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###### Department of Transportation

###### Federal Transit Administration

          - [Docket No. FTA-2024-0015]

# AGENCY:

Federal Transit Administration (FTA), Department of Transportation (DOT).

# ACTION:

Notice; request for comments.

# SUMMARY:

                        The Federal Transit Administration (FTA) has placed in the docket and on its website proposed guidance in the form of an updated circular pertaining to procurements financed in whole or part with Federal assistance awarded by FTA through grants or cooperative agreements (                        *i.e.,*                         “third party” procurements). This updated circular would cancel and replace Circular FTA C 4220.1F, most recently revised March 18, 2013. The proposed updates reflect statutory and regulatory changes that have occurred since the last update, as well as providing additional non-binding guidance. By this notice, FTA invites public comment on its proposed circular, “Third Party Contracting Guidance.”                    

# DATES:

Comments must be submitted by December 27, 2024. Late-filed comments will be considered to the extent practicable.

# ADDRESSES:

                        Please submit your comments by only one of the following methods, identifying your submission by docket number FTA-2024-0015. All electronic submissions must be made to the U.S. Government electronic site at                         *https://www.regulations.gov/​.*

                        (1)                         *Federal eRulemaking Portal:*                         Go to                         *https://www.regulations.gov/​*                         and follow the online instructions for submitting comments.                    

                        (2)                         *Mail:*                         Docket Management Facility: U.S. Department of Transportation, 1200 New Jersey Avenue SE, West Building, Ground Floor, Room W12-140, Washington, DC 20590-0001.                    

                        (3)                         *Hand Delivery or Courier:*                         West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, between 9 a.m. and 5 p.m. Eastern time, Monday through Friday, except Federal holidays.                    

                        (4)                         *Fax:*                         202-366-7951.                    

*Instructions:*                         You must include the agency name (Federal Transit Administration) and docket number (FTA-2024-0015) at the beginning of your comments. Submit two copies of your comments if you submit them by mail. For confirmation that FTA received your comments, include a self-addressed stamped postcard. Note that all comments received will be posted without change to                         *https://www.regulations.gov/​*                         including any personal information provided and will be available to internet users. For information on DOT's compliance with the Privacy Act, please visit                         *https://www.transportation.gov/​privacy.*

*Docket:*                         For access to the docket to read background documents and comments received, go to                         *https://www.regulations.gov/​*                         at any time or to the U.S. Department of Transportation, 1200 New Jersey Avenue SE, Docket Operations, M-30, West Building Ground Floor, Room W12-140, Washington, DC 20590 between 9 a.m. and 5 p.m. Eastern Time, Monday through Friday, except Federal holidays.                    

# FOR FURTHER INFORMATION CONTACT:

                        For third party contracting questions, contact Tara Murphy, Division Chief, Office of Administration, Federal Transit Administration, 1200 New Jersey Ave. SE, Room E41-311, Washington, DC 20590, phone: (202) 366-5647 or email                         *tara.murphy@dot.gov.*                         For legal questions, Christopher Hall, Office of Chief Counsel, same address, Room E56-312, phone (202) 941-9595 or email                         *christopher.hall@dot.gov.*

# SUPPLEMENTARY INFORMATION:

## Overview

                    FTA proposes an update to its Third Party Contracting Guidance Circular, which would replace and cancel the current iteration dated March 18, 2013 (C 4220.1F). The proposed circular would update FTA's guidance for                           ( print page 93825)                        recipient procurements financed with FTA assistance (third party contracts) to reflect current statutory and regulatory text, including the Infrastructure Investment and Jobs Act (IIJA), Public Law 117-582, signed into law on November 15, 2021; the Fixing America's Surface Transportation (FAST) Act, Public Law 114-94, signed into law on December 4, 2015; and new or updated administrative requirements from 2 CFR parts 200 and 1201.                

                    This notice does not include the proposed circular; electronic versions of the proposed circular may be found on the docket at                     *https://www.regulations.gov,*                     docket number FTA-2024-0015, or on FTA's website at                     *https://www.transit.dot.gov.*

## Chapter-By-Chapter Summaries

Throughout the proposed circular, revisions are proposed that would clarify or reorganize sections for improved readability, without substantively altering guidance from the current Circular 4220.1F. The proposed circular also updates citations to authority and adds citations to improve transparency about the sources of requirements. Proposed changes that would not have a substantive effect are not necessarily called out in this notice.

## Chapter I

In Chapter I, FTA proposes to revise several key definitions, including “Approval, Authorization, Concurrence, Waiver,” “Best Value,” “Change Order,” “Common Grant Rules,” “Constructive Change,” “Contract,” “Design-Build Project,” “Governmental Recipient,” “Joint Procurement,” “Non-Governmental Recipient,” “Recipient,” “State or Local Government Purchasing Schedule or Purchasing Contract,” “Third Party Contract,” and “Value Engineering.” In most cases, revisions were to simplify definitions, or align definitions with existing statute or regulations. Additionally, this chapter would introduce new definitions, such as “Alternate Contracting Method (ACM),” “Progressive Design-Build (PDB),” and “Public-Private Partnership (P3).”

FTA also proposes to update language in this chapter describing the Federal Transit Administration (FTA) and the roles of FTA's headquarters, regional, and metropolitan offices in supporting public transportation agencies.

## Chapter II

                    FTA proposes to revise Chapter II to clarify the circular's effect and applicability, including by distinguishing between binding requirements (                    *e.g.,*                     described using “must” or “shall”) and non-binding recommendations (                    *e.g.,*                     described using “may” or “should”). Throughout the proposed circular, revisions would take care to distinguish between the mandatory and the advisory. The proposed revisions would specify how the circular applies to different entities, including States, Tribes, non-State recipients, and third party contractors, and would simplify the Project Types and Third Party Contracts sections under the Applicability of the Circular. Updates would consolidate or remove outdated and inapplicable sections from this Chapter, such as those on “Other Agreement” Assistance, Art, the Over the Road Bus Accessibility Program, and certain Operations and Preventive Maintenance contracts. These sections are redundant or otherwise no longer relevant due to program changes.                

Additionally, proposed changes would expand the descriptions of available project delivery options for recipients by adding Construction Manager/General Contractor (CM/GC), Full Delivery or Program Management, and Progressive Design-Build (PDB) to the list of project delivery systems. Proposed revisions to Chapter II would also add guidance on Alternative Contracting Methods (ACMs) regarding PDB and P3. Finally, the proposed updates would revise the Federal Laws and Regulations section and the State and Local Laws and Regulations section to update the description of the relationships among Federal and State laws, regulations, and the FTA grant agreements and Master Agreement.

## Chapter III

FTA proposes amendments to Chapter III that would update guidance on recipients' responsibilities, with particular emphasis on Written Standards of Conduct to address Gifts and Violations, along with new guidance on Organizational Conflicts, to reflect current Federal regulations. Similarly, the proposed changes would update guidance on Self-Certification and Third Party Contracting Capacity to clarify FTA's use of certifications and describe existing practice and procedures at FTA. Proposed revisions to Adequate Third Party Contract Provisions, Industry Contracts, Record Keeping, Procurement History, Procurement Method, Contract Type, and Contractor Selection would improve clarity, update citations, and bring them into alignment with current Federal regulations.

Proposed revisions to Chapter III would also incorporate new guidance on Constructive Changes, update guidance on Access to Records, and remove Special Notification Requirements to align with current Federal regulations. Additionally, proposed changes would update guidance regarding Use of Technology/Electronic Commerce and Electronic Bidding and Reverse Auctions.

To address the industry's growing need for control and access to data, as contracts increasingly involve data collection, new guidance would be added on Data Rights. This guidance would cover aspects such as data collection, ownership, and usage, with specific provisions on negotiating data rights to secure adequate licenses for federally funded data. It would also ensure the clear definition of data rights, negotiation of data access rights to meet Federal objectives, and inclusion of appropriate clauses.

Proposed updates would update guidance on Audits to align with updated Federal regulations.

To replace the current circular's description of protests and appeals to FTA (see below, under Chapter VII), Chapter III would include a new section describing FTA's role in the recipient's procurement disputes and FTA's interest in settlements impacting Federal funds.

## Chapter IV

In Chapter IV, FTA proposes to clarify the Determining the Recipient's Needs section, including guidance on Necessity, Unnecessary Reserves and Spare Ratios, Acquisition for Assignment Purposes (“piggybacking”), Changes in the Recipient's Needs, and Joint Procurements, as well as State or Local Government Purchasing Schedules or Purchasing Contracts, in accordance with current FTA guidance and purchasing authorities and to reduce duplication of other sections of the circular. Guidance on Joint Procurements would be clarified, while Small Procurements and Lease-versus-Purchase guidance would be updated to align with existing Federal regulation. New guidance to reflect innovative procurement flexibilities introduced by the FAST Act would be introduced on Leases of Rolling Stock and Related Equipment, Leases of Removable Power Sources, reporting requirements, and lease specifications.

                    Additional updates would clarify Federal requirements affecting recipient acquisitions. Guidance on Responsibility Requirements and DOT Debarment and Suspension would be updated, with references to the GSA Excluded Parties List replaced by the System for Award Management (SAM). Updates to Conflicts of Interest, and Lobbying Certification and Disclosure                           ( print page 93826)                        would improve clarity and reflect current Federal regulations and FTA policy.                

The Federal Civil Rights Laws and Regulations section would be renamed Civil Rights and moved and consolidated with other civil rights-related sections for better flow. Updates within Administrative Requirements would include minor clarifications for accuracy. Under Cost Principles, unnecessary guidance on Governmental Entities, Educational Institutions, Non-Profit Entities, and For-Profit Entities would be removed because these entities all apply the same cost principles under FTA's policy.

The Payments Provision section would be updated with the latest FTA guidance on Advance Payments and Progress Payments.

Wage and Hour Requirements under Socio-Economic Requirements would be renamed the Contract Work and Hours and Safety Standards Act, to be consistent with regulation, and the information therein would be updated to reflect the most current description in Federal regulation. Fair Labor Standards guidance would be similarly updated.

Under Civil Rights, guidance would be reorganized for flow, and new guidance would address changes in the law regarding nondiscrimination on the basis of sexual orientation and gender since the last circular update.

The Targeted Contracting section would be updated. The description of U.S. DOT's Disadvantaged Business Enterprise (DBE) rule would be updated to reflect changes to that rule that took effect in 2024. The section on Small and Disadvantaged Business Enterprises and HUBZones would be expanded in accordance with existing Federal regulation.

Under Environmental Protection, guidance on the Clean Air Act, the Federal Water Pollution Control Act, and Recycled Products would be updated to reflect current Federal regulations. Energy Conservation would be updated to refer to current regulation. Preference for U.S. Property—Buy America would be updated to add reference to the Build America, Buy America Act that became law in 2021, the addition of construction materials to the list of products that must be manufactured in the United States on an FTA funded project, and reference to 2 CFR part 184, which implements the new requirement for construction materials. Guidance on Shipments by Ocean Vessel would be clarified.

Under Technical Restrictions, updates would remove unnecessary Metric Measurements guidance, because 2 CFR part 200 does not require this.

Under Rolling Stock—Special Requirements, guidance on Transit Vehicle Manufacturer Compliance with DBE Requirements would expand to include guidance on project-specific DBE participation goals. Updates on Minimum Useful Life and Spare Ratios would make clarifications and align with FTA's latest guidance. Outdated guidance on Air Pollution and Fuel Economy would be removed. Minor corrections and simplifications would be made to Preaward and Post Delivery Review, Bus Testing, In-State Dealers, and Rolling Stock Contract Options.

The Art section would be substantially removed because art no longer is an eligible expense under FTA's statute.

Guidance on Architectural and Engineering (A&E) Services would include updates on Qualifications-Based Selection, renamed from Qualifications-Based Requirements, to reorganize and clarify without substantive changes. Related updates for Construction, Service Purposes, Equivalent State Law, and Indirect Cost Rates would enhance clarity.

Under Construction—Special Requirements, guidance on Bonding, Bid Guarantees, Performance Bonds, Payment Bonds, Reduced Bonding, and Excessive Bonding would be updated to refer to current regulations and updated URLs without substantive change. Seismic Safety, Value Engineering, Equal Employment Opportunity, Davis-Bacon Wages, Anti-Kickback, Contract Work Hours and Safety Standards, and Labor Neutrality would receive non-substantive updates for clarity and regulatory alignment, and a new section on veterans' employment would be added in accordance with FTA's existing statute. The section on Preference for U.S. Property—Buy America would be consolidated earlier in the chapter. Accessibility guidance would also be relocated for clarity.

The Research, Development, Demonstration, Deployment, and Special Studies—Special Requirements section would include updates to Patent Rights, Rights in Data, Export Control, Protection of Human Subjects, and Protection of Animals to cite to current Federal regulations and FTA's Master Agreement where appropriate.

Finally, updates in Audit Services would align with current Federal regulations and dollar thresholds, with revisions to the Single Audit Act, Organizational Conflicts of Interest, Eligibility Costs, and verification processes. The section on Obtaining Indirect Cost Rates would be simplified and references to current Federal regulation would be added.

## Chapter V

Chapter V would update the Force Account and Shared Use sections for clarity to refer to FTA's latest guidance on the subjects. Under Joint Procurement, guidance would be clarified. Updates to the guidance on State or Local Government Purchasing Schedules or Purchasing Contracts would be clarified, and new guidance would be provided on Interstate Purchasing of Rolling Stock and Related Equipment to account for changes to rolling stock purchasing authorities. New guidance would be added on Interstate Purchasing Schedules and guidance on Intergovernmental Agreements would be updated to reflect new authorities introduced by the FAST Act for rolling stock procurements.

New guidance on Cooperative Procurement of Rolling Stock and Related Equipment would be added to reflect new FAST Act authorities.

Guidance on Competition and Price Reasonableness would be revised to align with current Federal regulations.

The Existing Contracts (Assignments) section would be reorganized and streamlined for clarity. Information on Alternatives to Assigned Contract Rights, Joint Procurements, and Intergovernmental Procurements would be removed and consolidated with the sections elsewhere in the circular dealing with those topics. Guidance related to Impermissible Actions, Improper Contract Expansion and Improper Cardinal Changes would be updated to improve clarity. Sections on Tests, Rolling Stock, and Federal Procurement Standards would be removed from this section and consolidated with sections elsewhere in this circular dealing with those topics.

## Chapter VI

For Chapter VI, the Competition Required section would incorporate changes to more closely reflect existing Federal regulations. The subsection on Unsolicited Proposals would be reorganized for flow without substantive change. Prequalification guidance would be updated to match current regulation, adding Objective Factors and refining sections on Currentness (formerly Lists), Sources, and Qualification Periods.

                    Solicitation Requirements and Restrictions would also be updated to align with Federal regulations, including clarifications in the subsections What to Include and Brand Name or Equal. Prohibitions would be revised, with updates on Excessive Qualifications, Unnecessary Experience, Improper Prequalification, Retainer                           ( print page 93827)                        Contracts, Excessive Bonding, Brand Name Only, and Geographic Restrictions (formerly In-State or Local Geographic Restrictions). Regarding geographic restrictions, changes since the last circular update include authority in IIJA to apply local hiring targets to construction projects, and the removal of a former prohibition against geographic restrictions from 2 CFR part 200. A reference to Self-Dealing and Bid Rigging would be added to the list of prohibited restrictions on competition.                

The section on Organizational Conflicts of Interest would be revised to include new guidance on the Recipient's Conflicts in accordance with current regulation. Updates to Contractor's Conflicts would include expanded guidance on Biased Ground Rules in accordance with existing regulation.

The Prohibited or Restricted Contract Types section would be simplified, with clarifications on Cost Plus a Percentage of Cost—Prohibited, Percentage of Construction Cost—Prohibited, and Time and Materials—Restricted. Subsections on When to Use and Firm Ceiling Price would be removed as unnecessary.

Methods of Procurement would be revised to reflect updated Federal regulations, including a new section on Self-Certified Micro-Purchase Thresholds, which were introduced by a new provision in 2 CFR part 200 that took effect in 2024. Under the new provision, a recipient may set for itself a micro-purchase threshold that is higher than the Federal micro-purchase threshold. Procedures, including Distribution (formerly Competition) and Documentation, would be clarified, and the Small Purchases subsection would be renamed Simplified Acquisitions for accuracy, regulatory alignment, and to avoid confusion with FTA's unrelated “small purchases” Buy America waiver. The Simplified Acquisitions section would be updated to align with the current regulations, including updates to Competition and Documentation.

Sealed Bids (Formal Advertising) would undergo updates to align with current Federal regulations and simplify guidance, with specific clarifications in When Appropriate, Fixed Price Contract, Discussions Unnecessary, and Procurement Procedures.

Competitive Proposals (Request for Proposals) would be updated for regulatory consistency, with clarification in When Appropriate and Discussion Expected. Procurement Procedures would see updates in Notice (formerly Publicity), Written Procedures (formerly Evaluation Method), Price and Other Factors, and the absorption of Best Value into Price and Other Factors.

The section on Two-Step Procurement Procedures would receive additional guidance and clarifications.

Guidance on Architectural and Engineering (A&E) Services and Other Services would be updated for clarity, and a new statement would be added to make clear that Multiple Award Indefinite-Delivery A&E Contracts are permissible.

Information on Design-Bid-Build (DBB) would be incorporated into a new section on Mixed A&E-Construction Contracts, covering both DBB and Progressive Design-Build (PDB). The Procurement Method section would be updated, with Construction Predominant, Design Services Predominant, and Selection Processes sections absorbed into Procurement Method for streamlined guidance.

The Other Than Full and Open Competition section would be revised to more closely follow Federal regulations. Guidance on Micro-Purchases, Sole Source, Unsolicited Proposals, and Restricted Data Rights would be updated for clarity. The Exigency or Emergency section would be clarified, with Unusual and Compelling Urgency absorbed under Exigency or Emergency. The significantly outdated paragraph about Associated Capital Maintenance Item Exception would be removed.

Updates would clarify guidance on Cardinal Changes, including revised guidance on when cardinal changes impair competition and how to recognize cardinal changes that impair competition.

Eligible Costs would be updated to align with the current Federal regulation and FTA policy in its Master Agreement. The section on Adjustments to Project Costs would be removed as unnecessary.

Cost Analysis and Price Analysis would receive minor revisions for clarity and organization, and the sentence on Federal cost principles would be removed as redundant with the following subsection, Guidance on Cost and Price Analysis.

Guidance on Evaluations and Contract Award would be updated with minor changes for clarity, and a new information on disqualifying offerors with recent Tax Liability or Felony Convictions.

## Chapter VII

Chapter VII in Circular 4220.1F deals with protests, changes, disputes, and appeals of the recipient's procurement decisions to FTA. The proposed circular would eliminate Chapter VII and replace it with a new paragraph in proposed Chapter III on Recipient Responsibilities and FTA's Role in Procurement Disputes. That paragraph would restate the current regulation, which commits procurement decisions to the discretion of the recipient and states that FTA will not substitute its judgment for that of the recipient unless the matter is primarily a Federal concern. It also would state FTA's interest in settlements of procurement disputes that would commit Federal funds or the proceeds of procurement disputes arising from federally funded procurements.

## Appendices

FTA proposes to revise the appendices of the circular to improve accuracy, accessibility, and ensure alignment with current best practices. Specifically, Appendix A, References, would be revised to reflect sources incorporated in this version. Appendix B, FTA Regional and Metropolitan Office Contact Information, and Appendix C, Third Party Contracting Checklist, would be removed to streamline the document and focus on core guidance. Additionally, Appendix D, Provisions, Certifications, Reports, Forms, and Other—Matrices, would be removed to enable more timely updates to this information on the FTA website.

## Closing

                    After a review and consideration of the comments provided on the updates proposed, FTA will publish the updated Third Party Contracting Guidance Circular (C 4220.1G) on its website and will announce the availability of the updated circular and the response to comments in the                     **Federal Register**                    .                

Veronica Vanterpool,

Deputy Administrator.

[FR Doc. 2024-27645 Filed 11-26-24; 8:45 am]

BILLING CODE 4910-57-P