Introduction to FHWA & the Federal-Aid Program

1. FEDERAL HIGHWAY ADMINISTRATION Introduction to FHWA& the Federal-Aid Program FHWA - Operation Engineers Gene Kaufman, P.E. (Glendive District) Bob Seliskar, (Great Falls District) Jeff Patten, (Butte District)

2. Objectives • Overview of Federal-Aid Program • FHWA Roles and Responsibilities • Project Management

3. Overview of Federal-Aid Program • Introduction • The FHWA organization • The Federal-Aid Program

4. DOT Agencies

5. FHWA Offices Montana DivisionHelena, MT Resource Center, Olympia Fields, IL Western Federal Lands Vancouver, WA Resource Center, Baltimore, MD Resource Center, SanFrancisco, CA Eastern Federal Lands Sterling, VA Central Federal Lands Denver, CO HQ, Washington, DC Resource Center, Atlanta, GA Federal-aid Offices 52 Division Offices 3 Federal Lands Division Offices 1 Resource Center in 4 locations 1 Headquarters Office Total FHWA Employees < 2500 Total MDT Employees = 2250

6. Montana Division Kevin McLaury(P.E.), Division Administrator Laura Whitten, Staff Assistant Mike Duman (P.E.), Assistant Division Administrator Program Development Admin & Finance Operations Ted Burch (P.E.): Team Leader & Bridge Engineer Carl James (P.E.): ROW, Environment Mark Zitzka: Pavement, Materials, Maintenance Bob Burkhardt: Planning & Research Lloyd Rue (P.E.): Safety, Design, Traffic Crystal Adams: PDP Mike Kulbacki (P.E.): Team Leader Craig Genzlinger (P.E.): D1-Missoula Jeff Patten: D2-Butte Bob Seliskar: D3-Great Falls Gene Kaufman (P.E.): D4-Glendive Alan Woodmansey (P.E.): D5-Billings Jason Senn: Co-op Student Scott Swarens: Team Leader Grace Speicher: Financial Specialist Ben Franks-Ongoy : Administrative Assistant Andy Wyciskalla: Computer Specialist (Consultant) 20 People

8. Overview of Federal-Aid Program • Introduction • The Federal-Aid Program • Financing and funding

9. Eligible Federally Funded Highways • 23 CFR 470.103 • “means highways on the Federal-aid highway system and all other public roads not classified as local roads or rural minor collectors.” • Designated as major collector and above • (STPS, STP, NHS, IM) • Some Bridge and Safety projects off system

10. LAW Title 23 USC REGULATIONS 23 CFR FHWA Policy and Directives

11. Past Highway Bills • ISTEA (‘91-’97) $155 B • TEA-21 (‘97-’03) $218 B (>40%) • SAFETEA-LU (‘03-’09) $244 B (>12%) • Future Hwy Bill (‘09-’15) $??? B (>??%)

12. SAFETEA-LU • Authorization thru FFY 2009 • Appropriated on a yearly basis • $244 billion total authorized nationally • MDT appropriated avg. $355 Mil/year

13. Federal - Aid Financing • Federal Highway Trust Fund Income Sources • Motor Fuel: 18.4 ¢/gal • Diesel Fuel: 24.4 ¢/gal • Other User Fees(Truck Related Taxes) • Montana State Gas • Motor Fuel: 27.8 ¢/gal(Sixth highest nationally) • Diesel Fuel: 28.5 ¢/gal(Fifth highest nationally)

14. Federal-aid Financing • Money Goes Back To Individual States • Donor v. Donee • Montana receives back more than $2.20 for every dollar of Federal Fuel tax collected in the state • Requirements (23 CFR) • Matching requirements • IM: FHWA 91.24% MDT 8.76% • NHS: FHWA 86.58% MDT 13.42% • Program Requirements (IM, NHS, STP)

15. SAFETEA-LU Authorizations: Highway and Highway Safety Programs for Montana (Millions/year)

16. Reimbursable Program(Not a grant program) Authorized to proceed Contractor Does Work State Pays Contractor State Submits Voucher to FHWA FHWA Sends Voucher to US Treasury Treasury Pays State

17. The Federal role in the Federal-aid highway program • Set minimum national standards • Ensure system compatibility • Provide capital assistance • Program oversight (Report to Congress)

19. FHWA Roles and Responsibilities • MDT/FHWA Partnership • Federal-Aid Participation

20. Federally Funded Funding Guidance Technical Assistance Oversight State Administered Plan Design Construct Operate & Maintain Partnership

21. MDT & FHWA & MTC Partnership Agreement • Revised and Signed 2004 • Currently being revised. • Roles & Responsibilities • Foster cooperation and strengthen partnership

22. Full Oversight • FHWA Full-Oversight Projects • NHS projects > $3mil • Interstate reconstruction >$1mil • Emergency Relief or Special Circumstances…

23. Non Full Oversight • Non Full-Oversight Projects • All other Federal-aid projects non NHS • CTEP, Guardrail, Striping/Pavement Markings, & Traffic Signal projects regardless of total construction cost or highway system • 100% State Funded Projects • No FHWA oversight, but may require FHWA action (for example Interstate, NHS) • Routine maintenance

24. Oversight • FHWA approves/concurs: • Full-Oversight projects • Financial $ authorization • Environmental Document • Design Reviews and PS&E • Design Exceptions • Contract award • Change orders • Final inspection & Final acceptance • Claim/Legal settlement • Non Full-Oversight projects • Environmental Document and Financial $ • As needed if there may be a Federal-aid issue

25. Non Full Oversight • Same Federal-aid rules apply for non-full-oversight projects – • MDT duty and responsibility. Contact us if you have questions

27. FHWA Roles and Responsibilities • MDT/FHWA Partnership • Federal-Aid Participation

28. Things We Hear • “Everything’s Eligible for Federal-aid” • “This isn’t a full–oversight project” • “How do I know what’s eligible?” • “It makes sense – why can’t we pay for it?”

29. Basic Guidance • Generally Federal-aid will not participate if: • Does not follow terms of contract • Pays for same material/work twice • Items that are not incorporated into the project • Violates State or Federal law/regulation

30. Ineligible Items • Work outside of the approved project limits • Work not covered in the environmental document • Costs incurred prior to FHWA authorization • Costs not adequately documented • Costs related to negligent MDT actions

31. Ineligible Items • Items not Incorporated into Project • Examples: • Restocking fee • Item transfer • Materials retained by MDT Maintenance • Excess aggregate retained by MDT

32. Ineligible Items • Maintenance Performed by Contractor • Examples: • Cleaning culverts < 4’ • Maintenance stockpiles

33. Ineligible Items • Out of Spec Materials that MDT Accepts • Examples: • Stockpiled material not meeting spec • Items not installed according to specifications • “Experimental” Proprietary product (without approved experimental feature program)

34. Ineligible Items • Waiver of Contract Time/LD’s without justification • Examples: • MDT does not charge contract time properly so waives LD’s • Transportation Commission waives LD’s without justification

35. Non-par: What do we do? • Decision to proceed with State funds • CO Discussion • Decide on budget source • Coordinate with Const. Admin. Services • Process CO • Coordinate with Estimate Section • Create new split on estimate system • Code items to only State Funds

37. Project Management • Project Delivery • Environmental Documents • Timelines • Value Analysis • Proprietary Items • Public Interest Findings • Design Exceptions • Contract Administration

38. Environmental Documents • CE, EA, EIS • “Significant” Impacts • FHWA approves all NEPA actions • NEPA commitment carried throughout duration of project • 23 CFR 771

39. Timelines • 10 year max from PE authorization to R/W or Construction • 20 year max from R/W authorization to Construction • Otherwise state repays all FHWA costs • MDT may request time extensions from FHWA • 23 CFR 630.112

40. Value Analysis (VA) • Adding value while minimizing project costs • FHWA considers • NHS projects > $25 million • Bridge > $20 million • MDT considers • Projects > $8 million • Project cost includes: Environmental, PE, ROW, & Construction

41. VA Savings at MDT • As of January 26, 2007 • 17 studies • Total cost of projects $330 million • 73 recommendations • Total project savings $45 million • Approved recommendations $7 million in savings and added value

42. Proprietary Items • Generic specs are preferred for competition • What is it? How many alt’s to list? • Must be approved in writing prior to contract award with public interest finding (PIF) • MDT Engineer approval for full oversight and non-oversight projects • FHWA approval for full oversight projects and statewide exceptions

43. Public Interest Findings • Proprietary Items • State owned/furnished materials • Mandatory sources • State preference vs out-of-state • What is the process? • Cost/benefit analysis • Discussion of product compatibility/synchronization • Logistical concerns (no equally suitable alternate)

44. NHS Full Oversight Project Design Exceptions • Best if discussed prior to submittal with FHWA if complicated • Submitted by Paul Ferry, Kent Barnes, or Tom Martin to FHWA. • Signed by FHWA Operations Eng • Ops Eng may consult with Lloyd Rue Safety/Design Eng • FHWA responds in writing.

46. Project Management • Project Delivery • Contract Administration • Buy America • Change Orders • Legal Fees / Claims • Design Errors

47. Buy America • All manufacturing must be done in USA • Applies to all permanent steel & iron • < $2,500 or < 0.1% • Waivers – do in design not construction • Foreign steel/iron cannot be “donated” • 23 CFR 635.410 • Different from “Buy American”

48. Change Orders • Contract changes • Alter termini • Alter character • Alter scope of work • All CO’s must be formally agreed to in advance by FHWA for full oversight projects. • FHWA office policy is to agree in writing/email

49. Legal Fees/Claims • FHWA funds will participate to the extent that the claim can be supported by the facts and has a basis in the contract on a case-by-case basis • MDT’s legal defense costs are eligible • Contractor legal costs not eligible • Contractor anticipated profit not eligible

50. Design Errors • Consultant Errors covered by E & O Insurance • Examples: • Gross Negligence in design • MDT reimbursed under E&O insurance