September 6 2012 Re Engineerig Services

53802 Federal Register / Vol. 77, No.
171 / Tuesday, September 4, 2012 / Proposed Rules
305), Food and Drug Administration, Interested persons may submit to the comments will be considered to the
5630 Fishers Lane, Rm. 1061, Rockville, Division of Dockets Management (see extent practicable.
MD 20852. ADDRESSES) either electronic or written ADDRESSES: Mail or hand deliver
FOR FURTHER INFORMATION CONTACT:
comments regarding this document. It is comments to the U.S. Department of
Ellen Anderson, Center for Food Safety only necessary to send one set of Transportation, Dockets Management
and Applied Nutrition (HFS–265), Food comments. Identify comments with the Facility, Room W12–140, 1200 New
and Drug Administration, 5100 Paint docket number found in brackets in the Jersey Avenue SE., Washington, DC
Branch Pkwy., College Park, MD 20740– heading of this document. Received 20590, or submit electronically at
3835, 240–402–1309. comments may be seen in the Division http://www.regulations.gov or fax
of Dockets Management between 9 a.m. comments to (202) 493–2251. All
SUPPLEMENTARY INFORMATION: In a notice and 4 p.m., Monday through Friday. comments should include the docket
published in the Federal Register on FDA will also place on public display number that appears in the heading of
December 20, 2011 (76 FR 78866), FDA any amendments to, or comments on, this document. All comments received
announced that a food additive petition the petitioner’s environmental will be available for examination and
(FAP 1A4784) had been filed by Nexira, assessment without further copying at the above address from 9
c/o Keller and Heckman LLP, 1001 G St. announcement in the Federal Register. a.m. to 5 p.m., e.t., Monday through
NW., Suite 500 West, Washington, DC If, based on its review, the Agency finds Friday, except Federal holidays. Those
20001. The petition proposes to amend that an environmental impact statement desiring notification of receipt of
the food additive regulations in is not required, and this petition results comments must include a self-
§ 172.780 Acacia (gum arabic) (21 CFR in a regulation, the notice of availability addressed, stamped postcard or you
172.780) to provide for the expanded of the Agency’s finding of no significant may print the acknowledgment page
safe use of acacia gum (gum arabic) in impact and the evidence supporting that that appears after submitting comments
food. finding will be published with the electronically. You may review DOT’s
Under 21 CFR 171.1(c)(H), either a regulation in the Federal Register in complete Privacy Act Statement in the
claim of categorical exclusion under 21 accordance with 21 CFR 25.51(b). Federal Register published on April 11,
CFR 25.30 or § 25.32 (21 CFR 25.32) or Dated: August 28, 2012. 2000 (Volume 65, Number 70, Page
an environmental assessment under 21 Dennis M. Keefe, 19477–78), or you may visit http://
CFR 25.40 is required to be submitted in Director, Office of Food Additive Safety, dms.dot.gov.
a food additive petition. A claim of Center for Food Safety and Applied Nutrition. FOR FURTHER INFORMATION CONTACT: Mr.
categorical exclusion under § 25.32(k) [FR Doc. 2012–21639 Filed 8–31–12; 8:45 am]
was submitted with the petition, which Jon Obenberger, Preconstruction Team
applies to substances added directly to
BILLING CODE 4160–01–P Leader, FHWA Office of Program
food that are intended to remain in food Administration, (202) 366–2221, or via
through ingestion by consumers and email at jon.obenberger@dot.gov, or Mr.
DEPARTMENT OF TRANSPORTATION Steven Rochlis, Attorney Advisor,
that are not intended to replace
macronutrients in food. The Agency FHWA Office of the Chief Counsel,
Federal Highway Administration (202) 366–1395, or via email at
reviewed the claim of categorical
exclusion submitted by the petitioner steve.rochlis@dot.gov. Office hours for
23 CFR Part 172 the FHWA are from 8 a.m. to 4:30 p.m.,
and stated in the original filing notice
its determination that, under § 25.32(k), [FHWA Docket No. FHWA–2012–0043] e.t., Monday through Friday, except
the proposed action was of a type that Federal holidays.
RIN 2125–AF44
does not individually or cumulatively SUPPLEMENTARY INFORMATION:
have a significant effect on the human Procurement, Management, and Electronic Access and Filing
environment, and therefore, neither an Administration of Engineering and
Design Related Services This document and all comments
environmental assessment nor an
received may be viewed online through
environmental impact statement is
AGENCY: Federal Highway the Federal eRulemaking portal at:
required.
Administration (FHWA), U.S. http://www.regulations.gov. The Web
However, upon further review of the Department of Transportation (DOT). site is available 24 hours each day, 366
petition, the Agency has decided that ACTION: Notice of proposed rulemaking days this year. Please follow the
the food additive may act to replace (NPRM); request for comments. instructions. Electronic submission and
macronutrients in food and, therefore, retrieval help and guidelines are
the categorical exclusion in § 25.32(k) is SUMMARY: The FHWA proposes to available under the help section of the
not applicable for the proposed action. update the regulations governing the Web site.
The Agency informed the petitioner of procurement, management, and An electronic copy of this document
this decision, who subsequently administration of engineering and may also be downloaded by accessing
submitted an environmental assessment. design related services directly related the Office of the Federal Register’s home
The potential environmental impact to a highway construction project and page at: http://www.archives.gov/
of this petition is being reviewed. To reimbursed with Federal-aid highway federal-register/, or the Government
encourage public participation program (FAHP) funding. The intent is Printing Office’s Web page at: http://
consistent with regulations issued under to make the regulations consistent with www.gpo.gov/fdsys.
sroberts on DSK5SPTVN1PROD with PROPOSALS
the National Environmental Policy Act prior changes in legislation and other
(40 CFR 1501.4(b)), the Agency is applicable regulations. These revisions Background
placing the environmental assessment also address certain findings and The FHWA proposes to modify
submitted with the petition that is the recommendations for the oversight of existing regulations for the
subject of this notice on public display consultant services contained in administration of engineering and
at the Division of Dockets Management national review and audit reports. design related service contracts to
(see DATES and ADDRESSES) for public DATES: Comments must be received on ensure consistency and compliance
review and comment. or before November 5, 2012. Late with prior changes in authorizing
VerDate Mar<15>2010 16:15 Aug 31, 2012 Jkt 226001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1
Federal Register / Vol. 77, No. 171 / Tuesday, September 4, 2012 / Proposed Rules 53803
legislation codified in 23 U.S.C. 53129), and effective on October 1, transportation.org/Documents/2010_

112(b)(2) and changes in other 2010, raising the Federal simplified Uniform_Audit_and_Accounting_
applicable Federal regulations. acquisition threshold established in 48 Guide.pdf). The definition of
Proposed revisions will also address CFR 2.101 of the FAR from $100,000 to ‘‘competitive negotiation’’ would be
certain findings contained in a 2008 $150,000 to account for inflation using amended to remove references to State
U.S. Government Accountability Office the Consumer Price Index as required in alternative or equivalent procedures
(GAO) review report (http:// statute. The FHWA proposes to revise prohibited by sec. 174 of the ‘‘2006
www.gao.gov/products/GAO-08-198) the small purchase procedures section Appropriations Act.’’ The definitions of
regarding increased reliance on to reflect this increase in the Federal ‘‘contracting agencies’’ and ‘‘one-year
consulting firms by State transportation threshold. applicable accounting period’’ would be
agencies (STAs) and a 2009 DOT Office The proposed revisions will also amended to provide consistency with
of Inspector General (OIG) audit report address certain findings and other terminology of this part. The
(http://www.oig.dot.gov/library-item/ recommendations contained in the definition of ‘‘engineering and design
4710) regarding oversight of engineering aforementioned GAO review and OIG related services’’ would be amended to
consulting firms’ indirect costs claimed audit reports, clarify existing also include professional services of an
on Federal-aid grants. This rulemaking requirements to enhance consistency architectural or engineering nature as
does not otherwise impose any new and compliance with Federal laws and defined by State law, consistent with
burdens on States, local public agencies, regulations, and address evolutions in the Brooks Act and common grant rule
or other grantees and subgrantees. industry practices regarding the requirements. Definitions would be
The primary authority for the procurement, management, and added for the terms ‘‘contract,’’
procurement, management, and administration of consultant services. ‘‘contract modification,’’ ‘‘Federal cost
administration of engineering and Specific proposed revisions are principles,’’ ‘‘fixed fee,’’ ‘‘scope of
design related services directly related described in the section-by-section work,’’ and ‘‘State transportation agency
to a highway construction project and analysis below. (STA)’’ to clarify the meaning of each
reimbursed with FAHP funding is within the context of the regulation. A
codified in 23 U.S.C. 112(b)(2). On Section-by-Section Discussion of the definition would also be added for
November 30, 2005, the Transportation, Proposals ‘‘management role’’ to clarify the types
Treasury, Housing and Urban The FHWA proposes to revise 23 CFR of services and roles performed by
Development, the Judiciary, the District part 172—Administration of consultants that require FHWA or direct
of Columbia, and Independent Agencies Engineering and Design Related Service grantee approval.
Appropriations Act, 2006 (Pub. L. 109– Contracts as follows:
115, 119 Stat. 2396, HR 3058), Section 172.5—Methods of Procurement
commonly referred to as the ‘‘2006 Title—Administration of Engineering This section would be redesignated as
Appropriations Act,’’ was signed into and Design Related Services Contracts sec. 172.7 and revised. The title would
law. Section 174 of this Act amended 23 The title of this part would be be changed to Procurement Methods
U.S.C. 112(b)(2) by removing the changed to Procurement, Management, and Procedures, to reflect the proposed
provisions that permitted States to use and Administration of Engineering and content which would address not only
‘‘alternative’’ or ‘‘equivalent’’ State Design Related Services to reflect the methods of procurement, but also the
qualifications-based selection range of requirements and Federal procurement requirements associated
procedures and other procedures for interests associated with the with these methods.
acceptance and application of procurement, management, and The title of paragraph (a) would be
consultant indirect cost rates that were administration of engineering and changed from procurement to
enacted into State law prior to June 9, design related services addressed within procurement methods, and would be
1998. this part. revised to specify the three currently
Effective on the date of enactment of allowable procurement methods:
the ‘‘2006 Appropriations Act,’’ States Section 172.1—Purpose and Competitive negotiation (qualifications-
and local public agencies could no Applicability based selection), small purchases, and
longer use alternative or equivalent Section 172.1 would be amended to noncompetitive. The provisions of
procedures. States and local public clarify the applicability of the subparagraph (a)(1) would be amended
agencies are required to procure requirements of this part for the to remove references to State alternative
engineering and design related services procurement, management, and or equivalent procedures prohibited by
in accordance with the qualifications- administration of engineering and sec. 174 of the ‘‘2006 Appropriations
based selection procedures prescribed design related services and the Act.’’ Additional provisions would be
in the Brooks Act (40 U.S.C. 1101 et requirements of the common grant rule added to clarify the requirements and
seq.) and to accept and apply consultant (49 CFR part 18) for procurement of expectations for solicitation; request for
indirect cost rates established by a these and other consultant services proposal; evaluation factors; evaluation,
cognizant Federal or State agency in reimbursed with FAHP funding. ranking, and selection; and negotiation
accordance with the Federal Acquisition to ensure consistency and compliance
Regulation (FAR) cost principles (48 Section 172.3—Definitions with the provisions of the Brooks Act as
CFR part 31). To comply with the Section 172.3 would be amended to required by 23 U.S.C. 112(b)(2)(A).
amendments to 23 U.S.C. 112(b)(2), this clarify the definitions of ‘‘audit’’ and Subparagraph (a)(2) would be
proposed rulemaking will remove all ‘‘cognizant agency’’ to provide amended to clarify the requirements for
references to alternative or equivalent consistency with the FAR cost use of small purchase procedures and
procedures. principles (48 CFR part 31) and with reflect the increase in the Federal
In addition, the Civilian Agency industry guidance established in the simplified acquisition threshold from
Acquisition Council and the Defense American Association of State Highway $100,000 to $150,000 (as specified in
Acquisition Regulations Council and Transportation Officials (AASHTO) the final rule published in the Federal
published a final rule in the Federal Uniform Audit and Accounting Guide, Register of August 30, 2010 (75 FR
Register of August 30, 2010 (75 FR 2010 Edition (http://audit. 53129)). Additional revisions would
53804 Federal Register / Vol. 77, No. 171 / Tuesday, September 4, 2012 / Proposed Rules
define the negotiation requirements for Paragraph (a) of the proposed sec. costs in accordance with the Federal
small purchase procedures and clarify 172.11 would clarify consultant cost principles.
the limitations on participation of FAHP requirements for accounting for costs, Paragraph (c) of the proposed sec.
funding in contract costs exceeding the maintaining adequate records, and 172.11 would clarify the responsibilities
established small purchase threshold. applying the FAR cost principles to for contracting agencies to provide
The provisions of subparagraph (a)(3) determine the allowability of costs. assurance of consultant cost compliance
would be amended to define contract Paragraph (b) of the proposed sec. with the FAR cost principles.
negotiation requirements for 172.11 would clarify the requirements Subparagraph (c)(2) would permit STAs
noncompetitive procurement for the allowability, acceptance, and and other direct grantees written
procedures and to remove references to application of elements of contract cost procedures to incorporate a risk-based
State alternative or equivalent in accordance with the common grant oversight process for providing
procedures prohibited by sec. 174 of the rule, FAR cost principles, and assurance of consultant cost compliance
‘‘2006 Appropriations Act.’’ requirements of 23 U.S.C. 112(b)(2). with the Federal cost principles on
Subparagraph (a)(4) would be Subparagraph (b)(1) of the proposed sec. contracts administered by the grantee or
removed, as State alternative or 172.11 would clarify requirements its subgrantees. This oversight process
equivalent procedures are now regarding cognizance, acceptance, and
would consist of risk assessment,
prohibited. application of consultant indirect cost
Paragraph (b) would be redesignated mitigation, and evaluation procedures
rates consistent with applicable Federal
as sec. 172.7(b)(2) and revised to clarify in support of the STA or other direct
requirements and industry guidance
the methods contracting agencies may grantee effectively allocating resources
established in the AASHTO Uniform
use to achieve Disadvantaged Business to provide reasonable assurance of
Audit and Accounting Guide, 2010
Enterprise (DBE) participation on consultant compliance with the FAR
Edition. Indirect cost rate requirements
engineering and design related services cost principles.
are proposed to include subconsultant
contracts in accordance with the rates since the Federal cost principles Information in paragraph (a) of the
requirements of 49 CFR part 26 and the also apply to subconsultant costs, the existing sec. 172.7, performance of
agency’s DBE program approved by qualifications of subconsultants are audits, would be transferred to
FHWA. considered under a qualifications-based subparagraph (c)(2) of sec. 172.11 and
Paragraph (b) of the redesignated sec. selection, and subconsultants may revised to remove references to other
172.7 would be amended to reference perform a significant portion of the State procedures prohibited by sec. 174
and clarify the applicability of various contracted services. Subparagraph of the ‘‘2006 Appropriations Act.’’
title 23 and 49 procurement related (b)(1)(iii) would clarify the requirement Audits performed in accordance with
requirements, including the common for STAs or other direct grantees to generally accepted government audit
grant rule procurement provisions, perform an evaluation of a consultant’s standards to test compliance with the
verification of suspension and or subconsultant’s indirect cost rate FAR cost principles would be listed as
debarment actions, and prevention of prior to acceptance and application of an evaluation procedure under an
conflicts of interest. A requirement to the rate to a contract when the rate has established risk-based oversight process.
develop a written code of conduct not been established by a cognizant Subparagraph (c)(3) of the proposed
governing the performance of agency. This subparagraph would sec. 172.11 would require consultants to
contracting agency employees and permit STAs and other direct grantees to certify to the contracting agency that
consultants is proposed to be included follow a risk-based oversight process for costs included within proposals to
within contracting agency written the evaluation performed to provide establish indirect cost rates are
policies, procedures, and contract assurance of indirect cost rate allowable in accordance with the FAR
documents to ensure consistency with compliance with the FAR cost cost principles prior to contracting
the conflict of interest requirements principles, as described in proposed agency acceptance of the indirect cost
specified in 23 CFR 1.33 and the subparagraph (c)(2). rates for application to contracts.
common grant rule. Information from paragraphs (b) and Implementation of this cost certification
Information in paragraph (c) of the (c) of the existing sec. 172.7 would be requirement was a recommendation in
existing sec. 172.5 would be transferred transferred to subparagraph (b)(1) of the the aforementioned 2009 OIG Audit
to paragraph (b) of a new sec. 172.9 proposed sec. 172.11 and revised to Report, and is based on FHWA Order
titled Contracts and Administration. remove references to other State 4470.1A, FHWA Policy for Contractor
The proposed sec. 172.9(b) would procedures prohibited by sec. 174 of the Certification of Costs in Accordance
clarify the permitted and prohibited ‘‘2006 Appropriations Act.’’ with FAR to Establish Indirect Cost
methods of payment and requirements Subparagraph (b)(2) of the proposed sec. Rates on Engineering and Design related
associated with the use of lump sum 172.11 would clarify requirements for Services Contracts (http://
and cost reimbursement contract establishment of consultant direct salary www.fhwa.dot.gov/legsregs/directives/
payment methods, consistent with FAR or wage rates on contracts to ensure orders/44701a.htm).
requirements and industry guidance compliance with qualifications-based
established in the AASHTO Guide for selection procurement requirements and Subparagraph (c)(4) of the proposed
Consultant Contracting, 2008 Edition. the reasonableness provisions of the sec. 172.11 would require contracting
FAR cost principles. Subparagraph agencies to pursue administrative,
Section 172.7—Audits (b)(3) of the proposed sec. 172.11 would contractual, or legal remedies as may be
This section would be redesignated as clarify requirements for the appropriate when consultants
sec. 172.11 and revised. The title of this determination of fixed fees or profit in knowingly charge unallowable costs to
section would be changed to Allowable accordance with qualifications-based a FAHP funded contract.
Costs and Oversight, and would address selection procurement requirements and Paragraph (d) of the existing sec.
requirements for the allowability of industry practices. Subparagraph (b)(4) 172.7 would be redesignated as sec.
contract cost and for providing of the proposed sec. 172.11 would 172.11(d) and revised to ensure
assurance of compliance with the clarify the requirements for determining consistency of terminology within the
Federal cost principles. the allowability of other direct contract regulation.
Section 172.9—Approvals associated with contract modifications Old section New section
Information in this section would be to ensure modifications are warranted,
transferred to a new sec. 172.5, Program properly scoped, and in compliance None .......................... 172.5(a) and (b)
with applicable Federal procurement Added.
Management and Oversight, a 172.9(a) ..................... 172.5(c) Revised.
redesignated sec. 172.7, Procurement requirements.
172.9(a)(5) ................ 172.5(c)(11), (12),
Methods and Procedures, and a new sec. Paragraph (b) of the existing sec. 172.9 and 172.9(d) Re-
172.9, Contracts and Administration, would be redesignated as paragraph (f) vised.
and revised for clarification to ensure of the proposed sec. 172.9. Paragraph (c) None .......................... 172.5(d) and (e)
consistency with applicable Federal of the existing sec. 172.9 would be Added.
laws and regulations. removed since the oversight and 172.9(b) ..................... 172.9(f) Revised.
Paragraph (a) of the existing sec. 172.9 approval responsibility of contracts for 172.9(c) ..................... Removed.
major projects, as specified in 23 U.S.C. 172.9(d) ..................... 172.7(b)(5) Revised.
would be redesignated as sec. 172.5(c)
and revised to clarify the requirements 106(h), should be defined within the
stewardship and oversight agreements Rulemaking Analyses and Notices
for contracting agency written
procedures to ensure compliance with that are established between individual Executive Order 12866 (Regulatory
existing Federal statutes and STAs and respective FHWA division Planning and Review), Executive Order
regulations. A new paragraph (a) of sec. offices. 13563 (Improving Regulation and
172.5 would clarify STA or other direct Paragraph (d) of the existing sec. Regulatory Review), and DOT
grantee responsibilities for management 172.9 would be redesignated as sec. Regulatory Policies and Procedures
of consultant services programs and 172.7(b)(5) and revised to clarify The FHWA has determined that this
oversight of subgrantees. A new contracting agency responsibilities action does not constitute a significant
paragraph (b) of sec. 172.5 would clarify associated with participation of FAHP regulatory action within the meaning of
program level responsibilities of funding for consultants performing Executive Order 12866 or within the
subgrantees. A new paragraph (d) of sec. services in a management role. These meaning of DOT regulatory policies and
172.5 would clarify a contracting revisions would ensure compliance procedures. The proposed amendments
agency’s ability to adopt direct Federal with applicable Federal requirements clarify and revise requirements for the
Government or other contracting regarding oversight, procurement, procurement, management, and
procedures and requirements which are conflicts of interest, and cost administration of engineering and
not in conflict with laws and regulations allowability. design related services using FAHP
applicable to the FAHP. Paragraph (e) of For ease of reference, the following funding and directly related to a
sec. 172.5 proposes a 12-month period distribution table is provided: construction project. Additionally, this
from the effective date of a final rule for action complies with the principles of
contracting agencies to issue or update Old section New section Executive Order 13563. The proposed
current written procedures for review changes to part 172 will provide
172.1 ......................... 172.1 Revised.
and approval by the appropriate 172.3 ......................... 172.3 Revised. additional clarification, guidance, and
oversight agency. Audit .......................... Revised. flexibility to stakeholders implementing
Information in subparagraph (a)(5) of Cognizant agency ..... Revised. these regulations. After evaluating the
the existing sec. 172.9 would be Competitive negotia- Revised. costs and benefits of these proposed
expanded under a new paragraph (d) of tion. amendments, the FHWA anticipates that
a proposed sec. 172.9 titled Contracts Contract ..................... Added. the economic impact of this rulemaking
and Administration. This new Contracting agencies Revised. would be minimal. These changes are
paragraph (d) would clarify Contract modification Added. not anticipated to adversely affect, in
requirements for consultant monitoring Engineering and de- Revised.
any material way, any sector of the
sign related serv-
and oversight which include providing economy. In addition, these changes
ices.
a qualified, full-time, public employee Federal cost prin- Added. will not create a serious inconsistency
of the contracting agency in responsible ciples. with any other agency’s action or
charge of each contract to ensure Fixed fee ................... Added. materially alter the budgetary impact of
compliance with the requirements of 23 Management role ...... Added. any entitlements, grants, user fees, or
U.S.C. 302(a) and evaluating a One-year applicable Revised. loan programs. It is anticipated that the
consultant’s performance on a contract. accounting period. economic impact of this rulemaking will
Paragraph (a) of the proposed sec. Scope of work ........... Added. be minimal; therefore, a full regulatory
172.9, Contracts and Administration, State transportation Added. evaluation is not necessary.
would define the various contract types agency.
and clarify the requirements associated
172.5(a) ..................... 172.7(a) Revised. Regulatory Flexibility Act
172.5(a)(1) ................ 172.7(a)(1) Revised.
with the use of on-call or indefinite 172.5(a)(2) ................ 172.7(a)(2) Revised.
In compliance with the Regulatory
delivery/indefinite quantity contracts in 172.5(a)(3) ................ 172.7(a)(3) Revised. Flexibility Act (Pub. L. 96–354, 5 U.S.C.
a manner that is consistent with Federal 172.5(a)(4) ................ Removed. 60l-612), the FHWA has evaluated the
laws and regulations. None .......................... 172.7(b) Added. effects of this proposed rule on small
Paragraph (c) of the proposed sec. 172.5(b) ..................... 172.7(b)(2) Revised. entities, such as local governments and
172.9 would clarify the provisions None .......................... 172.9(a) Added. businesses. Based on the evaluation, the
required to be incorporated into 172.5(c) ..................... 172.9(b) FHWA anticipates that this action
engineering and design related services None .......................... 172.9(c), (d), and (e) would not have a significant economic
Added. impact on a substantial number of small
contracts when FAHP funding is used to None .......................... 172.11(a), (b), and (c)
ensure consistency and compliance Added.
entities. The proposed amendments
with applicable Federal laws and 172.7(a) ..................... 172.11(c)(2) Revised. clarify and revise requirements for the
regulations. 172.7(b) ..................... 172.11(b)(1) Revised. procurement, management, and
Paragraph (e) of the proposed sec. 172.7(c) ..................... 172.11(b)(1) Revised. administration of engineering and
172.9 would clarify the requirements 172.7(d) ..................... 172.11(d) Revised. design related services using FAHP
funding and directly related to a for the purpose of the Paperwork Actions and Interference with
construction project. After evaluating Reduction Act of 1995 (44 U.S.C. 3501, Constitutionally Protected Property
the cost of these proposed amendments, et seq.). Rights.
as required by changes in authorizing
National Environmental Policy Act Executive Order 12988 (Civil Justice
legislation, other applicable regulations,
The FHWA has analyzed this Reform)
and industry practices, the FHWA
believes the projected impact upon proposed action for the purpose of the This action meets applicable
small entities which utilize FAHP National Environmental Policy Act (42 standards in sections 3(a) and 3(b)(2) of
funding for consultant engineering and U.S.C. 4321 et seq.) and has determined Executive Order 12988, Civil Justice
design related services would be that this action would not have any Reform, to minimize litigation,
negligible. Therefore, I certify that the effect on the quality of the human and eliminate ambiguity, and reduce
proposed action would not have a natural environment because this rule burden.
significant economic impact on a would merely establish the
substantial number of small entities. requirements for the procurement, Executive Order 13045 (Protection of
management, and administration of Children)
Unfunded Mandates Reform Act of 1995 engineering and design related services
This NPRM would not impose using FAHP funding and directly The FHWA has analyzed this
unfunded mandates as defined by the related to a construction project. proposed action under Executive Order
Unfunded Mandates Reform Act of 1995 13045, Protection of Children from
(Pub. L. 104–4, March 22, 1995, 109 Executive Order 13175 (Tribal Environmental Health Risks and Safety
Stat. 48). The actions proposed in this Consultation) Risks, and certifies that this proposed
NPRM would not result in the The FHWA has analyzed this action would not cause an
expenditure by State, local, and tribal proposed action under Executive Order environmental risk to health or safety
governments, in the aggregate, or by the 13175, dated November 6, 2000, and that may disproportionately affect
private sector, of $143.1 million or more believes that this proposed action would children.
in any one year (2 U.S.C. 1532). Further, not have substantial direct effects on Regulation Identification Number
in compliance with the Unfunded one or more Indian Tribes, would not
Mandates Reform Act of 1995, FHWA impose substantial direct compliance A regulation identification number
will evaluate any regulatory action that costs on Indian Tribal governments, and (RIN) is assigned to each regulatory
might be proposed in subsequent stages would not preempt Tribal law. This action listed in the Unified Agenda of
of the proceeding to assess the effects on proposed rulemaking merely establishes Federal Regulations. The Regulatory
State, local, and Tribal governments and the requirements for the procurement, Information Service Center publishes
the private sector. Additionally, the management, and administration of the Unified Agenda in April and
definition of ‘‘Federal Mandate’’ in the engineering and design related services October of each year. The RIN number
Unfunded Mandates Reform Act using FAHP funding and directly contained in the heading of this
excludes financial assistance of the type related to a construction project. As document can be used to cross-reference
in which State, local, or tribal such, this proposed rule would not this action with the Unified Agenda.
governments have authority to adjust impose any direct compliance
requirements on Indian Tribal List of Subjects in 23 CFR Part 172
their participation in the program in
accordance with changes made in the governments nor would it have any Government procurement, Grant
program by the Federal Government. economic or other impacts on the programs-transportation, Highways and
The FAHP permits this type of viability of Indian Tribes. Therefore, a roads.
flexibility. Tribal summary impact statement is not
Issued on: August 24, 2012.
required.
Executive Order 13132 (Federalism Victor M. Mendez,
Assessment) Executive Order 13211 (Energy Effects) Administrator.
This proposed action has been The FHWA has analyzed this In consideration of the foregoing, the
analyzed in accordance with the proposed action under Executive Order FHWA proposes to amend part 172 of
principles and criteria contained in 13211, Actions Concerning Regulations title 23, Code of Federal Regulations, as
Executive Order 13132, dated August 4, that Significantly Affect Energy Supply, follows:
1999, and it has been determined that Distribution, or Use. We have
this proposed action does not have a determined that this proposed action TITLE 23—HIGHWAYS
substantial direct effect or sufficient would not be a significant energy action 1. Revise Part 172 to read as follows:
federalism implications on States that under that order because any action
would limit the policymaking discretion contemplated would not be likely to PART 172–PROCUREMENT,
of the States. Nothing in this proposed have a significant adverse effect on the MANAGEMENT, AND
rule directly preempts any State law or supply, distribution, or use of energy. ADMINISTRATION OF ENGINEERING
regulation or affects the States’ ability to Therefore, the FHWA certifies that a AND DESIGN RELATED SERVICES
discharge traditional State governmental Statement of Energy Effects under Sec.
functions. Executive Order 13211 is not required. 172.1 Purpose and applicability.
172.3 Definitions.
Paperwork Reduction Act Executive Order 12630 (Taking of

Private Property) 172.5 Program management and oversight.
Federal agencies must obtain approval 172.7 Procurement methods and
from the Office of Management and The FHWA has analyzed this procedures.
Budget for each collection of proposed rule and has determined that 172.9 Contracts and administration.
information they conduct, sponsor, or this proposed action would not affect a 172.11 Allowable costs and oversight.
require through regulations. This taking of private property or otherwise Authority: 23 U.S.C. 106, 112, 114(a), 302,
proposed action does not contain a have taking implications under 315, and 402; 40 U.S.C. 1101 et seq.; 48 CFR
collection of information requirement Executive Order 12630, Governmental part 31; 49 CFR 1.48(b) and part 18.
§ 172.1 Purpose and applicability. (1) Federal agency; to perform management services such as
This part prescribes the requirements (2) State transportation agency of the a program or project administration role
for the procurement, management, and State where the consultant’s accounting typically performed by the contracting
administration of engineering and and financial records are located; or agency and necessary to fulfill the
design related services under 23 U.S.C. (3) State transportation agency to duties imposed by title 23 U.S.C., other
112 and as supplemented by the whom cognizance for the particular Federal and State laws, and applicable
common grant rule (as specified in 49 indirect cost rate(s) of a consulting firm regulations.
CFR part 18). The requirements of the has been delegated or transferred in One-year applicable accounting
common grant rule shall apply except writing by the State transportation period means the annual accounting
where inconsistent with the agency identified in subparagraph (2) of period for which financial statements
requirements of this part and other laws this definition. are regularly prepared by the consultant.
and regulations applicable to the Competitive negotiation means Scope of work means all services,
Federal-aid highway program (FAHP). qualifications-based selection work activities, and actions required of
The requirements herein apply to procurement procedures complying the consultant by the obligations of the
federally funded contracts for with 40 U.S.C. 1101–1104, commonly contract.
engineering and design related services referred to as the Brooks Act. State transportation agency (STA)
for highway construction projects Consultant means the individual or means that department or agency
subject to the provisions of 23 U.S.C. firm providing engineering and design maintained in conformity with 23
112(a) and are issued to ensure that a related services as a party to a contract. U.S.C. 302 and charged under State law
qualified consultant is obtained through Contract means a procurement with the responsibility for highway
an equitable qualifications-based contract or agreement between a construction (as defined in 23 U.S.C.
selection procurement process, that contracting agency and consultant 101); and that is authorized by the laws
prescribed work is properly under a FAHP grant or subgrant and of the State to make final decisions in
accomplished in a timely manner, and includes any procurement subcontract all matters relating to, and to enter into,
at fair and reasonable cost. under a contract. all contracts and agreements for projects
State transportation agencies (STAs) Contracting agencies means State and activities to fulfill the duties
(or other direct grantees) shall ensure transportation agency or a procuring imposed by title 23 United States Code,
that subgrantees comply with the agency of the State acting in conjunction title 23 Code of Federal Regulations, and
requirements of this part and the with and at the direction of the State other applicable Federal laws and
common grant rule. transportation agency, other direct regulations.
Federally funded contracts for grantees, and all subgrantees that are
services not defined as engineering and responsible for the procurement, § 172.5 Program management and
design related, or for services not in management, and administration of oversight.
furtherance of a highway construction engineering and design related services. (a) STA responsibilities. STAs (or
project or activity subject to the Contract modification means an other direct grantees) shall develop and
provisions of 23 U.S.C. 112(a), are not agreement modifying the terms or sustain organizational capacity and
subject to the requirements of this part conditions of an original or existing provide the resources necessary for the
and shall be procured and administered contract. procurement, management, and
under the requirements of the common Engineering and design related administration of engineering and
grant rule and procedures applicable to services means: design related consultant services,
such activities. (1) Program management, reimbursed in whole or in part with
construction management, feasibility FAHP funding (as specified in 23 U.S.C.
§ 172.3 Definitions. studies, preliminary engineering, design 302(a)). Responsibilities shall include
As used in this part: engineering, surveying, mapping, or the following:
Audit means a formal examination, in architectural related services with (1) Preparing and maintaining written
accordance with professional standards, respect to a highway construction policies and procedures for the
of a consultant’s accounting systems, project subject to 23 U.S.C. 112(a) (as procurement, management, and
incurred cost records, and other cost defined in 23 U.S.C. 112(b)(2)(A)); and administration of engineering and
presentations to test the reasonableness, (2) Professional services of an design related consultant services in
allowability, and allocability of costs in architectural or engineering nature, as accordance with paragraph (c) of this
accordance with the Federal cost defined by State law, which are required section;
principles (as specified in 48 CFR part to or may logically or justifiably be (2) Establishing a procedure for
31). performed or approved by a person estimating staffing, resources, and costs
Cognizant agency means any agency licensed, registered, or certified to of needed consultant services and
described below that has performed an provide the services (as defined in 40 associated agency oversight in support
audit in accordance with generally U.S.C. 1102(2)). of project authorization requests
accepted government auditing standards Federal cost principles means the cost submitted to FHWA for approval (as
to test compliance with the principles contained in 48 CFR part 31 specified in 23 CFR 630.106);
requirements of the Federal cost of the Federal Acquisition Regulations (3) Procuring, managing, and
principles (as specified in 48 CFR part for determination of allowable costs of administering engineering and design
31) and issued an audit report of the commercial, for-profit entities (as related consultant services in
consultant’s indirect cost rate, or any specified in 49 CFR 18.22(b)). accordance with applicable Federal and
described agency that has conducted a Fixed fee means a dollar amount State laws, regulations, and approved
review of an audit report and related established to cover the consultant’s policies and procedures (as specified in
workpapers prepared by a certified profit and business expenses not 23 CFR 1.9(a)); and
public accountant and issued a letter of allocable to overhead. (4) Administering subgrants in
concurrence with the audited indirect Management role means acting on the accordance with State laws and
cost rate(s). A cognizant agency may be contracting agency’s behalf, subject to procedures (as specified in 49 CFR
any of the following: review and oversight by agency officials, 18.37) and the requirements of 23 U.S.C.
106(g)(4)). This shall include providing and procedures shall, as appropriate for (16) Assessing administrative,
oversight of the procurement, each method of procurement a contractual, or legal remedies in
management, and administration of contracting agency proposes to use, instances where consultants violate or
engineering and design related address the following items to assure breach contract terms and conditions,
consultant services by subgrantees to compliance with Federal and State laws, and providing for such sanctions and
assure compliance with applicable regulations, and the requirements of this penalties as may be appropriate; and
Federal and State laws and regulations. part: (17) Resolving disputes in the
Nothing in this part shall be taken as (1) Preparing a scope of work and procurement, management, and
relieving the STA of its responsibility evaluation factors for the ranking/ administration of engineering and
under laws and regulations applicable selection of a consultant; design related consultant services.
to the FAHP for the work performed (2) Soliciting proposals from (d) A contracting agency may formally
under any consultant agreement or prospective consultants; adopt, by statute or within approved
contract entered into by a subgrantee. (3) Preventing, identifying, and written policies and procedures as
(b) Subgrantee responsibilities. mitigating conflicts of interest for specified in paragraph (c) of this
Subgrantees shall develop and sustain employees of both the contracting section, any direct Federal Government
organizational capacity and provide the agency and consultants (as specified in or other contracting regulation,
resources necessary for the 23 CFR 1.33 and the requirements of standard, or procedure provided its
procurement, management, and this part). application does not conflict with the
administration of engineering and (4) Verifying suspension and provisions of 23 U.S.C. 112, the
design related consultant services, debarment actions and eligibility of requirements of this part, and other laws
reimbursed in whole or in part with consultants (as specified in 49 CFR and regulations applicable to the FAHP.
FAHP funding (as specified in 23 U.S.C. 18.35 and 2 CFR part 180); (e) Notwithstanding the foregoing, a
106(g)(4)(A)). Responsibilities shall (5) Evaluating proposals and the contracting agency shall have a
include the following: ranking/selection of a consultant; reasonable period of time, not to exceed
(1) Adopting written policies and (6) Preparing an independent agency 12 months from the effective date of this
procedures prescribed by the awarding estimate for use in negotiation with the rule unless an extension is granted for
STA (or other direct grantee) for the selected consultant; unique or extenuating circumstances, to
procurement, management, and (7) Selecting appropriate contract issue or update current written policies
administration of engineering and type, payment method(s), and terms and and procedures for review and approval
design related consultant services in incorporating required contract in accordance with paragraph (c) of this
accordance with applicable Federal and provisions, assurances, and section and consistent with the
State laws and regulations; or when not certifications in accordance with requirements of this part.
prescribed, shall include: § 172.9;
(i) Preparing and maintaining its own (8) Negotiating a contract with the § 172.7 Procurement methods and
written policies and procedures in selected consultant; procedures.
accordance with paragraph (c) of this (9) Establishing elements of contract (a) Procurement methods. The
section; or costs, accepting indirect cost rate(s) for procurement of engineering and design
(ii) Submitting documentation application to contracts, and assuring related services funded by FAHP funds
associated with each procurement and consultant compliance with the Federal and directly related to a highway
subsequent contract to the awarding cost principles in accordance with construction project subject to the
STA (or other direct grantee) for review § 172.11; provisions of 23 U.S.C. 112(a) shall be
to assess compliance with applicable (10) Assuring consultant costs billed conducted in accordance with one of
Federal and State laws, regulations, and are allowable in accordance with the three methods: Competitive negotiation
the requirements of this part; Federal cost principles and consistent (qualifications-based selection)
(2) Procuring, managing, and with the contract terms as well as the procurement, small purchase
administering engineering and design acceptability and progress of the procurement for small dollar value
related consultant services in consultant’s work; contracts, and noncompetitive
accordance with applicable Federal and (11) Monitoring the consultant’s work procurement where specific conditions
State laws, regulations, and approved and compliance with the terms, exist allowing solicitation and
policies and procedures (as specified in conditions, and specifications of the negotiation to take place with a single
23 CFR 1.9(a)). contract; consultant.
(c) Written policies and procedures. (12) Preparing a consultant’s (1) Competitive negotiation
The contracting agency shall prepare performance evaluation when services (qualifications-based selection). Except
and maintain written policies and are completed and using such as provided in (2) and (3) below,
procedures for the procurement, performance data in future evaluation contracting agencies shall use the
management, and administration of and ranking of consultant to provide competitive negotiation method for the
engineering and design related similar services; procurement of engineering and design
consultant services. The STA (or other (13) Closing-out a contract; related services when FAHP funds are
direct grantee) written policies and (14) Retaining adequate programmatic involved in the contract (as specified in
procedures and all revisions shall be and contract records (as specified in 49 23 U.S.C. 112(b)(2)(A)). The solicitation,
approved by the FHWA. Written CFR 18.42 and the requirements of this evaluation, ranking, selection, and
policies and procedures prepared by part); negotiation shall comply with the
subgrantees shall be approved by the (15) Determining the extent to which qualifications-based selection
awarding STA (or other direct grantee). the consultant, which is responsible for procurement procedures for
Any deviations from approved policies the professional quality, technical architectural and engineering services
and procedures shall require review by accuracy, and coordination of services, codified under 40 U.S.C. 1101–1104,
FHWA, or the direct grantee as may be reasonably liable for costs commonly referred to as the Brooks Act.
appropriate, to assess compliance with resulting from errors and omissions in In accordance with the requirements of
applicable requirements. These policies the work furnished under its contract; the Brooks Act, the following
procedures shall apply to the (F) Require that submission of any appropriate number of qualified
competitive negotiation procurement requested cost proposals or elements of consultants, given the nature and size of
method: cost be in a concealed format and the project. If a consultant outside of the
(i) Solicitation. The solicitation separate from technical/qualifications locality area indicates as part of a
process shall be by public proposals as these shall not be proposal that it will satisfy the criteria
announcement, public advertisement, or considered in the evaluation, ranking, in some manner, such as establishing a
any other public forum or method that and selection phase; and local project office, that commitment
assures qualified in-State and out-of- (G) Provide a schedule of key dates for shall be considered to have satisfied the
State consultants are given a fair the procurement process and establish a local presence criteria.
opportunity to be considered for award submittal deadline for responses to the (2) The participation of qualified and
of the contract. Procurement procedures RFP which provides sufficient time for certified Disadvantaged Business
may involve a single step process with interested consultants to receive notice, Enterprise (DBE) subconsultants may be
issuance of a request for proposal (RFP) prepare, and submit a proposal, which used as a nominal evaluation criteria
to all interested consultants or a except in unusual circumstances shall where appropriate in accordance with
multiphase process with issuance of a be not less than 14 days from the date 49 CFR part 26 and a contracting
request for statements or letters of of issuance of the RFP. agency’s FHWA-approved DBE program.
interest or qualifications (RFQ) whereby (iii) Evaluation factors. (A) Criteria (iv) Evaluation, ranking, and
responding consultants are ranked used for evaluation, ranking, and selection. (A) Consultant proposals shall
based on qualifications and request for selection of consultants to perform be evaluated by the contracting agency
proposals are then provided to three or engineering and design related services based on the criteria established and
more of the most highly qualified must assess the demonstrated published within the public solicitation.
consultants. Minimum qualifications of competence and qualifications for the (B) While the contract will be with the
consultants to perform services under type of professional services solicited. prime consultant, proposal evaluations
general work categories or areas of These qualifications-based factors may
shall consider the qualifications of the
expertise may also be assessed through include, but are not limited to, technical
prime consultant and any
a prequalification process whereby approach (e.g., project understanding,
subconsultants identified within the
statements of qualifications are innovative concepts or alternatives,
proposal with respect to the scope of
submitted on an annual basis. quality control procedures), work
work and established criteria.
experience, specialized expertise,
Regardless of any process utilized for (C) Following submission and
professional licensure, staff capabilities,
prequalification of consultants or for an evaluation of proposals, the contracting
workload capacity, and past
initial assessment of a consultant’s agency shall conduct interviews or other
performance.
qualifications under an RFQ, a RFP (B) Price shall not be used as a factor types of discussions determined
specific to the project, task, or service is in the evaluation, ranking, and selection appropriate for the project with at least
required for evaluation of a consultant’s phase. All price or cost related items three of the most highly qualified
specific technical approach and which include, but are not limited to, consultants to clarify the technical
qualifications. cost proposals, direct salaries/wage approach, qualifications, and
(ii) Request for proposal (RFP). The rates, indirect cost rates, and other capabilities provided in response to the
RFP shall provide all information and direct costs are prohibited from being RFP. Discussion requirements shall be
requirements necessary for interested used as evaluation criteria. specified within the RFP and should be
consultants to provide a response to the (C) In-State or local preference shall based on the size and complexity of the
RFP and compete for the solicited not be used as a factor in the evaluation, project as defined in contracting agency
services. The RFP shall: ranking, and selection phase. State written policies and procedures (as
(A) Provide a clear, accurate, and licensing laws are not preempted by this specified in § 172.5(c)). Discussions may
detailed description of the scope of provision and professional licensure be written, by telephone, video
work, technical requirements, and within a jurisdiction may be established conference, or by oral presentation/
qualifications of consultants necessary as a requirement which attests to the interview. Discussions following
for the services to be rendered. The minimum qualifications and proposal submission are not required
scope of work should detail the purpose competence of a consultant to perform provided proposals contain sufficient
and description of the project, services the solicited services. information for evaluation of technical
to be performed, deliverables to be (D) The following nonqualifications- approach and qualifications to perform
provided, estimated schedule for based evaluation criteria are permitted the specific project, task, or service with
performance of the work, and applicable under the specified conditions and respect to established criteria.
standards, specifications, and policies; provided the combined total of these (D) From the proposal evaluation and
(B) Identify the requirements for any criteria do not exceed a nominal value any subsequent discussions which have
discussions that may be conducted with of ten percent of the total evaluation been conducted, the contracting agency
three (3) or more of the most highly criteria to maintain the integrity of a shall rank, in order of preference, at
qualified consultants following qualifications-based selection: least three consultants determined most
submission and evaluation of proposals; (1) A local presence may be used as highly qualified to perform the solicited
(C) Identify evaluation factors a nominal evaluation factor where services based on the established and
including their relative weight of appropriate. This criteria shall not be published criteria.
importance in accordance with based on political or jurisdictional (E) Notification must be provided to
subparagraph (a)(1)(iii) of this section; boundaries and may be applied on a responding consultants of the final
(D) Specify the contract type and project-by-project basis for contracts ranking of the three most highly
method(s) of payment to be utilized in where a need has been established for qualified consultants.
accordance with § 172.9; a consultant to provide a local presence, (F) The contracting agency shall retain
(E) Identify any special provisions or a local presence will add value to the acceptable documentation of the
contract requirements associated with quality and efficiency of the project, and solicitation, proposal, evaluation, and
the solicited services; application of this criteria leaves an selection of the consultant in
accordance with the provisions of 49 broken down into smaller components applicable Federal laws and regulations
CFR 18.42. merely to permit the use of small (as specified in 49 CFR 18.36).
(v) Negotiation. (A) Independent purchase procedures. (ii) When State and local procurement
estimate. Prior to receipt or review of (ii) A minimum of three consultants laws, regulations, policies, or
the most highly qualified consultant’s are required to satisfy the adequate procedures are in conflict with
cost proposal, the contracting agency number of qualified sources reviewed. applicable Federal laws and regulations,
shall prepare a detailed independent (iii) Contract costs may be negotiated contracting agencies must comply with
estimate with an appropriate breakdown in accordance with State small purchase Federal requirements to be eligible for
of the work or labor hours, types or procedures; however, the allowability of Federal-aid reimbursement of the
classifications of labor required, other costs shall be determined in accordance associated costs of the services incurred
direct costs, and consultant’s fixed fee with the Federal cost principles. following FHWA authorization (as
for the defined scope of work. The (iv) The full amount of any contract specified in 49 CFR 18.4).
independent estimate shall serve as the modification or amendment that would (2) Disadvantaged Business Enterprise
basis for negotiation and ensuring the cause the total contract amount to (DBE) program. (i) Contracting agencies
consultant services are obtained at a fair exceed the established simplified shall give consideration to DBE
and reasonable cost. acquisition threshold would be consultants in the procurement of
(B) Elements of contract costs (e.g., ineligible for Federal-aid funding. The engineering and design related service
indirect cost rates, direct salary or wage FHWA may withdraw all Federal-aid contracts subject to 23 U.S.C. 112(b)(2)
rates, fixed fee, and other direct costs) from a contract if it is modified or in accordance with 49 CFR part 26.
shall be established separately in amended above the applicable When DBE program participation goals
accordance with § 172.11. established simplified acquisition cannot be met through race-neutral
(C) If concealed cost proposals were measures, additional DBE participation
threshold.
submitted in conjunction with on engineering and design related
(3) Noncompetitive. The
technical/qualifications proposals, only services contracts may be achieved in
noncompetitive method involves
the cost proposal of the consultant with accordance with a contracting agency’s
procurement of engineering and design
which negotiations are initiated may be FHWA approved DBE program through
related services when it is not feasible
considered. Concealed cost proposals of either:
consultants with which negotiations are to award the contract using competitive
negotiation or small purchase (A) Use of an evaluation criterion in
not initiated should be returned to the the qualifications-based selection of
respective consultant due to the procurement methods. The following
requirements shall apply to the consultants (as specified in
confidential nature of this data (as § 172.7(a)(1)(iii)(D)); or
specified in 23 U.S.C. 112(b)(2)(E)). noncompetitive procurement method:
(i) Contracting agencies may use their (B) Establishment of a contract
(D) The contracting agency shall participation goal.
retain documentation of negotiation own noncompetitive procedures which
(ii) The use of quotas or exclusive set-
activities and resources used in the reflect applicable State and local laws
asides for DBE consultants is prohibited
analysis of costs to establish elements of and regulations and conform to
(as specified in 49 CFR 26.43).
the contract in accordance with the applicable Federal requirements.
(3) Suspension and debarment.
provisions of 49 CFR 18.42. This (ii) Contracting agencies shall
Contracting agencies must verify
documentation shall include the establish a process to determine when
suspension and debarment actions and
consultant cost certification and noncompetitive procedures will be used
eligibility status of consultants and
documentation supporting the and shall submit justification to, and
subconsultants prior to entering into an
acceptance of the indirect cost rate to be receive approval from, the FHWA before
agreement or contract in accordance
applied to the contract (as specified in using this form of contracting.
with 49 CFR 18.35 and 2 CFR part 180.
§ 172.11(c)). (iii) Circumstances under which a (4) Conflicts of interest. (i) Contracting
(2) Small purchases. The small contract may be awarded by agencies shall maintain a written code
purchase method involves procurement noncompetitive procedures are limited of standards of conduct governing the
of engineering and design related to the following: performance of their employees engaged
services where an adequate number of (A) The service is available only from in the award and administration of
qualified sources are reviewed and the a single source; engineering and design related services
total contract costs do not exceed an (B) There is an emergency which will contracts under this part and governing
established simplified acquisition not permit the time necessary to the conduct and roles of consultants in
threshold. Contracting agencies may use conduct competitive negotiations; or the performance of services under such
the State’s small purchase procedures (C) After solicitation of a number of contracts to prevent, identify, and
which reflect applicable State laws and sources, competition is determined to be mitigate conflicts of interest in
regulations for the procurement of inadequate. accordance with 23 CFR 1.33 and the
engineering and design related services (iv) Contract costs may be negotiated provisions of this subparagraph.
provided the total contract costs do not in accordance with contracting agency (ii) No employee, officer, or agent of
exceed the Federal simplified noncompetitive procedures; however, the contracting agency shall participate
acquisition threshold (as specified in 48 the allowability of costs shall be in selection, or in the award or
CFR 2.101). When a lower threshold for determined in accordance with the administration of a contract supported
use of small purchase procedures is Federal cost principles. by Federal-aid funds if a conflict of
established in State law, regulation, or (b) Additional procurement interest, real or apparent, would be
policy, the lower threshold shall apply requirements. (1) Common grant rule. (i) involved. Such a conflict arises when:
to the use of FAHP funds. The following STAs (or other direct grantees) and their (A) The employee, officer, or agent;
additional requirements shall apply to subgrantees must comply with (B) Any member of his or her
the small purchase procurement procurement requirements established immediate family;
method: in State and local laws, regulations, (C) His or her partner; or
(i) The scope of work, project phases, policies, and procedures which are not (D) An organization which employs or
and contract requirements shall not be addressed by or in conflict with is about to employ, any of the above, has
a financial or other interest in the specified in § 172.9(d)). A consultant competing and awarding task or work
consultant selected for award. serving in a management role shall be orders among the selected, qualified
(iii) The contracting agency’s officers, precluded from providing services on consultants. Task or work orders shall
employees, or agents shall neither projects, activities, or contracts under its not be competed and awarded among
solicit nor accept gratuities, favors, or oversight. the selected, qualified consultants on
anything of monetary value from (iv) FAHP funds shall not participate the basis of costs under on-call or IDIQ
consultants, potential consultants, or in the costs of a consultant serving in a contracts for services procured with
parties to subagreements. Contracting management role where the consultant competitive negotiation procedures.
agencies may establish dollar thresholds was not procured in accordance with Under competitive negotiation
where the financial interest is not Federal and State requirements (as procurement, each specific task or work
substantial or the gift is an unsolicited specified in 23 CFR 1.9(a)). order shall be awarded to the selected,
item of nominal value. (v) Where benefiting more than a qualified consultants:
(iv) Contracting agencies may provide single Federal-aid project, allocability of (1) Through an additional
additional prohibitions relative to real, consultant contract costs for services qualifications-based selection
apparent, or potential conflicts of related to a management role shall be procedure; or
interest. distributed consistent with the cost (2) On a regional basis whereby the
(v) To the extent permitted by State or principles applicable to the contracting State is divided into regions and
local law or regulations, such standards agency (as specified in 49 CFR 18.22(b)). consultants are selected to provide on-
of conduct shall provide for penalties, call or IDIQ services for an assigned
sanctions, or other disciplinary actions § 172.9 Contracts and administration. region(s) identified within the
for violations of such standards by the (a) Contract types. The types of solicitation.
contracting agency’s officers, contracts which shall be used are: (1) (b) Payment methods. (1) The method
employees, or agents, or by consultants Project-specific. A contract between the of payment to the consultant shall be set
or their agents. contracting agency and consultant for forth in the original solicitation,
(5) Consultant services in the performance of services and defined contract, and in any contract
management roles. (i) When FAHP scope of work related to a specific modification thereto. The methods of
funds participate in the contract, the project or projects. payment shall be: Lump sum, cost plus
contracting agency shall receive (2) Multiphase. A project-specific fixed fee, cost per unit of work, or
approval from the FHWA, or the direct contract where the defined scope of specific rates of compensation. A single
grantee as appropriate, before utilizing a work is divided into phases which may contract may contain different payment
consultant to act in a management role be negotiated and authorized methods as appropriate for
for the contracting agency, unless an individually as the project progresses. compensation of different elements of
alternate approval procedure has been (3) On-call or indefinite delivery/ work.
approved. Use of consultants in indefinite quantity (IDIQ). A contract for (2) The cost plus a percentage of cost
management roles does not relieve the the performance of services for a and percentage of construction cost
contracting agency of responsibilities number of projects, under task or work methods of payment shall not be used.
associated with the use of FAHP funds orders issued on an as-needed or on-call (3) The lump sum payment method
(as specified in 23 U.S.C. 302(a) and 23 basis, for an established contract period. shall only be used when the contracting
U.S.C. 106(g)(4)) and should be limited The procurement of services to be agency has established the extent,
to large projects or circumstances where performed under on-call or IDIQ scope, complexity, character, and
unusual cost or time constraints exist, contracts must follow either competitive duration of the work to be required to
unique technical or managerial negotiation or small purchase a degree that fair and reasonable
expertise is required, and/or an increase procurement procedures (as specified in compensation, including a fixed fee, can
in contracting agency staff is not a § 172.7). The solicitation and contract be determined at the time of negotiation.
viable option. provisions must address the following (4) When the method of payment is
(ii) Management roles may include, requirements: other than lump sum, the contract shall
but are not limited to, providing (i) Specify a reasonable maximum specify a maximum amount payable
oversight of an element of a highway length of contract period, including the which shall not be exceeded unless
program, function, or service on behalf number and period of any allowable adjusted by a contract modification.
of the contracting agency or may involve contract extensions, which shall not (5) The specific rates of compensation
managing or providing oversight of a exceed 5 years; payment method provides for
project, series of projects, and/or the (ii) Specify a maximum total contract reimbursement on the basis of direct
work of other consultants and dollar amount which may be awarded labor hours at specified fixed hourly
contractors on behalf of the contracting under a contract; rates (including direct labor costs,
agency. Contracting agency written (iii) Include a statement of work, indirect costs, and fee or profit) plus any
policies and procedures (as specified in requirements, specifications, or other other direct expenses or costs, subject to
§ 172.5(c)) may further define allowable description to define the general scope, an agreement maximum amount. This
management roles and services a complexity, and professional nature of payment method shall only be used
consultant may provide, specific the services; and when it is not possible at the time of
approval responsibilities, and associated (iv) If multiple consultants are to be procurement to estimate the extent or
controls necessary to ensure compliance selected and multiple on-call or IDIQ duration of the work or to estimate costs
with Federal requirements. contracts awarded through a single with any reasonable degree of accuracy
(iii) Use of consultants in solicitation for specific services: and should be limited to contracts or
management roles requires appropriate (A) Identify the number of consultants components of contracts for specialized
conflicts of interest standards as that may be selected or contracts that or support type services where the
specified in subparagraph (b)(4) of this may be awarded from the solicitation; consultant is not in direct control of the
section and adequate contracting agency and number of hours worked, such as
staffing to administer and monitor the (B) Specify the procedures the construction engineering and
management consultant contract (as contracting agency will use in inspection. Use of this payment method
requires contracting agency (11) Determination of allowable costs (vi) Evaluating and participating in
management and monitoring of the in accordance with the Federal cost decisions for contract modifications;
consultant’s level of effort and principles (all contracts and and
classification of employees used to subcontracts); (vii) Documenting contract
perform the contracted services. (12) Contracting agency requirements monitoring activities and maintaining
(6) Contracting agencies may pertaining to consultant errors and adequate contract records (as specified
withhold retainage from payments in omissions (all contracts and in 49 CFR 18.42).
accordance with prompt pay subcontracts); and (2) Performance evaluation. The
requirements (as specified in 49 CFR contracting agency shall prepare a final
(13) Contracting agency requirements
26.29). When retainage is used, the evaluation report of the consultant’s
pertaining to conflicts of interest (as
terms and conditions of the contract performance on a contract. The report
specified in 23 CFR 1.33 and the should include, but not be limited to, an
must clearly define agency requirements of this part) (all contracts
requirements, including periodic evaluation of the timely completion of
and subcontracts). work, adherence to contract scope and
reduction in retention and the
(d) Contract administration and budget, and quality of the work. The
conditions for release of retention.
(c) Contract provisions. Contracts monitoring. (1) Responsible charge. A consultant shall be provided a copy of
must include the following provisions: full-time, public employee of the the report and shall be provided an
(1) Administrative, contractual, or contracting agency qualified to ensure opportunity to provide written
legal remedies in instances where that the work delivered under contract comments to be attached to the report.
consultants violate or breach contract is complete, accurate, and consistent Additional interim performance
terms and conditions, and provide for with the terms, conditions, and evaluations should be considered based
such sanctions and penalties as may be specifications of the contract shall be in on the scope, complexity, and size of
appropriate (all contracts and responsible charge of each contract or the contract as a means to provide
subcontracts); project. While an independent feedback, foster communication, and
(2) Termination for cause and for consultant may be procured to serve in achieve desired changes or
convenience by the contracting agency a program or project management role improvements. Completed performance
including the manner by which it will (as specified in § 172.7(b)(5)) or to evaluations should be archived for
be effected and the basis for settlement provide technical assistance in review consideration as an element of past
(all contracts and subcontracts in excess and acceptance of engineering and performance in the future evaluation of
of $10,000); design related services performed and the consultant to provide similar
(3) Notice of contracting agency products developed by other services.
requirements and regulations pertaining consultants, a full-time, public (e) Contract modification. (1) Contract
to reporting (all contracts and employee must be designated by the modifications are required for any
subcontracts); contracting agency as being in amendments to the terms of the existing
(4) Contracting agency requirements responsible charge. A public employee contract that change the cost of the
and regulations pertaining to copyrights may serve in responsible charge of contract; significantly change the
and rights in data (all contracts and multiple projects and contracting character, scope, complexity, or
subcontracts); agencies may use multiple public duration of the work; or significantly
(5) Access by grantee, the subgrantee, employees to fulfill monitoring change the conditions under which the
the FHWA, the U.S. Department of responsibilities. The public employee’s work is required to be performed.
Transportation’s Inspector General, the responsibilities shall include: (2) A contract modification shall
Comptroller General of the United (i) Administering inherently clearly define and document the
States, or any of their duly authorized governmental activities including, but changes made to the contract, establish
representatives to any books, not limited to, contract negotiation, the method of payment for any
documents, papers, and records of the contract payment, and evaluation of adjustments in contract costs, and be in
consultant which are directly pertinent compliance, performance, and quality of compliance with the terms and
to that specific contract for the purpose services provided by consultant; conditions of the contract and original
of making audit, examination, excerpts, (ii) Being familiar with the contract procurement.
and transcriptions (all contracts and requirements, scope of services to be (3) Contract modifications shall be
subcontracts); performed, and products to be produced negotiated following the same
(6) Retention of all required records by the consultant; procedures as the negotiation of the
for not less than 3 years after the original contract.
(iii) Being familiar with the (4) Only the type of services and work
contracting agency makes final payment
qualifications and responsibilities of the included within the scope of services of
and all other pending matters are closed
consultant’s staff and evaluating any the original solicitation from which a
(all contracts and subcontracts);
requested changes in key personnel; qualifications-based selection was made
(7) Lobbying certification and
disclosure (as specified in 49 CFR part (iv) Scheduling and attending may be added to a contract. Services
20) (all contracts and subcontracts progress and project review meetings, outside of the scope of work established
exceeding $100,000); commensurate with the magnitude, in the original request for proposal must
(8) Standard DOT Title VI Assurances complexity, and type of work, to ensure be procured under a new solicitation,
(DOT Order 1050.2) (all contracts and the work is progressing in accordance performed by contracting agency staff,
subcontracts); with established scope of work and or performed under a different contract
(9) Disadvantaged Business Enterprise schedule milestones; established for the services desired.
(DBE) assurance (as specified in 49 CFR (v) Assuring consultant costs billed (5) Overruns in the costs of the work
26.13(b)) (all contracts and are allowable in accordance with the shall not automatically warrant an
subcontracts); Federal cost principles and consistent increase in the fixed fee portion of a cost
(10) Prompt pay requirements (as with the contract terms as well as the plus fixed fee reimbursed contract.
specified in 49 CFR 26.29) (all contracts acceptability and progress of the Permitted changes to the scope of work
and subcontracts); consultant’s work; or duration may warrant consideration
for adjustment of the fixed fee portion grantees) to establish or accept an audit may dispute the established
of cost plus fixed fee or lump sum indirect cost rate(s) shall provide indirect cost rate. If an error is
reimbursed contracts. assurance of compliance with the discovered in the established indirect
(f) Contracts. Contracts and contract Federal cost principles and may consist cost rate, the rate may be disputed by
settlements involving engineering and of the following: any prospective contracting agency.
design related services for projects that (A) Performing an audit in accordance (2) Direct salary or wage rates. (i)
have not been assumed by the State with generally accepted government Compensation for each employee or
under 23 U.S.C. 106(c), that do not fall auditing standards and issuing an audit classification of employee must be
under the small purchase procedures (as report; reasonable for the work performed in
specified in § 172.7(a)(2)), shall be (B) Reviewing and accepting an audit accordance with the Federal cost
subject to the prior approval by FHWA, report and related workpapers prepared principles.
unless an alternate approval procedure by a certified public accountant or (ii) To provide for fair and reasonable
has been approved by FHWA. another STA; compensation, considering the
(C) Establishing a provisional indirect classification, experience, and
§ 172.11 Allowable costs and oversight. cost rate for the specific contract and responsibility of employees necessary to
(a) Allowable costs. (1) Costs or prices adjusting contract costs based upon an provide the desired engineering and
based on estimated costs for contracts audited final rate; or design related services, contracting
shall be eligible for Federal-aid (D) Conducting other evaluations in
agencies may establish consultant direct
reimbursement only to the extent that accordance with a risk-based oversight
salary or wage rate limitations or
costs incurred or cost estimates process as specified in subparagraph
‘‘benchmarks’’ based upon an objective
included in negotiated prices are (c)(2) of this section and within the
assessment of the reasonableness of
allowable in accordance with the agency’s approved written policies and
proposed rates performed in accordance
Federal cost principles. procedures (as specified in § 172.5(c)).
(iv) A lower indirect cost rate may be with the reasonableness provisions of
(2) Consultants shall be responsible
accepted for use on a contract if the Federal cost principles.
for accounting for costs appropriately
submitted voluntarily by a consultant; (iii) When an assessment of
and for maintaining records, including
however, the consultant’s offer of a reasonableness in accordance with the
supporting documentation, adequate to
lower indirect cost rate shall not be a Federal cost principles has not been
demonstrate that costs claimed have
condition or qualification to be performed, contracting agencies shall
been incurred, are allocable to the
considered for the work or contract use and apply the consultant’s actual
contract, and comply with Federal cost
award. direct salary or wage rates for
principles.
(b) Elements of contract costs. The (v) Once accepted in accordance with estimation, negotiation, administration,
following requirements shall apply to subparagraphs (1)(ii)–(iv) herein, and payment of contracts and contract
the establishment of the specified contracting agencies shall apply such modifications.
elements of contract costs: indirect cost rate(s) for the purposes of (3) Fixed fee. (i) The determination of
(1) Indirect cost rates. (i) Indirect cost contract estimation, negotiation, the amount of fixed fee shall consider
rates shall be updated on an annual administration, reporting, and contract the scope, complexity, contract
basis in accordance with the payment and the indirect cost rate(s) duration, degree of risk borne by the
consultant’s annual accounting period shall not be limited by administrative or consultant, amount of subcontracting,
and in compliance with the Federal cost de facto ceilings of any kind. and professional nature of the services
principles. (vi) A consultant’s accepted indirect as well as the size and type of contract.
(ii) Contracting agencies shall accept cost rate for its 1-year applicable (ii) The establishment of fixed fee
a consultant’s or subconsultant’s accounting period shall be applied to shall be project or task order specific.
indirect cost rate(s) established for a 1- contracts; however, once an indirect (iii) Fixed fees in excess of 15 percent
year applicable accounting period by a cost rate is established for a contract, it of the total direct labor and indirect
cognizant agency that has: may be extended beyond the 1-year costs of the contract may be justified
(A) Performed an audit in accordance applicable period, through the duration only when exceptional circumstances
with generally accepted government of the specific contract, provided all exist.
auditing standards to test compliance concerned parties agree. Agreement to (4) Other direct costs. The Federal
with the requirements of the Federal the extension of the 1-year applicable cost principles shall be used in
cost principles and issued an audit period shall not be a condition or determining the reasonableness,
report of the consultant’s indirect cost qualification to be considered for the allowability, and allocability of other
rate(s); or work or contract award. direct contract costs.
(B) Conducted a review of an audit (vii) Disputed rates. If an indirect cost (c) Oversight. (1) Agency controls.
report and related workpapers prepared rate established by a cognizant agency Contracting agencies shall provide
by a certified public accountant and in subparagraph (1)(ii) herein is in reasonable assurance that consultant
issued a letter of concurrence with the dispute, the contracting agency does not costs on contracts reimbursed in whole
related audited indirect cost rate(s). have to accept the rate. A contracting or in part with FAHP funding are
(iii) When the indirect cost rate has agency may perform its own audit or allowable in accordance with the
not been established by a cognizant other evaluation of the consultant’s Federal cost principles and consistent
agency in accordance with indirect cost rate for application to the with the contract terms considering the
subparagraph (1)(ii) herein, a STA (or specific contract, until or unless the contract type and payment method(s).
other direct grantee) shall perform an dispute is resolved. A contracting Contracting agency written policies,
evaluation of a consultant’s or agency may alternatively negotiate a procedures, contract documents, and
subconsultant’s indirect cost rate prior provisional indirect cost rate for the other controls (as specified in § 172.5(c)
to acceptance and application of the rate specific contract and adjust contract and § 172.9) shall address the
to contracts administered by the grantee costs based upon an audited final rate. establishment, acceptance, and
or its subgrantees. The evaluation Only the consultant and the parties administration of contract costs to
performed by STAs (or other direct involved in performing the indirect cost assure compliance with the Federal cost
principles and requirements of this (F) Training on the Federal cost knowingly charge unallowable costs to
section. principles. a FAHP funded contract:
(2) Risk-based analysis. The STAs (or (iii) Documentation. Maintaining (i) Contracting agencies shall pursue
other direct grantees) may employ a adequate documentation of the risk- administrative, contractual, or legal
risk-based oversight process to provide based analysis procedures performed to remedies and provide for such sanctions
reasonable assurance of consultant support the allowability and acceptance and penalties as may be appropriate;
compliance with Federal cost principles of consultant costs on FAHP funded and
on FAHP funded contracts administered contracts. (ii) Consultants are subject to
by the grantee or its subgrantees. If (3) Consultant cost certification. (i) suspension and debarment actions (as
employed, this risk-based oversight Indirect cost rate proposals for the specified in 2 CFR part 180), potential
process shall be incorporated into STA consultant’s 1-year applicable cause of action under the False Claims
(or other direct grantee) written policies accounting period shall not be accepted Act (as specified in 32 U.S.C. 3729–
and procedures (as specified in and no agreement shall be made by a 3733), and prosecution for making a
§ 172.5(c)). In addition to ensuring contracting agency to establish final false statement (as specified in 18 U.S.C.
allowability of direct contract costs, the indirect cost rates, unless the costs have 1020).
risk-based oversight process shall been certified by an official of the (d) Prenotification; confidentiality of
address the evaluation and acceptance consultant as being allowable in data. The FHWA, grantees, and
of consultant and subconsultant indirect accordance with the Federal cost subgrantees of FAHP funds may share
cost rates for application to contracts. A principles. The certification audit information in complying with the
risk-based oversight process shall requirement shall apply to all indirect grantee’s or subgrantee’s acceptance of a
consist of the following: cost rate proposals submitted by prime consultant’s indirect cost rates pursuant
(i) Risk assessments. Conducting and and subconsultants for acceptance by a to 23 U.S.C. 112 and this part provided
documenting an annual assessment of STA (or other direct grantee). that the consultant is given notice of
risks of noncompliance with the Federal (ii) Consultant official shall be an each use and transfer. Audit information
cost principles per consultant doing individual executive or financial officer shall not be provided to other
business with the agency, considering of the consultant’s organization at a consultants or any other government
the following factors: level no lower than a Vice President or agency not sharing the cost data, or to
(A) Consultant’s contract volume Chief Financial Officer, or equivalent, any firm or government agency for
within the State; who has the authority to represent the
(B) Number of States in which the purposes other than complying with the
financial information utilized to grantee’s or subgrantee’s acceptance of a
consultant operates;
(C) Experience of consultant with establish the indirect cost rate proposal consultant’s indirect cost rates pursuant
FAHP contracts; submitted for acceptance. to 23 U.S.C. 112 and this part without
(D) History and professional (iii) The certification of final indirect the written permission of the affected
reputation of consultant; costs shall read as follows: consultants. If prohibited by law, such
(E) Audit history of consultant; Certificate of Final Indirect Costs cost and rate data shall not be disclosed
(F) Type and complexity of consultant under any circumstance; however,
accounting system; This is to certify that I have reviewed should a release be required by law or
(G) Size (number of employees and/or this proposal to establish final indirect court order, such release shall make
annual revenues) of consultant; cost rates and to the best of my note of the confidential nature of the
(H) Relevant experience of certified knowledge and belief: data.
public accountant performing audit of 1. All costs included in this proposal [FR Doc. 2012–21520 Filed 8–31–12; 8:45 am]
consultant; (identify proposal and date) to establish
BILLING CODE 4910–22–P
(I) Assessment of consultant’s internal final indirect cost rates for (identify
controls; period covered by rate) are allowable in
(J) Changes in consultant accordance with the cost principles of
organizational structure; and the Federal Acquisition Regulation EQUAL EMPLOYMENT OPPORTUNITY
(K) Other factors as appropriate. (FAR) of title 48, Code of Federal COMMISSION
(ii) Risk mitigation and evaluation Regulations (CFR), part 31; and
procedures. Allocating resources, as 29 CFR Part 1610
2. This proposal does not include any
considered necessary based on the costs which are expressly unallowable RIN 3046–AA90
results of the annual risk assessment, to under applicable cost principles of the
provide reasonable assurance of FAR of 48 CFR part 31. Availability of Records
compliance with the Federal cost Firm: lllllllllllllll
principles through application of the AGENCY: Equal Employment
Signature: lllllllllllll Opportunity Commission
following types of risk mitigation and Name of Certifying Official: lllll
evaluation procedures appropriate to ACTION: Notice of proposed rulemaking.
Title: lllllllllllllll
the consultant and circumstances: Date of Execution: llllllllll
(A) Audits performed in accordance SUMMARY: The Equal Employment
with generally accepted government (4) Sanctions and penalties. Opportunity Commission (‘‘EEOC’’ or
audit standards to test compliance with Contracting agency written policies, ‘‘Commission’’) proposes to revise its
the requirements of the Federal cost procedures, and contract documents (as Freedom of Information Act (FOIA)
principles; specified in § 172.5(c) and § 172.9(c)) regulations in order to implement the

(B) Certified public accountant or shall address the range of Openness Promotes Effectiveness in our
other STA workpaper reviews; administrative, contractual, or legal National Government Act of 2007
(C) Desk reviews; remedies that may be assessed in (OPEN Government Act) and the
(D) Other analytical procedures; accordance with Federal and State laws Electronic FOIA Act of 1996 (E–FOIA
(E) Consultant cost certifications in and regulations where consultants Act); to reflect the reassignment of FOIA
accordance with subparagraph (c)(3) violate or breach contract terms and responsibilities in the Commission’s
herein; and conditions. Where consultants field offices from the Regional Attorneys

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53802 Federal Register / Vol. 77, No.

171 / Tuesday, September 4, 2012 / Proposed Rules

legislation codified in 23 U.S.C. 53129), and effective on October 1, transportation.org/Documents/2010_

Paperwork Reduction Act Executive Order 12630 (Taking of

principles; specified in § 172.5(c) and § 172.9(c)) regulations in order to implement the

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