[Federal Register Volume 65, Number 138 (Tuesday, July 18, 2000)]
[Proposed Rules]
[Pages 44486-44490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17774]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Part 172
[FHWA Docket No. FHWA-98-4350]
RIN 2125-AE45
Administration of Engineering and Design Related Services
Contracts
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Notice of proposed rulemaking (NPRM); request for comments.
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SUMMARY: The FHWA proposes to revise its regulation on the
administration of engineering and design related services contracts in
order to establish procedures to be followed when using Federal-aid
highway funds for the procurement of engineering and design related
services, materials, equipment, or supplies. The proposed regulation
describes procurement methods contracting agencies are to use when
acquiring these services or related items. This proposed rule
implements 23 U.S.C. 112(b), as amended by section 307 of the National
Highway System Designation Act of 1995 (NHS Act) and section 1205(a) of
the Transportation Equity Act for the 21st Century (TEA-21), by
requiring States to award Federal-aid highway engineering and design
service contracts: In accordance
[[Page 44487]]
with the provisions of title IX of the Federal Property and
Administrative Services Act of 1949, or by use of equivalent State
qualifications-based procedures unless a State has previously
established by statute a formal procurement procedure for engineering
and design related services.
DATES: Written comments are due on or before September 18, 2000.
Comments received after that date will be considered to the extent
practicable.
ADDRESSES: Signed written comments should refer to the docket number
that appears at the top of this document and should be submitted to the
Docket Clerk, U.S. DOT Dockets Room PL-401, 400 Seventh Street, SW.,
Washington, DC 20590-0001. All comments received will be available for
examination at the above address between 9 a.m. and 5 p.m., e.t.,
Monday through Friday, except Federal holidays. Those desiring
notifications of receipt of comments must include a self-addressed,
stamped envelope or postcard.
FOR FURTHER INFORMATION CONTACT: Mr. Gary E. Moss, Office of Program
Administration, (HIPA-10), (202)-366-4654, or Mr. Steven Rochlis,
Office of the Chief Counsel, (HCC-30), (202)-366-1395, FHWA, 400
Seventh Street, SW., Washington, DC 20590. Office hours are from 7:45
a.m. to 4:15 p.m. e.t., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access
Internet users may access all comments received by the U.S. DOT
Dockets, Room PL-401, by using the universal resources locator (URL):
http://dms.dot.gov. It is available 24 hours each day, 365 days each
year. Please follow instructions online for more information and help.
An electronic copy of this document may be downloaded using a modem
and suitable communications software from the Government Printing
Office's Electronic Bulletin Board Service at (202) 512-1661. Internet
users may reach the Office of the Federal Register's home page at
http://www.nara.gov/fedreg and at the Government Printing Office's web
page at http://www.access.gpo.gov/nara.
Background
The FHWA's regulation on the administration of engineering and
design related services contracts, 23 CFR part 172, draws its authority
from 23 U.S.C. 112. Title 23, U.S.C., section 112 references the
provisions of title IX of the Federal Property and Administrative
Services Act of 1949 (Pub. L. 92-582, 86 Stat. 1278 (1972); 40 U.S.C.
541, et seq.) which provides the qualifications-based procedures to be
followed for the selection of engineering and design related services.
Section 307 of the NHS Act, Public Law 104-59, 109 Stat. 568, modified
23 U.S.C. 112 by requiring grantees of Federal highway funds to accept
indirect cost rates for architectural and engineering firms which are
established in accordance with the Federal Acquisition Regulations
(FAR) and accepted by a cognizant Federal or State agency if such rates
are not under dispute. The law also specifies that once a firm's
indirect cost rate is accepted, the grantee shall apply those indirect
cost rates for the purposes of contract estimation, negotiation,
administration, reporting, and contract payment. The NHS Act also
provided a period of time in which State Departments of Transportation
(State DOTs) could adopt statutes to allow use of alternate State
procedures other than those provided for in the NHS Act.
Section 1205 of TEA-21, Public Law 105-178, 112 Stat. 107 (1998),
further modified 23 U.S.C. 112(b) by removing the provision allowing
State DOTs to adopt alternate procedures for the procurement of design
and engineering consultants.
The changes made to 23 U.S.C. 112(b) by these two laws, as well as
provisions in 23 U.S.C. 106(c) relating to the assumption by the State
of responsibilities of the Secretary for project design and
construction, require the FHWA to modify 23 CFR part 172, subpart A--
Procurement Procedures. In addition, the FHWA proposes to add several
new terms to the definition section to clarify existing terms used in
the regulation.
The small purchase procedures section would be revised by raising
the maximum value for small purchases from $25,000 to $100,000.
The references to Certification Acceptance (CA), and Sec. 172.15,
Alternate Procedures, which were incorporated into 23 CFR part 172 to
implement Certification Acceptance, would be removed since
Certification Acceptance was repealed by section 1601 of the TEA-21.
Reference to the Secondary Road Plan (SRP) and the Combined Road
Plan (CRP) demonstration project, would be removed since these programs
are no longer being funded.
Section-by-Section Analysis
Section 172.1 Purpose and Applicability
The statement of purpose and applicability would be revised to
remove the references to the Certification Acceptance Plans that were
repealed by the TEA-21; to remove an obsolete reference to the
Secondary Road Plans; and to remove the reference to Combined Road
Plans because the Secondary and Combined Road programs are no longer
being funded. Additionally, paragraph (b) would be revised to limit the
use of State statutes for an alternate procedure to those enacted into
law before June 9, 1998 (the date the TEA-21 was enacted) and
redesignated as Sec. 172.5(b).
Section 172.3 Definitions
The term ``cognizant agency'' would be added to the list of
definitions to mean any Federal or State agency that has conducted and
issued an audit report of the consultant's indirect cost rate that has
been developed in accordance with the cost principles contained in the
Federal Acquisition Regulations (title 48, Code of Federal
Regulations). This term was used in section 307(a) of the NHS Act. The
term ``competitive negotiation'' would be revised to prohibit the use
of procurement procedures enacted into State law after the enactment of
TEA-21 (June 9, 1998). The terms ``contract modification,'' ``extra
work,'' ``fixed fee,'' ``prenegotiation audit,'' and ``scope of work''
would be removed since they would not be used in the new regulation.
Section 172.5 General Principles
This section, with the exception of paragraphs (b) and (e) would be
removed. The material that was covered in Sec. 172.5 is either covered
by other regulations or is not required by law. The provisions of
paragraph (a) need for consultant services in management roles are
still required to be consistent with 49 CFR 18.36(a) which requires
States to use the same procurement procedures as if they were procuring
with State funds, except where such procedures are inconsistent with
Federal statute requirements (see 49 CFR 18.4). In addition, States
would still have to meet the provisions of 23 U.S.C. 112(b)(2) that
require a State to award architectural and engineering contracts
relating to highway construction in the same manner as a contract for
architectural and engineering services is negotiated under the Brooks
Architects-Engineering Act (title IX of the Federal Property and
Administrative Services
[[Page 44488]]
Act of 1949, as amended; 40 U.S.C 541-544) , or equivalent State based
qualifications requirements. Alternatively, prior to TEA-21, the
Congress authorized a State to adopt a formal procedure for procurement
of architectural and engineering services adopted by State statute (23
U.S.C. 112(b)(2)(B)(ii)).
Paragraph (b), written procedures, would be redesignated as
Sec. 172.9(a).
The provisions of paragraph (c) are still required to be consistent
with 49 CFR 18.36(a) which requires States to use the same procurement
procedures as if they were procuring with State funds, except where
such procedures are inconsistent with Federal statutory requirements
(see 49 CFR 18.4).
The provisions of paragraph (d) are still required to be consistent
with 49 CFR 18.36 and 18.37, except where such procedures are
inconsistent with Federal statutory requirements (see 49 CFR 18.4).
But, as stated in the comments for Sec. 172.5(a), State and local
agencies must meet the requirements of 23 U.S.C. 112(b)(2).
The requirements of paragraph (e), the Disadvantaged Business
Enterprise program, are specified under 49 CFR part 26. Paragraph (e),
is redesignated as paragraph (b).
The requirements of paragraph (f), Contractual responsibilities,
are still required to be consistent with 49 CFR 18.36(a) which requires
States to use the same procurement procedures as if they were procuring
with State funds, except where such procedures are inconsistent with
Federal statutory requirements (see 49 CFR 18.4). Because States would
be responsible for approving contracts and settlements, provided such
contracts and settlements follow the same policies and procedures as
the State would follow using State funds, there would no longer be a
requirement that such settlements be approved by the FHWA, except for
settlements on contracts requiring approval under proposal Sec. 172.9.
Section 172.7 Methods of Procurement
This section would be redesignated as Sec. 172.5 and revised. This
section generally covers the methods that can be used for procurement
of design engineering services. Those same methods are still in the
regulations, but have been simplified. The small purchase section would
be revised by raising the maximum amount for procurement by small
purchase procedures from $25,000 to $100,000 to conform to the
simplified acquisition threshold set in 41 U.S.C. 403(11) and 49 CFR
18.36(d). The threshold has already been raised from $25,000 to
$100,000 by FHWA memorandum dated June 26, 1996, from the Director,
Office of Engineering to the FHWA Regional Administrators to implement
the change in the final rule published in the Federal Register of April
19, 1995 (60 FR 19646) concerning 49 CFR part 18 and the change to 41
U.S.C. 403(11), which defines the ``simplified acquisition threshold''
to mean $100,000.
Section 172.9 Compensation
The information in paragraph (a) of this section would be
transferred to a new paragraph (a) in Sec. 172.7, Audit Principles, and
revised to prohibit procedures enacted into State law after June 9,
1998 (TEA-21). Paragraphs (b), (c), and (d) would be removed.
Section 172.11 Contract Modification
This section would be removed to promote uniformity with the common
grant rule, 49 CFR part 18. The requirements of this section would in
general be addressed by 49 CFR 18.36 and 18.52.
Section 172.13 Monitoring the Contract Work
This section would be removed to promote uniformity with the common
grant rule, 49 CFR part 18. The requirements of this section would be
covered by 49 CFR 18.36 which generally involve State procedures.
Section 172.15 Alternate Procedures
This section would be removed as it implemented 23 U.S.C. 117,
Certification Acceptance, which was repealed by section 1601 of the
TEA-21 in 1998.
Sections 172.21, 172.23, and 172.25 of Subpart B
Subpart B, Private sector involvement program, would be removed.
This section was developed to meet the requirements of the Intermodel
Surface Transportation Efficiency Act of 1991 (ISTEA), Public Law 102-
240, 105 Stat. 1914, section 1060, Private sector involvement program,
but has never been funded.
For ease of reference the following distribution table is provided:
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Old section New section
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172.1(a).................................. 172.1 Revised.
172.1(b).................................. 172.1 Revised and 172.5(b)
Revised.
172.3..................................... 172.3 Revised.
Cognizant agency.......................... Added.
Competitive negotiation................... Revised.
Contract modification..................... Removed.
Extra work................................ Removed.
Fixed fee................................. Removed.
Prenegotiation audit...................... Removed.
Scope of work............................. Removed.
172.5(a).................................. Removed.
172.5(b).................................. 172.9(a).
172.5(c).................................. Removed.
172.5(d).................................. Removed.
172.5(e).................................. 172.5(b) Revised.
172.5(f).................................. Removed.
172.7 introductory paragraph.............. 172.5 introductory paragraph
revised and 172.5(a)(1)
Revised.
172.7(a).................................. 172.5(a)(1) Revised.
172.7(a)(3)(ii)(B)........................ 172.5(a)(2) Revised.
172.7(b).................................. 172.5(a)(4) Revised.
172.7(c).................................. 172.5(a)(3) Revised.
172.7(c)(1)............................... 172.5(a)(3) Revised.
172.7(c)(1)(i)............................ 172.5(a)(3)(i) Revised.
172.7(c)(1)(ii)........................... 172.5(a)(3)(ii) Revised.
172.7(c)(1)(iii).......................... 172.5(a)(3)(iii) Revised.
172.7(c)(2)............................... Removed.
None...................................... 172.7(b) Added.
None...................................... 172.7(c) Added.
None...................................... 172.7(d) Added.
72.9(a)................................... 172.7(a) Revised.
172.9(b), (c), and (d).................... Removed.
None...................................... 172.9(a), (b), (c) Added.
172.11.................................... Removed.
172.13.................................... Removed.
172.15.................................... Removed.
172 Subpart B............................. Removed.
172.21.................................... Removed.
172.23.................................... Removed.
172.25.................................... Removed.
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Rulemaking Analysis and Notices
All comments received before the close of business on the comment
closing date indicated above will be considered and will be available
for examination in the docket at the above address. Comments received
after the comment closing date will be filed in the docket and will be
considered to the extent practicable, but the FHWA may issue a final
rule at any time after the close of the comment period. In addition to
the late comments, the FHWA will also continue to file relevant
information in the docket as it becomes available after the comment
closing date, and interested persons should continue to examine the
docket for new material.
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
The FHWA has determined that this action is not a significant
regulatory action within the meaning of Executive Order 12866 or
significant within the meaning of the U.S. Department of
Transportation's regulatory policies and procedures. This proposed
action would
[[Page 44489]]
not adversely affect, in a material way, any sector of the economy. In
addition, these proposed changes would not interfere with any action
taken or planned by another agency and would not materially alter the
budgetary impact of any entitlements, grants, user fees, or loan
programs. This rulemaking merely proposes to amend current regulations
governing the administration of engineering and design related services
contracts based on changes in law. It is not anticipated that these
proposed changes would affect the total Federal funding available under
the engineering and design related services contracts. Consequently, it
is anticipated that the economic impact of this rulemaking would be
minimal; therefore, a full regulatory evaluation is not required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the anticipated effects of this proposed
rule on small entities, such as local governments and businesses. Based
on the evaluation, the FHWA hereby certifies that this proposed action
would not have a significant economic impact on a substantial number of
small entities.
Essentially, this rulemaking proposes to implement certain changes
in 23 U.S.C. 112 as mandated by recent laws. The rulemaking would
eliminate sections that were removed by the recent laws and other
sections that were not required directly by law or that were outdated.
Thus, the projected impact upon the small entities affected is expected
to be negligible because the FHWA merely proposes to update, simplify,
and clarify existing procedures. We specifically invite comments on the
projected economic impact of this proposal and would consider such
information before completing our Regulatory Flexibility Act analysis
when adopting final rules.
Unfunded Mandates Reform Act of 1995
This proposed rule will not impose a Federal mandate resulting in
the expenditure by State, Local, and tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (2 U.S.C. 1531 et seq.).
Executive Order 13132 (Federalism)
The proposed action has been analyzed in accordance with the
principles and criteria contained in Executive Order 13132, dated
August 4, 1999, and it has been determined that this proposed action
does not have a substantial direct affect or sufficient federalism
implications on States that would limit the policymaking discretion of
the States. Nothing in this document directly preempts any State Law or
regulation.
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.205,
Highway Planning and Construction. The regulations implementing
Executive Order 12372 regarding intergovernmental consultation on
Federal programs and activities apply to this program.
Paperwork Reduction Act
This proposed action does not contain a collection of information
requirement for the purpose of the Paperwork Reduction Act of 1995, 44
U.S.C. 3501-3520.
National Environmental Policy Act
The agency has analyzed this proposed action for the purpose of the
National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) and has
determined that this action would not have any effect on the quality of
the environment.
Executive Order 12630 (Taking of Private Property)
This proposed rule will not affect a taking of private property or
otherwise have taking implications under Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights.
Executive Order 12988 (Civil Justice Reform)
This proposed action meets applicable standards in section 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.
Executive Order 13045 (Protection of Children)
We have analyzed this proposed action under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. This proposed rule is not an economically significant rule and
does not concern an environmental risk to health or safety that may
disproportionately affect children.
Regulation Identification Number
A regulation identification number (RIN) is assigned to each
regulatory action listed in the Unified Agenda of Federal Regulations.
The Regulatory Information Service Center publishes the Unified Agenda
in April and October of each year. The RIN number contained in the
heading of this document can be used to cross reference this action
with the Unified Agenda.
List of Subjects in 23 CFR Part 172
Government procurement, Grant programs--transportation, Highways
and roads.
Issued on: June 26, 2000.
Kenneth R. Wykle,
Federal Highway Administrator.
In consideration of the foregoing, the FHWA proposes to revise part
172 of title 23, Code of Federal Regulations to read as set forth
below:
PART 172--ADMINISTRATION OF ENGINEERING AND DESIGN RELATED SERVICE
CONTRACTS
Sec.
172.1 Purpose and applicability.
172.3 Definitions.
172.5 Methods of procurement.
172.7 Audit principles.
172.9 Approvals.
Authority: 23 U.S.C. 112, 114(a), 302, 315, and 402; 40 U.S.C.
541 et seq.; 41 U.S.C. 253 and 259; sec. 1205(a), Pub L. 105-178,
112 Stat. 107 (1998); sec. 307, Pub. L. 104-59, 109 Stat. 568
(1995); sec. 1060, Pub. L. 102-240, 105 Stat. 1914, 2003 (1991); 48
CFR 12 and 31; 49 CFR 1.48(b) and 18.
Sec. 172.1 Purpose and applicability.
To prescribe policies and procedures for exceptions to the general
contracting regulations under the common grant rule, 49 CFR part 18. It
is not the intent of this regulation to release the grantee from the
other requirements of the common rule. The exceptions involve federally
funded contracts for engineering and design related services for
projects subject to the provisions of 23 U.S.C. 112(a) and are issued
to ensure that a qualified consultant is obtained through an equitable
selection process, that prescribed work is properly accomplished in a
timely manner, and at fair and reasonable cost.
Sec. 172.3 Definitions.
As used in this part:
Cognizant agency means any Federal or State agency that has
conducted and issued an audit report of the consultant's indirect cost
rate that has been developed in accordance with the cost principles
contained in the Federal Acquisition Regulations (FAR).
Competitive negotiation means any form of negotiations that
utilizes the following;
(1) Qualifications-based procedures complying with title IX of the
Federal Property and Administrative Services
[[Page 44490]]
Act of 1949 (Pub. L. 92-582, 86 Stat. 1278 (1972));
(2) Equivalent State qualifications-based procedures; or
(3) A formal procedure permitted by State statute that was enacted
into State law prior to the enactment of Public Law 105-178 (TEA-21) on
June 9, 1998.
Consultant means the individual or firm providing engineering and
design related services as a party to the contract.
Contracting agencies means State Departments of Transportation
(State DOTs) or local governmental agencies that are responsible for
the procurement of engineering and design services.
Engineering and design services means program management,
construction management, feasibility studies, preliminary engineering,
design, engineering, surveying, mapping, or architectural related
services with respect to a construction project subject to 23 U.S.C.
112(a).
Private sector engineering and design firms means any individual or
private firm (including small business concerns and small businesses
owned and controlled by socially and economically disadvantaged
individuals as defined in 49 CFR part 26) contracting with a State to
provide engineering and design services.
Sec. 172.5 Methods of procurement.
(a) Procurement. The procurement of Federal-aid highway contracts
for program management, construction management, feasibility studies,
preliminary engineering, design, engineering, surveying, mapping, and
architectural related services as specified in 23 U.S.C. 112(b)(2)
shall be evaluated and ranked by the contracting agency using one of
the following procedures:
(1) Competitive negotiation. Contracting agencies shall use
competitive negotiation for the procurement of engineering and design
related services when Federal-aid highway funds are involved in the
contract. These contracts shall use qualifications-based selection
procedures in the same manner as a contract for architectural and
engineering services is negotiated under title IX of the Federal
Property and Administrative Services Act of 1949 (40 U.S.C. 541-544) or
equivalent State qualifications-based requirements. The proposal
solicitation (project, task, or service) process shall be by public
announcement/advertisement or any other method that assures qualified
in-State and out-of-State consultants/firms are given fair opportunity
to be awarded the contract.
(2) State statutory procedures. States may procure engineering and
design related services using a different selection procedure as long
as these procedures are established in State statutes and the State
statutes were enacted into law before June 9, 1998.
(3) Noncompetitive negotiation. Noncompetitive negotiation may be
used to procure engineering and design related services on Federal-aid
participating contracts when it is not feasible to award the contract
using competitive negotiation or equivalent State qualifications-based
procedures. Contracting agencies shall submit justification and receive
approval from the FHWA before using this form of contracting.
Circumstances under which a contract may be awarded by noncompetitive
negotiation are limited to the following:
(i) The service is available only from a single source;
(ii) There is an emergency which will not permit the time necessary
to conduct competitive negotiations; or
(iii) After solicitation of a number of sources responding is
determined to be inadequate.
(4) Small purchases. Contracting agencies may use small purchase
procedures for the procurement of engineering and design related
services when the contract costs do not exceed $100,000.
(b) Disadvantaged Business Enterprise (DBE) program. The
contracting agency shall give consideration to DBE firms in the
procurement of engineering and design related service contracts subject
to 23 U.S.C. 112(b)(2) in accordance with 49 CFR part 26.
Sec. 172.7 Audit principles.
(a) Performance of audits. When contracts or subcontracts awarded
in accordance with 23 U.S.C. 112(b)(2)(A) are audited, the audits shall
comply with the cost principles contained in the Federal Acquisition
Regulations provided at 48 CFR part 31. Other procedures may be used if
permitted by State statutes that were enacted into law prior to June 9,
1998.
(b) Audits for indirect cost rate. Contracting agencies shall use
the indirect cost rate established by a cognizant agency audit for the
consultant, if such rates are not under dispute. The grantee shall
apply these indirect cost rates for the purposes of contract
estimation, negotiation, administration, reporting, and contract
payment and the indirect cost rates shall not be limited by any
administrative ceilings. The cost rates have a one-year applicability
period. Other procedures may be used if permitted by State statutes
that were enacted into law prior to June 9, 1998.
(c) Disputed audits. When the indirect cost rate(s) as established
by the cognizant audit in paragraph (b) of this section are in dispute,
then the parties of any proposed new contract must negotiate a
provisional indirect cost rate or perform an independent audit to
establish a rate for the specific contract.
(d) Prenotification; confidentiality of data. Only the FHWA and
recipients and sub-recipients of Federal-aid highway funds may share
the audit information, provided that the firm is given notice of such
use. Audit information shall not be provided to other firms or any
other government agencies without the written permission of the
affected firms, unless otherwise required by Federal law, regulation,
or pursuant to court order.
Sec. 172.9 Approvals.
(a) Written procedures. The contracting agency shall prepare
written procedures for each method of procurement it proposes to
utilize. These procedures and all revisions shall be approved by the
FHWA and describe, as appropriate to the particular method of
procurement, each step used:
(1) In preparing a scope of work, evaluation factors and cost
estimate for selecting a consultant,
(2) In soliciting proposals from prospective consultants,
(3) In the evaluation of proposals and the ranking/selection of a
consultant,
(4) In negotiation of the reimbursement to be paid to the selected
consultant,
(5) In monitoring the consultant's work and in preparing a
consultant's performance evaluation when completed, and
(6) In determining the extent to which the consultant, who is
responsible for the professional quality, technical accuracy, and
coordination of services, may be reasonably liable for costs resulting
from errors or deficiencies in design furnished under its contract.
(b) Contracts. Contracts and contract settlements involving design
services for projects that have not been delegated to the State under
23 U.S.C. 106(c) or that do not fall under the small purchase
procedures in Sec. 172.5(a)(4) shall be submitted to the FHWA for
approval.
(c) Major projects. Any contract, revision of a contract or
settlement of a contract for design services for a project that is
expected to fall under 23 U.S.C. 106(h) shall be submitted to the FHWA
for approval.
[FR Doc. 00-17774 Filed 7-17-00; 8:45 am]
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