Third Party Procurement

Frequently Asked Questions

Q = Question; A = Answer

Q. The most recent FTA document I can find addressing tag-ons is from 1998. In this "Dear Colleague" Letter dated October 1, 1998, it states: "Presently, that policy applies to rolling stock procurements only; however, consideration is being given to expanding the policy to cover other procurements in "the near future." My question is, has the FTA applied this policy to more than rolling stock?

A. The FTA policy regarding a prohibition on "tag-ons," as expressed initially in the Dear Colleague Letter dated October 1, 1998 and then mentioned again in the December 21, 1998 Dear Colleague Letter, was originally applied by FTA to rolling stock. However, the principles involved with the tag-on prohibition would apply to all classes of procurements. Tag-ons are defined by FTA as adding quantities on to the contracted quantities (base and option) as originally advertised, competed, and awarded, whether for the use of the buyer or for others and then treating the add-on portion as though it met the requirement of the original competition. Tag-ons are actually sole source additions that have not been justified and approved by the grantee's management official having authority to approve of sole source contract awards. This is why they are not permitted for any type of procurement. However, if the grantee believes it has a situation justifying a sole source contract award to a particular supplier, and the grantee documents the sole source rationale and has it approved by its management official(s), then it may process the procurement through another agency's contract, assuming that contract meets all the requirements of FTA Circular 4220.1F. This type of action would not be a tag-on as FTA has defined it (i.e., it would not be treating the award as though it were being made under the umbrella and authority of the original competition). Rather, it would be "up-front" in treating the action as a sole source award and it would be approved as such.

The BPPM has been modified and will soon be published, to discuss the practice of piggybacking as it applies to all classes of procurements. It is not limited to rolling stock. The Best Practices Procurement Manual (BPPM) discusses "piggybacking" and "tag-ons" in Section 6.3.3, which deals with rolling stock procurements, because it was in the area of rolling stock that abuses were first observed (and reported by bus manufacturers). Rolling stock continues to be the most problematic area of procurement for these practices. Additionally, the need for piggybacking is inherent to the buying of vehicles which have a long lead time and only a few manufacturers. While it would not be prohibited to procure other items through piggybacking, the need for such a procurement would probably be infrequent. (Revised: May 2010)