Construction Manager/General Contractor Contracting |
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Gregory G. Nadeau
Federal Highway Administration
June 29, 2015
[Federal Register Volume 80, Number 124 (Monday, June 29, 2015)]
[Proposed Rules]
[Pages 36939-36953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15617]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Parts 630 and 635
[Docket No. FHWA-2015-0009; FHWA RIN 2125-AF61
Construction Manager/General Contractor Contracting
AGENCY: Federal Highway Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM); request for comments.
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SUMMARY: Section 1303 of the Moving Ahead for Progress in the 21st
Century Act (MAP-21) amends 23 U.S.C. 112 to require the Secretary of
Transportation to promulgate regulations as necessary to implement the
Construction Manager/General Contractor (CM/GC) contracting method.
This NPRM initiates the formal rulemaking process to fulfill the
legislative requirement and establish such regulations as are necessary
for the FHWA's approval of projects using the CM/GC method of
contracting.
DATES: Comments must be received on or before August 28, 2015.
ADDRESSES: To ensure that you do not duplicate your docket submissions,
please submit them by only one of the following means:
Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting
comments.
Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave. SE., West Building Ground Floor
Room W12-140, Washington, DC 20590-0001;
Hand Delivery: West Building Ground Floor, Room W12-140,
1200 New Jersey Ave. SE., between 9 a.m. 5 p.m., Monday through Friday,
except Federal holidays. The telephone number is (202) 366-9329;
Instructions: You must include the agency name and docket
number DOT-FHWA-or the Regulatory Identification Number (RIN) for the
rulemaking at the beginning of your comments. All comments received
will be posted without change to http://www.regulations.gov, including
any personal information provided.
FOR FURTHER INFORMATION CONTACT: Mr. Gerald Yakowenko, Contract
Administration Team Leader, Office of Program Administration, (202)
366-1562, or Ms. Janet Myers, Office of the Chief Counsel, (202) 366-
2019, Federal Highway Administration, 1200 New Jersey Avenue SE.,
Washington, DC 20590. Office hours are from 8 a.m. to 4:30 p.m., E.T.,
Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Summary
This regulatory action is undertaken to fulfill the statutory
requirement in Section 1303(b) of MAP-21 requiring the Secretary to
promulgate a regulation to implement the CM/GC method of contracting.
The CM/GC is a contracting method that allows a contracting agency to
use a single procurement to secure pre-construction and construction
services. In the pre-construction services phase, a contracting agency
procures the services of a construction contractor early in the design
phase of a project in order to obtain the contractor's input on
constructability issues that may be affected by the project design. A
CM/GC contractor does not provide any preliminary or final design
services. As part of the preconstruction services phase of a CM/GC
contract, the CM/GC contractor provides information for consideration
in the design and environmental review processes on construction-
related aspects of a project, including the potential effects of design
elements on
[[Page 36940]]
construction costs, schedule and quality. The second phase, for
construction services, may begin once environmental review is complete
and risks are adequately defined. If the contracting agency and the CM/
GC contractor are able to agree on a price for a given scope and
schedule for construction, the CM/GC contractor and the contracting
agency may execute contract commitments for the construction services
phase of the project or a portion of the project.\1\ The CM/GC method
has proven to be an effective method of project delivery through its
limited deployment in the FHWA's Special Experimental Project Number 14
(SEP-14) Program. Utilizing the contractor's unique construction
expertise in the design phase can offer innovations, best practices,
reduced costs, and reduced schedule risks.
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\1\ After NEPA is complete, early work packages may be used and
can be awarded while final design for the project is being
completed, as described in the Section-by-Section analysis for
sections 635.504 and 635.506(d).
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The major provisions of these proposed regulations include: (1)
establish the minimum standards that contracting agencies' CM/GC
procurement procedures must follow, (2) establish the FHWA's role in
reviewing contracting agencies' CM/GC procurement procedures and other
FHWA approval requirements, (3) establish the procedures for
authorizing Federal funds for CM/GC projects, and 4) establish rules
regarding the relationship between the procurement of CM/GC project and
the environmental review process required under the National
Environmental Policy Act (NEPA) of 1969. The rule would apply to State
transportation agencies (STA) that contract for CM/GC services, and any
State or local government agency, public-private partnership, or Indian
tribe (as defined in 2 CFR 200.54) that is acting under the supervision
of the STA and is awarding or administering a CM/GC contract.
(1) The CM/GC Procurement Procedures: The proposed regulations
provide that CM/GC contracts must be procured through competitive
selection procedures providing for free and open competition. This
section also establishes procedural options for a contracting agency to
utilize in procuring CM/GC projects, the minimum information required
to be included in a CM/GC solicitation document, rules regarding the
use of interviews, and the basis on which CM/GC contracts are to be
awarded.
(2) The FHWA Concurrence in CM/GC Procedures, Contract Documents,
and Contract Awards: These proposed regulations provide that
contracting agencies must submit their CM/GC procurement procedures to
FHWA for approval to fulfill FHWA responsibilities to ensure that the
procedures comply with Federal requirements. The proposed rule also
provides that certain documents or actions relating to CM/GC
contracting, such as contract solicitation documents, contracts,
contract prices, and contract price analyses, require FHWA approval
prior to award. While the proposed regulation would reserve the
approval of the State's CM/GC procedures to FHWA, it would permit
States to assume all other CM/GC approvals through the FHWA-State
Stewardship and Oversight Agreements in accordance with 23 U.S.C.
106(c) and related FHWA guidance (see http://www.fhwa.dot.gov/federalaid/stewardship/140328.cfm). If an STA assumes responsibility
for CM/GC approvals under 23 U.S.C. 106(c), the STA would be required
to include documentation in the project file regarding actions taken
for assumed responsibilities. The documentation must be sufficient to
substantiate the approval or determination and, if applicable, to
support project authorization. In such cases, the STA will provide FHWA
with the documentation upon request. Note that the authority for State
assumption does not extend to eligibility determinations or project
authorizations.
(3) Authorization: These proposed regulations provide that FHWA
must approve contracting agencies' price estimate for the entire CM/GC
project before the authorization of construction services. Also, these
proposed regulations provide that FHWA must approve contracting
agencies' price or cost analyses, performed in accordance with 2 CFR
200.323(a), for preconstruction and constructions services before the
authorization of either of those activities. These approvals would be
subject to STA assumption of responsibilities under 23 U.S.C. 106(c).
When authorizing construction services, FHWA will rely on the agreed
price and scope of services or, if no agreement is reached between the
contracting agency and the CM/GC contractor, on the price established
through competitive bidding.
(4) Relationship to NEPA: These proposed regulations also establish
the relationship of the procurement of CM/GC projects to the NEPA
process to ensure that the CM/GC process may be used on projects
involving all potential NEPA reviews--a categorical exclusion,
environmental assessment (EA), or environmental impact statement (EIS).
One area in which CM/GC projects are similar to design-build projects
is that both types of projects may be awarded to a contractor before
the completion of NEPA. As such, these proposed regulations incorporate
many of the provisions regarding this relationship from the design-
build regulations at 23 CFR 636.109, such as ensuring that alternatives
will be evaluated and fairly considered when a project involves an EA
or EIS, including a provision in the CM/GC contract that allows
termination in the event the environmental review process does not
result in the selection of a build alternative, and permitting Federal
authorization of preliminary design activities. These proposed
regulations also establish the rules and conditions under which Federal
funds may participate, through reimbursement after the completion of
the NEPA process, in eligible costs of final design activities that the
contracting agency undertook at its own expense before completion of
the NEPA process.
Background
Section 1303 of MAP-21 amended 23 U.S.C. 112(b) by adding paragraph
(4) to authorize the use of the CM/GC method of contracting for
projects carried out by, or under the supervision of, an STA.
While the term CM/GC is not used in Section 1303 of MAP-21, the
statute allows contracting agencies to award a two-phase contract to a
``construction manager or general contractor'' for the provision of
construction-related services during both the preconstruction and
construction phases of a project. State statutes authorizing this
method of contracting use different titles including: CM/GC,
Construction Manager at-Risk, and General Contractor/Construction
Manager. Regardless of the terminology used by grantees and
subgrantees, FHWA has elected to use the term ``construction manager/
general contractor,'' or ``CM/GC,'' in reference to two-phase contracts
that provide for construction-related services in the preconstruction
and construction phases of a project.
The CM/GC contracting method allows a contracting agency to receive
a contractor's constructability recommendations during the design
process. A number of States, including Utah, Colorado, and Arizona,
have used the CM/GC project delivery method on a number of Federal-aid
highway projects under FHWA's SEP-14 program with great success. These
projects have shown that early contractor involvement through the CM/GC
method has the potential to improve the quality, performance, and cost
of the project while ensuring that construction issues
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are addressed and resolved early in the project development process.
The CM/GC contractor's constructability input during the design process
is used to supplement, but not replace or duplicate, the engineering or
design services provided by the contracting agency or its consultant.
More information about the CM/GC project delivery method can be found
on the FHWA's Every Day Counts Web page at http://www.fhwa.dot.gov/everydaycounts/edctwo/2012/cmgc.cfm.
The following procedures are typically included in the CM/GC
contracting method: (1) The contracting agency enters into an agreement
for pre-construction services with a construction contractor who
provides advice regarding constructability, price, construction
scheduling, and other information related to the construction of the
project; (2) the contracting agency may use this information in the
preliminary and final design phases of the project; (3) at a certain
stage in the design process where risks are adequately identified and
the scope of work is defined sufficiently for the contracting agency
and the CM/GC contractor to reasonably determine price, the contracting
agency may receive a price proposal from the CM/GC contractor (or
negotiate a price) for the defined scope and schedule for the project
or a portion of the project (such as an early work package); and (4) if
the price is reasonable, the contracting agency awards a construction
contract for the project or portion of the project. If the contracting
agency is not able to reach an agreement regarding price, scope, and
schedule, it may complete the design and let a traditional construction
contract by competitive bidding in accordance with Part 635. Given the
advanced stage of design at the conclusion of the preconstruction phase
of a CM/GC project, it is unlikely that a contracting agency would
convert the project to a design-build project; however, in such cases,
the contracting agency must comply with FHWA's design-build procurement
and other requirements in Part 636.
Services provided by the selected CM/GC contractor during the
preconstruction phase generally shall be limited to providing advice on
construction scheduling, sequencing, cost estimation, constructability,
material pricing, risk identification, and other construction related-
factors or issues (as defined in 23 U.S.C. 112(b)(4)(A)(ii)). During
the construction phase of the contract, the CM/GC contractor is
responsible for the physical construction of the project, or portion of
the project, for the agreed scope, schedule, and price.
The selected CM/GC contractor must not provide or conduct
engineering and design related services (as defined in 23 U.S.C.
112(b)(2) and 23 CFR part 172) under the contract. During the
construction phase of a CM/GC project, the CM/GC contractor may provide
incidental engineering related services typically performed by general
construction contractors, such as the preparation of falsework plans,
shop drawings, etc., which are identified within the request for
proposal and in the final plans and specifications for the project.
These services are not engineering and design related services as
defined in 23 CFR 172.3. Engineering and design related services for a
project utilizing a CM/GC contract would still be procured under a
separate contract in accordance with 23 CFR part 172.
Section 1303(b) of MAP-21 requires FHWA, acting on behalf of the
Secretary of Transportation, to promulgate regulations as necessary to
implement the CM/GC method of contracting. This NPRM is intended to
address the legislative requirement and establish procedures for FHWA's
approval of the CM/GC method of contracting in the Federal-aid highway
program.
Section-by-Section Discussion of the Proposed Changes
General Conforming Amendments in 23 CFR Parts 630 and 635
The FHWA proposes several amendments in 23 CFR part 630 and 635 to
account for the particular application of various Federal requirements
to CM/GC projects.
Section 630.106
The FHWA proposes to amend 23 CFR 630.106(a)(8) to provide for the
execution of the project agreement for CM/GC projects. This amendment
is similar to the existing language for design-build projects at Sec.
630.106(a)(7) in that this proposed amendment makes clear that FHWA
execution of a project agreement for preconstruction services
associated with final design and for construction shall not occur until
after the completion of the NEPA process. This language implements 23
U.S.C. 112(b)(4)(C)(ii), which prohibits the contracting agency from
awarding the construction services phase of a CM/GC contract until
after completion of the NEPA process.
Section 635.102
The FHWA proposes to amend the definitions in 23 CFR 635.102 by
adding a definition of CM/GC project. This definition incorporates the
language at 23 U.S.C. 112(b)(4)(A)(i) authorizing contracting agencies
to award 2-phase contracts to a construction manager or general
contractor for preconstruction and construction services.
Section 635.104
The FHWA proposes to amend 23 CFR 635.104 to state that the
applicable regulations pertaining to the CM/GC contracting process,
which are proposed in this rule, apply to CM/GC projects.
Section 635.107
The FHWA proposes to amend 23 CFR 635.107 to clarify that the
disadvantaged business enterprise program requirement will also apply
to CM/GC projects.
Section 635.109
The FHWA proposes to amend 23 CFR 635.109 to clarify that the
standardized changed condition clauses would also apply to construction
services agreements of CM/GC projects.
Section 635.110
The FHWA proposes to amend 23 CFR 635.110 to clarify that STAs may
use their own bonding, insurance, licensing, qualification or
prequalification procedure for any phase of design-build or CM/GC
procurement.
Section 635.112
The FHWA proposes to amend 23 CFR 635.112 to indicate that the FHWA
Division Administrator's approval of the solicitation document
constitutes FHWA's approval to use the CM/GC contracting method and
approval to release the solicitation document.
Section 635.113
The FHWA proposes to amend 23 CFR 635.113 to make clear that the
requirements for bid opening and tabulation do not apply to CM/GC
projects because the requirements in this section are only appropriate
for projects delivered under the traditional design-bid-build method.
Section 635.114
The FHWA proposes to amend 23 CFR 635.114 to make clear that the
award of a contract for a CM/GC project and the FHWA's concurrence in
such award are subject to the proposed requirements in 23 CFR part 635
subpart E.
Section 635.122
The FHWA proposes to amend 23 CFR 635.122 to require contracting
agencies to define their procedures for making progress payments for
CM/GC
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projects in the appropriate solicitation and contract documents.
Section 635.309
The FHWA proposes to amend 23 CFR 635.309(p) to make clear what
certification is required as a prerequisite to FHWA authorization of
physical construction and final design activities. Since both CM/GC and
design-build contracts are similar in that both types of contracts may
be awarded before the completion of the NEPA process, FHWA believes
that the certification requirements applicable to design-build
contracts should be equally applicable to CM/GC contracts.
CM/GC Procedures and Requirements
The FHWA proposes to add a new subpart E to 23 CFR part 635 to
provide the policies, requirements, and procedures relating to the use
of CM/GC contracting. As previously discussed, with the exception of
approval of STA CM/GC procedures, all FHWA approval requirements
proposed in this new subpart would be subject to assumption by the STA
in accordance with 23 U.S.C. 106(c).
Section 635.501--Purpose
In 23 CFR 635.501, we propose to add a paragraph describing that
the general purpose of subpart E is to prescribe the policies,
requirements, and procedures for the use of the CM/GC contracting
method.
Section 635.502--Definitions
In 23 CFR 635.502, we propose the definitions for certain terms
utilized in subpart E.
First, FHWA proposes to define the term agreed price to mean the
price agreed to by the CM/GC contractor and the contracting agency for
construction services.
Second, FHWA proposes to define the term CM/GC contractor to mean
the entity that has been awarded a CM/GC contract and is responsible
for providing preconstruction services under the first phase and, if a
price agreement is reached, construction services under the second
phase of such contract.
Third, FHWA proposes to define the term CM/GC project to mean a
project delivered using a 2-phase contract for preconstruction and
construction services. This definition is the same as the definition
proposed for section 635.102.
Fourth, FHWA proposes to define the term construction services as
the physical construction work undertaken by a CM/GC contractor to
construct a project or a portion of the project (including early work
packages). Construction services may be authorized as a single contract
for the project, or through a combination of contracts covering
portions of the project. If a combination of contracts is used for the
CM/GC project construction phase, procurement and authorization
procedures are the same for every construction services contract.
Fifth, FHWA proposes to define the term contracting agency as the
STA and any State or local government agency, public-private
partnership, or Indian tribe (as defined in 2 CFR 200.54) that is
acting under the supervision of the STA. This definition is consistent
with the grant structure reflected in 23 U.S.C. 112(a), (b)(1), and
(d). Those provisions set forth requirements and authorities applicable
to STAs as the recipients of title 23 funds. The requirements include
STA responsibility for overseeing compliance with applicable Federal
requirements by STA contractors and subrecipients. In the proposed
rule, the definition of ``contracting agency'' explicitly acknowledges
that both public and private entities may serve as subrecipients of
title 23 funds. This is consistent with 2 CFR 200.330, which guides
determinations on whether a non-Federal entity is receiving funds as a
subrecipient or as a contractor.
Sixth, FHWA proposes to define the term Division Administrator as
the chief FHWA official assigned to conduct business in a particular
State.
Seventh, FHWA proposes to define the term early work package as a
portion or phase of construction work (including material acquired for
a construction phase) that is procured before all design work for the
project is complete. Under the proposed rule, once NEPA is complete,
early work packages would allow contracting agencies to acquire long-
lead items or start a particular phase of construction for which the
risks are adequately identified and the scope of work is defined
sufficiently for the contracting agency and the CM/GC contractor to
reasonably determine price. If the authorized early work ultimately is
not needed or used for the project, Federal-aid funding participation
would be determined in a manner similar to FHWA's long-established test
for participation in the cost of corrective work necessitated by
engineering errors (see FHWA guidance at http://www.fhwa.dot.gov/programadmin/contracts/071263.cfm and http://www.fhwa.dot.gov/programadmin/contracts/090878.cfm). The FHWA would determine, on a
case-by-case basis, whether the excess costs were incurred based on the
reasonable exercise of diligence and judgment by the contracting
agency, in which case participation is permissible. If carelessness,
negligence, or incompetence on the part of the contracting agency or
those working on its behalf led to the excess costs, then Federal-aid
participation will be denied. Although there is some financial risk to
the contracting agency associated with using early work packages, in
certain instances, the use of early work packages may provide for
schedule acceleration, overall risk mitigation, and cost savings
related to inflation. The use of an early work package as a phase of a
project is consistent with 23 U.S.C. 112(b)(4)(A)(iii)-(iv).
Eighth, FHWA proposes to define the term final design as having the
same meaning as defined in 23 CFR 636.103. The FHWA intends for the
definition of final design to be as uniform as possible for all project
delivery methods.
Ninth, FHWA proposes to define the term NEPA process to make clear
that this is the environmental review required under the National
Environmental Policy Act of 1969, the applicable portions of the CEQ
Regulations Implementing NEPA (40 CFR parts 1500-1508), and the FHWA
regulations implementing NEPA at 23 CFR part 771.
Tenth, FHWA proposes to define the term preconstruction services as
consulting to provide a contracting agency and its designer with
information regarding the impacts of design on the physical
construction of the project. The ability of a contracting agency to
obtain this information from the CM/GC contractor early in the process
is the key component of a CM/GC contract and is what makes this project
delivery method beneficial. Under the preconstruction services phase of
a CM/GC contract, the CM/GC contractor may provide such information
during both preliminary and final design phases. However, while
preconstruction services includes constructability input from a CM/GC
contractor, these services must not constitute design and engineering
related services as defined in 23 CFR 172.3. Any procurement of design
and engineering related services must follow the procedures required
under 23 CFR part 172.
Eleventh, FHWA proposes to define the term preliminary design as
having the same meaning defined in 23 CFR 636.103. The FHWA intends for
the definition of preliminary design to be as uniform as possible for
all project delivery methods.
Twelfth, FHWA proposes to define the term solicitation document as
the document used by a contracting agency
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to advertise a CM/GC project and request expressions of interest,
statements of qualifications, proposals or offers.
Lastly, FHWA proposes to define the term State transportation
agency as having the same meaning as the term State transportation
department under section 635.102.
Section 635.503--Applicability
In 23 CFR 635.503, FHWA proposes to add a general statement of the
applicability regarding the requirements for this subpart. The
requirements apply to all CM/GC Federal-aid projects within the right-
of-way of a public highway or projects which are linked to a Federal-
aid project within the right-of way of a public highway. The
determination whether a project is ``linked'' is based on proximity,
dependency, or impact (i.e., the non-highway construction project would
not exist without the public highway, or exists to fulfill a separate
requirement of another highway project). Where the applicable law
requires that projects be treated as a project on a Federal-aid
highway, the provisions of this subpart will apply regardless of the
location of the project. The terms ``Federal-aid highway'' and
``highway,'' as used in this NPRM, are defined in 23 U.S.C. 101(a)(6)
and (11), respectively. The proposed language for this rule is similar
to applicability language used in the design-build contracting
regulation (23 CFR 636.104). The applicability provision is intended to
distinguish between projects that are subject to the provisions of 23
CFR parts 635 and 636, and projects where the contracting agency may
follow State-approved procedures and requirements. Parts 635 and 636
are applicable to Federal-aid construction projects that are located
within the right-of-way of a public highway. For projects neither
within a right-of-way of a public highway, nor linked to a project
within a right-of way of a public highway, contracting agencies may
follow their own State-approved procurement procedures consistent with
2 CFR part 200. These distinctions in procurement requirements are
discussed in the June 26, 2008, FHWA guidance ``Procurement of Federal-
aid Construction Contracts,'' available online at http://www.fhwa.dot.gov/construction/080625.cfm.
Section 635.504--CM/GC Requirements
In section 635.504(a), FHWA proposes to make clear that contracting
agencies may award a 2-phase contract for preconstruction and
construction services, as provided in 23 U.S.C. 112(b)(4)(A). The two
phases shall be the preconstruction and construction phases,
respectively. Subject to applicable procurement requirements, the
contracting agency has flexibility in determining how to structure the
award and contract documents that flow from the single competitive
procurement of the CM/GC contractor authorized in 23 U.S.C.
112(b)(4)(A), enacted by MAP-21. For example, the contracting agency
may elect to use a single contract document that makes firm commitments
for the preconstruction services at the time the contract is executed,
but conditions commitments for construction services on actions that
occur in the future (e.g., a negotiated agreement on construction
price). Alternatively, the contracting agency may choose to structure
the commitments by using separate agreements for the preconstruction
and construction services phases. In this latter scenario, the
contracting agency may treat the contract award as occurring in two
phases. The construction services phase may occur under one contract or
under multiple contracts covering portions of the project, including
early work packages.
The FHWA believes these contracting flexibilities are consistent
with the contracting efficiency purposes underlying 23 U.S.C.
112(b)(4), and with contracting practices used by participants in the
CM/GC SEP-14 experiments approved by FHWA. The language in 23 U.S.C.
112(b)(4) is ambiguous with respect to whether there is any limitation
on the number of contracts that may be used to carry out the 2-phase
CM/GC process. Section 112(b)(4) of Title 23, U.S.C. references the use
of ``a 2-phase contract'' (23 U.S.C. 112(b)(4)(A)(i)), which could be
interpreted as limiting CM/GC contracting agencies to the use of a
single contract. However, 23 U.S.C. 112(b)(4)(C)(ii) references ``the
award of the construction services phase of a contract.'' This could be
read as calling for the use of two contracts. The ``award'' of a public
contract typically is the contracting agency's decision to accept an
offer for performance of the specified work. In the normal course of
business, an award is followed by the execution of a contract between
the contracting agency and the successful offeror. Based on its
experience with CM/GC contracting, FHWA concluded requiring the use of
a single contract would create legal and administrative barriers to the
use of CM/GC contracting. For example, procurement laws in some States
require the use of separate contracts for preconstruction and
construction services. In addition, it could be administratively
challenging to develop adequate construction contract documents at the
time of the selection of the CM/GC contractor. Much of the relevant
construction information is not available until well into the
preconstruction phase. The FHWA concluded it is important to provide
contracting agencies with the flexibility to use either a single
contract or multiple contracts for CM/GC projects. This will facilitate
the use of the CM/GC method of procurement and further the statutory
purpose of more efficient contracting.
In section 635.504(b), FHWA proposes several requirements that
apply to contracting agencies' CM/GC procedures. First, consistent with
23 U.S.C. 112(a) and the new provisions in 23 U.S.C. 112(b)(4)(B), FHWA
proposes that all CM/GC contracts be procured utilizing competitive
selection procedures providing for free and open competition. The
requirement for free and open competition is a fundamental principle
under 23 U.S.C. 112 for the procurement of all Federal-aid highway
projects.
Second, FHWA proposes to allow contracting agencies to procure the
services of a CM/GC contractor using any of the following solicitation
options: Letters of interest, requests for qualifications, interviews,
request for proposals, or other solicitation procedures permitted by
applicable State law, regulation, or policy that promote a fair and
transparent procurement process.
Third, FHWA proposes to require contracting agencies to provide the
following minimum information in their solicitation documents for CM/GC
preconstruction services to ensure fairness and transparency: (1) A
clearly defined scope of services; (2) a list of evaluation factors and
significant subfactors, including their relative weight of importance
that will be used in evaluating proposals; (3) a list of required
deliverables; (4) an indication of whether interviews will be conducted
before establishing the final rank; and (5) a sample contract form(s).
In FHWA's experience, this information is needed, at a minimum, to have
an effective, fair, and transparent procurement process. In addition,
this information is typical of what many of the contracting agencies
that have utilized CM/GC under SEP-14 have included in their
solicitation documents.
Fourth, FHWA proposes to require contracting agencies to offer the
opportunity for an interview to all short listed firms if the
contracting agency
[[Page 36944]]
intends to interview any contractor during the procurement process. If
an interview is conducted, the opportunity for an interview must be
offered to all shortlisted firms (or firms that submitted responsive
proposals, if a short list is not used). Also, in conducting
interviews, contracting agencies must not engage in conduct that favors
one offeror over another and must not disclose one contractor's
proposal to another. The FHWA feels that interviews could aid a
contracting agency in evaluating its selection of a contractor for a
CM/GC project. If interviews are conducted, then it is important that
they be done in a fair and transparent manner.
Fifth, FHWA proposes to permit contracting agencies to award CM/GC
contracts based on qualifications, experience, best value, or any other
combination of factors considered appropriate by the contracting agency
as provided in 23 U.S.C. 112(b)(4)(B) and allowed by State law.
Lastly, FHWA proposes that contracting agencies follow the
traditional competitive bidding process required under 23 CFR part 635
subpart A in situations where they are unable to agree on a price with
the CM/GC contractor for the construction of the project. In such
cases, it is proposed that the contracting agency must notify the FHWA
Division Administrator of this decision and request FHWA's approval
before advertising for the receipt of competitive bids pursuant to 23
CFR 635 Subpart A if Federal-aid funding is desired in the cost of
construction. Once the contracting agency advertises for bids or
proposals for the project or a portion of the project, the contracting
agency no longer can use the CM/GC agreed price procedures under this
regulation.
Where contracting agencies bid the construction of the project
after being unable to reach a price agreement with the CM/GC
contractor, there is an inherent risk that the CM/GC contractor may
have (or be perceived as having) an unfair advantage if permitted to
competitively bid for project construction work. Under the proposed
rule, the contracting agency may follow State or local procurement
policies in determining if there is a real or apparent conflict of
interest and it is necessary to preclude the CM/GC contractor from
competitive bidding. For example, the contracting agency may determine
that the CM/GC contractor that performed preconstruction services does
not have an inherent advantage over other potential bidders/proposers
because the same information is available to all bidders/proposers. In
other cases, the contracting agency may preclude the CM/GC contractor
from competing with other firms due to State or local conflict of
interest policies, or a belief that the firm has knowledge or
information that other potential bidders/proposers do not have.
In section 635.504(c), FHWA proposes several standards governing
the FHWA's approval of an STA's CM/GC procedures.
First, FHWA proposes that STAs must submit their proposed CM/GC
procurement procedures to the FHWA Division Administrator for review
and approval. This review and approval is consistent with 23 U.S.C.
112(a), and is necessary to facilitate efficient administrative
oversight of an STA's CM/GC procurement process for compliance with
Federal requirements. The FHWA's approval of the STA's process will
eliminate the need for FHWA to review and evaluate the STA's CM/GC
procurement process on a project-by-project basis. Also, this review
and approval is consistent with other project delivery methods. The
FHWA also proposes that other contracting agencies be allowed to either
follow the FHWA-approved STA procedures or their own local procedures
if such local procedures are approved by both the STA and FHWA.
Second, FHWA proposes to establish the parameters for the Division
Administrator's approval of the STA's CM/GC procedures. Under the
proposed rule, the Division Administrator would be required to review
an STA's CM/GC procedures to verify that the procedures conform to the
requirements of applicable Federal regulations and do not operate to
restrict competition.
The Division Administrator's approval of CM/GC procurement
procedures is a program-level action and may not be delegated or
assigned to the STA.
In 23 CFR 635.504(d), FHWA proposes to include language that makes
it clear the 30 percent minimum self-performance requirement by the
general contractor in 23 CFR 635.116(a) applies to all agreements for
construction services. In CM/GC contracting, the contractor's role in
the construction phase of the contract is very similar to a general
contractor's role in traditional bid-build contracting. Therefore, it
is reasonable to require the same minimum self-performance requirements
for the construction phase of CM/GC projects. Contracting agencies may
continue to use higher self-performance requirements if required by
applicable State law, regulation or policy. Also, FHWA proposes to
allow contracting agencies to require the CM/GC contractor to award
subcontracts for construction services on a low bid basis if required
by State law, regulation, or policy.
In 23 CFR 635.504(e), FHWA proposes to specify the payment methods
that may be used for CM/GC projects. For preconstruction services, the
method of payment may be lump sum, cost plus fixed fee, cost per unit
of work, specific rates of compensation, or any other comparable
payment method permitted under State law. Since preconstruction
services are essentially services for consulting, the payment methods
for these services should be similar to other methods used for
consulting. However, the cost plus a percentage of cost and other
percentage of cost methods of payment must not be used, since these
methods are highly susceptible to abuse and, as a result, generally
prohibited in any type of Federal contracting. For construction
services, the method of payment may include any method of payment
authorized by State law (including, but not limited to; lump sum, unit
price, and target price); however, when compensation is based on actual
costs, an approved indirect cost rate must be used. See proposed
section 635.507.
Section 635.505--Relationship to the NEPA Process
In section 635.505, FHWA proposes the requirements to establish the
relationship between the CM/GC procurement process and the NEPA
process. The requirements in this section are designed to protect the
integrity of the NEPA decisionmaking process, since the solicitation
and award of a CM/GC project will often occur before the completion of
the NEPA process. In this section, FHWA not only incorporates the
specific statutory requirements in 23 U.S.C. 112(b)(4)(C), but also
substantially follows the requirements that have already been
established for design-build projects in 23 CFR 636.109 for
consistency. The design-build requirements were established to protect
the integrity of the NEPA decisionmaking process in situations where
design-build contracts are awarded before the completion of the NEPA
process.
First, in section 635.505(a), FHWA incorporates the provision of 23
U.S.C. 112(b)(4)(C)(i), providing that before the completion of the
NEPA process a contracting agency may: (a) Issue requests for
proposals, (b) proceed with the award of a contract for preconstruction
services, (c) issue notices to proceed to the contractor for
preconstruction services for preliminary design-related work, and (d)
issue
[[Page 36945]]
notices to proceed to a design firm for the preliminary design of the
project and any work related to preliminary design, to the extent that
those actions do not limit any reasonable range of alternatives. The
FHWA interprets the statutory condition in 23 U.S.C.
112(b)(4)(C)(i)(III), which appears in section 635.505(a)(4) of the
proposed regulation, as intended to ensure that performance of
preliminary design work will not bias or influence the environmental
review of the project, and that all reasonable alternatives will be
fairly considered when a project involves an EIS or EA.
Second, in section 635.505(b), FHWA proposes to implement the
provisions of revised 23 U.S.C. 112(b)(4)(C)(ii), by prohibiting
contracting agencies from proceeding with the award of an agreement for
construction services (including early work packages such as advanced
material acquisition or site work) before the completion of the NEPA
review process.
Third, in section 635.505(c), FHWA proposes to implement the
provisions of revised 23 U.S.C. 112(b)(4)(C)(ii) and (iv), by allowing
contracting agencies to proceed, solely at their own risk and expense,
with final design activities for a CM/GC project before completion of
the NEPA review process without affecting subsequent approvals required
for the project. If the contracting agency wishes to use the CM/GC
contractor for advice in connection with at-risk final design
activities, it may do so if it has a procedure for segregating the
costs of the CM/GC contractor's at-risk final design work from other
work. This is to ensure that the costs of the CM/GC contractor's at-
risk final design work are not submitted for Federal reimbursement
until after NEPA is complete. The proposed rule would require the
contracting agency to notify FHWA of its decision to proceed with at-
risk final design before the completion of the NEPA process. After NEPA
review of the CM/GC project is completed, contracting agencies may seek
reimbursement of eligible costs pursuant to proposed section
635.506(c), including any CM/GC contractor costs for at-risk final
design-related work. The statute and the proposed regulation create an
exception to the normal cost eligibility principles under 2 CFR part
200, subpart E, which exclude costs incurred before Federal
authorization. The proposed provisions are based on FHWA's
interpretation of 23 U.S.C. 112(b)(4)(C)(iv), as allowing final design
work by a contracting agency solely at its own risk, and 23 U.S.C.
112(b)(4)(C)(ii), as prohibiting FHWA approval or financial support for
final design and construction-related work before the completion of
NEPA review for the CM/GC project. The FHWA's proposal is consistent
with the statutory objective of protecting the integrity of the NEPA
decisionmaking process, as articulated throughout 23 U.S.C.
112(b)(4)(C).
Fourth, in section 635.505(d), FHWA proposes to implement the
requirement of 23 U.S.C. 112(b)(4)(C)(v), that contracting agencies
include a contract termination provision in the CM/GC contract in the
event the NEPA process does not result in the selection of a build
alternative. This NEPA-related provision is included to help ensure the
NEPA decisionmaking process is not biased by the existence of the CM/GC
contract. This provision is in addition to contract clauses relating to
termination for cause and convenience required by 2 CFR Appendix II to
Part 200.
Fifth, in section 635.505(e), FHWA proposes to require contracting
agencies to include a provision in their CM/GC contracts making it
clear that the scope of services in the preconstruction phase includes
all alternatives identified and considered in the NEPA process. It is
FHWA's belief that unbiased decisionmaking in the NEPA process requires
the State to maintain the ability to receive preconstruction services
from the constructor on any alternative identified and evaluated in the
NEPA process.
Sixth, in section 635.505(f), FHWA proposes to require contracting
agencies to include a provision in their CM/GC contracts expressly
declaring that no commitments are being made to any alternative
evaluated in the NEPA process and that the comparative merits of the
alternatives will be evaluated and fairly considered. Similar to
section 635.505(e), this provision is intended to ensure unbiased
decisionmaking in the NEPA process.
Seventh, in section 635.505(g), FHWA proposes to prohibit the CM/GC
contractor from preparing NEPA documentation or having any
decisionmaking responsibility with respect to the NEPA process. This
provision protects the preparation of the NEPA documentation against
any conflict of interest in the preconstruction services provided by
the CM/GC contractor. However, information that the CM/GC contractor
develops in providing preconstruction services may be considered in the
NEPA analysis and included in the record.
Lastly, in section 635.505(h), FHWA proposes to require contracting
agencies to include a provision in all agreements for construction
services ensuring that all environmental and mitigation measures
identified in the NEPA documentation and committed to in the NEPA
determination for the selected alternative will be implemented. Those
commitments form part of the basis for FHWA decision approving the
project for funding. Any proposed change to a final commitment made
during NEPA (regardless whether the review involved a categorical
exclusion, EA, or EIS) requires FHWA consideration of potential effects
on the earlier environmental review process.
Section 635.506--Project Approvals and Authorizations
First, in section 635.506(a)(1), FHWA proposes to provide
parameters regarding the assumption of specific project approval
actions by the STA under 23 U.S.C. 106(c). Under the proposed rule,
FHWA would retain approval of the STA's CM/GC procedures, but all of
the proposed CM/GC project-level FHWA approval responsibilities may be
assumed by the STA, in accordance with 23 U.S.C. 106(c). Assumptions by
the STA would occur through the FHWA/STA Stewardship and Oversight
Agreement for that State. Section 106(c) provides authority for State
assumption of a broad range of FHWA project-level actions relating to
design, plans, specifications, estimates, contract awards and
inspection of projects. The STAs may not further delegate or assign
FHWA's responsibilities to approve CM/GC projects to other contracting
agencies.
In section 635.506(a)(2), FHWA proposes a requirement for the
contracting agency to provide a copy of the solicitation documents for
FHWA review and approval before requesting FHWA's authorization for
either preconstruction or construction activities.
Second, in section 635.506(b), FHWA proposes to require contracting
agencies to request FHWA's authorization of preliminary engineering
before incurring costs for preconstruction services. Under the proposed
rule, the Division Administrator must review and approve the
contracting agency's cost or price analysis for preconstruction
services, prepared in a manner consistent with 23 CFR 200.323, before
authorizing preconstruction services for all procurements exceeding the
simplified acquisition threshold (currently $150,000).
Third, in section 635.506(c), FHWA proposes the requirements that
must be met before FHWA can authorize funds to reimburse a contracting
agency for final design and preconstruction services associated with
final design for
[[Page 36946]]
a CM/GC project where those costs were incurred at the contracting
agency's risk before the completion of the NEPA review of the project.
As discussed under section 635.505(c), 23 U.S.C. 112(b)(4)(C)(ii) and
(iv), as well as 23 CFR 771.113(a), prohibit FHWA authorization of
funding or other FHWA approval of these activities until after the
completion of the NEPA process. However, as provided in 23 U.S.C.
112(b)(4)(C)(iv), a contracting agency may proceed at its own expense
with final design and preconstruction services related to final design,
and seek reimbursement if the NEPA process concludes in the selection
of a build alternative.
In cases where contracting agencies proceed at their own risk and
expense, 23 U.S.C. 112(b)(4)(C)(iv)(II) provides that these activities
may eventually be eligible for Federal reimbursement.\2\ The FHWA
proposes to adopt provisions to safeguard the NEPA process and the use
of Federal funds for these activities by using criteria derived from
other parts of section 112 that address the NEPA process, and from
governmentwide NEPA implementing regulations issued by the President's
Council on Environmental Quality.\3\ Accordingly, FHWA proposes that
such activities be eligible for post-NEPA reimbursement only if the
Division Administrator finds the contracting agency's final design-
related activities: (1) Did not limit the identification and fair
evaluation of a reasonable range of alternatives for the proposed
project, (2) did not result in an irrevocable commitment by the
contracting agency to the selection of a particular alternative, (3)
did not have an adverse environmental impact, and (4) consistent with
governmentwide cost principles (2 CFR 200.403), are necessary and
reasonable and are adequately documented. This is an eligibility
determination, and it cannot be delegated or assigned to the STA.
However, in the case of projects for which the State is directly
responsible for NEPA compliance (either under an assignment of
environmental responsibilities pursuant to 23 U.S.C. 326 or 327, or
under a programmatic categorical exclusion agreement as authorized by
section 1318(d) of MAP-21), the Division Administrator may rely on a
State certification indicating these conditions are satisfied. These
proposed conditions for reimbursement under 23 U.S.C.
112(b)(4)(C)(iv)(II) in no way diminish the responsibility of the
Division Administrator to prevent actions by FHWA and others during the
NEPA process that would limit the choice of reasonable alternatives or
have an adverse environmental effect.\4\ If the Division Administrator
finds that either of those circumstances are present during the NEPA
review of the CM/GC project, regardless of whether the contracting
agency plans to seek reimbursement for final design-related activities
from Federal funds, the Division Administrator shall require the
contracting agency to take any necessary action to maintain the
integrity of the NEPA process.
---------------------------------------------------------------------------
\2\ Note that 23 U.S.C. 112(b)(4)(C)(iv)(II) erroneously
references 23 U.S.C. 109(r), which cannot be applied to this
provision.
\3\ 40 CFR 1506.1(a).
\4\ 40 CFR 1506.1(a)-(b).
---------------------------------------------------------------------------
Fourth, section 635.506(d) would address construction approvals and
authorizations. Under proposed section 635.506(d)(1), FHWA's
construction contracting requirements will apply to all of the CM/GC
project's construction contracts if any portion (including an early
work package) of the CM/GC project construction is funded with title 23
funds. In section 635.506(d)(2), the proposed rule would require FHWA
approval of the price estimate for construction costs for the entire
project before authorization of construction services (including
authorization for an early work package). This requirement is in the
statute at 23 U.S.C. 112(b)(4)(C)(iii)(I).
In section 635.506(d)(3), FHWA proposes to require contracting
agencies to perform a price analysis for every agreement for
construction services that establishes or modifies scope, schedule and
price for the CM/GC project or a portion of the project. This
requirement is intended to be consistent with price analysis
requirements under 2 CFR 200.323. The construction services price
analysis will be a comparison of the agreed price with the contracting
agency engineer's estimate or an independent cost estimate (if required
by the agency).
In section 635.506(d)(4), FHWA proposes to require FHWA approval of
the contracting agency's price analysis and agreed construction
services price before FHWA's construction authorization. This paragraph
would implement 23 U.S.C. 112(b)(4)(C)(iii)(II), which requires FHWA's
approval of any price agreement with the CM/GC contractor for the
project or any portion of the project before authorizing construction
activities.
Under section 635.506(d)(5) of the proposed rule, FHWA's
authorization of construction services will be based on the approved
agreed price for the project or portion of the project. The FHWA
proposes to allow the construction services authorization for early
work packages. Early work packages would allow contracting agencies to
acquire long-lead items, such as materials for the project (consistent
with 23 CFR 635.122), or start a particular phase of construction for
which final design is complete. Under the proposed rule, and in
accordance with 2 CFR part 200 and proposed section 635.507, FHWA may
deny eligibility for part or all of an early work package if such work
is not needed or used for the project. For example, if construction
materials are acquired for a CM/GC project, but not installed in the
project, the cost of such material would not be eligible for Federal-
aid participation (however, the contracting agency, as owner of the
excess materials, may propose use of the material on a future Federal-
aid project in accordance with 23 CFR 635.407(a)). In making the cost
eligibility determination, FHWA would include consideration of the
kinds of factors described in its long-established guidance on
participation in the cost of corrective work necessitated by
engineering errors (see FHWA guidance at http://www.fhwa.dot.gov/programadmin/contracts/071263.cfm and http://www.fhwa.dot.gov/programadmin/contracts/090878.cfm). The FHWA would evaluate, on a case-
by-case basis, whether the excess costs were incurred based on the
reasonable exercise of diligence and judgment by the contracting
agency. The FHWA would not participate in excess costs incurred as a
result of fraud, carelessness, negligence, or incompetence on the part
of the contracting agency or those working on its behalf. Despite the
financial risk to the contracting agency, in certain instances the use
of early work packages may provide for schedule acceleration, overall
risk mitigation, and cost savings related to inflation. The use of an
early work package as a phase of a project is consistent with 23 U.S.C.
112(b)(4)(A)(iii)-(iv).
Lastly, in section 635.506(e), FHWA proposes to require concurrence
from the Division Administrator before a contracting agency's award of
a Federal-aid CM/GC contract, including agreements to proceed to the
construction services phase or decisions to not proceed with an
agreement for construction services. Concurrence in the contract award
constitutes approval of the agreed price, scope, and schedule for the
work. Under 23 U.S.C. 112(b)(4)(C)(iii)(II), approval of the price
agreement is a prerequisite to FHWA authorization of preconstruction
and construction services costs. The documentation supporting a
contract
[[Page 36947]]
award should include the Disadvantaged Business Enterprise (DBE)
documentation required by 26 CFR 26.53(b)(2) when there is a contract
goal. The FHWA's concurrence in contract awards is required by 23
U.S.C. 112(d), and the concurrence provides FHWA with an opportunity to
verify that the appropriate contract requirements have been
incorporated and DBE commitments or good faith efforts have been
submitted.
Section 635.507--Cost Eligibility
In this section, FHWA makes clear that the Federal cost principles
must be satisfied for any costs that are included in negotiated prices,
as required by 2 CFR part 200, subpart E. Contracting agencies must
perform a cost or price analysis in connection with every procurement
action (including contract modifications) in excess of the simplified
acquisition threshold (currently $150,000).
In section 635.507(a)(1), for preconstruction services agreements
where actual costs or cost estimates are included in negotiated prices
that will be used for cost reimbursement, we propose to require that
all such costs must comply with the Federal cost principles to be
eligible for participation. This is consistent with 2 CFR part 200
subpart E.
In section 635.507(a)(2), for construction services agreements or
contracts, FHWA proposes that a price analysis must confirm price
reasonableness, consistent with 2 CFR 200.320 and 200.323, to satisfy
cost eligibility requirements. The FHWA will rely on a price analysis
that is prepared and approved in accordance with section 635.506(d)(3)
of this proposed rule, when authorizing construction services
(including early work packages).
In section 635.507(b), for cost-reimbursement contracts, we propose
to require that the CM/GC contractor provide an indirect cost rate
established in accordance with the Federal cost principles. The
indirect cost rate provisions in 23 U.S.C. 112(b)(2) do not apply to
CM/GC contracts because they are not agreements for architectural or
design services. Accordingly, contracting agencies must use an indirect
cost rate that is consistent with applicable provisions in 2 CFR part
200.
In section 635.507(c), we propose to implement a certification
requirement regarding the use of indirect cost rates for those firms
who have provided an approved indirect cost rate for use. This proposal
is consistent with Paragraph 3(d) of FHWA Order 4470.1A, ``FHWA Policy
for Contractor Certification of Costs in Accordance with Federal
Acquisition Regulations to Establish Indirect Cost Rates on Engineering
and Design-related Services Contracts.'' (http://www.fhwa.dot.gov/legsregs/directives/orders/44701a.htm).
Rulemaking Analyses and Notices
All comments received before the close of business on the comment
closing date indicated above will be considered and will be available
for examination in the docket at the above address. Comments received
after the comment closing date will be filed in the docket and will be
considered to the extent practicable. In addition to late comments,
FHWA will continue to file relevant information in the docket as it
becomes available after the comment period closing date, and interested
persons should continue to examine the docket for new material. A final
rule may be published at any time after close of the comment period.
Executive Order 12866 (Regulatory Planning and Review), Executive Order
13563 (Improving Regulation and Regulatory Review), and DOT Regulatory
Policies and Procedures
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The FHWA
has determined preliminarily that this action would not be a
significant regulatory action within the meaning of Executive Order
12866, nor within the meaning of the U.S. Department of
Transportation's regulatory policies and procedures. Executive Order
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
The FHWA anticipates that the economic impact of this rulemaking would
be minimal. The FHWA anticipates that the proposed rule would not
adversely affect, in a material way, any sector of the economy. As
mandated by Section 1303 of MAP-21, this rulemaking provides a
regulatory framework for the CM/GC contracting method, which is a
process that has already been deployed and used under the authority of
the FHWA's SEP-14 Program. In addition, these changes would not
interfere with any action taken or planned by another agency and would
not materially alter the budgetary impact of any entitlements, grants,
user fees, or loan programs. Consequently, a full regulatory evaluation
is not required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (Pub. L. 96-354,
5 U.S.C. 601-612), the FHWA has evaluated the effects of this action on
small entities and anticipates that the action would not have a
significant economic impact on a substantial number of small entities.
The proposed amendment provides procedures for approving CM/GC projects
in the Federal-aid highway program. As such, it primarily affects
States and States are not included in the definition of small entity
set forth in 5 U.S.C. 601.
Unfunded Mandates Reform Act of 1995
This proposed rule would not impose unfunded mandates as defined by
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48,
March 22, 1995) as it will not result in the expenditure by State,
local, tribal governments, in the aggregate, or by the private sector,
of $148.1 million or more in any one year (2 U.S.C. 1532). Further, in
compliance with the Unfunded Mandates Reform Act of 1995, the agency
will evaluate any regulatory action that might be proposed in
subsequent stages of the proceeding to assess the effects on State,
local, and tribal governments and the private sector.
Executive Order 13132 (Federalism Assessment)
Executive Order 13132 requires agencies to assure meaningful and
timely input by State and local officials in the development of
regulatory policies that may have a substantial, direct effect on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. This proposed action has been analyzed in
accordance with the principles and criteria contained in Executive
Order 13132 dated August 4, 1999, and FHWA has determined that this
proposed action would not have a substantial direct effect or
sufficient federalism implications on the States. The FHWA has also
determined that this proposed action would not preempt any State law or
regulation or affect the States' ability to discharge traditional State
governmental functions.
[[Page 36948]]
Executive Order 12372 (Intergovernmental Review)
Catalog of Federal Domestic Assistance Program Number 20.205,
Highway Planning and Construction. The regulations implementing
Executive Order 12372 regarding intergovernmental consultation on
Federal programs and activities apply to this program.
Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et
seq.), Federal agencies must obtain approval from the Office of
Management and Budget for each collection of information they conduct,
sponsor, or require through regulations. The FHWA has analyzed this
proposed rule under the PRA and has determined preliminarily that this
proposal does not contain collection of information requirements for
the purposes of the PRA.
National Environmental Policy Act
The FHWA has analyzed this action for the purpose of the NEPA, as
amended (42 U.S.C. 4321 et seq.). Agencies are required to adopt
implementing procedures for NEPA that establish specific criteria for,
and identification of, three classes of actions: Those that normally
require preparation of an EIS; those that normally require preparation
of an EA; and those that are categorically excluded from further NEPA
review (40 CFR 1507.3(b)). The proposed action is the adoption of
regulations that provide the policies, procedures, and requirements for
implementing the CM/GC contracting method pursuant to 23 U.S.C.
112(b)(4). This proposed action qualifies for categorical exclusions
under 23 CFR 771.117(c)(20) (promulgation of rules, regulations, and
directives). The FHWA has evaluated whether the proposed action would
involve unusual circumstances or extraordinary circumstances and has
determined that this proposed rulemaking action would not involve such
circumstances. As a result, FHWA finds that this proposed rulemaking
would not result in significant impacts on the human environment.
Executive Order 12630 (Taking of Private Property)
The FHWA has analyzed this proposed rule under Executive Order
12630, Governmental Actions and Interference with Constitutionally
Protected Property Rights. The FHWA does not anticipate that this
proposed action would affect a taking of private property or otherwise
have taking implications under Executive Order 12630.
Executive Order 12898 (Environmental Justice)
Executive Order 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations, and DOT
Order 5610.2(a) (the DOT Order), 91 FR 27534 (May 10, 2012) (available
online at www.fhwa.dot.gov/enviornment/environmental_justice/ej_at_dot/order_56102a/index.cfm), require DOT agencies to achieve environmental
justice (EJ) as part of their mission by identifying and addressing, as
appropriate, disproportionately high and adverse human health or
environmental effects, including interrelated social and economic
effects, of their programs, policies, and activities on minority
populations and low-income populations in the United States. The DOT
Order requires DOT agencies to address compliance with Executive Order
12898 and the DOT Order in all rulemaking activities. In addition, FHWA
has issued additional documents relating to administration of Executive
Order 12898 and the DOT Order. On June 14, 2012, FHWA issued an update
to its EJ order, FHWA Order 6640.23A, FHWA Actions to Address
Environmental Justice in Minority Populations and Low Income
Populations (the FHWA Order) (available online at www.fhwa.dot.gov/legsregs/directives/orders/664023a.htm).
The FHWA has evaluated this proposed rule under the Executive
Order, the DOT Order, and the FHWA Order. The FHWA has determined that
the proposed regulations would not cause disproportionately high and
adverse human health and environmental effects on minority or low
income populations.
Executive Order 12988 (Civil Justice Reform)
This action meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, Civil Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce burden.
Executive Order 13045 (Protection of Children)
We have analyzed this rule under Executive Order 13045, Protection
of Children from Environmental Health Risks and Safety Risks. The FHWA
certifies that this action would not cause an environmental risk to
health or safety that might disproportionately affect children.
Executive Order 13175 (Tribal Consultation)
The FHWA has analyzed this action under Executive Order 13175,
dated November 6, 2000, and believes that the proposed action would not
have substantial direct effects on one or more Indian tribes; would not
impose substantial direct compliance costs on Indian tribal
governments; and would not preempt tribal laws. The proposed rulemaking
addresses obligations of Federal funds to States for Federal-aid
highway projects and would not impose any direct compliance
requirements on Indian tribal governments. Therefore, a tribal summary
impact statement is not required.
Executive Order 13211 (Energy Effects)
We have analyzed this action under Executive Order 13211, Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. The FHWA has determined that this is not a
significant energy action under that order since it is not a
significant regulatory action under Executive Order 12866 and is not
likely to have a significant adverse effect on the supply,
distribution, or use of energy. Therefore, a Statement of Energy
Effects is not required.
Regulation Identifier Number
A RIN is assigned to each regulatory action listed in the Unified
Agenda of Federal Regulations. The Regulatory Information Service
Center publishes the Unified Agenda in April and October of each year.
The RIN number contained in the heading of this document can be used to
cross-reference this action with the Unified Agenda.
List of Subjects
23 CFR Part 630
Government contracts, Grant programs-transportation, Highways and
roads, Reporting and recordkeeping requirements.
23 CFR Part 635
Grant programs-transportation, Highways and roads, Reporting and
recordkeeping requirements.
Issued on: June 19, 2015.
Gregory G. Nadeau,
Acting Administrator, Federal Highway Administration.
In consideration of the foregoing, FHWA proposes to amend title 23,
Code of Federal Regulations, parts 630 and 635 as follows:
[[Page 36949]]
PART 630--PRECONSTRUCTION PROCEDURES
0
1. Revise the authority citation for part 630 to read as follows:
Authority: 23 U.S.C. 106, 109, 112, 115, 315, 320, and 402(a);
Sec. 1501 and 1503 of Public Law 109-59, 119 Stat. 1144; Public Law
105-178, 112 Stat. 193; Public Law 104-59, 109 Stat. 582; Public Law
97-424, 96 Stat. 2106; Public Law 90-495, 82 Stat. 828; Public Law
85-767, 72 Stat. 896; Public Law 84-627, 70 Stat. 380; 23 CFR 1.32
and 49 CFR 1.48(b), and Pub. L. 112-141, 126 Stat. 405, section
1303.
0
2. Amend Sec. 630.106 by adding a new paragraph (a)(8) to read as
follows:
Sec. 630.106 Authorization to proceed.
(a) * * *
(8) For Construction Manager/General Contractor projects, the
execution or modification of the project agreement for preconstruction
services associated with final design and construction services, and
authorization to proceed with such services, shall not occur until
after the completion of the NEPA process. However, preconstruction
services associated with preliminary design may be authorized in
accordance with this section.
* * * * *
PART 635--CONSTRUCTION AND MAINTENANCE
0
3. Revise the authority citation for part 635 to read as follows:
Authority: Sections 1525 and 1303 of Pub.L. 112-141, Sec. 1503
of Pub.L. 109-59, 119 Stat. 1144; 23 U.S.C. 101 (note), 109, 112,
113, 114, 116, 119, 128, and 315; 31 U.S.C. 6505; 42 U.S.C. 3334,
4601 et seq.; Sec. 1041(a), Pub.L. 102-240, 105 Stat. 1914; 23 CFR
1.32; 49 CFR 1.85(a)(1).
0
4. Amend Sec. 635.102 by adding, in alphabetical order, the definition
of ``Construction Manager/General Contractor (CM/GC) project'' to read
as follows:
Sec. 635.102 Definitions.
* * * * *
Construction Manager/General Contractor (CM/GC) project means a
project to be delivered using a two-phase contract with a construction
manager or general contractor for services during both the
preconstruction and construction phases of a project.
* * * * *
0
5. Amend Sec. 635.104 by adding paragraph (d) to read as follows:
Sec. 635.104 Method of construction.
* * * * *
(d) In the case of a CM/GC project, the requirements of subpart E
of this part and the appropriate provisions pertaining to the CM/GC
method of contracting in this part will apply. However, no
justification of cost effectiveness is necessary in selecting projects
for the CM/GC delivery method.
0
6. Amend Sec. 635.107 by revising the first sentence of paragraph (b)
to read as follows:
Sec. 635.107 Participation by disadvantaged business enterprises.
* * * * *
(b) In the case of a design-build or CM/GC project funded with
title 23 funds, the requirements of 49 CFR part 26 and the State's
approved DBE plan apply. * * *
0
7. Amend Sec. 635.109 by revising paragraph (a) introductory text to
read as follows:
Sec. 635.109 Standardized changed condition clauses.
(a) Except as provided in paragraph (b) of this section, the
following changed conditions contract clauses shall be made part of,
and incorporated in, each highway construction project, including
construction services agreements of CM/GC projects, approved under 23
U.S.C. 106:
* * * * *
0
8. Amend Sec. 635.110 by revising paragraph (f) introductory text to
read as follows:
Sec. 635.110 Licensing and qualification of contractors.
* * * * *
(f) In the case of a design-build and CM/GC project, the STDs may
use their own bonding, insurance, licensing, qualification or
prequalification procedure for any phase of procurement.
* * * * *
0
9. Amend Sec. 635.112 by adding paragraph (j) to read as follows:
Sec. 635.112 Advertising for bids and proposals.
* * * * *
(j) In the case of a CM/GC project, the FHWA Division
Administrator's approval of the solicitation document will constitute
the FHWA's approval to use the CM/GC contracting method and approval to
release the solicitation document. The STD must obtain the approval of
the FHWA Division Administrator before issuing addenda which result in
major changes to the solicitation document.
0
10. Amend Sec. 635.113 by adding paragraph (d) to read as follows:
Sec. 635.113 Bid opening and bid tabulation.
* * * * *
(d) In the case of a CM/GC project, the requirements of this
section do not apply. See subpart E of this part for approval
procedures.
0
11. Amend Sec. 635.114 by adding paragraph (l) to read as follows:
Sec. 635.114 Award of contract and concurrence in award.
* * * * *
(l) In the case of a CM/GC project, the CM/GC contract shall be
awarded in accordance with the solicitation document. See subpart E of
this part for CM/GC project approval procedures.
0
12. Amend Sec. 635.122 by adding paragraph (d) to read as follows:
Sec. 635.122 Participation in progress payments.
* * * * *
(d) In the case of a CM/GC project, the STD must define its
procedures for making progress payments pursuant to the selected
payment method in the appropriate solicitation and contract documents.
0
13. Amend Sec. 635.309 by revising paragraphs (p) introductory text,
(p)(1)(vi) introductory text, and (p)(3) to read as follows:
Sec. 635.309 Authorization.
* * * * *
(p) In the case of a design-build or CM/GC project, the following
certification requirements apply:
(1) * * *
(vi) If the STD elects to include right-of-way, utility, and/or
railroad services as part of the design-builder's (or CM/GC
contractor's) scope of work, then the Request for Proposals document
must include:
* * * * *
(3) Changes to the design-build or CM/GC project concept and scope
may require a modification of the transportation plan and
transportation improvement program. The project sponsor must comply
with the metropolitan and statewide transportation planning
requirements in 23 CFR part 450 and the transportation conformity
requirements (40 CFR parts 51 and 93) in air quality nonattainment and
maintenance areas, and provide appropriate approval notification to the
design builder (or the CM/GC contractor) for such changes.
0
14. Add subpart E to read as follows:
Subpart E--Construction Manager/General Contractor (CM/GC) Contracting
Sec.
635.501 Purpose.
635.502 Definitions.
635.503 Applicability.
635.504 CM/GC requirements.
635.505 Relationship to the NEPA process.
635.506 Project approvals and authorizations.
[[Page 36950]]
635.507 Cost eligibility.
Subpart E--Construction Manager/General Contractor (CM/GC)
Contracting
Sec. 635.501 Purpose.
The regulations in this subpart prescribe policies, requirements,
and procedures relating to the use of the CM/GC method of contracting
on Federal-aid projects.
Sec. 635.502 Definitions.
As used in this subpart:
Agreed price means the price agreed to by the Construction Manager/
General Contractor (CM/GC) contractor and the contracting agency to
provide construction services for a specific scope and schedule.
CM/GC contractor means the entity that has been awarded a two-phase
contract for a CM/GC project and is responsible for providing
preconstruction services under the first phase and, if a price
agreement is reached, construction services under the second phase of
such contract.
CM/GC project means a project to be delivered using a two-phase
contract with a CM/GC contractor for services during the
preconstruction and construction phases of a project.
Construction services means the physical construction work
undertaken by a CM/GC contractor to construct a project or a portion of
the project (including early work packages). Construction services may
be authorized as a single contract for the project, or through a
combination of contracts covering portions of the CM/GC project.
Procurement and authorization procedures are the same for every
contract for construction services.
Contracting agency means the State Transportation Agency (STA), and
any State or local government agency, public-private partnership, or
Indian tribe (as defined in 2 CFR 200.54) that is the acting under the
supervision of the STA and is awarding and administering a CM/GC
contract.
Division Administrator means the chief FHWA official assigned to
conduct business in a particular State.
Early work package means a portion or phase of physical
construction work (including material acquired for a construction
phase) that is procured after NEPA is complete but before all design
work for the project is complete. Contracting agencies may procure an
early work package only when the risks of the work are adequately
identified and the scope of work is defined sufficiently for the
contracting agency and the CM/GC contractor to reasonably determine
price. The requirements in Sec. 635.506 and Sec. 635.507 apply to
procuring an early work package and FHWA authorization for an early
work package.
Final design has the same meaning as defined in Sec. 636.103 of
this chapter.
NEPA process means the environmental review required under the
National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et
seq.), applicable portions of the NEPA implementing regulations at 40
CFR parts 1500-1508, and part 771 of this chapter.
Preconstruction services means consulting to provide a contracting
agency and its designer with information regarding the impacts of
design on the physical construction of the project, including
scheduling, work sequencing, cost engineering, constructability, cost
estimating, and risk identification. Under an agreement for
preconstruction services, the CM/GC contractor may provide consulting
services during both preliminary and final design. Such services do not
include design and engineering-related services as defined in Sec.
172.3 of this chapter.
Preliminary design has the same meaning as defined in Sec. 636.103
of this chapter.
Solicitation document means the document used by the contracting
agency to advertise the CM/GC project and request expressions of
interest, statements of qualifications, proposals, or offers.
State transportation agency (STA) has the same meaning as the term
State transportation department under Sec. 635.102 of this chapter.
Sec. 635.503 Applicability.
The provisions of this subpart apply to all Federal-aid projects
within the right-of-way of a public highway, those projects required by
law to be treated as if located on a Federal-aid highway, and other
projects which are linked to such projects (i.e., the project would not
exist without another Federal-aid highway project) that are to be
delivered using the CM/GC contractor method.
Sec. 635.504 CM/GC requirements.
(a) In general. A contracting agency may award a two-phase contract
to a CM/GC contractor for preconstruction and construction services.
The first phase of this contract is the preconstruction services phase.
The second phase is the construction services phase. The construction
services phase may occur under one contract or under multiple contracts
covering portions of the project, including early work packages.
(b) Procurement requirements. (1) The contracting agency shall
procure the CM/GC contract using competitive selection procurement
procedures providing for free and open competition.
(2) Contracting agency procedures may use any of the following
solicitation options in procuring a CM/GC contract: Letters of
interest, requests for qualifications, interviews, request for
proposals or other solicitation procedures provided by applicable State
law, regulation or policy. Single-phase or multiple-phase selection
procedures may also be used.
(3) Contracting agency procedures shall require, at a minimum, that
a CM/GC contract be advertised through solicitation documents that:
(i) Clearly define the scope of services being requested;
(ii) List evaluation factors and significant subfactors and their
relative importance in evaluating proposals;
(iii) List all required deliverables;
(iv) Identify whether interviews will be conducted before
establishing the final rank; and
(v) Include or reference sample contract form(s).
(4) If interviews are used in the selection process, the
contracting agency must offer the opportunity for an interview to all
short listed firms (or firms that submitted responsive proposals, if a
short list is not used). Also, if interviews are used, then the
contracting agency must not engage in conduct that favors one firm over
another and must not disclose a firm's offer to another firm.
(5) A contracting agency may award a CM/GC contract based on
qualifications, experience, best value, or any other combination of
factors considered appropriate by the contracting agency and the
Division Administrator and which are clearly specified in the
solicitation documents.
(6) In the event that the contracting agency is unwilling or unable
to enter into an agreement with the CM/GC contractor for the
construction services phase of the project (including any early work
package), after notification to the Division Administrator, the
contracting agency may initiate a new procurement process meeting the
requirements of subpart A of this part. If FHWA participation is being
requested in the cost of construction, the contracting agency must
request FHWA's approval before advertising for bids or proposals in
accordance with Sec. 635.112. Once the contracting agency advertises
for bids or proposals for the project or a portion of
[[Page 36951]]
the project, the contracting agency no longer can use the agreed price
procedures under this CM/GC regulation. When the contracting agency
makes a decision to initiate a new procurement, the contracting agency
may determine that there is an apparent conflict of interest and not
allow the CM/GC contractor to submit competitive bids.
(c) FHWA approval of CM/GC procedures. (1) The STA must submit its
proposed CM/GC procurement procedures to the FHWA Division
Administrator for review and approval. Any changes in approved
procedures and requirements shall also be subject to approval by the
Division Administrator. Other contracting agencies may follow STA
approved procedures or their own procedures if approved by the both the
STA and FHWA.
(2) The Division Administrator may approve procedures that conform
to the requirements of this subpart and which do not, in the opinion of
the Division Administrator, operate to restrict competition. The
Division Administrator's approval of CM/GC procurement procedures may
not be delegated or assigned to the STA.
(d) Subcontracting. Consistent with Sec. 635.116(a), agreements
for construction services must specify a minimum percentage of work (no
less than 30 percent of the total cost of the agreement for
construction services, excluding specialty work) that a contractor must
perform with its own forces. If required by State law, regulation, or
administrative policy, the contracting agency may require the CM/GC
contractor to competitively let and award subcontracts for construction
services to the lowest responsive bidder.
(e) Payment methods. (1) The method of payment to the CM/GC
contractor shall be set forth in the original solicitation documents,
contract, and any contract modification or change order thereto. A
single contract may contain different payment methods as appropriate
for compensation of different elements of work.
(2) The methods of payment for preconstruction services shall be:
Lump sum, cost plus fixed fee, cost per unit of work, specific rates of
compensation, or other comparable payment method permitted in State law
and regulation. The cost plus a percentage of cost and percentage of
construction cost methods of payment shall not be used.
(3) The method of payment for construction services may include any
method of payment authorized by State law (including, but not limited
to, lump sum, unit price and target price); however, when compensation
is based on actual costs, an approved indirect cost rate must be used.
Sec. 635.505 Relationship to the NEPA process.
(a) In procuring a CM/GC contract before the completion of the NEPA
process, the contracting agency may:
(1) Issue solicitation documents;
(2) Proceed with the award of a CM/GC contract providing for
preconstruction services and an option to enter into a future agreement
for construction services once the NEPA review process is complete;
(3) Issue notices to proceed to the CM/GC contractor for
preconstruction services, excluding final design-related activities;
and
(4) Issue a notice-to-proceed to a consultant design firm for the
preliminary design and any work related to preliminary design of the
project to the extent that those actions do not limit any reasonable
range of alternatives.
(b) The contracting agency shall not proceed with the award of an
agreement for the construction services phase of a CM/GC contract
(including early work packages such as advanced material acquisition or
site work) and, except as provided in paragraph (c) of this section,
shall not proceed, or permit any consultant or contractor to proceed,
with construction until the completion of the NEPA process for the
project.
(c) A contracting agency may proceed, solely at the risk and
expense of the contracting agency, with design activities at any level
of detail, including final design and preconstruction services
associated with final design, for a CM/GC project before completion of
the NEPA process without affecting subsequent approvals required for
the project. However, FHWA shall not authorize final design activities
and preconstruction services associated with final design, and such
activities shall not be eligible for Federal funding as provided in
Sec. 635.506(c), until after the completion the NEPA process. A
contracting agency may use a CM/GC contractor for preconstruction
services associated with at-risk final design only if the contracting
agency has a procedure for segregating the costs of the CM/GC
contractor's at-risk work from preconstruction services eligible for
reimbursement during the NEPA process. If a contracting agency decides
to perform at-risk final design, it must notify FHWA of its decision to
do so before undertaking such activities.
(d) The CM/GC contract must include termination provisions in the
event the environmental review process does not result in the selection
of a build alternative. This termination provision is in addition to
the termination for cause or convenience clause required by 2 CFR part
200, Appendix II.
(e) The CM/GC contract must include a provision providing that the
scope of services in the preconstruction phase includes all
alternatives identified and considered in the NEPA process.
(f) The CM/GC contract must include appropriate provisions ensuring
no commitments are made to any alternative during the NEPA process, and
that the comparative merits of all alternatives identified and
considered during the NEPA process, including the no-build alternative,
will be evaluated and fairly considered.
(g) The CM/GC contractor must not prepare NEPA documentation or
have any decisionmaking responsibility with respect to the NEPA
process. However, the CM/GC contractor may be requested to provide
information about the project and possible mitigation actions,
including constructability information, and its work product may be
considered in the NEPA analysis and included in the record.
(h) Any agreement for construction services under a CM/GC contract
must include appropriate provisions ensuring that all environmental and
mitigation measures identified in the NEPA documentation and committed
to in the NEPA determination for the selected alternative will be
implemented.
Sec. 635.506 Project approvals and authorizations.
(a) In general. (1) Under 23 U.S.C. 106(c), the States may assume
certain FHWA responsibilities for project design, plans,
specifications, estimates, contract awards, and inspections. Any
individual State's assumption of FHWA responsibilities for approvals
and determinations for CM/GC projects, as described in this subpart,
will be addressed in the State's FHWA/STA Stewardship and Oversight
Agreement. The State may not further delegate or assign those
responsibilities. If an STA assumes responsibility for an FHWA approval
or determination contained in this subpart, the STA will include
documentation in the project file sufficient to substantiate its
actions and to support any request for authorization. The STA will
provide FHWA with the documentation upon request.
(2) Before requesting the authorization for either preconstruction
or construction activities, the contracting agency must submit its
solicitation document for CM/GC services to the Division Administrator
for approval.
[[Page 36952]]
(b) Preconstruction services approvals and authorization. (1) If
the contracting agency wishes Federal participation in the cost of the
CM/GC contractor's preconstruction services, it must request FHWA's
authorization of preliminary engineering before incurring such costs.
(2) Before authorizing pre-construction services by the CM/GC
contractor, the Division Administrator must review and approve the
contracting agency's cost or price analysis for every procurement
(including contract modifications). A cost or price analysis is
encouraged but not required for procurements less than the simplified
acquisition threshold (currently $150,000).
(c) Final design during NEPA process. (1) If the contracting agency
proceeds with final design activities, including preconstruction
services associated with final design activities, at its own expense
before the completion of the NEPA process, then those activities for
the selected alternative may be eligible for Federal reimbursement
after the completion of the NEPA process so long as the Division
Administrator finds that the contracting agency's final design-related
activities:
(i) Did not limit the identification and fair evaluation of a
reasonable range of alternatives for the proposed project,
(ii) Did not result in an irrevocable commitment by the contracting
agency to the selection of a particular alternative,
(iii) Did not have an adverse environmental impact, and
(iv) Are necessary and reasonable and adequately documented.
(2) If, during the NEPA process, the Division Administrator finds
the final design work limits the fair evaluation of alternatives,
irrevocably commits the contracting agency to the selection of any
alternative, or causes an adverse environmental impact, then the
Division Administrator shall require the contracting agency to take any
necessary action to ensure the integrity of the NEPA process regardless
of whether the contracting agency wishes to receive Federal
reimbursement for such activities.
(d) Construction services approvals and authorizations. (1) Subject
to the requirements in Sec. 635.505, the contracting agency may
request Federal participation in the construction services costs
associated with a CM/GC construction project, or portion of a project
(including an early work package). In such cases, FHWA's construction
contracting requirements will apply to all of the CM/GC project's
construction contracts if any portion (including an early work package)
of the CM/GC project construction is funded with title 23 funds. Any
expenses incurred for construction services before FHWA authorization
shall not be eligible for reimbursement except as may be determined in
accordance with Sec. 1.9 of this chapter.
(2) The FHWA must approve the price estimate for construction costs
for the entire project before authorization of construction services
(including authorization of an early work package).
(3) The contracting agency must perform a price analysis for any
agreement (or contract modification) that establishes or revises the
scope, schedule or price for the construction of the CM/GC project or a
portion of the project (including an early work package). The price
analysis must compare the agreed price with the contracting agency's
engineer's estimate or an independent cost estimate (if required by the
contracting agency). A price analysis is encouraged but not required
for procurements less than the simplified acquisition threshold
(currently $150,000).
(4) The Division Administrator must review and approve the
contracting agency's price analysis and agreed price for the
construction services of a CM/GC project or a portion of the project
(including an early work package) before authorization of construction
services.
(5) Where the contracting agency and the CM/GC contractor agree on
a price for construction services, FHWA's authorization of construction
services will be based on the approved agreed price for the project or
portion of the project. The authorization may include authorization of
an early work package, including the advanced acquisition of materials
consistent with Sec. 635.122. In the event that construction materials
are acquired for a CM/GC project but not installed in the CM/GC
project, the cost of such material will not be eligible for Federal-aid
participation. In accordance with Sec. 635.507 and 2 CFR part 200,
FHWA may deny eligibility for part or all of an early work package if
such work is not needed for, or used for, the project.
(e) Contract award. Award of Federal-aid CM/GC contracts for
preconstruction and construction services requires prior concurrence
from the Division Administrator. The concurrence is a prerequisite to
the authorization of preconstruction and construction services
(including authorization for an early work package). Concurrence in the
contract award constitutes approval of the agreed price, scope, and
schedule for the work. The documentation supporting a contract award
should include the Disadvantaged Business Enterprise documentation
required by 26 CFR 26.53(b)(2) when there is a contract goal. A copy of
the executed contract between the contracting agency and the CM/GC
contractor, including any agreement for construction services, shall be
furnished to the Division Administrator as soon as practical after
execution. If the contracting agency decides not to proceed with the
award of a CM/GC construction services contract, then it must notify
the FHWA Division Administrator as provided in Sec. 635.504(b)(6).
Sec. 635.507 Cost eligibility.
(a) Costs, or prices based on estimated costs, for agreements under
a CM/GC contract shall be eligible for Federal-aid reimbursement only
to the extent that costs incurred, or cost estimates included in
negotiated prices, are allowable in accordance with the Federal cost
principles (as specified in 2 CFR part 200, subpart E). Contracting
agencies must perform a cost or price analysis in connection with
procurement actions, including contract modifications, in accordance
with 2 CFR 200.323(a) and this subpart.
(1) For preconstruction services, to the extent that actual costs
or cost estimates are included in negotiated prices that will be used
for cost reimbursement, the costs must comply with the Federal cost
principles to be eligible for participation.
(2) For construction services, the price analysis must confirm the
agreed price is reasonable in order to satisfy cost eligibility
requirements (see Sec. 635.506(d)(3)). The FHWA will rely on an
approved price analysis when authorizing funds for construction.
(b) Indirect cost rates. Where contract terms and payment are
negotiated based on individual elements of costs, the CM/GC contractor
must provide an indirect cost rate established in accordance with the
Federal cost principles (as specified in 2 CFR part 200, subpart E).
(c) Cost certification. (1) If the CM/GC contractor presents an
indirect cost rate established in accordance with the Federal cost
principles (as specified in 2 CFR part 200, subpart E), it shall
include a certification by an official of the CM/GC contractor that all
costs are allowable in accordance with the Federal cost principles.
(2) An official of the CM/GC contractor shall be an individual
executive or financial officer of the CM/GC contractor's organization,
at a level no lower than a Vice President or Chief Financial Officer,
or equivalent, who has the authority to make representations about the
financial
[[Page 36953]]
information utilized to establish the indirect cost rate proposal
submitted.
(3) The certification of final indirect costs shall read as
follows:
Certificate of Final Indirect Costs
This is to certify that I have reviewed this proposal to establish
final indirect cost rates and to the best of my knowledge and belief:
1. All costs included in this proposal (identify proposal and date)
to establish final indirect cost rates for (identify period covered by
rate) are allowable in accordance with the cost principles of the
Federal Acquisition Regulation (FAR) of title 48, Code of Federal
Regulations (CFR), part 31; and
2. This proposal does not include any costs which are expressly
unallowable under applicable cost principles of the FAR of 48 CFR part
31.
Firm:
Signature:
Name of Certifying Official:
Title:
Date of Execution:
[FR Doc. 2015-15617 Filed 6-26-15; 8:45 am]
BILLING CODE 4910-22-P