3.1 Types Of Specifications and Risks (1/98)
3.2 Using Consultants to Prepare Specifications (1/98)
3.3 Specifications for Equipment and Supplies (1/98)
3.4 Specifications for Construction (1/98)
3.5 Statements of Work for Services (1/98)
§ 8.c (1) of FTA Circular 4220.1E requires that all solicitations shall:
(1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not, in competitive procurements, contain features that unduly restrict competition. The description may include a statement of the qualitative nature of the material, product, or service to be procured and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a "brand name or equal" description may be used as a means to define the performance or other salient characteristics of a procurement. The special features of the named brand which must be met by offerors shall be clearly stated.
§ 15 of the Master Agreement states that:
d. Exclusionary or Discriminatory Specifications. Apart from inconsistent requirements imposed by Federal statute or regulations, the Recipient agrees to comply with the requirements of 49 U.S.C. § 5323(h)(2) by refraining from using any Federal assistance awarded by FTA to support procurements using exclusionary or discriminatory specifications.
e. Bus Seat Specifications. A State or local government recipient may use specifications conforming with the requirements of 49 U.S.C. § 5323(e) to acquire bus seats.
As a recipient of public funds you will have to keep in mind that you represent the government, whose objectives in spending taxpayers' money will always include, as one of its goals, the goal of full and open competition. It is easy to lose sight of t his under the pressure of completing a project on time. Many programs in your domain have political sensitivity and media visibility. The temptations will be great to "get something out now," and it will always be easier to respond to the immediate pressure than to do a careful and thorough job at the outset. But time taken here, in the careful research and drafting of the specifications, will invariably reward you with a better product, at a lower cost, and with far fewer claims and delays during the life of the project. Another age-old problem in this area of drafting specifications is the desire to push the state of the art to a new level, to have the best possible system, regardless of cost. Government organizations tend to be applauded for the visible quality of the things they do, whether it is their services, or major transit systems. But against these real-life pressures stands the Federal and State Government policy to define the "minimum needs" and to avoid specifications which might unduly restrict competition. We need to remind ourselves that our industrial suppliers are also taxpayers whose tax dollars are helping to finance this procurement; as such they are to be given every opportunity to compete for the work they are helping to finance.
Technical Specifications and Statements of Work must clearly describe the products and services to be procured in terms which will permit full and open competition and which will meet the buying agency's minimum essential needs.
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3.1 TYPES OF SPECIFICATIONS AND RISKS
Specifications may be very detailed in describing the product or work to be done, or may simply require an end result, or may contain combinations of these two approaches. There are different levels of risks and responsibilities inherent in these different types of specifications. As a general rule the more design details there are in the specification, the more the buying agency becomes responsible for the performance of the product. Conversely, the more the specification describes the performance of the product instead of it's design features, the more responsible the contractor becomes for the end product. The legal theory involved in these cases is the implied warranty of specifications. 1 Following is a discussion of the various types of specifications and the risks inherent in each type.
Specifications detailing the manner or method of performance are often treated as design specifications. Contrasted with these are performance specifications, which leave the details of performance, and the details of design, to the contractor's discretion. Design specifications are those which set forth precise measurements, tolerances, materials, in process and finished product tests, quality control, inspection requirements, drawings and other specific information. It is this design type of specification, dealing with the details of the work, which the contractor is "required to follow as one would a road map," which gives rise to implied warranty. Under this type of specification, the buying agency (as the author of the specifications) will be held responsible for design and related omissions, errors, and deficiencies in the specifications and drawings. 2 There is an implied warranty that the detailed designs or processes will result in an end item which functions as required. Conversely, there is no implied warranty where the specification simply sets forth an objective or end result to be achieved, and the contractor is free to select the means of accomplishing the task, in which case he assumes responsibility for that selection. 3 In those cases where the specification contains both design and performance requirements, it will depend on what portion of the specification causes the contractor's difficulties, whether he has discretion to choose how to do the work. 4
Specific situations working to relieve the contractor from end item performance responsibility would include:
DISCUSSIONPerformance specifications dictate the performance of the end product, not how the contractor will do the work. These are specifications which give the contractor discretion in how to achieve the end result called for by the contract. 11 Performance specifications place the greatest degree of responsibility on the contractor and represent the lowest degree of legal risk (but not necessarily the lowest program risk) to the buying agency. It must be s aid, however, that there are valid reasons for specifying "design" type requirements within performance specifications, as where standardization is needed, where there is an opportunity to avoid duplication of design costs which have already been incurred, etc.
It should also be noted that the fact that the buying agency specifies a minimum requirement for some component or some aspect of performance (e.g., "at least 3 hp"; "no more than 2" wide") does not change a performance specification into a design specification; i.e., the buying agency is not warranting that an item which meets the minimum requirement will perform properly when incorporated into the system. For example:
These are specifications which require a particular manufacturer's product, part number, or model. The specification may allow for an "equal" product and should clearly set forth the salient physical and functional characteristics of the brand name pro duct. Under this type of specification if the contractor uses the brand name product or an approved "equal," the buying agency assumes the responsibility for proper performance (assuming the contractor used the product in the proper way). If the contractor elects to manufacture an equal product in-house, he will be responsible that the product performs equally with the specified brand named product. The BPPM Section 184.108.40.206.1 contains extensive guidance on the use of "brand name or equal" specifications.
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§ 8.a.(5) of the FTA Circular 4220.1E requires that grantees avoid situations known as "organizational conflicts of interest." An organizational conflict of interest arises when a contractor, because of other activities, relationships, or contracts, is unable or potentially unable, to render impartial assistance or advice to the grantee, or when a contractor's objectivity in performing the contract work is impaired, or when a contractor has an unfair competitive advantage.
The FTA Circular envisions two distinct problems when using consultants to prepare specifications or statements of work: (1) that the consultant will be biased toward a particular product or firm because he has business relationships with that firm or a financial interest in the product, or (2) that the consultant will have an unfair competitive advantage if he is allowed to compete for a product or service which he helped to define in a specification or statement of work. When a contractor is used to prepare or assist in the preparation of specifications and statements of work, care must be taken to ensure that the contractor will be completely unbiased in his decisions. Buying agencies must ascertain that the contractor has no financial or organizational relationship with a potential supplier which might motivate him to slant a specification toward that supplier. With respect to the unfair competitive advantage issue, contractors developing specifications should not be allowed to compete on procurements for which they prepared specifications.
Contractors who are working on specifications to be used for competitive procurements should be required to accept a "Limitation on Future Contracting" provision in their contract for the specification/ consulting work which precludes them from bid ding on the resulting procurement. Further guidance may be found in the BPPM Section 220.127.116.11.2 "Organizational Conflicts Of Interest."
It is also advisable when using consultants to draft procurement specifications to obtain a formal written certification with their proposal which describes all of their past, present or planned organizational, financial, contractual or other interests with organizations whose products or services may be offered in response to the procurement on which they will be consulting. Where there are such interests identified by the contractor, the Contractor should also be required to describe why it believes that performance of the proposed consulting contract can be accomplished in an impartial and objective manner. An example of a certification requirement used by the Federal Department of Transportation may be found in Appendix B.10. 15
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3.3 - SPECIFICATIONS FOR EQUIPMENT AND SUPPLIES
Plans, drawings, specifications or purchase descriptions should state only the minimum needs of the agency and describe the supplies in a manner which will encourage maximum competition, avoiding restrictive features which might restrict offers.
Planning - A market survey should be conducted to determine sources that offer products which meet the requirements. Caution must be exercised to avoid disclosure of agency budgets or other information which might give a supplier an unfair competitive advantage. Descriptive literature from one prospective supplier cannot be used as the sole basis for writing specifications. Determine what your essential requirements are and separate these essentials from those which are "nice to have" or desirable. In your research determine what the state-of-the-art is and develop your specification within the state-of-the-art.
The technical provisions of construction specifications must be in sufficient detail so that, when used with the applicable drawings and the documents incorporated by reference, bids can be prepared on a fair and competitive basis. In contracting with public funds the essential objective in drafting specifications is to satisfy the fundamental public policy requiring full and open competition. This objective is not only a Federal requirement but most states and local governments have similar statutes. 17
Contracting books, manuals, etc. - Volumes have been written about the forbidding and exotic world of construction contracting, and we would like to begin by advising you to obtain some essential roadmaps for this journey, beginning with a comprehensive text entitled, appropriately, Construction Contracting. 18 We would also recommend you obtain a copy of the Construction Contract Administration Manual (which is devoted entirely to construction contracting) produced by a public agency working with FTA grant funds. 19
"A contractor should not be required to wade through a maze of numbers, catalogues, cross-reference tables and other data resembling cross-word puzzles in order to find out what the government requires in an invitation for bids." 20
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3.5 STATEMENTS OF WORK FOR SERVICES
A statement of work, rather than a specification, is used for services contracts. A statement of work defines the work required of a contractor, either to design the equipment to be procured or to provide services which are not related to the procurement of hardware.
Statements of work should include the following elements:
FTA MA - Federal Transit Administration Master Agreement
1 - United States v. Spearin, 248 U. S. 132 (1918).
3 - J. L. Simmons Co. V. United States, 188 Ct. Cl. 684, 412 F.d. 1360 (1969) at 689.
5 - J. L. Simmons Co., id.
11 - Aleutian Constructors v. United States, 24 Cl. Ct. 372 (1991).
12 - Intercontinental Mfg. Co. V. United States, 4 Cl. Ct. 591 (1984) at 595.
15 - Transportation Acquisition Regulation (TAR) Clause 1252.209-71 DISCLOSURE OF CONFLICTS OF INTEREST (Oct 1994).
16 - Prepared by Office of Procurement, The Metropolitan Transit Authority, Harris County, Texas, dated January 1987.
18 - The George Washington University's National Law Center's Government Contracts Program has published a number of excellent books dealing with Government contracting. One such book is Construction Contracting (The George Washington University: Washington, D.C., 1991). For a complete catalogue of contracting-related texts contact: The GW Bookstore, 800 21st. St., N.W., Washington, D.C. 20052, Phone: (202)994-6870, Fax: (202) 296-9445 http://www.bkstr.com/webapp/wcs/stores/servlet/StoreCatalogDisplay?storeId=10370&langId=-1&catalogId=10001.
19 - Construction Contract Administration Manual, Port Authority of Allegheny County, Procurement Department, 2235 Beaver Avenue, Pittsburgh, PA 15233-1080, Phone: (412) 237-7000, FAX: (412) 237-7101. This Manual contains many worthwhile things, such as procedures for bid document preparation, bidding, contract award, and contract administration; General Contract Provisions; a multitude of forms for reporting, evaluating, administering, etc.
20 - Gorn Corp. V. U. S., 424 F 2d 588 (Ct. Cl. 1970), noted at 592.