Q = Question; A = Answer
A. Recipients of FTA financial assistance are required by both 49 U.S.C. § 5325(a) and the common grant rule (49 C.F.R. § 18.36(c)) to use full and open competition when making purchases. Usually a grantee fulfills this requirement by one of three procurement methods: 1) conducting a standalone procurement for a finite number of vehicles, 2) jointly procuring a finite number of vehicles with one or more grantees, or 3) accepting the assignment of another grantee’s contractual right to purchase a finite number of vehicles (aka “piggybacking”). One common requirement in all three methods is that the number of vehicles to be purchased is based on the grantee’s actual needs and is advertised with the solicitation. Thus, all respondents to the solicitation can provide a bid price based on the number of vehicles to be purchased as well as other salient factors contained in the solicitation. When the contract is formed, the grantee commits to purchasing vehicles at the agreed upon price and the vendor commits to furnishing the vehicles at that price.
Unfortunately, in the case of the Houston-Galveston Area Council (HGAC) agreement, HGAC did not advertise for a finite number of vehicles. Indeed, the HGAC does not actually purchase any vehicles, as it does not operate a transit system. Thus, the vendors’ pricing is not a response to actual grantee needs for vehicles, but appears to be based on an indefinite quantity of vehicles.
While the HGAC agreement does not result in a binding contract to purchase vehicles, it does result in a list of vendor products and prices, similar to catalogs of prices and services that are normally advertised by individual vendors. Under the HGAC agreement, the actual purchase of vehicles is accomplished by HGAC members negotiating with participating vendors and placing purchase orders based on the prices listed in the HGAC agreement. However, given the requirements for full and open competition, FTA grantees are not free to simply place an order with a preferred vendor on a sole source basis based on a vendor’s catalog price. This would be a sole source procurement on the part of the grantee rather than a procurement using full and open competition. (Posted: June, 2011)
A. FTA may require the repayment of any funds spent in violation of the requirements of FTA Circular 4220.1F, but that decision would be made on a case by case basis. As far as avoiding future problems, grantees may not use cooperative purchasing organizations that award open - ended contracts without minimum and maximum quantities, and without federal clauses and certifications. Grantees may, however, use their State GSA type contracts and add federal clauses to those contracts with the first purchase order issued by the grantee. Grantees may also use joint procurements with other grantees where the advertised and contracted quantities represent the needs of the grantee organizations involved, and the contracts otherwise comply with FTA Circular 4220.1F. (Posted: January, 2012)