4220 1F to 1G

1. 4220 1F to 1G FTA/ Kirk M. Benson 18th Biennial State Programs Meeting and Public Transportation Partnerships Conference August 14-16, 2019

2. KEY REGULATIONS/GUIDANCE 2 CFR PART 200 – UNIFORM ADMININTRATIVE REQUIREMENTS Replaces “Common Grant Rule” (49 CFR Part 18) FAST ACT – SEE FTA WEB SITE FOR FAST ACT “FACT SHEETS” No. 3019 – Procurement and Leasing Buy America Fact Sheet FTA MASTER AGREEMENT FTA CIRCULAR 4220.1F (Under Revision to Reflect 2 CFR Part 200)

3. FAST ACT PROCUREMENT CHANGES • Purchase from another state’s cooperative procurement contract • Requires FTA to establish a Joint Procurement Clearinghouse to allow grantees to aggregate planned rolling stock purchases and identify joint procurement participants. • Increases (in phases) Buy America domestic content for rolling stock (FY18 and FY19 = 65%. FY20 and beyond = 70%). Content % based on date of delivery of first production vehicle. • Art and Landscaping – Prohibits federal funding from paying for art and/or non-functional landscaping of a transit project.

4. NEW $ THRESHOLDS BUY AMERICA - $150,000 (FAST ACT) MICRO-PURCHASES - $10,000 (From $3,500) SMALL PURCHASES - $250,000 (From $100,000)

5. FTA CIRCULAR 4220.1F • Where FTA funds are used in procurements for services or supplies, or where FTA-funded facilities or assets are used in revenue contracts, FTA Circular 4220.1F applies. Revenue contracts - only requirement is competition. • FTA funds, even operating assistance, can be segregated from local funds. • FTA Circular 4220.1F does not apply to wholly locally-funded capital procurements. BUT when FTA funds a “project,” as defined in the grant, all project contracts are subject to the Circular—even those funded only with local funds. • When FTA assistance for preventive maintenance is being applied as a percentage of total maintenance, all preventive maintenance contracts must comply with FTA Circular 4220.1F. • Procurements of real property consisting of land and any existing buildings or structures on that land are generally beyond the scope of FTA Circular 4220.1F. • 4220.1F does not apply to third party contractors – your contract clauses govern.

6. Top 10 Procurement System Review Deficiencies Nationally for FY14 - FY16 • Lack of Required Federal Clauses • Independent Cost Estimate (ICE) • Cost or Price Analysis • Written Record of Procurement History • Award to Responsible Contractors • Procurement Policies and Procedures • Sound and Complete Agreement • Clear, Accurate, and Complete Specifications • Cost Analysis Required [Sole Source] • Evaluation of Options

7. Micro-Purchase: Requirements • No Competition Required • No Federal Clauses Required • May Not “Split” Procurements to Avoid Competition • Should Try to Distribute Equitably Among Vendors • Only Documentation Required is: • Fair and Reasonable Price Determination and • The Basis for the Determination (See Sample Form on Next Slide)

8. Micro-Purchase: Fair and Reasonable Price I hereby determine the price to be fair and reasonable based on at least one of the following: Check one or more: _____ Found reasonable on recent purchase. _____ Similar in related industry. _____ Obtained from current price list. _____ Personal knowledge of item procured. _____ Obtained from current catalog. _____ Regulated rate (utility). _____ Commercial market sales price from advertisements. _____ Other. Comments: ______ Copy of purchase order, quotes, catalog page, price list, etc. is attached ___________________________ _____________________________ Purchasing Agent Date

9. Small Purchases ($10,000 up to $250,000) FTA C 4220.1F, Chapter VI, 3.b • No Advertising Required, But • Must Obtain Price Quotations From An “Adequate Number of Qualified Sources” • May Not Divide or Reduce the Size of a Procurement to Avoid Requirements of a Larger (Over $250,000) Procurement • May Set Lower Thresholds (Less Than $250,000) for Requiring Formal Procedures Including Advertising, • Cost or Price Analysis Not Required for Small Purchases by 2 CFR Part 200.323 but You May Require for Lesser Amounts than $250,000

10. GEOGRAPHIC PREFERENCE (FTA C 4220.1FCh. VI, 2.a. (4)(g)) Grantees shall conduct procurements in a manner that prohibits the use of statutorily or administratively imposed in-State or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference.

11. PIGGYBACKING/JOINT PROCUREMENTS/STATE PURCHASING SCHEDULES FTA C 4220.1FCh. V, 7.a(2) PIGGYBACKING: An assignment of existing contract rights to purchase supplies, equipment, or services. FTA Requirements for Original Contract: • Assignability Clause • Minimum/Maximum Quantities • All Federal Clauses (Buy America, etc.). Cannot add Federal clauses later! For rolling stock must obtain copies of all Buy America pre-award audits and certifications from awarding agency. Piggybacking agency must also certify Buy America compliance.

12. JOINT PROCUREMENTS FTA C 4220.1FCh. V, 3. JOINT PROCUREMENTS: Two or more agencies use a single solicitation and a single contract to procure their agency needs. Unlike a State purchasing schedule, the joint procurement is not conducted for the purpose of allowing other parties to use the contract later. The agencies participating in the procurement are named parties to the contract. Each agency needs are specified in the contract. All FTA requirements apply: clauses, certifications, minimum/maximum quantities if IDIQ, etc.

13. STATE PURCHASING SCHEDULES/CONTRACTS FTA C 4220.1FCh. V, 4. All FTA Requirements Apply: BUT Recipients may add Federal clauses and certifications, such as Buy America, in their first purchase orders issued under the State contract if the State did not include them in the State contract. This addition of Federal clauses may not be done with piggybacking actions. May now use the Purchasing Schedules and Contracts of other States if those States allow (FAST ACT).

14. SINGLE BIDS/PROPOSALS FTA C 4220.1FCh. VI, 3. i. (1) 2 Adequate Competition: Agency must contact the no-bid vendors to determine why they chose not to bid. If the reasons given were business related and not due to restrictive specifications, then the competition is deemed to be adequate by FTA. No sole source justification is required. Inadequate Competition: If the reasons for the no bids are due to restrictive specifications, competition is deemed inadequate. Agency must process sole source justification or revise specifications and reissue solicitation.

15. INDEPENDENT COST ESTIMATE FTA C 4220.1F Ch. VI, 6. & 2 CFR Part 200.323 The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold (now $250,000) including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals.

16. SAMPLE FORM FOR ICE • INDEPENDENT COST ESTIMATE SUMMARY • Requisition Number: ______Date of Estimate: ________________ • Description of Goods/Services: ______________________________________________________________ • Method of Obtaining Estimate: • Attach additional documentation such as previous pricing documentation, emails, internet screen shots, estimates on letterhead, etc. • For professional services attach estimated labor hours by labor category, labor rates, overhead rate, profit, materials, travel, etc. • ______Published Price List (attach source and date)______Historical Pricing (attach copy of documentation from previous PO/Contract)______Comparable Purchases by Other Agencies (attach email correspondence) • ______Engineering or Technical Estimate (attach)______Independent Third-Party Estimate (attach)______Other (specify) ____________________________(attach documentation) • Based on the above information, the estimated cost of the goods/services is $________________________. • ___________________________________________ Signature • ___________________________________________ Date

17. Cost & Price Analysis - 2 CFR Part 200.323 •  Price Analysis: The comparative process of evaluating total price without regard to the individual elements that make up the total price. Use for Commercial Items/Services • Cost Analysis: The evaluation of each cost element which makes up a total price. Use for Professional Services or where Cost Elements must be evaluated to negotiate a Fair and Reasonable Price • See “Pricing Guide for FTA Grantees” at: https://www.transit.dot.gov/funding/procurement/third-party-procurement/pricing-guide-fta-grantees • Must perform a cost or price analysis for all procurements above small purchase threshold of $250,000. Grantee can set lower amount.

18. PRICE ANALYSIS METHODS OF PRICE ANALYSIS • Adequate price competition (multiple bids) • Prices set by law or regulation (utilities) • Established catalog prices and market prices (substantial sales to general public) • Comparison to previous purchases (must be prior competitive sales) • Comparison to a valid Grantee independent estimate • Value analysis (based on performance differences of competing products)

19. COST ANALYSIS Must Obtain Detailed Cost Proposal Direct Labor (Categories, Hours, Rates) -Technical Evaluation/Payroll Data Overhead Rate – Independent Auditor Review/Recommendation Materials(Item, Quantities, Unit Prices) – Technical Evaluation/Vendor Quotes Travel (Air Fare, Per Diem, Car Rental, etc.) – Technical Evaluation/Verify Carrier Rates/Suggest Using GSA Per Diem Rates G&A Rate (If Applicable) - Independent Auditor Review/Recommendation Profit - (Complexity/Risk/Contractor Investment/Industry Practice)

20. CLAUSES • FTA Master Agreement • FTA C 4220.1F, Appendix D - Clause Matrix • FTA Best Practices and Lessons Learned Manual, Appendix A – Available at FTA Web Site • Grantees Must Evaluate Each Procurement for Specific Requirements and Incorporate Appropriate Clause Language In Contract

21. Pre-Award Audits for Rolling Stock (Revenue Vehicles) FTA Handbook: “Conducting Pre-Award and Post-Delivery Audits for Rolling Stock Procurements - January 2017” -- At FTA Web Site 1. Pre-Award Buy America Certification (Sec. 2.2): • Audit domestic content/final assembly in U.S. 2. Pre-Award Purchaser’s Requirements Certification (Sec. 2.3): • Verify bid meets solicitation specifications and bidder is responsible 3. Pre-Award FMVSS Certification of Compliance (Sec. 2.4): • Certify receipt of manufacturer’s self-certification that vehicle complies with FMVSS

22. Post-Delivery Audits for Rolling Stock (Revenue Vehicles) FTA Handbook: “Conducting Pre-Award and Post-Delivery Audits for Rolling Stock Procurements - January 2017” -- At FTA Web Site 1. Post-Delivery Buy America Certification (Sec. 3.1): • Audit actual domestic content of buses delivered/final assembly in U.S. 2. Post-Delivery Purchaser’s Requirements Certification (Sec. 3.2): • Verify buses delivered meet contract specifications via visual inspection and road testing. Resident inspector required for more than 10 buses. 3. Post-Delivery FMVSS Certification of Compliance (Sec. 3.3): • Certify receipt of manufacturer’s self-certification that vehicles comply with FMVSS.

23. RESPONSIBILITY DETERMINATION • Debarment and Suspension: www.sam.gov, click on “Search Records.” Print search result and place copy in contract file. • Past Performance: Call clients of contractor to determine performance record. Document the results of the calls. • Financial Condition: Review D&B report and/or corporate financial statements. • Document the Determination: Prepare a ”Determination of Contractor Responsibility” and retain in contract file.

24. NO PRICE COMPETITION • 2 CFR Part 200.323 • The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

25. Exercise of Options Basic Requirement (FTA C 4220.1F Ch. V, 7.a(1)) An option may not be exercised unless it has been determined that the option price is better than prices available in the market, or that when it intends to exercise the option, the option is more advantageous. • Should preform a market survey to see what other buyers have recently paid for the item.

26. Evaluation of Options FTA C 4220.1F Ch. VI, 7.b. Recipients must evaluate bids or offers for any option quantities or periods contained in a solicitation if it intends to exercise those options after the contract is awarded. • Always evaluate if you think you might exercise • If you don’t review/evaluate, exercise at a later point is a sole source procurement • Run numbers for the entire option period • “Unpriced” options are not valid options/may not be exercised as options

27. ADVANCE PAYMENTS (FTA C 4220.1F Ch. IV, 2.b(5)(b)) Recipients may not use FTA assistance to make payments to a third party contractor before the contractor has incurred the costs for which the payments would be attributable. Prior FTA approval is required when FTA funds are being used, except for: Customary Advance Payments – Where advance payments are “customary,” FTA approval is not required. Examples include such things as rent, tuition, insurance premiums, software licenses, construction mobilization costs, transportation, etc.

28. PROGRESS PAYMENTS FTA C 4220.1F, Ch. IV, 2.b(5)(c) Progress Payments are payments on fixed price contracts for unfinished work. They differ from partial payments, which are payments for completed items, where a part of the total deliverable items are completed, delivered and paid for when delivered. Progress payments are a means to provide financing to a fixed price contractor as work progresses, eliminating the contractor’s need to obtain lender financing. FTA requires grantees to obtain adequate security from the contractor (e.g., taking title to work in progress, obtaining a letter of credit, etc.) Payments must be based on costs incurred, except that construction contracts may be based on percent of completion of work.

29. LOBBYING CERTIFICATION FTA Best Practices Procurement Manual, Appendix A, Clause A.14 • Apply to all contracts subcontracts of $100,000 or more • Model Clause/Language: • 49 C.F.R. part 20, Appendices A and B provide specific language for inclusion in FTA funded third party contracts.

30. SOLE SOURCE CONTRACTS (FTA C4220.1F, Ch. VI, 3.i.) • When supplies or services are available from only one responsible source, and no other supplies or services will satisfy its requirements, the recipient may make a sole source award. • Recipient must document the contract file with a factual justification explaining why the contract cannot be competed. • Justification should be approved by an agency manager that is not in the requisitioning office (e.g., the Director of Procurement)

31. SOLE SOURCE SCENARIOS Property or services are available from one source if (typically) one of the following conditions is present: • Unique or Innovative Concept • Patents or Restricted Data Rights • Substantial Duplication Costs • Unacceptable Delay • Single Bid (Must Determine Why Only One Bid) FTA expects recipient to use competition, as feasible, to select teaming or consortium partners.

32. Architectural and Engineering Special Considerations – FTA C4220.1F, Ch. IV, 2.h. • Geographic Preference Allowed if Sufficient Competition • Selection Must Be Qualifications Only - Exclude Price (Brooks Act) • Serial Price Negotiations – See Next Slide. • A&E Services Must Be Related to or Lead to Construction, Repair or Alteration of Real Property in Order to Use Qualifications Based Selection. Nature of Work, not Type of Contractor, is Determinative. • May Not Use Qualifications Based Selection for Non-A&E Contracts, (e.g., Professional Services such as Legal, Medical, Accounting, etc.). Must Solicit and Evaluate Prices for These Types of Services.

33. Serial Price Negotiations FTA C4220.1F, Ch. VI, 3.f(3)(d) • Negotiations are conducted with only the most qualified offeror • Failing agreement on price, negotiations with the next most qualified offeror may be conducted until a contract award can be made to the most qualified offeror whose price is fair and reasonable to the recipient. • Document the results of the negotiations.

34. Written Record of Procurement History FTA C 4220.1F Ch. III, 3.d(1) Grantees are required to maintain and make available records detailing the history of each procurement.

35. Written Record of Procurement History Minimum Requirements: • The rationale for the method of procurement • The reason for selection of the contract type • The reason for contractor selection (evaluation should discuss the relative technical strengths and weaknesses, not just scores • The basis for the contract price (negotiation memorandum with cost and price analysis) • Extent of documentation commensurate with size and complexity of procurement

36. Sound and Complete Agreement FTA C 4220.1F Ch. III, 3.(b) • All contracts must include provisions adequate to define a sound and complete agreement. Must Include: • Termination for convenience and default clauses • Clear, Unambiguous Payment Provisions • Period of Performance/Delivery Schedule (Purchase Orders are often Deficient) • Disputes Clause • Do not use vendor/contractor terms and conditions

37. Procurement File Checklist C4220.1F, Chapter IV, para 2: • The recipient may also use the checklists in Appendix C of this circular as a reminder of Federal requirements, and the matrices in Appendix D of this circular for a list of clauses and provisions required by Federal laws and regulations. BPPM: Section B-2.2 Contracting OFFICER and User Responsibilities • Recipients may consider developing a checklist for their contracting officers and users to ensure a clear understanding of respective roles and responsibilities and that all required steps in a solicitation process are conducted. • For examples of procurement documentation checklists developed by recipients, see Appendix B, section B-4.7. https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/funding/procurement/8286/fta-best-practices-procurement-and-lessons-learned-manual-2016.pdf 37

39. PROCUREMENT FILE CHECKLIST Date Initials ___ Requisition _________ __________ ___ ICE _________ __________ ___ Federal Clauses _________ __________ ___ Advertised _________ __________ ___ Bid abstract _________ __________ ___ Cost/Price Analysis _________ __________ Bonds: ___ Bid _________ __________ ___ Performance _________ __________ ___ Payment _________ __________ ___ Responsibility Determination ________ ________ ___ Fair/Reasonable Determination_______ ________ ___ SAM/Excluded Parties _________ __________ ___ Buy America _________ __________ ___ Pre-Award _________ __________ ___ Post Delivery _________ __________ ___ Federal Clauses _________ __________

40. RESOURCES • FTA Procurement Page: https://www.transit.dot.gov/funding/procurement/procurement • C 4220.1F Third Party Procurement Guidance: https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/third-party-contracting-guidance • Best Practices Procurement Manual (BPPM): https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/funding/procurement/8286/fta-best-practices-procurement-and-lessons-learned-manual-2016.pdf

41. RESOURCES cont. • Third Party Procurement FAQs: https://www.transit.dot.gov/funding/procurement/third-party-procurement/third-party-procurement-faqs • Buy America Handbook: https://www.transit.dot.gov/regulations-and-guidance/buy-america/conducting-pre-award-and-post-delivery-audits-rolling-stock • Contact Us Tool: https://ftawebprod.fta.dot.gov/ContactUsTool/Public/FAQs.aspx?CategoryID • On-line “Tools & Resources: https://www.transit.dot.gov/funding/procurement/online-tools-resources • Pricing Guide • Procurement System Self-Assessment Guide