Third Party Procurement
Frequently Asked Questions
Q = Question; A = Answer
Q. What are the product liability insurance requirements for a product before it is purchased by a transit authority?
A. There is no standard requirement in the transit industry for product liability insurance. Each transit agency will have its own policy with respect to the amount and type of insurance coverage they require from their suppliers. (Revised: August 12, 2009)
Q. We are required to provide workers compensation insurance to our contract employees. However, this coverage is written separately from the agency’s normal coverage because our contract employees are not classified as "agency employees" and cannot be covered under our plan. Is it necessary to go out for solicitations each year for this type insurance coverage?
A. If FTA funds are being used to compensate the agency for these insurance costs, then FTA would require that the workers compensation insurance contract be competed. One way to lessen the burden on your agency would be for you to solicit for a multi-year contract. (Revised: August 12, 2009)
Q. If the transit agency's (a recipient of FTA funds) insurance broker is procured through a competitive RFP process, is that broker required to solicit specific insurance plans and costs from insurance carriers through yet another formal RFP process?
A. All contracts awarded with FTA funds must comply with FTA Circular 4220.1F, which is available online.
The short answer to your question is that the solicitation (RFP) and resulting contract must comply in all respects with the FTA procurement requirements even though a broker is involved. The RFP is really your agency's RFP regardless of who prepares it. (Posted: September, 2010)
Q. We recently had a sealed bid situation where after bid opening the lowest bidder could not comply with the insurance requirements. We talked with our risk manager and he acknowledged the insurance requirements were not needed and no one in the industry probably had that level or kind of insurance. Are we allowed to waive these requirements for this one bidder even if we did not change the requirements for all bidders who could have potentially bid. The risk manager said that the insurance requirements that could not be fulfilled were not an essential part of this procurement and most likely, no vendor would have been able to comply with it. I was instructed to allow the waiver of the requirements for this specific bidder/for this specific procurement.
A. The insurance requirements in your IFB terms and conditions were a material factor concerning the responsiveness of bids, and they cannot be "waived" without notifying all prospective bidders that the requirements have been removed from the IFB. The reason is that prospective bidders may have chosen not to bid because they could not meet the requirements. By re-soliciting bids without the unnecessary insurance requirements you will have removed what might be an impediment to bidding and secure more competition at better prices. (Posted: July, 2011)