WPC~. hxILA\Ay/Uۈ}Mt_#^0,e,]E2ӆaM1Cj&NMʑrDQ(hIul]nO9Ӵ0(iw%9[n ue<;~]b]^?|e E1^RkzvrR!, ; 훏L8DvS"T+A-SzP<@*~* 0r,- 0?. 0R/ 0e0 0x1 02 03 04 05 06 07 08 09 0: 0; 0< 0= 0> 0? 0@ 0A 0B 0C 0D 0E 0F 0G 0GHU *'J 0 QJ 0J B.nL D3L D+L 0L 0M 0N 0eO 05P 0+Q 0<R 0'H=R 0R 0_MS 0S 0xT 08U 0V 0 V 0W 0X 0nY 0FZ 0Z 0>[ 0[ 0\ 0] 0^ 0_ 0` 0a 0"b 02!c 0ScU6Od 0:d 0Yd 0_e 0 we 0f 0/h B*'j D/Qj 0j D/xl 0l 06um 0m 0:n 0^n 0<Ko 0noU,q C!r 0;r 0r 0:?s 0ys 0~t 0wu 0pv 0kw 0dx 0.y 0y 0z 0{ 0| 0 }fE~ 0G~a~ A 08 08D^   fa 4 1 UF 7 faU@w 0c4d 0wx fa B+ > L ^fpar  fa  1 փ 7,fDŽ 0UɄ f8a: N 0h 7 & 02 0f\a^ 0r 1u& 7 0 0r 1eM 7 0 0D 1 | 0#&UAN %=MC(GNo 1uq 72 m 721 ASc 0| 02 0D B-,U,Yf 0a= 7Qaa 0Nu 0× 7 7ɘטJΚ4 0L/d 0Gf 0 0ͤ 0a9M 0 0 0g 0 0ͩ] 06U>9 0wf*a, 0@ 0 0 05 0Я 0e 0fa 0ʱ 0 0H 0fafa 0´f`abvfa 0 0¹ 1UTd 1u UB 72ĻFU<eJGMRRRRRRRRRRRRRUN 0 0DUUNiii\UNDaaaLUNK???UNUNUN5UNSjUN YYYUN"pppUNJUNhhhUNS_UNrUN+;yyy*&UNRRRUN}:::UNO O   UN F: : : UN U> E   UNQUNQUNuU>-UN...UN|UN_UN?????SUN...UN#{qqqUNO:::UN    &"""UN%%%%UN';(;(;(UN2*o***UN+=,=,=,UN................................fh.aj.\  `&Times New Roman' FEDERAL TRANSIT ADMINISTRATION LEON SNEAD20LEON SNEAD & COMPANY .   2[+[ 0_level1   , 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level2   X 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level3    8.4` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level4    8.` ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level5    8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level6    8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level7   4 8. ` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level8   ` 8.` hp x (#823  ..   8.` hp x (#8  2[+[ 0_level9    8.<` hp x (#823  ..   8.` hp x (#8  2[[ 0_levsl1   , 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl2   X 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl3    8.4` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl4    8.` ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl5    8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl6    8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl7   4 8. ` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl8   ` 8.` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levsl9    8.<` hp x (#823  Ԁ   8.` hp x (#8  2[[ 0_levnl1   , 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl2   X 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl3    8.4` hp x (#823     8.` hp x (#8  2[[ 0_levnl4    8.` ` hp x (#823     8.` hp x (#8  2[[ 0_levnl5    8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl6    8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl7   4 8. ` hp x (#823     8.` hp x (#8  2[[ 0_levnl8   ` 8.` hp x (#823     8.` hp x (#8  2[[ 0_levnl9    8.<` hp x (#823     8.` hp x (#8  6 4Heading 1  02?%2A`Arial?   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XXXXXXXX  TABLE AL&Draw Object <<=8C HKKKK((2M$ r!..      XXXXXXXX  XX    0  (#$  0  ,2  a2_1a2_1_1Table_Aa2_1_2(359=AEIMQ1 s TABLE C(mK Z(Times New Roman (;3$2#  0  .3  0  N2Y`(O;$0  2#  a  .3  0` (#(#a2_2Table_B'Single1 da2_3a2_3_1a2_3_2Table_Ca2_3_3a2_4_1Table_Da2_4_2_1 359AM]q211.11.1.11.1.1.11.1.1.1.11.1.1.1.1.11.1.1.1.1.1.11.1.1.1.1.1.1.1 1.1.1.1.1.1.1.1.1*+ (_2623  ..a2_4_2_2_1Table_Fa2_4_2_2_2<+ :Outline001_1  X /%4 4 <DL/XXXA(\ Y`SymbolA23  ..  2( 4 <DL2XXXS\  `&Times New RomanS  sP(b$0  0` (#(#2#   .3  0 ` (#` (#(xir$0  0` (#(#0 ` (#` (#2#(  0  )3  0 (# (#Table_H($0  0` (#(#0 ` (#` (#0 (# (#2#(  a  )3  0h(#(#(35=EMU]em3(1)(1)(1)(1)(1)(1)(1)(1)(1)(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2#(   )3  0h(#h(#($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2#  0  )3  0(#(#(35;AGMSY_4a.a.a.a.a.a.a.a.a.({$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2#  a  )3  0p(#(#(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#0p(#(#2#     )3  0p(#p(# y{xGaeimquy}Bullet ListBullets List#|x(rr$..      X*XXXX*XXX*HP LaserJet 5,,,,0(9 Z6Times New Roman RegularX 3#37=CIQYag1.a.i.(1)(a)(i)1)a)i)EU#E<<CLevel 1Level 2Level 3Level 4Level 5(3A$ r!..      XXXXXXXX  (3A$ r!..      XXXXXXXX  ($$   1  )Hairline d(\ Y`SymbolF(3A$ r!..      XXXXXXXX  TABLE Js(a)TABLE D(O$<G+J :Outline002_1   /%` ` <DL/23  ..  2( 4 <DL2  sa)a)  kM$..      XXXXXXXXXX    33    _6?+ ` hp x X?   @   6  Manystatelawsrequireconstructioncontractstobeawardedatafirmfixedprice. @ kM$..      XXXXXXXXXX    34    _6?+ ` hp x X?   @   6  ݄Itisimportantthatthegranteesprojectbudgetreflectanallowanceforanypotentialincreaseinvolatile  commodityprices(e.g.,steel).http://www.arnet.gov/far/*G+G (_25   /%` ` hp x /23  ../%` ` hp x /     kM$..      XXXXXXXXXX    35    _6?+ ` hp x X?   @   6  ݄TheFARpriceescalationclausesinFAR52.2162,3,4includeamaximumaggregatepriceincreaseof  10percent;however,theFARalsogivestheContractingOfficerlatitudetoincreasethismaximumpercentif o circumstanceswarrant. Z kM$..      XXXXXXXXXX    36    _6?+ ` hp x X?   @   6  ݄Whenusingasteelescalationarticleonlythecostofmaterialisescalatedor_deescalated_Ԁandnoother  costssuchaslaborormachinery.*8+8 (_24  ," hp x ,23  ..," hp x ,  *5+5 (_23 ` ) hp x )23  ..) hp x ) ` *2+2 (_22  &hhp x &23  ..&hhp x &  */+/ (_21  #p x #23  ..#p x #  TABLE HLevel 1Level 2Level 3Level 4Level 5*,+, (_20 h  p x 23  .. p x h *)+) (_19  pp x 23  ..pp x   *&+& (_18   x 23  .. x   *AA (_17  5+ ` hp x 523  Ԁ5+ ` hp x 5  *GG (_16   /%` ` hp x /23  Ԁ/%` ` hp x /    S kM$..      XXXXXXXXXX    38    _Ԁ  󀄀##FAR52.2168!FixedFee. &$""0  x9 Z&Times New Roman*88 (_15  ," hp x ,23  Ԁ," hp x ,  TABLE A*55 (_14 ` ) hp x )23  Ԁ) hp x ) ` *22 (_13  &hhp x &23  Ԁ&hhp x &  *// (_12  #p x #23  Ԁ#p x #  *,, (_11 h  p x 23  Ԁ p x h *)) (_10  pp x 23  Ԁpp x   (&& &_9   x 23  Ԁ x   (AA &_8  5+ ` hp x 523  5+ ` hp x 5  TABLE B(GG &_7   /%` ` hp x /23  /%` ` hp x /   (88 &_6  ," hp x ,23  ," hp x ,  (55 &_5 ` ) hp x )23  ) hp x ) ` (22 &_4  &hhp x &23  &hhp x &  TABLE DTABLE E(// &_3  #p x #23  #p x #  \TABLE F y kM$..      XXXXXXXXXX    47    _6?+ ` hp x X?  6  ݀Thetermprogresspaymentsdoesnotapplytocosttypecontracts,andistobedistinguishedfrom  advancepayments,whicharepaymentsmadebeforeworkbegins(see_BPPM_Ԁsection4.4.4.2).TABLE B(,, &_2 h  p x 23   p x h   kM$..      XXXXXXXXXX    39    _Ԁ 󀄀FAR52.2168!FixedFee.()) &_1  pp x 23  pp x   (359=AEIMQ5 http://data.bls.gov/labjava/outside.jsp?survey=wpy{xj3MQUY]aeiBullets List\  `*Times New RomanTT < kM$..      XXXXXXXXXX    44    _6?+ ` hp x X?  6  ݀FTAhasredraftedtheparagraphrelatedtoprogresspaymentstoaccountforthepracticalrealitythat  takingtitletoworkinprogressmaynotbedesirableinsomecases. K kM$..      XXXXXXXXXX    48    _  󀀄Bothoftheconditionsnotedarealmostalwayspresentonconstructionprojects.  kM$..      XXXXXXXXXX    40    _Ԁ 󀄀Advanceagreementscannotprovideforthe_allowability_Ԁofcoststhatthecostprincipleshave  determinedtobeunallowable(e.g.,interest). [ kM$..      XXXXXXXXXX    49    _  FARClause52.2325PaymentsUnderFixedPriceConstructionContracts.V  kM$..      XXXXXXXXXX    50    _  󀄀49_CFR_Ԁ18.21(d)authorizesthepercentageofcompletionmethodforconstructioncontractsonly.V u kM$..      XXXXXXXXXX    45    _6?+ ` hp x X?  6  ݀Progresspaymentsinconstructioncontractsmaybemadeonapercentageofcompletionmethodin  accordancewith49_CFR_Ԁ18.21(d).Thispaymentmethodmaynotbeusedinnonconstructioncontracts.  kM$..      XXXXXXXXXX    46    _6?+ ` hp x X?  6  ݀ Adequatesecurityshouldreflectthepracticalrealitiesofdifferentprocurementscenariosandfactual  circumstances.Forexample,adequatesecuritymayconsistoftakingtitletoworkinprogressinarollingstock o procurement,receivingadraftdocumentinaconsultingcontract,orreceivingsomeportionofrecurringservices .~ underaservicescontract.Granteesshouldalwaysconsiderthecostsassociatedwiththissecurity(e.g.,bondsor = lettersofcreditmustbepurchasedinthecommercialmarketplace)andtheimpactthosecostshaveonthecontract  price,aswellastheconsequencesofincompleteperformanceastheyconsiderwhatconstitutesadequatesecurityfor k agivenprocurement.  kM$..      XXXXXXXXXX    41    _Ԁ  󀄀Ifacosttypesubcontractistobeawardedbytheprime,thesubcontractorsaccountingsystemmust  alsobeadequate.## C kM$..      XXXXXXXXXX    51    _ԀԀAppendixA.1,Clause16.##(9 Z6Times New Roman Regular(31;$ r!..      XXXXXXXX    0  .($$  0      K kM$..      XXXXXXXXXX    9    _ԀԄFTACircular4220.1E8.c.(1).##(9 Z6Times New Roman Regular R kM$..      XXXXXXXXXX    10    _  󀄀FTACircular4220.1E9.h.(1).##(9 Z6Times New Roman Regular : kM$..      XXXXXXXXXX    11    _Ԁ % 󀄀Id.#%# B kM$..      XXXXXXXXXX    6    _ԀԄGeographicpreferenceispermittedincertainnarrowsituations,includingprincipallywherepartofa  legallicensingrequirementandforarchitectsandengineers;FTACircular4220.1E##8.b.##(9 Z6Times New Roman Regular A kM$..      XXXXXXXXXX    7    _Ԁ#ԄTheCouncilofStateGovernments,NationalAssociationofStatePurchasingOfficials,Law  EnforcementAssistanceAdministration,andPeatMarwickMitchell&Co.,StateandLocalGovernment o Purchasing(1975) .~ p.6.2.###(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    8    _Ԁ'ԀUnitedStatesv.JohnC._Grimberg_ԀCo.,702F.2d1362,1367(Fed.Cir.1983)(inbanc).#'#(9 Z6Times New Roman Regular(9 Z6Times New Roman Regular + kM$..      XXXXXXXXXX    12    _Ԁ4ԀFTAMasterAgreementSections3(a)and3(a)(1);49_CFR_Ԁ18.36(3);FTACircular4220.1E  Paragraph7_(c)_.Inaddition,manystateandlocaljurisdictionshavelawsandregulations,whichaddressboththe o conductofpublicemployeesandtherelationshipbetweenpublicentitiesandprivatebusinesses.Thesevaryin .~ nature,andmayimposebothcivilandcriminalsanctionsonviolators.#4#(9 Z6Times New Roman Regular ` kM$..      XXXXXXXXXX    13    _Ԁ 8 󀄀SeeFTAMasterAgreementSection3(a)(1).#8#(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    14    _Ԁ<ԀThisinterpretationappliestobothsubcontractorsandgeneralcontractorsprovidingprocurement  relatedservicestoagrantee.#<#(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    15    _Ԁ @ 󀄀 @  @ #@#Apersonalconflictalsoariseswhereapersonwhosefinancialinterestsareattributedtotheemployee  hasaconflict!eitherbecausethatpersonisanemployee,prospectiveemployee,officer,director,oragentofa o contractororcompetingentity,orbecausethatpersonhasafinancialinterestinthecontractororcompetingentity. .~ Thefinancialinterestsofthefollowingareattributedtoanemployee: amemberoftheemployeesimmediate = family,hispartner,orhisoutsideemployerorprospectiveemployer.FTACircular4220.1EParagraph7(c). (9 Z6Times New Roman Regular x kM$..      XXXXXXXXXX    16    _Ԁ D 󀄀 @  @  @ #D#SeeFTACircular4220.1EParagraph7(c);18_CFR_Ԁ18.36(3)(iv);FTAMasterAgreementSection  3(a).However, [_t]he_ԀRecipientmaysetminimumruleswherethefinancialinterestisnotsubstantial,orthegiftis o anunsoliciteditemofnominalintrinsicvalue.FTAMasterAgreementSection3(a);seealsoFTACircular .~ 4220.1EParagraph7_(c)_;18_CFR_Ԁ18.36(3)(iv).Theseareknownas de_minimus_gifts,anddonotresultineither = arealorapparentconflictofinterest.ForFTAandotherFederalemployees,thelevelissetat$20peroccasion,  withamaximumof$50percalendaryearfromthesamesource(includingaffiliates).Inmanycases,however,the k bestresponsetoagiftofferedisasimple, Thankyou,butnothankyou.Section3(a)oftheFTAMaster * z Agreementrequiresthatgranteesincludeinthestandardsofconductpenalties,sanctions,orotherdisciplinary  9 actionsforviolationsofthecode,totheextentpermittedbystateorlocallaw.(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    17    _ԀHԀ @  @  @ #H#SeeFTACircular4220.1EParagraph8(a)(5).TheFederalAcquisitionRegulationsalsoprovidea  helpfuldefinitionoforganizationalconflictofinterest: Organizationalconflictofinterestmeansthatbecauseof o otheractivitiesorrelationshipswithotherpersons,apersonisunableorpotentiallyunabletorenderimpartial .~ assistanceoradvicetotheGovernment,orthepersonsobjectivityinperformingthecontractworkisormightbe = otherwiseimpaired,orapersonhasanunfaircompetitiveadvantage.48_CFR_Ԁ9.501.(9 Z6Times New Roman Regular U kM$..      XXXXXXXXXX    18    _ԀGenerally,anorganizationalconflictarisesbecauseapersonorentityhasorappearstohaveloyalties  to,orafinancialinterestin,twoorganizationsthatmayhavecompetingordifferinginterestsfromeachother!one o ofthembeingthegrantee.Forexample,anorganizationalconflictwouldariseifanemployeeoraconsultantserves .~ asamemberofapublicorquasipublicbodywithregulatoryauthorityoveraprojectorhasastakeinitsoutcome. = Thisarisesmostoftenwherearchitectssitondesignrevieworzoningboards.  kM$..      XXXXXXXXXX    19    _Ԁ O 󀄀 @  @ #O#Federaltransitlawrequiresgranteestoawardcontractsthroughaprocessoffullandopencompetition.  Organizationalconflictsofinterestthatgiveanypartyanunfaircompetitiveadvantageimpedefullandopen o competition,andthusareconsidered restrictiveofcompetitionunderParagraph8(a)(5)ofFTACircular4220.1E. (9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    20    _Ԁ 󀄀Mergersandacquisitionshavehadastrongeffectoncontractsintheenvironmentalarea,thus  warrantingaseparatediscussionofthistopic. h kM$..      XXXXXXXXXX    21    _Ԁ V 󀄀 @  @ #V#ThisisconsistentwiththeapproachusedinFederalcontractingassetforthinFAR9.504(e),wherea  contractcanbeawardedinspiteofaconflictwhenthecontractingofficerdeterminesthatitisinthebestinterestof o theGovernmenttodoso.(9 Z6Times New Roman Regular 1 kM$..      XXXXXXXXXX    22    _Ԁ 󀄀RecommendationoftheABAModelProcurementCode,R12202.01.  kM$..      XXXXXXXXXX    23    _Ԁ 󀄀BARTProcurementManual,AttachmentB. @   kM$..      XXXXXXXXXX    24    _Ԁ`Ԁ @  @ #`#Eachgranteealsoshouldconsultwithitscounselbeforerequiringannualfinancialdisclosure  statementstoconfirmthattherequirementcomplieswithanylaboragreementsapplicabletothegrantee.(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    25    _ԀdԀ#d#Inlargeundertakings,thismayinvolvemultiple,relatedconsulting,planning,design,technical  oversightortechnicalevaluationcontracts.Granteescanworkwithpersonsexperiencedinthefieldtodecidehow o tosegmentthe_procurements_Ԁandwhatrestrictionstoimpose. @ (9 Z6Times New Roman Regular s kM$..      XXXXXXXXXX    26    _Ԁ 󀄀40_CFR_Ԁ1506.5.Notethatifacontractorhasafinancialinterestintheoutcomeoftheproposed  project,thecontractorshouldinformthegranteeofitsinterest.Underappropriatecircumstances,thegranteemay o choosetowaivetheconflictofinterestaftercarefulconsideration(seeDiscussionSectionI).  kM$..      XXXXXXXXXX    27    _Ԁ k 󀄀LosAngelesCountyMetropolitanTransportationAuthority.ProcurementManualSection908(e).#k#(9 Z6Times New Roman Regular E kM$..      XXXXXXXXXX    28    _Ԁ o 󀄀Ibid.,Section2314.#o#(9 Z6Times New Roman Regular < kM$..      XXXXXXXXXX    29    _Ԁ s 󀄀Ibid.,Section407.5.AlsoSanFranciscoBayAreaRapidTransitDistrict(BART).Procurement  Manual#s#tSection#t#sԀII7.#s#(9 Z6Times New Roman Regularx9 Z&Times New Roman ; kM$..      XXXXXXXXXX    30    _Ԁ x 󀄀FAR9.202.#x#(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    31    _Ԁ | 󀄀LosAngelesCountyMetropolitanTransportationAuthority.ProcurementManual,Section  407.5(1)(a).#|#(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    32    _Ԁ  󀄀FAR##Section#5#Ԁ9.202(e).#~#(9 Z6Times New Roman Regularx9 Z&Times New Roman # kM$..      XXXXXXXXXX    37    _Ԁ 󀄀FAR52.216.7!AllowableCostandPayment.(9 Z6Times New Roman Regular(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    42    _Ԁ  󀄀Ifacosttypesubcontractistobeawardedbytheprime,thesubcontractorsaccountingsystemmust  alsobeadequate.##(9 Z6Times New Roman Regular U kM$..      XXXXXXXXXX    43    _Ԁ  󀄀46Comp.Gen.612(B159713)(1967).##(9 Z6Times New Roman Regular I kM$..      XXXXXXXXXX    52    _Ԁ  󀄀AppendixA.1,Clause17.##(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    53    _Ԁ  󀄀_Norair_Ԁ_Eng'g_ԀCorp.,_GSBCA_Ԁ3539,751_BCA_Ԁparagraph11,062.##(9 Z6Times New Roman Regular q kM$..      XXXXXXXXXX    54    _Ԁ  󀄀Baileyv.SecretaryofLabor,810F.Supp.261(D.Alaska1993).##(9 Z6Times New Roman Regular E kM$..      XXXXXXXXXX    55    _Ԁ  󀄀FARClause52.2329.##(9 Z6Times New Roman Regular  hH'..      XXXXXXXX  _8XXBestPracticesProcurementManualChapter2ProcurementPlanning&Organization#XX#!!!#XXPage  1      kM$..      XXXXXXXXXX    1    _ԀԄForformalassistanceinimplementingateamprocessseeHoward,JenniferM.andMiller,Lawrence  M.,TeamManagement:CreatingSystemsandSkillsforaTeamBasedOrganization(TheMillerConsultingGroup, o Inc.,1994)or_Leinberger_,Robinetal,TheArtofBusinessProcessManagement:Aguidebook,(_KPMG_ԀPeat .~ Marwick,_LLP_,1993).##(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    2    _ԀԄThelimitationisexpressedintermsofbuyingnomorethanfiveyearsrequirementseventhough  deliverymayoccurbeyondfiveyearsfromthedateofthecontract.##(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    3    _ԀԄThislimitationdidnotapplytoconstructioncontractsortoleasesofrealpropertyforthelifeofthe  transitasset o tobeconstructedonsuchproperty.##(9 Z6Times New Roman Regular e kM$..      XXXXXXXXXX    4    _ԀԀFTADearColleagueLetterC0802datedMay29,2002.##(9 Z6Times New Roman Regular  kM$..      XXXXXXXXXX    5    _Ԁ  󀄀ContactMr.John_Trotta_,VicePresident,Purchasing/Warehousing,ChicagoTransitAuthority,at  (312)2226113.##(9 Z6Times New Roman RegularTABLE I r!..      XXXXXXXX  _  Chapter2     2ProcurementPlanning&Organization    X2.1OrganizationofProcurementFunctions(5/96)    X 2.1.1ScopeofResponsibility(5/96) Z d 2.1.2Autonomy(5/96) @ J   X2.2LongTermPlanning(5/96)     X 2.2.1ContractPeriodofPerformanceLimitation(6/03)   2.2.2MultiYearvs.MultipleYearContracting(7/02)    X   2.3AnnualPlanning(5/96)    X 2.3.1SourcesandContents(5/96) V` 2.3.2IndependentGranteeCostEstimate(4/05) <F   X 2.4SourceSelectionPlan(5/96)   X 2.4.1FileDocumentation(5/96)  2.4.2FullandOpenCompetition(5/96)    2.4.2.1FullandOpenCompetitionPrinciple(5/96)  2.4.2.2RestraintsonCompetition(5/96) lv   ` 2.4.2.2.1BrandNames(6/03) 8B  `  N B.` hp x (#XB2.4.2.2.2WrittenStandardsofConductandConflictsofInterest:  ( 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) $!  X %"  X2.4.3.1FixedPriceContracts(4/05) h&r# 2.4.3.2CostReimbursementContracts(5/98) N'X $ 2.4.3.3TimeandMaterialsContracts(5/98) 4(>!% 2.4.3.4LaborHourContacts(5/98) )$"& 2.4.3.5CostPlusPercentageofCostContracts(5/98) * #'    ,%*  -&+  ~.', Ї2.4.4Payments(5/98)     2.4.4.1PaymentofthePrice(5/98)  2.4.4.2AdvancedPayments(6/03)   2.4.4.3ProgressPayments_(4/05)_   2.4.4.4WithholdingandFinalPayment(5/98) t ~  Z d  X XE.` hp x (#X(#E2.4.5IndefiniteDeliveryContracts(10/99) @ J  X XE.` hp x (#X(#E 2.4.5.1DefinitequantityContracts(10/99)    2.4.5.2RequirementsContracts(10/99)   2.4.5.3IndefinitequantityContracts(10/99)     % n %n   `     h 2.1ORGANIZATIONOFPROCUREMENTFUNCTION    % o %o?2.1.1ScopeofResponsibility  pz  *pq ddd Xdd Xdd X(#(#,jj+  :"""'<F<F  :dd REQUIREMENT N"""";#  """  NddFTACircular4220.1E,paragraph5a!GranteeSelfCertification,statesthatFTAintendsto   relyongrantees'[annual]"selfcertifications"thattheirprocurementsystemmeetsFTA  requirementstosupporttherequiredfinding[byFTA]thatagranteehasthetechnicalcapacity  tocomplywithFederalprocurementrequirements.  FTACircular4220.1E,paragraph7b!ContractAdministrationSystem,requiresgranteesto  maintainacontractadministrationsystemthatensuresthatcontractorsperforminaccordance fp withtheterms,conditions,andspecificationsoftheircontractsorpurchaseorders. LV 3)'2<   """" 3 DEFINITIONS  !     `  Centralize-Toconcentrateprocurementactionsanddecisionsinonepersonorgroupwithinan "  organization. #! ContractingOfficer-Aprocuringofficialwhohasdelegatedauthority,usuallyincluding %# authoritytosigncontractsandamendmentsonbehalfoftheprocuringagencyforoneormore n&x$ specificcontracts. T'^ % ContractingOfficer'sTechnicalRepresentative(_COTR_)-Arepresentativeoftheprocuring  )*"' agencywhohasmorelimitedauthoritythanthecontractingofficer,usuallyincludingproviding *#( technicaldirectiontothecontractor. *#)   .'- _ ԇDISCUSSION    AsaContractingOfficeryouareresponsiblebothforyourcontractscost-effectiveness  anditscompliancewithFederalandstaterequirements.Itiseasiertofulfillthese   responsibilitiesifmostofthedecisionsandcontractualactionsconcerningprocurement   arefocusedinoneormoreindividualswhoarefamiliarwithprocurementrequirements t ~ andprocedures.Theseactionsbeginwithplanningandsolicitationofoffers,include Z d communicationwithofferorsandcontractors,andcontinuethroughcontractacceptance @ J andwarrantyenforcement.Exceptinverysmallorganizations,thecontracting &0 responsibilitieswilloftenresidewithdifferentindividualsthantheindividualswhowould    bestunderstandthefunctionalandperformancerequirementsofthegoodsorservices.   Theselatterpersonsareyourinternalcustomers.     Purpose    Youandtheleadershipofyourorganizationneedtoclearlyunderstandthescopeofthe pz  procurementfunctionandorganizeresponsibilitiestoaccomplishseveralobjectives: V`  y{(y3"y3"  y3[23  0 `   toobtainthebestbuyforyouragencywhichrequiresanevaluationofallthe ", servicequality,safety,cost,schedule,andotherobjectivesoftheagency's  operatingfunctions;y3[݌` (#` (# Ќ     ?(` ` hp x (#X(#?  "y3"     E.` hp x (#` ` X(#Ey3t23  0 `   tocomplywithFederal,state,local,andagencyprocurementrequirements;y3t ݌` (#` (# Ќ     ?(` ` hp x (#X(#?  "y3"     E.` hp x (#` ` X(#Ey3]!23  0 `   toensureanunderstandingofthepreciseauthorityofyouandyouragencyteam  membersindealingwithsupplierswho,whilepartnersinmanyrespects,have lv someintereststhatconflictsharplywithyouragency's;andy3]!!݌R\` (#` (# Ќ     ?(` ` hp x (#X(#? 8B "y3"     E.` hp x (#` ` X(#Ey3#23  0 `   tocontrolthroughfinite,professionalboundaries,thepossibilityofcorruptionor  ( unethicalpractices.y3#$݌!` (#` (# Ќ    Theseobjectivesrequirethecleardefinitionandassignmentofprocurementresponsibilities.A " specificaspectofthatassignment,theneedforautonomy,isdiscussedinmoredetailinthe #  followingsectionoftheManual. $!  BestPractices  h&r# IdentificationofNeed-Theinitialidentificationofneedisoneaspectoftheprocurementcycle 4(>!% thatisgenerallythesoleresponsibilityofyourinternalcustomers(i.e.,programortechnical )$"& personnelforwhomyouareprocuringgoodsorservices).However,youmaybeinapositionto * #' facilitatetheconsolidationofprocurementsofdifferentinternalcustomerswiththesameneed. *#(  ~.', ЇProcurementPlanning!Preparationofprocurementplanning,ontheotherhand,shouldbe  exclusivelyaprocurementfunction.Ifyouragencyhasnotconductedformalplanning,this  processisawaytoestablishtheneedforaseparateprocurementfunctionanddemonstrateits  valuetotheorganization.Specificsuggestionsforusefulplanningactivitiesarediscussedbelow   underlongrangeandannualplanningcycles.   PreparationofSpecifications!Preparingspecificationsorstatementsofworkisusuallya Z d customerfunction.Generally,customershavethegreatestunderstandingoffunctionaland @ J performancerequirements;however,theprocurementfunctionshouldplayatleastanadvisory &0 roleinordertoavoidexclusionaryspecificationsandtoencouragefreeandopencompetition.    SolicitationofOffers!Thesolicitationofoffers(includinginvitationforbidsandrequestfor   proposals)isusuallythefirstimportantpublicactiontheagencytakes,anditshouldclearlybe   theresponsibilityatthispointoftheprocurementstaff.Customerteammembersareoften   helpfulincompilinglistsofpotentialofferors,andshouldparticipateintheprocurementprocess,   butcommunicationswithofferorsandtheofficialactionofsolicitingoffersisaprocurement pz  function. V` Communications!Ifcommunicationwithofferorsisdecentralized,oneofferormayobtainmore ", informationabouttheagency'spreferencesorevaluationprocessthantheothers.Itisageneral  practice(exceptatthesmallestagencies)torestrictcommunicationwithofferorstoonly  procurementpersonnelsothatnoofferorcouldgainanadvantageorapparentadvantageover  another.  EvaluationofOffers!Procurementpersonnelwillusuallyrequestandrelyupontheirtechnical  customerstoevaluatethetechnicalmeritsofproposalsandassesstheofferorsabilitytoperform lv thecontractsuccessfully.TheProcurementOfficermustoverseethetechnicalevaluationto R\ ensureitisconsistentwiththeevaluationcriteriapublishedintheRFPandthatthecontractfile 8B isadequatelydocumentedtoreflecttherelativestrengths,deficiencies,weaknessesandrisksof  ( thevariousproposals.Itisimportantthatthetechnicalevaluationprovideaclearnarrativeof ! theproposalsrelativemeritsandnotmerelyanumericalratingoftheproposals.Tomaintain ! theoverallintegrityoftheprocurement,theprocurementfunctionnormallymustatleast " approvetheselectionand(ifitdoesnothavesufficientauthority)willoftenpresentthe #  recommendationto $! thefinalauthority. %" Administration!Youshouldplayacontinuingroleintheadministrationofthecontracts, N'X $ particularlyinchangesanddisputes.Acceptanceofgoodsandservicesandpaymentapprovals 4(>!% alwaysrequireyourreview.Insimplerorroutinesituations,areceivingreportorCOTR )$"& acceptancecanbematchedtoyouroriginalpurchaseordertoensurepropercontrol. * #' Centralization/Decentralization!Manyorganizationsfinditmoreefficienttopermitcustomer +$) 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. t ~  % r %r;2.1.2Autonomy  @ J  DISCUSSION      Autonomyoftheprocurementfunction,oritsindependencefrominternalcustomers,is   importanttocarryingoutprocurementresponsibilitieswithoutundueinfluencebythe   customersandusersofthegoodsandservicesprocured.Whilethedegreeofautonomy   andorganizationalreportingrelationshipswillvarywiththesizeoftheorganizationand   itspolicies,autonomyenablesprocurementpersonneltogiveunbiasedconsiderationto pz  procurementprinciplesandrequirements,aswellastotheschedule,budget,functional V` andotherrequirementsoftheinternalcustomers. <F Purpose   Adebatehasragedforyearsbetweenthosewhoareprocessoriented(procurementofficialsand  compliancedepartmentssuchaslegal,internalaudit,orgrants)andthosewhoareprogram  oriented(maintenancemanagers,engineers,projectmanagers).  "y3"    y3S@23  0 `   Shouldtheprocurementfunctionsdescribedintheprevioussectionbecontrolled lv bytheprogramfunctions?Afterall,itistheprogramofficewhoseneedsaretobe R\ met,and,inmostaccountingsystems,theprogramtowhosebudgetthepurchase 8B willbecharged.y3S@@݌ (` (#` (# Ќ  "y3"  y3dB23  0 `   Shouldtheprocurementofficialbeentirelyautonomousandevaluatetheneedsof ! theprogram(e.g.,forimmediateservices)againstthelegalorprocedural " requirementsofthefundingsource(e.g.,FTACircular4220.1EifFederalfunds)?y3dBB݌# ` (#` (# Ќ  ! ! y{(yyy{  E.` hp x (#X(#ESomedegreeofautonomyoftheprocurementfunctionisnecessaryorganizationallyand %" functionallysothatprocurementpersonnelwillbefreefromundueinfluenceorpressureinthe h&r# awardandadministrationofcontracts.Theobvioussolutiontotheconflictbetween"process" N'X $ and"program"istohaveateaminwhicheachmemberrecognizesthestrengthsandcapabilities 4(>!% oftheotherteammembersandappreciatestheroleeachsidebringstothecontracttable.This )$"&     -&+ soundseasytoaccomplishbut,inmostpracticalsituations,isverydifficulttoachieve. l#  1      Failure   toachieveunityandteamworkwithintheagencyintheawardingandadministrationofpublic  contractscreatesfrequentopportunitiesforacontractortotakeadvantageofacontentiousstaff  relationshiptoitsfinancialadvantage(andtheagency'sfinancialdisadvantage).Achieving   properbalancebetweengroupsrequiresdelicatebalancingofpersonalitiesandcorporate   objectives,astrongexecutive,andawell-trainedstaff.Itmustalsoberecognizedthatthereis t ~ notextbookanswerthatwillworkineverysituationandineveryagency. Z d   Inadditiontobalancingtherolesofprogramandprocessinterestsinmakingprocurement &0 decisions,thepaymentofyouragency'sfundstocontractorsgenerallyrequiresthree    independentconcurringactions.Therequirementforindependentconcurringactionsis   sometimescalled"internalcontrol,"asitisamethodfortheagencytocontroltheproprietyofits   actionsinternally,ratherthanrequiringexternalreviewsandcontrol.Whilebestpracticesdiffer,   allauthoritiesrecognizeafundamentalneedforasystemofchecksandbalancesintheoverall   procurementprocess.Inanorganizationwithnochecksandbalances,ifanindividualperceived   aneedforastaffcar,thatpersoncoulddraftthespecificationsforthecar,preparethe pz  solicitationdocument,orderthecar,approvethecontract,inspectthepreparationofthecar, V` administerthecontract,acceptthecarafterdelivery,signtheagencychecktopaythedealer,and <F usethecarinamannerthepersondeemedappropriate.Itshouldbeobviousthatanorganization ", andprocurementprocesssuchasthiswouldnotbecredibleandwouldbesubjecttogreatabuse,  actualorperceived.Asaresult,mostpublicandprivateagenciesdividethosefunctionsamong,  atleast,threedistinctelementswithinitsorganization.  "y3"   E.` ` hp x (#X(#Ey3SQ23  0 `   Therequiringactivityisrepresentedbytheprogrammanagerwhoisresponsible  fordeterminingtherequirement,preparingthespecificationsand,then,actingas  thetechnicalrepresentativeoradvisortothecontractingofficerduringcontract lv performance.y3SQQ݌R\` (#` (# Ќ  H+` ` hp x (#` ` X(#H 8B "y3"  H.` ` hp x (#` ` X(#Hy3 T23  0 `   Theprocurementactivityisrepresentedbythecontractingofficerwhois  ( responsibleforensuringspecificationsarenotrestrictive,preparingthey3 TT݌!` (#` (# Ќ   ` solicitationdocumentinaccordancewiththelawandrulesandregulationsofthe ! agencyandtheFTA,solicitingtherequirement,andawardingthecontractin " accordancewiththesolicitation.Contractadministrationfunctionsareusually #  sharedwiththerequiringactivityandinvolvesuchfunctionsasapproving $! payment,acceptingthegoodsorservicesbought,andclosingoutthecontract. %"  h&r#  N'X $  4(>!% /  XH+ ` hp x ` ` X(#H  ?+ ` hp x (#X?/W  /WX݌̌ X-` ` X(#` X(#-    * #' "y3"  K.` ` hp x (#` ` X(#Ky3cY23  0 `   Thepaymentactivityisrepresentedbyathirdparty(thefinancedepartment)who  ensuresthatallapprovalsareobtainedandthatthepaymentiswithinthedollar  amountofthecontract.Often,theaccountspayablefunctioninfinanceeither  physicallyorelectronicallymatchesthreedocumentsissuedbythreedifferent   employees(thepurchaseorder,receivingreport,andapprovedinvoice)before   releasingfunds.y3cYY݌t ~` (#` (# Ќ   K.` hp x (#` ` X(#KTheprocurementandpaymentactivitiesare"process"functionsensuringthatthegoodsare @ J boughtandpaidforinaccordancewiththetermsofthecontract.The"program"activityisto &0 determinewhatisneededandthatitisobtainedwithinthetimerequiredandbudgetallocated.     BestPractices    DegreeofAutonomy-Fromanarrowprocurementperspective,theprocurementactivitywould   enjoythehighestdegreeofautonomywhereitreportsdirectlytothegoverningpolicyboardof   yourorganization.Mosttransitorganizationshavetoomuchdirectoperatingresponsibilityto pz  permitthisdegreeofautonomy.Threesolutionsare: V` "y3"   H1` ` hp x (#X(#Hy3`23  0 `   Procurementandcontractingcanreporttoachiefexecutive.y3``݌",` (#` (# Ќ  K.` ` hp x (#` X(#K  "y3"  H1` ` hp x (#` X(#Hy3a23  0 `   Mosttypically,theprocurementdepartmentreportstoanadministrativeor  financialfunctionthatisindependentoftheprimaryinternalcustomers(facility  equipmentandoperatingfunctions).y3a.b݌` (#` (# Ќ  K.` ` hp x (#` X(#K  "y3"  H1` ` hp x (#` X(#Hy3d23  0 `   Somedegreeofautonomycanbepreservedevenwithinanoperatingor  implementationfunctionifprocurementisseparatedfromtheprogramdelivery lv subgroups.y3dvd݌R\` (#` (# Ќ   K.` hp x (#` X(#KfB+ ` hp x X(#B  f-f  Inmediumandlargesystems,ifthecontractingfunctionisnotseparatedfromtheprogramf-ff݌  ( Ќ! X(#X!  fB+ ` hp x X(#B  f~g  office,thereisaninadequatesystemofchecksandbalancesontheprocurementprocess.f~gg݌ ! Ќ! X(#X!  fB+ ` hp x X(#B  fh  Overall,procurementpersonnelshouldhaveenoughautonomyorchecksandbalancesto ! achieveaqualityproductatafairandreasonablepricewithoutrealorapparentconflictsof " interestinthesolicitation,evaluationoraward.fh:i݌ #  Ќ! X(#X!  fB+ ` hp x X(#B  fj  fj=k݌̌! X(#X!  % | %|k2.2LONGTERMPLANNING  %"  DISCUSSION N'X $ Longtermprocurementplanning(i.e.,planningmorethanoneyearinadvance)isone )$"& optiontobeconsideredbylargetransitsystemsandbysystemsplanningamajortransit * #' investment,complexcapitalproject,orasubstantialnumberofoperatingcontractsthat *#( willspanseveralyears.Systemswithoutcurrentmajorcapitalprojectsmayfindthat +$) annualplanningisadequate. ,%*    ~.',   8Purpose   Procurementplanscoveringseveralyearsmaybeanimprovementoverpartitioningor  consolidationinmajorprojectsasawaytofacilitatethemostcost-effectiveprojectmanagement   anddelivery.Theplanscanidentifymajorchangesinprocurementworkload,andcanobviate   anytendencytorushprocurementdecisionsoractivitiesinwaysthatresultinwaste(e.g., t ~ throughfailuretoconsolidatemajorprocurements)orrisknon-compliance(e.g.,through Z d inadequatenoticeandnon-competitiveawards). @ J PlanContents-Alongtermprocurementplanwouldidentifythemajorprocurementsprojected    overthenexttwotofiveyears.Themulti-yearelementoftheTransportationImprovement   Program(TIP)isagoodstartingpointforidentifyingfuturecapitalprojectsandtheir   correspondingprocurementrequirements.Typically,theprocurementplanincludesanyfixed   guidewayprojects,revenuerollingstockreplacementsorfleetexpansions,andmajor   constructionprojects.Inthecaseoffixedguidewayandotherconstructionprojects,where   multipleprocurementsmaybeinvolved,theplanwouldidentifytheinitialstrategyforpackaging pz  thedesign,construction,andequipment.Considerationwouldalsobegiventoturnkey V` procurementsandtolongtermprojectsthatarenotpublicworks.Thelatterwouldincludemajor <F softwaresystems,fleetoverhaulandADAoperationalservice. ", MajorProjects-Oftenmajordesign/constructionandrailvehicleprocurementsareplanned  seventotenyearsinadvanceofneededcompletionbecauseseveralinterdependentcontractsmay  havetobeawardedinordertoaccomplishtheproject.Thetimeintervalstypicallyrequiredto  accomplishthesecontractawardsmightinclude:  "y3"    y3v23  0 `   OneyearadvanceplanningbeforeRequestforProposals(RFP)forthey3vw݌lv` #` # Ќ   ` engineeringservices; R\ "y3"  y3x23  0 `   FourmonthsfromRFPtoawardoftheengineeringservices;y3xBx݌ (` #` # Ќ     E.` ` hp x (#X(#E ! "y3"     E.` hp x (#` X(#Ey3y23  0 `   Twoyearstopreparetechnicalspecifications;y3y!z݌!` #` # Ќ     E.` ` hp x (#X(#E " "y3 "     E.` hp x (#` X(#Ey3Z{23  0 `   ThreemonthsfromcompletionofspecificationstosystemRFP;y3Z{{݌# ` #` # Ќ     E.` ` hp x (#X(#E $! "y3 "     E.` hp x (#` X(#Ey3<}23  0 `   SixmonthsfromsystemRFPtoaward;andy3<}}݌%"` #` # Ќ     E.` ` hp x (#X(#E h&r# "y3 "     E.` hp x (#` X(#Ey3 23  0 `   Threeyearsforsystemconstruction.y3 ݌N'X $` #` # Ќ      Theplanninganddesignprocessescanchangethisschedulesignificantly,andfewprocurements )$"& requirethislengthoftime.Whenmajorprojectsareundertaken,acomprehensiveprocurement * #' planthatoutlinesthesemajorprojectsalongwiththerestofyourprocurementworkloadwillbe *#( extremelyhelpful.Busprocurementsandmajorelectronic/datasystemsgenerallyrequireatleast +$) threeyearsofadvanceplanning. ,%*    ~.', Ї2.2.1ContractPeriodofPerformanceLimitation  *l}~ddjjpq##l,xbb+  :' :  REQUIREMENT N;#    N  49USC5326(b)limitstheprocurementofrollingstockandreplacementpartstono   morethanfiveyearsrequirementsunderasinglecontract,eventhoughdeliverymay   takeplacebeyondfiveyearsfromthedateoftheinitialcontract. j t FTACircular4220.1E,paragraph7.m,addressesthefiveyearcontracttermlimitation 6@  forrollingstockandreplacementparts.Italsorequiresthatcontractstermsforallother &  typesofcontractsbebasedonsoundbusinessjudgment.   FTACircular4220.1E,paragraph8!Competition,requiresallprocurementtransactions   tobeconductedinamannerprovidingforfullandopencompetition.   FTACircular4220.1E,paragraph7i!WrittenRecordofProcurementHistory,requires   granteestomaintainrecordsdetailingthehistoryofaprocurement. fp 3)'LV     3  DISCUSSION  *     OnMay29,2002,theFTAAdministratorissuedDearColleagueLetterC0802rescinding  FTAslongstandingfiveyearcontracttermlimitationforallcontractsexceptthosefor  rollingstockandreplacementparts.Thelimitationonrollingstockandreplacementparts  remainsineffectsincethelimitationisastatutoryrequirementandnotanFTApolicy.  l#  2         ThenewFTApolicyisnowexpressedinFTACircular4220.1E,paragraph7.mContract  TermLimitation. jt  Priortothisletter,FTACircular4220.1D,paragraph7mContractPeriodofPerformance 6 @ Limitation,hadlimitedtheperiodofperformanceofDOTassistedsupplyandservice !& contractstofiveyears,inclusiveofoptions,withoutpriorFTAapproval.  l#  3      ׀Asaresultof "  thisrescissionofthecontracttermlimitation,granteeswillnolongerberequiredtoobtain " priorFTAapprovalforcontracttermslongerthanfiveyears. l#  4      ׀Therescissionofthefive #  yeartermlimitappliesnotonlytonewcontractawards,buttoexistingcontractsaswell.  $!   GranteeprocurementswillcontinuetobereviewedbyFTAforcompliancewiththe full  %" andopencompetitionprinciplestatedinFTACircular4220.1Eparagraph8a,and  granteeswillcontinuetoberesponsibleforconductingtheirprocurementsinaccordance  withsoundbusinesspractices.Granteesareexpectedtobejudiciousinestablishingand  extendingtheircontractterms.     BestPractices  t ~     AlthoughFTAnolongerrequirespriorapprovalforcontracttermslongerthanfiveyears, @ J granteesremainresponsibleforconductingtheirprocurementtransactionsinaccordancewiththe &0  fullandopencompetitionprincipleexpressedinFTACircular4220.1E,paragraph8a.As    withanyprocurementaction,granteesshouldensurethattheirprocurementfilesadequately   documenttheirdecisionmakingprocess.Thisrecordshouldincludetherationaleforthe   contractperiodofperformance.   PeriodofPerformanceCriteria!Periodicrecompetitionofcontractspreservescompetitionand   keepspricescompetitive.Withoutperiodiccompetitiontheincumbentwillnothavethe pz  pressuresofacompetitivemarkettokeeppricesreasonableoranincentivetomaintain V` satisfactoryperformance.Thereare,however,criteriathatthegranteecanemploywhen <F decidinguponthetermofacontract.Someofthesecriteriaaresuggestedbelow. ", RevenueContracts!ItisFTApolicytoaffordallpersonsanequalopportunitytoaccessFTA  fundedassets.FTAalsoencouragesitsrecipientstomaximizenonfareboxrevenues.Thiscan  bedonethroughcontractualorotherappropriatearrangements,whichinvolvetheuseofFTA  fundedassetswithoutinterferingwithitstransituse.FTAhadpreviouslyinvokedafiveyear  termlimitasonewaytobalancethesepotentiallyconflictingpolicies.Itisimportantfor  granteestodocumenttheirrevenuecontractfileswithaneconomicanalysisthatdemonstrates lv howthesedualobjectiveswereaccomplished.Ifthecontractopportunitiesallowforfreeand R\ opencompetition,thentheGranteesprocurementpolicieswilladdressFTAsequalopportunity 8B policy.Wherehowever,thereisalimittothenumberoffirmswhowillbeawardedcontracts,  ( thenthegranteeshouldincludeaneconomicanalysisinthecontractfiletojustifythecontract ! term.Theeconomicanalysisshouldexplainwhythespecificperiodofperformancewas ! necessaryfortherecoveryofthecontractorsinvestmentandareasonableeconomicreturn.In " performingthisanalysis,granteesmaywishtoconductamarketsurveytoobtaininformation #  andrecommendationsfromprospectiveofferorstodeterminewhatthetypicalupfront $! investmentwillbeandwhatkindofcontractperiodwouldberequiredfortheofferorstorecover %" thatinvestmentandrealizeareasonableeconomicreturnonthatinvestment.Granteesshould h&r# documenttheirfileswiththisinformation,showingtheconclusionsreachedwithrespecttothe N'X $ contractperiodofperformancefinallyselected. 4(>!% Supplies!Typicallythecontractperiodofperformanceforsupplieswillbedictatedbythe * #' granteesforeseeableneedsandsuchfactorsaseconomicquantitybreaks,warehousingspace, *#( shelflife,technologyconcerns,etc.Whenthegranteeperceivesthattheremaybeanopportunity +$) toincreasecompetitionthroughalargerpurchase,thegranteemaywishtoconductamarket ,%* surveyofpotentialsupplierstodetermineiftheywouldmakeanofferunderadifferent  -&+ contractingscenario.Forexample,itmaybethattheywerediscouragedfrombiddingbecause  theupfrontinvestment(nonrecurringcostsoftooling,etc.)wouldbeprohibitiveovera  relativelyshortcontractperiod/limitedquantitybuy.However,iftheperiodwereextendedand  thequantityincreased,thesepotentialsuppliersmightbeinducedtoparticipate.Thisisineffect   whatonelargetransitagencyhasdonesuccessfully. l#  5      ׀Thus,theshortestcontractperiod/   minimumquantitybuymaynotnecessarilybetheoptimumdecision.Granteeswillneedto t ~ exercisesomediligenceindeterminingiflonger/largercontractsmightbeintheirbestinterests. Z d Iftheydecidetodothat,theyshoulddocumenttheirfilesshowingthebenefitsobtainedfromthe @ J longercontractperiods. &0 Whendecidingthebestperiodofperformanceforongoingservicescontracts,granteesneedto   considertheupfrontinvestmentbypotentialofferorsforspecializedpersonneltrainingandother   nonrecurringstartupcosts(e.g.,relocation)thatmustberecoveredoverthelifeofthecontract.   Onceagain,granteesshouldconsiderapresolicitationindustryoutreachtodiscusswith   individualsintheindustrywhattheymayseeasupfrontinvestmentsthatmustberecovered   fromtheprofitsanticipatedbythecontract.Thesediscussionsshouldrevealwhattheindustry pz  needsintermsofacontractlifeinordertosubmitcompetitivepricesagainsttheincumbent. V` Thesefactsneedtobedocumentedinyourcontractfilesasyoureachanagencydecisiononthe <F properperiodofperformanceoftheservicescontract. ",   2.2.2MultiYearvs.MultipleYearContracting  DISCUSSION  Granteesareauthorizedtoprocurerollingstockorothersuppliesandservicesbya  numberofmethods.Theseincludebuyingonanannualoronanasneededbasis,andalso lv onamultiyearormultipleyearbasis.Thedistinctionbetweenthemultiyearand R\ multipleyearmethodsisasfollows: 8B MultiYearContracting󀄀multiyearcontractingisamethodbywhichthegranteeprocures ! itsneedsfortheentirelifeofthecontract,eventhoughfundingfortheentirecontractisnot ! availableatthetimeofcontractaward.Thecontractrequiresthecontractortodeliverthe " entirerequirementsofthecontract.Optionprovisionsareunnecessary.Becausethe #  granteedoesnothavesufficientfundsfortheentirecontractattheoutsetofthecontract,it $! willbenecessarytorecognizeinthecontractthatthegranteemayhavetocancelthe %" contractatsomepointifadditionalfundsarenotforthcoming.Granteesmayhaveto h&r# includecancellationcostsinthecontractintheformofanadvanceagreementforany N'X $ programyearorportionthereofcanceledbythegrantee(butcancellationcostsarenot 4(>!% requiredtobeincludedifthecontractorwillacceptacontractwithoutthem).Additional  )$"& informationonmultiyearcontracting,whilenotbindingongrantees,isdiscussedinthe  FederalAcquisitionRegulation(FAR),Subpart17.1MultiYearContracting.  MultipleYearContracting󀄀multipleyearcontractingisamethodbywhichthegrantee   awardsacontractforabaseperiodofoneormoreyears,withoptionprovisionsforfuture   years'requirements.Thebaseperiodofthecontractisafirmandfullyfunded t ~ requirement.Beyondthebaseperiod,thegranteeusesoptionprovisions,whichmaybe Z d exercisedunilaterallyatthediscretionofthegranteeasadditionalfundingbecomes @ J available.Thereisnoneedfortheinclusionofcancellationpaymentssincetheexerciseof &0 theoptionsistotallywithinthediscretionofthegrantee.    Additionalinformationonmultipleyearcontracting,whilenotbindingongrantees,is   discussedintheFederalAcquisitionRegulation(FAR),Subpart17.2Options.   TermofContracts!AsnotedaboveinSection2.2.1!ContractPeriodofPerformance   Limitation,49USC5326(b)limitstheprocurementofrollingstockandreplacementparts pz  tonomorethanfiveyearsunderasinglecontract,eventhoughdeliverymaytakeplace V` beyondfiveyearsfromthedateoftheinitialcontract.  <F  %  %2.3ANNUALPLANNING    %  %Դ2.3.1SourcesandContents    DISCUSSION    Everytransitorganizationcancarryoutannualplanning;largesystemsmaymaintain lv multi-stepplanningprocesseswithsubstantivedocumentsthatarecarriedforwardfrom R\ yeartoyear.Smallsystemsmaypreparetheplansimplythroughpreparationofalistof 8B knownprocurementsatthebeginningofaplanningcycle(i.e.,inbudgetpreparationorin  ( themandatedplanningprocess).  !  Purpose  " Abasicpurposeformaintainingformalplansregardingprocurementswellinadvanceofissuing $! thesolicitationsistoenablemoredeliberateandcoordinateddecision-makinginmovingforward %" withtheprocurementsandrelatedactivities.Inaddition,procurementplanningisthebest h&r# opportunitytoidentifypotentialconsolidationofprocurements(e.g.,severalinternalcustomers N'X $ purchasingfurnitureorpersonalcomputersinthesametime-frame).Largeragenciesmayfind 4(>!% thatprocurementconsolidationyieldssubstantialsavings.Morespecifically,anadvance )$"& procurementplanisagoodwayfortheagencytodocumentitscompliancewithparagraph7(d) * #' ofCircular4220.1Ewhichstates,"Granteeproceduresshallprovideforreviewofproposed  *#( procurementstoavoidpurchaseofunnecessaryorduplicativeitems.Considerationshouldbe  giventoconsolidatingorbreakingoutprocurementstoobtainamoreeconomicalpurchase."  Theadvanceprocurementplanalsoprovesusefulinrespondingtoprocurementchallenges.It   providesanearlyrecordofdecisionsthatweremadeforbusinesspurposesbeforethereceiptof   offersandwithoutthepossibilityofcompetitivebias.Contractingofficialsshouldrecognizethat t ~ theplanisfluidandthattheircustomers'needswillchange,buteventhischangecanbemore Z d orderlyifthebaseplanhasbeendocumented.Achangeissimplyaccomplishedthroughaplan @ J update,ratherthanbeingpassedaroundbywordofmouthormemorandum,whichtendstoresult &0 inconfusionandindecision.     BestPractices    SourcesforPlans-Thepreparationofanadvanceprocurementplancanbeginwithdataalready   preparedforserviceandfinancialplanningpurposes.BothstateandlocalTransportation   ImprovementProgramslistmajorFederallyfundedprojectsforallmodesoftransportation. pz  WhilethepreparationoftheplansistheresponsibilityofthelocalMetropolitanPlanning V` Organizationandthestate,mosttransitagenciesareinvolvedinassistingwithdevelopmentof <F thetransitelementoftheplans,whichliststheirprojectsseparately.Aninternalcapitalbudgetis ", anothersource,whichmayhavemoredetailedorup-to-dateinformationonplannedcapital  procurements.  Althoughprojectsfundedwithoperatingfundsareoftensmallerandtheoperatingbudgetdoes  notusuallyofferasmuchspecificity,contractingofficialsmaybeabletoidentifymanyplanned  procurementsfromtheoperatingbudgetaswell.Historicalusageisanothervaluablesourcefor  theplan,particularlywhencomparedtotheoperatingbudget. lv Anothermethodavailabletoassistwithpreparationoftheplanistoconductasurveyofinternal 8B customers.Theymayprovidemoredetailonthebudgetedprojectsandmaybeabletoidentify  ( projectsthatarenotdifferentiatedinthebudget.Anannualsurveyofthemajorcustomerswill ! encouragethecustomersthemselvestoplantheirneedsforgoodsandservices. ! Annualprocurements,whichaccountforagreatdealofactivity,suchasparts,fuel,andother #  supplies,canbeprojectedatmostagenciesbasedonhistoricalneedandagency-wideplansand $! projects. %" PlanContents-Inadditiontotheidentityofeachprocurement,plansnormallyidentifythe N'X $ customercontact(s)(atmediumandlargeagencies),timerequirements,andfundingsources. 4(>!% Tentativestartdates,publicationdates,openingdatesandawarddatesareusuallybasedonthe )$"& typeandsizeoftheprocurementcontemplated.Timeshouldbeallowedfor: * #'     "y3 "  y323  0 `   preparationofasourceselectionplan(ifnotalreadycompleteorinprogress), +$) whereappropriate;y3݌,%*` #` # Ќ   -&+    E.` ` hp x (#X(#E"y3 "  y3623  0 `   preparationofspecifications;y36c݌` #` # Ќ  E.` ` hp x (#` X(#E  "y3"  y3d23  0 `   assemblyofthesolicitationofoffers;y3d݌` #` # Ќ  E.` ` hp x (#` X(#E   "y3"  y323  0 `   publicationperiodandtimeforpreparationofoffers,includingpre-bid/proposal   conference,whereappropriate;y3݌t ~` #` # Ќ  E.` ` hp x (#` X(#E Z d "y3"  y3/23  0 `   receiptandevaluationofoffers;andy3/\݌@ J` #` # Ќ   &0 "y3"  y323  0 `   requiredreviewsandapprovalactions.y3L݌  ` #` # Ќ      K KComplexprojectswillrequiremoretimeforprepar