockwhosetotalcostis10percentorlessoftheoverall a projectcontractcostarebeingprocuredaspartofthesamecontractforthemajorcapital M item.Iftheproductofferedqualifiesforapermanentdiscussedhere,thebidderorofferor 9  shouldcertifycompliancewithBuyAmerica.3< = ݌%!(#(# Ќ  Generally,onlygranteesmayapplyforawaiver.However,ifabidderorofferorisseekinga " waiverunderPart661.7(f)(waiverforcomponentorsubcomponentunderrollingstock #  procurements)orPart661.7(g)(waiverforspecificitemusedamanufacturedproduct),FTAwill $l! considerarequestforwaiverdirectlyfromthebidder,offeror,orsupplier. %X" ThegranteemayrequestawaiverfromFTAwhenthereisaviablepublicinterestargument '0!$ supportingawardtoanoncompliantbidderorofferorwhenthereisacompliantbidderor ("% offeror;whentherearenocompliantbidsoroffers(includingajustifiedsolesourcetoanon q)#& compliantbidderorofferor);orwhenthereismorethana25percentpricedifferencebetween  ]*#' thecompliantandnoncompliantbidoroffer.Otherwise,thegranteemustawardtothe i compliantbidderorofferormeetingallrequirementsforaward. U Applicationsforwaiversareprocessedfollowing49C.F.R.661.9.Exceptasnotedabove,the -  waiverrequestmustbeobtained"inatimelymanner"throughthegrantee.Granteesshould   thereforereviewthebidsoroffersandrequestawaiver,ifoneisnecessary,beforeaward.The   grantee'srequestforwaivermustbemadeinwritingandincludeallfactsandjustificationto   supportthewaiver,andbesubmittedtotheFTAAdministratorthroughtheappropriateFTA  t RegionalOffice.TheAdministrator(orRegionalAdministrator,incaseswhereauthorityhas  ` beendelegated)willissueawrittendeterminationsettingforththereasonsforgrantingor L  denyingthewaiver. 8   Investigations  y  FTAsBuyAmericainvestigativeproceduresestablishapresumptionthatabidderwhohas Q  submittedaBuyAmericacertificateisincompliancewiththeregulation.FTAwillinvestigateif =  itfindsthatthispresumptionhasbeenovercome.FTAmayinitiateaninvestigationonitsown ) orinresponsetoathirdpartypetition.Theregulationrequiresthatthepetitionincludea  statementofthegroundsofthepetitionandanysupportingdocumentation.49C.F.R.661.15.   IntentionalViolations  p  49C.F.R.661.18,statesthatanypersondeterminedbyaFederalagencyorcourttohave H intentionallyaffixedafalse"MadeinAmerica"labelto,ormisrepresentedtheoriginof,a 4 productthatwasusedintheprojectbutwhichwasnotproducedintheUnitedStatesisineligible   toreceiveanFTAfundedcontract. u  Forinstance,ifapersonhasbeenconvictedbyacourtofmakingafalsecertificationunderthese M provisions,thatpersonwouldbeineligibleforawardofacontract.Iftherewasaviolationbut 9  notaconviction,theinformationcouldstillaffectyourresponsibilitydetermination.Similarly,if %! itwasdetermined(perhapsthroughasuspensionordebarmentproceedingconductedbyafederal " agency)thatthepersonfalselyrepresentedtheAmericanoriginofaproduct,thatpersonwould " similarlybeineligibleforawardofacontract. #  Iftheviolationisdiscoveredafteraward,thecontractorremainsresponsibleforperformingthe %X" contract,includingsatisfyingtheBuyAmericarequirements.Atypicalresolutionistopermitthe &D # contractortosubstituteadifferentproductthatmeetsthespecificationsincludingtheBuy '0!$ Americarequirementatthecontractor'sexpense.Inrareinstances,FTAmayapproveapublic ("% interestwaiverallowingthenoncompliantproducttobeused.#'XX #XX' q)#& #'XX示R #&%'%   5+$( 4.3.3.2.3LobbyingCertification %1S  i %&*eq1xdd x1(#(#e,xdd +  ( ( XXREQUIREMENT +!i +B% l, |X, XpB3.doftheMasterAgreementstatesthat:v XX    v  v XX  vd.LobbyingRestrictions.TheRecipientagreesasfollows:  s   0  (1)RefrainfromusingFederalassistancefundstosupportlobbying,andK "" 0  (2)Comply,andassurethecompliancebyeachthirdpartycontractoratanytierand #  eachsubrecipientatanytier,withapplicablerequirementsofU.S.DOTregulations,   "NewRestrictionsonLobbying,"49CFRPart20,modifiedasnecessaryby31U.S.C.   1352.#XXX XvU ##v XX礕U #T%   |X l, |XT~ ""  ( xXX v0  ," j ""  ,  :  4  `   [  I    p DISCUSSION  r  TherequirementssetforthabovehavebeenincludedinallgrantsbetweentheFTAandits J granteeswitharequirementthatthecertificationflowdowntoallcontractorsand 6 subcontractorsforwhomacontractinvolvingfederalfundsinexcessof$100,000is " contemplated.Therequirementhastwoaspectstoit:First,thecertificationitselfmustbe w executedandreturnedwiththebidorproposal.Second,intheeventfundsofanysort c havebeenusedforlobbyingactivities C  59      ׀4 O  5  6\ O\   7 \ bythecontractororanysubcontractor;a O StandardForm-LLL,"DisclosureFormtoReportLobbying"mustalsobecompleted.Itis ; yourultimateresponsibilitytoensurethatthesecertificationsanddisclosureformsare ' submittedtotheFTA.B C  60      4 O  5  6^ O^   7 _    BestPractices   CertificationsRequired-Inallsolicitationsthatareexpectedtoresultincontractamountsin !Z excessof$100,000,thecertificationsetforthinAppendixAto49CFRPart20mustbe "F included.ThecertificationisalsoincludedinAppendixA.1,"FederallyRequiredModel #2 Clauses"ofthisManualunderthe"Lobbying"contractprovisions.  $    _&" AlthoughitisnotrequiredthatyouincludeacopyoftheStandardFormLLLinthesolicitation, i itisrecommendedthatyouhaveacopyavailabletofurnishtoanofferorifoneisrequested.A U copyisincludedintheCFRsectionandmaybereproduced. C  61      ׀A4O  5  6b Oc   76c Ԁcopymayalsobeavailable A fromyourlegalcounselorfederalgrantsofficebecausetheagencyhadtofurnishacopytothe -  FTAaswellaspartoftheGrant-makingprocess.     Timeliness-Thecertification(andStandardFormLLLifapplicable)shouldbeexecutedand   returnedwiththebidorproposal.Becausethelanguageoftheregulationsreferstoneedingthe  t certificationandapplicabledisclosuresattimeofaward,failuretosubmittheexecuted  ` certificationwiththeofferwouldnotbeconsideredaresponsivenessissueinacompetitive L  biddingprocurement.  8   Subcontracts-Youmaynotalwaysknowwhoyourprimecontractorsubcontractswith, y  particularlyinfixedpricecontracts.Itisrecommendedthatduringanypre-performance e  conferenceyouhavewiththeprime,youremindhimorheroftherequirementtoforwardthe Q  certificationanddisclosurestatementsmadebysubcontractorsatanytierwhohavesubcontracts =  inexcessof$100,000throughthetierstothecontractingofficer.  ) %  %h %  4.3.3.3OtherSubmissions%h   %  4.3.3.3.1AcknowledgmentofSolicitationAddenda%i  p DISCUSSION H Althoughthetopichasbeendiscussedindifferentcontexts, C  62      ׀4@O  5  6Wj Okj   7@j oneofthemostcritical   submissionsthatshouldbereceivedwithoffersisanacknowledgmentofanyamendments u  tothesolicitation.Thesearethechangestothetermsofthesolicitation(includingtothe a "boilerplate,"thedrawings,specifications,scopeofwork,etc.)thatinalllikelihoodhave M animpactonpriceorschedule.Ifanamendmentisnotacknowledged,youdonotknowif 9  theofferorisreallyofferingthesameproductorservicethatyouwant. %!   " BestPractices i  Therearetwowaysmostagenciesallowofferorstoacknowledgereceiptofamendments. A AswediscussedinthesectionontheSolicitation, C  63      ׀40O  5  6n On   70n manyagenciesincludeonthe solicitation   form itself,spaceforsolicitationamendmentstobeacknowledged.   Asecondwayisfortheofferortoactuallysignanddatetheamendmentcoversheetandreturnit  | eitheratthetimeofreceiptorincludeitwiththeoffer.  h Seldomisitrequiredbytheagency,butitisnotunusualforanofferortofillinthespaceonthe @  solicitationformandreturntheamendmenttoo.Noproblemfromyourstandpoint--just ,  "overkill"byaconcernedofferor.Ifyouseethissituationfrequently,youmaywanttocheckthe   instructionsyouhaveprovidedtoofferorsanddetermineifthereissomeambiguityaboutyour m  acknowledgmentrequirements. Y  Ifyoureceiveabidorproposalandoneormoreoftheissuedamendmentsarenot 1 acknowledged,whatdoyoudo?  Manytimesyouareinitiallyonlylookingatthelowbidder'sbid--lookattheotherbiddersand  seeiftheyacknowledgedtheamendment.Ifnot,theremaybeamailroomortimeliness x problem. d Arethechangestothesolicitationmadebytheamendmentmaterial? < &  Iftheamendmentismaterial,accumulatethedocumentsandseektheadviceofyourlegal } counsel.ParticularlyinanIFBprocurement,youmayhavealowbidthatisnon-responsiveand i cannotbeconsideredforaward.DependinguponhowyouragencyconductsRFPs,thefailureto U acknowledgeanamendmentisnotusually"fatal"andyoucanaskforanacknowledgmentduring A  negotiationsordiscussions.'t  -! Youmaywishtoincludeinyourproceduresorsolicitationsaprovisionforyourdetermination # regardingtheresponsivenessofofferswhichdonotacknowledgematerialaddenda.Sucha #  provisionwillreinforceyourdiscretion.  $t!   &L # %  4.3.3.3.2BidGuarantee%w   i *l1dxdd xq1(#(#l,xdd +  AA  REQUIREMENT  < Indiscussingbondingrequirements,11ofFTACircular4220.1Eprovides: %   Q"   |X   |XQ 0  Forthoseconstructionorfacilityimprovementcontractsorsubcontractsexceeding   $100,000,FTAmayacceptthebondingpolicyandrequirementsofthegrantee,   providedFTAdeterminedthatthepolicyrequirementsadequatelyprotecttheFederal  l interest.FTAhasdeterminedthatgranteepoliciesandrequirementsthatmeetthe X  followingminimumcriteriaadequatelyprotecttheFederalinterest:  D   ""  0  0 ""a.Abidguaranteefromeachbidderequivalenttofive(5)percentofthebid   price.The"bidguarantee"shallconsistofafirmcommitmentsuchasabid q  bond,certifiedcheck,orothernegotiableinstrumentaccompanyingabidas ]  assurancethatthebidderwill,uponacceptanceofitsbid,executesuch I  contractualdocumentsasmayberequiredwithinthetimespecified;  5   " "  15.moftheMasterAgreementstatesthat:     0  (m)Bonding-TheRecipientagreestocomplywiththefollowingbonding | requirements. h""  N" `  |X   |XN0  (1)0` ""ConstructionActivities-Therecipientagreestoprovidethebidguarantee, @ contractperformance,andpaymentbondingtotheextentdeemedadequateby , FTAandapplicableFederalregulations,andcomplywithanyrequirementsFTA  mayissue.m` "` " 0  (2)0` ""OtherActivities-TheRecipientagreestocomplywithanyotherbonding E  requirementsorrestrictionsFTAmayimpose.  C  64      1!` "` " Statelawsaresometimesspecificinrequiringorprohibitingsecurityandguarantiesinpublic  # procurements.Performancebondsareoftenrequired,andtherequirementmayalsoaffectbid #  guaranties. $x!   %d"    XXXXDISCUSSION 'l!# Theprimaryfunctionofobtainingabidguaranteeistofinanciallyprotecttheownerfrom )D#% lossshouldthesuccessfulofferorfailtoexecutefurthercontractualinstrumentsand *0$& furnishperformancebondsorinsurancecertificatesasrequired.AsrequiredbytheFTA,  +%' thisfinancialprotectiononconstructioncontractsis5%oftheamountoftheoffer.Bid i guarantiesareusuallyusedonlywherethereisarequirementforperformanceand/or U paymentbondsarerequiredpriortothecommencementofperformance. A WewilldiscussinothersectionsoftheManualbondingrequirementsinparticulartypesof   procurements,suchasforconstruction,  C  65      ׀e4DO  5  6 OІ rtic  7D quipmentandsupplies,2 C  66      ׀4O  5  6҇ O rtic  7 androllingstock.n C  67      ׀   I4O  5  6 O rtic  7; nthissection,wewilldiscussthesubmissionrequirementsforthevarioustypesofbid   guarantee,suchasbidbonds,certifiedchecks,andotherallowablenegotiableinstruments.  t Aswithmanyotheraspectsoftheprocurementprocess,theuseofbidsecurityandthe L  typesofsecuritymaybeaddressedinyourstatelaws.Inthesecases,youwillbeobligated 8  tofollowthoselawsaslongastheymeettheminimumrequirementsofthefederal $  regulationssetforthabove. y  BestPractices Q   Solicitation-Ifabidguaranteeistoberequired,asolicitationclauseisincludedthatdetails: )  }(s,c  ,c& "0    therequirement;,c& O ݌(#(# Ќ  ,c  ,cэ "0    theamountoftheguarantee(typically5percentofofferprice)andhowitshouldbe p calculated;,cэ ݌\(#(# Ќ  ,c  ,cՎ "0    acceptableformsofguarantee(usually,cashier'scheck,letterofcredit,orbondfrom 4 alicensedagency);and,cՎ ݌ (#(# Ќ  ,c  ,c "0    thattheguaranteemustbesubmittedwiththeoffer.,c  ݌a(#(# Ќ  Nonresponsiveness-Youcanincludeinyourpolicyregardingbidguarantiestheactionstobe 9  takenifoneisnotfurnishedinaccordancewiththesolicitationrequirement. %! ,c  ,c "0    Normallyinabiddingenvironment,iftheproperguaranteeisnotfurnishedwiththe " bid,thebidisnon-responsive.Ifyouallowedthebiddertosubmitthemissing #  guaranteeorcorrectadefectiveguaranteeafterthebidswere"exposed",youwould $l! beallowing"twobitesfromtheapple."Oncethebidsareknown,thebiddercould %X" decidetosubmit(ornot)thebidguaranteebasedonhowmuchmoneyisleftonthe &D # table!,c ݌'0!$(#(# Ќ  ! ! (lxs}  ("% ,c  ,c "0    Inacompetitiveproposalprocess,ifaguaranteewasrequiredandwasnot U submitted,yoursolicitationdocumentwoulddeterminewhetheritcouldbeasked A forduringnegotiations.Butwhatdoyoudoifyoucouldawardacontractwithout -  negotiations,(arightyouwillfrequentlyreservetoyourself)?Ifyouhavetoaskone   offerorforitsbidguarantee,isthatconsidereddiscussionsornegotiations.Ifso,   thatwouldnecessitateopeningdiscussionswithallofferorsinthecompetitive   range? C  68      ׀F42 O  5  6 O! uara  72 O orthesereasons,andbecauseproposershaveothermeansofeffectively  t withdrawingfromcompetitiveproposalprocesses,proposalguaranteeisless  ` frequentlyusedthanbidguarantee(evenifaperformancebondisultimately L  required).,c  ݌8 (#(# Ќ  Whatifthebidguaranteeisnotsigned,butthebidis?Whatifyouonlyreceivedoneofferand y  theguaranteewasnotincludedwiththatoffer?Whatiftheguaranteeisreceivedlate?Whatif e  theamountoftheguaranteeisinsufficient?Whatiftheguaranteeisnotdatedorhasanincorrect Q  date?Theseareallquestionsthatcouldariseandcanbeconsideredinyourpolicyformulation. =  2 C  69      ׀Y4O  5  6a Ou uara  7 ourpolicywouldprovide,e.g.,thatdeficienciesaffectingofferpricewouldbematerialand ) wouldestablishnonresponsiveness.  CustodyofGuarantee-WhatdoIdowiththebidguarantee?Itisrecommendedthatifthe  guaranteeisabondorletterofcredit,itberetainedwiththeprocurementfile.Ifitisotherthana p bidbond,itisrecommendedthatitbeplacedinasecurearea(safeorlockedfilecabinet)witha \ notationintheprocurementfileitslocation. H UnusedGuarantee-Guarantieshaveafinancialimpactonproposersaslongastheyareineffect.   Therefore,youwillwanttoreturnittotheunsuccessfulofferorsassoonasitisprudenttodoso u  (e.g.,youhaveawardedthecontractortheofferoristoofardownthebidlisttoreasonably a expectanaward).Youmayestablisharulethatallofferorsbeyondacertainrank(e.g.,the M fourthlowestandallhigherbids,allproposersoutsidethecompetitiverange)willimmediately 9  havetheirguaranteereturned. %! Returnunusedguaranteestocontractorsafterthecontingencieshavebeenmet--allcontractual " requirementshavebeenmetandtherequiredperformanceandpaymentbondsandinsurance #  certificatesareinplaceasprotectionfortheownerintheeventofdefaultornon-performanceof $l! thecontractor. %X" CollectionofBond-Althoughyouwillseldombeinvolvedincollectingfundsfromabonding '0!$ agencyunderabidbond,collectionislikethecaptureofthekinginchess.Itdictatesmanyof ("% themovesyouwillwanttomaketouseabidbondeffectivelywithoutimposingunnecessary  q)#& burdenonyourofferors.Theconditionswhichdischargethebondshouldbespecifiedinyour i solicitation.Generally,theprincipalconditionthatdischargesthebondorguaranteeisthe U furnishingofaperformancebond.Oftenthetermsofthebidguaranteealsoguaranteethatthe A offerorwillprovideexecutedcontractdocuments,insurancecertificates,paymentbonds,or -  evidenceofDBEcompliance.   &  Oncetheperformancebondisinplace,itguaranteesperformanceofallothercontractor   obligations.Themostlikelyreasonsaperformancebondwouldnotbefurnished(whicharethe  t conditionsyoumightlookforindecidingwhethertorequirebidguarantee)are:afinancial  ` conditionsoweakthatbondingcompanieswillnotparticipate,suchalargeamountofbonds L  alreadyissuedthatthebondcannotbeobtained,secondthoughtsaboutthecontractbasedonthe 8  informationrevealeduptothepointintimeofbonding,orafrivolousbid.' Ħ  $  Iftheperformancebondisnotprovided,youcanspecifytherightunderyourbidguarantee e  provisiontoimmediatelyacceptthenextrankedofferandtocollectfromthedefaultingofferor Q  thepriceandvaluedifferencebetweentheoffers.(Estimatingthisdifferenceisonewaytoset =  theamountofthebidguarantee.)Iftheguaranteeisabondorequivalentletterofcredit,youmay ) needtoobtainajudgmentagainsttheofferorbeforeyoucanactuallycollectfromthebonding  companyorbank.Asindicatedabove,itiscriticaltomostsupplierswhoprovidebidguarantee  thattheyretaintheconfidenceofbondingcompanies.Thebondingcompany'sconcernmay  assistincollectionfromadefaultingofferor.  p 4L O  5  6 O uara  7 7 % M 4.4SEALEDBIDS(INVITATIONFORBIDS)%M  H % N 4.4.0Overview%N    *eQ1Sdxdd x1(#(#e,xdd +  (aa (REQUIREMENT 0&\ 0 TheFTAdoesnotrequireuseofthesealedbid(invitationforbids)methodofprocurementfor E  anyparticularprocurement.Thismethodissimplyoneofmanythatmaybeused,as 1! appropriate.If,however,thegranteedecidesthismethodofprocurementisappropriate,9.c. " ofFTACircular4220.1Esetsforthsomedefinitions,parametersforuse,andsomespecific  # requirementstobefollowed: #  Q% '`  |X `  |XQ0 ' c.ProcurementbySealedBids/InvitationforBid(IFB).Bidsarepubliclysolicitedanda %d" firm-fixed-pricecontract(lumpsumorunitprice)isawardedtotheresponsiblebidder &P # whosebid,conformingwithallthematerialtermsandconditionsoftheinvitationforbids, ' 2l3  0    DisclosureAdvantages.Thefulldescriptionoftheprocessguidesproposersin *D$( understandingyourneeds,bolsterstheobjectivityofyourevaluationteam, +0%) encouragescandorfromtheproposersduringnegotiations,andencourages ,&* competitionthroughtheperceptionoffairtreatment.3> > ݌q-'+(#(# Ќ     ].', "3"    3@ 2l3  0    ManystandardRFPsnotifyprospectiveofferorsthatawardmaybemadeonthe i basisofinitialproposalssubmittedwithoutanynegotiationsordiscussions.The U implicationisclearly,thattheinitialproposalshouldbetheirbesteffort.3@ A ݌A(#(# Ќ   -   ProposalGuarantee-AlthoughperformancebondsareoftenappropriateandrequiredbyRFPs,   theuseofaproposalguaranteeislesscommonthanbidguarantee.Becausetheproposers   generallyhaveunavoidableopportunityduringnegotiationstorendertheirproposals   unacceptable,partofthepurposeofbidguarantiescannotbeachievedinthecaseofproposals.  t (SeeSection4.3.3.3.2,"BidGuarantee"andSection8.2.1,"PerformanceBonds.")However,ifit  ` isparticularlyimportantthattheinitialproposalsbefirmcommitmentsbytheofferors,that L  frivolousproposalsnotbesubmitted,orthatproposersbeabletoprovideperformancebonds, 8  thenaproposalguaranteeintheformofacashier'scheck,letterofcredit,orapprovedbondmay $  becost-effective. y   % - 4.5.2EvaluationofProposals Q   %-F  % . %.F *l1 ddxdd x1(#(#l,xdd +  )) REQUIREMENT  $  FTACircular4220.1E,paragraph9.d,requiresthefollowingwhenprocuringbycompetitive   proposals:  <,@X ,D X !<0 @ d.0@"@"ProcurementByCompetitiveProposal/RequestforProposals(RFP)....Ifthis h procurementmethodisusedthefollowingrequirementsapply:T"" ЀB ,@` X ,@X B @   (1)0 ` Requestsforproposalswillbepublicized.Allevaluationfactorswillbe , identifiedalongwiththeirrelativeimportance;` "` "  @   (2) ` Proposalswillbesolicitedfromanadequatenumberofqualifiedsources; Y  @   (3)0 ` Granteeswillhaveamethodinplaceforconductingtechnicalevaluationsofthe 1! proposalsreceivedandforselectingawardees;"` "` "  @   (4)0 ` Awardswillbemadetotheresponsiblefirmwhoseproposalismost #  advantageoustothegrantee'sprogramwithpriceandotherfactorsconsidered; $x! and%d"` "` "  @   (5)0 ` Indeterminingwhichproposalsismostadvantageous,granteesmayaward(if 'pe( O  5  6\ \ te  7pe( \ Ԁsealedbids, C  133      4ApeO  5  6] ] te  7pe] Ԁorcompetitiveproposals.B C  134      4CpeO  5  6^ ^ te  7pe_ ԀDoesmorethanonesource U exist?Doesadequatetimeexisttoobtainyourrequirementthroughacompetitiveprocess?Is A ItemB(forwhichcompetitionexists)anacceptablesubstituteforItemC(forwhichthereisonly -  onesource)?   ,c  0 : ,c` "0f:(#:(#  Statedanotherway,contractingofficersshouldtakereasonablestepstoavoidusing   solesourceprocurementexceptincircumstanceswhereitisbothnecessaryandin  t thebestinterestoftheagency.  ` ,c` ` ݌ f(#f(# Ќ  ,c  0 : ,cLb "0f:(#:(#  Ifoneofthethreemethodscanbeused(orisfeasible),evenifyouwouldrathernot, 8  solesourceisnotanoptionforyou.,cLb sb ݌$ f(#f(# Ќ  StepTwo-Ifoneofthecompetitiveprocessesisnotfeasibleinyoursituation,youmayusesole e  sourceprocurementifatleastoneofthefollowingcircumstancesispresent: Q  ,c  0 : ,c`d "0f:(#:(#  Theitemisavailableonlyfromasinglesource-Injustifyingtheuseofthis ) circumstance,youwillfrequentlyaddresssuchfactorsas:,c`d d ݌f(#f(# Ќ  *ly1 xdd x81:(#(#l,[dd ,dd +  -# - SingleSourceFactors:  Q Howdidyouarriveattheconclusionthis ) itemrepresentsyourminimumneedor  requirement?Isthisa"nicetohave"with  allthe"bellsandwhistles"ordoesitreally  representyourrequirementorminimum p need? \ Howdidyoudetermineavailability?Did  4 youcheckonpriorprocurementsforthe !  sameorsimilaritems? u"  Arethereothersources?Arethey M$! responsible?Areidenticalorcompatible 9%" partsorequipmentavailablefromany %&# othersource? +!' $ + Examples : Q% Utilityservices(howmanysourcesdoyouhave -' forelectricityinyourcommunity?)Limited ( rightsindata,patentrights,copyrights,or ) secretprocesses(Ifoneentityownsthepatent * onaprocessorproductyourequire,cananyone t+ elsemeetyourneed?)Relocationofamajor `, naturalgasdistributionlinefromyourrailright L- ofway(thenaturalgasutilitycompanyisthe  8. onlysourceavailabletoworkonthegasline)'!$/  '  -(!/ * 1! d[dd [dd y1 (#(#,<dd ,<dd +  ii Whopreparedthespecificationorstatement d ofwork?Didavendororcontractorassist? P Ifso,willtheybenefitsomehowbythe < decisiontoproceedwithasolesource  ( contract?#XXX X礋! # XXXX   }  #XXX XLn # XXXX d ,c  ].,Xf` ( [IX   |X]0  ,cn "0(#(#  Thepublicexigencyoremergencyfortherequirementwillnotpermitadelayresulting   fromcompetitivesolicitation-Twofactors:publicexigencyoremergencyandnotimeto q  competitivelyprocure! ]  ,cn lo ݌ (#(# Ќ  ,c  0  ,cp "0(#(#  Whenyouragency'sneedforthesuppliesorservicesisofsuchanunusualorcompelling 5  urgencythattheagencywouldbeseriouslyinjuredunlesssolesourceprocurementswere !  utilized,itcanbejustified.    ,cp q ݌ (#(# Ќ  ,c  0  ,cr "0(#(#  Inanemergencysituation,itisnotunusualforhealthandsafetyissuestobeafactorinthe |  decisiontoproceedwithasolesource. h ,cr r ݌ (#(# Ќ  ,c  0  ,cs "0(#(#  Iftheagencyitselfisresponsibleforbeingshortoftime--i.e.,lackofadvanceplanning, @ delaysinprocurementadministrationduetoshortageofprocurementpersonnelor , incompetenceofprocurementpersonnel,moneyinthebudgetbalanceexpirestheendof  nextmonth,particularcautionshouldbeexercisedinmakingadeterminationregarding m whethertheemergentconsequencesofdelaywarrantnoncompetitivenegotiationandto Y whatextenttheagencycontributed;anindependentopinionmaybewarranted. E ,cs s ݌ (#(# Ќ  ,c  0  ,cv "0(#(#  Iftheemergencyistorepairaholeintheroofofyourmaintenancefacilitywhereatree  limbfellthroughitbecauseofthestormlastnight,isthesolesourceprocurementapatch   joborareplacementoftheroofbecauseitwasgettingoldanyway?Oneschoolofthought  isthatyoushouldonlyperformtheminimalworknecessarytoalleviatetheexigencyor x theemergency.Don'tuseitasanexcusetodoremedialworkorbuyayear'ssupplyof  d somethingyouintendedtodocompetitivelynextmonthanyway. !P ,cv w ݌ (#(# Ќ  ,c  0  ,cy "0(#(#  WhilemanystatelawsparalleltheotherconditionsunderwhichFederalfundsmaybe #(  usedfornon-competitiveproposals,statelawsforemergencysituationsareoftenmore }$! restrictive.Furthermore,themostcriticaldelayinanemergencymaybeobtainingyour i%" agency'sauthority,e.g.atamonthlyboardmeeting;inquireabout(andrecommend U&# changesto,ifappropriate)yourBoard'spolicyforemergencyprocurements. A' $ ,cy "z ݌ (#(# Ќ   (lxx,c  0  ,c"} "0(#(#  FTAauthorizesnoncompetitivenegotiations-Youmayhaveasituationyoufeelwarrants )"& theutilizationofsolesourceprocurementsbutitdoesn'tquitefitintooneoftheother *#' circumstances.Youareasmalltransitpropertywithavehiclemonitoringsystemyou *$( installedlastyear.Theaccuracyandutilityofthesystemisexceedingallexpectationsand +t%) younowneedtodisplaythescheduleadherenceinformationinthreenewdowntown ,`&* transferlocations.CouldyougosolesourcetoBrandX?Ifyoujustifywhy -L'+ (compatibilityrequirements,interfaceswithproprietarysoftware,unavailabilityof .8(, interestedcompetition,,etc.),thismaybethesortofprocurementyoushoulddiscusswith i theFTAandrequestitspermissiontousesolesource. U ,c"} I} ݌ (#(# Ќ  ,c  0  ,c` "0(#(#  Aftersolicitationofanumberofsources,competitionisdeterminedinadequate-Youhave -  issuedanIFBandonlyreceivedonebidfromaresponsiblecontractor,butyoucannot   determineitspricetobereasonable.Ifyouaresatisfiedaboutthebiddingenvironment   andthereasonswhyyouonlyreceivedonebid,youcannegotiateasolesourcecontractto   arriveatareasonablypricedcontract.  t ,c` ݌ (#(# Ќ  ,c  0  ,c "0(#(#  Theitemisanassociatedcapitalmaintenanceitemasdefinedin49USC5307(a)(1)that L  isprocureddirectlyfromtheoriginalmanufacturerorsupplieroftheitemtobereplaced.- 8  ThistopicisdiscussedingreaterdetailinSection4.6.3,"AssociatedCapitalMaintenanceItem." $  ,c  ݌ (#(# Ќ  a%   |X,Xf` ( [IXo aStepThree- DOCUMENTATION ofjustification.Itisrecommendedthatyoudocumentvery e  thoroughlyandcarefullytherationaleyouwentthroughtojustifyyoursolesourceprocurement. U  Youragencymayhaveveryspecificrequirementsfor"FindingsandDeterminations"thatmust A  befollowed.Youmayhavepre-approvalrequirementsatacertaindollarthresholdthatmustbe - met--yourBoardofDirectorsmayrequireitsapprovalofanyproposedsolesourceprocurement  inexcessof$250,000priortothecommencementofthenegotiations.Youmayhaveother  documentationrequirementspeculiartoyouragency,state,orlocalgovernmentthatyoumust  meetpriortotheinitiationofnegotiationswhichmustbemet. t  % E 4.6.2NegotiationofContract%E  L  DISCUSSION $  "OnceIhavejustifiedtheuseofprocurementbynoncompetitiveproposals,whatdoIdo e next?HowdoInegotiatethisthing?" Q  BestPractices )!  SingleOfferafterCompetitiveSolicitation-AspreviouslydiscussedinSection4.4.3,"Single # Bid,"youmayconcludeafterreceivingonlyasinglebidthatcompetitionisinadequateandthat #  youshouldnegotiatewiththesinglebiddertoestablishafairandreasonableprice.Youmaybe $p! inthissituationbecauseyouonlyreceivedonebidorproposalfromonesourceoryouhave %\" determinedthatthecompetitionyoureceivedwasotherwise"inadequate."Toproceedinthis &H # case,youmustmeettherequirementsfornoncompetitivenegotiation.However,youdonotneed '4!$ toissueanewsolicitationbecauseyourrequirementisadequatelystated.Youmay,after ( "% meetingtherequirementsoftheprevioussection,proceedtonegotiateareasonablypriced u) #& contractusingthenegotiationproceduresdiscussedinSections4.5.2,"EvaluationofProposals," a*#' through4.5.8,"DebriefingUnsuccessfulOfferors." M+$(   %-&* AllOtherCases-Inothercircumstancesyouhavejustified,itisrecommendedthatyourequesta i proposalfromthesource.Thereisnoneedtoadvertise-therewillbenocompetition!Your U requestforaproposalcanbeasformalasyouwant--fromletterrequestsuptoafullblown A solicitationdocument.Regardlessoftheformused,youwantto: -  ].,X'f` ( [IX   |X],c  0 ' ,c "0'(#'(#  referto,orattach,alltermsandconditionsofthesolicitation.Youstillneedtocomply   withfederalrepresentationandcertificationrequirements.Youstillwillwanttohave   specialandgeneralprovisions.Youmayhaveadditionalagencyrequirementsthatmust  t bemet.WhatistheDBEgoalforthisprocurement--howwillitbemet?  ` ,c ݌ (#(# Ќ  ,c  0 ' ,cٓ "0'(#'(#  referto,orattach,thespecificationsorstatementofworkforthesupplyorservicebeing 8  procured. $  ,cٓ ݌ (#(# Ќ  ,c  0 ' ,c "0'(#'(#  requesttheapplicablecostorpricingdata. C  135      4HaO  5  6  enta  7a*  e  ,c * ݌ (#(# Ќ  Allowadequatetimeforthecontractortoprepareitsproposalpriortosubmissionbacktoyou. =  Reviewtheproposalwithimpactedinternalagencystaff--reallyprepareforyournegotiations  withthissolesource.  Negotiatethefinaltermsandconditionsofthecontractusingthenegotiationproceduresyou p woulduseinyourcompetitiveproposalmethodofprocurement. C  136      4JaO  5  6  enta  7a@ ԀThesenegotiationscanbe \ morepointedandopenbecausethereisnocompetitiveenvironmentinvolved--theintegrityofa H procurementprocessisnotinvolvedsoissueslike"technicalleveling"and"transfusion"donot 4 havetobeconsidered.   AsdiscussedinSection5.2,"CostandPriceAnalysis,"{andasrequiredbyFTACircular  a  4220.1E9.h.(2)},acostanalysisisrequired.Thisincludesverifyingtheproposedcostdata, M theprojectionsofthedata,andtheevaluationofspecificelementsofcostsandprofit. 9   % K 4.6.3AssociatedCapitalMaintenanceItem " %KF * 1 dd<dd <<dd < 1! (#(#,xdd +  # # REQUIREMENT  M$!  OriginalEquipmentManufacturercomponentsmaybeprocuredbycompetitivenegotiations %d" onlyif: &P # f.l A  |X,X'f` ( [IXf0  (e)Theitemisanassociatedcapitalmaintenanceitemasdefinedin49USC (("% 5307(a)(1)thatisprocureddirectlyfromtheoriginalmanufacturerorsupplierofthe v X X#})#&""  ## XX  vC #  *0$& *l' 1( ddxdd x 1 (#(#l,xdd +  ii  0  itemtobereplaced.ThegranteemustfirstcertifyinwritingtoFTA:(i)thatsuch d manufacturerorsupplieristheonlysourceforsuchitem;and(ii)thatthepriceofsuch P itemisnohigherthanthepricepaidforsuchitembylikecustomers. C  137      #XXX X礯n # XXXX#<"" # DEFINITION   D Associatedcapitalmaintenanceitem-Equipment,tires,tubes,ormaterial,eachcostingatleast   0.5percentofthecurrentfairmarketvalueofrollingstockcomparabletotherollingstockfor q  whichtheequipment,tires,tubes,andmaterialaretobeused. C  138      4NaO  5  6 4 enta  7ab  ]  DISCUSSION 5   Ifyoucanpurchaseareplacementpartorcomponentforrollingstockonlyfromthe    originalmanufacturer,andtheitemcostsatleast0.5%ofthevehicleprice,thenyoumay   procuretheitembynoncompetitiveproposalprovidedyoumaketherequisitecertifications |  inadvancetoFTAanddeterminethepricetobereasonablebasedonacostanalysis. h  BestPractices @  Inorderto"qualify"tousethiscircumstancetojustifysolesource,theFTAhasestablishedthe  followingrequirements: m f.,Xr4` ( [IXl A  |Xf,c  0 r ,c "0r(#r(#  Theitemmustbeanassociatedcapitalmaintenanceitemasdefinedabove. E ,c  ݌ (#(# Ќ  ,c  0 r ,c "0r(#r(#  Theitemmustbeprocureddirectlyfromtheoriginalmanufacturerorsupplierofthe  itemtobereplaced.   ,c ݌ (#(# Ќ  ,c  0 r ,c "0r(#r(#  Priortoexecutionofthecontract,youmustfirstcertifyinwritingtotheFTAthatsuch x manufacturerorsupplieristheonlysourceforsuchitem;andthatthepriceofsuchitem  d isnohigherthanthepricepaidforsuchitembylikecustomers. !P ,c 8 ݌ (#(# Ќ  ApprovaloftheFTAisnotrequired--justcertificationofthegrantee(you). #( Whenyoureadtheserequirementscarefully,youarestillessentiallyjustifyingasolesource{as i%! inFTACircular 4220.1E9.h.(1)(a)}andcertifyingthatfacttotheFTA.Also,eventhoughyou U&" arecertifyingthatthepriceoftheitemisnohigherthanthepricepaidforsuchitembylike E' # customers,youarestillrequiredtoperformacostanalysisaspartofthecontractnegotiationand 1(!$ awardprocess. )"%  % O  *$' 4.6.4UnsolicitedProposals i    DISCUSSION A    `( 4 <DL,Xr4` ( [IX` Thesubjectofunsolicitedproposalsisonenotcoveredintransitlaworthecommongrant   rule.Incaseslikethis,FTAwouldlooktotheFederalAcquisitionRegulations(FAR)   provisionsasaguideconcerningthecircumstancesunderwhichasolesourceawardwould   beappropriate.TheFARcoversthissubjectasFARPart15.6.TheFARisavailable  t onlineat4dtO  5    http://www.arnet.gov/far/w enta      6+ ? enta  7tXm .  ` Whenunsolicitedproposalsaresubmittedtoagrantee,theagencymustneverassumethat 8  theproductbeingofferedintheunsolicitedproposalistheonly,orbest,productavailable $  tomeettheneedsorobjectivesoftheagency.Theessentialconsiderationinwhetherornot y  toacceptanunsolicitedproposalwithoutcompetition(i.e.,tomakeasolesourcecontract e  award)iswhetherornottheproposalispresentinganinnovative,proprietaryconceptthat Q  isitselfessentialtoaccomplishingtheagencysobjective.Ifacompanyismerely =  presentingarationalefordoingcertainworkthatcouldbedonebyothersifgiventhe ) chancetocompete,thenthereisnopermissiblebasistoawardasolesourcecontract.  Inthecaseofaproprietarysoftwareproductthatisbeingofferedtoachieveacertaingoal,  thetransitagencyreceivingtheproposalcouldnot,forexample,releasetheofferors p proprietaryprogrammingcodesinacompetitivesolicitation.Buttheagencyshould,ifit \ deemsthemissiononeitwantstopursue,competethecontractawardintermsof H describingwhattheagencysobjectiveormissionisinordertoseewhatotherfirmsmight 4 offerintermsofsoftwaresolutions.   NewYorkCityTransit(NYCT)requiresthatanycontractresultingfromanunsolicited a proposalbejustifiedinwritingbytheProcurementOffice,regardlessofthedepartment M thatreceivedtheproposal.Eachproposalisreviewedtodetermineifthegoodsorservices 9  beingofferedareessentialtoNYCTandwhethertheproposerissimplyofferingsomething %! thatcanbeobtainedthroughopenandcompetitivebidding.Ifitisdeterminedthatthe " goodsorservicesbeingofferedwouldbenefitNYCT,andcouldbeobtainedthrough " competitivebidding,thenthereisnotsufficientjustificationforasolesourceaward. #  RevenueContracts󀄀Thesubjectofunsolicitedproposalsisdiscussedinthecontextof %X" revenuecontractsinBPPMsection1.3.3.8!RevenueContracts.Withrespecttounsolicited &D # proposalsinthecontextofcompaniesseekingtouseFTAfundedassetsforbusiness '0!$ purposes,theBPPMoffersthefollowingguidance: ("% Ё  UnsolicitedProposalsThesemaycomeforthwhencompaniesseeanopportunitytouse ]*#' thetransitsystem(anFTAfundedactivity)toenhancetheirbusinessinterest.Itmay I+$( appearfromsuchproposalsthatnoothercompanycouldofferthesameproductorservice. 5,%) However,thisdoesnotjustifyasolesourcecontract.Iftheideaoractivityisofinterestto  !-&* you,theconceptshouldbeevaluatedonitsownmeritandrevenueproducingpotential.If i thedecisionistoimplementit,thenacompetitiveprocessshouldbeusedtoselectthe U contractor,unlessyoudeterminethattheproposedconceptitselfisproprietary. A     NewYorkCityTransit(NYCT) wasapproachedrecentlybyacompany,whichsubmitted   anunsolicitedproposal,wantingtoinstallanelectronicinformationsystemonthesubway   cars.Thecompanywantedtoprogramthesystemsothatriderswouldknowwhatwas   overhead,e.g.WallStreet,theaterdistrict.NewYorkCitydecidedtoinvestigatethe  x conceptfirsttodetermineifitwassomethingthattheywantedtodotoenhancethesubway  d system.Decidingthattheylikedtheidea,theythenpreparedanRFPandsolicitedvendors P  onacompetitivebasis. <      MetropolitanAtlantaRapidTransitAuthority(MARTA)receivedanunsolicitedproposal }  fromacompanyaboutuseofsubwayrightofwayforlinkingAtlantawithfiberoptic i  cableusingMARTA'ssystemwideconduits.MARTAdeterminedthattheyhadunused U  conduitsandcouldleasespaceinthemtovarioustelecommunicationcompanies.They A  contactedtheregionalFTAofficeandreceivedtheirapprovalforanonexclusiveRFPto - seekcompetitiveproposalsfortwentyyearleases.Thishasproducedsuccessfulrevenue  contracts.     %OO #XXX X) # 4.7SPECIALPROCUREMENTMETHODS  x  % P 4.7.1Multi-StepProcurements%P   P  DISCUSSION (  Youhavediscussedindetailthedifferencesbetweenthecompetitivebiddingprocessand i thecompetitiveproposalprocessbutI'vegotoneofthose'tweeners'--somethingthatfalls U somewherebetweenthosetwoprocesses.Thereareanumberofvarioustechnical A  approachesthatwouldprobablymeetourrequirementand,ifwedeterminedwhichfirms -! metourminimaltechnicalrequirements,wecouldcompeteamongstthemonthebasisof " thelowestresponsive,responsiblebidder.Butwemayhavetoenterintodiscussionswith # allofferorsinordertodeterminetechnicalacceptability.Canthisbedone? #   FTACircular4220.1E permitsagreatnumberofproceduresthatvaryfromtheclassic %`" proceduresdiscussedinmostofthisManual.Forexample,avariationthathaslong-been &P # recognizedinpublicprocurementisreferredtoasthetwo-step,sealedbiddingmethodof ' R bmit  7ur&   ` ,cv ݌ (#(# Ќ  Receiptofun-pricedtechnicaloffers.Unlessrequiredbylaw,un-pricedtechnicaloffersneednot 8  bepubliclyopened. $  ,c  0 ' ,c "0'(#'(#  Offersaretypicallyopenedinfrontoftwoormoreauthorityemployeesaswitnesses. e  ,c  ݌ (#(# Ќ  ,c  0 ' ,c "0'(#'(#  Offersareusuallynotdisclosedtounauthorizedpersons. =  ,c  ݌ (#(# Ќ  Evaluationofun-pricedtechnicaloffersshouldbeinaccordancewiththecriteriasetforthinthe  solicitation.Theun-pricedtechnicaloffersshouldbecategorizedas  ,c  0 ' ,c "0'(#'(#  Acceptable; p ,c ݌ (#(# Ќ  ,c  0 ' ,cY "0'(#'(#  Potentiallyacceptable(i.e.,reasonablysusceptibleofbeingmadeacceptable);or H ,cY ݌ (#(# Ќ  ,c  0 ' ,cY "0'(#'(#  Unacceptable,inwhichcasethecontractingofficerrecordsinwritingthebasisforthis   findingandmakesitpartoftheprocurementfile. C  144      4^urHO  5  6  bmit  7urH  u  ,cY ݌ (#(# Ќ  ,c  0 ' ,c "0'(#'(#  Anyproposalwhichmodifiesorfailstoconformtotheessentialrequirementsor M specificationsofthesolicitationcanbeconsiderednonresponsiveandcategorizedas 9  unacceptable.,c ݌%!(#(# Ќ  0 '  '(#'(# ,c  0 ' ,cE "0'(#'(#  Whenanunpricedtechnicalofferhasbeendeterminedtobeunacceptable,thebiddermay " benotifiedofthatfactandisnotnormallyaffordedadditionalopportunitiestosubmit #  supplementalinformationamendingitstechnicaloffer.,cE l ݌$l!(#(# Ќ    &D # Discussionsinvolvingunpricedtechnicaloffersmaybeconductedwithanyofferorwho i submittedanacceptableorpotentiallyacceptabletechnicaloffer. U ,c  0 ' ,c "0'(#'(#  DiscussionscanbeconductedinaccordancewiththeprinciplesdiscussedinSection4.5.4 -  involvingthecompetitiveproposalmethodofprocurement.   ,c ݌ (#(# Ќ  ,c  0 ' ,c) "0'(#'(#  Oncediscussionshavecommenced,anyofferorwhohasnotbeennotifiedthatitsoffer   hasbeenfoundunacceptablemaysubmitsupplementalinformationamendingits  t technicalofferatanytimeuntiltheclosingdateestablished.  ` ,c) P ݌ (#(# Ќ  ,c  0 ' ,c "0'(#'(#  SuchsubmissionmaybemadeattherequestoftheContractingOfficer,oruponthe 8  offeror'sowninitiative. $   4  `   (   [  I    p ,c ݌ (#(# Ќ  PhaseTwooftheprocessmaybeinitiatedwithoutdiscussionsifthereareasufficientnumberof e  acceptableproposalstoensureadequatepricecompetitionunderPhaseTwo.Baseduponthe Q  resultsofPhase1,youmaywishtorevisethetechnicalspecifications(minimumtechnical =  requirements)inyourPhase2IFB,inamannerthatdoesnotconflictwiththefinalun-priced ) proposals.Whileyouhavenoassurancethatthepriceswillbeclosetoeachother,youknowto  whatdegreetheproposalshavecompetitivetechnicalmerit.  PhaseTwooftheProcess p TheproceduresdiscussedinSection4.4,"SealedBids,"canbefollowedinPhaseTwo.Each H bidderwhosubmittedanun-pricedofferthatwasdeterminedtobeacceptableinPhaseOneis 4 invitedtosubmitapricedoffer.TheIFBstatesthatthebiddershallcomplywiththe   specificationsandtheofferor'sacceptabletechnicalproposal.Noadditionalpublicnoticeor u  advertisementoftheIFBneedbegivenbecausesuchnoticewasgivenduringthePhaseOne a Process. M Awardwouldbemadetothelowest,responsiveresponsibleofferorasdiscussedinSection4.4, %! "SealedBids." "  % _ 4.7.2GovernmentalPricesandContracts%_(  #   % ` 4.7.2.1ProcurementsfromGeneralServicesAdministrationSchedules%`  %X"  CURRENTSTATUS '0!$  TheFederalSupplyScheduleprogramhasprovidedFederalagencieswithasimplifiedprocess q)#& ofacquiringcommonlyusedsuppliesandservicesinvaryingquantitiesatlowerpriceswhile ]*#' obtainingdiscountsassociatedwithvolumebuying.Congress,inenacting1555oftheFederal  I+$( AcquisitionStreamliningActof1994(PublicLaw103-455),  C  145      4bO  5  6, @ bmit  7n Ԁextendedthecooperative i purchasingprovisionsofGSAenablinglegislation: U ]( ,XXf` ( [IX ,X', ( [IX]0  (b)(2)(A)TheAdministratormayprovidefortheuseofFederalsupplyschedulesofthe -  GeneralServicesAdministrationbyanyofthefollowingentitiesuponrequest:(i)A   State,anydepartmentoragencyofaState,andanypoliticalsubdivisionofaState,   includingalocalgovernment...    (#(# However,Section4309oftheNationalDefenseAuthorizationActforFiscalYear1996" C  146      4d!O  5  6   7!1  ` suspendedtheauthorityoftheAdministratoroftheGeneralServicestoallowstateandlocal L  governmentstousethefederalsupplyschedules.Theprovisionsuspendedtheauthorityuntilthe 8  lateroftheperiodending18monthsafterthedateofenactmentofthisActortheperiodending $  30daysafterthedateaftertheAdministratorhasreviewedaGeneralAccountingOfficereport y  thatassessestheeffectsofstateandlocalgovernmentsuseofthefederalsupplyschedulesand e  hassubmittedthereportandcommentsonthereporttoCongress.TheActalsodirectedthe Q  GeneralAccountingOfficetoincludeinitsreporttotheAdministratoranassessmentofthe =  impactoncoststofederalagenciesfromtheuseoffederalsupplyschedulesbystateandlocal ) governments.  Inlightofthisrecentlegislation,whatisthestatusofstateandlocalgovernment(includingmost  transitpropertiestheoretically)beingabletousetheGSAfederalsupplyschedules?Itis p understoodthatatleastonetransitproperty(WashingtonMetropolitanAreaTransitAuthority) \ hasatleastlimitedauthorityfromtheGSAtoutilizethefederalsupplyschedules.However,we H arenotawareofotherAuthoritiesbeingabletoutilizethoseSchedules.Withthislegislation,we 4 mustawaitatleastuntilAugust1997(18monthsfromthedateofenactmentoftheDefense   AuthorizationActof1996)beforeweknowwhattheGSAandGAOreportstoCongresswillsay u  anditcouldbelongerthanthatiftherequiredreportsarelaterthanthen.Thisdoesnotappearto a beasourcethatweshouldexpecttobeabletouseanytimesoon. M Atsuchtimeasthismatterisclarified,theFTA,throughthisManual,willprovideinstruction %! andguidancetoitsgrantees. "  4.7.2.2StateandLocalSchedules #  Ѐ  $l!  *le1fddxdd x' 1( (#(#l,xdd +  %X"%X REQUIREMENT  %&#  Anadditionalgeneralprocurementstandardapplicabletothird-partyprocurementsincludedin 'a ct&aԌ N;# )"&    NЌXXXX   ReverseauctionsaresubjecttoalltheprocurementrequirementsofFTACircular4220.1E, )#' Paragraph7.q.3)'*$(     3  +v%( *l1ddxVVx- . (#(#l,xdd +  ii  0 @ ECommerceisanallowablemeanstoconductprocurements.Ifagranteechoosesto d utilizeECommerce,writtenproceduresneedtobedevelopedandinplacepriorto P solicitationandallrequirementsforfullandopencompetitionmustbemetinaccordance < withthisCircular. (@"@" K( 4 <DL,X,` X KWewouldnotethatsomestates,suchasNewYork,requireasealedbidprocedurefor i  competitiveprocurements.Wherestatelawrequiressealedbidding,reverseauctionsmaynot U  belegal.Inthesesituationsgranteesmaystillmakeuseofonlinebiddingbutthebidsmustbe A  keptsealedandnotdisclosed.Granteesmustchecktheirstateprocurementstatutesto -  determineifreverseauctionsarepermissible.Forexample,thestateofTexasrecentlyenacted   legislationallowingreverseauctions.Granteesshouldconsultwiththeircounseltodetermine   whetherreverseauctionsarelegallypermissibleunderStatelaw.        SL   S    h    DISCUSSION h:i݌ L  Ќ  S  Oneoftheinnovationsarisingoutofecommercehasbeentheuseofreverseauctions.The w termreverseauctionreferstoaliveonlineauctioninwhichtherolesofbuyerandsellerare c  reversed.Inanormal(forward)auction,sellersoffertosellatpricesdeterminedbythe O bidsofbuyers.Inareverseauction,buyersareofferingtobuysomethingatpricesbeing ; bidbysellers. Reversereferstotherelationshipofbuyerandsellerandwhodoesthe ' bidding.Sellersbidfortherighttoselltothebuyingorganizationandbuyersagreetobuy  atthepriceestablishedbytheauctionprocess.Inareverseauctionproceedingthebuyer  advertisesanddefinesonlinethecommodityforwhichitissolicitingbids.Thebuyermay  alsopostapriceatwhichthebiddingwillbegin.Thesepriceswillusuallybethebuyers n  lastgoodbuypriceoranindustrystandardprice,anditshouldbeapricethatwill Z encouragesupplierstobid.Ifthepriceissettoolow,itwilldiscouragesellersfrom F participating.Suppliers,whoseidentityiskeptconfidential,thenpostpricesonlineanytime 2 withinthedurationoftheauction(usuallyonedaytoseveralweeks)sothatsupplierscan   seetheircompetitorsbidsandrespondimmediatelywithcounteroffers.Supplierscan s!  reevaluateandadjusttheirbidinresponsetootherbiddersofferings.Someauctions _" provideforautomatictimeextensionsifabidisplacedinthelastfiveminutesofan K# auction,inwhichcaseanautomaticfiveminuteextensionpreventslastsecondbiddingand 7$ keepsallparticipantsonanevenplayingfield.Itispossibletohaveseveralautomatictime #%  extensionswhenbidsaresubmittedinthelastfiveminutesoftheevent.Thetransparency &! ofthemarketplacecreatesrigorouscompetitionamongtheparticipants,whichtendsto & " drivepriceslower.Reverseauctionsliveuptotheirnamebyhavingpricesfall. '~!# Experiencetodatewithreverseauctionsindicatesthatsavingsof15%20%fromprices (j"$ previouslypaidmaybepossible,especiallyifadditionalvendorscanbefoundtobidonthe )V#% requirement. *B$&   рMostoftheworktobedoneinareverseauctiontakesplacepriortotheactualevent.This ,&( includesidentifyingsupplierswhowillbid,prequalifyingthemandinformingthemabout o-') thetechnologythatisbeingused.Itisimportanttodefineeverythingupfront,including [.'* quality,deliveryterms,paymentterms,locationofuse,quantityrequiredandinwhatlot i size.InsomecasesbuyershaveissuedaRequestforProposals(RFP)asafirststepina U  bestvaluecompetitioninordertoevaluateprospectivebiddersproducts,capabilities, A etc.Areverseauctionisthenconductedamongqualifiedsuppliersasatechniquetoelicit -  thebestpossibleprices.   h  9%  <DLX9  hw  Anythingthatcanbedescribedwellcanbereversedauctioned.Thisincludesgoodsand   services.Thekeyisthattheitemhavefeaturesthataremeasurable,withaclearpurchase  t descriptionintermsofqualityandspecificity,sothatsuppliersarebiddingona  ` requirementthatiscleartoeveryone.Doingthiswillensureyouareabletocomparebids L  foressentiallyidenticalgoodsorservices.Indecidingifareverseauctionisrightfora 8  particularcommodity,theagencywillneedtodetermineifithaslongtermrelationships $  withanyoneortwosuppliersforthecommodity,andifso,why?Whatisvaluableabout y  therelationship?Wouldanauctionharmtherelationship?Anotherconsiderationwillbe e  whetherthereareenoughsuppliersofthiscommoditytomakeitcompetitive.Anyefforts Q  takentoincreasethenumberofbidderswhoparticipateintheauctionwillpaydividends =  intheend.Finally,thecommoditymustbesuchthatthereisasufficientprofitmarginto ) makepricescompressible,sothatsuppliershaveroomtobid.Andfinally,ashasalready  beensuggested,reverseauctionsneednotbelimitedtolowestpricecontractawards;they  maybeusedin bestvalueprocurementswheretechnicalproposalsarerequiredand  priceauctionsfollow,withcontractawardbeingmadetothefirmofferingthebestoverall p valuetothebuyingagency,withbothpriceandtechnicalmeritsconsidered.hww݌ \ Ќ  ! X X!    h  9%  <DLX9  h<  h<݌̌  ! X X!  BestPractices  4 <( 4 <DLX< FederalGovernmentExperience 󀄀AnumberofFederalagenciesarenowusingreverse u  auctions.TheFederalGovernmentbegantousethistechniquewiththerewriteoftheFARPart e 15in1997.FAR1.102.4(e)nowstatesthatifapracticeisnotexpresslyaddressedorprohibited Q bystatuteorregulation,Governmentemployeesshouldfeelfreetoinnovateandusesound =  businessjudgmentinmakingprocurementdecisions.Withrespecttoauctions,FAR )! 15.306(e)(3)requiresbidderstoagreetodisclosetheirpricespriortotheirparticipationinan " auctionevent.BasedontheFAR,governmentprocurementpersonnelmayusereverseauctions # aslongasthevendorsagreetoparticipate.(GranteesarenotrequiredtofollowtheFAR,andthis #  informationonFederalproceduresisprovidedforinformationpurposes). $p!  l` NavyDepartment󀄀TheNavyDepartmentsfirstauctionwasforaircraftejectionseat &H # mechanisms.Thisauctionlasted51minutes,withthreebidders,andNavyestimatesitsaved '4!$ over28%offthehistoricalpriceforthesemechanisms.Navyhasconductedoverfifteen ( "% additionalreverseauctionssincethefirstinMay2000,forsuppliesaswellasservices,using u) #& bothpriceandbestvalueasevaluationcriteria.Followingaresomeofthe lessonslearnedby a*#' theNavyDepartment,aspublishedattheirwebsite:/ C  151       M+$(   9,%) "3"  ?+ 4 <DLX?  3~2l3  0 4   Thereverseauctiontechniquemaynotdrasticallychangeorstreamlinethe U procurementprocess.3~݌A4(#4(# Ќ    "3"  E+ 4 <DL4XE  32l3  0 4   Itisahighlyeffectivepricingtool.3}݌ 4(#4(# Ќ    "3"  E+ 4 <DL4XE  392l3  0 4   Priortoopeningtheauction,allparticipatingvendorsshouldlogonandverifytheir   connectiontothesystem.39݌ t4(#4(# Ќ    "3"  E+ 4 <DL4XE  3ы2l3  0 4   Asetperiodoftimeforthereverseauctionshouldbeestablishedbasedonthe L  numberofparticipantsandthecomplexityoftheacquisition.3ыO݌8 4(#4(# Ќ    "3"  E+ 4 <DL4XE  32l3  0 4   Thetimeestablishedfortheauctionneedstobeflexibleincasethereisanofferat y  closingtime.Forexample,ifabidisreceivedwithinoneminuteoftheclosingtime e  fortheauction,theauctionperiodshouldbeextendedforanadditionalnumberof Q  minutestoallowbidderstorespondtothelastbid.3݌= 4(#4(# Ќ  B( 4 <DL4XBMarineCorps󀄀TheU.S.MarineCorpshasalsopublishedtheirexperienceswithreverse  auctions.TheMarineCorpstookconcertedeffortstobuildadatabaseofvendorsforvarious  producttypesandtoincludemorevendors,trainthemonthereverseauctiontool,andgetthem  toparticipateintheirfirstauction.Theresultwassignificantlyincreasedcompetition.The p averageauctionhaslasted30minuteswithawardmadedirectlythereafter.Theaveragesavings \ fortheeightauctionsthusfarhavebeen25%fromtheestimatedvaluesbasedonhistoricaland H retailprices.TheMarineCorpsreportsthatvendorsactuallypreferthisprocesstothesealedbid 4 process.TheMarineCorpsRegionalContractingOfficeSouthwest(RCOSW)receivedthe   DepartmentoftheNavyCompetitionExcellenceAwardfortheimplementationofthis u  innovativepractice. a Army󀄀TheArmyisusingreverseauctionsforbestvaluetypesofprocurements.Followingisan 9  excerptfromtheArmyprocurementproceduresguideasreproducedintheDODDefense %! AcquisitionDeskbook: "    ApplicabilitytoBestValueAcquisitions  #    K(X$hK<( 4 <DLX< X9%4 4 <DLX9Reverseauctionsarelegalaslongastheidentityofthebiddersisnotdisclosed.You %T" mayusethemfortradeoffacquisitionsasapricingtool.Onceyouhavefinishedwith &@ # technicaldiscussions,youmayconductareverseauctiontoestablishtheofferorsfinal ',!$ prices.Providetheseprices,alongwiththerestoftheevaluationresults,totheSource ("% SelectionOfficialforhis/heruseinselectingtheproposalthatrepresentsthebestvalue. m)#& Apotentialbenefitisthatcompetitionwilldrivethepricesdownastheofferorshave Y*#' visibilityoftheotherpricesbeingproposed. E+$(  X<( 4 <DL44X< X9%4 4 <DLX9Youmayusereverseauctionstopurchaseavarietyofproductsandservices.Reverse -&* auctionsworkespeciallywellonacquisitionsofmanufactureditems.Whileyoucanuse   .'+ reverseauctionstobuycommodities,theseitemsusuallyhavesmallerprofitmarginsand i therefore,thepotentialbenefitsareless. U  X<( 4 <DL44X< X9%4 4 <DLX9Whenusingreverseauctionsinabestvalueacquisition,ensuretheauctiondoesnot -  drivepricesdowntothepointthattheresultantcontractdoesnotprovideenough   incentiveforthecontractortoprovidequalitysuppliesandservices.    X<( 4 <DL44X< X9%4 4 <DLX9Useofreverseauctionsisappropriateatdifferentpointsinanacquisition.Forexample,  t youmayusethemtoachievetheofferorsfinalpriceoryoumayusethemtodownsizethe  ` numberofofferors,butdecidenottousethemforthefinalnegotiations.4 C  152       L   XAirForce󀄀TheAirForceContractingPolicyMemoonReverseAuctions(February19,2001) $  wasissuedafterresearchonhowreverseauctionsarebeingusedinprivateindustry,andthe y  memoprovidesanumberof lessonslearned.Amongthesewere: e    "3"   (lxx$, X44X$  32l3  0    Reverseauctionsarebeingusedbyindustrymorefor bestvalueacquisitionsthanfor =  lowestpriceacquisitions.(TheSunMicrosystemscasediscussedbelowunder Private ) IndustryExperienceillustratesthis.)3݌(#(# Ќ    "3"    32l3  0    Suppliersarenormallyprequalified,includingpastperformance,andthenareverse  auctionisusedforthesubmissionofcompetitiveprices.3݌p(#(# Ќ    "3"    32l3  0    Aresponsibilitydeterminationisperformedontheapparentsuccessfulbidder.3/݌H(#(# Ќ  B( 4 <DL, XB 2<( 4 <DLX<TheAirForceprocuredamotorizedsecuritygateforoneofitsfacilitiesandrequestedtechnical   proposalsfirst.Thosefirmssubmittingacceptabletechnicalproposalsthensubmittedprices u  onlinethroughareverseauction.Theapparentlowbidderwasthenrequiredtosubmitacost a proposalforevaluation.Findingtheproposalsatisfactory,acontractwasawarded.AirForce M waspleasedwiththeresultsoftheprocess.iXX      i     XX   9  TreasuryDepartment!TheU.S.TreasuryDepartment(IRS)conducted,inMay2001,itsfirst " auctionandoneofthelargestFederalauctionstodate:$131millionforPCs,laptopsand " monitors.Treasuryestimatesitsavedabout$68millioninaverysuccessfulauction.An #  exampleofthesavingsachievedwasthereductionintheunitpriceofatopenddesktop $l! computerfromapreauctionpriceof$1,434to$625(asavingsof56percent).Therewerethree %X" distributorsthatsubmittedbids,representingIBM,GatewayandDell.TheIRSrequirements &D # weresolicitedonabestvaluebasis.iXX      i     XX  8 C  153      ׀ '0!$   ("% Treasuryhasalsohadsuccesswithsmallbuys.Manyofthosebuyswerebelow$25,000and i severalwerebelow$1,000.Morethan$300,000inpurchaseshavebeenmadein2002,with U someimpressiveresults.Customssaved43percentonthepurchaseofashredderandthe A FinancialCrimesEnforcementNetworksaved87percentontwo265megabytememorykits. -  Vendorinteresthasbeengreat.Forexample,theBureauofPublicDebthasbeenaveraging72   bidsperauction.Inall,closeto2,000bidshavebeenreceivedfromover330firms.Another   noteworthyachievementisthattheBureauofPublicDebt,theATFandCustomshaveawarded   100percentoftheirauctionresultstosmallbusinesses.iXX      i     XX  : C  154        t  2h  <%  <DL4X<  hɱ  hɱ,݌̌  $ 4X X$  h  <%  <DL4X<  h  GeneralServicesAdministration(GSA)!GSAmaintainsareverseauctionwebsiteforFederal L  agencies.OnJuly25,2002theGSAFederalTechnologyServiceawardedanumberofcontracts 8  forreverseauctionservicestovariouscompanies( enablers)thatprovideservicesrangingfrom $  conductingthecompleteauction( HostedServices)toprovidingenablingsoftwaresothatthe y  useragencycanconductitsownauctions( DesktopServices).TheenablersthatreceivedGSA e  contractsarelistedonthewebsite.iXX      iagen    XX  ? C  155      h݌ Q  Ќ  $ 4X X$  h  <%  <DL4X<  h    GSAconductedareverseauctionpilotprogramfromMay2000toMay2001.GSAreportsthat ) variousgovernmentagenciesparticipatinginthepilotprogramrealizedsavingsof12%48%  throughthereverseauctionprocess.Forexample,theDefenseFinancingandAccounting  Servicepaid22percent,or$2.1millionless,thannormalpricesfordesktopcomputers,laptops  andprinters.TheNationalInstitutesofHealth(NIH)paid25percent,or$395,000,lessthan p normalpricesforutilitywipes,atypeofcleaningsupplies.TheCoastGuardpaid22percent,or \ $300,000,lessthannormalpricesforsparepartsforHU25Falconjets.ht݌ H Ќ  $ 4X X$  h  <%  <DL4X<  h  h^݌̌  $ 4X X$  TheDeputyAssistantCommissionerforServiceDevelopment,GSAFederalTechnology   Service,Mr.MannyDeVera,iscreditedwithdeveloping TenCommandmentsforReverse u  Auctions: a   ReverseAuction 9  TenCommandments  %!    (#17x* X4X*0 X X0  1.0  Linkreverseauctionstrategytoacquisitionstrategy.Whendevelopingthe " acquisitionstrategyask, Couldreverseauctioningapplytothisrequirement?#| (#(#   2.0  FollowtheFederalAcquisitionRegulation.Theseguidingprinciplesstillapply.iXX      ixagen    XX  C` C  156      %T"(#(#   ',!$   3.0  Chooseasolidperformingenabler.(Enablersarefirmsthatperformreverse i auctions.)Withthetroublescurrentlybeingexperiencedinthedigitaleconomy,a U fewenablersmaynotbearoundinthefutureandcouldpresentrisks.A(#(#   4.0  Educatesuppliersinadvanceofconductingareverseauction.Fullservice   enablersprovidethisserviceintheirfees. (#(# h  B%  <DL XB  * X X*h    5.0  Bepreparedforpublicityanduseittoyouradvantage.Publicityhappensbecause  t reverseauctionsarerelativelynewandthemedia,tradeassociations,seniorh^݌ `(#(# Ќ  0 X X0  0  0(#(#governmentofficialsandothersareallcarefullywatchingthegovernmentsentry L  intothisnewwayofdoingbusiness.Enablersarealsoaggressivelypublicizing 8  theiractivities.$ (#(#   6.0  Beginwithsimplerequirementsandmovegraduallytomorecomplexones.The e  moreexperienceanorganizationhaswithconductingauctions,themorecomplex Q  requirementstheycanputoutforbid.= (#(#   7.0  Establishtherulesofthereverseauctionupfront.Someexamplesoftheserules  arethebidincrementstobeused,timeextensions,logisticsandother  considerations.(#(#   8.0  Conductamockauction.Theadage practicemakesperfectisveryappropriate \ here.H(#(#   9.0  Considerconductinganauctionwherebiddersbidtoprovideaquantityofa   commodity,asopposedtopricebasedbidding.Forexample,reverseauctionsare u  beingconductedwherethebuyerhasasetamounttheywanttospend,say$1 a millionforPCs,andisnotfocusedontheunitcost.Intheseauctions,biddersbase M theirbidsonthenumberofPCsthattheywillprovideforthe$1million.9 (#(#   10.0  TheContractingOfficerisincontrolofthereverseauctioneventatalltimes."(#(# 4 X X414X> X11 X4X1FIRSTGOV.gov!TheU.S.Governmentsofficialwebportalisfirstgov.govE C  157      .Inserting #   reverseauctionsintheSearchboxwillgiveyouaccesstomorethan186millionwebpages $l! fromfederalandstategovernmentswhereyouwillfindinformationregardingtheseagencies %X" experiencewithreverseauctions. &D #   #'XX礭a#XX' PrivateIndustryExperience! Theprivateindustrysectorhasbeenusingreverseauctions ("% sincethemid1990s.Arecentwhitepaperpresenteddataindicatingthat20percentofall  u) #& privateindustryfirmsmaybeusingonlineauctions(realtimebidding)toprocureaportionof i theirgoodsandservices.H C  158      iXX      i7agen    XX  ݀ U Acurrentmagazinearticlediscussestheexperienceofonemajorprivateindustryplayerinthe -  reverseauctionarena!SunMicrosystems.SunimplementeditsDynamicBiddingprogramin   May2000withagoalof20percentreductionoftheirtargetedbudget,andtheyachievedthisin   theirfirstpilotauction.Ithassincebeenusedformorethan100procurementsandcoversallthe   commoditiesSunbuys.OneoftheimportantfacetsoftheSunmethodisthatthecompanyuses  t a bestvalueapproachtosourceselectionwiththeirpriceauctions.Sunbelievesitssupplier  ` relationshipsarestrategicanditwillnotswitchtoanuntestedcompanysimplytogetalower L  price.Pastperformanceinareassuchasquality,manufacturingflexibility,facilitylocationand 8  engineeringsupportarealsoconsideredinthefinaldecision.Sunemphasizesthatthereverse $  auctionapproachdoesnotreplacethestrategicrelationshipbetweencompanies.Pricesbidare y  onlyonefactorinthefinalselectiondecisionprocess,buttheauctionsmeanthatlesstimeis e  spentonnegotiatingtheprice,termsandconditionsthanwaspreviouslythecase. Theend Q  resultisthatittakesSunanhourtofindthetruemarketprice,eliminatingweeksorevenmonths =  ofnegotiatingbackandforth.IthasalsoresultedinsignificantbottomlinesavingsforSun. ) Theyusedthisprocesson$1billionoftheirdirectspendinfiscalyear2001,andhaveraisedthe  goalforthisfiscalyear.iXX      iucti    XX  J C  159        ArecentarticleinanEbusinesspublicationsuggestedanumberofareasthatmightbegood p candidatesforreverseauctions.iXX      iucti    XX  M C  160      Theauthorsrecommendationsforreverseauctionsinclude: \ -4X X- (lx7"3"    32l3  0 4   StrategicRelationshipisLessImportant3݌44(#4(# Ќ  h  ?%  <DL4X?  ! ` `  X!h  Theauthorbelievesitisdifficulttobuildcooperativerelationshipswithsuppliers   throughanauctionprocessandthusauctionsaremoresuitableforpurchasesofoff u  theshelf,nearcommoditydirectmaterials.hM݌ a Ќ  $4X` ` ,$  "3"  *,4X*  32l3  0 4   PriceisMainDecisionFactor3H݌9 4(#4(# Ќ  h  ?%  <DL,?  ! ` `  X!h  Auctionsworkbestforcategorieswherethemaindiscriminatorbetweensuppliersis %! price.h݌ " Ќ  $,` ` ,$   (lxx  #  "3"  X3!2l3  0 4    XXXX'  ` ,'# 'X X4# XX 'ManyQualifiedSuppliers3!\݌i4(#4(# Ќ  h  <%  <DL ` X<  ! ` `  X!  Xh  Auctionsneedadequatecompetitiontosucceed.Wherethereislimitedcompetition U becauseofascarcityofsuppliers,acommitmentofsupplyismoreimportantthanany A incrementalpricesavingsthatcouldbeachievedthroughanauction.h1݌ -  Ќ  !  ` X` ` ,!  "3"   K*4  ` X*  32l3  0 4   LowtoMediumStrategicImportance3C݌ 4(#4(# Ќ  * '44w*h  <%  <DL' <  $ '4 X$h  0 ' 04'(#'(#Themoststrategiccategoriesshouldnotbesubjecttoastandaloneauction.This   wouldincludecomponentscriticaltothecompanysendproduct.Inthesecasesthe  t auction,ifconducted,shouldbecombinedwithsomesortoffacetofacediscussions  ` withkeysuppliers.h݌L 4(#4(# Ќ  $ ' ' $  XK! 44 ' !"3"   ,44X32l3  0 4   PurchasesCanBe Lotted3#݌$ 4(#4(# Ќ  h  9%  <DL,9  X! ` `  X!h  Itmaybecumbersometorunindividualauctionsforeachofmanylineitems.Line y  itemscanbebundledinto lotsandsupplierswillberequiredtobidonalltheparts e  inthatlotornone.Thisconceptof lottingworkswellwithofficeproducts.h`݌ Q  Ќ   ,` ` ,  "3"   # 'X X# XX '  4 ,32l3  0 4    @4 Benchmarks3݌)4(#4(# Ќ  h  9%  <DL 49  % , X%  4 , ,h`  Whenacompanyissatisfiedwithacurrentsupplierbutfeelsaneedtotestthemarket  toensuretheyarereceivingacompetitiveprice,theymaydothisthroughanauction.h`݌  Ќ    4 4  ,4 " , 4"$X` ,$0  04(#(#PotentialsupplierscanberequiredtorespondtoanRFPinordertoqualifyforthe  auction.Thekeyistoadequatelydocumentonesservice,delivery,paymentterms0@R"  p andother nonpricerequirementsupfronttoensurethatsuppliersarebiddingonan \ applestoapplesbasis.H4(#4(# h  ?%  <DLXX?  4 h{  TransitAgencyExperience !TransitAgencyexperiencewithreverseauctionshasbeenh{݌   Ќ  'XX X'  h  ?%  <DLXX?  h  extremelylimitedincomparisontoboththeprivatesectorandtheFederalgovernment.TheLos y AngelesCountyMetropolitanTransitAuthority(LACMTA)hasusedthisprocesssuccessfully e onalimitedbasisbutdoesnotfeelithassignificantpotentialfortheirneeds.Q C  161      ׀LACMTA Q believesitcanworkwellforcommonmaterialsbutmaybeinconsistentwithgoodlongterm =  partnershiprelationshipswithsuppliers.Forexample,wherethereisaneedfortechnicalsupport )! orforquickreactiontimeinordertomeetcriticalagencyneeds,theauctionprocessdoesnot " lenditselftothekindofagency/supplierrelationshipsthatarerequiredforlongtermmission # success.ButLACMTAbelievesthatifpriceistheonlyconsideration,andsupplierpartnerships #  forthecommodityalsoisnotaconsideration,thenreverseauctioningcanworkwell.hR݌ $p! Ќ  'XX X'  h  ?%  <DLXX?  h$  h$݌̌  'XX X'  h  ?%  <DLXX?  h  TheSoutheasternPennsylvaniaTransportationAuthority(SEPTA)conductedapilotprogramto &H # testtheprocessonaprocurementoffluorescenttubesandtheyweresuccessful.Buttheyalsodo '4!$ notfeelthattheiragencywilladoptthistechniquetoanysignificantdegree.Oneofthelessonshg݌  ( "% Ќ  'XX X'  learnedbySEPTAisthecriticalityanddifficultyofinformingpotentialbiddersoftheauction i andgettingthempreparedtobid.i X X      iial     XX   S C  162       U   h  ?%  <DLXX?  h  hb݌̌  'XX X'    h  ?%  <DLXX?  h  TheHoustonMetropolitanTransitAuthority(MTA)isconsideringtheuseofareverseauction -  forfurniture.i X X      iial     XX   V2 C  163      hK݌   Ќ  'XX X'    # 'X X~#( ,XX(#' '#XX' XXXX    # 'X X#} XX '  XChapter5 A ~5AwardofContracts@*   X,  5.0Overview(1/98)      5.1ResponsibilityofContractor(5/98)      ` 5.1.1GeneralStandardsofResponsibility(5/98)  t    ` 5.1.2SpecialStandardsofResponsibility(5/98)  `    ` 5.1.3ObtainingInformationforDeterminationofResponsibility(5/98) L     ` 5.1.4DeterminationandDocumentation(5/98) y8      5.2CostandPriceAnalysis(6/03) Q    5.3AwardProcedures(5/98) =     `    ` 5.3.1PublicAnnouncementsofContractAwards(5/98)      ` 5.3.2DebriefingofOfferors(4/05)    5.4DocumentationofProcurementAction(5/98)       ` 5.4.1SealedBidProcurements(5/98) p    `   5.4.1.1AbstractofBids(5/98) H    `   5.4.1.2DocumentationofAwardDecision(5/98) a     ` 5.4.2NegotiatedProcurements(5/98) 9   5.4.2.1FileDocumentationofSelectionDecision(5/98)      `   5.4.2.2PreNegotiationPlan(5/98) !    `   5.4.2.3MemorandumofNegotiations(5/98) #   5.0OVERVIEW  %X" Thischapterconcernsthemoreimportantproceduresanddocumentationrequirementswhichare q'0!$ closesttoandrelatemostdirectlytothetimeoftheactualcontractaward. Thesearethefinal ]("% stepsinthelongprocessleadingtotheselectiondecision,thenegotiationofacontract,the M) #& signingofthecontract,andthenotificationstounsuccessfulofferorsandthegeneralpublicof 9*#' whothewinneris.  %+$(   ,&* 5.1RESPONSIBILITYOFCONTRACTOR A *e1ddxdd x1(#(#e,xdd +   REQUIREMENT  }<  Paragraph7.h.ofFTACircular4220.1Estates:   ̀0 l AwardstoResponsibleContractors.Granteesshallmakeawardsonlytoresponsible   contractorspossessingtheabilitytoperformsuccessfullyunderthetermsand   conditionsofaproposedprocurement.Considerationshallbegiventosuchmattersas  l contractorintegrity,compliancewithpublicpolicy,recordofpastperformance,and X  financialandtechnicalresources.D l"l" Paragraph7.i.ofFTACircular4220.1Estates: ]  0 l WrittenRecordofProcurementHistory.Granteesshallmaintainrecordsdetailingthe 5  historyofaprocurement.Ataminimum,theserecordsshallinclude:...(3)reasons !  forcontractorselectionorrejection. l"l"     DEFINITION   Responsible-Ifthelowestresponsivebidderpossesses,atthetimeofcontractaward,theability  toperformsuccessfullyandawillingnesstocomplywiththetermsandconditionsofaproposed  contract,thebidderisconsideredresponsible.  p DISCUSSION H Responsibilityisaprocurementissuedeterminedafterreceiptofbidsorproposalsand a  priortothetimeofcontractaward.Thecontractormustbeconsideredresponsibletobe M  awardedacontract,regardlessoftheprocurementmethodusedtoselectthatcontractor 9! (sealedbidding,competitiveproposal,orsolesource).Forexample,supposeyour %" procurementproceduresallowforawardofacontracttoasolesource,providedthereis # sufficientjustification.Asitturnsout,thesolesourcechosenhasbeendebarredbythe # DepartmentoftheArmy.IfFederalfundsareinvolved,acontractcannotbeawardedto $  thesolesourcebecausethecontractorisnotconsideredresponsible.Z C  1      4 O  5  6O   7 Youranalysisofthe %! factorsinvolvedinmakingadeterminationofresponsibilityinvolvesagreatdealof & " subjectivity--afterall,youaregradingafirm's"ability"todoajob. 'l!#   )D#% Youmayhaveaprocurementwhereitisnecessarytodeterminetheresponsibilityofa A criticalsubcontractorinorderforyoutomakeapositivedeterminationabouttheprime - contractor'sresponsibility.\ C  2      Ifthatisnecessary,youmayusethesamestandardsin  determiningtheresponsibilityofthesubcontractorasyouwouldindeterminingthe   responsibilityoftheprimecontractor.   5.1.1GeneralStandardsofResponsibility    Tobedeterminedresponsible,aprospectivecontractormustmeetallofthefollowing  ` requirements: L    (a) ` Financialresourcesadequatetoperformthecontract,ortheabilitytoobtainthem. e$  # 'X X_# XX '  (b)0 ` Abilitytomeettherequireddeliveryorperformanceschedule,takinginto =  considerationallexistingcommercialandgovernmentalbusinesscommitments.) ` (#` (#   (c)0 ` Asatisfactoryperformancerecord;` (#` (#   (d)0 ` Asatisfactoryrecordofintegrityandbusinessethics;` (#` (#   (e)0 ` Thenecessaryorganization,experience,accounting,andoperationalcontrols,and p technicalskills,ortheabilitytoobtainthem;\` (#` (#   (f)0 ` Compliancewithapplicablelicensingandtaxlawsandregulations;u4` (#` (#   (g)0 ` Thenecessaryproduction,construction,andtechnicalequipmentandfacilities,or M  theabilitytoobtainthem;9` (#` (#   (h)0 ` CompliancewithAffirmativeActionandDisadvantagedBusinessProgram   requirements;and ` (#` (#   (i)0 ` Otherqualificationsandeligibilitycriterianecessarytoreceiveanawardunder " applicablelawsandregulations.# ` (#` (#  # 'X X# XX '5.1.2SpecialStandardsofResponsibility %X"  Youmayhaveaparticularprocurementorclassofprocurementswhich,duetothecomplexityof q'0!$ 8theproductsbeingacquired,requirethatprospectivecontractorsmeetspecialstandardsof ]("% responsibility.Theseprocurementswillrequirethatcontractorshavespecializedexpertiseor I)#&   5*#' facilitiesinordertoperformthecontractadequately.Thesespecialstandardsofresponsibility A 8mustbesetforthinthesolicitation.Failuretomeetthespecialstandardswilldisqualifyabidder - fromconsiderationforaward.AnexampleofaSpecialResponsibilityStandardwouldbethe  SpecialQualityAssurancerequirementconcerningmeasuringandtestingfacilitiesand   manufacturingcontrolswhichmustbemetbyprospectivebusmanufacturers. ^ C  3              ` 5.1.3ObtainingInformationforDeterminationofResponsibility    Beforemakingadeterminationofresponsibility,youmustpossessorobtaininformation  ` sufficienttosatisfyyourselfthataprospectivecontractormeetstheapplicablestandardsand L  requirementsforresponsibilitysetforthinthissection.AppendixB.11representsanexampleof y8  a"ResponsibilityQuestionnaire"usedbyamajortransitauthoritytoobtaininformationfrom e$  bidderswhichisnecessaryinordertomakeadeterminationofresponsibility. Q  Ѐ =  Sourcesofinformationavailabletoyourforyourdeterminationscouldinclude: )  (a)0  GeneralServicesAdministrationpublicationtitledListofPartiesExcludedfromFederal  ProcurementorNonprocurementPrograms;(#(# (b)0  Recordsandexperiencedata,includingverifiableknowledgeofyouragency'spersonnel;(#(# (c)0  Informationsuppliedbytheprospectivecontractor,includingbidorproposal \ information,questionnairereplies,financialdata,informationonproductionequipment, H andpersonnelinformation;u4(#(# (d)0  Preawardsurveyreports;andM (#(# (e)0  Othersources,suchaspublications,suppliers,subcontractors,andcustomersofthe % prospectivecontractor,financialinstitutions,governmentagencies,andbusinessand   tradeassociations. (#(#  5.1.4DeterminationandDocumentation "  TheFTACircular4220.1EParagraph7(i)requiresgranteestomaintainawrittenrecordofthe $l! procurementhistory,including"reasonsforcontractorselectionorrejection."Whiletheaward %X" ofacontractitselfcaninsomeinstances(e.g.smallpurchases)beconsideredimplicitaffirmation &D # thatacontractorhasbeendeterminedtoberesponsible,whereappropriatethewrittenrecord q'0!$ shouldstatethespecificbasisforaresponsibilitydetermination. ]("%  ,&* ЇWhenanofferonwhichanawardwouldotherwisebemadeisrejectedbecausetheprospective - contractorisfoundtobenonresponsible,theContractingOfficershouldmake,sign,andplacein  thecontractfileadeterminationofnonresponsibilitywhichstatesthebasisforthedetermination.   Documentsandreportssupportingadeterminationofresponsibilityornonresponsibility,   includinganypreawardsurveyreports,shouldbeincludedinthecontractfile.    DiscussionswithOfferor󀄄 Indoingtheresearchnecessarytomakearesponsibility  ` determination,youarefreetodiscusswiththebidder/offeroranyconcernswhichyoumayhave P  regardingthebidder's/offeror'sresponsibility.Youarefreetodiscussissuesof"responsibility" }<  withthebidder,unlikeissuesregarding"responsiveness,"whichcannotbediscussedwith i(  bidders(SeeBPPMSection4.4.4). U   5.2COSTANDPRICEANALYSIS -  # 'X X礁!# v  ' *lddxdd x1(#(#l,xjj+  :111'vv  :d# '  v4# XX 'd REQUIREMENT N1111;#'  111  NddParagraph10ofFTACircular4220.1Erequiresacostorpriceanalysisforeveryprocurement B action:# 'X X?5# v  ' o.  X?+4 44 <DL!X?# '  v6# XX 'Granteesmustperformacostorpriceanalysisinconnectionwitheveryprocurement  action,includingcontractmodifications.Themethodanddegreeofanalysisis  dependentonthefactssurroundingtheparticularprocurementsituation,butasa  startingpoint,granteesmustmakeindependentestimatesbeforereceivingbidsor | proposals.# 'X X/7# v  ' h  X( X444X!6(?+ 4 <DL!X? % XX!}9%<( <DL!X<# '  v9# XX '(a)CostAnalysis-Acostanalysismustbeperformedwhentheofferoris 3 requiredtosubmittheelements(i.e.,LaborHours,Overhead,Materials,etc.)of  theestimatedcost;e.g.,underprofessionalconsultingandarchitecturaland   engineeringservicescontracts.# 'X XO:# v  '     ( X  X!9(?+ 4 <DL!X? ?% XX!F<%B.4 <DL!XB# '  v;# XX 'Acostanalysiswillbenecessarywheneveradequatepricecompetitionislackingand "@" forsolesourceprocurements,includingcontractmodificationsorchangeorders,unless m#,# pricereasonablenesscanbeestablishedonthebasisofacatalogueormarketpriceofa Y$$ commercialproductsoldinsubstantialquantitiestothegeneralpublicoronthebasis E%% ofpricessetbylaworregulation.# 'X X=# v  ' 1&&  ?+ X4X!<+?+ 4 <DL!X? % XX!?%<( <DL!X<# '  v1?# XX '(b)PriceAnalysis-Apriceanalysismaybeusedinallotherinstancesto 'z!( determinethereasonablenessoftheproposedcontractprice.# 'X Xp@# v  ' (f")  ?( X  X!@(B.4 <DL!XB ?+ X4X!A+<( <DL!X<# '  vTA# XX '(c)Profit󀄀Granteeswillnegotiateprofitasaseparateelementofthepricefor 1*#+ eachcontractinwhichthereisnopricecompetitionandinallcaseswherecost +$, analysisisperformed.  ,%-  ( X  X!:B(?+ 4 <DL!X? ?% XX!C%B.4 <DL!XB .(0  ?+ X4X!^D+<( <DL!X<(d)FederalCostPrinciples󀄀Costsorpricesbasedonestimatedcostsfor 9 contractsundergrantswillbeallowableonlytotheextentthatcostsincurredor % costestimatesincludedinnegotiatedpricesareconsistentwithFederalcost   principles.Granteesmayreferencetheirowncostprinciplesthatcomplywith   applicableFederalcostprinciples.   3)'    1111 3 ( X  X!D(?+ 4 <DL!X? DEFINITIONS   x     G  GG݌̌   CostAnalysis󀄀Acostanalysisentailsthereviewandevaluationoftheseparatecostelements P  andtheproposedprofitofanofferor'scostorpricingdataandthejudgmentalfactorsappliedin }<  estimatingthecosts.Acostanalysisisgenerallyconductedtoformanopiniononthedegreeto i(  whichtheproposedcost,includingprofit,representswhattheperformanceofthecontractshould U  cost,assumingreasonableeconomyandefficiency. A      `J  `JJ݌̌   PriceAnalysis-Apriceanalysisinvolvesexaminingandevaluatingaproposedpricewithout  evaluatingitsseparatecostandprofitelements.Priceanalysisisbasedessentiallyondatathatis    verifiableindependentlyfromtheofferor'sdata.      L  LFE( N hL!,` X E %X" C,` X  N hXX!h@C?" N z <XX ,` X ? N Offeror's    Technical/Audit    Prenegotiation q'0!$ Category N Proposal <   0  Recommendation    Objective]("%(#(# C,` X  N z <XX AC?" N  - ,` X ? N Rate  Amt.  0  Rate  Amt.    Rate - Amt.I)#&(#(# LaborOverhead N x%  $  0  x%  $    x% - $5*#'(#(# MaterialOverhead N x%  $  0  x%  $    x% - $!+$((#(# G&A N x%  $  0  x%  $    x% - $ ,%)(#(#   -'+ Offeror'sProposal A Firstsubparagraph.Describehowtheofferordevelopedtheproposedindirectrates.Doesa  forwardpricingrateagreementexist?Ifso,whatistheperiodcoveredbytheagreement?This   informationshouldbeprovidedbytheofferor.   Audit/OtherRecommendation   Secondsubparagraph.Explainwhattheaudit'srecommendationsarebasedupon.This  ` mayincludeexceptiontakentosomecostelementswithintheoverheadpool,suchasfringe L  benefits,unemploymenttaxes,rent,depreciation,etc.Thisinformationshouldbereflectedinthe y8  auditreport.Ifyoudonotobtainanauditreport,youcanrequestcurrentraterecommendations e$  and/orhistoricalactualratesfromyourstateauditoffice.Comparingtheofferor'sproposedrates Q  totheactualratescanprovideagoodmeasureonhowaccuratetheofferor'sproposedrateshave =  been. )  PrenegotiationObjective  Thirdparagraph.AddresshowyoudevelopedtheGrantee'sprenegotiationobjective,andupon  whatinformationyourelied.Areyourobjectiveratesbaseduponrecommendations?  Occasionally,youmayexperienceasituationwhereyouhaven'tobtainedanauditreport,and p yourstateauditofficehasnoinformationonaspecificofferor.Insuchcases,itmaybetoyour \ advantagetorequestanauditoftheofferor'srates.Absentthisinformation,youwillneedto H evaluatetheofferor'sproposedratesindetail(i.e.,costelementsincludedintheindirectpools) u4 forallowabilityandallocability.Comparingoneofferor'srateswiththoseofanotherofferor'sis a  notanacceptablemethodinanycase.Also,comparingthisyear'sproposedratestolastyear's M  ratesisnotabasisforestablishingreasonablenessofthecurrentlyproposedrate. 9  C,` X  N  - BCB% 4N <!,` X B(3)  DirectMaterial.    XF,` X  4N <!PNFB%4 44N <!,` X B  XF,` X 4 44N <!OF?" N <!,` X ?Provideadetailedbreakdownandcompare,indetaileddiscussions,theofferor'smaterial ! quantitiesandunitprices. "  " Offeror's  Technical/Audit    Prenegotiation $l! Material " Proposal  Recommendation    Objective %X" C,` X  N <!OCE( N Dx!,` X E " Qty UP  Amt  Qty V UP  Amt  Qty  UP L Amt &D # PwrSup " xx $  $  xx V $  $  xx  $ L $ q'0!$ CMChips " xx $  $  xx V $  $  xx  $ L $ ]("% Wire " xx $  $  xx V $  $  xx  $ L $ I)#& Other " xx $  $  xx V $  $  xx  $ L $ 5*#'  Total  "    $   V   $     L $ !+$(   ,&* Offeror'sProposal A Firstsubparagraph.Addressthebasisoftheofferor'sproposeddirectmaterial(engineering  estimate?baseduponhistory?etc.)andcostsassociatedwiththematerial(catalogprices?oral   quotes?writtenquotes?historicalpricesescalatedby$?competitive?,etc.)Willtherebeany   scrap,attritionorvariancefactorstoconsider?Ifapplicable,hastheofferorincludedananalysis   forlargedollaritems?Istheanalysismeaningful?   Audit/TechnicalRecommendation  ` Secondsubparagraph.Addresstheaudit/technicalrecommendations.Hastheauditor/originator y8  takenexceptiontoanyoftheproposedmaterialitems,quantitiesorassociatedprices?Have e$  exceptionsbeenadequatelysupported? Q  PrenegotiationObjective )  Thirdsubparagraph.SupporttheGrantee'sprenegotiationobjective.Ifyouhavetakenexception  toanymaterialitemsand/orquantities,whatinformationhaveyoureliedupontoreachyour  conclusions?Ifyouhavetakenexceptiontoanypricingaspectsoftheofferor'sproposal,explain  fullyhowyouarrivedatyourobjective.Incaseswhereyouhavenoauditreport,theimportance  ofathoroughtechnicalevaluationisincreased.Youmustmakeadeterminationofprice p reasonablenessforthedirectmaterialitems.Whenchallengingacost,explainthebasisforyour \ position."Appearstoohigh,"withoutrationale,isnotsufficient. H @,` X  N !Q@H+ 4N Dx!,` X H (4)  OtherDirectCosts(ODC). a   XC,` X  4N !\CH+4 44N Dx!,` X H  XCompare,indetaildiscussions,theofferor'sproposal,theauditand/ortechnical 9 recommendation,andtheprenegotiationobjectiveforotherdirectcosts.Forexample: % C,` X 4 44N !]CE( N Dx!,` X E " Offeror's    Technical/Audit  Prenegotiation   CostElement " Proposal    Recommendation  Objective ! @,` X  N !_@9N x!,` X 9ComputerSupport " $  $  $ " Freight " $  $  $ #  AirTravel " $  $  $ $l! PerDiem " $  $  $ %X" Consultant " $  $  $ &D #  TotalODC " $  $  $ q'0!$ Offeror'sProposal M) #& Firstsubparagraph.Summarizetheofferor'srationaleforproposingthevariousexpenses.The %+$( elementsaboveareexamplesofthetypesofcostsgenerallyincludedasotherdirectcosts(ODC). ,%)   -'+ Technical/AuditRecommendation A  " Secondsubparagraph.Summarizetheauditand/ortechnicalrecommendations.Addressallthe  itemsincludedunderthiselement.Anyexceptionstakenmustbefullyexplained.   PrenegotiationObjective   Thirdparagraph.Provideananalysisoftheitemsincludedunderthiscostelement.Forinstance,  t arethenumberoftripsscheduledconsideredreasonablebyauditoryourtechnicalevaluation?  ` Arethecostspertripreasonable? L  Youcancheckairtravelrateswithcommercialairlines.Howdotheofferor'sproposedcosts e$  comparewithprevioushistory?Didthecontractorapplyanescalationfactor?Isitreasonable? Q  Inyouranalysis,youmayneedtoshowalowerlevelbreakdown(i.e.,abreakdownofthe =  numberandlocationofproposedtrips). )  7,` X r!`7< 4N x!,` X < (5)  Profit/FeeAnalysis     =,` X 4N !g=< 4N x!,` X <=,` X 4N !h=   6S-ai,` X 60 S Provideasummarythatcomparestheofferor'sproposalandtheGrantee'sprenegotiation  objective.Forexample:S(#S(#  ?N x!S-ai? " Offeror's  Prenegotiation \  " Proposal  Objective H @S-aiN !5j@E" N <x!S-aiE " Rate  Amt  Rate  Amt u4  " xx%  $  xx%  $ a  Offeror'sProposal 9 Firstsubparagraph.Statetheofferor'sproposedprofit/feerate,thatamount,andanyother   informationprovidedbytheofferortosupporttheproposedrate.   PrenegotiationObjective " Secondsubparagraph.AddresstheGrantee'sprenegotiationobjectiveprofit/feerate,which $l! shouldbebaseduponapplicationofyourstructuredapproach. %X"   XFS-ai N <!@kFE"4 4N <x!S-aiE &D #  (lx8#########FS-ai4 4N <!xnF! ! (lxx"3"  B x S-aiB  3?p2l3  0    Structuredapproachesfordeterminingprofitorfeeprenegotiationobjectivesprovidea q'0!$ disciplineforensuringthatallrelevantfactorsareconsidered.3?pp݌]("%(#(# Ќ  K"4 4 <x! x K̄0  Granteesshoulduseastructuredapproachfordeterminingtheprofitorfeeobjective 5*#' inthoseacquisitionsthatrequirecostanalysis;and!+$((#(#  j XL x 4 4 <!qLK"  <x! x K  ,%)  >j L x   <!}sLK" <x! x Kӄ0  Mayprescribespecificexemptionsforsituationsinwhichmandatoryuseofa ,&* structuredapproachwouldbeclearlyinappropriate.-'+(#(#  > XL x  <!EtLK"4 4 <x! x K .(, L x 4 4 <!uL"3"    3dv2l3  0    Profitorfeeprenegotiationobjectivesdonotnecessarilyrepresentnetincometo A contractors.Rather,theyrepresentthatelementofthepotentialtotalremunerationthat - contractorsmayreceiveforcontractperformanceoverandaboveallowablecosts.This  potentialremunerationelementandtheGrantee'sestimateofallowablecoststobe   incurredincontractperformancetogetherequaltheGrantee'stotalprenegotiation   objective.Justasactualcostsmayvaryfromestimatedcosts,thecontractor'sactual   realizedprofitorfeemayvaryfromnegotiatedprofitorfee,becauseofsuchfactorsas   efficiencyofperformance,incurrenceofcoststheGranteedoesnotrecognizeas  t allowableandcontracttype.3dvv݌ `(#(# Ќ  K"4 4 <x! x K L     XXT+4 44 <DL!4 4 <!T  = x 444X!z=K"4 44<x! x Kz    ItisintheGrantee'sinteresttooffercontractorsopportunitiesforfinancialrewards y8  sufficientto(1)stimulateefficientcontractperformance,and(2)attractthebest e$  capabilitiesofqualifiedlargeandsmallbusinessconcernstoGranteecontracts.z|݌ Q  Ќ  XXH4 4 <!4 44<!H   L x 4 4 <!{LK"4 4 <x! x K =     XXT+4 44 <DL!4 4 <!T  = x 444X!V~=K"4 %4<x! x K~    BoththeGranteeandcontractorshouldbeconcernedwithprofitasamotivatorof )  efficientandeffectivecontractperformance.Negotiationsaimedmerelyatreducing   pricesbyreducingprofit,withoutproperrecognitionofthefunctionoftheprofit,arenot  intheGrantee'sinterest.~݌  Ќ  XXH4 4 <!4 %4<!H   L x 4 4 <!LK"4 4 <x! x K   PARTD  TYPEOFCONTRACTCONTEMPLATED     XL x 4 4 <!OLK"  <x! x KExplainthetypeofcontractcontemplatedandtherationaleforselection.i X X        inOb     XX  XXX X  t C  12      ׀Ifthisprenegotiation X memorandumisbeingwrittenforamodificationtoanexistingcontract,youmustalsoaddress D thecontracttype. q0  PARTE  MAJORDIFFERENCES I  Identifyanyanticipatedproblemareas,exceptionstakenbytheofferor(s)tothesolicitationterms ! andconditions,ormajordifferenceswhichmayinterferewithnegotiations,andyourintended   negotiationstrategy.    PARTF  NEGOTIATIONAPPROVALSOUGHT "  Giveyourspecificrecommendationsimilartothefollowing: $h! "ApprovalofthisPreNegotiationMemorandumisrecommendedbasedupontheinformationset &@ # forthhereinandauthoritytonegotiateandenterintoacontractisrequested.Itisconsideredthe m',!$ opinionofthenegotiatorthattheGrantee'sprenegotiationobjectivesarerealisticandcanbe Y("% achieved." E)#&   +$( Preparedby:      Date:_________________ . # 'X X礙B# XX '#XXX X# XXXXh  ___________________________________    L x   <!dLH z x! x H(SignatureandTitle)   Reviewedby:0 N 0N (#N (#0(#(#Date:_________________{  #XXX XL# XXXX# 'X X # XX ' (#(# ___________________________________     (SignatureandTitle)   Approvedby: ` ______________________________  0  Date:_________________zL (#(# I x z !IH  x! x H______________________________ f8  I x  !IH x! x H(NameandTitle) R$  I x !IH x! x HMyApprovalis:(checkone)____a.  Unconditional *  I x x!`IH <x! x H  ____b.  Conditional(Seeattachedexceptions.)   $   N( <DL!<x!N  X= x   X!F=T+4 44 <DL! x T$  $݌   Ќ  X6<x!444X!6   I x <x!ǑIT+ 4 <DL! x T5.3AWARDPROCEDURES  DISCUSSION  Contractawardsgenerallyfollowoneoftwoprocedures: l   OfferandAcceptance󀄀Whenyouarefullyinagreementwithallofthetermsand rD conditionsoftheofferandyoudesiretomakeanimmediatecontractaward,youmaywish ^0 touseasimpleofferandacceptanceformastheawardingdocument.Allthatisrequiredis J thatyousignthe"acceptance"blockontheformandissueittothecontractor.Theform 6 mayreferencedocumentssuchastheRequestForProposal(RFP),whichcontaintheterms " andconditionsuponwhichtheofferisbased.Foranexampleofanofferandacceptance   formatseeAppendixB.7.v C  13      󀀀Thisapproachmayworkwelliftherehavebeennochanges   tothetermsoriginallyestablishedintheRFP,butwheretherehavebeenchanges,eitherin ! theofferor'sproposedtermsorresultingfromnegotiations,youmayavoidconfusionby " draftingabilateralcontractdocumentwhichdefinesthefinaltermsagreedupon. # BilateralContract󀄀InmanycasestherewillhavebeenchangestotheRFPtermsorthe %h! proposaltermsduringthecourseofdiscussionsandnegotiationswiththeofferors.Insuch &T" casesyoumaywanttoissueapreliminarynoticeofawardnotifyingthesuccessfulofferor n'@ # thatithasbeenselectedforawardandthatanintegratedbilateralcontractdocumentwill Z(,!$ beforthcoming.Thisintegratedcontractwouldincorporatethefinalnegotiatedtermsand F)"% conditions,includingprice,specifications,warrantyprovisions,etc.Havingtheofferor  2*#& signthecontractwiththefinaltermsandconditionsavoidstheproblemofconfusionasto . whatthefinalagreementactuallywas,whichcouldhappeniftheofferandacceptance  formatwereusedafterrevisionswerediscussed.Offerorsshouldbeadvisednottostart   workuntilacontracthasbeensignedbybothparties.AppendixB.8containstheFederal   contractawardform.    5.3.1PublicAnnouncementsofContractAwards    *e1ddxjjx(#(#e,xdd +  ``  REQUIREMENT    Paragraph14ofFTACircular4220.1E,ContractAwardAnnouncement,states: rD  0 l Ifagranteeannouncescontractawardswithrespecttoanyprocurementforgoodsand J  services(includingconstructionservices)havinganaggregatevalueof$500,000or 6  more,thegranteeshall:" l"l" : x X!#:?X X x ?0 l 0 l"l"a.SpecifytheamountofFederalfundsthatwillbeusedtofinancetheacquisition  inanyannouncementofthecontractawardforsuchgoodsandservices;and " " 0 l 0 l"l"b.Expressthesaidamountasapercentageofthetotalcostsoftheplanned  acquisition.(| " "   ( DISCUSSION  PublicAnnouncements󀄀Ifyouragencymakespublicannouncementsofitscontract \ awards,andtheawardhasanaggregatevalueof$500,000ormore,youarerequiredto vH complywiththecontractawardannouncementprovisionnotedabove.Public b4 announcementsmayincludepressreleases,announcementsinpublicmeetings,Internet N  postingsandpubliclyreleaseddocuments. :!  5.3.2DebriefingofOfferors  #  DISCUSSION $ Debriefingofunsuccessfulofferorscanbevaluabletoboththeofferorsandtheprocuring &! agency.Adebriefingcanbehelpfulforanumberofreasons: ' " 6,XX4` XX X6,c    ,c"0 4   Itcommunicatesasenseoffairnessandappreciationtoofferorswhohavemade )X"$ sizeableinvestmentsoftimeandresourcesinpreparingbidsorproposalsfor r*D#% yourprogram.,c݌^+0$&4(#4(# Ќ  ,c    ,c"0 4   Itmayavoidaprotestbyconvincingadisappointedofferorthatyouragency's 6-&( decisionwascarefullymade,factuallywellsupported,andthebestoneforyour ".&) agency.,c݌/'*4(#4(# Ќ  ,c    ,c["0 4   Ofmostimportance,itcanhelpofferorsimprovetheirfutureproposals,whichis . adefiniteadvantagetothemandtoyouragency.,c[݌4(#4(# Ќ  # 'X Xa# XX 'BestPractices    TimeofDebriefing󀄀Mostagenciesconducttheirdebriefingsaftercontractawardbecausethey   feelthatevaluationinformationcommunicatedtoanofferorpriortoawardcouldencouragea   protestorthatitmightresultinanattemptbytheunsuccessfulofferortoresubmitanimproved  t proposalanddelaytheselectionprocess.Typically,oneoftheitemsaddressedinadebriefingis ` theproposalsstrengthsandweaknessesinthecontextofwhatthetransitagencywaslooking zL  for;thisinformationcouldbevaluabletoacompetitorinnegotiations.Ontheotherhand,some f8  Federalagencies,suchasNASA,havehadconsiderablesuccessinavoidingprotestsbyusing R$  preawarddebriefings.NASAfeelsthatanindepth,preawarddebriefingwillworktoconvince >  anunsuccessfulofferorthattheAgencychosethebestproposal,thusdiscouragingaprotest.In *  addition,NASAwouldprefertodealwithaprotest,iftheyaregoingtogetone,beforeaward   andnotafteraward,whentheywouldfacetheriskofhavingtoterminatethecontract.Whatever   policyyouragencychoosestouseneedstobecarefullycoordinatedwithyourwrittenprotest  procedures,whicharediscussedinSection11.1,Protests,oftheBPPM.x C  14        PreawardDebriefing!Thetimingofthedebriefingrelativetocontractawardwillaffectthe  natureoftheinformationyoucanprovidetotheofferor.Ifanofferorhasbeennotifiedthatithas p beenexcludedfromthecompetitiverangeorotherwiseexcludedfromthecompetition,andthe \ offerorrequestsadebriefingpriortoaward,youwillhavetodecidewhethertogranttherequest vH ordelaythedebriefinguntilaftercontractaward.Ifyoudecidetogranttherequestforapre b4 awarddebriefing,youmustlimittheinformationdisclosedtothatofferorsproposalandnot N  discloseanyinformationabouttheotherofferors.Torevealinformationaboutotherofferors :  wouldcompromisetheintegrityoftheprocurement.Informationrevealedtoanofferorpriorto & awardmustbelimitedtothefollowing:   "3"  X9 X,XX4` X932l3  0    Theagencysevaluationofthesignificantstrengthsandweaknessesoftheofferors ! proposalinaccordancewiththeevaluationcriteria;3݌"(#(# Ќ  "3"  32l3  0    Asummaryofthereasonsforeliminatingtheofferorfromthecompetition;3݌$ (#(# Ќ  "3"  32l3  0    ݀Reasonableresponsestorelevantquestionsaboutwhethertheevaluationprocedures &X" containedinthesolicitationandotherregulationswerefollowedineliminatingthe r'D # offerorfromthecompetition.3݌^(0!$(#(# Ќ  Preawarddebriefingsmustnotdisclosethefollowing: 6*#&  "+#' "3"  3θ2l3  0    Thenumberofofferors;3θ ݌,$((#(# Ќ  "3"  32l3  0    Theidentityofotherofferors;3ֹ݌.(#(# Ќ  "3"  32l3  0    Thecontentorevaluationofotherofferorsproposals.3݌ (#(# Ќ  "3"  3p2l3  0    Therankingofotherofferors;3p݌ (#(# Ќ  "3 "  3E2l3  0    Confidentialbusinessinformationofotherofferors.Seebelow!Disclosureof   ConfidentialInformation.3Er݌ t(#(# Ќ  XPostawardDebriefing!Rememberthattheprimaryobjectiveofthedebriefingistohelpthe zL  offerorimproveitschancesofsuccessonfutureproposals,andnottodefendtheagency's f8  selectiondecision.Inlightofthispurpose,postawarddebriefingsmayinclude,attheagencys R$  discretion,thefollowinginformation: >  "3 "  X3;2l3  0 4   Theagencysevaluationofthesignificantstrengthsandweaknessesordeficienciesin   theofferorsproposalinaccordancewiththeevaluationcriteria;3;v݌ 4(#4(# Ќ    "3 "  32l3  0 4   Pastperformanceinformationonthedebriefedofferorbutnotthenamesof  individualsprovidingreferenceinformationaboutanofferorspastperformance;{ C  15      ׀3݌4(#4(# Ќ    "3 "  32l3  0 4   Theoverallevaluatedcostorpriceandtechnicalranking,ifapplicable,ofthe p successfulofferorandthedebriefedofferor.Evaluatedcostorpricewouldinclude \ theagencysestimatedcostofcorrectingdefectsorweaknessesintheitemsor vH servicesoffered;3݌b44(#4(# Ќ   N  "3 "  32l3  0 4   Asummaryoftherationalefortheselectiondecision;3݌: 4(#4(# Ќ   & "3"  32l3  0 4   Reasonableresponsestorelevantquestionsaboutwhethertheevaluationprocedures   containedinthesolicitationandotherregulationswerefollowed.3݌ 4(#4(# Ќ   !  XPostawarddebriefingsshouldnotinclude: "  ' "3"  X32l3  0 4   Pointbypointcomparisonsofthedebriefedofferorsproposalwiththoseofother $  offerors;3݌%l!4(#4(# Ќ   &X" "3"  32l3  0 4   Specificnumericalevaluationscores.Thisinevitablyleadstohavingtoexplainthe r'D # basisfor,anddefend,thenumbers.Itwillputthemembersoftheagencysevaluation ^(0!$ 3݌ J)"%4(#4(# Ќ  0 4 team ontrialfortheirscores,andwillmakenopositivecontributiontothe . objectivesofthedebriefing.Itmaywellcontributetoaprotest;4(#4(#    "3"  3Y2l3  0 4   Confidentialbusinessinformation.Seebelow!DisclosureofConfidential   Information.3Y݌ 4(#4(# Ќ      XMethodofDebriefing󀄀Debriefingsmaybedoneorallyorinwriting.Ifthedebriefingisdone   orally,thecontractingofficershouldconductthedebriefingandcontrolwhatisbeingdivulged.} C  16      ׀  t Ifthereasonsforrejectionarehighlytechnical,asubjectmatterexpertmayparticipateona ` limitedandcontrolledbasis.Themorepeoplepresent,themoredifficulttocontroltheflowof zL  information.Disclosureoftheidentityofevaluatorscanleadtopersonalfrictionandallegations f8  ofbias. R$  DisclosureofConfidentialInformation󀄀Granteesshouldconsulttheirindividualstatelaws *  regardingthedisclosureofproprietaryinformationfromcompetitors'proposals.Such   informationwouldinclude:      ' "3"  X32l3  0 4   Tradesecrets;3݌4(#4(# Ќ    "3"  32l3  0 4   Confidentialmanufacturingprocessesandtechniques;3݌4(#4(# Ќ   p "3"  32l3  0 4   Financialorbusinessinformationthatisconfidential,suchascostinformation,profit, \ overheadrates,etc.3݌vH4(#4(# Ќ   b4  XItissuggestedthatadisclaimerbeusedinthesolicitationtostatethatinformationwillnotbe N  disclosedwithoutpriornoticetotheofferorandanopportunity(e.g.,10days)toobtaincourt :  protectionfromdisclosure. & Inconclusion,theinformationcommunicatedtotheofferormustbeofvaluetotheofferor.The   informationmustenabletheofferortounderstandwhyitsproposalwasnotselected.Thistype ! ofdiscussionmayrequiresomegeneralcomparisonoftheofferor'sproposalwiththewinning " proposalinordertocommunicatethebasisonwhichtheselectiondecisionwasmade,andto # meaningfullycommunicatetheweaknessesintheofferor'sproposal.# 'X X礭##' '# ''   $    v  ' XX  v5.4DOCUMENTATIONOFPROCUREMENTACTIONS &X"  *e1ddxdd x1(#(#e,xdd +  ^(0!$^(0!  REQUIREMENT  (!% Paragraph7.i.ofFTACircular4220.1Erequiresawrittenrecordoftheprocurementhistory: B*#& # v X X礿# XX  v0  (+$(""   (  ,%( *l1ddxdd x1(#(#l,xdd +  ..  Granteesshallmaintainrecordsdetailingthehistoryofaprocurement.Ataminimumthese d recordsshallinclude: ~P  v X X8  0M!M! M!M! # XX  v:#0  0""(1)therationaleforthemethodofprocurement, "" 0  0""(2)selectionofcontracttype, "" 0  0""(3)reasonsforcontractorselectionorrejection,and "" 0  0""(4)thebasisforthecontractprice.|  #XXX XM# XXXX # "" #DISCUSSION  Section2.4.1,FileDocumentation,containsalistingofthevarioustypesofcontractfile ~  documentationwhicharetypicallyrequiredtodocumentthehistoryofaprocurement. j  Section9.1,DocumentationofContractAdministration,containsguidancefordocumenting V  contractadministrationactivity. pB  Thepurposeofthissectionistodiscussthedocumentationrequirementswhichareclosest H toandrelatemostdirectlytotheawardofthecontract.Itmightbehelpfultonotethat 4 documentationofcontractdecisionsandactionsisaperennialproblemreportedwith   regularitybyreviewteamsdoingProcurementSystemReviewsforFTA'sgrantee   community.ThesedocumentationproblemsareintheveryareasofFTA'shighestpriority  concerns,asexpressedinCircular4220.1E,andsomeareconcernedwithdocumentation  relatedtocontractawards.Themostcommonlynoticedproblemsinclude:  ,c   ' ,cL"0 4   Noindependentcostanalysispriortosolicitation,,cL݌z4(#4(# Ќ  ,c   ' ,c)"0 4   Nocostorpriceanalysisofcontractors'proposals,,c)P݌ 4(#4(# Ќ  ,c   ' ,c"0 4   Nodocumentedrationalefortheselectedcontracttype,0 4(#4(# ,c݌l> (# (# Ќ  0 ' ,c  ,c"04'(#'(#  Nodocumentationforthecontractorselectiondecision,,c݌ 4(#4(# Ќ  g0 ' ,c  ,c"04'(#'(#  Nodocumentationdescribinghowthepricewasdetermined/negotiated .,c݌6"4(#4(# Ќ  =X X XR=- ,XXX X-5.4.1SealedBidProcurements $! 5.4.1.1AbstractofBids %# BestPractices ' %  Atthetimeofbidopeningthereshouldbeapublicreadingofthebidsandarecordingofthem, )l"' usuallyreferredtoasanAbstractofBids.AnexampleofanabstractisinAppendixB.4which *X#( containstheGSAForms1409/1410,AbstractofOffers,usedinFederalprocurementsforthe r+D$) recordingofbids.Abstractsofbidsshouldbeavailableforpublicinspection. ^,0%*  5.4.1.2DocumentationofAwardDecision 6.', ЇBestPractices .  Awrittenrecordoftheawarddecisionneedstobemade.Theelementsoftheawarddecision   whichneedtobedocumentedare:   ,c  1X X,XX16,X, XX X60  ,c"0(#(#  Atabulationandevaluationofbids.Thiswillincludeadeterminationthatthelowbidis   fullyresponsivetotheIFB.ResponsivenessisdiscussedinSection4.4.4,Responsive   Bidder.Whentherearelowerbidsthanthebidbeingacceptedforaward,theaward  t decisiondocumentmustgivethereasonsforrejectingthelowerbids.Whenthereare ` equallowbids,thedocumentationmustdescribehowthetiewasbroken.,c&݌zL (#(# Ќ  ,c  0  ,c"0(#(#  Adeterminationthatthelowbidderisresponsible.ResponsibilityisdiscussedinSection R$  5.1,ResponsibilityofContractor.,c݌> (#(# Ќ  ,c  0  ,c"0(#(#  Adeterminationofthereasonablenessoftheprice.Section5.2,CostandPriceAnalysis,   discussestheFTACircularrequirementthateveryprocurementactionmustincludea   costorpriceanalysistodeterminethereasonablenessoftheproposedcontractprice.The  startingpointforthiscostorpriceanalysisshouldbetheindependentcostestimate.  Significantdifferencesbetweentheindependentcostestimateandthelowbidneedtobe  discussed.,c݌(#(# Ќ  5.4.2NegotiatedProcurements \ 5.4.2.1FileDocumentationofSelectionDecision b4  BestPractices  :  Havingconsideredalloftheavailableproposalevaluationdata,theselectionofficialmust   documentthebasisforthedecisiontoselectthatofferor"whoseproposalismostadvantageous   tothegrantee'sprogramwithpriceandotherfactorsconsidered." C  17      Thecontractfile ! documentationshouldincludethefollowing: " :X X,X, X:6,XX4` XX X60  ,c  ,c"04(#(#  DeterminationofCompetitiveRange(SeeSection4.5.3,CompetitiveRange).The $  CompetitiveRangeDeterminationidentifiesthoseproposalsthathadareasonable %l! chanceofbeingselectedforaward,giventheirrelativetechnicalstrengthsand &X" weaknesses,andtheirrelativeprices.,c݌r'D #4(#4(# Ќ   J)"%   ,c  ,c"0 4   TheTechnicalEvaluation(SeeSection4.5.2,EvaluationofProposalsandAppendix . B.1).Thetechnicalevaluationinformationindicatestherelativestrengthsand  weaknessesoftheproposals,togetherwiththetechnicalrisks(ifany)ofthevarious   approaches.,c݌ 4(#4(# Ќ  0  ,c  ,c"04(#(#  ACost/PriceAnalysis(SeeSection5.2,CostandPriceAnalysis).Inallinstances,   thecontractfilemustreflectevidenceofacostorpriceanalysis.Youmaywishto0@0" 0@0"(#(#   prepareaseparateCost/PriceAnalysismemorandumanalyzingthecostsorprices  t proposedagainst:(a)theindependentcostestimatepreparedpriortosolicitation,(b) ` specificcompanyinformationintheproposals,suchastheparticulartechnical zL  approachbeingoffered,and(c)anyotherpertinentinformationsuchasatechnical f8  evaluationofthecostproposal,anadvisoryauditoftheofferor'scostproposal,ora R$  comparisonofpricesofferedwithpriorprocurements.,c݌> 4(#4(# Ќ  ݀:X X,XX4` X:"3"  6,XX X632l3  0 4   Ifthecontractbeingawardedisacostreimbursementtype,theCost/PriceAnalysis   needstoaddresstherealismofthevariouscostelementsproposed,andwherethe   costsareunrealisticallylow,anadjustmentshouldbemadetoreflectwhattheagency  believestheeffortwillactuallycostgiventhatofferor'sspecifictechnicalapproachas  wellasitsdirectandindirectcostrates.Thiscostrealismassessmentmustbe  carefullyconsideredwhendeterminingwhichofferor'sproposalrepresentsthebest  valuefortheprocuringagency.Alltoooftencontractorsareunrealisticallyoptimistic p inestimatingcostsincompetitivecosttypesituations(knownas"buyingin").The \ resultisthatthelowestproposed/estimatedcostisnotnecessarilythemost vH advantageouschoicefortheprocuringagency.3i݌b44(#4(# Ќ  ,c  ,c"0 4   DeterminationofSelectedContractor'sResponsibility%  Ԁ(SeeSection5.1, :  ResponsibilityofContractor).Documentationregardingtheselectedcontractor's & responsibilityshouldbeincludedinthefile.,c݌ 4(#4(# Ќ  5.4.2.2PreNegotiationPlan  !  BestPractices #  ManyprocuringagencieshaveadoptedarequirementforwrittenPreNegotiationPlanspriorto %l! conductingnegotiationswithofferorsinnegotiatedprocurementsituations.Theadvantagesof &X" usingthiskindofdocumentarenumerous.First,itrequiresareasonedanalysisoftheofferor's r'D # price,leadingtotheestablishmentofanegotiationobjectivewhichisacceptabletoall ^(0!$ organizationalelementsoftheagency.Second,itallowsyoutodeveloparangeofprice J)"% objectiveswhichisacceptabletoyouragencymanagement,sothatnegotiationscanbeconcluded 6*#& ifthepricecanbenegotiatedwithintherangeestablishedinthePreNegotiationPlan.APlan "+#' alsobringstogetherthevariousinterestedpartiesoftheagencyinthedevelopmentandapproval ,$( ofaunifiednegotiationposition,sothatinternalagencydifferencesofopinioncanberesolved ,%) beforenegotiationsbegin,producingnegotiationobjectivesthateveryonecansupport. -&*  .'+ AnexampleofagranteePreNegotiationPlancanbefoundinAppendixB.6. C  18      ؀Severalfeatures . ofthisPlanareworthnoting:  ,c  0  ,c "0(#(#  Theindependentgranteecostestimatewasusedinthepriceanalysisofthecontractor's   proposal.,c  ݌ (#(# Ќ  ,c  0  ,c "0(#(#  Anadvisoryauditofthecontractor'scostproposalwasperformedandtheresultswere   usedtodeveloptheprenegotiationposition.Majorsubcontractorswerealsoevaluated.,c  ݌ t(#(# Ќ  ,c  0  ,c "0(#(#  Thetechnicalprogramofficeandthecontractsofficemettojointlydevelopanegotiation zL  positionthatwasacceptabletoboth.(Note:someorganizationsfindithelpfulto f8  developtheirnegotiationobjectivesasarangeofprices,toincludebothatargetprice R$  objectiveandamaximumpricewhichwillnotbeexceededinnegotiationswithout >  furtherapprovalsbyagencymanagement.Thisapproachallowsthenegotiationteama *  degreeofflexibilitywhichisusuallyneededbecausecontractorsoftenbringinformation   tonegotiationswhichagencypersonneldidnothavewhentheypreparedtheirnegotiation   plan.)8 C  19       ,c 6 ݌(#(# Ќ  ,c    ,c"0    Agencymanagementofficialsreviewedtheprenegotiationstrategyandapprovedthe  positionadopted,thusprecludinganyafterthefact"secondguessing"duringthecontract  reviewprocess.,cD݌p(#(# Ќ  5.4.2.3MemorandumofNegotiations vH BestPractices N   ItisessentialthateverycontractawardbedocumentedwithaMemorandumofNegotiations.An  &  exampleofaMemorandumofNegotiationsisinAppendixB.9. C  20       Thismemorandummust   describethemostimportantaspectsoftheprocurementhistory,whichatminimumwould   includethefollowinginformation: ! ,c    ,c"0    Astatementofthepurposeoftheprocurement.,c*݌#(#(# Ќ       4 ,c  0  ,c"0(#(#  Ahistoryoftheprocurement,includingreferencestoimportantdocumentswiththeir %l! datesandidentifyingnumbers.Thesewouldinclude:advertisementsoftheprocurement, &X" RFP,technicalevaluationofproposals,etc.,c݌r'D #(#(# Ќ   ^(0!$ ,c  0  ,c"0(#(#  Thenamesandpositionsofeachpersonwhoparticipatedinthenegotiations.,c݌.(#(# Ќ  ,c  0  ,c"0(#(#  Anexplanationofhowthefinalpricewasnegotiated.Thisexplanationneedsto   referencethePreNegotiationPlanpriceobjective(ifaPlanwasdeveloped),the   independentcostestimate(whichshouldalwaysbedeveloped),andanyadvisoryaudits   thatmayhavebeenconducted.SeeAppendixB.12(NegotiationMemorandumSample   Format)foranillustration.,c݌ (#(# Ќ  ,c    ,c"0    Adiscussion ofimportantcontracttermsandconditions,suchasinsurancerequirements, ` DBEparticipation,BuyAmericaprovisions,etc.,c݌~P (#(# Ќ   (lxx   V(    XP1 ` Chapter6 f 6ProcurementObjectTypes:SpecialConsiderations >  - ,XX,X-0  6.1Construction(10/98) (#(#   0 ` 6.1.1TheTraditionalConstructionProcessDesign/Bid/Build(10/98) ` (#` (#   0 ` 6.1.2ConstructionManagement("CM")(10/98) t` (#` (#   0 ` 6.1.3"FastTracking"PhasedDesign,AwardandConstruction(10/98) `` (#` (#   0 ` 6.1.4"Turnkey"Design/BuildContracting(10/98)L ` (#` (#   0 ` 6.1.5ValueEngineering(6/03)8 ` (#` (#   0 ` 6.1.6FacilitiesMaintenanceJobOrderContracts(10/98)$ ` (#` (#   0 ` 6.1.7Partnering(4/05)v ` (#` (#   0 ` 6.18CompetitiveProposalsvs.SealedBids(10/98)b ` (#` (#   0 ` 6.1.9IncentivestoReduceProjectCompletionTime(10/98)N ` (#` (#    ` 6.1.10SpecialContractProvisions(10/98) :  0  6.2EquipmentandSupplies(2/00)(#(#   0 ` 6.2.1Lease/Maintain(2/00)` (#` (# 0   ` 0 (#(#6.2.1.1LeaseandMaintenanceofVehicles(2/00)\ (# (# 0   ` 0 (#(#6.2.1.2LeaseofHeavyEquipmentwithOperators(2/00)H (# (# 0  6.3RollingStock(10/98) (#(#   0 ` 6.3.1Buses(10/98)^` (#` (#    ` 0 6.3.1.1CompetitiveProposalsvs.SealedBids(10/98)6  (# (#    ` 0 6.3.1.2APTAStandardBusProcurementGuidelines(10/98)"! (# (#   0 ` 6.3.2RailCars(10/98)"` (#` (#    ` 6.3.3JointProcurementsofRollingStockand Piggybacking(6/03) #  0  0` (#(#6.3.4PreAwardandPostDeliveryReviewsforBuyAmericaAct$l!` (#` (# 0  0` (#(#󀀀Compliance(10/00)%X"` (#` (#    ` 6.3.5Warranties(6/03) &D # 0  6.4ProfessionalServices(5/96)("%(#(# 0  6.5ArchitectEngineeringServices(3/04)n)#&(#(# 0  6.6Insurance(11/03)Z*#'(#(# 0  6.7Artwork(6/03)F+$((#(#   -&* 6.1CONSTRUCTION  f Constructioncontractingpresentsauniquesetofproblemsfortheprocurementspecialist,and > thissectionoftheBPPMwillattempttoidentifysomeoftheseissues.Anumberoffactorstend *  tomakeconstructioncontractinganareawhereproblemsabound.Thefirstistheuniquenessof   theprojectsthemselves;i.e.,theyareusuallyperformedwithdrawingsandspecificationswhich   aredevelopedforthefirst,andonlytime,forthatproject.Becausethedocumentsareoneofa   kind,therehasbeennopriorexperiencewhichwouldhaveidentifiederrorsandclarified  t ambiguities.Anotherfactoristhehighlycompetitivenatureofthebiddingprocess,producing  ` priceswhichhavenoleewayforsolvingdesignproblemswhichariseduringperformanceofthe L  contractorforaccommodatingchanges.Addtothesefactorsthelegalcomplexitiesarisingfrom 8  Federal,Stateandlocalstatutes,regulationsandcodes,andtheprocessbecomesoneunlikeany $  otherintheprocurementfield. , ,X X v  # XX, , e-#Thereisahighdegreeofspecializationintheconstructionindustryamongfirms.Themajor N  areasbeingexcavationandfoundations,masonry,steelwork,roofing,plumbing,electrical,and :  heatingandairconditioning.Giventhisdegreeofspecialization,theroleofthegeneral & contractoristomanageotherspecialtycontractors,schedulingandcoordinatingtheirwork.In  thisrolegeneralcontractorsassumeahighdegreeofriskwhentheybidfirmfixedprices,thus  guaranteeingperformanceforthebidprice.ItshouldalsobenotedthatanumberofStates  requirethatthevarioustradesbebidasseparateprimes,whichaddstothecomplexityofproject p managementandcontracting;e.g.,whocontrolsthevariouscontractors?Ifthegeneraltrades \ contractorisgiventhisresponsibility,howwillitbecompensatedandwhatenforcement H authoritydoesithaveagainsttheotherprimes? , ,X X 4 # XX, , 1#Anotherpartyinthisprocessisthesurety,whoissuesabondassuringperformanceofthe r  contract,includingthepaymentofsuppliersandmechanicsinaccordancewiththetermsoftheir ^ contractswiththeconstructioncontractor. , ,X X J # XX, , e3#Anumberofdifferentconstructioncontractingstrategiesarediscussedbelow.Someofthe "! materialpresentedhasbeenexcerptedfromtheAmericanBarAssociation(ABA)Model " ProcurementCode,Chapter5,whichgranteesareencouragedtoread.Granteesarealso " encouragedtoobtaintheFTAconstructionmanagementmanualentitledProjectand #  ConstructionManagementGuidelines1996Update. C  1      ׀TheseGuidelinesweredevelopedbyFTA $l! "toassistlocalTransitagenciesindevelopingmanagementstructuresandworkprogramsto %X" effectivelyplanandimplementthevariousphasesofFTAfundedtransitcapitalimprovement &D # projects."TheGuidelinescontainusefulprocurementinformationandguidancerelatedto '0!$ constructionprojects. , ,X X ("% # XX, , 7#  F+$( 6.1.1TheTraditionalConstructionProcessDesign/Bid/Build v X X f  # XX  vi8#Ithasbeentraditionalintheconstructionindustrytoemployanarchitect/engineer(A/E)to  completeadetaileddesignoftheentireprojectbeforesolicitingbidsfromconstruction v contractors.Thistraditionalapproachisknownassequentialdesignandconstruction.This  b sequentialdesign/constructionapproachrequiresthatadetaileddesignpackageoftheentire  N projectbecompletebeforebidsaresolicitedfromconstructioncontractors.Followingawardof  : theconstructioncontract,theA/Eisoftenretainedbytheownerfortheconstructionphase,and  & actsastheowner'sagent,toinspecttheconstructionworktoensurethatthestructuresarebuilt x  accordingtothedesignsandspecifications. v X X d  # XX  v'<#Advantages󀄀Amajoradvantageofthesequentialdesignandconstructionapproachisthat   complexoroneofakindprojectscanbethoroughlyplannedandthoughtthroughbefore t  constructionbegins.Thetraditionalapproachthusproduces,inthedesignphaseoftheproject, `  themostaccurateestimateoffinalprojectcosts,andthisisanadvantageofthetraditional L  technique.Ifproblemsareencounteredwithdesignaspectsforthelatterstagesoftheproject,the 8  earlierdesignfeaturesorphasescanbemodifiedbeforeanyconstructionworkhasbeendone, $ thusavoidingconstructioncontractorclaimsanddelays.AnotheradvantageisthattheAgencyis v givenafixedpriceforcompletionoftheentireprojectbeforeconstructionbegins.Theremay b alsobeadvantagesinobtainingthenecessaryfinancingandprojectapprovals.Overall N managementoftheprojectshouldalsobesimplifiedbythisapproach. v X X : # XX  v@#DisadvantagesSequentialdesignandconstructionrequiresalongertimetocompletethe ^ projectthanphaseddesignandconstruction("fasttracking").Andsincetimepressuresareoften J themostintenseissuesconfrontingtheAgency,thesequentialmethodmaynotbefeasible. 6 Alternativecontractingapproacheshavearisentoshortentheprojectcompletiontime.These " includephaseddesignandconstruction("fasttracking"),whichofteninvolvestheuseofa t constructionmanager,andturnkey(designbuild)contracting. v X X `  # XX  vC#6.1.2ConstructionManagement v X X   # XX  v:D#Inrecentyearsaconstructiontechniqueknownasconstructionmanagementhascomeinto t! practice.Inthisschemetheowneremploysaconstructionmanagerwhoactsastheowner's `"  agentduringthedesignphaseandasoverseerduringtheconstructionphase.Duringthedesign L#! phasetheconstructionmanagerworkscloselywiththeA/E,monitoringtheA/E'seffortsto 8$" ensurethatthedesignwillbewithintheowner'sbudget,willaccomplishtheowner'spurposes, $%# etc.OneofthecriticaltasksaCMcanperformduringthedesignphaseisaconstructability &$ review,ensuringthatthedesigncanactuallybebuilt. C  2      ׀Thespecificroleofconstruction & % managersinthisphasewillvarygreatlyfromprojecttoproject.Theirdutiesmayincludecost  '!& estimating,costevaluating,projectscheduling,revieworpreparationofcontractdocuments, f receivingbids,andadvisingtheownerofbidderqualificationsandtheacceptabilityofbids.  b"X X R # XX"  boI#Multipleprimecontractors󀄀Duringtheconstructionphase,theconstructionmanagementrole *  canalsotakeavarietyofforms.Underoneschemetheconstructionmanagerwillcoordinatethe   workofthevariousspecialtycontractors,whocontractdirectlywiththeownerasmultipleprime   contractors.Thespecialtycontractors,whowouldnormallyhavebeensubcontractorstoa   generalcontractorinthetraditionalconstructionarrangement,nowcontractdirectlywiththe  t owner,andthecoordinationnormallydonebythegeneralcontractorisperformedbythe  ` constructionmanager. TheconstructionmanagermayalsoassisttheA/Ewithinspectionsof L  thework.Inthisschemetheconstructionmanagerhasnofinancialliabilityforsuccessful <  completionoftheworkthereisnocontractwiththeownertocompletetheprojectforacontract (  price.  b"X X z   # XX"  bN# Advantages󀄀Theconstructionmanagerwillbringconstructionexpertisetotheprojectteamat R  anearlydesignstageoftheproject,enablingdesigndecisionstobemadewithanappreciationof >  theirimpactonconstruction.AconstructionmanagermaybeindispensableiftheAgencylacks * thepersonnelresourcestoadequatelyandaggressivelymanagetheproject.Phaseddesignand  constructionmaybeusedmuchmoreeasilybecausetheconstructionmanagercanperformthe  vitalfunctionsofcoordinatingtheworkoftheA/Econtractorandthespecialtyconstruction  contractors.   b"X X t # XX"  bYQ# Disadvantages󀄀Theconstructionmanager'sfeewilladdtotheoverallcostoftheproject,andthe L costofemployinganindependentconstructionmanagermaynotbefeasibleonsmaller 8 constructionprojects.   b"X X $ # XX"  bR# Contractprovisions󀄀Itiscriticalthattheconstructionmanager'scontractclearlydefinethe b authorityandthedutiesoftheconstructionmanagerwithrespecttotheothercontractorsonthe N project;e.g.,howmuchauthoritydoestheconstructionmanagerhaveovertheworkoftheA/E :  andthespecialtyconstructioncontractors? Iftheconstructionmanagerfailstoproperly &! coordinatetheworkofthespecialtyconstructioncontractors,willtheconstructioncontractoror " theAgencybeliable? ItwillalsobenecessarytodefinetheCM'sauthorityinthedesignand # constructioncontracts,sothatthesecontractorswillknowthedegreetowhichtheyaretoaccept #  directionfromtheCM.  v X X $x! # XX  vhV#6.1.3"FastTracking"Phaseddesign,awardandconstruction &P #  Fasttrackingisaproceduredesignedtoshortentheoveralltimeforprojectcompletionby (("% phasingthedesignandconstructionactivitiessothattheycanbeperformedtogether.Inthis z)#& schemeeachphaseoftheprojectisplacedundercontractoncethedesignforthatphaseis f*$' completed.Unlikethetraditionalapproach,wheretheentireprojectisfirstdesignedandthen R+$( contractedforwithoneconstructioncontract,thefasttrackschemewillcompletethedesign >,%) workinphases,andthenawardconstructioncontractsforthevarioussubsystemsorphasesonce *-&* thedesignforthatphaseisfinished.Thustherewillbeanumberofspecialtyconstruction .'+ contractsawardedbytheowner,andaconstructionmanagerwillnormally,thoughnot f necessarily,beretainedtoassistinpackagingthevariousspecialtycontractsandtomanagethe R workofthesespecialtycontractors.Thisworkofdefiningandmanagingthespecialtycontracts > canalsobedonebyinhouseprojectmanagementorbytheA/E. iX X *  # XX i[#Advantages󀄀Phaseddesignandconstructioncanreducetheoverallcompletiontimeofthe   project.ItcanalsoallowtheAgencytoreducethescopeofthelaterphasesifthecostofthe   earlierphasesexceedthebudget.ItalsoallowstheAgencygreaterflexibilityinthetimingofthe  t constructioncontractawards,thustakingadvantageofmarketconditions,ormanagingthe  ` availablefunding. iX X L  # XX i^#Disadvantages󀄀Thereisariskinherentinphaseddesignandconstructionbecauseportionsof $  theprojectarebegunbeforethelaterportionsaredesigned.Ifmajorchangesoccurinthelater v  phases,theymaycausecostlychangesintheearlierworkanddelaystothespecialtycontractors. b  TheseareriskswhichwillbebornebytheAgency. iX X N  # XX i`# 6.1.4TurnkeyorDesign/BuildContracting iX X & # XX i`# Thiscontractingtechniquehasseenincreasinguseinrecentyears.Between1987and1992there  wasa300percentincreaseindesignbuildprojects,whichindicatesagrowingimportanceof  turnkeyprojectsintheconstructionindustry.Accordingtostatisticsprovidedbythe p EngineeringNewsRecord,by1995,30percentofallnonresidentialconstructionwasusingthe \ turnkeymethod.Thegrowingimportanceofturnkeymethodswasattributedtoitsbenefitsin H savingtimeandcostswithnoreductionofqualityrelativetoconventionalprojectapproaches.It 4 mustbenoted,however,thatnotallStatespermitdesignbuildcontractingbyStateagencies.   Inthisscheme,atransitagencycontractswithasingleprivateentity,theturnkeycontractor,for ^ thedesign,constructionanddeliveryofacompleteandoperationalproject.Insomeinstances, J thecontractorisrequiredtooperateandmaintainthesystemforadefinedperiodoftime.The 6  privatecontractoristypicallyaconsortiumofprivatecompaniesofferingengineeringanddesign, "! construction,manufactureofvehicles,financeandrelatedsupportservices.Thedeveloper " contractorwillbeselectedcompetitivelybasedon"performancetype"(nondetailed) " specificationswhichdescribetheowner'sobjectivesandrequirements . Developerswillsubmit #  proposeddesignswiththeircompetitiveproposals,andownersmustselectbetweencompeting $p! designapproachesandprices. %\" Itshouldbenotedthatoneofthedrawbacksofdesignbuildisthattheownerdoesnothavean '4!$ independentsource(theA/Eintraditionalconstruction)overseeingdesignimplementationand ( "% verifyingconformancewiththedrawingsandspecifications. r) #&  WorkshoponInternationalTransitTurnkeyandJointDevelopment 󀄀TheTransportation J+$(  ResearchBoardhaspublishedaveryinformativeResearchCircularentitledProceedingsofthe :,%) WorkshoponInternationalTransitTurnkeyandJointDevelopment.  C  3      ThisWorkshopwasheld f  onOctober1519,1996anditspurposewas"toexplorecurrentinternationalexperienceinthe R developmentofturnkeytransitprojects,todiscusseffectiveturnkeypractices,andtoidentify > thoseaspectsthatwarrantfurtherconsideration."TheResearchCircularsummarizeseachofthe *  presentationsmadeattheworkshop,andpresentsthe"lessonslearned"bythoseorganizations   usingvariousturnkeyapproaches.Thenamesofthepresentersandtheirorganizationsarealso   given,whichprovidesareferencetoolforcontactingotherswhoareinvolvedwithturnkey   projects.GranteesareencouragedtoobtainthisTransportationResearchCircularitisa  t valuablesourceofinformation.SomeofthemoreimportantobservationsmadeattheWorkshop  ` includethefollowing: L   &%X X"3"    3n2l3  0 `   # XX% &n#TheFederalgovernmentandmostStates,butnotall,allowturnkeyforsome v  agenciesand/orprojects.Infact,therecentlyenactedFederalstatute b  TransportationEquityActForThe21stCentury(TEA21)permitsgranteesto3n o݌N ` (#` (# Ќ  0  0` (#(#useturnkeycontractingtodesignandbuildamasstransportationsystemoran :  operablesegmentofamasstransportationsystem.SomeStateshaverecently &  expandedtheirregulationstopermitdesignbuildcontracts,andthistrendislikely  tocontinue.Manyofthecurrenttransitturnkeyprojectshadtoenactlegislation` (#` (#    ` orreceivewaiverstopermittheturnkeyprocess.   &%X X"3"    3s2l3  0 `   # XX% &r#Anegotiatedprocurementprocessisstronglyrecommendedforselectionofa H turnkeycontractor.Discussionsbetweentheownerandofferorsfacilitatesatrue 4 "meetingoftheminds";allowscraftingoftailoredsolutionsforcontractor   concerns;andachievestheoptimumbalanceofriskandprice.Negotiationscan r  leadtooptimumdecisions.Ifanegotiatedprocurementcannotbedone,thena ^ twostepbiddingprocessisrecommendedasthenextbestapproach.SomeStates J whichallowdesignbuildcontractingrequireabidprocessratherthana3s requirementsforcontractorjobcostsystems;pricingchangeordersbasedonthe *  jobcostsystem;anddetailedauditprovisions.31|j|݌ ` (#` (# Ќ   &%X X"3"    3~2l3  0 `   # XX% &~#Theturnkeyapproachmayresultinlowercapitalcostsandfewerchangeorders3~.݌ t` (#` (# Ќ     ` andcontractdifficulties.  ` 0   &%X X (#(# "3"    32l3  0 `   # XX% &~#Theturnkeyapproachmayhaveanadverseimpactonsmallandmediumsized $  firms,includingDBEfirms.Agenciesmaywanttoconsiderusingincentive3݌v ` (#` (# Ќ  0  0` (#(#clausesintheirsolicitationstoencourageDBEparticipation,aswellasrequiring b  offerorstoidentifysmallandminorityownedbusinessesintheirproposalsduring N  theprequalification/RFPstagesoftheprocurement.ItwasreportedthatBART :  hadbeenverysuccessfulwiththisprequalificationrequirementintheSan &  FranciscoAirportExtensionturnkeydemonstrationproject. C  4       ` (#` (# "3"    32l3  0 `   Environmentalapprovals,intergovernmentalcoordination,andfinanceshouldbe  inplacepriortotheturnkeyprocurement.Itiscriticallyimportantthatproject p participantsdevelopateamingperspective.Aformalpartneringagreementwith \ thecontractorteamandtangentialagencieshasbeenusedwithsuccess.See H Section6.1.7Partnering.3߄݌4` (#` (# Ќ    6.1.5ValueEngineering r  *e1ddxdd x1(#(#e,dd +  JJ REQUIREMENT  H H FTACircular4220.1E,Section7(g)encouragestheuseofvalueengineeringclausesin . constructioncontracts:     0 l g.UseofValueEngineeringinConstructionContracts.Granteesareencouragedtouse ! valueengineeringclausesincontractsforconstructionprojects.FTAcannotapprovea "x NewStartsgrantapplicationforfinaldesignfundingorafullfundinggrantagreement #d  untilvalueengineeringiscomplete(seeCircular5010).$P!l#l# %<" dH   DISCUSSION '\!# FTACircular4220.1Edoesnotrequirevalueengineeringclausesbutitdoesencourage )4#% theminconstructioncontracts.Valueengineeringisaproceduredesignedtoincentivize * $& contractorstosubmitchangeproposalswhichreducethecostofcontractperformanceby  r+ %' promisingthecontractorashareofthesavings.Contractorscanoftenfindlessexpensive f waystoperformtheircontractsthanthemethodsprescribedintheircontract R specifications.Theywillbereluctant,however,toproposechangeswhichwillreducetheir > contractpriceandhavetheeffectofreducingtheirprofitonthecontract.Value *  engineeringisatechniquedesignedtoovercomethisdisincentivebyofferingthemashare   ofthesavingsresultingfromtheirchangeproposals.   @*Itisimportanttonotethatsomecontractualarrangements(e.g.,designbuildcontracts)  t mayinherentlyincludevalueengineeringconceptsandprinciples.Wherethisisthecase,  ` FTAdoesnotrequireseparatevalueengineeringproposals,changeorders,orother L  processes.Fromaprocurementview,theconceptofvalueengineeringismoreimportant 8  thantheformittakes. $  TheFederalGovernmentusesvalueengineeringclausesincontractsforsupplies,services, b  constructionandarchitect/engineerservices.Part48oftheFARisdedicatedtothesubject N  ofvalueengineering.TheprescribedclauseforFederalconstructioncontractsmaybe :  foundatFAR52.2483ValueEngineeringConstruction.Whilethisclauseisnotrequired & forgranteethirdpartycontracts,itmayproveusefulasaguideastohowtostructurea  valueengineeringclause.  FTAsProjectandConstructionManagementGuidelines1996Update,Section4.2.3Value p EngineeringandPeerReview,presentsadiscussionofthevalueengineeringprocessduring \ thedesignphaseoftheproject. C  5       H BestPractices    ValueengineeringclausesinusebyTransitAgenciestendtolimitthetypeofsavingswhichthe ^ AgencywillsharewiththeContractortothoseexpectedonthecontractbeingperformed.These J arecommonlyknownas"instantsavings."TheContractorwouldnotsharein"collateral 6  savings"or"futuresavings"resultingfromhischangeproposal."Collateralsavings"arethose "! savingsanticipatedbytheAgencyoutsidethecontract,suchasoperations,maintenance, " logisticalsupport,etc."Futuresavings"wouldbethoseresultingfromtheContractor'svalue " engineeringproposalsonfuturecontractsforthesamedeliverableitems.Thetypicalshareratio #  is50percentfortheAgencyand50percentfortheContractorofany"netsavings"resultingfrom $l! theContractor'schangeproposal."Netsavings"aredefinedas"grosssavings"lessthe %X" Contractor'scostsfordevelopingandimplementingtheproposalaswellasanyAgencycosts &D # resultingfromthechange,suchasreview,implementation,inspection,etc.Estimated"gross '0!$ savings"wouldincludetheContractor'slabor,material,equipment,overhead,profitandbond. ("% Attheconclusionofnegotiationsforthechangeproposal,acontractmodificationisissued n)#& reducingthecontractpricebytheAgency'sshare. Z*#'   2,%) PAnimportantfeatureofallvalueengineeringclausesisthattheAgency'sdecisiontoacceptor f rejectthecontractor'sproposalisfinalandconclusive,andnotsubjecttoappeal. R AnotherimportantfeatureoftheusualAgencyclausesisthattheContractor'svalueengineering *  changeproposal(VECP)mustnot"impairanyessentialfunctionorcharacteristicoftheWork,   suchassafety,servicelife,reliability,economyofoperation,easeofmaintenance,andnecessary   standardizationoffeatures." C  6      ׀AnotherAgency'sclausereadsthattheContractor'sVECP"shall   notalteranyitem'scharacteristicssuchasfunctionality,servicelife,reliability,economyof  t operation,easeofmaintenance,andnecessarystandardizedfeaturesandappearance." C  7        `  6.1.6FacilitiesMaintenanceJobOrderContracts 8   TheMetropolitanAtlantaRapidTransitAuthority(MARTA)hasmadeuseofaverycost v  effectiveprocurementapproachknownasJobOrderContracting(JOC)foritsfacilities b  maintenancerequirements.Theserequirementswouldincludetherepair,alteration, N  modernization,maintenanceandrehabilitationofbuildings,structures,orotherrealproperty. :  TheJOCisacompetitivelybid,firmfixedpriceindefinitequantitycontract,againstwhich & MARTAissuesWorkOrdersasspecificneedsarise.  TheunusualfeatureoftheJOCisthattheInvitationForBid(IFB)includesalloftheconceivable  lineitemsofwork,withspecifications/definitionsforeachlineitem,andunitpricesforeach p item.ThesespecificationsandlineitempricesweredevelopedbyMARTAwiththeassistance \ ofaconsultingengineeringfirm.Thelineitemunitpriceswerefurnishedtoprospectivebidders H ina"UnitPriceBook,"whichwasdevelopedbytheconsultant.TheUnitPriceBookhasover 4 90,000itemswhichdetailspecificrepairandconstructiontasksandspecifications.TheBook   coversawiderangeofareassuchasconcrete,airdistribution,plumbing,electrical,and r  hazardousandtoxicwaste.TheUnitPriceBookisworksegmentbased.Eachjobisdetailed ^ andbrokendownbytask.Thepricesarebasedontheuseofexperiencedlaborandhighquality J materials.TheBookalsoincorporatesprevailingmarketareacostdataandwages. 6  Whenbidsaresolicited,theobjectiveistoobtainbidson"adjustmentfactors."Nospecific " projectsarebid.Awardisbasedonthelowestproposedadjustmentfactor.Thetwoprice " adjustmentfactorsarefornormalandovertimework.Thesetwoadjustmentfactorsareapplied #  toallitemsintheUnitPriceBook.Adjustmentfactorsarerequiredtobebidtofourdecimal $l! places.Thebestwayforabiddertodevelopitsadjustmentfactoristopriceoutseveraltypesof  %X" projectsandtakeanaverage.Forexample,ifthepricebookstatesthatthecosttoreplacea f windowis$100,andaprospectivebidderdevelopsanestimateof$75,thenthebidder's R adjustmentfactoris.7500.Likewise,ifthebidderestimatesapriceof$110toreplacethe > window,thenthebidder'sadjustmentfactorwouldbe1.1000.Onthemostrecentaward,the *  winninglowbidofferedan"adjustmentfactor"of0.7700. , ,X X   # XX, , O#FollowingawardoftheJOC,theprocessforissuingWorkOrderswouldbeasfollows:   "3 "    32l3  0 `   Ameetingisheldwiththecontractortodiscussthescopeoftheworktobedone.3\݌ `` (#` (# Ќ  "3 "    372l3  0 `   AWorkOrderProposalisthenrequestedfromtheContractor.TheContractor's (  priceiscomputedby:37݌ ` (#` (# Ќ     c  0  0` (#(# c-0 ` (#` (#  SelectingvariousprepricedconstructiontasksfromtheUnitPriceBook. cݭ݌  (# (# Ќ   c  0  0` (#(# c-0 ` (#` (#  MultiplyingthepreestablishedpricesfromtheUnitPriceBookby N  quantitiesandthenbytheContractor'sadjustmentfactor. c݌:  (# (# Ќ  "3 "    32l3  0 `   TheContractor'sproposaliscomparedtoanindependentAuthorityestimate.3B݌` (#` (# Ќ  "3 "    32l3  0 `   Ifthepriceisreasonable,aWorkOrderisissued.3O݌t` (#` (# Ќ  "3 "    3 2l3  0 `   Ifthepriceisnotreasonable,thejobissolicitedundernormalprocurement p procedures.3 V݌\` (#` (# Ќ  TheJOCprocessofferstheopportunitytosavesignificanttimeandadministrativeeffortbecause 4 thereisonlyonecompetitivebidprocess,andthatiswhentheadjustmentfactorsaresolicited.   Thereafter,individualjobsdonothavetobecompeted,sothereisnolengthyadvertisingor r  solicitationtime,orcomplexsolicitationdocumentstoprepare,approveandissue.TheJOCcan ^ beamultiyearcontract,therebyreducingthenumberoftimestheprogrammustbecompeted. J MARTA'scontractisforonebaseyearplustwooneyearoptions,anditsvalueisapproximately 6  $9million. v X X "! # XX  v#0   (#(#  6.1.7Partnering  "! #XXX Xy#0 XXXXPartneringisaconcept/techniquedesignedtofosterateambuilding,or"partnering"frameof $l# mindtowardtheaccomplishmentoftheconstructionproject.Partneringwasoriginally %X$ developedbytheArmyCorpofEngineersforuseonmajorconstructionprojectswithlarge &D % projectstaffsontheworksiteandwhereeffectivecommunicationsareessential.Theparties '0!& involvedintheperformanceoftheproject,includingtheAgency,theAEfirm,theprime ("' Contractor,andallsubcontractorswouldmeettogetheronaregularbasis(atleastmonthly)to n)#( establishandmaintainopenlinesofcommunication,withthegoalofensuringrelationshipsof Z*#) trustandcooperation. F+$* ThepartneringprocessusuallyemploysaprofessionalFacilitatorwhoconductsthesessionsso -&, astopromotetrustandreachmutualagreementsonhowtheprojectistoproceed.The  .'- FacilitatorsfeeandassociatedcostsarepaidforbytheContractorwhoisinturnreimbursedby f theowner(50%)fromalineiteminthecontractPriceSchedule.Thepartneringprocessdoes R notchangeoralterthecontractagreement.Itisnotjustaonetimemeetingatthestartofthe > project,butisanongoingprocess.Itisusuallyaccomplishedinfivedistinctphases: *  "3"  -,X,` X,XX-  32l3  0    PhaseIisajointsessionoftopexecutivesdesignedtoarriveataclearagreementonthe   projectsbusinessgoalsandestablishaclearissueresolutionprocess.Issuesgenerally   focusonsafety,budget,communications,quality,schedule,teamwork,impactonthe  t communityandacommitmenttoworktogetherforasuccessfulproject.MARTA  ` developedaPartneringCharterforitsNorthSpringsStationProject,signedbyallthe L  teammembers,whichreadsasfollows:3]݌8 (#(# Ќ  K+4 44 <DL!,X,` XK0  We,theteammembersoftheNorthSpringsStation(CF520)ProjectTeam,are v  committedtocontinuingthetraditionofeffectivepartneringamongourorganizations b  andtodeliveringafacilityinwhichallteammemberstakepride.N (#(#   Wewillmeasureourcollectivesuccessthroughthefollowingprojectobjectives: & "3"  B(` ` <DL!444X!B X3$2l3  0 4   Completetheprojectonscheduleandmeetallmilestones3$݌4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B3d2l3  0 4   Provideasafeworksitetominimizelosttimeaccidents3d݌4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Completetheprojectwithinbudget3݌p4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Fairprofitearnedbycontractor3 ݌\4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Quicklyresolveclaimswithoutlitigation3:݌H4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Deliveraqualityproductwithinspecifiedstandards3]݌44(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Serveasresponsibleneighborsandprovideapositiveimpacttothesurrounding   community3݌r 4(#4(# Ќ  E+4 44 <DL!` ` X!EWewillpromoteteamworkbasedonthefollowingprinciplesandattitudes: J / /"3"  B(` ` <DL!444X!B3V2l3  0 4   Timelyinputs,responsesanddecisions3V݌"!4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B3v2l3  0 4   Open,effectivecommunications3v݌"4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Honestyandtrust3݌"4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Solvingproblemsatthelowestpossiblelevel3݌# 4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Workingtogetheragainstthejobnoteachother3/݌$l!4(#4(# Ќ  "3"  B(` ` <DL!` ` X!B32l3  0 4   Fullteamcommitmentandparticipationinpartnering3Z݌%X"4(#4(# Ќ  E+ 4 <DL!` ` X!E XNotethatthePartneringCharteridentifiesitsgoalsasthebestinterestsofalltheparties.These '0!$ interestsincludetheearningofafairprofitbytheContractor.ItiscriticalfortheAgency's ("% personneltoseetheContractorasateammemberwhoseinterestinearningafairprofitis n)#& equallyimportanttotheinterestsoftheAgency. Z*#' "3"  *,` XxX!*  3$2l3  0    PhaseIIconsistsofaworkshopwhereallstakeholdersparticipateindevelopingaproject 2,%) charterdefiningteamgoals,conductandrisks.WashingtonMetropolitanAreaTransit3$݌ -&*(#(# Ќ  0  0(#(#Authority(WMATA)projectmembersdevelopedthefollowingProjectCharterforthe f MetroGeorgiaAvenuePetworthStation:R(#(# 04` Xx,` Xx0 4 ProjectPriorities: *   #(0x""   XK.` hp x (#4` XxK  X2o3   `   SuccessfulPartnering>݌   Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X"2o3   `   Earlyidentificationandresolutionofproblems"݌   Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X2o3   `   Realizingonesownresponsibilitiesandobligations|݌  t Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X2o3   `   Communityrelations0݌  ` Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X2o3   `   Openness݌ L  Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X2o3   `   Timeliness(especiallyearlysubmittals,earlypermits)E݌ 8  Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  XK2o3   `   BeingabletolivewithchangesK݌ $  Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  X2o3   `   Safety݌ v  Ќ  *4` XxX(#*   ""   XK.` hp x (#4` XxK  Xj2o3   `   Qualityj݌ b  Ќ  *4` XxX(#*   " "   XK.` hp x (#4` XxK  X2o3   `   Makingaprofit݌ N  Ќ  *4` XxX(#*   " "   XK.` hp x (#4` XxK  Xz2o3   `   EEO,disadvantagedbusinessprogram,employeesalariesz(݌ :  Ќ  *4` XxX(#*   " "   XK.` hp x (#4` XxK  X-2o3   `   Maintainingprofessionalism-݌ & Ќ  *4` XxX(#*   34 Xx4` Xx3   4 ChallengesWeFace:   #(00 #"#"  ,N.4 <DL!4 XxN  ,#2o3   `   Gettingapprovalsquickly#`݌ p Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#E2o3   `   Resolvingissuesbygiveandtake#E݌ \ Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#2o3   `   Minimizingchanges#|݌ H Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#Z2o3   `   Designingthroughchanges#Z݌ 4 Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#2o3   `   Slurrywall#݌   Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#h2o3   `   Architecturaldome#h ݌ r  Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#2o3   `   Beingpaidontime#݌ ^ Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#n2o3   `   Closeoutwithin60days#n݌ J Ќ 34 Xx4X!3   "#"  ,N.4 <DL!4 XxN  ,#2o3   `   Noclaims8ifunavoidable,finalizepromptly#݌ 6  Ќ 34 Xx4X!3   "# "  ,N.4 <DL!4 XxN  ,#2o3   `   Cityconstruction#:݌ "! Ќ 34 Xx4X!3   "# "  ,N.4 <DL!4 XxN  ,#2o3   `   Publicsafety#݌ " Ќ 34 Xx4X!3   "# "  ,N.4 <DL!4 XxN  ,#2o3   `   Hazardousmaterial#:݌ " Ќ 34 Xx4X!3   "# "  ,N.4 <DL!4 XxN  ,#2o3   `   Avoidinginterferencewithothercontractors#݌ #  Ќ 34 Xx4X!3   "# "  ,N.4 <DL!4 XxN  ,#2o3   `   Stayinginharmony#Z݌ $l! Ќ 34 Xx4X!3   WMATAhasusedPartneringinitsmajorconstructioncontractsforovertenyearsandinitslast &D # twoRailcarcontracts.WMATAbelievesthatpartneringmayalsobeusefulinbuscontracts '0!$ wherethereisaneedtoenhancecommunicationsandworkingrelationshipsbetweentheowner ("% andthebusmanufacturer.Forexample,issuesofdelivery,paymentandpotentialperformance n)#& mattersrelativetotesting,warranty,etc.couldalsobeaddressed. Z*#'   ! ! (x0#"3"  B"` ` ` DL!4 XxB X 3 23  0    PhaseIIIprovidesformonthlyevaluationsbythosemanagingthejobforbothparties. 2,%) Theobjectiveistosolveproblemsatthelowestlevel,andallmembersshouldbe -&* evaluatingtheteamsprogress,orlackthereof,inmeetingtheestablishedgoals.Monthly  .'+ meetingsareheldattheexecutiveleveltoreviewanddiscussareasofconcernorinterest. f Problemsareidentifiedandsolutionsareagreedto.Organizationalimpedimentsto R solutionsareresolved.Ifnecessary,unresolvedissuesareescalatedtohighermanagers. > Manyissuesareresolvedbeforetheybecomemajorproblemsandthesesuccessesare *  alsodiscussedatthemonthlymeeting.3 ݌ (#(# Ќ  ,XH+ ` <DL!` ` ` X!H   -X ` X!-"3"    323  0    PhaseIVisanexecutivesession,supplementedbykeyprojectpersonnelfromboth   parties.Thisisnormallyaquarterlymeeting.Thepurposeistoaddressthemainissues  t thatrequireresolution,andtoensurethatthePartneringprocessremainsontrack.3 ݌ `(#(# Ќ   L  "3"    3 23  0    E+ ` <DL!X EPhaseVisaclosuresessiontoprovidefeedbackonthevalueofthePartneringprocess. 8  Thissessionisnotalwaysheld.3  ݌$ (#(# Ќ  ,H+ ` <DL!` X!H v  1 l<`  H+ 4 <DL!` X!HAdditionalinformationonPartneringisavailablefromtheConstructionIndustryInstitute.i0 ¿)X0 X      i      0 XX)0 ¿   C  8      #XXX0 X# XXXXJ   b   6.1.8CompetitiveProposalsvs.SealedBids  :   ProjectsInvolvingTechnology 󀄀Generallysuchprojectsareeitherpartofalargerconstruction  project,inwhichcasetheymayfallundercompetitivebiddingrequirements,ortechnology  acquisitionprojectsinvolvingprofessionalservicesandpossiblyaninstallationcomponent,  whichtakesthemoutsidetheconstructionfieldwithitssealedbidrequirements.Wherethework t tobeperformedundercontractistoadominantextentotherthanconstruction,someTransit ` Agencieshaveexperiencedsituationswhereacompetitiveproposalhasproventobeabetter L methodofcontractingfortheprojectthanthetypicalsealedbidapproach.Thishasbeentruefor 8 projectswhichentailedtechnology,suchassoftwareandsystemsintegrationwork.Inthese $ situationsyoumaywanttoevaluatealternativetechnicalapproachesoralternativewaysof v construction.TheseconditionslendthemselvestoanRFPtypeofsolicitation,whereyouwill b havetheflexibilitytoholddiscussionswiththeofferorsandselectthe"bestvalue"foryour N Agency,consideringnotonlypricebutthevalueoftheproductsbeingoffered,includingtheir :  expectedreliabilityandmaintainability.Onesuchprojectinvolvingtechnologywasacontract &! foraPublicAddress/CustomerInformationScreen.Thisprojectisbeingconstructedovera " numberofphases.Thefirstphasecontractwashandledasasealedbid.Theproblemwiththis " approachwasthatthelowestresponsiblebidderwasaconstructioncontractorandnotasystems #  integrator.Therewasaconsiderableamountofsoftwareinvolvedandthesolicitationdocuments $p! didnotmentionwhoretainedsoftwarerights.Aprojectsuchasthisshouldbesolicitedasan %\" RFPsothatnegotiationscantakeplaceandprospectivecontractorscanbeevaluatedonthebasis &H # oftheirsuitabilityforthework. C  9       '4!$   r) #& CriticalProjectsInvolvingScheduleIncentives 󀄀Ifstatelawpermits,itmaybeadvantageous f toconsideranegotiatedmethodofprocurementinsteadofsealedbidswhentheprojectinvolves V acriticalcompletionscheduleandwhereyouhavechosentouseincentiveprovisionsinthe B contractorabid/proposalevaluationmethodsuchasthosedescribedinsection6.1.9Incentives .  toReduceProjectCompletionTimes.Wherethemethodologybeingusedtoevaluatebidsis   unconventional,andwhereitmaybeadvantageoustohavetheflexibilitytoholddiscussions   withtheprospectivecontractors,anRFPapproachmaybepreferabletoasealedbidmethod   becauseitwillgiveyoutheabilitytodiscussthecontractors'proposedapproachestoschedule  x improvementandtherealismofthoseproposals.Itmustberecognized,however,thata  d negotiatedprocurementwillrequiremoretimetoaward,andthismaybecounterproductive P  whentheprojectisatimecriticalone.  O)X X <  # XX O)i# &%X X # XX% &#6.1.9IncentivestoReduceProjectCompletionTimes   O)X X f  # XX O)B# &%X X# XX% &#Transitagencieshavehadsuccessinreducingprojectcompletiontimesbyusingatechnique *  whereinbidsaresolicitedandevaluatedintermsofthepricesofferedandthebestachievable   completionschedule. C  10      ׀Thecontractawardisdeterminedbythelowestevaluatedbid,using  boththebidpriceandtheproposedcompletionschedule.Inthisprocurementscenario:  O)X X  # XX O) #"3"    3>!23  0 `   TheAgencyspecifiesthemaximumdurationoftheprojectinthebiddocuments.3>!w!݌` (#` (# Ќ  "3"    3O"23  0 `   TheAgencydeterminesthevalueofa"day"duringthecontractperiodand  specifiesthisvalueinthebiddocuments.3O""݌r` (#` (# Ќ  "3"    3#23  0 `   Biddersmustproposetheprojectduration(bestachievableschedule)intheirbids.3##݌J` (#` (# Ќ  "3"    3$23  0 `   Thebiddocumentswoulddefinethedamagesforfailuretoachievetheproposed " completionschedule,andthebonusesforearlycompletion,iftheAgencyshould t choosetousethemwiththedamagesprovisions.Theuseofdamagesforfailure3$$݌` ` (#` (# Ќ  0  0` (#(#tomeettheproposedcompletionscheduleisimportantinordertokeepthe L! bidders"honest"intheirproposedcompletionschedules.Theuseofbonuseswill 8" provideanevenstrongerincentiveforthebidderstosuccessfullymaketheir $# proposedschedulesaftercontractaward.$ ` (#` (# "3"    3(23  0 `   Price+Duration(#ofDays)=EvaluatedBid3(T(݌%"` (#` (# Ќ  Example: 'Z!$    `  Bid   h   CompanyX p Days  CompanyY󀀀Days (F"%  Valueofadayis A(BidPrice)$5,000,000   p $5,500,000 x  *$' $5,000   `  B(Contract p+ %(    `  Duration) h    p 720Days 򀀀 󀀀600Days  \,%)   L-&*  [   `  ValueofDuration  f    `  (Days x$5,000)  $3,600,000 p   $3,000,000  R    `  EvaluatedTotal  $8,600,000 p   $8,500,000 .   ThecontractwouldbeawardedtoCompanyYsinceitsevaluatedbidislowerthanthatof   CompanyXby$100,000.Valueofawardwouldbe$5.5million.     AdvantagestoPricePlusScheduleBidding  This techniqueislikelytoencourageefficient  d contractorstobid,anditoffersthelikelihoodofshorterconstructionprojectdurationsbecauseof T  thestrongfinancialincentivesforachievingthebestcompletionschedule. @  ConcernswithPricePlusScheduleBidding󀄀Itisextremelyimportantthattheconstruction ~  contractorhavecontrolovertheworksite,andthattheAgency'sresponsibilitiesattheworksite j  beminimalor,preferably,nonexistent.IfthecontractorisdependentupontheAgencytofurnish V  supportattheworksite,orifthecontractor'sworkisdependentupontheactivitiesofother B  contractors,theAgencycanexpectclaimsregardingtheissueofdelays,whichinturnaffectthe . incentiveprovisionsoftheconstructioncontract.Inviewoftheprobabilitiesofclaimsand  litigation,Agenciesshouldavoidincentivecontractssuchasthisunlesstheycanturnaworksite  overtoaconstructioncontractorandallowthecontractortocontrolthatsiteandthescheduling  ofallworkrequiredtocompletetheproject.Wherecontractorslackthenecessarycontrolover x theworksite,Agenciesmaywellhavetopayhigherprices,basedonthecontractbonusesand d thecontractor'ssuccessfulclaimsfordelays,andstillhaveaprojectthatislateincompletion. P Completionincentivesmayworktodiscourageprimecontractorsfromsubcontractingwithsmall ( ordisadvantagedbusinessfirms.Primeswillprobablyseekpartnerswhoarelargebusinesses z withproventrackrecords,andwhichhavesubstantialresourcesavailabletoperformtheworkas f expeditiouslyaspossible. R Thequalityofconstructionworkmaysufferduetotheschedulepressures,andAgencieswill *! needtoexertclosesurveillanceoverthecontractor.  " 6.1.10SpecialContractProvisions #   Constructioncontractsrequirecertainprovisions whichareuniquetothatactivity.These %`" provisionsarediscussedindetailinothersectionsoftheBPPM.Followingisasummaryofthe &P # specialprovisionsandtheBPPMsectionswheretheyarediscussed.  O)X X '%( and18.Section8.1.2DavisBaconActcontainsmoredetailedguidancewithrespectto ,*&) administeringtherequirementsofthisAct.  O)X X |-'*  h.(+  [(       # XX O)9:#Bonding 󀄀Constructioncontractsrequirecontractorstofurnishthreetypesofbondsbidbonds, f paymentbondsandperformancebondswhicharediscussedinAppendixA.1,clause13,with V moredetailedguidanceoneachtypeofbondinSection8.2.1PerformanceBonds. B  Liquidateddamages 򀄀Section8.2.3LiquidatedDamagescontainsguidanceontheuseof   liquidateddamagesclauses.    DifferingSiteConditions 󀄀Section9.2.3.1containsguidanceonadministeringtheDiffering  | SiteConditionsclause.  l  SpecificationsforConstruction 󀄀Section3.4SpecificationsforConstructiondiscusses D  requirementswithinFTACircular4220.1EandtheMasterAgreement(MA)whichmayaffect 4  yourconstructionspecifications.    Insurance 󀄀Section6.6Insurancediscussesanapproachtoinsuringconstructionproject ^  contractorsknownasOwnerControlledInsurancePrograms(OCIP),whichhasproventobean N  effectivemethodofinsuringthecontractorteamsinvolvedinconstructionprojects. :  Warranties 󀄀Obtainingacceptablewarrantydocumentsinatimelymannerfromcontractorshas  beenhistoricallydifficult.Nocontractualincentivehasexistedtomotivatecontractorstosupply  therequiredwarranties.Granteesmaywishtoconsidermakingthesubmissionofanacceptable  warrantyformaconditionofproductorsystemacceptanceinordertomotivatecontractorsto t furnishtherequiredform.Granteesmightalsoincludethewarrantyformsasafixedpriceline ` iteminthecontractforpaymentpurposes,thusgivingthecontractorsastrongmotivationto L supplytherequiredforms. 8  ContractCloseout 󀄀Closeoutofconstructioncontractswillrequirecertaindocumentation v uniquetothesecontracts,suchaslienwaivers,asbuiltdrawings,etc.Theserequirementsare f discussedinChapter10,CloseOut. R   6.2EQUIPMENTANDSUPPLIES *" 6.2.1Lease/Maintain $  *ldddd 1(#(#l,xZZ+  :111'%t"%t : , ,X X XX, , REQUIREMENT N1111;#X&$   111 HNh  <%  <DLX!<  ! B!h'F  Requirementsrelatedtotheleaseofequipmentandfacilitiesmaybefoundinthefollowing 'f!% regulations:h'FF݌ (R"& Ќ  $ X! X$     2(8x <%` ` <DLX!<0 b (a)  FTACircular4220.1Egenerally,andparagraph7dwhichrequires,where0@b"b"0@F"F" )#' appropriate,ananalysisofleaseversuspurchasealternativestodeterminethe0@contrmost *l$( economicalapproach.+X%)b"b" + X!` ` XGH+<%` ` <DLX!<0 b (b)  FTAMasterAgreement,MA(12),Section16,Leases.,&*b"b"  !BF0 b (c)  CapitalLeases(49CFR,Part639.)=31.'+b"b" H   1111 = DISCUSSION iX X  f  # XX iKK#Sinceequipmentleasesareconsidered thirdpartycontractswithinthemeaningofFTA D Circular4220.1E,therequirementsofthatCircularapplytosuchprocurements.The 0  Circularrequiresaleaseversuspurchaseanalysistodeterminethemosteconomical   approachtoanygivenprocurement.TheMasterAgreement,Section16,concernscapital   leases,inaccordancewith49CFR,part639. iX X   # XX iM#Leasevs.purchasealternatives!Wheneveranagencyisconsideringtheleasingof  l equipment,aleasevs.purchaseanalysisshouldbemade.Theanalysisshouldbe X  appropriatetothesizeandcomplexityoftheprocurement.Itisusuallymoreeconomical D  topurchaseequipmentthantoleaseit.Thisisnotalwaystrue,however,especiallywhen 0  highlycomplexequipmentisinvolvedandthereareissuesofmaintainingtheequipmentor   havingtrainedpersonnelwhoarecompetenttooperatetheequipment.Indetermining n  whethertheleaseofequipmentisfeasible,thefollowingfactorsmustbeconsidered: Z  + X!` ` XI+'X XX!' (x82G (lxx "3"  !0  3)R2l3  0` (#(#  Estimatedlengthoftheperiodtheequipmentistobeusedandtheamountof t timeofactualequipmentusage;3)RxR݌`` (#` (# Ќ  "3"  0  3S2l3  0` (#(#  Whencircumstancesrequiretheimmediateuseofequipmenttomeet  programorsystemgoalsandtheleasingwouldserveasaninterimmeasure x tomeettheseimmediateneeds.3SS݌d` (#` (# Ќ  "3"  0  3%U2l3  0` (#(#  Financialandoperatingadvantagesofalternativetypesandmakesof \ equipment;3%U^U݌H` (#` (# Ќ  "3"  0  3RV2l3  0` (#(#  Totalrentalcostfortheestimatedperiodofuse; iX X3RVV݌t` (#` (# Ќ  "3"  # XX i W#0  3mW2l3  0` (#(#  Netpurchasepriceifacquiredbypurchase; iX X3mWW݌l` (#` (# Ќ  "3"  0  # XX iBX#3X2l3  0` (#(#  Transportationandinstallationcosts; iX X3XY݌ ` (#` (# Ќ  "3"  # XX itY#0  3Y2l3  0` (#(#  Maintenanceandotherservicecosts(e.g.,thecostofpermanenthousing "* facilitiesforheavycranesmightprecludetheirpurchase,andthelackof |# trainedoperatorsofheavyequipmentmaydictatethattheagencyleasethe h$ equipmentwithtrainedoperators); iX X3Y2Z݌T%` (#` (# Ќ  "3"  # XX i[#0  3\2l3  0` (#(#  Differenceinwarrantycoveragesbetweenleaseandpurchase;e.g.,some &  officeequipmentleasesdonotprovideforwarrantyrepairswhereasnew 'l! purchaseswouldbecoveredbywarranties; iX X3\{\݌(X" ` (#` (# Ќ  "3"  # XX i]#0  3 ^2l3  0` (#(#  Availabilityofaservicingcapability,especiallyforhighlycomplex0@v` (#` (#0@vD(#D(# P*#! equipment(CantheAgencyservicetheequipmentifitispurchased?); iX X3 ^i^݌<+$"` (#` (# Ќ  "3 "  0  # XX i_#3_2l3  0` (#(#  Potentialobsolescenceoftheequipmentbecauseofimminenttechnological ,h&# improvements; iX X3_=`݌-T'$` (#` (# Ќ   L/(% "3 "  0  # XX i`#3ma2l3  0` (#(#  Tradeinorsalvagevalue; iX X3maa݌f` (#` (# Ќ  "3 "  0  # XX i2b#3b2l3  0` (#(#  Imputedinterestcosts(netpresentvalueofleasepayments);and iX X3bb݌` (#` (# Ќ  !VR"3 "  !0  # XX ic#3c2l3  0` (#(#  Insurancecosts.3cmd݌ $` (#` (# Ќ  + X!X XP+?( 4 <DLX!?BestPractices b      Leaseswithoptionstopurchase!Whenaleaseisjustified,aleasewithoptiontopurchasemay :  beappropriate. &      `     h      p       Longtermleases!Generally,alongtermleaseshouldbeavoided,butmaybeappropriateifan   optiontopurchaseorotherfavorabletermsareincluded.    6.2.1.1LeaseandMaintenanceofVehicles \    &           hurch     'h  LeasevsBuyAnalysis ! Whencomparingthe costsofleasingvs.ownership,maintenancecosts 4 willusuallybeamajoreconomicfactor.Indeedtheprimaryadvantageofleasingisthe $ avoidanceofmaintenancecostsforitemssuchasbrakes,batteries,etc.Granteesmustcarefully v estimatethemaintenancecostsovertheanticipatedlifeofthevehicle.Thecostsofownership b willbeincreasedbythesemaintenancecostsanddecreasedbytheanticipatedresalevalue N (salvagevalue)ofthevehiclewhenitissold. :  l` UsingaRequestforProposalvs.InvitationforBid!PACESuburbanBusServicesexperience  withcompetitiveprocurementsusinganRFPhasbeenpositive. C  11      ׀Thereismuchmoreflexibility  forthegranteewhenanRFPisusedinsteadofanIFB.TheRFPapproachgivesthegranteean  opportunitytoestablishevaluationcriteriaforimportantfactorsofperformance,includingsuch p itemsaspreventativemaintenance,emergencyroadsideassistance,repairs,fuelcard \ managementservices,andaccidentservices.Proposalscanbeevaluatedwiththeobjectiveof H selectingthebestoverallcombinationofservicequalityandprice.Negotiationscanbeheldwith  4 theofferorsinordertosecurethebestpossibleproposalandcontractterms.ThePACESuburban !  BusRFPissuedforleasingandmaintainingtheirfleetvehiclesmaybefoundinAppendixB.15.  b"X X r"      # XX"  bo#JointProcurementswithStateDOTs!GranteesshouldinquirewiththeirStateDepartmentsof $ Transportationastowhetheritwouldbefeasibletoleasevehiclesfromcontractsawardedbythe p%   State.TheseStatecontractsfrequentlyrepresentthebestpossibletermsavailableforvehicle \&! leasing.Whenpursuingthis piggybackingapproach,granteepersonnelmustdetermineifthe H' " StatecontractcontainsalltherequiredFederalclausesandcertificationsrequiredbyFederal 4(!# regulations.GranteesmaywishtotaketheinitiativewiththeirStateDOTstoplanaheadfor   )"$ jointprocurementsofvehiclesinordertoassurethattheirneedsareaddressedandthatthe f Federalrequirementsareincludedwhentheprocurementsareinitiated.Foradditionalguidance, R seeSection6.3.3JointProcurementsofRollingStockand Piggybacking. >  6.2.1.2LeaseofHeavyEquipmentwithOperators  b"X X    # XX"  but#Someagencieshavefounditbeneficialtolease,ratherthanpurchase,heavyequipment,suchas (  cranes,withoperators. C  12      ׀Themoreimportantconsiderationsheretendtobeoperationalrather   thaneconomic.Advantagestoleasingwouldincludesuchfactorsas:      b"X X (lxx "3"    0  # XX"  byv#3w2l3  0` (#(#  theavailabilityoffullytrainedandlicensedequipmentoperators;3ww݌ ` (#` (# Ќ   % X!X:e%9" <DLX!9    (lxx"3"  % X!  Xx%?( 4 <DLX!?0  0(#(#3hy2l3  0` (#(#  theconvenienceofhavingthelessorprovidetheveryspecializedmaintenance   servicesandhousingstructuresfortheequipment;and3hy'z݌p ` (#` (# Ќ  % X!Xy%9" <DLX!9 \   "3"  0  0(#(#3{2l3  0` (#(#  thelessorsassumptionofliabilityincaseofaccidents.3{,|݌H` (#` (# Ќ  % X!  X{%?( 4 <DLX!?JointAgencyProcurements󀄀Heavyequipmentmaybeverydifficulttoobtainonshortnotice,   andlongertermleases,suchasthreeyears,maybeadvisable.Inaddition,competitionmaybe r  virtuallynonexistent.Underthesecircumstances,agenciesmightbeadvisedtoseekoutother ^ agenciesintheirgeographicalregioninordertoconductajointprocurementfortheircommon J needssoastoobtainamorefavorablecontractthaneithercouldprocurebythemselves. 6 LaborLaws!AgencieswillneedtobeawareoflocalorStatelaborlaws,aswellasFederallaws  ifconstructionisinvolved(e.g.,DavisBaconAct),whendevelopingtheirsolicitationdocument  andcontract.  Insurance!Insurancerequirementswillbeanimportantpartofthecontractterms.Agency X procurementpersonnelshouldcarefullycoordinatetheinsuranceprovisionswiththeirinsurance  D departmentorlegalspecialists.Requirementsmightincludecoverageforcommercialgeneral !0 liability,autovehicleinsurance,workerscompensation,andperhaps,aspecialrailwayprotective " policy.Theagencysinsurancespecialistsshoulddeterminespecificcoveragerequirementsand n# amounts. Z$    6.3ROLLINGSTOCK  2&"   #XXX X# XXXX*l1ddxZZx(#(#l,xdd +   (!$ (!  REQUIREMENT  n("% TheFTAMasterAgreement,MA(12),Section15(l)definesseveralrequirementsforthe )#& acquisitionofrollingstock: *t$' x  #XXX X礧# XXXX +`%(    ,|&( *e 1 ddxdd x1(#(#e,xdd +  ff Hl.RollingStock.Inacquiringrollingstock,theRecipientagreesasfollows: P 0 l (1)MethodofAcquisition.TheRecipientmayawardathirdpartycontractforrolling  ( stockbasedoninitialcosts,performance,standardization,lifecyclecosts,andother z  factors,orbasedonacompetitiveprocurementprocessinaccordancewith49U.S.C. f  Section5326(c).R l"l" 0 l (2)MultiyearOptions.Inaccordancewith49U.S.C.Section5326(b)(1),aRecipient *  mayprocurerollingstockusingfinancialassistanceappropriatedfor49U.S.C.Chapter   53usingacontract,withanoption,nottoexceed5yearsafterthedateoftheoriginal   contract,topurchaseadditionalrollingstockorreplacement. l"l" 0 l (3)PreAwardandPostDeliveryRequirements.TheRecipientagreestocomplywith `  therequirementsof49U.S.C.Section5323(m)andFTAregulations,"PreAwardand L  PostDeliveryAuditsofRollingStockPurchases,"49C.F.R.Part663,andany 8 revisionthereto.$l"l" 0 l (4)BusTesting.Totheextentapplicable,theRecipientagreestocomplywiththe b requirementsof49U.S.C.Section5323(c)andFTAregulations,"BusTesting,"49 N C.F.R.Part665,andanyrevisionthereto.):l"l" dH ) 6.3.1Buses  Z  6.3.1.1CompetitiveProposalsvs.SealedBids  2 GranteeexperienceswithcompetitiveRequestsforProposals(RFP's)forbusprocurements   indicatesthatthismethodmaybepreferabletotheuseofsealedbids.WhenRFP'sareused,the  granteehastheflexibilitytoholddiscussionswiththeofferorsandtoevaluatetheproposalsand  | conductnegotiationsforthebestdeliveryschedules,warranties,quality/reliability,aftermarket !h supportintermsofpartsavailability,andprices.Inotherwords,granteescanawardtheir "T contractsonthebasisofthebestvalue,withallimportantfactorsconsidered.SomeStatelaws, #@ however,requiretheuseofsealedbiddingproceduresforbuses,inwhichcasegranteeswould $,  notbeabletousecompetitiveRFP's. ~%! Prequalificationofsystems/components󀄀TheMetropolitanTransitAuthority(MTA)ofHarris V' # County,Houston,TX,completedalarge243busprocurementwhichusedatwostepsealedbid B(!$ process.Thisentailedaprequalificationprocedure"RequestforApprovedEquals"formajor .)"% systemsandcomponents.InStepone,MTAissuedaperformancetypespecificationidentifying *#& allthesystemsorcomponentswhichhadtobesubmittedforapprovalpriortobids.Examples +$' wouldinclude:engines,transmissions,doorsystems,etc.MTAreviewedthesubmissionsin +%( termsoftheircharacteristics,specifications,etc.anddeterminedwhatsystemsandcomponents ,x&) theywouldaccept.MTAthenissuedanoticetoallbiddersidentifyingwhatcomponentswere -d'* acceptable,sothatallbiddersknewbeforehandwhatitemswereacceptabletobidon.Sealed .P(+ bidswerethenreceived,andwhenthelowbidderwasidentified,MTAperformedanauditfor f specificationcomplianceandcompliancewithBuyAmerica. C  13       R  6.3.1.2APTAStandardBusProcurementGuide+lines  *  TheAmericanPublicTransitAssociation(APTA)publishedtheStandardBusProcurement   Guidelines(SBPG)inJanuary1997as"amodelforsolicitationofoffersandcontractsforthe   supplyoftransitbuses."TheSBPGcontainssuggestedtermsandconditionsregardingthe  t solicitation,thecontractdocument,qualityassuranceandcontractorwarranties.Asecond  ` volumecontainingtechnicalspecificationsisunderdevelopment.Granteesarecautioned, L  however,thattheAPTA2 C  14      Guidelinesmaycontaintermsandconditionswhicharenotconsistent 8  withFTA'spoliciesassetforthinFTACircular4220.1E.Forexample,theprovisionsregarding $  advancepaymentsandwarrantiesintheAPTAGuidelinescannotbeadoptedwithoutprior v  FTAwaivers. b   6.3.2RailCars  :  Therearecertainrealitiesintherailcarindustrywhichimpactthemannerinwhichrailcarsare  procured.TransitAgenciesbuyingrailcarstendtodosoinfrequently,withanumberofyears  betweenprocurements.Thetechnologycanbeexpectedtochangeconsiderablyduringthe  interveningyearsbetweentheseprocurements.ThisfactmakesitcriticalthatAgenciesdo p considerableadvanceplanninginordertodeterminethecurrentstateoftheartbeforethey \ formulatetheirspecificationstoprocurerailcars. H BecausethereisvirtuallynostandardizationintheUnitedStatesintheareaoftrackgauges,   stationplatformheights,tunneldesigns,etc.,andbecausenewrailcarsmustbecompatiblewith r  existingcars,itisnotfeasibleforTransitAgenciestoconsolidateprocurementsofrailcarsand ^ usecommonbuysor"piggybacking."Whilejointpurchasingofrailcarsisdifficult,anagency J designingaspecificationshouldconsultwithotherswhohaveeitherrecentlypurchasedcarsor 6  whoareintheprocessofdoingso,andattempttoachievewhatevercommonalityofcomponents "! ispossible.Thiswillfacilitatebothjointpurchasesofpartsinsubsequentyearsandtheabilityto " secondsource.Anotheraspectofthisproblemwithnonstandardizedrailcarsisthatitresultsin " highonetimedesigncostsforeachAgency'sprocurement.Thisinturnprovidesanincentiveto #  buyasmanycarsasfeasibleundereachsolicitationsothatthedesigncostscanbeamortized $l! overagreaternumberofvehicles,withacorrespondingreductioninunitprices.Onarecent %X" MARTAprocurement,forexample,theunitpricewasreducedby$400,000byincreasingthe &D # quantityofcarstobeprocuredfrom30(theinitiallyplannednumber)to100.Thissavingswas '0!$ duetoamortizingthenonrecurringdesigncostsoveralargernumberofunits.Agenciesshould  ("% carefullyconsiderthemultiyearcontractingstrategiesdiscussedinSection2.2LongTerm f Planning. R  BestPractices  *  MARTA'sexperiencewitharecentmajorrailcarprocurementoffersanumberofhelpful   insights. C  15      ׀    Competitiveproposals 󀄀Theprocurementspecificationsweresubjectedtoapeerreviewby  ` otherTransitAgenciesandindependentconsultantspriortoreleaseintheRFP.Thisgave P  MARTAthebenefitofotherTransitAgencies'experienceswithmorerecentrailcar <  procurements.MARTAelectedtouseacompetitiveRequestforProposal(RFP)approach (  insteadofasealedbidmethod,whichhadbeentheirearlierpractice.Theywerepleasedwith z  thisdecisionbecauseitgavethemtheneededflexibilitytodiscussvarioustechnicalapproaches f  forcomplexitemswitheachoftheofferors,andtoachievethe"bestvalue,"giventhedifferent R  technicalapproachesofferedandthepricesproposedfortheseapproaches."Bestvalue" >  includedexpectedreliabilityandmaintainabilityfeatures,suchasonboarddiagnostics. * MARTA'sRFPincludedaProposalDataRequirementsList(PDRL)whichdefinedtheformat  andcontentoftherequiredproposalinformation,therebycreatingproposaluniformity,whichin  turnincreasedthequalityandefficiencyofproposalevaluation.Theproposalevaluationplan, t includingthescoringmechanism,wascarefullydevelopedandtestedusingseveralmock ` proposalsbeforetheRFPwasissued.Onceproposalswerereceived,theproposalevaluation L planandscoringmechanismwereadheredtometiculouslyinordertoavoidanyappearanceof 8 bias.Thiskindofrigidadherencetotheproposalevaluationplanisacriticalrequirementfor $ AgenciestoobserveiftheyusetheRFPmethodology.MARTA'suseofindividualsoutsidethe v Agencytoparticipateontheproposalevaluationcommitteeaddedanelementofobjectivityand b independencetotheprocess,aswellasenhancingtheoverallexperiencebaseoftheevaluation N team. :  MARTAkeptthetechnicalandpriceproposalevaluationsseparate,soasnottoinfluencethe " technicalevaluators.Theyalsoestablisheda"competitiverange"followinginitialproposal " evaluations,andhelddiscussionswiththosecompaniesinthecompetitiverange(thosethathada #  reasonablechanceforcontractaward).Offerorseliminatedfromthecompetitiverangewereto $p! benotifiedquicklyafterMARTA'sdecisionsothattheycouldreleasetheirteamstoother %\" opportunities. &H # ThetimerequiredtocompletetheprocurementprocesswaslongerusingtheRFPmethodthanit ( "% wouldhavebeenwithsealedbids(IFB).UsinganIFBwasestimatedtotakebetweenfourand  r) #& sixmonthsfromadvertisingtoaward,whereastheRFPmethodtookabout13monthsfrom f releaseoftheRFPtocontractaward.AgenciesplanningtousetheRFPmethodwillhaveto R allowformoretimethanifsealedbidsareused,butthefinalresultsmaybeworththeadded > procurementtime. *   Futurepurchasesofproprietaryparts 󀄀Effortsshouldbemadeintheoriginalacquisitionof   railcars(andbuses)toincludean"advanceagreement"withthesupplierconcerningthefuture   acquisitionofproprietaryparts.Thiscouldbedoneasapercentagediscountofthelistprice.  x Thebestapproachmightbetohaveaoneyearcontractfortheproprietaryparts,withaseriesof  d fouroneyearoptions(tobeextendedsubjecttoFTAapproval).Thiswouldenabletheagency, P  attheendofeachyear,todeterminewhetherthemarketplacehaschangedintermsofthe <  competitiveavailabilityofpartsformerlyonlyavailablefromthevehiclemanufacturer. (   6.3.3JointProcurementsofRollingStockand Piggybacking  f  *l1ddxdd x 1 (#(#l,xdd +  > >   REQUIREMENT  < FTACircular4220.1Eappliestoallthirdpartycontractactionsundertakenbygranteeswith " Federalfunds,includingactionstakenpursuanttothecontractsofotherentities,suchas(1)  theexerciseofoptionswhichhavebeenassignedtothegranteebyanotherentitywhich  awardedthecontractinitially,(2)theassignmentofcontractsthemselvestoagranteeby  anotherentity(underwhichthegranteewillspendFederalfunds),and(3)jointprocurements l withotherentities(underwhichthegranteewillspendFederalfunds). X Ofparticularsignificancearethefollowingprovisionsof4220.1E: 0 % X!X.}%' XX!'  7.e.IntergovernmentalProcurementAgreements. n + X! X+-  XX!-0  0""(1)0 ""Granteesareencouragedtoutilizeavailablestateandlocalintergovernmental F  agreementsforprocurementoruseofcommongoodsandservices.When 2! obtaininggoodsorservicesinthismanner,granteesmustensureallfederal " requirements,requiredclauses,andcertifications(includingBuyAmerica)are0@I"toachie0@I"""0@I"""  # properlyfollowedandincluded,whetherinthemasterintergovernmental #  contractorinthegrantee'spurchasedocument. C  16      $|! " "   b"X X# b""  br#  b"" bC    %h" # XX"  b#0  0""(2)0 ""Granteesarealsoencouragedtojointlyprocuregoodsandserviceswithother P  grantees.Whenobtaininggoodsorservicesinthismanner,granteesmust < ensureallfederalrequirements,requiredclauses,andcertificationsareproperly  ( followedandincludedintheresultingjointsolicitationandcontract z  documents. C  17      f  " " 0  0""(3)0 ""Granteesmayassigncontractualrightstopurchasegoodsandservicestoother >  granteesiftheoriginalcontractcontainsappropriateassignabilityprovisions. *  Granteeswhoobtainthesecontractualrights(commonlyknownas   'piggybacking')mayexercisethemafterfirstdeterminingthecontractprice   remainsfairandreasonable.B C  18        " " 0  8.a.FullandOpenCompetition.Allprocurementtransactionswillbeconductedina `  mannerprovidingfullandopencompetition.L "" 0  9.i.(1)EvaluationofOptions.Theoptionquantitiesorperiodscontainedinthe $ contractor'sbidoroffermustbeevaluatedinordertodeterminecontractaward.When v optionshavenotbeenevaluatedaspartoftheaward,theexerciseofsuchoptionswill b beconsideredasolesourceprocurement.  b"X XN""  :  # XX"  b# DISCUSSION  P  Recently,therehasbeenagrowingtrendamongsttransitsystemstobecomecreativeinthe ( acquisitionofrollingstock.Themostconstructiveofthesetechniquesinvolveadvance z planningandjointprocurementbyseveralsystems.FTAencouragesthistechnique.In f thesejointprocurements,theneedsofthevarioustransitsystemsaredefinedinthe R  solicitationandthemanufacturersareaskedtobiduponthetotalknownneedsofthe >! agenciesinvolved.Inothersituations,transitagencieswillidentifyanexistingcontractof *" anotheragencyand"piggyback"thatcontractbymeansofanassignmentofcontract # rightssuchasanassignmentofoptions.Additionally,thereistheoccasionwherean $ agencyawardsanIndefiniteDelivery/IndefiniteQuantity(ID/IQ)contractandallows  $  otheragenciestopurchasefromit.Regardlessoftheapproachused,itisimportantthat f granteesbeawareoftherequirementsofFTACircular4220.1Ewithrespectto R competition,evaluationofoptionsinmakingthebasiccontractaward,andtheexistenceof > asolesourceconditionwhenoptionalquantitiesareorderedwhichwerenotpricedand *  evaluatedaspartofthebasiccontractawardprocess.  ItisFTAspolicythattheestimated   quantitiesmustreflecttheimmediateorreasonablyforeseeableneedsofthepartiestothe   solicitationand,inthecaseofindefinitedelivery/indefinitequantitycontracts,aminimum   andmaximumquantitymustbestated.  p BestPractices D   Thestreamliningofbuspurchasescanoccurwhentwoormoresystemsjoinforcesusingthe   samespecification,solicitationprocess,termsandconditions,etc.leadingtothepurchaseof n  vehiclesfromthesamevendor.Thiscanbeaccomplishedusing(1)theservicesofonelead Z  governmentalagency,(2)aconsortium,or(3)"piggybacking."Whileallofthesemechanisms F  requireadvanceplanning,thefirsttwooccur preaward,whilethelatteroccurs post 2  award.Theadvantagesofusingaconsolidatedprocurementapproachincludethefollowing:  1 X!  X`1'` XX!',c  ,c"0    Smallertransitsystemslackthepersonnelandtheexpertisetoconductbusprocurements  expeditiously,especiallyinlightofFederalrequirements.Procurementleadtimesshould | begreatlyreducedthroughaconsolidatedprocurementprocedure.,c"݌h(#(# Ќ  ,c  ,c"0    Stafftimeatthevarioustransitsystemsandthevehiclemanufacturerswillbesavedby @ eliminatingtheredundancyinconductingmultiplebiddingprocessesforthesame , vehicles.,c݌~(#(# Ќ  ,c  ,c"0    Qualityimprovementscouldresultfromthebusesbeingmanufacturedinamore V standardizedfashion.,c3݌B(#(# Ќ  ,c  ,c"0    Savingsintransitsystems'operatingcostswillberealizedfromearlierdeliveryofnew ! buses,asoldervehicleswithhigheroperatingcostsareretiredearlier.,c7݌"(#(# Ќ  ,c  ,c`"0    Itistobehopedthatlargerquantitybuyingwouldresultinbetterpricesthananumberof #x  smallerindividualsolicitations.,c`{݌$d!(#(# Ќ  ,c  ,c"0    Whencommonvehiclesarepurchased,itmayresultinbetteroverallcoordination/learning &< # amongtransitsystemsinthattheywillbeusingthesamevehicles. , ,X X,c݌'(!$(#(# Ќ  # XX, , y# AdvancePlanningJointProcurements  f)#& + X!` X+B+ 4 <DL!X!B ConsolidatedProcurements 󀄀Variousgovernmentalagenciesmayactasafacilitatorforthe >+$( awardofmultiplecontracts.Thisapproachisparticularlybeneficialwhendealingwithalarge  .,%) numberofgrantees.Asanexample,theNewYorkStateDepartmentofTransportation f (NYSDOT)hasbeenusingtheservicesofitsOfficeofGeneralServices(OGS)formanyyears R topurchasevehiclesunderFTA'sSection5310Program.Here,sixdifferenttypesoflightduty > busesarepurchasedeveryyearforthe5310granteesusinganOGSbidprocessbasedupon *  specificationsdeveloped,inpart,bythegranteesfacilitatedbyNYSDOT.DuringtheOGSbid   process,NYSDOTestimatesthenumberofvehiclestobepurchasednotonlyforthe5310   grantees,butalsoforotherpublictransportationprovidersintheState.Forthe5310Program,   NewYorkStatecontractsdirectlywiththesuccessfulmanufacturer.Thebusesarebuiltand  t delivereddirectlytothe5310granteealongwiththetitle.Otherpublictransportationsystems  ` withinthestate(e.g.5311and5307grantees)mayaccessthesesamecontracts,contracting L  directlywiththesuccessfulmanufacturer.Byusingthiscontractingprocess,theefficiencies 8  describedpreviouslyaremaximized.  b"X X $  # XX"  b# Consortiums 󀄀Consortiumshavebeenusedwhereanumberofsystemscometogethertojointly b  issueasolicitationandimmediatelyawardindividualcontractswiththesuccessfulbidder. R  Giventhedifferenttypesofbusconfigurations(e.g.diesel/CNG;lowfloor/highfloor),itmaybe >  usefultoidentifyaleadagencyfordevelopingaspecificationforeachtypeofbusconfiguration. * Thespecificationsdevelopedwouldthenbereviewedbytheothermembersoftheprocuring  group,whowouldprovidetheircommentsonthespecificationtotheleadsystem.Thelead  systemmightmodifythespecificationbasedonthecommentsreceived,butifthechangeswere  notinthebestinterestoftheleadsystem,thechangeswouldbeincludedasoptionsinthebid t package.Forexample,iftheleadsystemwantedrollcurtaindestinationsigns,andothersystems ` wantedelectronicdestinationsigns,thespecificationwouldcallforrollcurtaindestinationsigns, L andelectronicdestinationsignswouldbeincludedundertheoptionstobepricedbybiddersas 8 partofthebidpackage.  b"X X $ # XX"  b#Thebidadvertisementwouldspecificallyidentifyhowmanybuseswerebeingpurchasedfor b whichtransitsystems.Differencesoroptionsinthespecificationforeachuniquesystemwould N beidentifiedandpricesobtainedfromthemanufacturersforthevariousoptionsoutsideofthe :  basespecification. &! Asanexample,NewYorkStatehasasuccessfulhistorywithaCNGconsortiuminvolvingFTA " grants.Sixmajorsystemsformedaconsortium,aidedbyNYSDOTasafacilitator,topurchase #  thefirstCNGbusesplacedintoserviceintheState.Asinglesolicitationwasused,afterwhich $p! eachtransitsystemawardeditsowncontractinaccordancewiththetermsofthesolicitationand %\" thewinningbid. C  19       &H #    ( "% Piggybacking  f A PiggybackingandTagons FTACircular4220.1EsetsforthFTApolicyandguidancerelated > toprocurementscommonlyreferredtoas piggybackingand tagons.Thesetermsare .  definedintheCircularasfollows:   0   Piggybackingisanassignmentofexistingcontractrightstopurchasesupplies,   equipment,orservices. C  20       x(#(# 0   (#(# 0  Tagonisdefinedastheadditionofwork(supplies,equipmentorservices)thatis P  beyondthescopeoftheoriginalcontractthatamountstoacardinalchangeasgenerally <  interpretedinFederalpracticebythevariousBoardsofContractAppeals. Inscope (  changesarenottagons.(See Tagonparagraphbelowforfurtherdiscussion). C  21      z (#(#   CircumstancesWhenPiggybackingIsPermissible! Thereareanumberofissuesthatshould R  beaddressedbyagranteebeforedecidingtopiggybackanotheragencyscontract.Granteesmust B  beabletoaffirmativelydeterminethatthecontracttobepiggybackedmeetsFederal . requirements.TheseFederalrequirementsincludecompliancewithFTACircular4220.1Eand  theDearColleagueLetterC9825.Granteesareadvisedtopayparticularattentiontothe  specificissuesidentifiedinthePiggybackingWorksheetparagraphbelow.     x PiggybackingWorksheet! APiggybackingWorksheetmaybefoundinAppendixB.16.The f issuesreferredtointheworksheetthatmustbeevaluatedpriortoadecisiontopiggybackanother V contractareasfollows: B  % X!Xj%',` XX!'  1.0  Haveyouobtainedacopyofthecontractandthesolicitationdocument,includingthe   specificationsandanyBuyAmericaPreAwardorPostDeliveryaudits? (#(#   2.0  Doesthecontractcontainanexpressassignabilityclausethatprovidesfortheassignment  x ofallorpartofthespecifieddeliverables?FTAspolicyisthattheoriginalsolicitation  d mustcontainanexpressnotificationtoallbiddersthatanassignmentwouldbepossible P  underthetermsofthecontract.Suchanotificationwouldputthebiddersonnoticethat <  theywouldlikelybecalledupontodeliverallofthedeliverableitems,boththebaseas (  wellastheoptionquantities.Theassignmentclausewouldthusbeanimportantfactorin z  theoriginalcompetitivebidding.Ifthecontractdoesnotcontainanexpressassignability f  clause,piggybackingisnotpermitted.R (#(#   3.0  DidtheContractorsubmitthe certificationsrequiredbyFederalregulationsin * accordancewiththerequirementsofthissolicitation?SeetheBPPMSection4.3.3.2.  FederallyRequiredSubmissionswithOffers.Piggybackingisnotpermittedwhenthe  ContractorhasfailedtosubmittherequiredFederalcertificationswithitsbid.(#(#   4.0  DoesthecontractcontaintheclausesrequiredbyFederalregulations?SeetheBPPM ` AppendixAFederallyRequiredandOtherModelContractClauses.Notethatnotall L clausesinAppendixAwillapplytoallcontracts!revieweachclauseforapplicabilityto 8 thespecificcontracttobepiggybacked.IfarequiredFederalclauseisnotincludedinthe $ contract,piggybackingisnotpermitted.v(#(#   5.0  Werethepiggybackingquantitiesincludedintheoriginalsolicitation;i.e.,weretheyin N theoriginalbidandweretheyevaluatedaspartofthecontractawarddecision?Ifnot,a :  Tagonisnotpermitted.&!(#(#   6.0  Ifthecontractisanindefinitequantitycontract,didtheoriginalsolicitationandresultant " contractcontainbothaminimumandamaximumquantity,whichrepresentthe #  reasonablyforeseeableneedsofthepartiestothesolicitation?SeeBPPMSection2.2.5.3 $p! !IndefinitequantityContracts,andtheparagraphbelowIndefiniteQuantityContracts, %\" UnlimitedOptionsandPiggybacking.&H #(#(#   7.0  Ifthepiggybackingactionrepresentstheexerciseofanoptionprovisioninthecontract,( "%(#(#   0  istheoptionstillvalid?Optionsthathaveexpiredmaynotbeexercised.r) #&(#(#   8.0  DoesyourStatelawallowfortheproceduresusedbytheoriginalcontractingagency; J+$( e.g.,negotiationsvs.sealedbids?6,%)(#(#   9.0  Wasacostorpriceanalysisperformedbytheoriginalprocuringagencydocumentingthe .'+ reasonablenessofthecontractprice?Includeacopyinyourfiles..(,(#(# Ї*X,` X*  10.0  DoesthecontracttermcomplywiththefiveyeartermlimitestablishedbyFTA4220.1E, f paragraph7.m?R(#(#   11.0  Wasthereaproperevaluationofthebidsorproposals?Includeacopyoftheanalysisin *  yourfiles. (#(#   12.0  Whattypesofchangeswillyourequiretobemadetothevehicles?Foranassignment,   only withinscope(noncardinal)changesareallowed(e.g.,seatingfabricsandcolors,  t paintschemes,signage,floorcoloring,etc.).ForfurtherguidanceseeBPPMSection  ` 9.2.1ContractScopeandCardinalChanges. iX XL (#(# # XX i # IndefiniteQuantityContracts,UnlimitedOptionsandPiggybacking !Seriousproblems $  arisewhenagenciesissuesolicitationswithunlimitedquantities,whichresultinopenended z  contractswhichotheragenciesthenpiggyback.Thispracticecreatesanumberofserious f  problems;therefore,unlimitedquantitiesarenotpermitted. R  "3"    32l3  0    Sincetherollingstockmanufacturersdonotknowwhatthepotentialordersmaybe * underthecontract,theycannotplantheiroperationsnorcantheyquotepriceswhich  reflectthequantitiesthatmaybeproduced.3U݌(#(# Ќ  "3"    32l3  0    Unspecifiedquantitiesresultinhigherunitpricesfortheprocuringagency3݌t(#(# Ќ  0  0(#(#becausemanufacturersmustusetheminimumquantityspecifiedtocalculatepricesfor ` material,engineering,etc.L(#(# "3"    32l3  0    Forthesereasons,openended,indefinitequantity/indefinitedeliverycontracts,or $ contractswithunlimitedoptionsarenotpermitted.Theyarenotonlydisruptivetobus v manufacturersandtheirsuppliers,whocannotplantheirproductionschedulesgiventhe b degreeofuncertaintythatthesecontractsentail,buttheyarealsocounterproductiveto N thegranteecommunity,whichwillinvariablepayhigherpricesforitemswhichwerenot :  reallycompetedina fullandopencompetition.3݌&!(#(# Ќ  E+ 4 <DL!XE 6.3.4PreAwardandPostDeliveryReviewsforBuyAmericaActCompliance  " *e1ddxdd x1(#(#e,dd +  $$p!$p $REQUIREMENT ':%" H'TheFTAMasterAgreement,MA(12),Section15(1)(3)definesthefollowingrequirements: iX X &T # 0 l # XX i #(3)PreAwardandPostDeliveryRequirements.TheRecipientagreestocomplywith V(!% therequirementsof49U.S.C.Section5323(m)andFTAregulations, PreAwardand B)"& PostDeliveryAuditsofRollingStockPurchases,49CFRPart663,andanyrevision .*#' thereto.+$(lZ#lZ#  iX X# XX i#TheFTADearColleagueLetterC9703,datedMarch18,1997providesfurtherguidanceto ,P&* granteesonhowtocomplywiththeBuyAmericarequirementsofthePreAwardandPost -<'+  .((, Deliveryreviewsforrollingstockprocurementsetforthin49.CFRPart663.TheFTA d AdministratorsDearColleagueLetterC9713,datedAugust5,1997,thatamendedtheMarch P 18,1997guidancebyremovingaxlesformtherequiredfinalassemblyactivities,was < subsequentlywithdrawnbytheDearColleagueLetter,C9718,datedSeptember25,1997,  ( whichrescindedtheAugust5,1997guidancebyredirectinggranteesandmanufacturersto z  followtheMarch18,1997guidanceonfinalassemblyrequirementsforbusprocurements. f   v X X$R  dH   $# XX  vV# DISCUSSION $ TheFTAAdministratorsDearColleagueLetterC9703datedMarch18,1997,outlines   thestepsthatagranteemusttakeinperformingpreawardandpostdeliveryreviewsof   rollingstockprocurementstoensuretheircompliancewithBuyAmericaActrequirements. n  ThisDearColleagueLettermaybefoundinAppendixA.2oftheBPPM.Thisletter Z  providesguidancetogranteesconcerningthesereviews.Itmustbestressedthatgrantees F  aretodocumenttheirreviewsandincludethisdocumentationintheircontractfilesas 2 evidencethattheyhaveperformedtherequiredreviews.Thefiledocumentationmust  describethedataandinformationreviewedbythegranteespersonnelandthebasisfor p  concludingthatthemanufacturerhascompliedwiththeBuyAmericaActrequirements, \ includingdomesticcontent,finalassemblylocationandfinalassemblyactivities.Also, H whereappropriate,copiesofcertificationsofcompliancewithorinapplicabilityofFederal 4 MotorSafetyStandardsshouldbeincludedinthefile.   FTAhasalsopublishedtwomanualsthatprovidedetailedguidancetogranteesconcerning  whichBuyAmericacertificationsanddocumentsareneededtosupporttheprocurement ~ processfromissuanceofthesolicitationtotitletransfer,aswellastheproceduresthat j thegranteemayfollowwhenconductingthepreawardandpostdeliveryreviews.There V are#XXX Xɽ# XXXXalsoexamplesofBuyAmericacalculationsandresponsestofrequentlyasked B questions. C  22        . 6.3.5Warranties l" *l"1#dddd 1(#(#l,xdd +  D$ D$ REQUIREMENT  $B!  FTACircular9030.1C,UrbanizedAreaFormulaProgram:GrantApplicationInstructions (&" statesthefollowing: ' #     V  V}    Ԍ   (!$    *#% *l)1[ddxdd x"1#(#(#l,xdd +  ff  ue      PreventiveMaintenance.Preventivemaintenance,anexpensethatbecameeligibleforFTA d capitalassistanceforoneyearwiththeDOT1998AppropriationsAct,wasestablishedas P eligibleforFTAcapitalassistanceunderTEA21,soFY1998fundsandsubsequentfiscal < yearappropriationsmaybeusedforpreventivemaintenance.Preventivemaintenancecostsare  ( definedasallmaintenancecosts8. C  23       z    Warranty.Awarrantythatisanindustrystandardisaneligiblecapitalcostaspartofthe R  acquisitionofabusoranycapitalasset.2 C  24       >      FTACircular5010.1C,GrantManagementGuidelinesstatesthefollowing:         #  #+#݌̌     Warrantystandards,whenpartofequipmentcontracts,shouldprovideforcorrectionof   defectiveorunacceptablematerialsorworkmanship.Theseshouldspecifycoverageand t  durationandmeetcurrentlyavailableindustrystandards. C  25       `  #XXX X# XXXX   L  DISCUSSION &   T  & A         '% %532       h  9%  <DLX9  hU&  "Warranty"meansapromiseoraffirmationgivenbyacontractortothepurchaser , regardingthenature,usefulness,orconditionofthesupplies,equipmentorperformanceof ~ servicesfurnishedunderthecontract.Theprincipalpurposesofawarrantyareto j delineatetherightsandobligationsofthecontractorandthepurchaserfordefectiveitemshU&&݌ V Ќ  ! X X!  andservices,andtofosterqualityperformance.Thebenefitstobederivedfroma B warrantymustbecommensuratewiththecostofthewarrantytothepurchaser." C  26       .   h  9%  <DLX9  h*  h*h*݌̌  ! X X!  h  9%  <DLX9  h*  Manytransitagenciespurchaseorprocureequipmentwithwarranties.Dependingupon  theitemandthecontractlanguage,amanufacturerwillthenrepairorreplaceanypieceof  equipmentthatfailsorisotherwisedefectiveduringthewarrantyperiod,thecommitment x torepairorreplacebeingthe"warranty."FTAsgranteesthatspecifyandpurchaseh*<+݌  d Ќ  ! X X!  warrantiesshouldappropriatelytailorthewarranties,includingbutnotlimitedto !P remedies,exclusions,limitationsanddurations. "< (XX (B( 4 <DLXBInmanyinstancesanitemiscustomarilywarrantedinthetrade,and,asaresultofthat z$  practice,thecostofanitemtothepurchaserwillbethesamewhetherornotawarrantyis f%! included.Inthoseinstances,itwouldbeinthepurchaser'sinteresttoincludesucha  R&" warranty.  C  27      Insomeinstances,industryassociationssuchastheAmericanPublicTransit f AssociationortheAmericanSocietyforTestingandMaterialshavedeveloped R specificationsincludingwarrantiesthatarerecognizedas IndustryStandard. > Granteesareencouragedtoexercisesoundbusinessdecisionsinstructuringbroaderand   morecomprehensivewarrantiesthanthatofferedasamatteroftradepracticeorasan   industrystandard(i.e.,an extendedwarranty)wheresuchwarrantiesareadvantageous   andcosteffective.Suchbusinessdecisionsmustbebaseduponmarketresearchand  t price/costanalysis.  `   Forgranteligibilitypurposes,FTAhadhistoricallytreatedthecustomarywarranty 8  offeredasamatteroftradepracticeasanormalwarrantyandextendedwarranties $  differently.Thisinturnaffectedtheircosteligibilitydifferently.  v   Priorto1998,normalwarrantieswereeligiblecapitalexpensesandthereforequalifiedfor N  80%Federalparticipationundercapitalassistancegrants.TheOfficeofInspector :  Generalsawthe extendedwarrantyasaformofoperatingexpense,impermissibleatthe & timeasacapitalexpense.Hence,extendedwarrantieswereclassifiedasmaintenance  (operating)expenseandassuchwereineligibleforfundingundercapitalassistancegrants  andwereonlyeligiblefor50%Federalparticipationunderoperatingassistancegrants.    р  WiththepassageofTEA21in1998,FTAreviseditspoliciestoreflecttheprovisionsofthe \ newstatute.FTAsnewpoliciesarestatedinFTACircular9030.1C,UrbanizedArea H FormulaProgram:GrantApplicationInstructions,datedOctober1,1998.2 C  28      ׀Underthenew 4 costeligibilityguidelines,maintenanceisnowaneligiblecapitalexpense,andthereisno   longeradistinctionbetweennormalwarrantiesandextendedwarranties,asbothare r  eligiblecosts.Thereare,however,procurementconsiderationsandthosearediscussed ^ below. J   Withrespecttotheprocurementofwarranties,priorto1998FTAgrantapplication "! guidanceidentifiedspecificwarrantytimeframesasbeing normalforeachofthemajor " componentsofvehicles.In1998,FTAchangedthistoallowthegranteeonthebasisofits " marketresearchtodeterminewhatiscustomaryor normal. #  NormalwarrantycostsareeligibleforreimbursementunderFTAgrantstotheextentthat %X" thegranteedeterminesthattheyarecustomaryoranindustrystandardandFTAsother &D # grantrequirementsaremetsuchasthatcontainedinFTAsC4220.1E. '0!$ (XX>.(B( 4 <DLXB  n)#& Similarly,extendedwarrantiesareeligiblecoststotheextentthat(1)thegrantee f determineswhatformofwarrantywouldbeadvantageousandcosteffectiveaspartofthe R granteesprocurementplanningeffort,and(2)extendedwarrantycostsareevaluated > separatelyanddeterminedtobe fairandreasonable.  *       'X X ' ' ' ' ' 'c 'ccccpc     'p?     XX '?@ re@Ԍ̌    XXX X XXX X XXX X XXX X XXX X XXX X XXX X XXX X   BestPractices      &  AnexampleofwarrantytermsisthelistdevelopedbyAPTAinitsStandardBusProcurement  t Guidelines!CommercialTermsandConditions(October10,1997). C  29      ׀mongtheissues  ` addressedinAPTAssuggestedwarrantyprovisionsare:' B L    "3"     (XX=(?%` ` <DLX?3wD2l3  0 4   CompleteBus!SuggestedTerms3wD3E݌$ 4(#4(# Ќ   +X` ` XD+B( 4 <DLXB"3"   (XX$F(?%` ` <DLX?3gF2l3  0 4   BodyandChassisStructure!SuggestedTerms3gFG݌b 4(#4(# Ќ   +X` ` XF+B( 4 <DLXB"3"   (XXH(?%` ` <DLX?3ZH2l3  0 4   PropulsionSystem!SuggestedTerms3ZH I݌: 4(#4(# Ќ   +X` ` XH+B( 4 <DLXB(XXJ("3"  X*, XX*3kJ2l3  0 4   MajorSubsystems!SuggestedTermsforBrakes,DestinationSigns,HVAC,Door  Systems,AirCompressorandDryer,WheelchairLiftandRampSystem,etc.3kJJ݌4(#4(# Ќ  B( 4 <DL, XB(, XXL("3 "  3pL2l3  0 4   ExceptionstoWarranty!Forexample,whenProcuringAgencyhasnotallowedan p  equalrequestedbytheContractor,andsupplierwontofferthewarrantyrequired \ bytheProcuringAgency;3pLL݌H4(#4(# Ќ  XB( 4 <DL, XB (lxx "3"    3N2l3  0 `   DetectionofDefects!SchedulefornotifyingContractorandContractors   response;3N O݌r ` (#` (# Ќ  X(, XX#N(?%4 4 <DL, X?"3"  3P2l3  0 `   FleetDefects!Contractorsdutytoimplementcorrectiveworkprogram;3PP݌J` (#` (# Ќ  "3"  3Q2l3  0 `   RepairProcedures!WhenrepairsmaybemadebyProcuringAgencyand "! reimbursedbyContractor;3QQ݌"` (#` (# Ќ  "3"  (, X44XLP(?%4 4 <DL, X?3R2l3  0 `   WarrantyafterRepairs!Repairpartstohavetheunexpiredwarrantyperiodofthe3RPS݌# ` (#` (# Ќ   (lx xfN ` originalpart. $l!  X j  %X" (, X44XS(% . %.>U# 'X XA# XX '6.4PROFESSIONALSERVICES &@ # #XXX X1%#0 XXXX  j *e1 12 dxdd x)1[(#(#e,Ydd +  $~("%~(" $ REQUIREMENT 4*(|"& H4Professionalservicesotherthanarchitecturalandengineeringservicesmaybeobtainedthrough b*#' sealedbids,competitiveproposals,or(asthecontractvaluewarrants)smallpurchaseor N+$( micropurchaseprocedures. :,%) ЇProcurementofArchitecturalandEngineeringServices(A&E).Granteesshallusecompetitive d proposalproceduresbasedontheBrooksActwhencontractingforA&Eservicesasdefinedin P 40U.S.C.Section541.OthertypesofservicesconsideredA&Eservicesincludeprogram < management,constructionmanagement,feasibilitystudies,preliminaryengineering,design,  ( surveying,mappingandserviceswhichrequireperformancebyaregisteredorlicensedarchitect z  orengineer....This"qualificationsbasedprocurementmethod"canonlybeusedforthe f  procurementofA&Eservices.Itcannotbeusedtoobtainothertypesofserviceseventhougha R  firmthatprovidesA&Eservicesisalsoavailabletoperformothertypesofservices.These >  requirementsapplyexcepttotheextentanystateadoptsorhasadoptedbystatuteaformal *  procedurefortheprocurementofarchitecturalandengineeringservices. (FTACircular4220.1E,   Section9.e.)-#!  dH   -  #XXX0 XU##'XXU#XX' XXXXDISCUSSION  &   AlthoughyoumayuseanyoftheapplicableselectionmethodsdescribedinChapter4and   permittedbystatelawforprofessionalservices,thecompetitiveproposalmethodisthe  mostcommonforprocuringprofessionalservices.SpecialFederalrequirementsapplyto p architecturalandengineeringservices.Eventhoughprofessionalservicessuchaslegal \ advice,investmentadvice,auditingorengineeringadvicemayhavebeenrenderedtoyour H agencyonalong-standingbasis,orwithoutawrittencontract,orbyformalapprovalatthe 4 highestlevel,suchpracticesdonotexemptthoseservicesfromtherequirementsforfree   andopencompetition,maximumfiveyearterms,andwrittenselectionprocedures. r  Purpose J  Youhavearequirementtocontractforalaboratorytoprovidetestingforyouragency'sdrugand " alcoholtestingprogram.Youcannotaffordtotakeachanceongettingacontractorwhohas  littleexperience,apoorhistoryofqualitycontrol,andanunreliableperformancehistoryinterms  ofchainofcustody.Ifyouhavetobidthiscontract,withlowpricebeingthedecidingelement,   thatisapttobewhatyouget.Unfortunately,inafewjurisdictions,thatiswhatyoumaybefaced !l with.However,inmostjurisdictions,thestatelegislatureshavewiselyenactedaprocurement "X policythatexemptsprofessionalandpersonalservicecontractsfromthestrictrequirementsof #D thecompetitiveprocurementlaws.Inthosestates,competitivesealedproposalstatutes, $0  mini-"BrooksAct"statutesforarchitect/engineeringandrelatedservices,orexemptionsfrom %! competitiverequirementsaltogether(oracombinationofalloftheabove)havebeenenacted. n& " Thecriticalpointisthatyourstate,eitherlegislativelyorthroughstatutoryinterpretationsbythe Z' # stateattorneygeneralorthecourts,willallowyousomeflexibilityinbuyingprofessional F(!$ servicesbecauseitdoesnotmakesense"tobuytheservicesofbrainsurgeonthroughalow 2)"% bidderprocurementprocess." *#& ЀItisimportanttodistinguishbetweentwotypesofprofessionalservices: +%(   ,|&) Ѐ f -, X, X-"3 "    3g2l3  0 4   StatutoryProfessionalServices-Theseareservicesthatareclearlyspelledoutina R statuteandprocurementprocessisdefinedforobtainingtheseservices.Thesearethe > mini-"BrooksAct"statutesandincludearchitecturalandengineeringservices.The *  statutemayalsoincludesomerelatedservicesorotherservicesthelegislaturehas   determinedshouldbeboughtinamulti-stepprocurementprocess.3g7h݌ 4(#4(# Ќ  InTexas,forinstance,theTexasProfessionalServicesActdefines"professionalservices"as  t serviceswithinthescopeofthepracticeofaccounting,architecture,landsurveying,medicine,  ` optometryorprofessionalengineering,orareprovidedinconnectionwiththeprofessional L  employmentorpracticeofapersonwhoislicensedasacertifiedpublicaccountant,anarchitect, 8  alandsurveyor,aphysician(includingasurgeon),anoptometristoraprofessionalengineer. C  30      ׀ $  Texashassaid,astothesecontractsorservices,thatcompetitivebiddingshallnotbeusedand v  thattheselectionandawardshallbemadeonthebasisof"demonstratedcompetenceand b  qualificationstoperformtheservice"andforafairandreasonableprice.2 C  31      ׀Forarchitecturalor N  engineeringservices,Texasmandatesa"BrooksAct"process C  32      ׀andconcludesthisActwiththe :  publicpolicystatementthatcontractsenteredintoinviolationoftheseprovisionsarevoid.( C  33      ׀ & Inalllikelihood,yourstatewillhaveadoptedapublicpolicyontheprocurementofstatutorily  definedprofessionalservicesthatmaybesimilartotheTexasstatuteandyoushouldbevery  knowledgeableofthatstatute.  "3 "    3q2l3  0 4   OtherProfessionalServices-Moststatesofferyouotherwaystoavoidstrict \ compliancewithcompetitivebiddinglaws(and,insomestates,competitiveproposal H lawsaswell)byexemptingtheprocurementofprofessionalorpersonalservicesfrom 4 followingcompetitiverequirements.Thus,itisimportanttoknowwhatisconsidered   aprofessionalserviceforthepurposesofthisexemptionunderyourstate'slaw.This r  mayvaryfromstatetostate.Theserviceusuallywillinvolvelaborandskillsthatare ^ predominatelymentalorintellectualratherthanphysicalormanualandtheproviders J oftheservicearemembersofdisciplinesrequiringspecialknowledgeorthe 6  attainmentofahighleveloflearning,skillandintelligence.3qq݌"!4(#4(# Ќ  # 'X X;]# XX 'Theexemptionsaredesignedtopermittheservicesofthemostqualified,competentand " experiencedindividualstobeobtainedandarecognitionthattheseservicescanseldombe #  measuredwithobjectivecriteria.Intheabsenceofastatutorydefinition,theseservicesmay $l! includesuchprofessionsasattorneys,constructionmanagementconsultants,insurancebrokers,  %X" physicians,auctioneers,medicallaboratorytesting,theologians,etc.Youmustconsultyourstate f lawontheseissues--unlikethestatutoryprofessionalservicesdiscussedabove,moststatesdo R notprohibityoufromusingacompetitiveprocesstoobtaintheservicesoftheseother > "professionals,"theyjustprovideanexemptionifyouchoosetouseit. *   BestPractices    A&EServices-Fortheprocurementofarchitecturalandengineeringservices,theFTAandmost  t statelawsmandateaqualifications-basedprocurementprocess.  ` OtherProfessionalServices-FortheprocurementofprofessionalservicesotherthanA&E 8  services,yougenerallyhaveagreatdealofflexibilityinhowyouobtainthoseservices.Insome $  cases,youmaybeabletoadequatelyandobjectivelydefinetheservicesrequiredandobtain v  thoseservicesthroughacompetitivebiddingprocessonthebasisoflowpricedbids.Inother b  cases,eitherbecauseofaninabilitytoadequatelyand/orobjectivelydefineyourrequirementor N  becauseofalimitationofyourstate'slaw,thecompetitivebiddingmethodofprocurementmay :  notbepossibletobeused.Inthatcase,acompetitiveproposalprocessmaybethebestmethod & tousewheremoresubjectiverequirementscanbeevaluatedandweighedwiththepriceoffered  toarriveataproperlybalancedawarddecision.Dependinguponthestatementofworkandthe  estimateddollarvalueoftheprocurement,youmaybeabletoeffectivelyandefficientlyusethe  micro-purchasemethodofprocurement(detailedinSection4.1)orthesmallpurchasemethodof p procurement.Asthestewardsofpublicfunds,itisalwaysimportanttorememberthatyouare \ spendingtaxdollarsandtoproperlyweightheservicesyouareobtainingagainstwhatyouare H payingforthoseservices. 4 Finally,itispossiblethattheprofessionalservicesyoudesiremaybeobtainedfromonlyone r  sourceand,thus,youwillselectyourprofessionalserviceprovideronthebasisofasolesource ^ (noncompetitive)methodofprocurement.Inthiscase,youmustcomplywiththeprovisionsof J Section9.eofFTACircular4220.1Easwellasyourstatelaw.Again,eventhoughyouare 6  negotiatingwithonlyonesourcefortheseservices,yourgoalshouldbetoobtainapricethatis "! fairandreasonable. "  6.5ARCHITECTENGINEERSERVICES #  *l:1;dYdd Y1 12 (#(#l,xdd +  %X"%X REQUIREMENT# 'X X+v# XX '  "&#  # 'X XR# ??$= 'FTACircular4220.1Estates: '  thepurposeofestablishingindirectcostratesifsuchratesarenotcurrentlyunderdispute.  *   #XXX0 Xӛ# XXXXThisrequirementtoacceptundisputedauditsconductedbyothergovernmentalagencies   originatesin49U.S.C.5325(b).Itshouldalsobenotedthatthislanguagehasbeen   interpretedbyFTAsChiefCounselsOfficeasprecludinggranteesfromimposing(requiring)   ceilings(or caps)onoverheadratesincontractsforarchitectengineerservices. C  37      #XXX X礖#0 XXXX x   #0 8X0 X##'80 #0 8'  0 XX80  d   DISCUSSION l  #XXX0 X]# XXXX?+ 4 <DL!X?SelectionofContractor󀄀FTACircular4220.1ErequirestheprocurementofAEservices D inaccordancewiththe"qualificationsbasedprocurementmethods"oftheBrooksAct. 0 The A&EservicesthatmustbeprocuredaccordingtotheBrooksActproceduresare  definedintwostatutes:40U.S.C.1102and49U.S.C.5325(b).Bothofthesestatutes n mustbetakenintoconsiderationwhendecidingwhatconstitutes A&Eservices. Z 1 l<` Theeasiestwaytoconceptualizetherequirementsofthesetwostatutesistofirstapplythe 2 definitionin49U.S.C.5325(b)anddetermineiftheservicesare programmanagement,  constructionmanagement,feasibilitystudies,preliminaryengineering,design,   architectural,engineering,surveying,mapping,andrelatedservices.Iftheservicesfall  intooneofthesecategories,theyareservicesthatmustbeprocuredpursuanttotheBrooks | Act.i X X      iX     XX    C  38      ׀Iftheservicesdonotfallintooneofthesecategories,thenthethreeparttestfrom h 40USC1102mustbeapplied.Thethreeparttestfromthatstatutestates:  T   ",  Theterm architecturalandengineeringservicesmeans f    X  ?(4 4 <DL!X!?4  4݌ R Ќ     > X?( <DL!44X!?  (A)  professionalservicesofanarchitecturalorengineeringnature,asdefinedby > Statelaw,ifapplicable,whicharerequiredtobeperformedorapprovedbya *  personlicensed,registered,orcertifiedtoprovidesuchservicesasdescribedin   thisparagraph;݌   Ќ    E+  <DL!  X!E        E( <DL!  X!E  (B)  professionalservicesofanarchitecturalorengineeringnatureperformedby  p contractthatareassociatedwithresearch,planning,development,design,  \ construction,alteration,orrepairofrealproperty;and ݌ H  Ќ    E+ <DL!  X!E 4  E( <DL!  X!E(C)  otherprofessionalservicesofanarchitecturalorengineeringnature,or   incidentalservices,whichmembersofthearchitecturalandengineering r  professions(andindividualsintheiremploy)maylogicallyorjustifiably ^  perform,includingstudies,investigations,surveyingandmapping,tests, J  evaluations,consultations,comprehensiveplanning,programmanagement, 6  conceptualdesigns,plansandspecifications,valueengineering,construction " phaseservices,soilsengineering,drawingreviews,preparationofoperation  andmaintenancemanuals,andotherrelatedservices.   > XE+4 44 <DL!  X!E XE+ 4 <DL!444X!EThisistheportionofA&Eservicesthatreliesonindicatorssuchaslicensingandwhether l A&Efirmsnormallydothespecificsortoftaskunderconsideration.Ifthefunctionfits X withinthisdefinitionofA&Eservices,BrooksActproceduresapply.  D  &          C0& A   epe     'm  TheBrooksAct(40USC1102)definesthecompetitiveprocedurestobeusedinthe / selectionofAEfirms,andtheseprocedureswillapplytogranteeprocurementsofAE  servicesunlessthegrantee'sStatehasadoptedformalprocurementproceduresforAE  services,inwhichcasetheStateprocedureswillgovern.Aqualificationsbasedselection  processmustbefollowedforallAEprocurementsregardlessofdollarvalue. y TheBrooksActrequiresaqualificationsbasedprocurementmethodfortheselectionofAE !Q firms.Priceisexcludedasanevaluationfactor,andnegotiationsareconductedwiththe "= mostqualifiedfirmonly.Ifanagreementcannotbereachedonpricewiththemost #)  qualifiedfirm,negotiationsareformallyterminatedwiththatfirm,therebyrejectingthat {$! firmsproposal,andthegranteecannotreturntothisfirmatalaterdatetoresume g%" negotiations.Negotiationsarethenconductedwiththenextmostqualifiedfirm.This O&# processcontinuesuntilanegotiatedagreementisreachedwhichthegranteeconsiderstobe ;' $ fairandreasonable. '(!%  &          (Z")"& A  #epe     ')  h?(  <DL!X!?  h   hB݌  )F#' Ќ  ' X! X!'  NegotiatingIndirectCostsi X X      iepe     XX    C  39       f h?(  <DL!X!?  h  hi݌̌' X! X!'  -, X X!-0  A)04(#(#Granteesmust(asageneralrule)acceptundisputedauditsthathavebeen > conductedbyanyFederalorStateagencyoftheconsultantsindirectcostrateif *  theauditreporthasbeendevelopedinaccordancewiththecostprinciples   containedintheFARPart31.However,iftheauditisconductedbyanother   Stateagency,andthegranteecanfullydocumentandjustifytoFTAwhythe   otherStateagencysauditshouldnotbeaccepted,thenFTAmaypermitthe  t granteetoconductitsownaudit. `4(#4(# 0  B)04(#(#Undisputedauditedratesmustbeusedforthepurposeofcontractestimation, 8  negotiation,administration,reportingandcontractpayment.Thisrequirement $  appliestotheundisputedauditedratesofA&Esubcontractorsthatare v  performingundercostreimbursementsubcontractsaswellasprime b  contractors.N 4(#4(# hH(  <DL!, X H  B(` ` <DL! X!Bht  ht݌̌0, X ` ` X!0  0  C)04(#(#Ifthereismorethanoneaudit,thegranteemayusewhicheveraudititwishes. & However,asapracticalmatter,theauditsshouldhavevirtuallyidenticalresults  iftheyareconductedinaccordancewithFARPart31.Also,iftheaudits  resultedindifferentfindings,itislikelythatsomeonewouldbedisputingoneor  moreoftheauditfindings.p4(#4(# hH(  <DL!, X H  B(` ` <DL! X!Bh|  h|!݌̌0, X ` ` X!0  3XX4X, X 30  D)04(#(#IfaconsultanthasnotbeenauditedbyanyFederalorStategovernmentagency, H thegranteeorStategovernmentagencyshouldconductanauditandbecomethe 4 cognizantagency.However,inthecaseofaconsultantcontractinvolvingavery   smalldollaramount,thegranteeshouldbeabletorelyonitsowncostandprice r  analysisinordertonegotiatethecontractprice.^4(#4(# hE(  <DL!XX4XE  B(` ` <DL! X!Bh     4    <   ho݌  J Ќ  -XX4X` ` X!-   5(8x ! !";"  ;0  2  E  )3  04(#(#  Manyconsultantfirmshavemultipleindirectcostratessuchasanationalor R corporatewiderate,aregionalorStaterate,andabusinesssegmentrate.Ifa > consultantproposesaparticularratesuchasaregionalrateoraratefora *  particularservice(e.g.,designservicesorconstructionmanagement),thatrate   musthavebeenauditedbyacognizantFederalorStategovernmentalagency   beforethegranteewouldberequiredtoacceptit.Ifanothergovernmental   agencysauditedrateisnotapplicabletothecontractinquestion,thegrantee  t mayperformitsownauditapplicabletotheunauditedrate.Forexample,ifthe  ` consultanthasanauditedratefordesignservicesbutnotforconstruction L  managementservices,thegranteedoesnothavetoaccepttherateproposedfor 8  constructionmanagementservices.;݌$ 4(#4(# Ќ  hE(  <DL!XX4XE  B(` ` <DL! X!Bh  hj݌̌-XX4X` ` X!-  ";"  ;0  2  F  )3  04(#(#  GranteesmaynotrequireorimposeacaporceilingonanA&Econsultants b  overheadrateseveniftheconsultantagreestosuchacapbycontract.Thekey N  wordsherearerequireorimpose.Initsfinalrule,Section172.7(b)!Auditsfor :  IndirectCostRate,FHWAmadethefollowingconcessioninresponsetoa & WisconsinDOTexpressedconcernthataStatemaynotbeabletoacceptalower  overheadratefreelyofferedbyaconsultantfirm:;݌4(#4(# Ќ  hE(  <DL!XX4XE  B(` ` <DL! X!Bh  h݌̌-XX4X` ` X!-  hE(  <DL!XX4XE  ?% <DL! X!?h  TheFHWAagreestherearemanyreasonswhyanoverheadrateforafirm p maybeunusuallyhighforashortperiodoftime.Insuchcases,afirmmay X believethatitwouldbeinitsbestinteresttoofferalowerrate.TheFHWA @ agreesthataconsultantshouldbefreetoofferaloweroverheadratethanthe ( onedeterminedbyacognizantFederalorStategovernmentagency,andthat v thecontractingagencyshouldbefreetoacceptitprovidedsuchrateisoffered ^ voluntarilybytheconsultant.Undernocircumstances,however,shalla F contractingagencyrequirealoweringoftheoverheadrate.h݌ . Ќ  *XX4X  X!*   0  G)04(#(#Granteesmaynotnegotiateanoverheadratethatisfixedfortheentirecontract, ! orforanyparticularfiscalyear,andnotsubjecttoadjustmentbasedonanaudit ! ofactualcostsincurred.Granteesmay,however,useprovisionalbillingrates "t whereabillingrateisestablishedforaparticularcontractperiodandissubject #`  toadjustmentbasedonanauditofactualcostsincurredforthatperiod.$L!4(#4(# hE(  <DL!XX4XE  -XX4X X!-hS  hS݌̌0XX4XXX4X0    H)0 4 IfthecognizantFederalorStateagencyforaconsultantisbehindschedulein &$ # finalizingauditsandthelatestacceptedauditofindirectcostrateslagsbythree v'!$ orfouryears,thegranteemayuseanotheragencysauditifitwasconductedin b(!% accordancewiththeFARanditsfindingswereundisputed.Ifanaudithasbeen N)"& performedbyaprivatefirminaccordancewithFARPart31andisundisputed, :*#' thatauditcouldalsobeused.Iftherearenoauditsavailableunderthese &+$( assumedparameterswherethecognizantagencyisthreeorfouryearsbehind, ,%) thegranteemayconductitsownauditinaccordancewithFARprinciplesto ,&* determinetheactualoverheadrates.Otherwise,thelastauditperformedbythe -'+  cognizantFederalorStateagencywouldbeused..p(,4(#4(# hE(  <DL!XX4XE  . X! X!.-XX4X X!-hE  dhE݌̌0XX4XXX4X0  ! ! (885"3"  d  32  I  )3  0 4   Granteesmaynotuseanegotiatedoverheadrateprocedureinlieuofusingthe R actualundisputedandacceptedauditbyacognizantFederalorState > governmentalagency.Thereasonisthatpricenegotiationsontheindirectcost *  rateoranycomponentthereofcanbeviewedasanadministrativeordefacto   ceilingprohibitedby49U.S.C.5325(b).Nevertheless,theStatehastheright   andobligationtonegotiateafairandreasonabletotalpriceforthecontract.   Anycomponentoftheprice,excepttheindirectcostrate,maybenegotiated.3[݌ t4(#4(# Ќ  hE(  <DL!XX4XE  . X! X!.-XX4X X!-h  hO݌̌0XX4XXX4X0  ! ! J( x80  J)04(#(#FTAhaselectedtofollowtheprovisionsofFHWAinitsimplementationof L  TEA21contractingrequirementsforarchitectengineerservices.FTAisnot 8  boundbytheFHWArule,however,andmaypermitexceptionsincompelling $  andunusualcircumstances.v 4(#4(#  1 X!XX4X"1c      &  c  cS av#Ԍ̌  c    c  BestPracticesc avԌ N  Ќ    'bGThebasicapproachusedtoselectAEcontractorsusingBrooksActproceduresmakesuseof & StatementsofQualifications.Thisbasicapproachisoutlinedbelow.    ` 2 'X X ' 'c 'ccccpc    8`& ( B  Xw;Xp#XX;XXw# XXXXB avFԌ̌   XXX X XXX X XXX X XXX X XXX X XXX X XXX X XXX X 2    ~ 2 'X X ' ' ' ' ' 'c 'ccccpc    8~T  #pp#Xw;Xp#XX;XXw# XXXXStatementsofQualificationsProcessT avԌ  Ќ   XXX X XXX X XXX X XXX X XXX X XXX X XXX X XXX X 2  '(s ConsultantResourceFile 󀄀Granteesmaywishtomaintainaconsultantresourcefilewiththe & namesofAEfirmsandtheirrespectivedisciplines,personnelresources,corporateexperience,  etc.ThisfilewouldprovideaninitialmailinglistforissuanceofarequestforContractSpecific  StatementsofQualifications.Theinitiallistofpotentialofferorsthatagranteemightmaintain  wouldbesupplementedbyapublicannouncementoftheproject,callingforinterestedAEfirms t torespondtoaquestionnairefromthegranteeidentifyingthefirmsbasicexperienceand ` personnelresources.ForanexampleofaquestionnaireusedbytheFederalGovernmentto L identifypotentialAEfirmswhowouldthenbesolicitedtosubmittheircontractspecific  8 qualifications,seetheFederalStandardForm330(SF330),ArchitectEngineerQualifications.i X X      iԌ     XX     C  40       !$ TheSF330,Part2,istheFederalequivalentofaconsultantresourcefile.Thisquestionnaire v" willprovidethefollowingtypesofinformationabouteachofthefirmsbranchoffices: b#  | B( ` <DL! X!B N$   n#########(8xJ"#" | ,K.4 <DL! ` X!K  1 X!4X!<1E+ 4 <DL! X!E#XXX XG# XXXX#2 3   4   #XXX XO# XXXXThelocationofthecompanysofficesandapointofcontactwithineachoffice.#n݌ :%! Ќ ,- ` X!4X!- |  | 1 X! ` X!1E+ 4 <DL! X!EӀ"#"  ,E.4 <DL!X!E  1 X!4X!1E+ 4 <DL! X!E#XXX X# XXXX#`2 3   4   #XXX X# XXXXThenumberofpersonnelbydiscipline(e.g.,architects,civilengineers,geologists, ' # surveyors,soilsengineers,etc.).#`݌ (!$ Ќ ,' X!4X!'    + X!X!+B( ` <DL! X!B )"% "#"  ,H.4 <DL! ` X!H  1 X!4X!~1E+ 4 <DL! X!E#XXX X# XXXX#2 3   4   #XXX X# XXXXSummaryofprofessionalservicesfeesreceivedforeachofthelastfiveyears.#݌ )#& Ќ ,* ` X!4X!*   . X! ` X!.B( ` <DL! X!B *$'   +l%( "#"  ,H.4 <DL! ` X!H  1 X!4X!1E+ 4 <DL! X!E#XXX X礈# XXXX#2 3   4   #XXX XC# XXXXProfileoffirmsprojectexperienceforlastfiveyears.Thequestionnairelistsover f  100differenttypesofprojectcodes(airports,tunnels,towers,gassystems,etc.)#b݌ ^ Ќ ,* ` X!4X!*    . X! ` X!.E+ 4 <DL! X!E"#"  ,E.4 <DL!X!E  1 X!4X!1E+ 4 <DL! X!E#XXX X# XXXX#2 3   4   #XXX X# XXXXSummaryofannualaverageprofessionalservicesrevenuesforlastthreeyears 6  showingtotalsforFederalandNonFederalwork.# ݌ .  Ќ ,' X!4X!'    + X!X!+B( ` <DL! X!B      ,H.4 <DL! ` X!H  ,A     O   NotethattheSF330,Part2,doesnotasktheAEfirmtoidentifyspecificpersonnelor   approachesthatitwouldproposetouseforthespecificprojectthatthegranteeis   advertising.Projectspecificinformationwouldcomelaterinastatementof Contract  x SpecificQualifications(SF330,Part1)discussedbelow.O  ݌ d  Ќ  - ` X!4X!-    . X! ` X! .E+ 4 <DL! X!E PublicAnnouncements AgenciesmustpublicizerequirementsforA&Eservicesinaccordance <  withStatelaw.Thesenoticescouldbeplacedinlocalnewspapersandinpublicationssuchas ,  PassengerTransport,EngineeringNewsRecord,DodgeReport,etc.Thesenoticesshould ~  describetheAgency'srequirementsandthecriteriatobeusedintheevaluationofAE j  qualificationstatements.ThepublicannouncementswouldadviseinterestedAEfirmstosubmit V  expressionsofinteresttotheprocurementoffice.Theseexpressionsofinterestmaytakethe B formofaquestionnaireregardingtheAEfirmsbasicresourcesandcorporateexperience,along . thelinesoftheSF330,Part2,usedbytheFederalGovernment.Fromtheseexpressionsof  interest,andthelistoffirmsidentifiedintheconsultantresourcefile,thegranteecanthensolicit  ProjectSpecificQualificationStatementsfromprospectiveAEfirmsthatthegranteejudgesto  havethebasiccapabilitiestoperformtheproject. x       ݌̌   PreproposalConference !Preproposalconferencesaregenerallyusedinmorecomplex P acquisitionsasameansofbriefingprospectiveofferorsastotheprojectrequirementsaswellas @ theagenciesselectioncriteria.Thisallowsthefirmstobetterunderstandtheagencysobjectives , andaskpertinentquestionsthatwillhelptheminpreparingtheirproposalsorprojectspecific ~ qualificationstatements(seebelow).Forfurtherguidanceonpreproposalconferences,see j Section4.3.2.4PreBidandPreProposalConferences. V        ݌̌   RequestforContract/ProjectSpecificQualificationStatements 󀄀InterestedAEfirmswould ." berequiredtosubmittheirProjectSpecificQualificationStatementstotheprocurementoffice. # Foranexampleofaquestionnaireusedtosolicitprojectspecificqualifications,seetheFederal  $  StandardForm330(SF330),Part1,ContractSpecificQualifications.i X X      i     XX     C  41      ׀TheSF330,Part1, $! goesbeyondthegeneralinformationrequestedintheSF330,Part2.Part1asksthefirmto %|" identify(1)theproposedprojectteam,showingallfirmsandtheirrolesintheproject,(2)an &h # organizationalchartoftheproposedteam,showingthenamesandrolesofallkeypersonneland 'T!$ thefirmtheyareassociatedwith,(3)resumesofallkeypersonnelbeingproposedfortheproject, (@"% and(4)relevantprojectexperienceofeachoftheproposedteamsfirms. ),#&     L  Ls݌  ~*$' Ќ   FromtheseQualificationStatements,thegranteesAEevaluationcommitteewouldscoreand R rankthefirmsonthebasisoftheirtechnicalqualifications.Itwouldbeadvisablenottohavea > predeterminedcutoffscoretodeterminethosefirmsthatarethemostqualified.Scoringshould *  beatoolfortheindividualcommitteemembertodeterminetherelativestrengthsand   weaknessesofthefirmsbeingevaluated.Also,itwouldbebestnottodeterminethemost   qualifiedfirmsbyaveragingtheindividualcommitteememberscores.Thenumericalscores   shouldhelpeachmemberrankthevariousfirmsinordertoallowtheprocurementofficerto  t determinea shortlistforconductingoralpresentationsanddiscussions.Onceeachcommittee  ` memberhasrankedthefirms(usingthepublishedevaluationcriteria,therelativeweightsand L  scoringsystem),thecommitteeshouldmeettodiscussthefindingsoftheindividualmembers 8  andreachaconsensusonarankingofthevariousfirms. $  Someagencieshavefoundaqualitative(adjective)ratingsystemtobemoreeffectivethana b  numericalscoringsystem.Forexample,firmsareevaluatedwithrespecttotheirqualifications N  statementsineachoftheevaluationcriteriaelementsasbeing excellent, satisfactory,or :   unsatisfactory.Afterratingeachfirmsqualificationsforeachcriterion,thecommittee & membersthengiveeachfirmanoverallevaluationrating.Theoverallratingsforthefirmsare  thencomparedandthefirmswiththemost excellentratingsareshortlisted.Whetheryouuse  anumericalorqualitative(adjective)ratingsystem,awrittennarrativebyeachevaluator  justifyingtheirdecisionshouldbeprepared. p  RequestforTechnicalProposals !Ifyoudeterminetorequiredetailedtechnicalproposalsafter H theshortlisthasbeendetermined,youwillneedtoestablishtheevaluationcriteriatobeusedin 8 selectingthesuccessfulcontractorandtoadvisethefirmsofthecriteriainyourRFP.Criteria $ willnormallyinvolvesuchmattersasthefollowing:d v  J( x8n######### #########(8xJd"#"  ,E.4 <DL!X!E    1 X!4X!v 1H.,4 <DL! X!H#&2  1  .3   4   PastPerformance!Thesolicitationshouldadviseofferorsofyourapproachin N evaluatingpastperformance,includingevaluatingofferorsthathavenorelevant :  performancehistory,andshouldalsoadviseofferorstoidentifypastrelevantcontracts &! foreffortssimilartoyourrequirement.Thesolicitationshouldalsoallowofferorsto " provideinformationonproblemsencounteredontheidentifiedcontractsand " correctivemeasurestaken.Thisevaluationshouldalsoconsiderthepastperformance #  ofkeypersonnelandsubcontractorsthatwillperformmajororcriticalaspectsofthe $p! work.Thisevaluationofpastperformance,asoneindicatorofanofferorsabilityto %\" performthecontractsuccessfully,isseparatefromtheresponsibilitydetermination &H # discussedinSection5.1.#& (݌ '4!$ Ќ ,* X!,4X!*   $   ?( <DL!X!?   :  . X!  X!'.E+ , <DL! X!E$,  # 'X X#  'd$,-݌ ( "% Ќ  * X!, X!*   # ' .# XX 'd"#"  ,E.4 <DL!X!E  1 X!4X!-1H.,4 <DL! X!H#/2  2  .3   4   TechnicalCriteria!Technicalfactorsregardingthespecificmethods,designs,and J)"& systemsproposedtobeusedbytheofferorwillbeconsideredandtheymustbe 6*#' tailoredtothespecificrequirementsofyoursolicitation.Thesefactorsmustrepresent "+$( thekeytechnicalareasofimportancethatyouintendtoconsiderinthesource ,%) selectiondecision.Technicalfactorsshouldbechosentosupportmeaningful ,&* comparisonanddiscriminationbetweencompetingproposals.Iftheagencyhas#/0݌  -'+ Ќ ,* X!,4X!*   + X!X!/+ X-* hX' X!* ,establishedminimumstandardsfordeterminingtechnicalacceptabilityofproposals, f thesestandardsmustbeclearlysetforthinthesolicitation. R    ,B(  <DL! hX'B# 'X X.# XX ' > "#"  ,H.4 <DL! X!H  1 hX'4X!41E+ 4 <DL! hX'E#@52  3  .3   4   KeyPersonnel!Anevaluationofkeypersonnelisoftensuggestedwhenthe *  procurementinvolvesservicesorrequirementswheremanagementoftheworkisa   criticalfactorindeterminingitssuccess.Qualificationsandexperienceofkey   personnelmaybeanimportantevaluationfactor.Someagencieshaverequiredoral   presentationsbykeypersonnelduringwhichtheagencyofficialsmayaskthesekey  t personnelrelevantquestionstodeterminethedepthoftheirknowledgeincritical  ` areas.#@5G6݌ L  Ќ ,* X!4X!*    8  "#"  ,H.4 <DL! X!H  1 hX'4X!61E+  <DL! hX'E#92  4  .3   4   SpecializedCriteria󀄀Granteesmayalsowanttoincludespecializedcriteriasuchas $  experienceincomplyingwiththeAmericanswithDisabilityActrequirementsand v  previousworkonlandmarkorhistoricstructures.#9:݌ b  Ќ ,- X! X!-    ,4 ,. hX' X!d:.E+ 4 <DL! hX'E ,< ,. hX'4X!<.E+ 4 <DL! hX'E DesignCompetition !ThequestionissometimesraisedastowhethertheA&Econtractorcan :  beselectedonthebasisofaconceptualdesigncompetitionratherthanqualificationsstatements. * TheBrooksActwouldpermitgranteestoselectanA&Efirmonthisbasis.TheFARdiscusses  thisapproachinSubpart36.6021!SelectionCriteria,paragraph(b).OfcoursetheFARisnot  bindingongranteesbuttheFederalparametersforusingdesigncompetitionsmayproveusefulto  grantees.Granteeswillhavetoconsiderthepaymentofproposalstipendstothosefirmsthatare t requestedtosubmitdesignproposals.i X X      i@mila     XX    C  42      ׀Theamountoftheproposalstipendwouldbeuniform ` forallcompetitors.Itwouldalmostassuredlyattractgreatercompetitiveinterestandshouldgive L thegranteetitletotheproposaldesignconceptssincetheproposalisbeingpaidforbythe 8 grantee.Againsttheadvantagesisthecosttothegranteeofpayingfortheproposals. $  ArchitectEngineerSelectionCommittee! WhenestablishingtheirAESelectionCommittees, b agencieswillneedtoappointmemberswhohavespecificexpertiseinthedisciplinesneededfor R performingthecontract.ItwouldalsobewelltohaveaDBEadvisor.Itmaybehelpfulto >  appointsomememberstothisCommitteewhoareorganizationallyoutsidetheengineeringoffice *! thatwillbemanagingtheAEcontract.Theproblemtobeavoidedwhenestablishingthis " SelectionCommitteeisoneof control;i.e.,caremustbetakenthatoneofficedoesnotcontrol # theselectionprocesstothepointwhereonlyaselectgroupof favoritecontractorsarewinning #  contractawards.ThiscommitteeperformstheinitialreviewofAEcontractorqualificationsand $t! determinestherankings. %`"  DevelopingtheShortList !Determinationoftheshortlistorcompetitiverangeofqualified '8!$ firmswithwhomoraldiscussions/presentationswilltakeplaceshouldbetheprerogativeofthe (("% procurementofficer.Theshortlistshouldbeanumberappropriateforadequatecompetitionand  z)#& shouldconsistofthosefirmsthathaveareasonablechanceofgettingtheaward.Thesefirms f wouldthenbeinvitedtomakepresentationstotheevaluationcommittee.Granteesshouldcheck R theirstatelawstoseeifaminimumnumberoffirmsisrequiredtobeshortlisted. >     I  I J݌̌   OralpresentationsbyAEfirms !HavingevaluatedthequalificationsoftheAEfirmswho   submitteddetailedqualificationstatements(ortechnicalproposals),anddevelopedtheshortlist   ofqualifiedfirms,theAESelectionCommitteewouldestablishascheduleforeachfirmto   makeoralpresentations,althoughpresentationsarenotalwaysnecessaryorappropriate.If  x discussionsarenecessary,theycanbewrittenorbyphoneorvideoconference.TheCommittee  d wouldadvisethefirmsinadvanceofanyquestionstheCommitteehadregardingthefirmandits P  capabilities.ThesequestionswouldbeaddressedbytheAEfirmattheoralpresentation.The <  CommitteemayalsowishtospecifythosekeypersonneloftheAEfirmthatshouldpresentin (  ordertoanswertheCommitteesquestions.Itisimportantthattheuserorganizationbe z  comfortablewiththeactualprojectmanagersbeingassignedtotheproject,andforthisreason f  thepresentationsshouldbemadebythefirmsproposedkeystaff,notbyasalesexecutive. R      dO  dOO݌̌   FinalrankingofAEfirms Attheconclusionoftheoralpresentations,eachoftheSelection * Committeememberswouldperformafinalscoringandrankingoftheshortlistedfirms.These  finalscoreswouldthenbediscussed,andtheprocurementofficerchairingthepanelshouldstrive  forconsensus!findingafirmthatisvaluedbymostmembersandacceptabletotherest.This  processshouldnotbeamechanical majorityrulesvote.Failuretoobtainaconsensuscan x resultininternalfightingiftheprojectgetsintodifficulty,andcanevencreatethesedifficulties. d Onceanagreementisreachedonthehighestqualifiedfirm,thatfirmisthenrequestedtosubmit P acostproposalfornegotiationofacontract. <     cS  cSS݌̌   ContractNegotiations TheBrooksActrequiresaqualificationsbasedprocurementmethod z fortheselectionofAEfirms.Priceisexcludedasanevaluationfactor,andnegotiationsare j conductedwiththemostqualifiedfirmonly.Ifanagreementcannotbereachedonpricewiththe V mostqualifiedfirm,negotiationsareformallyterminatedwiththatfirm.Oncenegotiationsare B  terminated,thatfirmisirrevocablyoutofcontentionforthecontractandcannotbebroughtback .! in.Negotiationsarethenconductedwiththenextmostqualifiedfirm.Thisprocesscontinues " untilanegotiatedagreementisreachedwhichthegranteeconsiderstobefairandreasonable. #     +W  +WRW݌̌   InhouseCostEstimate OneofthebiggestproblemsnotedinFTAProcurementSystems $x! Reviewsisthefailureofagenciestopreparedetailedinhousecostestimatespriortoreceiving %h" costproposals.ThisisespeciallycriticalinAEprocurementswheretherearenocompeting &T # proposalstoprovideacomparison.InordertomeaningfullyevaluateandnegotiatetheAE '@!$ firmscostproposal,itiscriticalthatthegranteestechnicalstaffprepareadetailedinhouse (,"% costestimate(workestimate)oftheworkrequiredbytheAEfirmbeforethesolicitationisissue. ~)#& Inordertobeusefulasatoolinevaluatingthecostproposal,thisinhouseestimateneedstobe j*$' preparedinthesamelevelofdetailthatthegranteeisrequiringtheAEfirmtosubmitits V+$( proposal.Inotherwords,thegranteestechnicalstaffpreparesitsinhouseestimateasifthe B,%) granteewerethecontractorproposingonthecontract.Itisalsoimportantthatgranteesrequire .-&* AEfirmstosubmittheircostproposalsinthesameformatinwhichtheinhouseestimatewas  .'+ prepared.GranteesshouldconsiderissuingtheirRequestforProposalwithasamplecost f proposalformatandalistofpositiondescriptionsforeachofthedirectlaborcategoriesusedby R granteesinhousecostestimatingteam.Thisshouldallowforaoneforonecomparisonofthe > costproposalandtheinhouseestimate,thusfacilitatingtheevaluationandnegotiationprocess. *  h?(  <DL!X!?  h^  TermsandConditions TheRFPshouldcontainalloftheagencysrequiredtermsand   conditions(clauses,etc.).Thiswillallowthecontractortoaddressthesetermsandconditionsin   itsproposal,whichcanthenbediscussedatnegotiations.TheAEcontractorshouldbeadvised  x beforeitsubmitsitsproposalwhatcontractclausesarenegotiableandwhatarenot.Thiswill  d saveboththecontractorandthegranteealotofneedlesseffortindiscussingnonnegotiable P  termsandconditions.Forexample,Federallyrequiredclauseswouldnotbesubjectto <  negotiationandcontractorsshouldbesoadvisedbeforetheyputtheirproposalstogether.Any (  exceptionstakenbythecontractortotermsandconditionsshouldbeincludedintheprice z  proposalonly.Thiswillavoidinfluencingthetechnicalevaluation,anditrecognizesthat f  contracttermsinvolveriskallocationandthereforecost.h^^݌ R  Ќ' X! X!'  h?(  <DL!X!?  hc  hcd݌̌' X! X!'  h?(  <DL!X!?  h{d  ControllingtheNegotiations Anexperiencedcontractspecialistwhocancontrolthemeeting * shouldleadthenegotiationteam.Resourcepersonnel(engineers,architects,lawyers,cost  analysts,etc.)areavaluableresourcetothecontractspecialistforadvice,butthesepersonnel  shouldnotbetheonesmakingbusinessdecisionsandcommittingtheagencyduringthe  negotiations.Caremustbetakenthatthecontractordoesnotcreateasituationwherethe x agencyscontractspecialistandresourcepersonnelbecomedividedintheirpositions.Whenthe d agencysteamneedstodiscussalternativesorpossibleconcessionsduringnegotiations,they P shoulddosoinprivatecaucusesandnotinthepresenceofthecontractor.Thereshouldbeone < spokespersonfortheagency"thecontractspecialist"whocontrolsthemeeting.h{dd݌ ( Ќ  ' X! X!'  h?(  <DL!X!?  hNi  hNii݌̌' X! X!'  h?(  <DL!X!?  hj  ContractType !Granteeswillneedtochoosethetypeofcontractthatismostappropriatefor f thescopeofworkanticipated.BPPMSection2.4.3containsadiscussionofcontracttypes, V includingfixedprice,costreimbursement,timeandmaterials,andlaborhourcontracts.This B  sectionshouldbereviewedforgeneralguidanceastothecircumstanceswheneachtypeof .! contractmaybeappropriate.hjmj݌ " Ќ' X! X!'  h?(  <DL!X!?  hl  hl/m݌̌' X! X!'  IndirectCostRates 󀄀TheFTAMasterAgreementrequiresgranteestoacceptundisputedaudits #  ofotherFederalorStategovernmentagenciesforpurposesofestablishingindirectcostratesthat $|! areusedforpricing,negotiation,reportingandcontractpayments.Seetheparagraphabove %h" entitled NegotiatingIndirectCostsintheDISCUSSIONsection. &T #       + hX'X!=+E+ 4 <DL! hX'EUo  Uoo݌̌   h?(  <DL!X!?  hHp  ProfitAnalysisFactors !Suggestedprofitanalysisfactorsinclude:hHpp݌ (,"% Ќ' X! X!'  h?(  <DL!X!?  hsq  hsqq݌̌' X! X!'   J( x8#########d& ,L=+ hX'X!o+ (lxxJ#XXX Xv#"3"  ,  -4` X  hX'-0 4 3s2l3  0` 4(#4(#  SkillandexpertiseoftheAEpersonnelrequiredforthework,3s.t݌n*$'` (#` (# Ќ  "3"  0 4 3u2l3  0` 4(#4(#  Contractcostriskbasedoncontracttypeandthedegreeofriskincompletingthe F,%) workwithinthenegotiatedprice,3u9u݌2-&*` (#` (#    .'+ "3"   XXXX34, X4` X 30 4 3qv2l3  0` 4(#4(#  Potentialliability(e.g.,thirdpartyliability)oftheAEfirmbasedonthenatureof f  theproject,3qvv݌R` (#` (# Ќ  hH(  <DL!4, XH  hx  E+  <DL! X!E#XXX X礞v# XXXXhxsx݌̌  34, X X!3  "3"  0 4 3}y2l3  0` 4(#4(#  Priorperformancerecordofthefirm,3}yy݌* ` (#` (# Ќ  hH(  <DL!4, XH  . X! X!x.hlz  E+  <DL! X!Ehlzz݌̌  34, X X!3  "3"  0 4 3{2l3  0` 4(#4(#  Degreeofcontractorinvestment,asitmaycontributetomoreefficientand   economicalcontractperformance.3{{݌ ` (#` (# Ќ  s ,shH(  <DL!4, XH  ,. X! X!{.B(` ` <DL! X!Bh3}  h3}~݌  t Ќ04, X` ` X!0  hH(  <DL!4, XH   ,} ,h~  ProfitonChangeOrders!ItiscommonpracticeintheconstructionindustryforAEfirmsto  ` requestincreasesintheircontractfees/profitbasedonthepercentageincreaseinthecostofthe L  constructioncontract.Granteesshouldavoidthispracticeeventhoughitiscommonplaceinthe 8  constructionindustry.AEcontractorsprofitsshouldbebasedontheirworkeffortandshould $  neverbenegotiatedonapredeterminedpercentagebasisofacostincreaseinthecontractwhose v  costtheAEfirmisaffectingbyitsdesigns.Granteesareprohibitedfromanytypeofcostplus b  percentofcostcontracting.(SeeBPPMSection2.4.3.5CostPlusPercentageofCost N  Contracts(CPPC).h~-݌ :  Ќ04, X X!0  hH(  <DL!4, XH  h  hd݌̌04, X X!0  hH(  <DL!4, XH  hۃ  AERoleinConstructionChangeOrders,ClaimsandLitigation !TheAEfirmcanprovide  assistancetotheagencyintheevaluationofchangestotheconstructioncontract,whetherthe  changesoriginatewiththeagencyorwiththeconstructioncontractor.Whenchangesare  suggestedbytheconstructioncontractor,theymustbeevaluated,beforetheyareadopted,asto t theirtotalsystemimpactontheproject,andtheAEisinthebestpositiontodothis.TheAE ` canalsoprepareacostestimateofthechangedworkthatthegranteecanusetoevaluatethe L constructioncontractorspriceproposalforthechange,andtheAEcanassistthegranteein 8 negotiationsasatechnicalresourceifthegranteesodesires.TheAEalsohasaroletoplayin $ theevaluationofclaimssubmittedbytheconstructioncontractor,althoughinthiscasetheAEs v participationissomewhatdefensive.Forexample,theAEmaybecalledintodefenditsdesigns b orspecifications,orthetimetheAEtooktoreviewandapprovetheconstructioncontractors N documentation,andinthiscasetheAEseffortsmaynotbereimbursableunderthetermsofthe :  AEscontractwiththeagency.Thesamewouldholdtrueforissuesthatgotolitigation"the &! AEshouldberequiredtodefenditsdesignsandspecificationswithoutadditionalchargetothe " agency.Granteeswoulddowelltomakethisasubjectforan advanceunderstandingintheir " AEcontracts,sothatwhenclaimsandlitigationoccur,thepartieswillunderstandtheir #  respectiveobligations.Iftheclaimsorlitigationarecausedbytheagencysactions,however, $p! andarenotduetotheAEsworkproductsoractions,thentheAEcanexpecttobereimbursed %\" bytheagencyforitseffortsindefendingtheclaimandassistingtheagencyinthelitigation.hۃ>݌ &H # Ќ  04, X X!0  hH(  <DL!4, XH  h  h݌̌04, X X!0  4 X!4, X}4E+ 4 <DL! X!E ABAModelProcurementCode(MPC) TheAmericanBarAssociation'sModelProcurement ( "% CodeSection5501,ArchitectEngineerandLandSurveyingServices , containsacomprehensive v)#& andveryworthwhilepresentationofprocurementproceduresusingStatementsofQualifications f*$' fortheawardofAEcontracts. TheMPCcoverstheentirespectrumofeventsleadingtoa R+$( contractaward,withdetailed recommendationsfortheprocuringAgencytofollow.  B,%)     .  .U݌̌    .'+ FederalProcedures 󀄀TheFederalGovernmentproceduresforprocuringArchitectEngineer f servicesmaybefoundinFAR36.6,ArchitectEngineerServices. V  AEContractProvisions  .        ݌̌   Designwithinfundinglimitations 󀄀YoumaywishtoincludeaclauserequiringtheAEfirmto   designtheprojectsothattheconstructioncostsdonotexceedyourbudget,anamountthatwould   bestatedintheAEcontractasa designtocostrequirement.Ifthepriceofferedbythelow  | bidderinyourconstructionIFBexceedsthestatedlimitintheAEcontract,theAEfirmshould  h beresponsibletoredesigntheprojectatnoincreaseinthepriceoftheAEcontract.Ifthehigher T  thananticipatedconstructioncostisduetoreasonsbeyondthecontroloftheAEfirm,suchas @  anunexpectedincreaseinthecostofcertainmaterials,thentheAEfirmshouldnotbeobligated ,  toredesigntheprojectatitsownexpense.Likewise,ifthegranteehasrequiredfeaturesinthe ~  facilitythatcontributetothebidsbeinginexcessofthebudget,thenachangeordertothese j  requirementsmaybeinorder,andthistoowouldbesomethingbeyondtheAEfirmsabilityto V  control,thusrelievingtheAEfromredesignresponsibility.Granteeswillneed,therefore,to B  examinetheelementsoftheconstructioncontractorsbidtoseewhythebidpriceexceedsthe .  designtocostamountthattheAEwasattemptingtoachieve.Anexampleofacontract  clauseusedbyonetransitagencyfollows:            DesignWithinFundingLimitationsi X X      inth     XX    C  43      ݌ x Ќ     ,E.4 <DL!X!E    S  dSٛ݌̌  ,* X!4X!*   , ,+ X!X!+B( <DL! X!BdA.  Thecontractorshallaccomplishthedesignservicesrequiredunderthiscontractsoas P topermittheawardfortheconstructionoftheproposedfacilityatapricethatdoes < notexceedtheestimatedconstructioncontractpriceassetforthinparagraph(C) ( below.Whenbidsorproposalsfortheconstructioncontractarereceivedthatexceed z theestimatedprice,theAgencyshallanalyzethereasonsfortheexcessiveprices f and,ifappropriate,theContractorshallperformsuchredesignandotherservicesas R arenecessarytopermitcontractawardwithinthefundinglimitation.These >  additionalservicesshallbeperformedatnoincreaseinthepriceofthiscontract. *! However,theContractorshallnotberequiredtoperformsuchadditionalservicesat " nocosttotheAgencyiftheunfavorablebids,orproposalsaretheresultof # conditionsbeyondtheitsreasonablecontrol. #    , ,. X!  X!.E+ 4 <DL! X!EӁdh?(  <DL!X!?   , ,. X! X!.B( <DL! X!Bh  dB.  TheContractorwillpromptlyadvisetheDirectorofPurchasingifitfindsthatthe %`" projectbeingdesignedwillexceedorislikelytoexceedthefundinglimitationsand &L # itisunabletodesignausablefacilitywithintheselimitations.Uponreceiptofsuch '8!$ informationtheDirectorofPurchasingwillreviewtheContractor'srevisedestimate ($"% ofconstructioncost.TheAgencymay,ifitdeterminesthattheestimatedh݌  v)#& Ќ  ' X!  X!'    constructioncostcontractpricesetforthinthiscontractissolowthatawardofa f constructioncontractnotinexcessofsuchestimateisimprobable,authorizea R changeinscopeormaterialsasrequiredtoreducetheestimatedconstructioncostto > anamountwithintheestimatedconstructioncontractpricesetforthinparagraph(C) *  below.     , ,+ X!X!Ģ+E+ 4 <DL! X!EӁ  , ,+ X!X!+B( <DL! X!BC.  Theestimatedconstructioncontractpricefortheprojectdescribedinthiscontractis   $_____________.  t   ,! ,. X!  X!Z.Ӂ Designerrorsordeficiencies 󀄀IftheAEfirm'sdesigns,drawingsorspecificationscontain L  errorsordeficiencies,theAEfirmshouldberequiredtocorrectthematnoincreaseinpriceto <  thegrantee.Whenerrorsarediscoveredduringconstruction,AEsaregenerallyliablefor (  correctionofthedrawingsattheirowncost,andforthedifferencebetweenwhatthe correct z  constructionwillcost(asachangeorderissuedtotheconstructioncontractor)andwhatitwould f  havecostintheoriginalcontracthadthedrawingsbeencorrect.Thisincludesanytearoutthat R  needstobedone,etc. >  StatelicensinglawsalsoresultinmanymultistateAEsthataresetupasshellcompaniesto  holdlicensesindifferentstates.Agenciesshouldobtainaperformanceguaranteefromtheparent  companyinthesesituations.        ׭݌̌   AEInsurance !AgenciesshouldrequireAEstohaveGeneralLiabilityaswellasErrorsand ` Omissionsinsurance.WhenAEsproposetobeselfinsured,agenciesmustlookcarefullyatthe P adequacyofthefirmsassetsbeforeacceptingthisselfinsuranceapproach.SeealsoBPPM < Section6.6!Insurance. ( # 'X X 5# ,Z XX ' ,6.6INSURANCE# 'X X#  f  XX '*eF1Hddxdd x1(#(#e,xdd +  > >   REQUIREMENT   < H49CFRPart19.31prescribesinsurancerequirementsforgranteeswhoareinstitutionsof "" highereducation,hospitals,andothernonprofitorganizations: # -  " tX X!-0 r Section19.31InsuranceCoverage.Recipientsshall,ataminimum,providethe $! equivalentinsurancecoverageforrealpropertyandequipmentacquiredwithFederal %l" fundsasprovidedtopropertyownedbytherecipient.Federallyownedpropertyneednot &X # beinsuredunlessrequiredbythetermsandconditionsoftheaward.'D!$r"r" TheMasterAgreement,FTAMA(12),Section20prescribesinsurancerequirementsforall )#& grantees: n*$' 0 r a.MinimumRequirements.Ataminimum,theRecipientagreestocomplywiththe F,%) insurancerequirementsnormallyimposedbyitsStateandlocalgovernments.2-&*r"r"  .'+ 0 r b.FloodHazards.Totheextentapplicable,theRecipientagreestocomplywiththe d # 'X X礁# XX 'floodinsurancepurchaserequirementsofsection102(a)oftheFloodDisasterProtection P Actof1973,42U.S.C.Section4012a(a),withrespecttoanyProjectactivityinvolving < constructionoracquisitionhavinganinsurablecostof$10,000ormore..$" (r"r" dH   .04X  " tX0 (lxx# 'X XC# XX ' DISCUSSION   H  TheMasterAgreementprescribesarequirementthatgranteesdeterminewhattheir   individualStatesrequireintermsofinsuranceforconstructionprojects,andthatgrantees r  ensurethattheirStateinsurancerequirements,ifany,arereflectedinthirdpartycontracts. ^  Thecustomaryapproachforinsuringagainstrisksassociatedwithworkunderthirdparty J  contractsistorequirecontractorstopurchaseandmaintaininsurancecoverageswhichthe 6  granteespecifieswithinthetermsandconditionsofthethirdpartycontract.Theseterms "  andconditionswouldspecifythetypeofinsurancerequired,suchasworkerscompensation,   builder'srisk,generalliability,railroadprotectiveinsurance,automobile,errorsand   omissions,etc.,aswellastheamountofthevariouscoveragesrequired.  C  44      ׀   Under49CFR19.31,institutionsofhighereducation,hospitals,andothernonprofit \ organizationsarerequiredtoinsurerealpropertyandequipment,whichhasbeen H acquiredwithFederalfunds,tothesamedegree,ifany,theyinsuretheirownpropertyand 4 equipment.ThisCFRrequirementpertainstopropertywhichhasbeenprocuredand   acceptedbythegrantee,andforwhichtitlehasvestedinthegrantee.Thistypeof r  insurancewouldbedesignedtoinsureagainstdamageorlosstothepropertyitself,andthe ^ granteewouldprocurethisinsurancedirectlyfromaninsurancecompanyorthroughan J insurancebroker,aspartofitsannualinsuranceprogramforthegrantee'spropertyand 6 operations. " BestPractices   & $ '     '  WrapUpPolicies' Ԍ !l Ќ       Constructionprojects󀄀Thetraditionalmethodofinsuringtheparticipantsonlargeconstruction #D projectshasbeenforeachparty(projectowner,contractorsandsubcontractors)topurchase $0  insuranceindependentlytoprotectthemselvesfromfinanciallosses.Incontrastwiththe %! traditionalmethod,projectownerscanelecttopurchaseawrapupinsurancepolicythatwill n& " coverallthepartiesinvolvedintheproject.Overthepastdecade,wrapupinsurancehas Z' # becomeincreasinglypopularbecauseofthepotentialforcostsavings.In1998,forexample, F(!$ wrapupinsurancecoveredabout300constructionprojectsnationwide. 2)"%           ݌̌     '$ $   +$' Granteesmaywanttoconsidersometypeofwrapupprogramfortheirlargerconstruction f projects(thoseover$10M).Theseprogramsarealsoknownasownercontrolledinsurance R programs(OCIP).Awrapuporownercontrolledinsuranceprogramisoneinwhichthe > TransitAgencyprocuresaninsuranceprogramcoveringallcontractorsandsubcontractorswho *  willbeworkingonalargeconstructionprojectorafamilyofrelatedconstructionprojects.   Typicalinsurancecoveragewouldprovidefor:workerscompensation,generalliability,and"all   riskscourseofconstruction"(sometimesreferredtoasbuilder'srisk).Thispolicyisusually   purchasedthroughtheservicesofaninsurancebroker,whomayhavebeenselectedthrougha  t competitiveRFP.Asconstructioncontractsareawardedoverthetermofthepolicyperiod,the  ` namesofthecontractorsandallsubcontractorsareaddedtothepolicyasnamedinsureds. L      .  .U݌̌    l` Thisapproachhasbeenusedwithexcellentresults.i X X      ithe     XX    C  45       Amongtheadvantagesnotedare: $  "3"  -, X4X-  3<2l3  0    TheAgencyknowsforsurethatitscontractors/subcontractorshaveadequateinsurance f  coverage.3<݌R (#(# Ќ    "3"    32l3  0    ForWorkersCompensationinsurancetherewillbepremiumdiscountsbecauseofthesize * ofthepolicy.Whentheinsuranceisboughtasone,coordinatedpolicy,ratherthan0@!2U.S.C.0@!(#(#  procuredpiecemealthroughtheindividualcontractorsandsubcontractors,therewillbe  premiumdiscounts.Thebiggerthepolicy,thebiggerthediscount.Otherpremium  savingplansmaybeavailablethroughawrapupprogram.Notethattheconstruction t contractorsareinformedintheInvitationForBid(IFB)provisionswhatinsurancethe ` Agencyisproviding,thuspermittingthecontractorstorequestcreditsfromtheir L insurancecompaniesforthatproject.Thecreditstotheirpremiumscanthenbepassed 8 alongtotheagencyintermsoflowerbidprices.3݌$(#(# Ќ      ?%  <DL, X?  ݌̌    (lxx"3"  ', X X'  3S2l3  0    Newerandsmallerconstructioncontractorsmayhaveadifficulttimegettinginsurance. b ThisisespeciallytrueforsmallcontractorsandsomeDisadvantagedBusinessEnterprises N (DBE's).AwrapupprogramcanenhancetheAgency'sDBE :  participation,aswellastheoverallcompetitiveenvironmentforitsconstructionprojects, &! byenablingmorecontractorstocompeteforthework.3S݌"(#(# Ќ  "3"    32l3  0    ?%  <DL, X?Incaseswherethereisalossanditisnotclearwhichconstructioncontractoror #  subcontractorisatfault,theinjuredpartydoesnothavetoprovewhichcompanycaused $p! theloss,onlythatalosshasoccurred,andsomeoneinthegroupwasresponsible.This %\" greatlyreducesthecostofsettlementofclaims,withobviousbenefitstotheinjured &H # parties.3L݌'4!$(#(# Ќ  "3"  ', X X'  32l3  0    Byhavingoneinsurancecompany,therewillbeoneinsurer'ssafetyengineerwith r) #& completeauthorityovertheentirejob,thusprovidingbettercoordinationofsafetyissues.B( 4 <DL, XB3*݌^*#'(#(# Ќ    J+$( GAOStudyofWrapUp󀄀In1999theU.S.GeneralAccountingOffice(GAO)completeda R studyofsixmajortransitandhighwayprojectsusingwrapupinsurance.i X X      ithe     XX    C  46      Theseprojects > includedseveraldesignbuildprojectsfinancedbyFTAandFHWA.Thepurposeofthereport *  wastoidentifytheadvantagesanddisadvantagesofwrapupinsuranceovertraditionalinsurance   andthefactorsthatcanaffectthebroaderuseofwrapupinsurance.   GAOfoundanumberofadvantagesanddisadvantagesinusingwrapupinsurance.Their  t researchfindingsincludedthefollowing:  `  X9%4 4 <DLX9Majoradvantagesincludesavingsfrombuyinginsurance inbulk,eliminating 8  duplicationincoverage,handlingclaimsmoreefficiently,reducingpotentiallitigation, $  andenhancingworkplacesafety.Accordingtoinsuranceindustryofficials,wrapup v  insurancecansaveprojectownersupto50percentonthecostoftraditionalinsurance, b  orfrom1to3percentofaprojectsconstructioncost,dependingonitssize.The N  potentialdisadvantagesofwrapupinsuranceincluderequiringprojectownerstoinvest :  moretimeandresourcesinadministration.Projectownersmusthireadditional & personnelorpaytocontractoutthemanagementofwrapupinsurance.Inaddition,  Projectownerscouldalsohavetopaylargepremiumsatthebeginningoftheproject.  However,transportationofficialssaidthesecostswerereasonable.    Anumberoffactorscanaffectthebroaderuseofwrapupinsurance.Perhapsthemost \ significantbarriersarestatesystemsforworkerscompensationthat,insomestates, H effectivelypreventwrapupinsurancebygreatlyreducingitspotentialcostsavings. 4 Anotherlimitationisthataprojectmustbesufficientlylarge,orcontainatleasta   sufficientamountoflaborcosts,tomakewrapupinsurancefinanciallyviable.Finally, r  somecontractorsdislikewrapupinsurancebecauseitreducesacontractorsprofits ^ frominsurancerebates. J    X<( 4 <DL44X<TypesofWrapUpInsurancePlansTwotypesofplansareavailabletoprojectowners.Oneis "! topayaflatpremium(alsoknownasaguaranteedcostplan).Withthisplan,premiumsremain " fixedforthetermofthepolicyevenifahighamountofclaimsispaidout.Thistypeofplanis " commonforsmallandmediumsizedbusinesses.Thesecondtypeofplanisknownasaloss #  sensitiveplan.Herethepremiumsdependonthepolicyholdersclaimsthatareactuallypaid $l! (called losses).Alosssensitiveplanreturnsarefundforlowlossesandchargesadditional %X" premiumsforhighlosses,thusgivingtheowneranincentivetomaximizesafeoperations.Five &D # ofthesixmajorprojectsstudiedbyGAOusedlosssensitiveplans,andalluseddeductiblelimits '0!$ tolowertheirinsurancecosts.i X X      iomb     XX     C  47       ("%  n)#& CostSavings󀄀ThesixprojectsstudiedbyGAOallclaimedcostsavingsasaresultofusing f wrapupinsurance.Savingsclaimedrangedfrom$2.9millionto$265million.i X X      iomb     XX   $ C  48      Contributingto R thesesavingswerefewerinjuriesresultingfromcentralizedsafetyprograms,aswellasusing > bulkbuyingpower,avoidingduplicateinsurancecoverage,usingmoreefficientwaystoprocess *  claims,andreducinglitigation.i X X      i$omb     XX   ( C  49             CentralizedSafetyPrograms󀄀Undertraditionalinsurance,eachcontractoranditsinsurance   companymaybeinvolvedwithsafetybuttypicallythereisnocoordinatedsafetyprogram.Each  t contractorandsubcontractorisconcernedonlyfortheirsegmentofthework,andthedegreeof  ` emphasisplacedonsafetywillvaryfromcontractortocontractor.Additionally,someofthese L  contractorsmaybepoorlymonitoredbytheirinsurancecompaniesatthejobsite.Incontrast,on 8  projectsinsuredunderwrapuppolicies,theresponsibilityforsafetywillbecentralizedinone $  safetyteam(includingoneinsurancecompany)thatoverseesallaspectsofsafetyatajobsite, v  withjurisdictionoverallcontractorsandsubcontractors.Itisimprovedsafety,resultinginfewer b  injuries,thatproducesmuchofthepotentialsavingsfromwrapupinsurance.Whenloss N  sensitiveplansareused,theparticipantshaveacompellingfinancialinteresttokeepinjuriestoa :  minimumsoastorealizeinsurancerebates.AllsixprojectsstudiedbyGAOclaimedreduced & injuriesasthemainbasisfortheirinsurancecostsavings.i X X      iomb     XX   -2 C  50              ݌̌   StateInsuranceRegulations!Becausethreefourthsofthetotalinsurancecostonaconstruction  projectcanbeforworkerscompensation,removingitfromtheprojectownerscontrol p effectivelyeliminatesmostofthecostsavingsderivedfromwrapupinsurance.i X X      ݀iomb     XX   i X X      i6omb     XX   32 C  51      Andthisis \ whathappensinsomestatesthatrequirecontractorstousethestatefundforworkers H compensationastheprimaryinsurancevehicleforconstructionprojects.i X X      iomb     XX   7n  C  52      Somestates,suchas 4 MichiganandOhio,requireownerstoobtainpriorapprovalforwrapupinsurancefromthestate   insuranceregulator.Michiganalsoestablishesaminimumprojectcostof$65milliontobe r  eligibleforwrapupinsurance.Oregonlimitswrapuptoprojectsof$100millionandwillnot ^ allow rollingdifferentprojects(combiningseveralprojects)underoneinsuranceprogram. J     DevelopingInsuranceCostInformation!InthesixprojectsstudiedbyGAO,ownersdeveloped "! costinformationfortraditionalvs.wrapupinsurancebyoneofthreemethods:(1)obtainingtwo " bids!onewithinsuranceincluded(traditionalmethod)andonewithinsuranceexcluded(wrap f upmethod),(2)removinginsurancecostsfromexistingcontracts,or(3)relyingonbrokers R estimatesoftraditionalinsurance. >     HelpingSmallandDisadvantagedBusinesses!Byprovidinginsurancecoveragetoall   contractors,includingsmallanddisadvantagedbusinesses,ownerscanoftenimprovethedegree   ofparticipationbythesebusinesseswhentheyusewrapupinsurance.Forexample,accordingto   GAO,theChicagoTransitAuthority(CTA)achievedabout30percentparticipationbyDBEsin  t their1994GreenLineRehabilitationProject.  `           ݌̌     PotentialProblemsWithWrapUp󀄀Granteesmustbecautiousaboutcontractorswithpoorsafety 8  recordsandhighinsurancecosts.Theycanpresentaproblemwhenthegranteeisusingan $  ownercontrolledinsuranceprogram.GranteesusinganOCIPshouldspecifyintheirsolicitation v  documents(IFBs,RFPs)thatthebidderspastperformancewithrespecttosafetymatterswill b  beconsideredaspartofthegranteesdeterminationofcontractor responsibility.SeeSection N  5.1ResponsibilityofContractor. :    Megaprojects󀄀Onmegaprojects,granteesshouldconsultwithindividualswhohavehad  workingexperiencewithsuchprojectsbecausetheremaybeopportunitiesforinnovative  techniques.Suchprojectslendthemselvestocreativenegotiationswiththeinsurancecompanies.  FTAregionalpersonnelwithsuchexperiencemaybeconsulted.i X X      iDrs     XX   ; C  53       p   EquipmentandSupplies󀄀Equipmentcontractorswouldtypicallyfurnishtheirowninsurance H coveragefortheproductstheyfurnish,exceptthatforinstallationofheavyequipment,thewrap 4 uppolicycouldapplytotheinstallationwork.Itwouldbeprudenttodosomemarketresearch   beforeestablishingtheinsurancelimitsthatyourequirethesupplierstohaveinordertobidon r  yourrequirement.Ifthelimitsaretoolarge,itmayrestrictcompetition.Bycallingthepotential ^ biddersinadvance,youcandeterminewhatinsurancelimitsarereasonabletostipulateinyour J IFBorRFP. 6          i   i  ݌̌     Hazardousmaterials󀄀Whenyourprojectrequiresthecontractortoworkwithpollutantsorany " typeofhazardousmaterials(suchasasbestos,wasteoilproducts,partscleaners,etc.,)besureto " haveyourinsurancespecialistandyourenvironmentalsafetyofficerreviewallofthe #  contractor'spoliciesverycarefullytodetermineifthereareanyexclusionsinanyofthepolicies  $l! forthetypeofmaterialinvolved.Ifthereisanyquestioninanyofthepolicies,besuretohave f thecontractorobtainariderfromhisinsurancecompanyremovingtheexclusion. R     ArchitectEngineerServices 󀄀ItisthecustomarypracticeofArchitectEngineerfirmstobuy *  errorsandomissionsinsurancetoprotectagainstdesignerrorswhichtheymaymakeinthe   courseoftheirdesignwork.However,theremaybesituationswherethecostofinsurancefora   particularprojectisveryhigh.Thiscouldoccur,forexample,whentheAEfirmisdesigning   elementsofasystem,suchasarapidrailsystem,whichwillcarrylargenumbersofpassengers.  x Thissituationcarrieswithitthepotentialforveryhighliabilityintheeventofanaccidentcaused  d byafaultydesignofasystemelement.Insomecases,likethese,Agencieshavedecidedto P  indemnifytheirAEfirmagainstliabilityarisingfromdesignerrorsoromissions.Whenthis <  approachisfollowed,theAEfirmdoesnotincurtheveryhighcostoferrorsandomissions (  insurance,whichwouldhavebeenpassedalongtotheAgencyasadirectcostontheircontract. z  ThemoneythussavedbytheAgencyinnothavingtopayforinsurancecouldthenbedeposited f  inaspecialselfinsurancefundfromwhichfutureclaims,ifany,wouldbepaid.Ifthereareno R  accidentsandclaims,theAgencywillrealizesomeextraordinarysavings.MARTAelectedto >  usethisindemnificationapproachwithitsprimaryengineeringconsultingcontractor,andthe * resultingsavingswereabout$300,000annually.Anydecisiontoadoptthisapproachisamajor  one,andobviouslyentailsanelementofrisktotheAgency.Itshouldbepointedoutthatin  manystatesitisagainstpublicpolicyforonepartytoindemnifyanotheragainstthatpartysown  negligence.Underthesecircumstances,thetypeofindemnitydescribedwouldbeillegal.# 'X X礆# XX ' t  6.7ARTWORK  L *lP1Qddxdd xF1H(#(#l,xdd +  $$  REQUIREMENT   HRequirementsrelatedtotheprocurementofartworkintransitprojectsmaybefoundinthe n followingdocuments: Z 0 l a.FTACircular9400.1ADesignandArtinTransitProjects,datedJune1995.2!l"l" 0 l b.49CFRSection18.34 Copyrights.) #l"l" dH  ) DISCUSSION *%  FTACircular9400.1AprovidesFTApolicyandguidancefortheincorporationofdesign ' " andartintotransitprojectsfundedbyFTA.? C  54      ׀Someofthemoreimportantissuesinthis '!# Circularconcern: (t"$ 1.0  Theeligibilityofdesignandartaseligiblecostsandguidancefortheincorporation *L$& ofqualitydesignandartintotransitprojectsfundedbytheFTA.+8%'(#(#   v-') 2.0  Flexibleguidelinesfortheamounttobespentonartwork;e.g.,costsshouldbeat f leastonehalfof1%ofconstructioncosts,butshouldnotexceed5%ofconstruction R costs,dependingonthescaleoftheproject.Fundsspentontheartworkshouldbe > adequatetohaveanimpact.* (#(# 3.0  Theencouragementofartiststointeractwiththecommunity(residentsand   businesses)onproject. (#(# 4.0  TheCircularhascertainspecificrecommendationsfortheprocurementofart: `(#(# 0  a.0` (#(#Theselectionprocessshouldconsideruseofavarietyofartiststhatare 8  capableofworkingontheproject,$ ` (#` (# # 'X X$# &% '# '% &# XX '0  b.0` (#(#Selectionofartistsshouldbebyapanelofartanddesignprofessionals,such N  asartadministrators,artists,curators,andarchitects,: ` (#` (# # 'X X# &% '# '% &1 # XX '0  c.0` (#(#Thecommunitysurroundingthefuturefacilityshouldparticipateinthe  selectionprocessthismayincludealllevelsofparticipation,including  generatingideasfortheproject,supplyinginformation,attendingpanel p meetings,andbeingvotingmembersofthepanel.\` (#` (# 5.0  Criteriaforevaluationspecificworksofartforcommissioning.Thesewould 4 include: (#(# 0  a.0` (#(#qualityofartofdesign,^` (#` (# # 'X Xt # &% '# '% &3## XX '0  b.0` (#(#impactonmasstransitcustomers,"` (#` (# # 'X Xv## &% '# '% &$# XX '0  c.0` (#(#connectiontositeand/oradjacentcommunity;artthatrelates,informor  substancetothecultures,people,naturalorbuiltsurroundings,orhistoryof  l theareainwhichtheprojectislocated,# 'X X]$# i '!X` (#` (# 0  # ' i%# XX 'd.0` (#(#appropriatenessforsite,includingsafetyandscale,# 'X X&# i 'Z# ` (#` (# 0  # ' i&# XX 'e.0` (#(#durabilityofmaterials,$"` (#` (# 0  f.0` (#(#resistancetovandalism,and&h $` (#` (# 0  g.0` (#(#minimummaintenance. (@"&` (#` (#  BestPractices  ~*$( Thesizeandnatureoftheprojectmayaffectthechoiceofprocedurestobefollowed.The V,%* guidanceheremaybemostrelevantfortheprocurementofmajorartintransitprojects,andisin  B-&+ facttakenfromtheexperiencesofseveraltransitagenciesthathaveprocuredorareinthe f processofprocuringsignificantartworkfortheirtransitprojects. R GranteesshouldalsobefamiliarwiththetencasestudiesthatFTAhaspublishedonitswebsite *  detailingthe lessonslearnedfromagenciesthatfacedadiversityofproblemsandchallengesin   bringingtheirartintransitprojectstoasuccessfulconclusion.B C  55          A.MaintaininganArtistRegistry   t ManyStatesandtheU.S.GeneralServicesAdministration(GSA)maintainanArtistsRegistry. L  TheGSAhasdevelopedthe GSANationalArtistsRegistry,whichisadatabaseofseveral 8  thousandcontemporaryAmericanartistsofallcareerlevels,media,andstyles.Thisregistryis $  usedtosolicitexpressionsofinterestfromartistswhosepriorworkisofthetypethatGSAis v  interestedinconsideringfortheircurrentproject. b  TheLosAngelesCountyMetropolitanTransportationAuthority(MTA)maintainsamailinglist :  databaseofprofessionalartistswhoareinterestedinworkingonMTAprograms.Inclusionon & themailinglistisopentoallprofessionalartistsonanongoingbasis.Artistsaresolicitedfrom  thismailingdatabaseforexpressionsofinterestviaopenCallforArtists.  ItmustbepointedoutthatsomeArtistsRegistriesrequirethesubmissionofslidesand p statementsofqualificationsbyartists.Theyrequireconsiderabletimeandresourcestomaintain, \ andunlessacceptanceintotheregistryisjuried,thenumberofunqualifiedorinappropriate H artistsmayexpandtothepointofrenderingtheregistryoflittleornovalue.Artistswillwantto 4 updatetheirslidesperiodically,andthehandling,storage,databaseentryandreturnmailingmay   beprohibitiveforallbutthelargestprograms. r  AmorepracticalapproachformostgranteeorganizationswillbetocontacttheirStatesArts J Councilandotherorganizationsthatmaintainmailinglistsofpublicartists.Examplesofthese 6  otherorganizationswouldincludeothertransitagenciesthathavebeenactiveinpublicartwork "! programsE C  56      ׀andorganizationssuchasForecastPublicArtworksat4Z O  5  www.forecastart.org6p44   7 4Ԁand " PublicArtNetwork(PAN)at4[ O  5  www.americansforthearts.org.6]5q5   7 5ԀThisapproachwillprovidethe " granteewithanextensivelistofartistsatminimalexpensetothegrantee,andisamuchmore #  practicalapproachforthosegranteesthathave onetimeartworkprojectsandlimitedstaffing $l! tomaintainanexpensiveArtistsRegistryormailingdatabase. %X"   '0!$ B.The CallForArtists  f The callforartistscanbepublishedfornationalcoverageinpublicationssuchasPublicArt > Review,SculptureMagazine,ArtInAmerica,ArtNews,andArtForum,andregionalperiodicals *  suchas,NewArtExaminer,ArtPapers,andArtWeekaswellaslocalnewspapers.However,the   experiencesofseveralagenciesinadvertisinghavenotbeencompletelysatisfactoryasfaras   reachingprospectiveartists.Afarmoresuccessfulapproachhasbeentodevelopthenamesand   addressesoftheartiststobesolicitedandsendthemanoticeofthecommissionopportunities  t and RequestforExpressionofInterest(RFI)letter.Forexample,SoutheasternPennsylvania  ` TransportationAuthority(SEPTA)hiredanartconsultantwhoculledalistofcandidateartists L  fromvariousartfoundations.OtheragencieshaveusedtheirStateArtsCouncilasaresourcefor 8  listingsofartistsnamesandaddresses.Asalreadydiscussed,somehavegonetotheexpenseof $  maintainingArtistsRegistriesandmailingdatabasestoidentifycandidateswhoarecontacted v  directlybymail. b  Applicantsarenormallyaskedtoprovideresumes,slidesofpastwork,copiesofpublished :  reviews/articlesabouttheirwork,andperhapsavideotapeofseveralminuteslenght.Artistsmay & alsoberequiredtostateintheircoverletterswhytheyareinterestedincreatingartworkforthe  projectbeingadvertisedandwhytheirworkisapplicabletoanoutdoortransitenvironment.   C.PublicizingtheProjectsArtBudget  p Ithasbeenthepracticeofalmostallagencies,includingtheU.S.GSA,topublishtheagencys H budgetfortheartprojectatthetimethe callforartistsisreleasedand/orthenoticesaresentto 4 candidateartistssolicitingtheirinterestintheproject.Thereasoningbehindthepracticeisto   informtheartistsoftherelativemagnitudeoftheprojectandtoestablishanevaluationand r  selectionprocessthatwillbebasedona bestvalueforthemoneytypeofdecision,insteadof ^ themoretraditionalprocurementapproachofdeterminingthelowestpriceproposalthatwill J produceanartworkthatmeetsapredeterminedspecification.Inotherwords,agencieswantthe 6  verybestproductthatcanbeobtainedwiththefundsavailableforart,andthereisgenerallyno "! motivationtoreducetheartworkmonetaryinvestmentbyselectingartconceptsthatareless " costlybutalsomaybeartisticallyandaestheticallylessrewardingtotheagencyandthe " community. #  Anexampleofabudgetthatwaspublishedwitha CalltoArtistsbytheMetropolitanCouncil, %X" Minneapolis,MNisshowninAppendixB.18HiawathaLinePublicArt&DesignBudget. &D # TheCalltoArtistslistedsixteencommissionopportunities,fourofwhichwere DesignOnly '0!$ commissions,whiletwelveotherswerelistedas Design,Fabrication,andInstallation ("% commissions.Theworkinvolvedinthevariousphasesofthesecommissionswasdescribedin n)#& theCalltoArtists,andtheamountofthecommissionallocatedforeachphasewasasshownin Z*#' AppendixB.18.Notethateverycommissionincludedthecompletionofdesignsandthe F+$( preparationofconstructiondrawingswithinthescopeoftheinitialcontractaward.Theinitial 2,%) contractsdidnot,however,includetheFabricationandInstallationPhases.Theagencys -&* decisiontoinvolveanyparticularartistintheFabricationand/orInstallationPhasewastobe   .'+ madeatthecompletionoftheDesignPhase,andwastoberelatedtosuchconsiderationsasthe f artworkdesign,theartistsinterestininvolvementintheFabricationandInstallationPhase,and R theagenciessinterestinretainingtheartistsinvolvementinthosefollowonphases.The > involvementofanyparticularartistsintheFabricationandInstallationphasecouldvaryfromthe *  completefabricationandinstallationoftheartwork,fabricationandinstallationofcertain   elementsoftheartworkcoordinatedwiththeinstallationofotherelementsbytheprojects   Design/Builder,oversightoffabricationandinstallationbytheprojectsDesign/Builder,orinan   unusualsituation,noinvolvementatall.Becausethinvolvementoftheartistmightvaryinthe  t FabricationandInstallationPhase,thecommissionamountassociatedwiththisFabricationand  ` InstallationPhasewasestimatedasamaximumamountinthepublishedbudget.Theactual L  amountofanyfabricationandinstallationcommissionwastobedeterminedbynegotiations 8  betweentheagencyandtheartistattheconclusionoftheDesignPhasedependingontheartists $  degreeofinvolvement.G C  57       v   D.TheSelectionProcess  N  Timing󀄀Oneofthemostimportantlessonslearnedfromthosewhoprocureartworkisthatthe & artistshouldbeselectedandonboardataveryearlydateinthedesignprocess,preferablyatthe  inceptionofthedesignprocessasmembersofthedesignteam.Startingtheartistearlywiththe  ArchitectEngineerfirmthatwilldothedesignworkenablestheartisttohavemaximum  opportunitiesfortheartwork.Ifyouwaituntilthefacilityisdesignedalready,orvirtually p designed,youlimitwhattheartistcando.Thisisamajorconsideration.Inordertoaffordthe \ artisttheopportunitytocollaboratewiththeA/Efirmduringthedesignconceptphase,theartist H selectionprocessshouldbeginwellbeforetheA/Econtractisawarded. 4 MethodsofSelectingArtists󀄀Therearetwobasicapproachesthathavebeenusedtoselect r  artists.Oneinvolvestheselectionofa shortlistofcandidatesfromwhomcompetitive ^ proposalsaresolicitedandevaluated.Theseproposalswouldtypicallycallforthesubmissionof J designconcepts,modelsand/orrenderings,costproposals,etc.).Theotherapproachisonein 6  whichtheevaluationisdesignedtoselecttheartistinsteadofselectingthebestartworkconcept "! asinthecompetitiveproposalmethod.Thismethodwouldproducea shortlistofthemost " qualifiedcandidatesbasedonartistsresumes,slidesofpreviousartworkproducts,videotapes, " theartistsexpectedhourlyremuneration,etc.Interviewsareconductedwiththeshortlist #  candidates.Selectionthenfollowstheinterviews.Thelatterapproachdoesnotinvolvethe $l! submissionofdesignconceptsfortheprojectbeingadvertisedthepreparationofdesigns %X" comesafterartistselection.Nordoesthisapproachcallforartiststosubmittheestimatedprices &D # oftheirartworkbecausethearthasnotyetbeendesigned.Itdoes,however,callfortheartiststo '0!$ submittheirproposedhourlyratesofremuneration,whichfulfillstherequirementofFTA ("% Circular4220.1Ethatcostbeafactorintheselectionprocess.Notethatcostmayinfactbethe  n)#& leastimportantfactorifthegranteesochooses,butitmustbeconsideredintheselectionprocess. f Adiscussionofthesetwoapproachesfollows. R # 'X X'# &% '# '% &Y# XX 'ReviewofQualificationstoDeterminea ShortListofCandidates󀄀Havingissuedthe callfor   artistsandreceivedlettersofinterestfromcandidateartists,mostagencies(withparticipationof   anartistselectionpanel)useaqualificationsbasedprocesstonarrowdownthecandidatestoa    shortlistoffourtosevencandidates.Thisprocessofdevelopingtheshortlistwouldtypically  t bebasedontheartistspastwork.Resumesandslidesoftheartistspreviousworkwould  ` normallybereviewed(byaselectionpanel)atthisstageoftheevaluationprocess.Artistswould  L notnormallyberequiredtosubmita technicalproposaloftheirconceptualdesignsforthe 8  projectatthisstage. $  # 'X XY# &% '# '% &]# XX 'SelectionafterInterviews󀄀Havingdetermined shortlistofcandidateartists,agencies N  approachestodeterminethatactualwinningartistmayvary.Whentheprojectisjustbeginning :  andtheartistswillbeworkingwiththeA/Efirmtodevelopdesignconcepts,thetypical &  approachhasbeentofurnishtheshortlistedartistswiththecommunityprofileandinvitethem   tobeinterviewedbytheselectionpanel.Thewinningartististhenselectedonthebasisoftheir  pastworkandtheinterviewprocess.Anexampleoftheartistselectioncriteriawhichmightbe  usedinthistypeofscenariowouldbeasfollows: p # 'X X^# &% '"3"  0  3wa2l3  0` (#(#  # '% &Wa# XX 'Aestheticqualityofpreviouslycompletedartprojectsandcommissions.3waa݌4` (#` (# Ќ  # 'X X!b# &% '"3"  0  3 c2l3  0` (#(#  # '% &b# XX 'Applicabilityandsuitabilityofpastworktothespecificcommissionopportunities ^ beingadvertisedbythegrantee.3 cFc݌J` (#` (# Ќ  # 'X X礷c# &% '"3"  0  3d2l3  0` (#(#  # '% &d# XX 'Appropriatenessofpreviouslycompletedartworkstotheirsites,includingsafety  andscale.3de݌` (#` (# Ќ  # 'X X礏e# &% '"3"  0  3f2l3  0` (#(#  # '% &f# XX 'Durabilityandsuitabilityofmaterials,resistancetovandalismandaminimumof X maintenancerequirements.3ff݌ D` (#` (# Ќ  # 'X XNg# &% '# '% &Rh# XX '0  "3"  3h2l3  0` (#(#  Experienceworkingwiththepublicandneighborhoodcommunities.3hh݌n"` (#` (# Ќ  # 'X X礕h# &% '0   (#(# # '% &i# XX 'SolicitingCompetitiveProposals󀄀Whentheprojectforwhichtheartisbeingprocuredhas 2$! alreadybeendesignedand/orbuilt,someagenciesinvitealloftheshortlistedartiststosubmit %" proposalsfortheproject.However,someagencieshaverequiredproposalsevenwhentheartist  &# selectionprocessisoccurringearlyintheprogram,beforetheA/Efirmhasdoneanydesign. & $ Whenproposalsaresolicited,andfollowingthesubmissionandevaluationoftheseproposals, '|!% interviewsarethenscheduledwithallofthecandidateswheretheartistsmaypresenttheir (h"& proposalsandtheagencysselectionpanelmayaskquestionoftheartists.Artistsmaybecalled )T#' upontopresentarenderingoftheirproposedartwork(amodelordrawingsorwritten *@$( descriptions),acostproposal,andsamplesoftheactualproposedmaterialtobeused.Thecost +,%) proposal(budget)wouldincludecostsfordesign,fabrication,sitepreparationandinstallation, ~,&* insurance,etc.Sincetheconceptualdesignsareprobablythemostvaluablecontributionthatthe  j-'+ artistswillmake,agencieshaveoftenfeltitequitabletocompensatetheartistsforthis f conceptualdesignwork,andtheywillestablishauniformamountofmoneytobepaidtoeach R artistforhis/herworkindevelopingtheproposal.Forexample,SEPTAsprocurementof > artworkfortheFrankfordTransportationCenterincludeda designstipendof$2,500toeachof *  thesemifinalistartiststhatwereaskedtoprovidedetailedproposalsaspartofthefinal   competition.Thisdesignstipendof$2,500forthesemifinalistswasadequatetogenerate   significantinterestfromnationallyacclaimedartists.I C  58         Thisapproachofrequiringcompetitiveproposalsisnotwithoutitsproblems.Thefirst  ` significantproblemwillbehowtoinvolvethecommunityduringtheprocessofproposal L  (conceptualdesign)development.Communityinvolvementisoneofthemostimportantaspects 8  ofthedesignprocessandFTACircular9400.1Anotesitassuch.Itmaybedifficultfor $  communityrepresentativestodealobjectivelyandinteractwiththecompetingartistsdesignsif v  competitiveproposalsarerequired.Experiencehasshownthatinvolvementofcommunity b  representativesatthisstageproducesproblemsinhavingtodealwithanumberofcompeting N  artistsanddesigns,andtoreconciledifferencesofpreferencewithgranteepersonnelresponsible :  forartistselection.Itmaybeeasierandperhapsmoreconstructiveforcommunity & representativestoworkwithoneartistwhohasbeenselectedbythegranteepriortoconceptual  designdevelopment,andthenserveasamajorcontributortotheprocessofdesigndevelopment.  Thisaffordsthecommunityadesigndevelopmentroleduringconceptualdesignworkratheran  afterthefactrolewithseveralartistswhosedesignconceptshavealreadybeenformulated. p Anotherconsiderationistheadequacyofthedesignstipend.Willthestipendyouragencycan \ affordtopayanumberofartistsbeadequatetocompensatethemforresearch,travel,community H discussions,conceptualdesignwork,models,renderings,etc.?Consideralsowhethertherather 4 smallstipendandlimitedtimegiventothecompetingartistswillproducethebestpossible   designconceptsforyourproject,orwhetheryouragencywouldbebetterservedwithselecting r  anartistbasedonthequalityandsuitabilityofhis/herpastworkforyourapplication,andgiving ^ thisartistmoreresourcesandtimetoproducethebestdesignconceptaftercollaborationwith J communityrepresentatives. 6   E.ContractingWiththeSelectedArtistforDesignandFabricationoftheArt  " DirectContractVs.SubcontractwiththeA/EFirm󀄀Mostagencieswillnormallyawardaprime #  contracttotheartist,althoughsomehaveassignedtheresponsibilityofcontractingwiththeartist $l! totheA/Efirmthatisdoingthefacilitydesign. %X" TypeofContract󀄀Becauseofpotentialproblemswithunsuitableaccountingsystemforcost '0!$ reimbursementcontracts,granteeswouldbeadvisedtoconsidercontracttypesforartworkthat ("%   n)#& donotrequiretheauditingofincurredcosts.Usingafixedpricecontractwiththeartistwould f usuallybepreferabletoacosttypecontract. R DeterminingaFairandReasonableContractPrice󀄀Whennegotiatingacontractpricewiththe *  selectedartist,acostproposalshouldbesolicited,evaluatedandnegotiatedaswithany   procurementforprofessionalservices;e.g.,acontractwithanarchitecttodesignafacility.Itis   recommendedthatthegranteeconsiderwhetheritisadvisabletocontractinitiallyforthedesign   phaseoftheworkandpostponenegotiationsofthecost/priceforfabricationandinstallationuntil  t thedesigniscompletedandapproved.Thisphasedapproachwouldthenallowtheartistto  ` solicitbidsorproposalsfromfabricatorsandinstallersbasedonafinaldesignandspecifications L  forfabricationandinstallation.Thephasedapproachwillavoidtheproblemoftryingto 8  prematurelyguesswhatthefabricationandinstallationcostswillbepriortocompletionofthe $  design.Aphasedapproachwillalsoallowthegranteeandartisttonegotiatedfixedprice v  contractsforthedesignphaseandthenforthefabrication/installationphase.Thisinturnwill b  avoidthepitfallsinherentincostreimbursementcontractingwithanartistthatprobablydoesnot N  haveacostaccountingsysteminplacethatissuitableforacosttypecontract.Seethe :  paragraph,FabricationCosts,below. & Experiencewithartworkprojectswouldindicatethatthedesignphaseoftheprojectcouldbe  anywherebetween10%and20%ofthetotalprojectbudget.Forlargerprojectsthedesignphase  costsshouldrepresentthelowerendoftherange(about10%oftheprojectbudget).Smaller p projectsmayhavealargerpercentage(upto20%)oftheprojectcostdevotedtodesignactivities. \ Theprimaryreasonforthisisthatthecostsofdoingcommunityresearch,includingthetravel H expensesassociatedwiththisresearchanddiscussionswithcommunityrepresentatives,will 4 representalargerfractionofthetotalbudgetforsmallerprojectsthanlargerones.Thisisnotto   suggestthathedesignphasecontractbenegotiatedasapercentofthetotalprojectbudget,only r  thatgranteesmaywishtoapplythesehistoricalpercentsasa sanitycheckwhenevaluatingthe ^ artistscostproposalforthedesignphase.Designbudgetpercentagesmayalsobeimpactedby J theartistsnational/internationalprominenceandrecognition.Historicalexperiencewith 6  architecturalfeesforavarietyofconstructionprojectsmayprovetoillustratethepointbeing "! madehere.Typicalfeesforthemostartistictypeofbuildingprojectshavebeentabulatedbythe " R.S.MeansCompany,andthefeepercentagesrangefromahighof16%oftotalprojectcostsfor " thesmallerprojects($100K)toalowof8.3%forthehighestdollarvalueprojects(over #  $50M).K C  59      ׀# 'X XIj# i 'Ԁ $l! # ' iɌ# XX 'DetermininganHourlyRateofCompensationThehourlyrateofcompensationfortheartist n& # shouldbeproposedbytheartistinhis/hercostproposal(alongwiththeothernecessarycost Z' $ elements),andevaluatedbythegranteeforreasonableness.Thegranteewouldbeadvisedto F(!%   2)"& evaluatetheartistscompensationonotherprojects,aswellaswhatartistsworkingonsimilar f sizepublicartprojectshaverecentlyandhistoricallybeenpaidbyotherowners.Theobjectiveis R todetermineafairandreasonablerateofcompensationfortheexpertiseofferedbythat > particularartist,whichwillbeanimportantpartoftheoverallcontractpriceforthedesignphase. *  Determiningafairandreasonablehourlyrateofcompensationfortheartistmayalsobe   extremelyhelpfulifforanyreasonthegranteedecidestoterminatetheartistscontractforthe   convenienceofthegrantee.Intheeventofatermination,thegranteeandtheartistwillhaveto  t negotiatetheamounttobepaidtheartistforhis/hereffortsuptothepointoftermination.  ` Havingalreadynegotiatedanhourlyrateofcompensationaspartofthecontractnegotiationsto L  determineapriceforthedesignphasecontract,thepartieswillthenhaveanequitablebasisto 8  determinetheamounttobepaidfortheartistsseffortspriortothetermination. $  PaymentProvisionsDesignPhase󀄀Experiencehasshownthattheremaybeproblemswith b  usingstandard progresspaymentclauseswherepaymentsaremadeatregularintervalsbased N  upontheartists progresstowardscompletionoftheartworkdesign.Measuringprogressonan :  artworkcontractmayprovethebeaverysubjectiveexerciseandonethatcausesproblemsfor & theagencyandtheartist.Apreferableapproachwouldbetousea milestonepayments  approachwherecontractuallyspecifieddollarpaymentsaretobemadeforachievementof  specifiedmilestones.  FabricationCostWhentheartististobecontractuallyresponsibleforfabricatingtheartwork, \ thetypicalscenariowillinvolveasubcontractorthatwilldotheactualfabricationwork.Itis H veryimportantthattheartistberequiredtofurnishcrediblecostandpriceinformationregarding 4 fabricationoftheartworksothatarealisticcontractpricecanbenegotiatedwiththeartist.   Granteesshouldnotrelyon guestimatesfromtheartistwhenthecontractpriceisbeing r  negotiated.Therehasbeenatendencytousetheartistsowncostestimatesforfabrication ^ insteadofrequiringtheartisttoobtainrealisticcost/priceproposalsfromfabricators.Thisin J turnhasledtosomesignificantcostoverrunswhentherealfabricationcostbecomesknownasa 6  resultofbidsobtainedlaterbytheartist.Thistendstohappenwhenthagencyscontractwith "! theartistisacostreimbursementorTimeandMaterialtypeofcontract.Owingtothe " uncertaintiesinfabricationcosts,agenciesmaywanttocontractin phasesfortheartwork " project,wherethefirstphaseisforworkuptosubmissionandagencyapprovaloftheartists #  design,andasecondphaseforfabricationandinstallationsupportbytheartist.Thissecond $l! phasewouldbepricedusingcompetitive