Indefinite Delivery and Indefinite Quantity Contracts for Federal-Aid Construction |
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Brandye L. Hendrickson
Federal Highway Administration
2 May 2018
[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Notices]
[Pages 19393-19395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09276]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. FHWA-2018-0003]
Indefinite Delivery and Indefinite Quantity Contracts for
Federal-Aid Construction
AGENCY: Federal Highway Administration (FHWA), U.S. Department of
Transportation (DOT).
ACTION: Notice--request for comments.
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SUMMARY: The FHWA is announcing that the Indefinite Delivery and
Indefinite Quantity (ID/IQ) method of contracting (including Job Order
Contracts) for low-cost construction contracts in the Federal-aid
highway program will be allowed, without prior FHWA approval, under
certain circumstances.
DATES: Comments must be received on or before June 1, 2018. Late
comments will be considered to the extent practicable.
ADDRESSES: You may submit comments, identified by the document number
at the top of this document, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Fax: 1-202-493-2251.
Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor,
Room W12-140, Washington, DC 20590.
Hand Delivery/Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Ave. SE, between 9:00 a.m. and 5:00 p.m.,
Monday through Friday, except Federal holidays. The telephone number is
(202) 366-9329.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to www.regulations.gov, including any personal
information provided.
Docket: For access to the docket to read background documents or
comments received, go to www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Mr. John Huyer, FHWA Office of Program Administration,
(202) 366-1562, or via email at John.Huyer@dot.gov. For legal
questions, please contact Mr. Jomar Maldonado, FHWA Office of the Chief
Counsel, 202-366-1373, or via email at Jomar.Maldonado@dot.gov. Office
hours for the FHWA are from 8:00 a.m. to 4:30 p.m., E.T.,
[[Page 19394]]
Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION: This notice announces that contracting
agencies no longer need to submit individual requests and work plans
pursuant to Special Experimental Project No. 14 (SEP-14) for low-cost
contracts that are awarded to the lowest responsive bidder based on an
invitation for bids. However, this contracting technique continues to
be authorized on an experimental basis while FHWA explores rulemaking
to revise FHWA's regulations to accommodate this contracting technique.
Background
The ID/IQ contracts are a method of contracting that allows an
indefinite quantity of services for a fixed time. They are used in the
Federal Government when agencies cannot determine, above a specified
minimum, the precise quantities of supplies or services that the
Government will require during the contract period. For construction
ID/IQ contracts, contractors bid unit prices for estimated quantities
of standard work items and task orders are used to define the location
and quantities for specific work. The ID/IQ contracts may be awarded to
the lowest responsive bidder based on an invitation for bids or the
best-value proposer based on responses to Requests for Proposals.
Contracting agencies use other names for these types of contracts
including on-call contracts, area-wide contracts, continuing contracts,
push-button contracts, and task order contracts. Job Order Contracts
(JOCs) are a form of ID/IQ contracts that utilize a construction task
catalogue with pre-priced work item descriptions and where contractors
bid ``mark-up rates.'' The contract is awarded to the lowest responsive
bidder determined by their rates.
Although ID/IQ contracts have been specifically authorized in the
Federal procurement process (48 CFR 16.5) and for the contracting of
architecture and engineering (A/E) services in the Federal-aid highway
program (FAHP) (23 CFR part 172), the FAHP authorization and
procurement laws for construction do not address the possible use of
ID/IQ contracts. The FAHP construction procurement statute, 23 U.S.C.
112(b)(1), requires contracts to be awarded by a competitive bidding
process to the lowest responsive bidder (traditional design-bid-build
project delivery method based upon the premise of a 100 percent-
complete design and a well-defined scope of work). The ID/IQ contracts
are awarded based upon a general, but not completely defined, scope of
work for a geographic area and limited time period (but not specific
locations, designs, or quantities) and are often awarded based upon
specific evaluation criteria.
A. Experience Under Special Experimental Project Number 14 (SEP-14)
The FHWA has used its authority in 23 U.S.C. 502(b)(1) to test the
use of ID/IQ contracts for the construction of FAHP projects through
the SEP-14 Program for innovative contracting techniques. Under the
SEP-14 Program, contracting agencies interested in testing an
innovative contracting technique submit project-specific (or
programmatic) work plans for their implementation. The FHWA Division
Office evaluates the work plan, coordinates with FHWA Headquarters,
and, if it finds the work plan to be acceptable, FHWA approves the use
of the technique on a temporary basis for a project or group of pilot
projects. Over time, FHWA Headquarters staff assess the initiative to
determine if it is a technique that should be operationalized for the
FAHP on a permanent basis without the need for individual requests,
work plans, and evaluation reports. Operationalizing SEP-14 experiments
has taken different paths in the past based on the source of the policy
warranting innovation and FHWA's risk assessment, such as FHWA-
initiated memoranda (for example, cost plus time bidding and lane
rental), FHWA-initiated rulemaking (for example, warranty clauses at 23
CFR 635.413), and congressionally initiated statutory amendments (for
example, design-build and contractor manager/general contractor under
23 U.S.C. 112(b)(3)-(4)). More information on SEP-14 can be found at
https://www.fhwa.dot.gov/construction/cqit/sep14.cfm.
Having evaluated the use of JOCs and ID/IQ contracts for
construction in the FAHP for over a decade, FHWA has now determined
that they are suitable for operationalization. For more than 10 years,
FHWA and State departments of transportation (State DOTs) have
experimented with the use of ID/IQ contracts and JOCs for construction.
FHWA has approved the use of these contracts under SEP-14 for 16
different State DOTs and 6 local public agencies. Evaluation reports
indicate that JOCs and ID/IQ contracts allow for cost-effective
contracting for small value contracts and preventive maintenance
programs. These evaluation reports can be found at https://www.fhwa.dot.gov/programadmin/contracts/sep14list.cfm. Specifically,
the reports indicate that these contracts eliminate the need for
contracting agencies to advertise and award numerous small contracts
and provide contracting agencies with wide flexibility in programming
and addressing preventive maintenance needs.
The FHWA's determination that this contracting technique is
suitable for operationalization is consistent with requests in Senate
reports for fiscal year 2017 and 2018 appropriations to operationalize
JOCs. S. Rept. No. 114-243, 43 (April 21, 2016); S. Rept. No. 115-138,
52 (July 27, 2017).
B. Steps for Operationalizing ID/IQs and JOCs for Construction in the
FAHP
The FHWA is proceeding with two phases to operationalize ID/IQ
contracts and JOCs for construction in the FAHP. The first phase is the
issuance of this Notice, and the second phase is the initiation of a
rulemaking.
1. Notice To Allow ID/IQ and JOCs for Low-Cost Construction Contracts
The first phase is the issuance of this Notice describing when
contracting agencies may use ID/IQ contracts and JOCs for construction
without the need for project-specific work plans from contracting
agencies.
The FHWA considers ``low-cost contracts'' to be 1- or 2-year
contracts awarded to the lowest responsive bidder for construction of
projects that qualify for FHWA categorical exclusions (CE) under the
National Environmental Policy Act (NEPA) of 1969 (23 CFR 771.117) and
where the total value of task or work orders does not exceed $2,000,000
per year. Contracting agencies should continue to following existing
procedures for contract extensions. The FHWA may allow contract
extensions, but the maximum length of the contract period with
extensions may not exceed 5 years.
Contracting agencies interested in this contracting method should
provide assurances to FHWA, including assurances that the total value
of task or work orders will not exceed $2,000,000 per year, that the
actions covered will be for projects that qualify for a CE, that the
work will comply with applicable Title 23 requirements, and that the
contracting agency will comply with applicable Disadvantaged Business
Enterprise requirements.
Individual tasks must undergo a complete environmental review prior
to their approval (23 CFR 771.113(a)). The FHWA Division Office should
determine how individual task orders will be approved. In addition,
there are
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requirements in 23 CFR part 635 that may not apply to ID/IQs (for
example, standard change conditions clauses in 23 CFR 635.109 and self-
performance requirements in 23 CFR 635.113), but FHWA will encourage
contracting agencies to use similar requirements consistent with State
or local government policy.
This contracting technique will continue to be experimental under
FHWA's SEP-14 authority because FHWA's regulations and procedures do
not accommodate this type of contracting technique; however,
contracting agencies will not need to submit individual SEP-14 requests
and work plans for low-cost contracts under these conditions. The FHWA
would expect contracting agencies to continue to request specific SEP-
14 approval for best value awards, multiple-award ID/IQ contracts and
JOCs, and contracts that exceed the low-cost threshold or are not
otherwise within the limitations of this notice. The FHWA will request
its division offices to report annually on different metrics to assess
the contracting technique's impact on competition. The FHWA seeks
public comments on this approach.
2. Step Two: Rulemaking Initiation
Under the second phase, FHWA intends to initiate rulemaking to
address the construction and approval regulations that need amendments
in order to allow the contracting technique on a permanent basis. This
rulemaking would be published in the Federal Register and provide an
opportunity for the public to comment on the use of ID/IQ contracts or
JOC for construction in the FAHP.
Authority: 23 U.S.C. 112 and 502; 23 CFR 635.
Issued on: April 25, 2018.
Brandye L. Hendrickson,
Acting Administrator, Federal Highway Administration.
[FR Doc. 2018-09276 Filed 5-1-18; 8:45 am]
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