56896 Federal Register / Vol. 73, No. 190 / Tuesday, September 30, 2008 / Notices 

oversight program. FTA’s Master 

Agreement specifies these requirements. 

FTA determines compliance through 

self-certification, oversight review and 

audits, and site visits. FTA annually 

completes an individual Grantee 

Oversight Assessment Questionnaire, 

which serves as baseline information for 

each grantee’s capacity to comply, and 

the degree of the risk the grantee’s 

program may represent for the Federal 

program. Based on this information, 

FTA makes decisions about which 

grantees will receive oversight reviews 

during the coming year. Regional staff 

uses the information to develop regional 

oversight plans and to allocate oversight 

resources within the region for the 

upcoming fiscal year, which may 

include oversight reviews, regional 

meetings, and/or regional site visits. 

One commenter asked FTA to add its 

Job Access Reverse Commute (JARC) 

and New Freedom Programs to the list 

of programs covered by State 

Management Reviews. FTA only listed 

programs for which it is authorized to 

withhold a percentage for oversight 

activities. FTA retains the right to 

review any of its programs through State 

Management Reviews. 

F. Chapter VI—Financial Management 

Chapter VI discusses the proper use 

and management of Federal funds FTA 

expects from its grantees. Financial 

management is one of the most 

important practices in the management 

of Federal funds. 

One commenter asked FTA to define 

the Cash Basis of Accounting and its 

permissible use. Definitions have been 

added. 

Another commenter asked FTA to 

clarify whether a specific form is 

required for documenting internal 

controls. FTA notes that the form 

checklist provided in Circular 5010.1D 

is not mandatory. FTA has provided it 

to those transit properties that do not 

currently do their own testing. FTA has 

modified Circular 5010.1D to make clear 

that this form is a tool, not a 

requirement. 

G. Appendices 

One commenter noted that Appendix 

C, Guide for Preparing an Appraisal 

Scope of Work, is excellent guidance 

and asked FTA to include a review 

appraisal scope of work. FTA agrees 

with this comment and has indicated 

that the Guide for Preparing an 

Appraisal Scope of work can also be 

used for a review appraisal. 

Appendix D, Fleet Status Report, has 

been renamed and revised so as to not 

be confused with the Fleet Status Report 

screen in TEAM. The new name is 

Rolling Stock Status Report. The use of 

this report is limited to disposing of a 

vehicle that has met minimum useful 

life and fair market value is greater than 

$5,000, disposing of a vehicle before it 

reaches minimum useful life, or 

requesting a budget revision affecting 

vehicles. 

Issued in Washington, DC, this 22nd day 

of September, 2008. 

James S. Simpson, 

Administrator. 

[FR Doc. E8–22891 Filed 9–29–08; 8:45 am] 

BILLING CODE 4910–57–P 

DEPARTMENT OF TRANSPORTATION 

Federal Transit Administration 

[Docket No. FTA–2007–29125] 

Third Party Contracting Guidance: 

Notice of Final Circular 

AGENCY: Federal Transit Administration 

(FTA), DOT. 

ACTION: Notice of Availability of Final 

Circular. 

SUMMARY: The Federal Transit 

Administration (FTA) has issued FTA 

Circular 4220.1F, ‘‘Third Party 

Contracting Guidance’’ to provide 

comprehensive guidance to grantees and 

recipients of cooperative agreements 

(recipients) to implement third party 

contracting requirements that apply to 

FTA assisted procurements. 

DATES: Effective Date: The effective date 

of this circular is November 1, 2008. 

ADDRESSES: A copy of this circular and 

comments and material received from 

the public, as well as any documents 

indicated in the preamble as being 

available in the docket, are part of 

docket FTA–2007–29125 and are 

available for inspection or copying at 

the Docket Management Facility, U.S. 

Department of Transportation, 1200 

New Jersey Ave., SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

You may retrieve the circular and 

comments online through the Federal 

Document Management System (FDMS) 

at Web site: http://regulations.gov. Enter 

the docket number FTA–2007–29125 in 

the search field. The FDMS is available 

24 hours each day, 365 days each year. 

Electronic submission and retrieval help 

and guidelines are available under the 

help section of the Web site. 

This notice does not include the final 

circular. An electronic version of the 

circular may be found on the docket: 

http://regulations.gov, docket number 

FTA–2007–29125, or on the FTA Web 

site: http://www.fta.dot.gov. Paper 

copies of the circular may be obtained 

by contacting FTA’s Administrative 

Services Help Desk, at 202–366–4865. 

FOR FURTHER INFORMATION CONTACT: 

James Harper, Director, Office of 

Procurement, Office of Administration, 

Federal Transit Administration, 1200 

New Jersey Avenue, SE., East Building, 

Room E42–332, Washington, DC 20590, 

phone: 202–366–1127, fax: 202–366– 

3808, or e-mail James.Harper@dot.gov 

for issues regarding third party 

contracting procedures and practices; or 

Kerry L. Miller, Assistant Chief Counsel 

for General Law, Office of Chief 

Counsel, Federal Transit 

Administration, 1200 New Jersey 

Avenue, SE., East Building, Room E56– 

314, Washington, DC 20590, phone: 

202–366–1936, fax: 202–366–3809, or 

e-mail, Kerry.Miller@dot.gov, for legal 

issues. 

Table of Contents 

I. Background 

II. Overview 

III. Chapter-by-Chapter Analysis 

A. Chapter I—Introduction and Role of the 

Federal Transit Administration 

B. Chapter II—Applicability 

C. Chapter III—The Recipient’s 

Responsibilities 

D. Chapter IV—The Recipient’s Property 

and Services Needs and Federal 

Requirements Affecting Those Needs 

E. Chapter V—Sources 

F. Chapter VI—Procedural Guidance for 

Open Market Procurements 

G. Chapter VII—Protests, Changes and 

Modifications, Disputes, Claims, 

Litigation, and Settlements 

1. Appendix A—References 

2. Appendix B—FTA Regional and 

Metropolitan Contact Information 

3. Appendix C—Third Party Contracting 

Checklists 

4. Appendix D—Matrices of Third Party 

Contract Provisions 

I. Background 

This notice provides a summary of 

FTA’s Third Party Contracting Guidance 

final circular, and addresses comments 

received in response to the FTA’s 

September 28, 2007, Federal Register 

notice (72 FR 55630). FTA’s most recent 

enabling legislation, the Safe, 

Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for 

Users (SAFETEA–LU), Public Law 109– 

59, August 10, 2005, as amended by the 

SAFETEA–LU Technical Corrections 

Act, 2008, Public Law 110–244, June 6, 

2008, added new third party contracting 

requirements for FTA recipients. Other 

Federal laws and regulations have also 

amended certain Federal requirements 

or added new Federal requirements 

affecting third party procurements 


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undertaken by FTA recipients. To 

address these changes, FTA is re-issuing 

FTA Circular 4220.1E, issued June 19, 

2003, and last amended in February of 

2004. 

FTA published proposed FTA 

Circular 4220.1F in the Federal 

Document Management System (FDMS) 

at Web site: http://regulations.gov, and 

in the FTA Web site: http:// 

www.fta.dot.gov. FTA published a 

notice of availability in the Federal 

Register (72 FR 55630) on September 

28, 2007, seeking public comment on 

the proposed circular. FTA established 

a November 27, 2007, deadline for 

comments, but extended the comment 

period to February 15, 2008, as 

announced in the Federal Register on 

October 31, 2007 (72 FR 61708). 

Ten commenters responded to FTA’s 

request for comments in response to that 

notice and the proposed circular. 

Commenters included four State 

departments of transportation, four 

regional transportation authorities, one 

trade association, and one private forprofit firm. 

This notice does not include the final 

circular. An electronic version of the 

circular may be found on the docket: 

http://regulations.gov, docket number 

FTA–2007–29125, or on the FTA Web 

site: http://www.fta.dot.gov. Paper 

copies of the circular may be obtained 

by contacting FTA’s Administrative 

Services Help Desk, at 202–366–4865. 

II. Overview of the Circular 

We recognize that this edition ‘‘F’’ of 

FTA Circular 4220.1 is substantially 

different from the previous FTA 

Circular 4220.1E, ‘‘Third Party 

Contracting Requirements,’’ 06–19–03. 

The final FTA Circular 4220.1F (the 

final circular) does contain much more 

information and guidance than was 

available in the previous circular, which 

focused mostly on Federal 

requirements. In part, this results from 

the SAFETEA–LU amendment to 49 

U.S.C. Section 5334 adding a new 

subsection ‘‘(l)’’ requiring FTA to 

publish for notice and comment any 

‘‘guidance document * * * that * * * 

imposes obligations, produces 

significant effects on private interests, or 

effects a significant change in existing 

policy.’’ The final circular now 

describes many procedures and 

processes that will assist the recipient in 

complying with the many Federal 

statutory and regulatory requirements 

that can affect third party procurements. 

Many commenters expressed the 

following views about the format and 

contents of the proposed circular as a 

whole: 

1. Too Much Information and 

Complexity 

Several commenters objected to the 

length and complexity of the proposed 

circular, expressing a preference for the 

‘‘tight structure and focused approach’’ 

of the previous circular. We understand 

that a streamlined list of requirements 

can be desirable. Because we are 

required by law to present all matters 

that may have a significant effect on 

private interests for public comment, we 

have included as many subjects as 

possible that might directly or indirectly 

affect a specific FTA assisted 

procurement. FTA assisted 

procurements are subjected not only to 

many Federal procedural requirements, 

but also to many Federal requirements 

about the nature of property and 

services that may be acquired and the 

prospective contractors that might seek 

to provide them. FTA lacks authority to 

issue blanket waivers to those Federal 

requirements. 

The circular’s purpose is to provide 

guidance on how a recipient might 

comply with the many requirements 

affecting its procurements that 

accompany the use of Federal assistance 

awarded by FTA. If the recipient is 

prepared to forgo the use of FTA 

assistance to support a procurement, 

then the circular’s guidance will not 

apply to that procurement. 

Nevertheless, we have attempted to 

reduce the circular’s complexity and 

make it more user-friendly by 

consolidating related information in 

seven separate chapters. Chapter I 

describes the context in which the 

guidance takes place and FTA’s role in 

third party contracting. Chapter II 

designates to whom and to what the 

circular applies. Chapter III outlines the 

recipient’s general procurement 

responsibilities. Chapter IV describes 

the various Federal requirements that 

may affect the eligibility of prospective 

contractors to participate, the property 

and services to be acquired, the 

limitations imposed on the use of the 

property or services acquired, as well as 

the acquisition procedures to be used. 

Chapter V lists the various sources from 

which the recipient might acquire 

property and services. Chapter VI 

describes the procedural requirements 

that apply to the various procurement 

methods. Chapter VII closes by 

providing guidance on resolving 

contract difficulties that might emerge. 

Appendix A lists the various laws, 

regulations, executive orders, and 

directives referenced in the circular. 

Appendix B provides an updated list of 

FTA regional and metropolitan offices 

with contact information. A new 

Appendix C adds checklists to remind 

the recipient of the many Federal 

requirements that might apply to its 

procurement, with references to the 

various sections, subsections, 

paragraphs, and subparagraphs of 

Chapters II through VI. A new Appendix 

D adds clause matrices. After a recipient 

gains a clear understanding of the 

meaning of the terms used in the 

circular, what FTA may do, and the 

types of acquisitions covered by the 

circular, the recipient can use the later 

chapters of the circular as reminders of 

the many Federal requirements that 

affect various acquisitions, alternatives 

to the open market that may provide the 

property and services that are sought, 

and the different procedures to be used 

for the various methods of procurement. 

Specifically, we are concerned that 

the recipient remains aware of the many 

Federal requirements that could affect 

the contractor that may be selected and 

the nature of what is being required. If 

concentration is focused mainly on 

acquisition procedures, it can be easy to 

lose sight of other Federal requirements 

that may prove difficult or expensive to 

administer if considered too late. While 

these matters were briefly noted in 

former FTA third party contracting 

circulars, mostly by reference to the 

Master Agreement, we disagree that they 

are beyond the scope of a third party 

contracting procurement circular. For 

example, a prospective contractor 

should be aware of the implications of 

entering into contracts financed with 

FTA assistance, such as complying with 

our Buy America and Charter Service 

regulations, government-wide 

environmental protections, among 

others, before submitting a bid or 

proposal in response to a recipient’s 

solicitation. Also, the recipient may 

wish to consider the various sources 

from which the property or services it 

seeks may be obtained. 

One commenter complained that the 

proposed circular would no longer be 

useful as a training document because it 

is too complex. We disagree. We believe 

the final circular with its focus on 

consolidating topics, providing more 

guidance and information, coupled with 

checklists of requirements that might be 

overlooked if contract awards need to be 

expedited, will far better serve the 

individuals to be trained. 

One commenter asked for review aids 

such as worksheets, clause and 

certifications matrices, and model 

clauses. We agree that these aids could 

be helpful, and have included a new 

Appendix C with checklists including 

references to specific parts of the 

circular. FTA has also prepared a new 

Appendix D with matrices identifying 


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the various clauses and contract 

provisions that might be required. For 

examples of model clauses, we refer you 

to the FTA’s Best Practices Procurement 

Manual (BPPM), which we are planning 

to update in the near future. We caution, 

however, that while these checklists and 

matrices will be current on the day the 

final circular is issued, later enacted 

Federal laws and regulations may not be 

reflected in timely amendments to the 

circular. FTA will attempt to update the 

circular as necessary, but recommends 

that the recipient check the Master 

Agreement and the FTA Web site for 

information about any new Federal 

requirements. 

2. Separate Requirements From 

Guidance 

One commenter asked whether the 

circular only provides guidance to FTA 

recipients or whether it intends to 

provide mandatory directions or 

requirements when financing third 

party contracts with Federal assistance. 

Several other commenters requested us 

to clearly identify distinctions between 

Federal requirements and guidance or 

recommendations or separate Federal 

third party procurement requirements 

from guidance. 

FTA considers this circular to be 

FTA’s official guidance for 

implementing Federal requirements. 

This guidance consists of FTA’s 

recommendations for achieving 

compliance with the various Federal 

requirements that might apply to a 

recipient or its procurement. The actual 

Federal requirements are contained in 

the provisions of Federal statutes or in 

promulgated Federal regulations, and in 

many cases impose binding 

requirements on participants in FTA 

assisted procurements. Appendix A 

contains a list of many of those laws and 

regulations applicable to FTA assisted 

procurements. Executive Orders, 

directives, and similar publications are 

binding on the Executive Branch of the 

U.S. Government, which must 

implement them. While the Executive 

Orders and other directives to Federal 

agencies do not apply directly to parties 

or individuals outside the Federal 

Government, some provisions of those 

Orders or directives require the 

cooperation of parties that are not part 

of the Executive Branch of the U.S. 

Government. Consequently, FTA must 

gain the consent of the relevant parties 

to ensure compliance with the 

Executive Orders and Federal directives. 

FTA does this through the provisions of 

its Master Agreement incorporated by 

reference in each FTA grant agreement 

and FTA cooperative agreement. To 

determine what is required of the 

various participants in an FTA assisted 

project, we suggest that you review 

those documents. 

Because this circular consists of a 

broad range of guidance to FTA 

recipients, some of that guidance will 

simply re-state a Federal law or 

regulation, while other guidance will 

provide one or more methods of 

complying with an underlying Federal 

law or regulation, focusing on the terms 

of the FTA law or regulation to clarify 

what is needed for compliance. Doing so 

will result in ‘‘blurring of lines between 

legal and regulatory requirements, 

guidance, and commentary,’’ as noted 

by one commenter. Throughout the final 

circular, however, FTA has attempted to 

identify those provisions that constitute 

Federal statutory or regulatory 

requirements. Information not 

designated as a Federal statutory or 

regulatory requirement in nearly all 

cases will be compliance guidance. 

FTA is willing to give serious 

consideration to alternative ways a 

recipient may comply with the Federal 

laws and regulations that apply to FTA 

programs. In some situations, FTA is 

familiar with only one method of 

achieving compliance, and then only 

that method is listed in the final 

circular. Other situations lend 

themselves to various methods of 

compliance. In summary, an FTA 

recipient should review the Federal 

laws and regulations cited in connection 

with each subject of concern to learn 

what requirements apply to it and to 

other participants in its project. To 

determine what is required of FTA that 

might affect third party procurement, 

the recipient may also review any 

Executive orders and other Federal 

directives referred to in connection with 

each subject of concern as well as the 

relevant Federal laws and regulations. 

FTA’s BPPM, while not official FTA 

guidance, includes more extensive 

examples of procedures, processes, or 

ways in which compliance with specific 

Federal requirements might be 

achieved. 

A recipient seeking methods of 

complying with a Federal requirement 

other than those described in the final 

circular or in the BPPM should contact 

FTA employees and officials in its 

region, particularly because FTA is not 

authorized to provide Federal assistance 

for third party procurements that do not 

comply with Federal requirements. 

While many recipient actions do not 

expressly require approval under 

Federal law or regulation, if FTA finds 

that a third party procurement fails to 

comply with Federal requirements, then 

FTA may need to withdraw funding, 

obtain a refund, or offset future Federal 

assistance that would have been 

provided to the recipient. In summary, 

the recipient is ultimately responsible 

for compliance with Federal 

requirements. If the recipient chooses to 

take an action that is later determined 

to violate Federal law or regulations, 

then it can expect that the Federal 

Government will take remedial action. 

3. Links to Relevant Documents Needed 

One commenter requested us to add 

links to essential documents referenced 

in the proposed circular. We are unable 

to do so at this time, although we have 

included on-line addresses of certain 

resources that may be difficult to find. 

Be aware, however, that these addresses 

may change as Web sites change. 

In summary, we recognize that 

implementing FTA’s third party 

contracting guidance can be 

complicated, and that many disparate 

Federal requirements will apply. We 

expect to continue to learn from your 

experience in administering the many 

Federal requirements that apply to third 

party contracting. We will be 

monitoring the usefulness of this 

guidance, and we continue to be open 

to comments and suggestions. We value 

input from our recipients and others, 

and we urge you to communicate with 

FTA staff at our headquarters and 

regional offices regarding questions and 

concerns you may have and successes 

you experience. 

4. Notification of Changes to the Final 

Circular 

One commenter recommended that 

FTA provide notice and comment about 

all amendments or updates to the final 

circular, even if FTA later amends or 

updates the final circular because of 

revisions to other FTA or other Federal 

regulations or guidance that has 

undergone notice and comment. 

FTA disagrees. When the revision of 

a circular or regulation requires the 

Federal Government to provide an 

opportunity for notice and comment, 

there is no need to satisfy that 

requirement again just to update a 

reference to that revised document. FTA 

is required by 49 U.S.C. 5334(l) to 

provide notice and comment and 

otherwise follow applicable Federal 

rulemaking procedures about any 

change that ‘‘grants rights, imposes 

obligations, produces significant effects 

on private interests, or effects a 

significant change in existing policy.’’ 

FTA, however, need not provide notice 

and comment when making minor 

technical corrections, such as updating 

legal citations and ensuring conformity 

of its circulars with the latest Federal 

regulations or guidance that has 


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undergone notice and comment. FTA 

will notify the public of those changes 

as they occur. 

FTA will also post updates on its Web 

site: http://www.fta.dot.gov. The 

recipient should register for 

notifications when FTA issues Federal 

Register notices or new guidance. To 

register for notifications, go to the FTA 

public Web site: http://www.fta.dot.gov. 

In the middle of the page will be a box 

with the following message: 

Sign up for e-mail updates 

The Federal Transit Administration now 

offers e-mail updates on various 

topics including Federal Register 

notices, SAFETEA–LU and others. 

Please click on the link above to begin 

the sign-up process. 

5. Editorial Comments 

A few commenters recommended 

brief descriptions of citations, and noted 

editorial discrepancies and 

typographical errors. We agree with 

most of their recommendations and 

have made appropriate changes in the 

final circular. 

III. Chapter-by-Chapter Analysis 

This section briefly describes the 

contents of each chapter of the final 

circular and addresses public comments 

received in response to its September 

28, 2007, and October 31, 2007, notices. 

A. Chapter I—Introduction and 

Background 

Chapter I is an introductory chapter 

with general information about FTA and 

how to contact us. It also provides a 

brief review of FTA’s authorizing 

legislation, along with information 

about Grants.gov. It includes definitions 

applicable to third party contracting, 

and describes FTA’s role in third party 

procurements. While contact 

information about FTA officials is 

identified in the various chapters of the 

final circular, if you have a question and 

an FTA official is not identified as a 

contact source, you should contact the 

Regional Administrator for the region in 

which the project is administered or the 

Associate Administrator for the Program 

under which a headquarters project is 

administered. 

Sections 1 Through 4—Description of 

FTA, Its Authorizing Legislation, 

Contact Information, and General 

Background 

We have edited the first four sections 

of Chapter I, but they otherwise remain 

substantially similar to those of the 

proposed circular provided in 

connection with FTA’s September 27, 

2007, Federal Register notice. 

Section 5—Definitions 

The fifth section of Chapter I contains 

definitions of various terms used in the 

final circular. Several commenters 

submitted recommendations, including 

requests for changes in some of the 

proposed definitions and requests for 

additional definitions. 

From FTA Circular 4220.1E, we have 

retained the definitions of ‘‘Best Value,’’ 

‘‘FTA,’’ ‘‘State,’’ and ‘‘Third Party 

Contract,’’ modified to accommodate 

comments we received. 

From the ‘‘Definitions’’ subsection of 

the proposed circular, we have retained 

definitions of ‘‘Approval, Authorization, 

Concurrence, Waiver,’’ ‘‘Common Grant 

Rules,’’ ‘‘Cooperative Agreement,’’ 

‘‘Design-Bid-Build Project,’’ ‘‘DesignBuild Project,’’ ‘‘Grant,’’ ‘‘Master 

Agreement,’’ ‘‘Non-Governmental 

Recipient,’’ ‘‘Electronic Commerce (ECommerce),’’ ‘‘Property,’’ ‘‘Recipient,’’ 

and ‘‘Revenue Contract,’’ modified to 

accommodate comments we received. 

We have separated the definitions of 

‘‘State,’’ ‘‘Local Government’’ and 

‘‘Indian Tribal Government’’ from the 

definition of ‘‘Governmental Recipient’’ 

without changing the meaning of those 

terms. 

We have also added definitions of 

‘‘Cardinal Change,’’ ‘‘Change Order,’’ 

‘‘Constructive Change,’’ ‘‘Force 

Account,’’ ‘‘Full and Open 

Competition,’’ ‘‘Joint Procurement,’’ 

‘‘Project Labor Agreement (PLA),’’ 

‘‘Public Transportation,’’ ‘‘State or Local 

Government Purchasing Schedule or 

Purchasing Contract,’’ ‘‘Unsolicited 

Proposal,’’ and ‘‘Value Engineering,’’ to 

preclude misunderstanding of those 

subjects as they are discussed in the 

final circular. 

As stated in the preamble to the 

proposed circular, we have substituted 

a definition of ‘‘Recipient’’ for the 

definition of ‘‘Grantee’’ to encompass 

both recipients of Federal grants and 

recipients of cooperative agreements. 

We transferred the term ‘‘Piggybacking’’ 

included in previous FTA Circular 

4220.1E from the Definitions section of 

Chapter I to the Chapter V discussion of 

‘‘Assignment of Contract Rights.’’ We 

also transferred the term ‘‘tag-on’’ 

included in previous FTA Circular 

4220.1E from the Definitions section of 

Chapter I to the Chapter V discussion of 

‘‘Cardinal Changes.’’ 

Subsection 5.a—Approval, 

Authorization, Concurrence, Waiver 

In the definition of ‘‘Approval, 

Authorization, Concurrence, Waiver,’’ 

appearing for the first time in the 

proposed circular, one commenter 

objected to the term ‘‘conscious written 

statement,’’ and recommended that it be 

replaced with ‘‘written sanction * * * 

by.’’ FTA disagrees with this 

recommendation because not every 

‘‘approval, authorization, concurrence, 

[or] waiver’’ constitutes a sanction. We 

have, however, replaced the word 

‘‘conscious’’ with ‘‘deliberate.’’ 

Subsection 5.b—Best Value 

Commenters submitted four 

recommendations for revisions to the 

definition of ‘‘Best Value.’’ We have 

accepted those recommendations and 

have redrafted the definition to 

emphasize that best value is one type of 

competitive, negotiated procurement 

process with award determined on the 

basis of other factors important to the 

recipient in addition to cost or price 

factors. In this subsection, we have 

replaced terms used in connection with 

sealed bid procurements, which 

implicitly require award to the low 

bidder, with terms suitable for 

negotiated procurements. We have also 

included a statement that the evaluation 

factors for a specific procurement 

should reflect the subject matter and the 

elements that are most important to the 

recipient, and a clarification that our list 

of evaluation factors appearing in the 

proposed circular are not an exhaustive 

list of acceptable evaluation factors. 

Subsection 5.c—Cardinal Change 

One commenter sought clarification of 

terms pertaining to ‘‘changes.’’ To 

remedy misunderstandings, we have 

added a definition of ‘‘Cardinal 

Change.’’ 

Subsection 5.d—Change Order 

To remedy misunderstandings, we 

have also added a definition of ‘‘Change 

Order.’’ 

Subsection 5.f—Constructive Change 

We have also revised the definition of 

‘‘Constructive Change’’ in view of the 

same request for clarification. 

Subsection 5.h—Design-Bid-Build 

Project 

Another commenter requested that we 

remove the term ‘‘at risk’’ in the 

definition of ‘‘Design-Bid-Build Project’’ 

when referring to contracting for the 

construction portion of the project. We 

agree, and have made that change. 

Subsection 5.i—Design-Build Project 

The same commenter also requested 

us to broaden the definition of ‘‘DesignBuild Project’’ to include projects other 

than transportation systems or operable 

segments. We agree, and have made the 

change. 


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Subsection 5.k—Force Account 

One commenter’s statements about 

our involvement in a recipient’s 

decision to use its workforce to perform 

project work prompted us to add a 

definition of ‘‘Force Account.’’ 

Subsection 5.m—Full and Open 

Competition 

One commenter’s statements 

prompted us to add a definition of ‘‘Full 

and Open Competition.’’ 

Subsection 5.p—Indian Tribal 

Government 

We separated the definition of 

‘‘Indian Tribal Government’’ from the 

definition of ‘‘Governmental Recipient.’’ 

Subsection 5.q—Joint Procurement 

We have added a definition of ‘‘Joint 

Procurement’’ to differentiate it from 

‘‘State or Local Purchasing Schedule or 

Purchasing Contract.’’ 

Subsection 5.r—Local Government 

We separated the definition of ‘‘Local 

Government’’ from the definition of 

‘‘Governmental Recipient.’’ 

Subsection 5.s—Master Agreement 

One commenter recommended that 

we change the definition of ‘‘Master 

Agreement’’ to conform to our 

explanation in the FTA Master 

Agreement. We agree, and have made 

that change. 

Subsection 5.t—Non-Governmental 

Recipient 

One recipient noted that the 

definition of ‘‘non-governmental 

recipient’’ excludes private businesses 

except at FTA’s discretion, but does not 

add a definition of private business. We 

have used the term ‘‘non-governmental 

recipient’’ to mean ‘‘recipient’’ as 

defined in Department of Transportation 

(DOT) regulations, ‘‘Uniform 

Administrative Requirements for Grants 

and Agreements with Institutions of 

Higher Education, Hospitals, and Other 

Non-Profit Organizations,’’ 49 CFR Part 

19. That definition includes the term 

‘‘commercial organizations,’’ which we 

interpret to mean ‘‘private businesses.’’ 

Thus we have not defined ‘‘private 

business’’ for purposes of the final 

circular. FTA intends to inform 

recipients that it will reserve the right 

to apply the provisions of 49 CFR Part 

19 to all recipients not covered by 49 

CFR Part 18. As provided in those 

regulations, the Federal Acquisition 

Regulation (FAR) cost principles 

applicable to for-profit organizations 

will apply to commercial organizations. 

Subsection 5.u—Project Labor 

Agreement (PLA) 

We have added a definition of 

‘‘Project Labor Agreement’’ consistent 

with the General Services 

Administration’s (GSA) definition of 

that term. 

Subsection 5.v—Property 

We have amended our definition of 

‘‘Property’’ to replace ‘‘real property’’ 

with ‘‘land and buildings, structures, or 

appurtenances on land.’’ 

Subsection 5.w—Public Transportation 

We have added a definition of ‘‘Public 

Transportation’’ in view of the 

amendment to the SAFETEA–LU 

Technical Corrections Act, which 

expressly restores the exclusion of 

‘‘sightseeing service’’ from the 

definition of ‘‘public transportation’’ for 

purposes of 49 U.S.C. Chapter 53. 

Subsection 5.x—Recipient 

Another commenter requested us to 

include an explanation in our definition 

of ‘‘Recipient’’ that a ‘‘Recipient’’ does 

not include a third party contractor or 

third party subcontractor. We agree, and 

have made the addition requested. 

Subsection 5.y—Revenue Contract 

One commenter requested us to 

reconcile the meanings of ‘‘Revenue 

Contract’’ as used throughout the 

proposed circular. We agree, and have 

revised the definition for consistency 

with the meaning of the term as used in 

Chapter II, subparagraph 2.b(4). 

Subsection 5.aa—State or Local 

Government Purchasing Schedule or 

Purchasing Contract 

We have added a definition of ‘‘State 

or Local Government Purchasing 

Schedule or Purchasing Contract’’ to 

differentiate it from ‘‘Joint 

Procurement.’’ 

Subsection 5.bb—Third Party Contract 

One commenter requested that the 

definition of ‘‘Third Party Contract’’ be 

amended specifically to include 

purchase orders and credit card 

purchases. We agree, and have made the 

change. 

Subsection 5.cc—Unsolicited Proposal 

We have added a definition of 

‘‘Unsolicited Proposal’’ consistent with 

FAR standards. 

Subsection 5.dd—Value Engineering 

One commenter’s statements 

prompted us to add a definition of 

‘‘Value Engineering.’’ 

Section 6—FTA’s Role 

The sixth section discusses FTA’s role 

and responsibilities with regard to third 

party procurements. The subsections 

hereunder addressing third party 

contract reviews, procurement system 

reviews, and training and technical 

assistance continue to be substantially 

similar to those of FTA Circular 

4220.1E. 

Subsection 6.a—Reliance on the 

Recipient’s Self-Certification 

For consistency with the Common 

Grant Rules, the final circular retains 

the proposed circular’s discussion of 

self-certification. Specifically, the DOT’s 

Common Grant Rule for governmental 

recipients, 49 CFR Part 18, permits 

governmental recipients to request selfcertification, but does not require them 

to do so, nor does that Common Grant 

Rule permit FTA to require selfcertification. The DOT’s Common Grant 

Rule for non-governmental recipients, 

49 CFR Part 19, has no provisions 

addressing self-certification. 

Subsection 6.f—Master Agreement 

Two commenters requested changes 

to our discussions of FTA’s Master 

Agreement. In this subsection, we are 

not merely defining the Master 

Agreement, but are providing more 

information about it and how it can best 

be used. 

Subsection 6.g—‘‘Best Practices 

Procurement Manual (BPPM)’’ 

One recipient asked us to clarify the 

purpose of the BPPM. We have revised 

this subsection that describes the BPPM 

to emphasize that the BPPM is not 

official FTA guidance applicable to the 

recipient, but instead is a compilation of 

suggested procedures, methods, and 

examples the recipient may use as it 

sees fit. Another commenter requested 

us to update the BPPM so that it will be 

a reliable resource. We are planning to 

update the BPPM, but are uncertain 

whether we will be able to maintain it 

so that it will always reflect accurate 

recommendations. 

Subsection 6.h—Third Party Contracting 

Helpline 

We have included a better Web 

address for FTA’s Third Party 

Contracting Helpline. 

Subsection 6.i—‘‘Frequently Asked 

Questions’’ 

We have included a reference to the 

FTA Web site for ‘‘Frequently Asked 

Questions’’ about third party 

contracting. 


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B. Chapter II—Applicability 

We have restructured Chapter II to 

consolidate provisions pertaining to the 

various categories of recipients and their 

projects. We expanded the chapter to 

include additional paragraphs to 

respond to unanticipated comments to 

the proposed circular. As a result, we 

have transferred some provisions of the 

proposed circular to this chapter. 

Much of this chapter retains 

provisions substantially similar to their 

counterpart provisions within FTA 

Circular 4220.1E or its footnotes, with 

important exceptions discussed below: 

Section 1—Legal Effect of the Circular 

After reading many of those 

comments, we have become aware that 

many of our recipients misunderstand 

the legal implications of FTA’s 

circulars. As a result, we included a 

new section at the beginning of Chapter 

II to explain that the final circular, 

although official FTA guidance, is not a 

Federal mandate comparable to a 

Federal law or regulation. 

Section 2—Applicability of the Circular 

Subsection 2.a—Participants in FTA 

Assisted Procurements 

Paragraph 2.a(1)—Recipients of FTA 

Grants and Cooperative Agreements 

Subparagraph 2.a(1)(a)—States 

As stated in the preamble to proposed 

FTA Circular 4220.1F, the previous FTA 

Circular 4220.1E inadvertently 

misstated FTA’s long-standing practice 

in administering its State managed 

programs when it took the position that 

only States and State instrumentalities 

could use State procedures when 

undertaking procurements financed 

with FTA’s funding for State managed 

programs. We have retained the new 

language of the proposed circular, 

which correctly states OMB’s decision 

that FTA governmental subrecipients of 

States may use State procurement 

procedures, but non-governmental 

recipients of States must use the 

procurement procedures of the Common 

Grant Rule for non-governmental 

recipients. 

Paragraph 2.a(3)—Recipients of Both 

Federal Assistance Awarded by FTA 

and Funds Provided by Another Federal 

Agency 

While there is a general 

understanding that FTA requirements 

apply to FTA assisted procurements, 

one commenter asked what Federal 

requirements would apply if another 

Federal agency were also providing 

funding for the project. Our response is 

that the requirements of each agency’s 

laws and regulations would apply to the 

project, and the recipient would need to 

take actions that would meet the 

requirements of all participating 

agencies. 

Paragraph 2.a(5)—Third Party 

Contractors and Subcontractors 

Subparagraph 2.a(5)(b)—Effect of 

Federal Requirements 

One commenter appears to question 

whether federally required contract 

clauses must flow down to third party 

contractors and subcontractors because 

the circular does not apply directly to 

them. We have included a new 

paragraph addressing the status of third 

party contractors and subcontractors 

and have informed recipients that some 

Federal laws and regulations will, in 

effect, require the compliance of their 

third party contractors and 

subcontractors as well as the recipient. 

In those cases, the recipient must 

include adequate provisions in their 

solicitation documents and third party 

contracts. 

Subsection 2.b—Third Party Contracts 

Paragraph 2.b(1)—Capital Contracts 

Subparagraph 2.b(1)(b)—Art 

One commenter asked us to update 

the procurement requirements in FTA 

Circular 9400.1A, ‘‘Federal Transit 

Administration Design and Art in 

Transit Projects,’’ dated 06–09–95. FTA 

intends to do so after the end of Fiscal 

Year 2008. 

Subparagraph 2.b(1)(c)—Over-the-Road 

Bus Accessibility Program 

One commenter asked whether the 

exemption from the proposed circular’s 

provisions applies only to FTA’s Overthe-Road Bus Accessibility Program or 

whether all over-the-road bus 

procurements are also exempted. We 

have revised the proposed circular to 

clarify that the exemption applies only 

to the Over-the-Road-Bus Accessibility 

Program and does not include over-theroad buses acquired through other FTA 

programs. 

Subparagraph 2.b(1)(d)—Real Property 

Four commenters pointed out 

apparent inconsistencies pertaining to 

the application of the proposed circular 

to real property. While we have left the 

definition of ‘‘Property’’ to include ‘‘real 

property,’’ we agree that clarifications 

are needed and have revised the 

paragraph pertaining to real property to 

emphasize that the final circular does 

not apply to the purchase of land and 

existing facilities, but does apply to 

construction of new buildings and 

facilities on the land acquired for the 

project, and applies to alterations or 

repairs to buildings and facilities on the 

land when it was acquired or made 

available for project use. 

Paragraph 2.b(2)—Operations Contracts 

Subparagraph 2.b(2)(b)—Operations 

Contracts Financed Entirely Without 

FTA Assistance 

As stated in the notice of availability 

of proposed FTA Circular 4220.1F, FTA 

has been considering whether and to 

what the extent its third party 

contracting provisions should apply to 

an FTA recipient’s acquisitions financed 

entirely without FTA assistance. 

For many years, FTA has taken the 

position that ‘‘one dollar taints all,’’ a 

policy in which FTA required a 

recipient to apply FTA requirements to 

all its other operations contracts, 

including those contracts financed 

entirely without Federal assistance, if 

the recipient uses any part of its FTA 

formula assistance to support any 

operation contract. Because recipients 

in large urbanized areas have not been 

authorized to use Urbanized Area 

Formula assistance for operations, 

operations contracts they can 

demonstrate were financed entirely 

without FTA assistance have not been 

required to comply with FTA 

requirements. In contrast, recipients in 

smaller urbanized areas currently must 

apply FTA requirements to all their 

operations procurements, whether or 

not they are financed with FTA 

assistance, if they use any of their 

Urbanized Area Formula assistance or 

Nonurbanized Area Formula assistance 

to support even one operations contract. 

FTA did make exceptions for 

Congestion Mitigation and Air Quality 

(CMAQ) and Job Access/Reverse 

Commute (JARC) assistance used for 

operations, determining that if a 

recipient could demonstrate which 

operations contracts CMAQ or JARC 

assistance supported, then the 

recipient’s other entirely privately 

financed operations contracts need not 

comply with FTA requirements. Now 

that SAFETEA–LU changed the JARC 

program from a discretionary program to 

a formula program, FTA must determine 

whether to impose its procurement 

requirements on a recipient’s operations 

contracts not financed with Federal 

assistance if the recipient uses its 

formula JARC funds for operations. 

FTA also provided an exception for 

recipients in large urbanized areas to 

exempt all their operations contracts 

from FTA requirements provided they 

are able to trace their use of preventive 

maintenance funding to specific 

contracts. If, however, they are unable to 


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do so, and use FTA assistance for 

general support of preventive 

maintenance contracts, then FTA 

requirements will apply to all their 

operations contracts. 

At the same time, FTA has been 

reviewing its policies pertaining to its 

recipients’ use of other FTA assistance 

that finances operations contracts in 

connection with other project activities. 

Among other programs in which FTA 

supports the costs of project-related 

operations are the New Freedom 

Program, 49 U.S.C. 5317, the Elderly 

Individuals and Individuals with 

Disabilities Program, 49 U.S.C. 5310, the 

Elderly Individuals and Individuals 

with Disabilities Pilot Program, 49 

U.S.C. 5310 note, and the National 

Research Program, 49 U.S.C. 5312(a), all 

of which involve some recipients or 

subrecipients that receive only a small 

portion of their financial expenses from 

FTA. 

FTA expressly sought comments 

about the extent to which FTA 

requirements should be applied to a 

recipient or subrecipient’s operations 

contracts financed entirely without 

Federal assistance. FTA also sought 

comments on the extent of agency 

operating expenses that are not related 

to public transportation but must 

comply with FTA procurement 

requirements under the concept that one 

dollar of FTA operating assistance 

brings an agency’s entire operating 

budget under the FTA requirements. 

Specifically, FTA requested comments 

on the rationale for excluding other 

operating contracts from the 

applicability of FTA requirements. 

Those that commented overwhelmingly 

urged FTA to exempt all acquisition 

financed without any Federal assistance 

from Federal requirements. Most 

commenters believe imposing Federal 

requirements on acquisitions not 

financed with Federal assistance to be 

overbroad, if not unauthorized. 

FTA also asked for examples of how 

operating expenses could be tracked and 

managed so that FTA assisted expenses 

could be segregated from other 

operating costs. One commenter 

explained that many accounting and 

bookkeeping systems are generally 

capable of identifying cost allocations 

sufficiently thoroughly so that the 

funding sources of each contract can be 

readily identified. Because a variety of 

accounting systems can identify funding 

sources, the commenter asked FTA not 

to impose a uniform accounting system 

that might be expensive to implement. 

The commenter also pointed out that 

FTA could monitor that process by 

asking recipients to state whether or not 

they are segregating federally assisted 

acquisitions, including operations 

acquisitions, from acquisitions financed 

entirely without FTA assistance, and 

then ask those recipients that are 

segregating their acquisitions to describe 

the methods by which they are tracking 

sources of funding. FTA could reserve 

the right to disallow the practice if the 

recipient’s recordkeeping methods are 

deficient. States could monitor those 

practices for compliance by their 

recipients that qualify to use State 

procedures. 

In considering its proposal to remove 

FTA’s procurement requirements from 

operations contracts financed with FTA 

formula assistance, FTA is aware that 

doing so might diminish contracting 

opportunities for some disadvantaged 

business enterprises (DBE). To preclude 

that result, FTA has emphasized its 

position that a recipient required by 

DOT regulations, ‘‘Participation by 

Disadvantaged Business Enterprises in 

Department of Transportation Financial 

Assistance Programs,’’ 49 CFR Part 26, 

to have a DBE program may not 

structure its operations expenditures (or 

other expenditures) in a manner that 

removes an unreasonable proportion of 

contracts that could have been 

performed by DBEs from its DBE 

program. Accordingly, we expressly 

sought comments estimating the 

impacts on DBE participation that might 

accompany FTA’s proposed policy 

change that would permit all recipients 

to separate their FTA assisted 

operations contracts from their other 

operations contracts receiving no FTA 

assistance. However, we did not receive 

any comments directly addressing 

prospective adverse impacts on DBE 

participation that might result from that 

change. 

One commenter advised that applying 

DBE requirements broadly to all 

procurements might well invalidate the 

entire DBE program. FTA does not 

intend to require each FTA assisted 

procurement to be included in a 

recipient’s DBE program. Nevertheless, 

a recipient that enters into a third party 

contracts for operations or planning 

must comply with the requirements of 

the DBE regulations. Therefore, FTA 

maintains that a recipient required to 

have a DBE program may not structure 

its operations expenditures (or other 

expenditures) in a way so that an 

unreasonable proportion of contracts 

that could be performed by DBEs are 

removed from its DBE program. 

After considering the comments we 

received, FTA has determined not to 

require any FTA recipient to apply FTA 

statutory and regulatory requirements to 

acquisitions that the recipient can 

demonstrate conclusively it has been 

financed entirely without FTA 

assistance. In exempting the recipient 

from FTA requirements that have in the 

past affected its procurements, however, 

we caution the recipient that FTA 

cannot exempt a recipient from other 

Federal requirements that may apply 

irrespective of whether or not the 

acquisition were financed with Federal 

assistance. An example would be 

Federal requirements for accessibility 

for individuals with disabilities that 

would apply to a recipient irrespective 

of whether or not Federal assistance 

were made available for an activity 

undertaken by the recipient. FTA 

assisted procurements, however, must 

comply with all applicable Federal 

requirements. 

Paragraph 2.b(3)—Preventive 

Maintenance Contracts 

In the paragraph pertaining to the 

application of FTA requirements to 

preventive maintenance contracts, one 

commenter asked us to identify 

‘‘discrete.’’ Rather than defining 

‘‘discrete,’’ we have substituted the term 

‘‘separate and distinct’’ in the final 

circular. 

Paragraph 2.b(4)—Revenue Contracts 

One commenter objected to an FTA 

requirement that revenue contracts be 

awarded ‘‘utilizing competitive 

procedures and principles,’’ asking 

instead that we reinstate the distinction 

between situations that offer 

unrestricted access to similar users and 

situations that can provide only limited 

access to similar users. We agree, and 

have made that change in the final 

circular. 

Paragraph 2.b(6)—Public-Private 

Partnerships 

One commenter asked us to describe 

or define the contract delivery 

arrangements or project delivery 

systems listed in the proposed circular 

in connection with public-private 

partnerships (PPPs). Because we did not 

want to duplicate information 

previously published, we have included 

a reference to the FTA ‘‘Notice of 

establishment of Public-Private 

Partnership Pilot Program; solicitation 

of applications,’’ 72 FR 2583–2591, 

January 19, 2007, which includes a 

description of the various contract 

delivery arrangements or project 

delivery systems in the context of PPPs. 

One commenter proposed that we 

designate as PPPs only those 

partnerships that include both project 

delivery and operations. FTA disagrees. 

Structured in multiple forms, PPPs can 

vary greatly according to the scope of 

responsibility and degree of risk 


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assumed by the private partner for 

project activities. The same commenter 

pointed out that design-build (with or 

without a warranty) and construction 

manager at risk are variations on the 

design-bid-build method of project 

delivery. We agree that design-build 

(with or without a warranty) and 

construction manager at risk are project 

delivery systems but consider that 

projects with those attributes can 

constitute a PPP because the private 

partner or partners undertake the 

recipient’s function of selecting the 

construction firm, and assume the risk 

of delivering the entire project. 

In all eight categories of PPPs we have 

identified, the private partner 

undertakes in part the duties usually 

performed by the recipient and assumes 

some of the recipient’s financial risk. 

Moreover, FTA’s ‘‘Notice of 

establishment of Public-Private 

Partnership Pilot Program; solicitation 

of applications,’’ 72 FR 2583–2591, 

January 19, 2007, expressly 

acknowledges all eight types of PPPs 

listed in the proposed circular. 

Two commenters objected to our 

discussion of PPPs and joint 

development as too intrusive. One 

commenter complained that having to 

craft individual arrangements with FTA 

for each project would be unduly timeconsuming, recommending that FTA 

establish objective principles for our 

participation in those projects. We agree 

that objective FTA principles for PPP 

participation would be helpful. As a 

result of our experience with joint 

development projects, we have 

excerpted parts of our ‘‘Notice of Final 

Agency Guidance on the Eligibility of 

Joint Development Improvements under 

Federal Transit Law,’’ 72 FR 5788, 

February 7, 2007, which contains third 

party contracting guidance we have 

found useful. As we gain more 

experience with joint development 

projects and other PPPs, we will issue 

further guidance as appropriate. 

Paragraph 2.b(7)—Transactions 

Involving Complex Financial 

Arrangements 

Two commenters offered 

recommendations about the role of an 

‘‘arranger’’ or facilitator in complicated 

financial transactions involving FTA 

assisted property. One commenter 

pointed out that the arranger is usually 

paid with the proceeds of the 

transaction resulting from the use of 

FTA assisted property, and indicated 

that the arranger should be selected 

using competitive procedures. Because 

FTA is not sure that arrangers are 

always paid in part with FTA assistance 

or the proceeds derived from the use of 

FTA assisted property, we have not 

imposed that mandate. However, when 

an arranger is compensated with 

proceeds derived from the use of FTA 

assisted property, we have stated our 

expectation that the recipient would use 

competitive procedures to select its 

arranger. In addition, one commenter 

recommended that FTA strengthen 

conflict of interest procedures 

applicable to arrangers to ensure that an 

arranger does not personally benefit by 

using his or her company or other 

companies in which he or she has a 

financial interest. In this matter, FTA 

believes it appropriate to rely on the 

recipient’s conflict of interest 

requirements and procedures to prevent 

unfair dealing. 

Paragraph 2.b(8)—Force Account 

One commenter recommended that 

we clarify that the final circular does 

not apply to a recipient’s force account 

work. We agree, and have added a 

paragraph stating that the final circular’s 

third party contracting guidance does 

not apply to force account work. 

Section 3—Federal Laws and 

Regulations 

Subsection 3.c—Other Federal 

Requirements 

Paragraph 3.c(1)—Compilation in the 

Master Agreement 

We received two comments about the 

significance of the Master Agreement. 

One commenter suggested we add a 

paragraph discussing the Master 

Agreement in much greater detail. We 

have included a reference to the 

discussion of the Master Agreement in 

Chapter I, subsection 6.f of the final 

circular, instead of repeating that 

information in Chapter II. Because the 

purpose of discussing the Master 

Agreement here is to identify it as a 

resource identifying Federal 

requirements, among other things, we 

have revised the heading of that 

paragraph in the final circular. Another 

commenter complained that the Master 

Agreement is not a useful means of 

communicating procurement 

requirements to recipients. Although we 

agree that the Master Agreement does 

not provide explicit procurement 

guidance to recipients, we have found 

that the Master Agreement is one of the 

most useful means of providing 

recipients a reasonably current 

compilation of the many Federal 

requirements that apply to FTA assisted 

projects. 

Paragraph 3.c(2)—Conflicting Federal 

Requirements 

One commenter asked which FTA 

official or officials should be notified of 

conflicting Federal laws and regulations 

when more than one Federal agency 

provides support for an FTA assisted 

project. The final circular advises the 

recipient to notify the FTA Chief 

Counsel in writing. 

Section 4—State and Local Laws and 

Regulations 

Subsection 4.b—Conflicts Between 

Federal Requirements and State or Local 

Requirements 

The same commenter also asked who 

should be notified when conflicting 

Federal and State requirements apply to 

a project. Our response is that the 

recipient should notify the Regional 

Counsel for the region in which the 

project is being administered or the 

Assistant Chief Counsel for General Law 

for those projects administered by FTA 

headquarters staff. 

The proposed circular noted that in 

the case of a conflict between State and 

local laws, it might be necessary for 

FTA to terminate the project if no 

resolution were available. One 

commenter sought an explanation of 

how this might occur. Since the 

inception of the FTA program, FTA has 

required recipients to comply with 

Federal requirements. In a relatively few 

instances, recipients have needed to 

persuade their State legislatures to enact 

special legislation that would permit the 

recipient to comply with Federal laws 

and regulations to permit its project to 

continue. For that reason, the recipient 

should notify FTA in writing as soon as 

possible when conflicts between Federal 

and State laws or regulations occur. 

FTA is willing to work with the 

recipient in seeking and implementing 

an equitable resolution. 

Two other commenters opposed the 

proposed circular’s termination 

provisions, claiming among other 

reasons that the recipient’s counsel, not 

FTA, should be authorized to determine 

what requirements apply, and that FTA 

enforcement of Federal laws 

inconsistent with State laws would 

effectively pre-empt State or local laws. 

First of all, FTA makes every effort to 

avoid the need to terminate Federal 

assistance for a project due to 

conflicting Federal and State or local 

laws or regulations. When such 

situations arise, occasionally they have 

been resolved by efforts the recipient 

has made to persuade its State 

legislature to amend the conflicting law, 

at least to the degree necessary to permit 

FTA assistance to be used. FTA is not 


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authorized to waive Federal 

requirements except to the extent 

permitted by the underlying Federal 

laws and regulations. If a Federal law or 

regulation contains a requirement that 

FTA may not waive, FTA has no choice 

but to insist on the recipient’s 

compliance as a condition of FTA 

assistance. If the Federal Government 

terminates Federal assistance for a 

project based on the recipient’s failure 

or inability to comply with Federal law 

or regulations, FTA’s position is that the 

termination would not be a Federal preemption of State or local law. The 

decision of whether a Federal agency 

will provide or continue Federal 

assistance for a specific project is 

separate and distinct from a Federal 

decision to pre-empt State or local law. 

C. Chapter III—The Recipient’s 

Responsibilities 

Apart from specific procurement 

procedures discussed at length in 

Chapter VI, this chapter consolidates the 

recipient’s procurement responsibilities. 

We have retained much of the 

information included in FTA Circular 

4220.1E, but we have also added 

information about Common Grant Rule 

provisions not discussed in that 

circular. 

Section 1—Written Standards of 

Conduct 

Subsection 1.a—Personal Conflicts of 

Interest 

Three commenters objected to the 

personal conflict of interest prohibitions 

as written in the proposed circular. The 

Common Grant Rules and FTA Circular 

4220.1E prohibit personal conflicts of 

interest by prohibiting contract 

activities that ‘‘would’’ result in a real 

or apparent conflict of interest, while 

the proposed circular would prohibit 

personal conflicts of interest by 

prohibiting contract activities that 

‘‘could’’ result in a real or apparent 

conflict of interest. We agree with the 

commenter who pointed out that 

changing ‘‘would’’ to ‘‘could’’ broadens 

the standard from predictable to 

speculative. In drafting the proposed 

circular, FTA did not intend to deviate 

from Common Grant Rules standards or 

otherwise amend FTA’s current 

standards. Accordingly, we have revised 

this provision by substituting ‘‘would’’ 

for ‘‘could,’’ consistent with Common 

Grant Rules standards. 

Section 2—Self-Certification 

We received no comments on selfcertification, except in the context of 

some commenters’ objections to 

statements recommending FTA review 

of particular matters before the recipient 

takes action. Those commenters argued 

that FTA reviews of prospective actions 

diminish prerogatives they should have 

due to their self-certification. They 

apparently believe that by 

acknowledging their self-certification, 

FTA is endorsing the correctness of a 

self-certified recipient’s procurement 

decisions. Our response is that certain 

FTA reviews and approvals are required 

by Federal laws and regulations 

irrespective of self-certification. Other 

reviews FTA recommends are intended 

to preserve the recipient’s ability to use 

FTA assistance to support the 

procurement by helping the recipient 

avoid an inadvertent violation of 

Federal laws or regulations, some of 

which can be complex. 

Section 3—Third Party Contracting 

Capacity 

Section 3 contains discussions of the 

requirements for third party contracting 

capacity, adequate contract provisions, 

and an adequate procurement history 

that are substantially similar to their 

FTA Circular 4220.1E counterparts. We 

have added other subsections to the 

final circular, such as recordkeeping, 

that were omitted from FTA Circular 

4220.1E but addressed in the Common 

Grant Rules. 

Two commenters objected to the 

provision in Section 3 stating that 

contractors providing procurement 

expertise or support to the recipient 

‘‘should be unrelated to and 

independent of any potential bidder or 

offeror.’’ The commenter explained that 

prospective bidders or offerors 

frequently know others with necessary 

procurement expertise, and forbidding 

the use of those sources would 

unnecessarily reduce the availability of 

expertise a recipient might need. We 

agree with that commenter and have 

changed the standard to one that calls 

for preventing or ameliorating 

organizational conflicts of interest that 

would result in conflicting roles that 

might bias a contractor’s judgment or 

result in an unfair competitive 

advantage. 

Subsection 3.c—Industry Contracts 

One commenter noted that our 

caution about using industry contracts, 

while reasonable in certain situations, 

might be unwarranted if construed too 

broadly. Specifically, the commenter 

expressed the belief that there are 

advantages to using well-known 

industry developed forms, such as the 

AIA forms used in the construction 

industry or payment request forms and 

similar documents whose contract terms 

and clauses are familiar to contractors 

performing the work. In other situations, 

a recipient should be able to solicit 

specifications or contract terms for 

possible use in a future solicitation. We 

agree that judicious use of standard 

forms, specifications, and contract terms 

may be justified in certain situations, 

and have revised the subsection on 

industry contracts to clarify that the 

recipient may use them if they can 

accommodate Federal requirements. 

Subsection 3.e—Special Notification 

Requirements for States 

Two commenters had concerns about 

the project and contract notification 

requirements for States that have been 

included in DOT’s annual 

appropriations acts for the last few 

years. FTA Circular 4220.1E described 

former Appropriations Act notification 

requirements having a $500,000 

threshold that applied to all FTA 

recipients. In contrast, the DOT 

Appropriations Acts in the last few 

years have limited their notification 

requirements to States, but no longer 

recognize a $500,000 threshold. Now 

each State must include statements in 

all its requests for proposals, 

solicitations, Federal assistance 

applications, forms, notifications, press 

releases, or other publications involving 

FTA assistance that FTA is or will be 

providing Federal assistance for the 

project, the amount of Federal 

assistance FTA has provided or expects 

to provide, and the Catalog of Federal 

Domestic Assistance (CFDA) Number of 

the program that authorizes the Federal 

assistance. 

One commenter asked whether, when 

issuing its announcements, it really 

must include the CFDA Number for the 

FTA program under which the project is 

supported. FTA’s position is that 

because identification of the CFDA 

number is expressly required by the 

recent DOT appropriation acts, the 

recipient must include the requisite 

CFDA number. The commenter also 

asked whether the requirement for 

States must flow down to its 

subrecipients. FTA interprets the 

appropriations laws to require 

compliance with those notification 

requirements by the State’s 

subrecipients, lessees, or third party 

contractors at any tier, and we have 

included a provision in the final 

circular to that effect. 

Another commenter has requested 

FTA to discuss this notification 

requirement in its grant management 

circulars and to take other measures to 

communicate with States directly about 

these broad notification requirements. 

We agree and will make special efforts 

to inform the States of these 

requirements. 


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Subsection 3.f—Use of Technology/ 

Electronic Commerce 

One commenter recommended that 

FTA expressly endorse a more extensive 

use of electronic contracting, including 

electronic bidding and reverse auctions, 

and that FTA permit the recipient to 

engage contractors to perform those 

services. FTA approves the use of 

electronic bidding and reverse auctions 

for third party procurements of 

$100,000 or less and, if permitted under 

State or local law, for third party 

procurements of a greater value. A 

recipient may perform electronic 

contracting using its own staff or may 

engage one or more contractors to act on 

its behalf. 

Section 4—Audit 

We received no comments on this 

section of Chapter III. 

D. Chapter IV—The Recipient’s Property 

and Services Needs and Federal 

Requirements Affecting Those Needs 

We have restructured Chapter IV to 

consolidate provisions pertaining to the 

various categories of recipients and their 

projects. We expanded the chapter to 

include additional paragraphs in 

response to comments on the proposed 

circular. As a result, some of the 

guidance originally included in other 

chapters of the proposed circular has 

been transferred to this chapter of the 

final circular. 

However, much of this chapter retains 

provisions that are substantially similar 

to their counterpart provisions in FTA 

Circular 4220.1E or its footnotes, with 

important exceptions discussed below. 

Section 1—Determining the Recipient’s 

Needs 

One commenter suggested that the 

acquisition planning and project 

management functions addressed in this 

chapter should not be included in a 

circular focused on third party 

contracting guidance. FTA disagrees. 

FTA considers procurement procedures 

to be only one aspect of third party 

contracting. The fundamental purpose 

of procurement is to acquire property 

and services that meet the purchaser’s 

needs. The type, amount, 

characteristics, and features of the 

property or services an FTA recipient 

seeks and conditions under which the 

property and those services are acquired 

must satisfy Federal requirements that 

apply to federally assisted procurements 

if the recipient intends to use FTA 

assistance to support the costs of the 

property or services it procures. For an 

FTA recipient, these requirements will 

encompass Federal requirements 

focused on FTA acquisitions as well as 

general Federal requirements that apply 

to all federally assisted acquisitions. 

For example, some Federal 

requirements may change the way a 

contractor fabricates and delivers 

property; others will affect how the 

contractor provides the requested 

services, the amount of wages it must 

pay, and the labor protections it must 

provide to some or all employees. As a 

result, to assure that FTA assistance can 

be used to support the costs of property 

and services a recipient seeks, it is 

important that the recipient’s 

acquisition comply with all of the many 

applicable Federal laws and regulations 

having an indirect effect, if not a direct 

effect, on the property or services to be 

acquired and also on the contractor that 

provides the property and services. 

FTA believes it important that the 

recipient be fully aware of these 

requirements and restrictions at the time 

it begins to determine the types of 

property and services it needs. FTA 

cannot support a recipient’s 

procurement that in some way has 

violated one or more Federal 

requirements. Thus FTA cautions the 

recipient to examine its initial 

preferences in light of Federal 

requirements before undertaking a 

procurement for which it intends to use 

FTA assistance. As an aid, we refer you 

to the checklists in Appendix C. In the 

course of developing the checklists 

identified with specific provisions of 

the final circular, we have consolidated 

requirements pertaining to specific 

aspects of procurement in separate 

chapters, and thus have found it 

necessary to transfer some information 

from Chapter IV of the proposed circular 

to Chapter VI of the final circular, which 

provides procedural guidance for open 

market procurements. 

Subsection 1.a—Eligibility 

The property or services a recipient 

acquires with FTA assistance must be 

eligible for Federal support. One 

commenter requested a more definitive 

explanation of eligibility and requested 

examples. We have expanded that 

explanation to focus on the 

requirements for eligibility under 

Federal law as well as eligibility under 

the scope of the specific project 

supported by the FTA assistance to be 

used. 

Subsection 1.b—Necessity 

Paragraph 1.b(1)—Unnecessary Reserves 

One commenter expressed concern 

about FTA’s position that the recipient’s 

acquisitions be limited to its immediate 

needs, especially when followed by 

prohibitions against the procurement of 

excess capacity for assignment purposes 

(which FTA does permit in limited 

circumstances). The commenter asked 

whether the recipient can and should 

rely on its own understandings about 

what it needs or whether FTA is, in 

effect, prohibiting cooperative 

procurements. 

We have revised this discussion for 

clarity. FTA’s decision to limit 

participation in the costs of acquisitions 

to only that property or services the 

recipient requires to fulfill its 

immediate needs, is justified by the 

requirements of the Common Grant 

Rules. In monitoring whether a recipient 

has complied with its procedures to 

determine what property or services are 

necessary, FTA bases its determinations 

on what would have been a recipient’s 

reasonable expectations at the time it 

entered into the contract. 

Paragraph 1.b(2)—Acquisition for 

Assignment Purposes 

FTA recognizes that a recipient’s later 

needs might decrease due to changed 

circumstances or even honest mistakes. 

In those cases, it is appropriate for a 

recipient to assign its extra contract 

authority to another entity needing the 

property or services. Although it may be 

difficult to determine precisely, FTA 

expects the recipient to make a 

concerted effort to measure its actual 

immediate needs carefully before 

entering into a procurement. A recipient 

should be cautious about acquiring 

contract rights whose use or disposition 

is genuinely uncertain at the time of 

contract award, except if the contract is 

intended to support State or local 

purchasing schedules. 

Subsection 1.c—Procurement Size 

Other commenters raised concerns 

that the guidance would prohibit 

cooperative procurements. We 

understand that by ‘‘cooperative 

procurements,’’ the commenters are 

referring to what we designate as ‘‘joint 

procurements,’’ meaning a method of 

contracting in which two or more 

purchasers agree from the outset to use 

a single solicitation document and enter 

into a single contract with a vendor for 

delivery of property or services in a 

fixed quantity, even if expressed as a 

total minimum and total maximum. 

This restriction does not preclude joint 

(cooperative) procurements because a 

joint (cooperative) procurement is 

intentionally developed to meet the 

actual, immediate needs of the two or 

more parties that seek to acquire similar 

property or services, as discussed more 

fully below. Nor does this restriction 

apply to a State that enters into 

contracts with various vendors to 


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establish State Purchasing Schedules for 

its convenience and the convenience of 

its authorized users. 

One commenter has expressed the 

opinion that market conditions are not 

the usual reason for using joint or 

cooperative procurements, maintaining 

that joint procurements result when 

they are economically advantageous. 

FTA disagrees on the grounds that 

market conditions can affect what is 

economically advantageous to a 

recipient. We have, however, revised 

the Procurement Size paragraph of the 

final circular to emphasize the 

importance of economic advantage to 

the recipient. 

Other commenters requested FTA to 

acknowledge that ‘‘grantees are not 

responsible for the actions of other 

grantees, even when conducting joint or 

cooperative procurements.’’ FTA is 

unwilling to make that change. FTA 

generally holds recipients responsible 

for compliance with Federal 

requirements by all participants in its 

project, apart from a few exceptions 

involving designated recipients in 

FTA’s Urbanized Area Formula program 

that relinquish their responsibilities to 

other grantees. 

Section 2—Federal Requirements That 

May Affect a Recipient’s Acquisitions 

One commenter recommended that 

FTA remove the references to its Master 

Agreement, maintaining that they are 

inapplicable to the discussion of Federal 

laws and regulations in this chapter. We 

disagree, but have transferred our 

discussion of the Master Agreement to 

the introductory paragraphs of Chapter 

I, subsection 6.f of the final circular, 

which provides a general discussion of 

Federal Requirements that may affect a 

recipient’s acquisitions. 

Subsection 2.a—Contractor 

Qualifications 

Paragraph 2.a(2)—Debarment and 

Suspension 

One commenter has informed us that 

its State maintains its own debarment 

and suspension list, and that it checks 

both the Federal and State lists for 

debarments and suspensions. FTA has 

no objection to a recipient precluding a 

prospective participant included in a 

State debarment or suspension list from 

participating in an FTA assisted project, 

even if that prospective participant is 

not included in GSA’s Excluded Parties 

List System (EPLS). 

Paragraph 2.a(5)—Federal Civil Rights 

Laws and Regulations 

Subparagraph 2.a(5)(b)— 

Nondiscrimination on the Basis of Sex 

We added a subparagraph reminding 

the recipient that its third party 

contractors must comply with Federal 

laws and regulations pertaining to 

nondiscrimination on the basis of sex. 

Subparagraph 2.a(5)(c)— 

Nondiscrimination on the Basis of Age 

We added a subparagraph reminding 

the recipient that its third party 

contractors must comply with Federal 

laws and regulations pertaining to 

nondiscrimination on the basis of age. 

Paragraph 2.a(6)—Socio-Economic 

Development 

Subparagraph 2.a(6)(a)—Disadvantaged 

Business Enterprises (DBE), and 

Subparagraph 2.a(6)(b)—Small and 

Minority Firms and Women’s Business 

Enterprises 

One commenter objected to the 

application of both DOT’s DBE 

regulations and the Common Grant 

Rules’ participation preferences for 

small and minority firms and women’s 

business enterprises. FTA disagrees 

with the commenter. At a minimum, 

each recipient must comply with DOT’s 

general DBE regulatory prohibition 

against discrimination, 49 CFR 26.13, 

irrespective of whether the recipient is 

required to have a DBE program. A 

recipient required to have a DBE 

program must comply with the 

provisions of its program. All Federal 

recipients, including FTA recipients, 

must comply with the Common Grant 

Rules’ provisions concerning 

participation by small and minority 

firms and women’s business enterprises. 

FTA believes it is possible to comply 

with both the DOT’s DBE regulations 

and the Common Grant Rules, because 

the Common Grant Rules for 

participation by small and minority 

firms and women’s business enterprises 

do not require fixed goals or actions, 

such as extending the reach of DBE 

program requirements to all minority 

firms and women’s business enterprises 

that would not otherwise qualify for 

inclusion under DOT’s DBE regulations. 

These regulations contain no provisions 

requiring them to be mutually exclusive. 

Paragraph 2.a(7)—Sensitive Security 

Information 

One commenter asked whether the 

Federal ‘‘Protection of Sensitive 

Security Information’’ requirements of 

49 U.S.C. section 40119(b) and its 

implementing DOT regulations, 

‘‘Protection of Sensitive Security 

Information,’’ 49 CFR Part 15, and 49 

U.S.C. 14(s) and its implementing 

Department of Homeland Security 

(DHS) regulations, ‘‘Protection of 

Sensitive Security Information,’’ 49 CFR 

Part 1520, actually apply to FTA 

assisted procurements and must be 

included in third party contracts. The 

commenter believes those regulations 

are targeted mainly on airlines. 

While recognizing the focus on airline 

security, FTA has determined that these 

laws and regulations do apply to public 

transportation agencies and other FTA 

recipients that have sensitive security 

information, such as information related 

to vulnerability assessments (including 

any information addressing 

vulnerabilities or corrective actions) 

conducted after September 11, 2001, 

and other information covered by the 

regulations. Therefore, FTA’s view is 

that recipients must include 

requirements for compliance with those 

regulations in their third party contracts 

to assure that their contractors will take 

the necessary steps to protect any 

sensitive security information within 

their control. 

This determination is based on the 

DHS Interim Final Rule issued in 2004 

that extended sensitive security 

information protections to all forms of 

transportation coupled with the 

Transportation Safety Administration 

and DOT amendments to their 

regulations removing limiting references 

to ‘‘aviation or maritime’’ in their 

regulations at 49 CFR Parts 1520 and 15, 

respectively. See, 70 FR 1379, January 7, 

2005. 

Paragraph 2.a(8)—Seat Belt Use 

One commenter asked for a model 

contract clause for Seat Belt Use with 

flowdown requirements in the final 

circular or FTA’s BPPM. We have not 

included a model clause in the final 

circular but will draft one for inclusion 

in the BPPM. 

Subsection 2.b—Administrative 

Restrictions on the Acquisition of 

Property and Services 

Notably we have re-arranged the 

format of this subsection to group topics 

for easier usage in conjunction with the 

new checklists we have included in 

Appendix C. 

Paragraph 2.b(3)—Period of 

Performance 

Four commenters objected to the 

period of performance provisions in the 

proposed circular. One commenter 

found our period of performance 

discussion confusing. We have 

restructured that discussion as 


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requested. Two other commenters 

objected to our statement that the third 

party contract terms be no longer than 

‘‘minimally necessary’’ as unduly 

restrictive and not found in applicable 

law. Our response is that this is not a 

new standard. In fact, FTA Circular 

4220.1E, the predecessor to the final 

circular, also provided that, ‘‘Grantees 

are expected to be judicious in 

establishing and extending contract 

terms no longer than minimally 

necessary to accomplish the purpose of 

the contract.’’ We understand, however, 

that if a recipient takes that guidance to 

an extreme, allowing no reasonable 

period to accommodate even small 

performance delays, then the guidance 

would be undesirable. We have 

therefore removed the ‘‘minimally 

necessary’’ standard, replacing it with 

guidance that the recipient is expected 

to establish a period of performance 

consistent with ‘‘the time necessary to 

accomplish the purpose of the 

contract.’’ 

Four commenters also objected to the 

position that every time extension 

would constitute an out-of-scope change 

requiring a sole source justification. One 

commenter seems to believe that we 

would treat all time extensions not 

contemplated in the original contract as 

out-of-scope changes. This provision, 

which is included in FTA Circular 

4220.1E, is not new. Nevertheless, we 

agree that a time extension can 

sometimes be a legitimate remedy in 

circumstances beyond the recipient’s 

control, and should not in all cases be 

considered an out-of-scope change. In 

other instances, however, the 

circumstances surrounding other time 

extensions, especially those in which 

significant new deliverables would be 

added, would be an out-of-scope 

change. We have revised the final 

circular accordingly. 

Paragraph 2.b(5)—Payment Provisions 

Subparagraph 2.b(5)(b)—Advance 

Payments 

One recipient pointed out that 

prohibiting a recipient from using local 

share funds for advance payments 

without first obtaining FTA’s consent is 

unfair, particularly if no Federal 

assistance is at risk. We agree, and have 

modified the paragraph to remove the 

prohibition for projects having 

automatic preaward authority or 

projects having some form of preaward 

authority. 

Another recipient asked for more 

examples of allowable pre-award 

expenditures. We agree, and have 

identified additional examples in the 

final circular, noting that the examples 

given are not all-inclusive. 

Paragraph 2.b(6)—Protections Against 

Performance Difficulties 

Subparagraph 2.b(6)(a)—Changes 

One commenter emphasized the need 

for changes clauses. We have 

strengthened our recommendations that 

recipients include changes clauses in 

their contracts. We recognize, however, 

that a recipient may only be able to 

include a contract provision requiring 

the contractor to consider a change 

rather than demand a change. Every 

recipient may not have the economic 

leverage to compel a third party 

contractor to continue contract work 

until it is assured payment and other 

terms under which it must work. We do 

expect the recipient to include changes 

and changed conditions clauses that 

provide for both parties to negotiate in 

good faith about desirable changes. 

Subparagraph 2.b(6)(b)—Remedies 

Sub-subparagraph 2.b(6)(b)1— 

Liquidated Damages 

Four commenters requested changes 

to the liquidated damages provisions in 

the proposed circular. Two commenters 

recommended that acceptable methods 

of calculating liquidated damages, in 

addition to time, be acknowledged as 

acceptable. We agree, and the final 

circular includes additional methods of 

calculating liquidated damages. Another 

commenter recommended that we 

substitute the proposed circular’s 

statement that ‘‘the rate and 

measurement period may not be 

excessive,’’ with the established 

standard for liquidated damages ‘‘that 

the measure of damages must be 

calculated to reasonably reflect the costs 

estimated to be incurred by the recipient 

should the standard not be obtained, 

and that the procurement file should 

contain a record of the calculation and 

rationale.’’ We agree, and have made 

that change. Another commenter asked 

how we expect a recipient to document 

the reasonableness of the liquidated 

damages it intends to use. We have 

included provisions in the final circular 

explaining that FTA expects the 

recipient to calculate a rate and 

measurement standard that reasonably 

reflects the costs should the standard 

not be met, and expects the recipient to 

include this information in its 

solicitation and contract. We have also 

added a discussion in Chapter VII of 

how liquidated damages might, in 

certain situations, foster settlements. 

Subsection 2.c—Socio-Economic 

Requirements for the Acquisition of 

Property and Services 

Paragraph 2.c(1)—Labor 

Subparagraph 2.c(1)(a)—Wage and Hour 

Requirements 

Two commenters pointed out that the 

threshold for the wage and hour 

requirements of the Contract Work 

Hours and Safety Standards Act has 

been amended to apply to contracts of 

$100,000 or more. We agree, and the 

final circular includes that change. 

Subparagraph 2.c(1)(b)—Fair Labor 

Standards 

Consistent with the FTA Master 

Agreement, we added a reminder that 

the Fair Labor Standards Act protects 

employees engaged in commerce. 

Paragraph 2.c(2)—Civil Rights 

Subparagraph 2.c(2)(c)—Environmental 

Justice 

We added a subparagraph reminding 

the recipient of Federal Environmental 

Justice provisions. 

Subparagraph 2.c(2)(d)—Limited 

English Proficiency (LEP) 

We added a subparagraph reminding 

the recipient of Federal Limited English 

Proficiency provisions. 

Subparagraph 2.c(2)(e)— 

Nondiscrimination on the Basis of 

Disability 

Sub-subparagraph 2.c(2)(e)3—DOT 

Public Transportation Regulations 

Implementing Section 504 and the ADA 

We consolidated references to the 

major Federal regulations that describe 

the various requirements for public 

transportation services to individuals 

with disabilities, and provided some 

examples of their application. 

Subparagraph 2.c(2)(f)—Electronic 

Reports and Information 

One commenter asked us to clarify 

whether the requirement to use 

accessible electronic formats when 

delivering reports would apply only to 

third party contracts for delivery of 

reports, or also to other information in 

electronic format that the recipient 

intends to provide to FTA. We have 

revised the paragraph on electronic 

reports and information to clarify that 

all information submitted to FTA must 

be provided in accessible formats. 


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Paragraph 2.c(3)—Environmental 

Requirements 

Subparagraph 2.c(3)(f)—Recycled 

Products 

One commenter asked FTA to post on 

its Web site a link to EPA’s Web site 

about recovered materials advisory 

notices. We have included the EPA Web 

site in the final circular. 

Paragraph 2.c(5)—Preference for U.S. 

Property—Buy America 

One commenter pointed out that the 

proposed circular’s description of FTA’s 

Buy America requirements omitted 

discussion of the $100,000 threshold. 

We agree, and have included this 

information in the final circular. We 

have also revised the Buy America 

provisions for the final circular to 

clarify that FTA’s Buy America 

requirements apply to property 

delivered to the recipient, but not to 

property acquired by a contractor for 

use in performing contract work if the 

property used is not delivered to the 

recipient. 

Subsection 2.d—Technical Restrictions 

on the Acquisition of Property and 

Services 

Paragraph 2.d(3)—Use of $1 Coins 

One commenter objected to the 

Presidential $1 Coin Act of 2006 

requirement that each FTA-assisted 

public transportation service property 

that uses coins or currency to be fully 

capable of accepting and dispensing $1 

coins because it is likely to cause an 

undue hardship on rural public 

transportation agencies because they 

will need to either retrofit existing 

equipment, including farebox and ticket 

dispensing equipment, or purchase new 

equipment. The Department of Treasury 

is implementing those requirements, 

and FTA lacks the authority to waive 

them. 

Subsection 2.e—Rolling Stock—Special 

Requirements 

Paragraph 2.e(8)—In-State Dealers 

One commenter asked how we will 

administer the SAFETEA–LU 

amendment to 49 U.S.C. 5325 providing 

that bus purchases may not be restricted 

to in-State dealers. The commenter’s 

concern is focused on the conflict that 

would arise if State law limits purchases 

of motor vehicles to in-state dealers, 

while 49 U.S.C. 5325(i) prohibits the 

limitation. The commenter points out 

that recipients must comply with 

Federal law as well as State law. We 

agree that Federal laws that appear to 

conflict with similar State laws can 

cause problems to FTA’s recipients. 

However, 49 U.S.C. 5325(i) preempts 

conflicting in-state dealer requirements 

contained in State laws. 

Paragraph 2.e(10)—Five-Year Limitation 

One commenter asked how FTA plans 

to enforce the five-year limitation on 

rolling stock contracts, and whether 

FTA will require the recipient to 

prepare a five-year needs document for 

its contract files. Our response is that 

FTA has considerable discretion to take 

actions to determine and enforce 

compliance with the statutory 

requirements in its enabling legislation. 

We believe it useful for the recipient to 

have documentation in its files that can 

justify any actions that might call into 

question the recipient’s compliance 

with statutory requirements of any type, 

including compliance with the five-year 

limitation on rolling stock contracts. 

Subsection 2.f—Public Transportation 

Services—Special Requirements 

Paragraph 2.f(1)—Protections for Public 

Transportation Employees 

Consistent with the FTA Master 

Agreement, we added a reminder that 

the Fair Labor Standards Act protects 

employees engaged in commerce. 

Subsection 2.g—Architectural 

Engineering and Related Services— 

Special Requirements 

We received three comments about 

procurements of architectural, 

engineering, and related services as 

specified in 49 U.S.C. 5325(b)(1). 

Paragraph 2.g(2)—Relation to 

Construction 

Two commenters pointed out 

inconsistencies between Chapter IV and 

Chapter VI of the proposed circular in 

determining when qualifications-based 

procurement procedures must be used 

and may not be used. We have redrafted provisions of both chapters to 

stress that qualifications-based 

procurement procedures may be used 

only when the services are directly in 

support of, directly connected to, 

directly related to, or lead to 

construction, alteration, or repair of real 

property. 

Subparagraph 2.g(2)(c)—Type of 

Contractor Not Determinative 

One commenter also suggested that 

we state that certain architectural 

engineering firms have the capability of 

performing services beyond traditional 

A&E services. We have amended both 

chapters for consistency, so that the 

final circular emphasizes that it is the 

nature of the work to be performed and 

its relationship to construction, not the 

nature of the prospective contractor, 

that determines whether qualificationsbased procurement procedures must be 

used or whether qualifications-based 

procurement procedures may not be 

used. 

Another commenter asked how these 

qualifications-based procurement 

requirements would apply to various 

activities undertaken in an Intelligent 

Transportation System (ITS) project 

involving construction or improvements 

to real property. The final circular now 

contains a list of some of the activities 

likely to take place during the 

implementation and development of an 

ITS project, and have identified those in 

which qualifications-based procurement 

procedures must be used and those in 

which qualifications-based procurement 

procedures may not be used. 

Subsection 2.h—Construction—Special 

Requirements 

Paragraph 2.h(1)—Bonding 

Subparagraphs 2.h(1)(f)—Excessive 

Bonding 

Three commenters questioned 

whether FTA would accept State 

bonding policies that differ from Federal 

requirements. We have amended the 

proposed circular to affirm that we will 

not challenge State or local bonding 

policies that exceed FTA’s 

requirements. One commenter requested 

that we address the use of bonding for 

acquisitions beyond construction, 

commenting on its expense and 

usefulness. We have amended the 

proposed circular to explain that while 

bonding is expensive, bond 

requirements can be useful if the 

recipient has a material risk of loss 

because of a failure of the prospective 

contractor. This is to prevent potential 

risks associated with contractor 

bankruptcy or financial failure at the 

time of partially completed work. 

Another commenter urged us not to 

encourage recipients to submit each 

bonding request that exceeds the limits 

described in the proposed circular to 

FTA for approval. We agree, and the 

final circular now reminds the recipient 

that it may contact the Regional 

Administrator for the region 

administering the project for approval of 

its bonding policies if it chooses to do 

so. If a recipient’s bonding policies far 

exceed FTA or State or local 

requirements to an extent that 

competition is reduced, FTA cannot 

assure the availability of FTA assistance 

to support the costs of that acquisition. 

Paragraph 2.h(3)—Value Engineering 

One commenter cautioned us about 

our statement that ‘‘FTA will not 

approve a New Starts grant application 


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for final design funding or a full funding 

grant agreement until value engineering 

is complete.’’ While that sentence is 

based on the requirements of 49 U.S.C 

5309, we agree that restrictions 

pertaining to New Starts projects should 

not be included in the final circular in 

a way that might become invalid due to 

later changes in law. Therefore, we have 

softened the statement to caution that 

value engineering can be required as a 

pre-requisite for some FTA assistance 

awards. 

Another commenter asked that we 

include a definition of ‘‘value 

engineering’’ that distinguishes it from 

cost-cutting. We agree, and have added 

a definition to Chapter I, section 5 that 

will be used consistently in our revised 

circulars. 

Paragraph 2.h(5)—Prevailing Wages 

Two commenters expressed their 

belief that, along with raising the 

threshold of the Contract Work Hours 

and Safety Standards Act to $100,000, 

the threshold of the Davis-Bacon Act 

requiring prevailing wages to be paid for 

construction labor had also been raised 

to $100,000. FTA disagrees. The DavisBacon Act has not been so amended. 

The Davis-Bacon Act applies its 

prevailing wage requirements to ‘‘every 

contract in excess of $2,000 . . . .’’ 40 

U.S.C. 3142. 

Paragraph 2.h(9)—Preference for U.S. 

Property—Buy America 

Three commenters objected to FTA’s 

Buy America provisions for 

construction projects as overbroad. We 

agree, and the final circular now 

includes information about the $100,000 

threshold. The final circular also 

clarifies FTA’s position that its Buy 

America requirements apply to property 

delivered to the recipient, but not to 

property acquired by a contractor for 

use in performing contract work if that 

property the recipient used is not 

delivered to the recipient under their 

contract. 

Subsection 2.i—Research, Development, 

Demonstration, Deployment, and 

Special Studies—Special Requirements 

Paragraph 2.i(1)—Patent Rights 

One commenter asked whether FTA 

will grant a waiver of patent rights when 

the recipient wants the source code 

being created to be an open source so 

that others will be encouraged to use 

that source code; or when the recipient 

wants to contract with an entity that has 

already created an open source code to 

tailor that code and allow the tailored 

code also to become open source. At the 

outset, FTA cannot waive another 

party’s patent rights. While Federal law 

does not generally authorize a Federal 

agency to require inventors to make 

their federally assisted inventions 

available to the public at large, FTA can 

and does support projects in which 

participants agree to make rights to use 

an invention developed or reduced to 

practice under an FTA project broadly 

available. 

Paragraph 2.i(2)—Rights in Data 

One commenter took exception to 

FTA’s rights in data policy as being 

inconsistent with the Common Grant 

Rules. For data developed under a 

research, development, demonstration, 

or special studies project, FTA’s general 

policy is to obtain sufficient rights to 

permit FTA to make either FTA’s 

license in the copyright to the subject 

data or a copy of the subject data to 

which it would be entitled under the 

Common Grant Rules available to any 

FTA recipient, subrecipient, third party 

contractor, or third party subcontractor,. 

FTA obtains these rights in data through 

the recipient’s agreement set forth in the 

FTA Master Agreement. If FTA is not 

able to secure sufficient rights in data 

derived from the research projects it 

supports and is unable to make that data 

available for the general benefit of 

transportation, then certain research and 

development projects might not be 

worth pursuing. 

The commenter then requested an 

explanation of those contracts excepted 

from these requirements. FTA does not 

seek these broad rights in data for other 

than research, development, 

demonstration, or special studies 

projects. For example, FTA does not 

seek greater rights in data supplied 

under its capital projects than those 

rights provided in the Common Grants 

Rules, because FTA is not providing 

Federal assistance for the research and 

development of property or services at 

the time the property or services are 

eligible for capital funding. Due to 

questions that arose in connection with 

licensing automatic data processing 

equipment or programs for the 

recipient’s use, if FTA capital assistance 

is used to support those costs, then FTA 

would not take the greater rights. In 

summary, FTA does not seek greater 

rights in data used in projects for which 

FTA did not directly finance the 

research and development costs of that 

data. 

Paragraph 2.i(3)—Export Control 

One commenter requested that we 

provide a citation to the Export Control 

regulations referenced in the proposed 

circular. We agree, and have added the 

requested citation to the final circular. 

Subsection 2.j—Audit Services 

Three commenters asked for more 

information about obtaining audit 

information from other Federal 

agencies. We have included information 

about Federal agencies that work with 

various types of recipients and 

contractors to establish indirect cost 

rates consistent with FAR cost 

principles. It is our understanding that 

those Federal agencies are charged with 

those responsibilities and are expected 

to fulfill them. While a Federal agency 

might not perform all audits for 

recipients of Federal assistance, the 

Federal agency charged with the 

responsibility for establishing indirect 

cost rates and other similar functions 

would be expected to provide the 

recipient sufficient data that the 

recipient’s private or internal auditors 

could perform their duties properly. 

When we revise our BPPM, we will 

include more information. 

E. Chapter V—Sources 

Section 1—Force Account 

Four commenters questioned our 

inclusion of force account as a source 

from which a recipient could obtain 

services. Three commenters asserted 

that the use of force account is a grants 

management issue, not a procurement 

issue. Understanding our decision to 

discuss force account in contrast with 

third party contracting, one commenter 

recommended that we clarify that the 

final circular does not apply to force 

account work. We agree, and the final 

circular states that its procurement 

guidance does not apply to a recipient’s 

force account work. 

Section 3—Joint Procurements, and 

Section 4—State or Local Government 

Purchasing Schedules or Purchasing 

Contracts 

Several commenters informed us that 

the proposed circular’s descriptions of 

joint procurements and procurements 

through State or local government 

purchasing schedules or contracts is 

confusing, and recommended that we 

reinstate the provisions of FTA Circular 

4220.1E. Two commenters, for example, 

pointed out that joint procurements are 

unlikely to be undertaken using State or 

local government purchasing schedules. 

We agree, and we have revised the 

sections on Joint Procurement as well as 

the section on State or Local 

Government Purchasing Schedules or 

Purchasing Contracts for clarity. 

Section 3—Joint Procurements 

The final circular defines ‘‘joint 

procurement’’ to mean a method of 

contracting in which two or more 


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purchasers agree from the outset to use 

a single solicitation document and enter 

into a single contract with a vendor for 

delivery of a property or services in a 

fixed quantity, even if expressed as a 

total minimum and total maximum. The 

final circular emphasizes that the 

contract resulting from a joint 

procurement is not drafted with the 

understanding that its terms will be 

made available to purchasers other than 

the original parties at a later date. As 

with all FTA assisted contracts, the 

recipient must comply with all 

applicable Federal requirements. 

One commenter asked whether a 

‘‘Cooperative Purchasing Program’’ is 

the same as a joint procurement. We 

used the term ‘‘Cooperative Purchasing 

Program’’ to refer to the GSA 

Cooperative Purchasing Program for the 

Federal Government. The final circular 

now identifies that program as the 

‘‘GSA’s Cooperative Purchasing 

Program’’ to preclude confusion with 

joint procurements. 

Subsection 3.a—Use Encouraged 

One commenter suggested that 

discussing the advantages of joint 

procurement as being able to ‘‘exactly 

match’’ each participating recipient’s 

requirements is misleading, and informs 

us that in many cases customizing 

would be required. We agree, and we 

removed the term ‘‘exactly match.’’ 

Section 4—State or Local Government 

Purchasing Schedules or Purchasing 

Contracts 

In this section, we have established a 

definition of ‘‘state or local government 

purchasing schedule’’ to mean an 

arrangement that a State or local 

government has established with 

multiple vendors in which those 

vendors agree to provide essentially an 

option to the State or local government 

to acquire specific property or services 

in the future at established prices. If the 

State or local government wishes to 

permit others to use the schedules, the 

State or local government might seek the 

agreement of the vendor to provide the 

listed property or services to others with 

access to the schedules, or it may permit 

the vendor to determine whether it 

wishes to do so. This arrangement has 

two parts: (1) Establishing the schedule, 

and (2) acquiring property and services 

from the schedule. FTA does not 

provide Federal assistance to a State or 

local government when it is establishing 

its schedule. FTA assistance is provided 

after the schedule is established and a 

recipient acquires property or services 

from that schedule. 

Subsection 4.a—Use Encouraged 

One commenter asked how State or 

local government schedules or 

purchasing agreements could be 

available to other parties. The extent to 

which a State or local government 

chooses to make its purchasing 

agreements or schedules available rests 

with the State or local government that 

has established the schedule or 

purchasing contract. 

Subsection 4.b—All FTA and Federal 

Requirements Apply 

Several commenters expressed the 

view that it would be impossible for a 

recipient to use State or local 

government schedules or purchasing 

agreements if FTA requirements were to 

apply to those procurements. FTA 

recognizes that when a State or local 

government establishes a schedule, it 

has not contemplated the need to 

comply with FTA’s third party 

procurement requirements. For 

example, a State or local government 

generally does not consider matters 

such as FTA Buy America standards at 

the time its schedules are introduced. A 

recipient that seeks to use FTA 

assistance to acquire property or 

services from a State or local 

government purchasing schedule, 

however, must comply with applicable 

FTA requirements. To do so, the 

recipient is expected to use competition 

by seeking bids from three or more 

vendors listed on the schedule, and then 

determine whether the property or 

services as offered would comply with 

Federal requirements. Among other 

things, the recipient would need to 

determine whether a product sought 

from the schedule would qualify as 

domestic or foreign under our Buy 

America standards, if the product would 

be shipped by ocean-going vessel or by 

air for compliance with Federal cargo 

preference requirements, if a new bus 

had been tested and whether preaward 

and post delivery review could be 

obtained, whether the property sought 

had been manufactured in accordance 

with environmental restrictions, and so 

forth. FTA is not able to waive Federal 

requirements beyond what is 

permissible under law. Only if the 

property or services listed on a State or 

local government purchasing schedule 

complies with FTA’s requirements 

would the recipient be able to use FTA 

assistance to support the costs of that 

property or services. 

One commenter asked us to describe 

methods of meeting FTA requirements 

when acquiring property and services 

through a State or local government 

purchasing schedule. While the 

recipient would not prepare an open 

market solicitation for the property or 

services when attempting to use a State 

or local government purchasing 

schedule, the recipient might choose to 

append the relevant Federal 

requirements to a purchase order and 

obtain the vendor’s consent to those 

conditions as a prerequisite for using 

FTA assistance to support the costs of 

that property or those services. But 

whatever procedure the parties use, 

requirements applicable to FTA 

procurements cannot be waived. 

Section 6—Federal Supply Schedules 

Subsection 6.d—Competition and Price 

Reasonableness 

One commenter asked whether State 

and local governments must verify 

competition was used for the 

procurement of items listed on GSA 

schedules before using those schedules. 

Our response is that there is no need to 

verify that competition was used for the 

property and services listed on GSA 

schedules prior to using the schedules. 

Vendors listed on GSA schedules 

should be treated as prospective 

sources. Therefore, a recipient is 

generally expected to select at least 

three vendors from a GSA schedule and 

seek proposals. 

Section 7—Existing Contracts 

Subsection 7.a—Permissible Actions 

Paragraph 7.a(1)—Exercise of Options 

Subparagraph 7.a(1)(c)—Awards 

Treated as Sole Source Procurements 

One commenter requested that we 

explain what we mean by ‘‘failure to 

evaluate the option.’’ There is no 

requirement to solicit for options or 

obtain firm option prices as part of a 

solicitation. If option prices are 

obtained, the recipient need not 

evaluate those option prices in 

determining the underlying contract 

award. However, if the recipient does 

not evaluate options when the contract 

was awarded, it may not exercise the 

options at a later date unless it can 

justify a sole source award. 

Two commenters objected to our 

position that negotiating a lower option 

price would always result in a sole 

source award requiring justification. 

FTA recognizes that it is reasonable to 

permit the price of an option to be 

reduced if the lower price can be 

reasonably determined from the terms of 

the original contract, or if that price 

results from actions that can be reliably 

measured, such as changes in Federal 

prevailing labor rates, or as authorized 

under State or local law. One of the 

commenters also objected to our view 


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that negotiating a higher option price 

would always result in a sole source 

award requiring justification. FTA has 

not changed its position. If only a higher 

price is available, then competition 

would normally be required unless the 

higher price results from actions that 

can be reliably measured, such as 

increases in Federal prevailing labor 

rates, or as authorized under State or 

local law. 

One commenter objected to our 

requirement for contracts to include 

maximum quantities. The commenter 

believes that requiring maximum 

quantities could adversely affect the 

establishment of State or local 

government purchasing schedules. FTA 

disagrees. FTA does not finance the 

establishment of State or local 

purchasing schedules, so that when 

State or local governments and their 

vendors enter into contracts for their 

purchasing schedules, those contracts 

are not subject to FTA requirements. It 

is only when a recipient intends to use 

FTA assistance to acquire property or 

services that FTA requirements are 

imposed. Thus if an FTA recipient seeks 

to acquire an indefinite amount of 

property or services through a State or 

local purchasing schedule, it would 

need to specify a maximum quantity as 

well as a minimum quantity. 

Paragraph 7.a(2)—Assignment of 

Contract Rights 

Subparagraph 7.a(2)(a)—Acquisition 

Through Assigned Contract Rights 

Three commenters objected to our 

position that a recipient seeking an 

assignment of contract rights from 

another recipient must ensure that the 

assigning recipient ‘‘has not improperly 

expanded the quantity of property or 

services to be delivered under its 

original contract.’’ The purpose of this 

provision is to express FTA’s intention 

that the recipient seeking the 

assignment would review the assigning 

recipient’s contract to determine 

whether the total quantities sought 

would not exceed the limits of that 

original contract. We agree that a 

recipient seeking an assignment of 

contract rights cannot determine 

whether or not the assigning recipient 

specified greater quantities than the 

assigning recipient needed at the time of 

its original solicitation. We have revised 

this guidance to clarify FTA’s concerns. 

Subsection 7.b—Impermissible Actions 

Paragraph 7.b(2)—Cardinal Changes 

One commenter asked us to provide 

more guidance about cardinal changes 

and not use the terms ‘‘in-scope’’ and 

‘‘out-of-scope’’ as determinative of 

contract changes. The commenter 

warned that if the contract provisions 

are read without consideration of their 

context, minor changes not expressly 

addressed or even contemplated under 

the contract when it was signed might 

be considered out-of-scope changes. 

Minor changes, even if considered ‘‘outof-scope’’ because they are not 

addressed in the contract, should not be 

considered ‘‘cardinal’’ changes. The 

commenter recommended that a 

cardinal change be described as ‘‘a 

major deviation from the original 

purpose of the work or the intended 

method of achievement,’’ rather than an 

‘‘out-of-scope change.’’ Although the 

Federal Court of Claims coined the term 

‘‘cardinal change’’ to describe changes 

that are beyond the scope of the 

contract, we agree that some changes 

necessary to fulfill the original intent of 

the contract might not be expressly 

included in the contract. Therefore, we 

have adopted the commenter’s 

recommendation, and the final circular 

contains revised provisions. 

One commenter wanted many more 

examples and much more guidance. 

Such guidance can be found in FTA’s 

BPPM at the FTA Web site: http:// 

www.fta.dot.gov/funding/ 

thirdpartyprocurement/ 

grants_financing_6037.html and 

‘‘Frequently Asked Questions’’ at the 

FTA Web site: http://www.fta.dot.gov/ 

funding/thirdpartyprocurement/ 

grants_financing_6039.html. 

Two commenters objected to the 

example of an engine change or similar 

large component change as a cardinal 

change per se, particularly since it 

might be necessary to obtain a 

compatible new engine if the old engine 

is no longer available. FTA’s view is 

that if a major component of a vehicle 

is no longer available, the recipient 

should use competition to obtain a 

compatible substitute. In some cases, 

the recipient would need to enter into 

a contract with the original 

manufacturer if installation of the 

needed component would be 

complicated, but in other cases, similar 

components available from more 

vendors might be usable and available. 

If the vehicle has not been fabricated 

when a specific major component 

became obsolete, whether using a 

different component would cause a 

cardinal change would depend on the 

extent of the effect of that change. The 

final circular, however, states that the 

circumstances surrounding the need for 

changing major components will 

determine whether or not a change 

would be a cardinal change. 

F. Chapter VI—Procedural Guidance for 

Open Market Procurements 

We have also restructured Chapter VI 

so that the final circular consolidates 

provisions pertaining to the various 

procurement methods. Chapter VI of the 

final circular includes additional 

paragraphs to respond to unanticipated 

comments on the proposed circular. As 

a result, we have transferred some of the 

guidance originally included in other 

chapters of the proposed circular to 

Chapter VI of the final circular. Much of 

this chapter retains provisions 

substantially similar to their counterpart 

provisions in FTA Circular 4220.1E or 

its footnotes, with important exceptions 

discussed below. 

Section 1—Competition Required 

Subsection 1.b—Unsolicited Proposals 

Two commenters pointed out that the 

unsolicited proposal provisions of the 

proposed circular are too broad. FTA 

agrees that the proposed circular’s 

guidance could be misunderstood. The 

final circular now permits a recipient to 

use the same standards applicable to a 

Federal agency that must comply with 

the FAR. 

Section 2—Solicitation Requirements 

and Restrictions 

Subsection 2.a—Description of Property 

or Services 

Paragraph 2.a(1)—What To Include 

Four commenters objected to our 

admonition that ‘‘Detailed technical 

specifications should be avoided if at all 

possible in favor of performance 

specifications.’’ Two commenters 

pointed out that prohibiting detailed 

technical specifications could make 

fleet management more difficult, while 

one commenter informed us that the 

prohibition would conflict with designbid-build construction contracting 

procedures. We agree in part, and have 

revised the discussion of detailed 

technical specifications so that the final 

circular only expresses a preference for 

performance or functional 

specifications, coupled with a statement 

explaining that there is no flat 

prohibition against detailed technical 

specifications when appropriate. The 

final circular also includes a statement 

referencing Common Grant Rules 

requirements. 

Paragraph 2.a(2)—Quantities Limited to 

the Recipient’s Actual Needs 

One commenter recommended that a 

discussion of the recipient’s needs be 

placed in a different circular or policy 

document. We disagree. It is important 

to remind recipients that they should 


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not contract for excess quantities, 

particularly because doing so can 

increase costs and provide more 

opportunities for them to assign their 

contract rights to others, a practice FTA 

does not favor. 

Paragraph 2.a(4)—Prohibitions 

Subparagraph 2.a(4)(d)—Retainer 

Contracts 

Two commenters objected to our 

prohibition against a recipient making 

noncompetitive awards to any person or 

firm on a retainer contract without 

providing further justification. The 

commenters reminded us that many 

recipients award retainer contracts 

based on competition. They expressed 

their view that this prohibition would 

unduly limit the recipient’s flexibility to 

acquire the property and services it 

needs. We agree in part, and the final 

circular now prohibits only 

noncompetitive awards to persons or 

firms on retainer contracts if those 

awards are not for the property or 

services specified for delivery under the 

retainer contracts. 

Subparagraph 2.a(4)(e)—Excessive 

Bonding 

One commenter requested more 

discussion of bonding. The final circular 

now explains more fully our objections 

to unnecessary bonding as unduly 

restrictive of competition. 

Subparagraph 2.a(4)(f)—Brand Name 

Only 

Two commenters requested us to state 

that specifying a brand name product 

without stating salient characteristics 

that would allow for an equivalent may 

be acceptable as a proper sole source 

award. We have not adopted that 

recommendation, as we believe it would 

encourage specifications based on brand 

names without descriptions of salient 

characteristics. The final circular, 

however, includes a modified 

discussion of ‘‘brand name only’’ 

matters indicating that prohibitions 

against the use of ‘‘brand name only 

descriptions’’ would apply in some 

situations. 

Subparagraph 2.a(4)(g)—In-State or 

Local Geographic Restrictions 

Sub-subparagraph 2.a(4)(g)3—Major 

Disaster or Emergency Relief 

One commenter recommended that 

we revise our discussion of exceptions 

to in-state or geographical preferences 

for major disaster or emergency relief 

projects, making special reference to the 

Stafford Act’s preference for 

organizations, firms, and individuals 

residing or doing business primarily in 

the affected area. We agree, and the final 

circular includes this change. 

Subparagraph 2.a(4)(h)—Organizational 

Conflicts of Interest 

One commenter recommended that 

the organizational conflict of interest 

subparagraph be revised for clarity. We 

agree, and have made that revision. 

Sub-subparagraph 2.a(4)(h)2—Remedies 

Three commenters objected to the 

proposed circular’s provisions that 

appeared to exempt consortia from 

organizational conflict of interest 

restrictions. When drafting those 

provisions, we were attempting to 

distinguish arrangements in which a 

contract would be awarded for both 

initial and follow-on work from 

arrangements in which a contract would 

be awarded for only the initial work. 

The final circular contains revised 

provisions stressing that FTA expects 

the recipient to analyze each planned 

acquisition for potential organizational 

conflicts of interest as early in the 

acquisition process as possible, and to 

take appropriate measures to avoid, 

neutralize, or mitigate them before 

contract award. 

Subparagraph 2.a(4)(i)—Restraint of 

Trade 

One commenter asked why 

noncompetitive pricing is included 

within the same category as matters 

within the recipient’s control. Both 

Common Grant Rules provide that 

noncompetitive pricing practices 

between firms or between affiliated 

companies are practices that in some 

situations can be restrictive of 

competition. Consequently, the 

recipient should be alert to situations 

evidencing the possibility that bidders 

or offerors seeking contracts might be 

engaging in noncompetitive pricing 

practices. Questionable practices would 

include submissions of identical bid 

prices for the same products by the 

same group of firms. Other questionable 

practices would be reflected in an 

unnatural pattern of awards that had the 

cumulative effect of apportioning work 

among a fixed group of bidders or 

offerors. 

Subsection 2.c—Contract Type 

Specified 

Paragraph 2.c(1)—Typical Contract 

Types 

Subparagraph 2.c(1)(a)—Firm Fixed 

Price 

One commenter recommended that 

we include a discussion of firm fixed 

price contracts with economic price 

adjustments. We agree, and revised the 

final circular to state that a firm fixed 

price contract may include an economic 

price adjustment provision, incentives, 

or both. 

Section 3—Methods of Procurement 

Subsection 3.a—Micro-Purchases 

We received three comments about 

micro-purchases. Two commenters 

advised us that the discussion in the 

proposed circular was too detailed, and 

specifically recommended that 

documentation procedures be moved to 

the BPPM. We believe a reasonably 

comprehensive discussion of micropurchases is necessary in view of the 

opportunities for misunderstanding. 

One commenter recommended that 

we remove discussions of dollar limits 

in connection with micro-purchases, 

mainly because States or local 

jurisdictions may have lower limits. We 

disagree. Although we stated in the 

proposed circular that the recipient 

could establish lower thresholds for 

micro-purchases, the final circular 

emphasizes that the recipient may set 

lower thresholds for micro-purchases in 

compliance with State and local law, or 

otherwise as it considers appropriate. 

The same commenter asked how 

Davis-Bacon requirements relate to the 

dollar value of a procurement unless it 

is FTA’s position that contracts subject 

to Davis-Bacon cannot be procured as 

micro-purchases. In its discussion of 

micro-purchases, the proposed and final 

circulars are cautioning the recipient 

that even though it may use micropurchase procedures for procurements 

of construction, it still must comply 

with Davis-Bacon prevailing wage 

requirements. 

One commenter asked whether the 

Service Contract Act’s threshold of 

$2,500 should be mentioned in 

connection with micro-purchases. We 

have not discussed the Service Contract 

Act because the only FTA recipient that 

must comply with the Service Contract 

Act is the District of Columbia. 

Subsection 3.c—Sealed Bids (Formal 

Advertising) 

Paragraph 3.c(1)—When Appropriate 

One commenter pointed out that our 

discussion of sealed bidding gives the 

impression that sealed bidding can only 

be used for acquisition of property and 

construction. We agree that sealed 

bidding can be used for the acquisition 

of other types of property and services, 

and the final circular now clarifies that 

matter. 


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Subparagraph 3.c(1)(d)—Price 

Determinative 

One commenter recommended that 

we clarify the term ‘‘price-related 

factors’’ in our discussion of contract 

price in the context of sealed bidding 

procurements. We agree, and revised the 

final circular to identify transportation 

costs, life cycle costs, and discounts 

expected to be taken as examples of 

price-related factors. 

Subparagraph 3.c(1)(e)—Discussions 

Unnecessary 

The same commenter recommended 

that we clarify this subparagraph to 

distinguish between when discussions 

are acceptable, such as before receipt of 

bids, in negotiations after receipt of 

bids, and in pre-award responsibility 

determinations, and when discussions 

are not acceptable, such as after receipt 

of bids. We agree, and made appropriate 

changes. 

Subsection 3.d—Competitive Proposals 

(Request for Proposals) 

The same commenter also 

recommended that we change the 

wording of the standard for using 

competitive proposals to ‘‘there is an 

expectation that there is more than one 

source willing and able to submit an 

offer, or proposal.’’ We agree, and the 

final circular contains appropriate 

changes. 

Two commenters requested that we 

clarify that only one of the four preconditions justifying the use of 

competitive proposals need be present. 

We agree, and the made that revision. 

Paragraph 3.d(1)—When Appropriate 

Subparagraph 3.d(1)(a)—Type of 

Specifications 

One commenter recommended that 

we support the use of negotiations when 

performance specifications are used. 

Two commenters recommended that we 

delete ‘‘unavailability of adequate 

specifications or descriptions’’ as a 

standard justifying use of competitive 

proposals. We have adopted those 

recommendations, and the final circular 

now include a statement that detailed 

technical specifications may be used if 

other circumstances, such as the need 

for discussions or factors other than 

price alone should determine contract 

award. 

Subparagraph 3.d(1)(b)—Uncertain 

Number of Sources 

The same commenter expressed the 

view that uncertainty about whether 

more than one offeror will submit a 

proposal is not in itself a reason to 

require the use of competitive proposals 

if State and local laws permit the 

recipient to negotiate if it only receives 

a single bid in response to a formally 

advertised procurement. The 

commenter then recommended that we 

delete the standard or explain it more 

fully. We agree, and have explained the 

standard more fully. 

Subparagraph 3.d(1)(c)—Price Alone 

Not Determinative 

One commenter asked us to clarify the 

distinction between price-related factors 

in sealed bidding and award criteria for 

competitive proposals. We agree, and 

made the necessary revision. 

Subparagraph 3.d(1)(d)—Discussions 

Expected 

The same commenter asked us to 

make the distinction between 

discussions permitted in sealed bidding 

and the discussion/negotiation process 

in competitive proposals. We agree, and 

made the revision. 

Paragraph 3.d(2)—Procurement 

Procedures 

Subparagraph 3.d(2)(f)—Best Value 

That commenter also requested us to 

amend the discussion of ‘‘Best Value’’ to 

stress that the evaluation factors for a 

specific procurement should reflect the 

subject matter and the elements that are 

most important to the recipient. We 

agree, and made the revision. 

Subsection 3.e—Two-Step Procurement 

Procedures 

One commenter recommended that 

competitive negotiation be included in 

the discussion of two-step procurement 

processes. We agree, and added 

guidance about proposals as well as bids 

in our general discussion of two-step 

procurement procedures. 

Subsection 3.f—Architectural 

Engineering Services and Other Services 

Again as in Chapter IV, the same 

commenter suggested that we state that 

certain architectural engineering firms 

have the capability of performing 

services beyond traditional A&E 

services. We have revised both Chapter 

VI and Chapter IV of the final circular 

for consistency, emphasizing that the 

nature of the work to be performed and 

its relationship to construction, not the 

nature of the prospective contractor, 

determines whether qualifications-based 

procurement procedures must be used 

or may not be used. 

Paragraph 3.f(1)—Qualifications-Based 

Procurement Procedures Required 

One commenter reminded us to 

resolve the inconsistencies between 

Chapter IV and Chapter VI of the 

proposed circular in designating the 

relationship to real property compared 

with the relationship to construction as 

the standard for determining when 

qualifications-based procurement 

procedures must be used and may not 

be used. We have revised both Chapter 

VI and Chapter IV of the final circular 

to stress that qualifications-based 

procurement procedures may be used 

only when the services are directly in 

support of, directly connected to, 

directly related to, or will lead to 

construction, alteration, or repair of real 

property. 

Another commenter requested us to 

provide examples of activities related to 

a project involving ‘‘improvements to 

real property’’ that would require the 

use of qualifications-based procurement 

procedures. The final circular includes 

several examples. 

Paragraph 3.f(2)—Qualifications-Based 

Procurement Procedures Prohibited 

The same commenter also requested 

us to provide examples of 

‘‘improvements to real property’’ for 

which qualifications-based procurement 

procedures would be prohibited. We 

agree, and have added several examples. 

Paragraph 3.f(5)—Audits and Indirect 

Costs 

Subparagraph 3.f(5)(d)—Prenotification: 

Confidentiality of Data 

Two commenters asked us to clarify 

the confidentiality requirements for cost 

or rate data used to determine indirect 

cost rates for architectural engineering 

contracts, particularly in light of the fact 

that States have widely differing ‘‘Open 

Records’’ type laws. FTA recognizes that 

some State laws might make it difficult 

for a recipient to protect cost and rate 

data pertaining to its contractors. 

Nevertheless, FTA’s enabling legislation 

at 49 U.S.C. 5325(b)(3)(D) requires a 

recipient to treat any cost or rate data 

used to determine indirect cost rates for 

architectural engineering contracts as 

confidential. Section 5325(b)(3)(D) also 

prohibits the recipient from making that 

data accessible or providing it to 

another party unless the audited firm 

provides the recipient written 

permission to do so. Moreover, if 

prohibited by law, that cost and rate 

data may not be disclosed under any 

circumstances. FTA is not authorized to 

waive the requirements of 49 U.S.C. 

5325(b)(3)(D). Therefore, the final 

circular recommends that before 

requesting or using cost or rate data, not 

only should a recipient notify the 

affected firm, but it also must obtain 

permission to provide that data in 


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response to a valid request under a 

State’s ‘‘Open Records’’ type law. 

Subsection 3.g—Design-Bid-Build 

One commenter asked us to use an 

outline format for this subsection. We 

agree, and have revised the format of 

this subsection for greater consistency 

with the formats generally used in the 

final circular. 

The same commenter requested us to 

revise the subsection to emphasize that 

two contracts are awarded when a 

recipient uses the design-bid-build 

procurement method. We agree, and 

made that revision. 

Subsection 3.h—Design-Build 

In response to comments about format 

and clarity, we revised the final circular 

for greater consistency with the formats 

generally used in the final circular. 

Subsection 3.i—Other Than Full and 

Open Competition 

Paragraph 3.i(1)—When Appropriate. 

Subparagraph 3.i(1)(b)—Sole Source 

Sub-subparagraph 3.i(1)(b)1—Unique 

Capability and Availability 

One commenter asked us to provide 

examples of unique capability and 

availability that justify a sole source 

procurement, pointing out that many 

vendors have unique capabilities that do 

not justify a sole source procurement. 

We do not believe specific examples 

would be helpful and might further 

cause misunderstanding. In describing 

property or services that have unique 

capability and availability, we recognize 

that property or services with unique or 

innovative concepts, that have patents 

or restricted data rights, that would 

require substantial duplication costs, or 

would require unacceptable delay meet 

the standard of having unique capability 

and availability. Our position is that a 

unique or innovative concept qualifies 

as a sole source if it is a new, novel, or 

changed concept, approach, or method 

that is the product of original thinking, 

the details of which are kept 

confidential or are patented or 

copyrighted. The property or services 

must also be available to the recipient 

only from one source and have not been 

available in the past to the recipient 

from another source. We believe 

situations in which prospective 

acquisitions are limited by patents or 

restricted data rights, substantial 

duplication costs, or requiring 

unacceptable delay can be readily 

recognized and need no further 

explanation. 

Sub-subparagraph 3.i(1)(b)2—Single Bid 

or Proposal 

Four commenters pointed out that in 

our discussion of the consequences of 

procurements resulting in a single bid or 

proposal, the proposed circular uses the 

terms ‘‘adequate’’ and ‘‘inadequate’’ in 

ways different from the BPPM’s use of 

those terms. In short, the commenters 

requested that we adopt the standard 

that competition is ‘‘adequate’’ if a 

single bid or proposal is submitted 

through no fault of the recipient. We 

agree, and made that revision. 

Subparagraph 3.i(1)(d)—Associated 

Capital Maintenance Item Exception 

Repealed 

Two commenters asked why we 

omitted associated capital maintenance 

items as appropriate for sole source. 

When SAFETEA–LU was signed into 

law on August 10, 2005, it repealed the 

sole source procurement authority for 

associated capital maintenance items. 

Since then, an associated capital 

maintenance item must qualify under 

the same standards that would apply to 

other sole source acquisitions. 

Paragraph 3.i(3)—Procurement 

Procedures 

Subparagraph 3.i(3)(b)—Sole Source 

Justification 

One commenter recommended that 

we require that a sole source 

justification must be prepared by an 

entity that can independently evaluate 

information provided by the recipient 

and prospective contractor. FTA agrees 

that independent sole source 

evaluations would be desirable, but 

believes it would be unrealistic to 

impose a firm requirement for 

independent evaluations. Requirements 

for independent sole source evaluations 

are not expressly authorized by our law 

or the Common Grant Rules, and may 

conflict with State or local procurement 

procedures. 

Section 5—Incentive Costs and 

Payments 

One commenter asked whether 

incentive payments are available only to 

contractors that provide accurate cost 

and ridership estimates in connection 

with a new fixed guideway capital 

project and to contractors that enable a 

new fixed guideway capital project to be 

completed for less than its original 

estimated cost. Another commenter 

objected to that limitation. We agree that 

incentive payments should not be 

limited to the two situations described. 

The final circular now contains a 

reference to the ‘‘Incentive Payments’’ 

information in ‘‘Frequently Asked 

Questions’’ at the FTA Web site: 

http://www.fta.dot.gov/funding/ 

thirdpartyprocurement/faq/ 

grants_financing_6148.html. 

Section—6 Cost and Price Analysis 

Subsection 6.a—Cost Analysis 

One commenter asks whether, as 

stated in the proposed circular, a cost 

analysis will be necessary in the case of 

a single bid or proposal when 

competition has been determined 

adequate because submission of only 

one bid or proposal was not the fault of 

the recipient, or whether a price 

analysis would be acceptable. FTA’s 

position is that a cost analysis will be 

required in the case of a single bid or 

proposal that is not the fault of the 

recipient, except if a price analysis can 

be based on a catalog or market price of 

a commercial product sold in 

substantial quantities to the general 

public or based on prices set by law or 

regulation. 

Paragraph 6.a(2)—Establishing Indirect 

Cost Rates 

One commenter questioned whether 

the discussion about which entity must 

approve indirect cost rates applies to 

architectural engineering contracts. FTA 

did not intend these provisions to apply 

to architectural engineering contracts 

because architectural engineering 

contracts have their own statutory 

indirect costs requirements. We have 

revised this discussion and the final 

circular now states that the provisions 

of this paragraph do not apply to 

architectural engineering contracts. 

Subparagraph 6.a(2)(b)—Contracts 

Exceeding $5 Million 

Rather than engage an outside auditor, 

one commenter has recommended that 

a recipient be permitted to use its 

internal audit staff to perform indirect 

costs when required for contracts 

exceeding $5 Million. FTA disagrees. 

The purpose of using an outside entity 

is to obtain an objective review of the 

recipient’s rates, profits, and other 

financial data related to a contract that 

must undergo cost analysis. 

Section 7—Evaluations 

Subsection 7.c—Evaluators 

One commenter objected to the 

proposed circular’s implied requirement 

that all proposal evaluations must be 

performed by auditors or financial 

management personnel, pointing out 

that for certain procurements, technical 

or public policy personnel should 

perform the evaluations. We agree that 

technical and public policy staff should 

participate in bid or proposal 


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evaluations and that a recipient may use 

auditors and financial management 

personnel as they see fit, and have made 

that revision to the final circular. We 

have also clarified that the recipient 

may contract for those services its staff 

are unable to perform. 

Subsection 8—Contract Award 

Subsection 8.a—Award to Other Than 

the Lowest Bidder 

One commenter recommended that 

the recipient be advised to state its right 

to award the contract to other than the 

low bidder or offeror in its solicitation 

document. We agree, and the final 

circular has been revised accordingly. 

Subsection 8.c—Rejections of Bids and 

Proposals 

Three commenters recommended that 

the subparagraph discussing bid 

rejection should be expanded to apply 

to both bids and offers or proposals. We 

agree, and have made the revision 

requested. 

G. Chapter VII—Protests, Changes and 

Modifications, Disputes, Claims, 

Litigation, and Settlements 

This chapter consolidates FTA 

guidance pertaining to third party 

procurement protests with guidance 

pertaining to disagreements that may 

emerge during the course of a third 

party procurement. The chapter now 

includes discussions of protests, 

changes and modifications, disputes, 

claims, litigation, and settlements. 

Section 1—Protests 

Section 1 addresses FTA and the 

recipient’s responsibilities pertaining to 

protests of third party contract 

decisions. These provisions are 

substantially similar to those in FTA 

Circular 4220.1E. It adds a new 

discussion of FTA’s practice of 

reviewing only those protests of an 

‘‘interested party,’’ which must be an 

actual or prospective bidder or offeror 

with a direct economic interest in the 

third party contract award. 

Subsection 1.a—The Recipient’s Role 

and Responsibilities 

Paragraph 1.a(2)—Responsibilities to 

FTA 

Subparagraph 1.a(2)(a)—Timely 

Notification 

Three commenters asked who the 

recipient should notify when it receives 

a third party contract protest. Our 

response is that FTA expects the 

recipient to report any current or 

prospective third party contract protest 

involving more than $100,000, and any 

protests involving controversial or 

highly publicized matters irrespective of 

amount in its next quarterly Milestone 

Progress Report, and at the next Project 

Management Oversight review, if any. If 

the recipient issues a protest decision 

adverse to the protester, FTA expects 

the recipient to notify the FTA Regional 

Administrator for the region 

administering a regional project or the 

FTA Associate Administrator for the 

Program Office administering a 

headquarters project directly, so that 

FTA can be prepared in case of an 

appeal. We included that information in 

the final circular. 

Subsection 1.b—FTA’s Role and 

Responsibilities 

Paragraph 1.b(1)—Requirements for the 

Protester 

Subparagraph 1.b(1)(a)—Qualify as an 

‘‘Interested Party’’ 

One commenter asked whether a 

subcontractor that has committed to be 

part of a team that prepared the 

proposal or bid would be eligible to 

qualify as an ‘‘interested party’’ and file 

a protest with FTA, or whether only a 

prime contractor or consultant would 

qualify as an ‘‘interested party.’’ Our 

response is that a subcontractor does not 

qualify as an ‘‘interested party’’ that 

may file a protest with FTA because a 

subcontractor has only an indirect 

interest in the results of the 

procurement; moreover, a subcontractor 

does not submit bids or offers to the 

recipient. The final circular lists various 

entities that either qualify or do not 

qualify as an ‘‘interested party’’ that 

may file a protest with FTA. For 

example, an established consortium, 

joint venture, team, or partnership that 

is an actual bidder or offeror would 

qualify as an ‘‘interested party’’ that has 

a direct economic interest in the results 

of the procurement. An individual 

member of a consortium, joint venture, 

team, or partnership, acting solely for 

itself, however, would not qualify as an 

‘‘interested party.’’ An association or 

organization that does not perform 

contracts also would not qualify as an 

‘‘interested party.’’ 

Paragraph 1.b(2)—Extent of FTA Review 

In view of FTA’s decision to limit its 

review of third party contract protests to 

a recipient’s failure to have or to follow 

its protest procedures, a recipient’s 

failure to review a complaint or protest, 

or allegations of violations of Federal 

law or regulations, one commenter 

complained that FTA’s requirements for 

recipients are very detailed and impose 

additional administrative burdens on 

the recipient to report each protest to 

the FTA even if the protest does not 

involve any of the areas that the FTA 

would review. We disagree. The 

Common Grant Rules for governmental 

recipients require the recipient ‘‘in all 

instances * * * [to] * * * disclose 

information regarding the protest to the 

awarding agency.’’ FTA reserves the 

right to obtain as much information as 

it needs about each protest, although the 

amount of information it may request 

will vary depending on whether FTA is 

asked to participate in the costs of 

defending the protest and its resolution. 

The extent of information FTA may 

require will also vary depending on 

whether the protest involves 

controversial or highly publicized 

matters. The final circular states that 

FTA is particularly interested in any 

protest of an FTA assisted third party 

contract exceeding $100,000, and any 

protest of an FTA assisted third party 

contract involving controversial or 

highly publicized matters irrespective of 

the amount. 

Section 2—Changes and Modifications 

This section consists of guidance on 

changes and modifications to third party 

contracts. We revised the guidance in 

the final circular to accommodate some 

of the comments discussed below. 

One commenter requested an 

extensive discussion of the procedures 

for contract changes and modifications. 

Our response is that more extensive 

information about changes and 

modifications can be found in the 

BPPM. 

The same commenter asked that the 

final circular include references to other 

parts of the circular pertaining to 

contract changes. In Chapter I, section 5 

of the final circular, we have established 

definitions for ‘‘cardinal change,’’ 

‘‘change order,’’ and ‘‘constructive 

change.’’ We are not using the term 

‘‘constructive change order’’ in the final 

circular. The final circular includes 

information about changes in Chapter 

IV, paragraph 2.b(3) in connection with 

period of performance, in Chapter IV, 

subparagraph 2.b(6)(a) in connection 

with protecting against performance 

difficulties, and Chapter V, paragraph 

7.b(2) in connection with assignment of 

contract rights. 

Section 3—Disputes 

The final circular changes the location 

of the section on disputes with the 

section on claims set forth in the 

proposed circular, and adds more 

information in response to comments 

we received as described below. 


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Subsection 3.a—The Recipient’s Role 

and Responsibilities 

Paragraph 3.a(1)—Notify FTA about 

Disputes 

One commenter asked whom the 

recipient should notify when it becomes 

involved in a dispute related to a third 

party contract. Our response is that FTA 

expects the recipient to report any 

current or prospective third party 

contract dispute involving more than 

$100,000, and any dispute involving 

controversial or highly publicized 

matters irrespective of amount, in its 

next quarterly Milestone Progress 

Report, and at the next Project 

Management Oversight review, if any. 

The final circular contains that 

information. 

Paragraph 3.a(2)—Adequate 

Documentation 

One commenter argued that requiring 

the recipient to include all pertinent 

facts, events, negotiations, applicable 

laws, and a legal evaluation of the 

likelihood of success in any potential 

litigation pertaining to a dispute appears 

to imply that FTA would question any 

settlement the recipient arranges unless 

there is no likelihood of successful 

litigation. The commenter also added 

that while some disputes may lead to 

litigation, many should be settled. We 

agree in principle that many disputes 

may best be resolved through 

settlement. But whether or not FTA 

seeks access to the recipient’s records 

pertaining to a dispute, FTA expects the 

recipient to include adequate 

documentation in its project files of the 

facts, events, negotiations, applicable 

laws, and a legal evaluation of the 

likelihood of success in any potential 

litigation proceeding as may be 

necessary to justify FTA’s concurrence 

in the compromise or settlement of the 

claim, should FTA determine its 

concurrence would be necessary. 

Maintaining adequate documentation of 

a dispute or other significant event will 

likely benefit the recipient, even if FTA 

does not inspect those records. The 

amount of information FTA may request 

will vary depending upon the nature of 

the claim. FTA is particularly interested 

in any current or prospective major 

dispute exceeding $100,000, and any 

dispute involving controversial or 

highly publicized matters irrespective of 

amount relating to any third party 

contract. The final circular contains that 

information. 

Paragraph 3.a(3)—Audit 

The same commenter expressed 

concerns about our recommendation 

that the recipient obtain a project audit, 

and argued that for FTA to delay 

participation in settlement costs until an 

audit has been completed could 

unnecessarily hamper negotiations and 

delay closure of the project. Our 

response is that a recipient should rely 

on itself to finance its own settlements, 

with the use of project funds that have 

been awarded for the contract under the 

grant or cooperative agreement to the 

extent that settlement costs are 

supportable under the Federal cost 

principles that apply to the recipient. 

The recipient should not rely on FTA to 

provide any extra Federal assistance 

beyond the amount previously awarded 

to support the settlement. 

The same commenter asked why FTA 

would recommend an audit after the 

recipient has reached a settlement 

agreement. We consider an audit to be 

a tool that the recipient can use to 

justify that the settlement is necessary, 

reasonable, adequately documented, 

and that FTA should participate in its 

costs. 

Section 4—Claims and Litigation 

In addition to changing the location of 

the section on claims with the section 

on disputes as set forth in the proposed 

circular, the final circular includes a 

discussion of litigation and also 

includes more information in response 

to comments we received as described 

below. 

Subsection 4.a—The Recipient’s Role 

and Responsibilities 

One commenter asked us to clarify 

whether the Common Grant Rules’ 

assignment of responsibility to the 

recipient to resolve third party contract 

claims means that the recipient is 

expected to resolve claims made under 

its third party contracts or claims 

against the contractor made by third 

parties. FTA’s interpretation of the 

Common Grant Rules is that the 

recipient is expected to resolve claims 

made under its third party contracts, but 

not claims against the contractor made 

by third parties. We have revised the 

circular to make that clarification. 

Paragraph 4.a(2)—Legal Rights and 

Remedies 

The same commenter complained 

about the provision in the proposed 

circular directing the recipient to pursue 

all legal rights and remedies available 

under any third party contract, claiming 

that doing so would preclude settlement 

of minor disputes until all contract 

remedies, including termination or 

litigation, have been exhausted. The 

commenter pointed out that such an 

interpretation would have significant 

adverse effects on the project. We agree 

in part with the commenter’s 

observations. The final circular has been 

revised to clarify that, in resolving third 

party contract claims, FTA expects the 

recipient to take reasonable measures to 

pursue its rights and remedies available 

under law, including settlement, 

particularly if failure to do so would 

jeopardize the Federal interest in the 

project or cause the recipient to seek 

additional Federal assistance. 

The same commenter argued that 

providing the level of documentation 

specified in the proposed circular 

would have the potential of violating 

attorney/client privilege, and that 

providing documentation relative to any 

disputed negotiations is very different 

from producing procurement files 

relative to a particular solicitation. 

While FTA understands that providing 

information in connection with claims 

or litigation can be difficult, FTA 

reserves the right to review the 

recipient’s records and supporting 

documentation that would justify the 

use of FTA assistance to support the 

costs resulting from the claim or 

litigation. The amount of information 

FTA may request will vary depending 

on the nature of the claim or litigation. 

FTA is particularly interested in any 

current or prospective major third party 

contract claim or litigation in amounts 

exceeding $100,000, and any claim or 

litigation involving controversial or 

highly publicized matters irrespective of 

the amount relating to any third party 

contract. The final circular contains that 

information. 

Subsection 4.b—FTA’s Role and 

Responsibilities 

Paragraph 4.b(1)—Proceeds Recovered 

One commenter pointed out that it 

may not be possible to calculate the 

amount of proceeds a recipient recovers 

in proportion to the Federal share 

committed to the project. The amount of 

‘‘any net proceeds’’ may not have a 

direct correlation to a portion of an 

overall project. Except for unusual 

circumstances, we disagree. We believe 

that equitable calculations of the 

Federal share committed to a project or 

part of a project may in some instances 

be difficult, but not impossible. 

Moreover, the last sentence of 49 U.S.C. 

5309(h)(6) requires proportionate 

refunds of the Federal share when 

reductions in the net project costs of 

capital investment projects are made. 

The Common Grant Rules provide that 

recipients should expend refunds and 

rebates for project costs before 

requesting further payments from the 

Federal Government, which would have 

the effect of providing some, if not a 


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strictly proportionate, refund of Federal 

assistance to the Federal grantor agency. 

Paragraph 4.b(2)—Liquidated Damages 

One commenter asked whether in 

negotiating a settlement, the recipient 

could exchange its rights to liquidated 

damages for extra property or services. 

We agree that in some situations doing 

so would be reasonable. The final 

circular includes a new paragraph 

addressing that matter. 

Section 5—FTA Participation in 

Settlements, Arbitration Awards, and 

Court Awards 

Much of the guidance in this section 

has been transferred from FTA Circular 

5010.1C, ‘‘Grant Management 

Guidelines,’’ 10–01–98 substantially 

intact, modified to accommodate the 

comments we received as discussed 

below. 

Subsection 5.a—The Recipient’s 

Responsibilities 

Paragraph 5.a(1)—Settlement 

Arrangements Must Be Reasonable 

One commenter asked that FTA 

discuss settlements in lieu of liquidated 

damages that substitute additional 

services or equipment for cash 

payments, possibly resulting in benefits 

to all parties. We agree that, in certain 

situations, substitutions of extra 

property or services rather than 

liquidated damages payments could 

constitute all or part of a reasonable 

settlement. FTA also recognizes that in 

certain instances a settlement may 

require the recipient to relinquish its 

claims for all or part of the liquidated 

damages and other amounts the 

recipient would be owed if it prevailed 

on all matters at issue. The final circular 

includes a new paragraph explaining 

FTA’s views on reasonable settlements. 

Subparagraph 5.a(3)(c)—Special Federal 

Interest or Federal Concern 

We have amended the heading of this 

subparagraph to include the term 

‘‘Federal Concern,’’ which is sometimes 

used interchangeably with ‘‘Special 

Federal Interest.’’ We believe it is in the 

best interests of the recipient to obtain 

FTA review and written concurrence in 

settlements when a special Federal 

interest or concern is declared due to 

program management concerns, possible 

mismanagement, impropriety, waste, or 

fraud. One commenter requested that 

we explain when and how the recipient 

should be aware that a special Federal 

interest in a project is ‘‘declared,’’ and 

complained that, as written, the 

declaration could be an after-the-fact 

action by FTA. Our response is that if 

the recipient has entered into a 

settlement before FTA has declared a 

special interest in the matter at issue, 

then the recipient would not be able to 

obtain FTA’s review and concurrence in 

advance. In such a case, if after the 

recipient agreed to a settlement and 

FTA became interested in the project 

due to allegations of program 

management concerns, possible 

mismanagement, impropriety, waste, or 

fraud, FTA could refuse to participate in 

the costs of activities associated with 

those improprieties, and even recover 

the Federal assistance used to support 

those improprieties. The purpose of 

obtaining FTA review and concurrence 

is to gain assurance that the costs of 

specific activities, including 

procurements, will be eligible for FTA 

assistance. 

Subsection 5.b—FTA’s Prerogatives 

Paragraph 5.b(2)—Provide Federal 

Assistance 

The same commenter expressed 

concerns that FTA will fund only a 

portion of eligible costs of contractor’s 

claims. Our response is as follows: To 

the extent that the recipient has not 

used all or part of the FTA assistance 

budgeted for the activity that was the 

subject of a dispute, claim, or litigation, 

the recipient may use the funds so 

budgeted to pay the costs of the 

settlement or resolution of the matter. 

Any additional FTA assistance that 

could be provided would depend on the 

availability of all or part of the FTA 

assistance requested. Even if all the 

requested FTA assistance were 

available, we cannot assure that FTA 

will be able to provide a sufficient 

amount of Federal assistance to pay for 

the entire Federal share of those costs. 

Nevertheless, FTA generally attempts, 

subject to availability of funds, to 

provide FTA assistance in the 

percentage that matches the percentage 

of the original award. However, any 

expenditure of FTA assistance is also 

subject to the requirement that the costs 

claimed be reasonable, allowable, and 

allocable. 

Paragraph 5.b(3)—Deny Federal 

Assistance 

Three commenters objected to the list 

of situations in which FTA may 

determine the extent to which FTA 

assistance could be used for their 

support. The commenters pointed out 

that many of the situations listed 

involving the recipient, the contractor, 

and other jurisdictions or entities may 

be a result from judgments entered into 

in good faith that turned out bad, rather 

than matters of negligence or 

incompetence. We agree, and have 

revised the final circular to clarify 

FTA’s views that the situations 

described in the paragraph do not 

always mean that FTA will not provide 

all or some Federal assistance 

contemplated, or that FTA will 

withdraw all or some Federal assistance 

previously awarded, or that FTA will 

attempt to recover all or some Federal 

assistance used in the situation. 

The commenter asked that FTA 

remove its examples of specific 

circumstances in which FTA might not 

participate in project costs unless those 

circumstances are exhaustive. FTA 

disagrees. Not knowing all the 

possibilities that can affect a project, we 

are unable to provide an all-inclusive 

list of examples that might cause FTA 

to reduce, withdraw, or seek recovery of 

all or some Federal assistance. We 

believe these examples can be useful 

indications of situations of concern to 

FTA. 

Another commenter implied that 

failure by FTA or its oversight 

contractors to note and correct errors the 

recipient has made should affect FTA’s 

decision to participate in the costs of 

resolving protests, disputes, claims or 

litigation in which the recipient 

otherwise might be found to be at fault. 

We disagree. FTA pays its ‘‘oversight’’ 

contractors only to perform ‘‘oversight’’ 

and report their findings and 

recommendations to FTA. Neither FTA 

nor its oversight contractors act as a 

recipient’s quality control agents nor do 

they make decisions for recipients. Any 

perceived failure of FTA or its oversight 

contractors to note and correct a 

recipient’s error does not indicate FTA’s 

concurrence in the recipient’s action, 

nor does it impose any liability on FTA. 

Appendix A—References 

One commenter provided 

recommendations about changes to 

citations as listed in the Appendix. The 

final circular includes most of those 

recommended changes. 

Appendix B—FTA Regional and 

Metropolitan Office Contact 

Information 

The final circular’s list of regional and 

metropolitan office contact information 

now includes the Philadelphia 

Metropolitan Office, which was 

erroneously omitted. 

Appendix C—Third Party Contracting 

Checklists 

In response to one commenter’s 

request for review aids and worksheets, 

the final circular now includes a new 

Appendix C with checklists including 

references to specific sections of the 

final circular. 


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Appendix D—Federally Required and 

Other Model Clauses 

In response to one commenter’s 

request for clause matrices, the final 

circular now includes a new Appendix 

D with matrices identifying the various 

clauses and contract provisions that 

might be required. 

Index 

One commenter asked us to include 

‘‘piggybacking’’ and ‘‘tag-on’’ to the 

index. We agree, and the final circular 

includes those terms in this index. 

The same commenter asked that topic 

headings be formatted to stand out more 

clearly. The final circular includes these 

changes. 

Issued in Washington, DC, this 24th day of 

September, 2008. 

James S. Simpson, 

Administrator. 

[FR Doc. E8–22914 Filed 9–29–08; 8:45 am] 

BILLING CODE 4910–57–P 

DEPARTMENT OF THE TREASURY 

Open Meeting of the President’s 

Advisory Council on Financial Literacy 

AGENCY: Office of Financial Education, 

Treasury. 

ACTION: Notice of meeting. 

SUMMARY: The President’s Advisory 

Council on Financial Literacy will 

convene its fifth meeting on Tuesday, 

October 14, 2008, in the Cash Room of 

the Main Department Building, 1500 

Pennsylvania Avenue, NW., 

Washington, DC beginning at 2 p.m. 

Eastern Time. The meeting will be open 

to the public. 

DATES: The meeting will be held on 

Tuesday, October 14, 2008, at 2 p.m. 

Eastern Time. 

ADDRESSES: The President’s Advisory 

Council on Financial Literacy will 

convene its fifth meeting in the Cash 

Room of the Main Department Building, 

1500 Pennsylvania Avenue, NW., 

Washington, DC. 

Submission of Writen Comments: The 

public is invited to submit written 

statements with the President’s 

Advisory Council on Financial Literacy 

by any one of the following methods: 

Electronic Statements 

E-mail 

FinancialLiteracyCouncil@do.treas.gov; 

or 

Paper Statements 

Send paper statements in triplicate to 

President’s Advisory Council on 

Financial Literacy, Office of Financial 

Education, Room 1332, Department of 

the Treasury, 1500 Pennsylvania 

Avenue, NW., Washington, DC 20220. 

In general, the Department will post 

all statements on its Web site (http:// 

www.treasury.gov/offices/domesticfinance/financial-institution/fineducation/council/index.shtml) without 

change, including any business or 

personal information provided such as 

names, addresses, e-mail addresses, or 

telephone numbers. The Department 

will make such statements available for 

public inspection and copying in the 

Department’s library, Room 1428, Main 

Department Building, 1500 

Pennsylvania Avenue, NW., 

Washington, DC 20220, on official 

business days between the hours of 10 

a.m. and 5 p.m. You can make an 

appointment to inspect statements by 

telephoning (202) 622–0990. All 

statements, including attachments and 

other supporting materials, received are 

part of the public record and subject to 

public disclosure. You should submit 

only information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Edwin Bodensiek, Director of Outreach, 

Department of the Treasury, Main 

Department Building, 1500 

Pennsylvania Avenue, NW., 

Washington, DC 20220, at 

ed.bodensiek@do.treas.gov. 

SUPPLEMENTARY INFORMATION: In 

accordance with section 10(a) of the 

Federal Advisory Committee Act, 5 

U.S.C. App. and the regulations 

thereunder, Dubis Correal, Designated 

Federal Officer of the Advisory Council, 

has ordered publication of this notice 

that the President’s Advisory Council on 

Financial Literacy will convene its fifth 

meeting on Tuesday, October 14, 2008, 

in the Cash Room in the Main 

Department Building, 1500 

Pennsylvania Avenue, NW., 

Washington, DC, beginning at 2 p.m. 

Eastern Time. The meeting will be open 

to the public. Because the meeting will 

be held in a secured facility, members 

of the public who plan to attend the 

meeting must contact the Office of 

Financial Education at 202–622–1783 or 

FinancialLiteracyCouncil@do.treas.gov 

by 5 p.m. Eastern Time on Friday, 

October 10, 2008, to inform the 

Department of their desire to attend the 

meeting and to provide the information 

that will be required to facilitate entry 

into the Main Department Building. To 

enter the building, attendees should email the Department their full name, 

date of birth, social security number, 

organization, and country of citizenship. 

The purpose of this meeting is for the 

President’s Advisory Council on 

Financial Literacy to discuss new 

agenda items, update the President’s 

Advisory Council on Financial Literacy 

on the work of the committees and 

follow-up on issues from previous 

meetings. 

Dated: September 24, 2008. 

Taiya Smith, 

Executive Secretary, Treasury Department. 

[FR Doc. E8–22941 Filed 9–29–08; 8:45 am] 

BILLING CODE 4810–42–P 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

Ameribank, Northfork, WV; Notice of 

Appointment of Receiver 

Notice is hereby given that, pursuant 

to the authority contained in section 

5(d)(2) of the Home Owners’ Loan Act, 

the Office of Thrift Supervision has duly 

appointed the Federal Deposit Insurance 

Corporation as sole Receiver for 

Ameribank, Northfork, West Virginia 

(OTS No. 14177). 

Dated: September 23, 2008. 

By the Office of Thrift Supervision. 

Sandra E. Evans, 

Federal Register Liaison. 

[FR Doc. E8–22744 Filed 9–29–08; 8:45 am] 

BILLING CODE 6720–01–M 

DEPARTMENT OF VETERANS 

AFFAIRS 

Advisory Committee on Women 

Veterans; Notice of Meeting 

The Department of Veterans Affairs 

(VA) gives notice under Public Law 92– 

463 (Federal Advisory Committee Act) 

that the Advisory Committee on Women 

Veterans will meet October 28–30, 2008 

at the Capital Hilton, 16th and K Street, 

NW., Washington, DC, from 8:30–4:30 

p.m., each day. The meeting is open to 

the public. 

The purpose of the Committee is to 

advise the Secretary of Veterans Affairs 

regarding the needs of women veterans 

with respect to health care, 

rehabilitation, compensation, outreach, 

and other programs and activities 

administered by the VA designed to 

meet such needs. The Committee will 

make recommendations to the Secretary 

regarding such programs and activities. 

On October 28, the agenda will 

include overviews of the Veterans 

Health Administration, the Veterans 

Benefits Administration, the National 

Cemetery Administration, an update on 

the 2008 Advisory Committee on 

Women Veterans Report, and an update 

on the activities conducted by the 


ebenthall on PROD1PC60 with NOTICES