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HomeMy WebLinkAbout13-071 - EXHIBITS A-I - Tukwila Transit Center Design, Construction and Management Following are Exhibits A thru I to Contract 13-071 Exhibits A-I: Tukwila Transit Center Design, Construction and Maintenance EXHIBIT A TUKWILA TRANSIT CENTER PROJECT Item Budget Funding Source City FTA Grant 1 Site Preparation $200,000 $100,000 $100,000 2 Site Utilities 100,000 50,000 50,000 3 Paving, Sidewalks, Customer 490,000 245,000 245,000 Waiting Areas 4 Landscaping Improvements 600,000 300,000 300,000 5 Shelter Improvements 640,000 320,000 320,000 6 Transit Center Amenities 420,000 210,000 210,000 7 Electrical Improvements 350,000 175,000 175,000 Total $2,800,000 $1,400,000 $1,400,000 Agreement Between King County and the City of Tukwila For the Design, Construction and Maintenance of the Tukwila Transit Center EXHIBIT B COUNTY MAINTENANCE SUPPORT AREA Agreement Between King County and the City of Tukwila For the Design, Construction and Maintenance of the Tukwila Transit Center OUTHBOUND STOP NORTHBOUND STOP _ CAN SHELTER TUKWILA URBAN CENTER TRANSIT CENTER PROJECT; ANDOVER PARK WEST STREET & WATER IMPROVEMENT PROJECT COUNTY EXHIBIT B EXHIBIT C 49 CFR 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 1 of 38 TITLE 49 - TRANSPORTATION PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS Subpart A -- General Sec. 18.1 Purpose and scope of this part. 18.2 Scope of subpart. 18.3 Definitions. 18.4 Applicability. 18.5 Effect on other issuances. 18.6 Additions and exceptions. Subpart B -- Pre -Award Requirements 18.10 Forms for applying for grants. 18.11 State plans. 18.12 Special grant or subgrant conditions for "high risk" grantees. Subpart C -- Post -Award Requirements Financial Administration 18.20 Standards for financial management systems. 18.21 Payment. 18.22 Allowable costs. 18.23 Period of availability of funds. 18.24 Matching or cost sharing. 18.25 Program income. 18.26 NonFederal audits. Changes, Property, and Subawards 18.30 Changes. 18.31 Real property. 18.32 Equipment. 18.33 Supplies. 18.34 Copyrights. 18.35 Subawards to debarred and suspended parties. 18.36 Procurement. 18.37 Subgrants. Reports, Records Retention, and Enforcement 18.40 Monitoring and reporting program performance. 18.41 Financial reporting. 18.42 Retention and access requirements for records. 18.43 Enforcement. 18.44 Termination for convenience. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 2 of 38 Subpart D -- After - the -Grant Requirements 18.50 Closeout. 18.51 Later disallowances and adjustments. 18.52 Collection of amounts due. Subpart E -- Entitlements Authority: 49 U.S.C. 322(a). Source: 53 FR 8086 and 8087, Mar. 11, 1988, unless otherwise noted. Editorial Note: For additional information, see related documents published at 49 FR 24958, June 18, 1984, 52 FR 20198, May 29, 1987, and 53 FR 8028, March 11, 1988. Subpart A-- General Sec. 18.1 Purpose and scope of this part. This part establishes uniform administrative rules for Federal grants and cooperative agreements and subawards to State, local and Indian tribal governments. Sec. 18.2 Scope of subpart. This subpart contains general rules pertaining to this part and procedures for control of exceptions from this part. Sec. 18.3 Definitions. As used in this part: Accrued expenditures mean the charges incurred by the grantee during a given period requiring the provision of funds for: (1) Goods and other tangible property received; (2) services performed by employees, contractors, subgrantees, subcontractors, and other payees; and (3) other amounts becoming owed under programs for which no current services or performance is required, such as annuities, insurance claims, and other benefit payments. Accrued income means the sum of: (1) Earnings during a given period from services performed by the grantee and goods and other tangible property delivered to purchasers, and (2) amounts becoming owed to the grantee for which no current services or performance is required by the grantee. Acquisition cost of an item of purchased equipment means the net invoice unit price of the property including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges such as the cost of installation, transportation, taxes, duty or protective in- transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the grantee's regular accounting practices. Administrative requirements mean those matters common to grants in general, such as financial management, kinds and frequency of reports, and retention of records. These are distinguished from "programmatic" requirements, which concern matters that can be treated only on a program -by- program or grant -by -grant basis, http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 3 of 38 such as kinds of activities that can be supported by grants under a particular program. Awarding agency means (1) with respect to a grant, the Federal agency, and (2) with respect to a subgrant, the party that awarded the subgrant. Cash contributions means the grantee's cash outlay, including the outlay of money contributed to the grantee or subgrantee by other public agencies and institutions, and private organizations and individuals. When authorized by Federal legislation, Federal funds received from other assistance agreements may be considered as grantee or subgrantee cash contributions. Contract means (except as used in the definitions for "grant" and "subgrant" in this section and except where qualified by "Federal ") a procurement contract under a grant or subgrant, and means a procurement subcontract under a contract. Cost sharing or matching means the value of the third party in - -kind contributions and the portion of the costs of a federally assisted project or program not borne by the Federal Government. Cost -type contract means a contract or subcontract under a grant in which the contractor or subcontractor is paid on the basis of the costs it incurs, with or without a fee. Equipment means tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. A grantee may use its own definition of equipment provided that such definition would at least include all equipment defined above. Expenditure report means: (1) For nonconstruction grants, the SF -269 "Financial Status Report" (or other equivalent report); (2) for construction grants, the SF271 "Outlay Report and Request for Reimbursement" (or other equivalent report). Federally recognized Indian tribal government means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village as defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 688) certified by the Secretary of the Interior as eligible for the special programs and services provided by him through the Bureau of Indian Affairs. Government means a State or local government or a federally recognized Indian tribal government. Grant means an award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible grantee. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, which the grantee is not required to account for. Grantee means the government to which a grant is awarded and which is accountable for the use of the funds provided. The grantee is the entire legal entity even if only a particular component of the entity is designated in the grant award document. Local government means a county, municipality, city, town, township, local public authority (including any public and Indian housing agency under the United States Housing Act of 1937) school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under state law), any other regional or interstate government entity, or any agency or instrumentality of a local government. Obligations means the amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 4 of 38 future period. OMB means the United States Office of Management and Budget. Outlays (expenditures) mean charges made to the project or program. They may be reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of actual cash disbursement for direct charges for goods and services, the amount of indirect expense incurred, the value of inkind contributions applied, and the amount of cash advances and payments made to contractors and subgrantees. For reports prepared on an accrued expenditure basis, outlays are the sum of actual cash disbursements, the amount of indirect expense incurred, the value of in -kind contributions applied, and the new increase (or decrease) in the amounts owed by the grantee for goods and other property received, for services performed by employees, contractors, subgrantees, subcontractors, and other payees, and other amounts becoming owed under programs for which no current services or performance are required, such as annuities, insurance claims, and other benefit payments. Percentage of completion method refers to a system under which payments are made for construction work according to the percentage of completion of the work, rather than to the grantee's cost incurred. Prior approval means documentation evidencing consent prior to incurring specific cost. Real property means land, including land improvements, structures and appurtenances thereto, excluding movable machinery and equipment. Share, when referring to the awarding agency's portion of real property, equipment or supplies, means the same percentage as the awarding agency's portion of the acquiring party's total costs under the grant to which the acquisition costs under the grant to which the acquisition cost of the property was charged. Only costs are to be counted - -not the value of third -party in -kind contributions. State means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments. The term does not include any public and Indian housing agency under United States Housing Act of 1937. Subgrant means an award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases, nor does it include any form of assistance which is excluded from the definition of "grant" in this part. Subgrantee means the government or other legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided. Supplies means all tangible personal property other than "equipment" as defined in this part. Suspension means depending on the context, either (1) temporary withdrawal of the authority to obligate grant funds pending corrective action by the grantee or subgrantee or a decision to terminate the grant, or (2) an action taken by a suspending official in accordance with agency regulations implementing E.O. 12549 to immediately exclude a person from participating in grant transactions for a period, pending completion of an investigation and such legal or debarment proceedings as may ensue. Termination means permanent withdrawal of the authority to obligate previouslyawarded grant funds before that authority would otherwise expire. It also means the voluntary relinquishment of that authority by the grantee or subgrantee. "Termination" does not include: (1) Withdrawal of funds awarded on the basis of the grantee's underestimate of the unobligated balance in a prior period; (2) Withdrawal of the unobligated balance http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 5 of 38 as of the expiration of a grant; (3) Refusal to extend a grant or award additional funds, to make a competing or noncompeting continuation, renewal, extension, or supplemental award; or (4) voiding of a grant upon determination that the award was obtained fraudulently, or was otherwise illegal or invalid from inception. Terms of a grant or subgrant mean all requirements of the grant or subgrant, whether in statute, regulations, or the award document. Third party in -kind contributions mean property or services which benefit a federally assisted project or program and which are contributed by non - Federal third parties without charge to the grantee, or a cost -type contractor under the grant agreement. Unliquidated obligations for reports prepared on a cash basis mean the amount of obligations incurred by the grantee that has not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the grantee for which an outlay has not been recorded. Unobligated balance means the portion of the funds authorized by the Federal agency that has not been obligated by the grantee and is determined by deducting the cumulative obligations from the cumulative funds authorized. Sec. 18.4 Applicability. (a) General. Subparts A through D of this part apply to all grants and subgrants to governments, except where inconsistent with Federal statutes or with regulations authorized in accordance with the exception provision of Sec. 18.6, or: (1) Grants and subgrants to State and local institutions of higher education or State and local hospitals. (2) The block grants authorized by the Omnibus Budget Reconciliation Act of 1981 (Community Services; Preventive Health and Health Services; Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child Health Services; Social Services; LowIncome Home Energy Assistance; States' Program of Community Development Block Grants for Small Cities; and Elementary and Secondary Education other than programs administered by the Secretary of Education under title V, subtitle D, chapter 2, Section 583 -the Secretary's discretionary grant program) and titles I -III of the Job Training Partnership Act of 1982 and under the Public Health Services Act (Section 1921), Alcohol and Drug Abuse Treatment and Rehabilitation Block Grant and part C of title V, Mental Health Service for the Homeless Block Grant). (3) Entitlement grants to carry out the following programs of the Social Security Act: (i) Aid to Needy Families with Dependent Children (title IV -A of the Act, not including the Work Incentive Program (WIN) authorized by section 402(a)19(G); HHS grants for WIN are subject to this part); (ii) Child Support Enforcement and Establishment of Paternity (title IV -D of the Act); (iii) Foster Care and Adoption Assistance (title IV -E of the Act); (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and XVI -AABD of the Act); and (v) Medical Assistance (Medicaid) (title XIX of the Act) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B). (4) Entitlement grants under the following programs of The National School Lunch Act: http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 6 of 38 (i) School Lunch (section 4 of the Act), (2) Commodity Assistance (section 6 of the Act), (3) Special Meal Assistance (section 11 of the Act), (4) Summer Food Service for Children (section 13 of the Act), and (5) Child Care Food Program (section 17 of the Act). (5) Entitlement grants under the following programs of The Child Nutrition Act of 1966: (i) Special Milk (section 3 of the Act), and (ii) School Breakfast (section 4 of the Act). (6) Entitlement grants for State Administrative expenses under The Food Stamp Act of 1977 (section 16 of the Act). (7) A grant for an experimental, pilot, or demonstration project that is also supported by a grant listed in paragraph (a)(3) of this section; (8) Grant funds awarded under subsection 412(e) of the Immigration and Nationality Act (8 U.S.C. 1522 (e)) and subsection 501(a) of the Refugee Education Assistance Act of 1980 (Pub. L. 96422, 94 Stat. 1809), for cash assistance, medical assistance, and supplemental security income benefits to refugees and entrants and the administrative costs of providing the assistance and benefits; (9) Grants to local education agencies under 20 U.S.C. 236 through 241 -1(a), and 242 through 244 (portions of the Impact Aid program), except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for Handicapped Children); and (10) Payments under the Veterans Administration's State Home Per Diem Program (38 U.S.C. 641(a)). (b) Entitlement programs. Entitlement programs enumerated above in Sec. 18.4(a) (3) through (8) are subject to subpart E. Sec. 18.5 Effect on other issuances. All other grants administration provisions of codified program regulations, program manuals, handbooks and other nonregulatory materials which are inconsistent with this part are superseded, except to the extent they are required by statute, or authorized in accordance with the exception provision in Sec. 18.6. Sec. 18.6 Additions and exceptions. (a) For classes of grants and grantees subject to this part, Federal agencies may not impose additional administrative requirements except in codified regulations published in the Federal Register. (b) Exceptions for classes of grants or grantees may be authorized only by OMB. (1) All Departmental requests for exceptions shall be processed through the Assistant Secretary of Administration. (2) [Reserved] http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 7 of 38 (c) Exceptions on a case -by -case basis and for subgrantees may be authorized by the affected Federal agencies. (1) All case -by -case exceptions may be authorized by the affected operating administrations or departmental offices, with the concurrence of the Assistant Secretary for Administration. (2) [Reserved] [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 60 FR 19646, Apr. 19, 1995] Subpart B -- Pre -Award Requirements Sec. 18.10 Forms for applying for grants. (a) Scope. (1) This section prescribes forms and instructions to be used by governmental organizations (except hospitals and institutions of higher education operated by a government) in applying for grants. This section is not applicable, however, to formula grant programs which do not require applicants to apply for funds on a project basis. (2) This section applies only to applications to Federal agencies for grants, and is not required to be applied by grantees in dealing with applicants for subgrants. However, grantees are encouraged to avoid more detailed or burdensome application requirements for subgrants. (3) Forms and procedures for Federal Highway Administration (FHWA) projects are contained in 23 CFR part 630, subpart B, 23 CFR part 420, subpart A, and 49 CFR part 450. (b) Authorized forms and instructions for governmental organizations. (1) In applying for grants, applicants shall only use standard application forms or those prescribed by the granting agency with the approval of OMB under the Paperwork Reduction Act of 1980. (2) Applicants are not required to submit more than the original and two copies of preapplications or applications. (3) Applicants must follow all applicable instructions that bear OMB clearance numbers. Federal agencies may specify and describe the programs, functions, or activities that will be used to plan, budget, and evaluate the work under a grant. Other supplementary instructions may be issued only with the approval of OMB to the extent required under the Paperwork Reduction Act of 1980. For any standard form, except the SF -424 facesheet, Federal agencies may shade out or instruct the applicant to disregard any line item that is not needed. (4) When a grantee applies for additional funding (such as a continuation or supplemental award) or amends a previously submitted application, only the affected pages need be submitted. Previously submitted pages with information that is still current need not be resubmitted. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988] Sec. 18.11 State plans. (a) Scope. The statutes for some programs require States to submit plans before receiving grants. Under regulations implementing Executive Order 12372, "Intergovernmental Review of Federal Programs," States are http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 8 of 38 allowed to simplify, consolidate and substitute plans. This section contains additional provisions for plans that are subject to regulations implementing the Executive order. (b) Requirements. A State need meet only Federal administrative or programmatic requirements for a plan that are in statutes or codified regulations. (c) Assurances. In each plan the State will include an assurance that the State shall comply with all applicable Federal statutes and regulations in effect with respect to the periods for which it receives grant funding. For this assurance and other assurances required in the plan, the State may: (1) Cite by number the statutory or regulatory provisions requiring the assurances and affirm that it gives the assurances required by those provisions, (2) Repeat the assurance language in the statutes or regulations, or (3) Develop its own language to the extent permitted by law. (d) Amendments. A State will amend a plan whenever necessary to reflect: (1) New or revised Federal statutes or regulations or (2) a material change in any State law, organization, policy, or State agency operation. The State will obtain approval for the amendment and its effective date but need submit for approval only the amended portions of the plan. Sec. 18.12 Special grant or subgrant conditions for "high- risk" grantees. (a) A grantee or subgrantee may be considered "high risk" if an awarding agency determines that a grantee or subgrantee: (1) Has a history of unsatisfactory performance, or (2) Is not financially stable, or (3) Has a management system which does not meet the management standards set forth in this part, or (4) Has not conformed to terms and conditions of previous awards, or (5) Is otherwise not responsible; and if the awarding agency determines that an award will be made, special conditions and/or restrictions shall correspond to the high risk condition and shall be included in the award. (b) Special conditions or restrictions may include: (1) Payment on a reimbursement basis; (2) Withholding authority to proceed to the next phase until receipt of evidence of acceptable performance within a given funding period; (3) Requiring additional, more detailed financial reports; (4) Additional project monitoring; (5) Requiring the grantee or subgrantee to obtain technical or management assistance; or (6) Establishing additional prior approvals. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPER... Page 9 of 38 (c) If an awarding agency decides to impose such conditions, the awarding official will notify the grantee or subgrantee as early as possible, in writing, of: (1) The nature of the special conditions /restrictions; (2) The reason(s) for imposing them; (3) The corrective actions which must be taken before they will be removed and the time allowed for completing the corrective actions; and (4) The method of requesting reconsideration of the conditions /restrictions imposed. Subpart C -- Post -Award Requirements Financial Administration Sec. 18.20 Standards for financial management systems. (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost -type contractors, must be sufficient to -- (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and subgrantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially- assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financiallyassisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. (3) Internal control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized purposes. (4) Budget control. Actual expenditures or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. If unit cost data are required, estimates based on available documentation will be accepted whenever possible. (5) Allowable cost. Applicable OMB cost principles, agency program regulations, and the terms of grant and subgrant agreements will be followed in determining the reasonableness, allowability, and allocability of costs. (6) Source documentation. Accounting records must be supported by such source documentation as http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 10 of 38 cancelled checks, paid bills, payrolls, time and attendance records, contract and subgrant award documents, etc. (7) Cash management. Procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of reports on subgrantees' cash balances and cash disbursements in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by letter -of- credit or electronic transfer of funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the grantees. (c) An awarding agency may review the adequacy of the financial management system of any applicant for financial assistance as part of a preaward review or at any time subsequent to award. (d) Certain Urban Mass Transportation Administration (UMTA) grantees shall comply with the requirements of section 15 of the Urban Mass Transportation (UMT) Act of 1964, as amended, as implemented by 49 CFR part 630, regarding a uniform system of accounts and records and a uniform reporting system for certain grantees. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988] Sec. 18.21 Payment. (a) Scope. This section prescribes the basic standard and the methods under which a Federal agency will make payments to grantees, and grantees will make payments to subgrantees and contractors. (b) Basic standard. Methods and procedures for payment shall minimize the time elapsing between the transfer of funds and disbursement by the grantee or subgrantee, in accordance with Treasury regulations at 31 CFR part 205. (c) Advances. Grantees and subgrantees shall be paid in advance, provided they maintain or demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their disbursement by the grantee or subgrantee. (d) Reimbursement. Reimbursement shall be the preferred method when the requirements in paragraph (c) of this section are not met. Grantees and subgrantees may also be paid by reimbursement for any construction grant. Except as otherwise specified in regulation, Federal agencies shall not use the percentage of completion method to pay construction grants. The grantee or subgrantee may use that method to pay its construction contractor, and if it does, the awarding agency's payments to the grantee or subgrantee will be based on the grantee's or subgrantee's actual rate of disbursement. (e) Working capital advances. If a grantee cannot meet the criteria for advance payments described in paragraph (c) of this section, and the Federal agency has determined that reimbursement is not feasible because the grantee lacks sufficient working capital, the awarding agency may provide cash or a working capital advance basis. Under this procedure the awarding agency shall advance cash to the grantee to cover its estimated disbursement needs for an initial period generally geared to the grantee's disbursing cycle. Thereafter, the awarding agency shall reimburse the grantee for its actual cash disbursements. The working capital advance method of payment shall not be used by grantees or subgrantees if the reason for using such method is the unwillingness or inability of the grantee to provide timely advances to the subgrantee to meet the subgrantee's actual cash disbursements. (f) Effect of program income, refunds, and audit recoveries on payment. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 11 of 38 (1) Grantees and subgrantees shall disburse repayments to and interest earned on a revolving fund before requesting additional cash payments for the same activity. (2) Except as provided in paragraph (f)(1) of this section, grantees and subgrantees shall disburse program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments. (g) Withholding payments. (1) Unless otherwise required by Federal statute, awarding agencies shall not withhold payments for proper charges incurred by grantees or subgrantees unless -- (i) The grantee or subgrantee has failed to comply with grant award conditions or (ii) The grantee or subgrantee is indebted to the United States. (2) Cash withheld for failure to comply with grant award condition, but without suspension of the grant, shall be released to the grantee upon subsequent compliance. When a grant is suspended, payment adjustments will be made in accordance with Sec. 18.43(c). (3) A Federal agency shall not make payment to grantees for amounts that are withheld by grantees or subgrantees from payment to contractors to assure satisfactory completion of work. Payments shall be made by the Federal agency when the grantees or subgrantees actually disburse the withheld funds to the contractors or to escrow accounts established to assure satisfactory completion of work. (h) Cash depositories. (1) Consistent with the national goal of expanding the opportunities for minority business enterprises, grantees and subgrantees are encouraged to use minority banks (a bank which is owned at least 50 percent by minority group members). A list of minority owned banks can be obtained from the Minority Business Development Agency, Department of Commerce, Washington, DC 20230. (2) A grantee or subgrantee shall maintain a separate bank account only when required by FederalState agreement. (i) Interest earned on advances. Except for interest earned on advances of funds exempt under the Intergovernmental Cooperation Act (31 U.S.C. 6501 et seq.) and the Indian Self- Determination Act (23 U.S.C. 450), grantees and subgrantees shall promptly, but at least quarterly, remit interest earned on advances to the Federal agency. The grantee or subgrantee may keep interest amounts up to $100 per year for administrative expenses. (j) 23 U.S.C. 121 limits payments to States for highway construction projects to the Federal share of the costs of construction incurred to date, plus the Federal share of the value of stockpiled materials. (k) Section 404 of the Surface Transportation Assistance Act of 1982 directs the Secretary to reimburse States for the Federal share of costs incurred. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988] Sec. 18.22 Allowable costs. (a) Limitation on use of funds. Grant funds may be used only for: http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 12 of 38 (1) The allowable costs of the grantees, subgrantees and cost -type contractors, including allowable costs in the form of payments to fixed -price contractors; and (2) Reasonable fees or profit to cost -type contractors but not any fee or profit (or other increment above allowable costs) to the grantee or subgrantee. (b) Applicable cost principles. For each kind of organization, there is a set of Federal principles for determining allowable costs. Allowable costs will be determined in accordance with the cost principles applicable to the organization incurring the costs. The following chart lists the kinds of organizations and the applicable cost principles. For the costs of a State, local or Indian tribal government. Private nonprofit organization other than an (1) institution of higher education, (2) hospital, or (3) organization named in OMB Circular A122 as not subject to that circular. Educational institutions. For - profit organization other than a hospital and an organization named in OMB Circular A122 as not subject to that circular. Use the principles in -- OMB Circular A -87. OMB Circular A -122. OMB Circular A -21. 48 CFR part 31. Contract Cost Principles and Procedures, or uniform cost accounting standards that comply with cost principles acceptable to the Federal agency. (c) The overhead cost principles of OMB Circular A -87 shall not apply to State highway agencies for FHWA funded grants. (d) Sections 3(1) and 9(p) of the UMT Act of 1964, as amended, authorize the Secretary to include in the net project cost eligible for Federal assistance, the amount of interest earned and payable on bonds issued by the State or local public body to the extent that the proceeds of such bonds have actually been expended in carrying out such project or portion thereof. Limitations are established in sections 3 and 9 of the UMT Act of 1964, as amended. (e) Section 9 of the UMT Act of 1964, as amended, authorizes grants to finance the leasing of facilities and equipment for use in mass transportation services provided leasing is more cost effective than acquisition or construction. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988] Sec. 18.23 Period of availability of funds. (a) General. Where a funding period is specified, a grantee may charge to the award only costs resulting from obligations of the funding period unless carryover of unobligated balances is permitted, in which case the carryover balances may be charged for costs resulting from obligations of the subsequent funding period. (b) Liquidation of obligations. A grantee must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period (or as specified in a program regulation) to coincide with the submission of the annual Financial Status Report (SF -269). The Federal agency may extend this deadline at the request of the grantee. Sec. 18.24 Matching or cost sharing. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 13 of 38 (a) Basic rule: Costs and contributions acceptable. With the qualifications and exceptions listed in paragraph (b) of this section, a matching or cost sharing requirement may be satisfied by either or both of the following: (1) Allowable costs incurred by the grantee, subgrantee or a cost -type contractor under the assistance agreement. This includes allowable costs borne by non - Federal grants or by others cash donations from non - Federal third parties. (2) The value of third party inkind contributions applicable to the period to which the cost sharing or matching requirements applies. (b) Qualifications and exceptions (1) Costs borne by other Federal grant agreements. Except as provided by Federal statute, a cost sharing or matching requirement may not be met by costs borne by another Federal grant. This prohibition does not apply to income earned by a grantee or subgrantee from a contract awarded under another Federal grant. (2) General revenue sharing. For the purpose of this section, general revenue sharing funds distributed under 31 U.S.C. 6702 are not considered Federal grant funds. (3) Cost or contributions counted towards other Federal costs - sharing requirements. Neither costs nor the values of third party in -kind contributions may count towards satisfying a cost sharing or matching requirement of a grant agreement if they have been or will be counted towards satisfying a cost sharing or matching requirement of another Federal grant agreement, a Federal procurement contract, or any other award of Federal funds. (4) Costs financed by program income. Costs financed by program income, as defined in Sec. 18.25, shall not count towards satisfying a cost sharing or matching requirement unless they are expressly permitted in the terms of the assistance agreement. (This use of general program income is described in Sec. 18.25 (g).) (5) Services or property financed by income earned by contractors. Contractors under a grant may earn income from the activities carried out under the contract in addition to the amounts earned from the party awarding the contract. No costs of services or property supported by this income may count toward satisfying a cost sharing or matching requirement unless other provisions of the grant agreement expressly permit this kind of income to be used to meet the requirement. (6) Records. Costs and third party in -kind contributions counting towards satisfying a cost sharing or matching requirement must be verifiable from the records of grantees and subgrantee or cost -type contractors. These records must show how the value placed on third party in -kind contributions was derived. To the extent feasible, volunteer services will be supported by the same methods that the organization uses to support the allocability of regular personnel costs. (7) Special standards for third party in -kind contributions. (i) Third party in -kind contributions count towards satisfying a cost sharing or matching requirement only where, if the party receiving the contributions were to pay for them, the payments would be allowable costs. (ii) Some third party in -kind contributions are goods and services that, if the grantee, subgrantee, or contractor receiving the contribution had to pay for them, the payments would have been an indirect costs. Costs sharing or matching credit for such contributions shall be given only if the grantee, subgrantee, or contractor has established, along with its regular indirect cost rate, a special rate for allocating to individual projects or programs the value of the contributions. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 14 of 38 (iii) A third party in -kind contribution to a fixed -price contract may count towards satisfying a cost sharing or matching requirement only if it results in: (A) An increase in the services or property provided under the contract (without additional cost to the grantee or subgrantee) or (B) A cost savings to the grantee or subgrantee. (iv) The values placed on third party inkind contributions for cost sharing or matching purposes will conform to the rules in the succeeding sections of this part. If a third party in -kind contribution is a type not treated in those sections, the value placed upon it shall be fair and reasonable. (8) 23 U.S.C. 121(a) permits reimbursement for actual construction cost incurred by States for highway construction projects. Except for private donations of right -of -way, contributions and donations shall not be considered State costs, and shall not be allowable for matching purposes for highway construction contracts. 23 U.S.C. 323 permits private donations of right -of -way to be used for a State's matching share, and establishes procedures for determining the fair market value of such donated right -of -way. (9) Section 4(a) of the UMT Act of 1964, as amended, provides that the Federal grant for any project to be assisted under section 3 of the UMT Act of 1964, as amended, shall be in an amount equal to 75 percent of the net project costs. Net project cost is defined as that portion of the cost of the project which cannot be reasonably financed from revenues. (10) Section 18(e) of the UMT Act of 1964, as amended, limits the Federal share to 80 percent of the net cost of construction, as determined by the Secretary of Transportation. The Federal share for the payment of subsidies for operating expenses, as defined by the Secretary, shall not exceed 50 percent of the net cost of such operating expense projects. (c) Valuation of donated services (1) Volunteer services. Unpaid services provided to a grantee or subgrantee by individuals will be valued at rates consistent with those ordinarily paid for similar work in the grantee's or subgrantee's organization. If the grantee or subgrantee does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work in the same labor market. In either case, a reasonable amount for fringe benefits may be included in the valuation. (2) Employees of other organizations. When an employer other than a grantee, subgrantee, or cost -type contractor furnishes free of charge the services of an employee in the employee's normal line of work, the services will be valued at the employee's regular rate of pay exclusive of the employee's fringe benefits and overhead costs. If the services are in a different line of work, paragraph (c)(1) of this section applies. (3) Section 5(g) of the Department of Transportation Act (49 U.S.C. 1654(g)) limits in -kind service contributions under the local Rail Service Assistance Program to "the cash equivalent of State salaries for State public employees working in the State rail assistance program, but not including overhead and general administrative costs. "' (d) Valuation of third party donated supplies and loaned equipment or space. (1) If a third party donates supplies, the contribution will be valued at the market value of the supplies at the time of donation. (2) If a third party donates the use of equipment or space in a building but retains title, the contribution will be valued at the fair rental rate of the equipment or space. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 15 of 38 (e) Valuation of third party donated equipment, buildings, and land. If a third party donates equipment, buildings, or land, and title passes to a grantee or subgrantee, the treatment of the donated property will depend upon the purpose of the grant or subgrant, as follows: (1) Awards for capital expenditures. If the purpose of the grant or subgrant is to assist the grantee or subgrantee in the acquisition of property, the market value of that property at the time of donation may be counted as cost sharing or matching, (2) Other awards. If assisting in the acquisition of property is not the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of this section apply: (i) If approval is obtained from the awarding agency, the market value at the time of donation of the donated equipment or buildings and the fair rental rate of the donated land may be counted as cost sharing or matching. In the case of a subgrant, the terms of the grant agreement may require that the approval be obtained from the Federal agency as well as the grantee. In all cases, the approval may be given only if a purchase of the equipment or rental of the land would be approved as an allowable direct cost. If any part of the donated property was acquired with Federal funds, only the non - federal share of the property may be counted as costsharing or matching. (ii) If approval is not obtained under paragraph (e)(2)(i) of this section, no amount may be counted for donated land, and only depreciation or use allowances may be counted for donated equipment and buildings. The depreciation or use allowances for this property are not treated as third party in- kind contributions. Instead, they are treated as costs incurred by the grantee or subgrantee. They are computed and allocated (usually as indirect costs) in accordance with the cost principles specified in Sec. 18.22, in the same way as depreciation or use allowances for purchased equipment and buildings. The amount of depreciation or use allowances for donated equipment and buildings is based on the property's market value at the time it was donated. (f) Valuation of grantee or subgrantee donated real property for construction/acquisition. If a grantee or subgrantee donates real property for a construction or facilities acquisition project, the current market value of that property may be counted as cost sharing or matching. If any part of the donated property was acquired with Federal funds, only the non - federal share of the property may be counted as cost sharing or matching. (g) Appraisal of real property. In some cases under paragraphs (d), (e) and (1) of this section, it will be necessary to establish the market value of land or a building or the fair rental rate of land or of space in a building. In these cases, the Federal agency may require the market value or fair rental value be set by an independent appraiser, and that the value or rate be certified by the grantee. This requirement will also be imposed by the grantee on subgrantees. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8086, Mar. 11, 1988] Sec. 18.25 Program income. (a) General. Grantees are encouraged to earn income to defray program costs. Program income includes income from fees for services performed, from the use or rental of real or personal property acquired with grant funds, from the sale of commodities or items fabricated under a grant agreement, and from payments of principal and interest on loans made with grant funds. Except as otherwise provided in regulations of the Federal agency, program income does not include interest on grant funds, rebates, credits, discounts, refunds, etc. and interest earned on any of them. (b) Definition of program income. Program income means gross income received by the grantee or subgrantee directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period. "During the grant period" is the time between the effective date of the award and the ending date http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 16 of 38 of the award reflected in the final financial report. (c) Cost of generating program income. If authorized by Federal regulations or the grant agreement, costs incident to the generation of program income may be deducted from gross income to determine program income. (d) Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised by a grantee or subgrantee are not program income unless the revenues are specifically identified in the grant agreement or Federal agency regulations as program income. (e) Royalties. Income from royalties and license fees for copyrighted material, patents, and inventions developed by a grantee or subgrantee is program income only if the revenues are specifically identified in the grant agreement or Federal agency regulations as program income. (See Sec. 18.34.) (f) Property. Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of Secs. 18.31 and 18.32. (g) Use of program income. Program income shall be deducted from outlays which may be both Federal and non - Federal as described below, unless the Federal agency regulations or the grant agreement specify another alternative (or a combination of the alternatives). In specifying alternatives, the Federal agency may distinguish between income earned by the grantee and income earned by subgrantees and between the sources, kinds, or amounts of income. When Federal agencies authorize the alternatives in paragraphs (g) (2) and (3) of this section, program income in excess of any limits stipulated shall also be deducted from outlays. (1) Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the net allowable costs. Program income shall be used for current costs unless the Federal agency authorizes otherwise. Program income which the grantee did not anticipate at the time of the award shall be used to reduce the Federal agency and grantee contributions rather than to increase the funds committed to the project. (2) Addition. When authorized, program income may be added to the funds committed to the grant agreement by the Federal agency and the grantee. The program income shall be used for the purposes and under the conditions of the grant agreement. (3) Cost sharing or matching. When authorized, program income may be used to meet the cost sharing or matching requirement of the grant agreement. The amount of the Federal grant award remains the same. (4) Section 3(a)(1)(D) of the UMT Act of 1964, as amended, provides that the Secretary shall establish requirements for the use of income derived from appreciated land values for certain UMTA grants. Specific requirements shall be contained in grant agreements. (5) UMTA grantees may retain program income for allowable capital or operating expenses. (6) For grants awarded under section 9 of the UMT Act of 1964, as amended, any revenues received from the sale of advertising and concessions in excess of fiscal year 1985 levels shall be excluded from program income. (7) 23 U.S.C. 156 requires that States shall charge fair market value for the sale, lease, or use of rightofway airspace for non - transportation purposes and that such income shall be used for projects eligible under 23 U.S.C. (h) Income after the award period. There are no Federal requirements governing the disposition of program income earned after the end of the award period (i.e., until the ending date of the final financial report, see http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 17 of 38 paragraph (a) of this section), unless the terms of the agreement or the Federal agency regulations provide otherwise. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087, Mar. 11, 1988] Sec. 18.26 Non - Federal audits. (a) Basic rule. Grantees and subgrantees are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501 -7507) and revised OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations." The audits shall be made by an independent auditor in accordance with generally accepted government auditing standards covering financial audits. (b) Subgrantees. State or local governments, as those terms are defined for purposes of the Single Audit Act Amendments of 1996, that provide Federal awards to a subgrantee, which expends $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall: (1) Determine whether State or local subgrantees have met the audit requirements of the Act and whether subgrantees covered by OMB Circular A -110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Nonprofit Organizations," have met the audit requirements of the Act. Commercial contractors (private for profit and private and governmental organizations) providing goods and services to State and local governments are not required to have a single audit performed. State and local governments should use their own procedures to ensure that the contractor has complied with laws and regulations affecting the expenditure of Federal funds; (2) Determine whether the subgrantee spent Federal assistance funds provided in accordance with applicable laws and regulations. This may be accomplished by reviewing an audit of the subgrantee made in accordance with the Act, Circular A -110, or through other means (e.g., program reviews) if the subgrantee has not had such an audit; (3) Ensure that appropriate corrective action is taken within six months after receipt of the audit report in instance of noncompliance with Federal laws and regulations; (4) Consider whether subgrantee audits necessitate adjustment of the grantee's own records; and (5) Require each subgrantee to permit independent auditors to have access to the records and financial statements. (c) Auditor selection. In arranging for audit services, Sec. 18.36 shall be followed. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 61 FR 21387, May 10, 1996, amended at 62 FR 45939 and 45947, August 29, 1997] Changes, Property, and Subawards Sec. 18.30 Changes. (a) General. Grantees and subgrantees are permitted to rebudget within the approved direct cost budget to meet unanticipated requirements and may make limited program changes to the approved project. However, unless waived by the awarding agency, certain types of post -award changes in budgets and projects shall require the prior written approval of the awarding agency. (b) Relation to cost principles. The applicable cost principles (see Sec. 18.22) contain requirements for prior http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 18 of 38 approval of certain types of costs. Except where waived, those requirements apply to all grants and subgrants even if paragraphs (c) through (f) of this section do not. (c) Budget changes (1) Nonconstruction projects. Except as stated in other regulations or an award document, grantees or subgrantees shall obtain the prior approval of the awarding agency whenever any of the following changes is anticipated under a nonconstruction award: (i) Any revision which would result in the need for additional funding. (ii) Unless waived by the awarding agency, cumulative transfers among direct cost categories, or, if applicable, among separately budgeted programs, projects, functions, or activities which exceed or are expected to exceed ten percent of the current total approved budget, whenever the awarding agency's share exceeds $100,000. (iii) Transfer of funds allotted for training allowances (i.e., from direct payments to trainees to other expense categories). (2) Construction projects. Grantees and subgrantees shall obtain prior written approval for any budget revision which would result in the need for additional funds. (3) Combined construction and nonconstruction projects. When a grant or subgrant provides funding for both construction and nonconstruction activities, the grantee or subgrantee must obtain prior written approval from the awarding agency before making any fund or budget transfer from nonconstruction to construction or vice versa. (d) Programmatic changes. Grantees or subgrantees must obtain the prior approval of the awarding agency whenever any of the following actions is anticipated: (1) Any revision of the scope or objectives of the project (regardless of whether there is an associated budget revision requiring prior approval). (2) Need to extend the period of availability of funds. (3) Changes in key persons in cases where specified in an application or a grant award. In research projects, a change in the project director or principal investigator shall always require approval unless waived by the awarding agency. (4) Under nonconstruction projects, contracting out, subgranting (if authorized by law) or otherwise obtaining the services of a third party to perform activities which are central to the purposes of the award. This approval requirement is in addition to the approval requirements of Sec. 18.36 but does not apply to the procurement of equipment, supplies, and general support services. (e) Additional prior approval requirements. The awarding agency may not require prior approval for any budget revision which is not described in paragraph (c) of this section. (f) Requesting prior approval. (1) A request for prior approval of any budget revision will be in the same budget formal the grantee used in its application and shall be accompanied by a narrative justification for the proposed revision. (2) A request for a prior approval under the applicable Federal cost principles (see Sec. 18.22) may be http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 19 of 38 made by letter. (3) A request by a subgrantee for prior approval will be addressed in writing to the grantee. The grantee will promptly review such request and shall approve or disapprove the request in writing. A grantee will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee. If the revision, requested by the subgrantee would result in a change to the grantee's approved project which requires Federal prior approval, the grantee will obtain the Federal agency's approval before approving the subgrantee's request. Sec. 18.31 Real property. (a) Title. Subject to the obligations and conditions set forth in this section, title to real property acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively. (b) Use. Except as otherwise provided by Federal statutes, real property will be used for the originally authorized purposes as long as needed for that purposes, and the grantee or subgrantee shall not dispose of or encumber its title or other interests. (c) Disposition. When real property is no longer needed for the originally authorized purpose, the grantee or subgrantee will request disposition instructions from the awarding agency. The instructions will provide for one of the following alternatives: (1) Retention of title. Retain title after compensating the awarding agency. The amount paid to the awarding agency will be computed by applying the awarding agency's percentage of participation in the cost of the original purchase to the fair market value of the property. However, in those situations where a grantee or subgrantee is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, the net proceeds from the disposition may be used as an offset to the cost of the replacement property. (2) Sale of property. Sell the property and compensate the awarding agency. The amount due to the awarding agency will be calculated by applying the awarding agency's percentage of participation in the cost of the original purchase to the proceeds of the sale after deduction of any actual and reasonable selling and fixing -up expenses. If the grant is still active, the net proceeds from sale may be offset against the original cost of the property. When a grantee or subgrantee is directed to sell property, sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return. (3) Transfer of title. Transfer title to the awarding agency or to a third -party designated/approved by the awarding agency. The grantee or subgrantee shall be paid an amount calculated by applying the grantee or subgrantee's percentage of participation in the purchase of the real property to the current fair market value of the property. (d) If the conditions in 23 U.S.C. 103(e) (5), (6), or (7), as appropriate, are met and approval is given by the Secretary, States shall not be required to repay the Highway Trust Fund for the cost of right -of -way and other items when certain segments of the Interstate System are withdrawn. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087, Mar. 11, 1988] Sec. 18.32 Equipment. (a) Title. Subject to the obligations and conditions set forth in this section, title to equipment acquired under a grant or subgrant will vest upon acquisition in the grantee or subgrantee respectively. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 20 of 38 (b) States. A State will use, manage, and dispose of equipment acquired under a grant by the State in accordance with State laws and procedures. Other grantees and subgrantees will follow paragraphs (c) through (e) of this section. (c) Use. (1) Equipment shall be used by the grantee or subgrantee in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency. (2) The grantee or subgrantee shall also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, providing such use will not interfere with the work on the projects or program for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by the awarding agency. User fees should be considered if appropriate. (3) Notwithstanding the encouragement in Sec. 18.25(a) to earn program income, the grantee or subgrantee must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted or contemplated by Federal statute. (4) When acquiring replacement equipment, the grantee or subgrantee may use the equipment to be replaced as a tradein or sell the property and use the proceeds to offset the cost of the replacement property, subject to the approval of the awarding agency. (d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part with grant funds, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the grantee or subgrantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (e) Disposition. When original or replacement equipment acquired under a grant or subgrant is no longer needed for the original project or program or for other activities currently or previously supported by a Federal agency, disposition of the equipment will be made as follows: (1) Items of equipment with a current per -unit fair market value of less than $5,000 may be retained, sold or otherwise disposed of with no further obligation to the awarding agency. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 21 of 38 (2) Items of equipment with a current per unit fair market value in excess of $5,000 may be retained or sold and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment. (3) In cases where a grantee or subgrantee fails to take appropriate disposition actions, the awarding agency may direct the grantee or subgrantee to take excess and disposition actions. (f) Federal equipment. In the event a grantee or subgrantee is provided federally -owned equipment: (1) Title will remain vested in the Federal Government. (2) Grantees or subgrantees will manage the equipment in accordance with Federal agency rules and procedures, and submit an annual inventory listing. (3) When the equipment is no longer needed, the grantee or subgrantee will request disposition instructions from the Federal agency. (g) Right to transfer title. The Federal awarding agency may reserve the right to transfer title to the Federal Government or a third part named by the awarding agency when such a third party is otherwise eligible under existing statutes. Such transfers shall be subject to the following standards: (1) The property shall be identified in the grant or otherwise made known to the grantee in writing. (2) The Federal awarding agency shall issue disposition instruction within 120 calendar days after the end of the Federal support of the project for which it was acquired. If the Federal awarding agency fails to issue disposition instructions within the 120 calendar -day period the grantee shall follow Sec. 18.32(e). (3) When title to equipment is transferred, the grantee shall be paid an amount calculated by applying the percentage of participation in the purchase to the current fair market value of the property. Sec. 18.33 Supplies. (a) Title. Title to supplies acquired under a grant or subgrant will vest, upon acquisition, in the grantee or subgrantee respectively. (b) Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the award, and if the supplies are not needed for any other federally sponsored programs or projects, the grantee or subgrantee shall compensate the awarding agency for its share. Sec. 18.34 Copyrights. The Federal awarding agency reserves a royaltyfree, nonexclusive, and irrevocable license to reproduce, publish or otherwise use, and to authorize others to use, for Federal Government purposes: (a) The copyright in any work developed under a grant, subgrant, or contract under a grant or subgrant; and (b) Any rights of copyright to which a grantee, subgrantee or a contractor purchases ownership with grant support. Sec. 18.35 Subawards to debarred and suspended parties. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 22 of 38 Grantees and subgrantees must not make any award or permit any award (subgrant or contract) at any tier to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs under Executive Order 12549, "Debarment and Suspension." Sec. 18.36 Procurement. (a) States. When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non - Federal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations. Other grantees and subgrantees will follow paragraphs (b) through (i) in this section. (b) Procurement standards. (1) Grantees and subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section. (2) Grantees and subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. (3) Grantees and subgrantees will maintain a written code of standards of conduct governing the performance of their employees engaged in the award and administration of contracts. No employee, officer or agent of the grantee or subgrantee shall participate in selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when: (i) The employee, officer or agent, (ii) Any member of his immediate family, (iii) His or her partner, or (iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm selected for award. The grantee's or subgrantee's officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subagreements. Grantee and subgrantees may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the extent permitted by State or local law or regulations, such standards or conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the grantee's and subgrantee's officers, employees, or agents, or by contractors or their agents. The awarding agency may in regulation provide additional prohibitions relative to real, apparent, or potential conflicts of interest. (4) Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid purchase of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach. (5) To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 23 of 38 (6) Grantees and subgrantees are encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs. (7) Grantees and subgrantees are encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost. (8) Grantees and subgrantees will make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. (9) Grantees and subgrantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. (10) Grantees and subgrantees will use time and material type contracts only- - (i) After a determination that no other contract is suitable, and (ii) If the contract includes a ceiling price that the contractor exceeds at its own risk. (11) Grantees and subgrantees alone will be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to source evaluation, protests, disputes, and claims. These standards do not relieve the grantee or subgrantee of any contractual responsibilities under its contracts. Federal agencies will not substitute their judgment for that of the grantee or subgrantee unless the matter is primarily a Federal concern. Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction. (12) Grantees and subgrantees will have protest procedures to handle and resolve disputes relating to their procurements and shall in all instances disclose information regarding the protest to the awarding agency. A protestor must exhaust all administrative remedies with the grantee and subgrantee before pursuing a protest with the Federal agency. Reviews of protests by the Federal agency will be limited to: (i) Violations of Federal law or regulations and the standards of this section (violations of State or local law will be under the jurisdiction of State or local authorities) and (ii) Violations of the grantee's or subgrantee's protest procedures for failure to review a complaint or protest. Protests received by the Federal agency other than those specified above will be referred to the grantee or subgrantee. (c) Competition. (1) All procurement transactions will be conducted in a manner providing full and open competition consistent with the standards of Sec. 18.36. Some of the situations considered to be restrictive of competition include but are not limited to: (i) Placing unreasonable requirements on firms in order for them to qualify to do business, (ii) Requiring unnecessary experience and excessive bonding, http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 24 of 38 (iii) Noncompetitive pricing practices between firms or between affiliated companies, (iv) Noncompetitive awards to consultants that are on retainer contracts, (v) Organizational conflicts of interest, (vi) Specifying only a "brand name" product instead of allowing "an equal" product to be offered and describing the performance of other relevant requirements of the procurement, and (vii) Any arbitrary action in the procurement process. (2) Grantees and subgrantees will conduct procurements in a manner that prohibits the use of statutorily or administratively imposed in -State or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts State licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criteria provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract. (3) Grantees will have written selection procedures for procurement transactions. These procedures will ensure that all solicitations: (i) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a "brand name or equal" description may be used as a means to define the performance or other salient requirements of a procurement. The specific features of the named brand which must be met by offerors shall be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. (4) Grantees and subgrantees will ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also, grantees and subgrantees will not preclude potential bidders from qualifying during the solicitation period. (d) Methods of procurement to be followed (1) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (2) Procurement by sealed bids (formal advertising). Bids are publicly solicited and a firmfixedprice contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in Sec. 18.36(d)(2)(i) apply. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 25 of 38 (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively and for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids; (B) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond; (C) All bids will be publicly opened at the time and place prescribed in the invitation for bids; (D) A firm fixed -price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (3) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed -price or cost - reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply: (i) Requests for proposals will be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical; (ii) Proposals will be solicited from an adequate number of qualified sources; (iii) Grantees and subgrantees will have a method for conducting technical evaluations of the proposals received and for selecting awardees; (iv) Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and (v) Grantees and subgrantees may use competitive proposal procedures for qualifications -based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 26 of 38 (4) Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate. (i) Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies: (A) The item is available only from a single source; (B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (C) The awarding agency authorizes noncompetitive proposals; or (D) After solicitation of a number of sources, competition is determined inadequate. (ii) Cost analysis, i.e., verifying the proposed cost data, the projections of the data, and the evaluation of the specific elements of costs and profits, is required. (iii) Grantees and subgrantees may be required to submit the proposed procurement to the awarding agency for pre -award review in accordance with paragraph (g) of this section. (e) Contracting with small and minority firms, women's business enterprise and labor surplus area firms. (1) The grantee and subgrantee will take all necessary affirmative steps to assure that minority firms, women's business enterprises, and labor surplus area firms are used when possible. (2) Affirmative steps shall include: (i) Placing qualified small and minority businesses and women's business enterprises on solicitation lists; (ii) Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources; (iii) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority business, and women's business enterprises; (iv) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority business, and women's business enterprises; (v) Using the services and assistance of the Small Business Administration, and the Minority Business Development Agency of the Department of Commerce; and (vi) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (e)(2) (i) through (v) of this section. (f) Contract cost and price. (1) Grantees and subgrantees must perform a cost or price analysis in connection with every procurement action including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, grantees must make independent estimates before receiving bids or proposals. A cost analysis must be performed when the offeror is http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 27 of 38 required to submit the elements of his estimated cost, e.g., under professional, consulting, and architectural engineering services contracts. A cost analysis will be necessary when adequate price competition is lacking, and for sole source procurements, including contract modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation. A price analysis will be used in all other instances to determine the reasonableness of the proposed contract price. (2) Grantees and subgrantees will negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration will be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work. (3) Costs or prices based on estimated costs for contracts under grants will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices are consistent with Federal cost principles (see Sec. 18.22). Grantees may reference their own cost principles that comply with the applicable Federal cost principles. (4) The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used. (g) Awarding agency review. (1) Grantees and subgrantees must make available, upon request of the awarding agency, technical specifications on proposed procurements where the awarding agency believes such review is needed to ensure that the item and/or service specified is the one being proposed for purchase. This review generally will take place prior to the time the specification is incorporated into a solicitation document. However, if the grantee or subgrantee desires to have the review accomplished after a solicitation has been developed, the awarding agency may still review the specifications, with such review usually limited to the technical aspects of the proposed purchase. (2) Grantees and subgrantees must on request make available for awarding agency pre -award review procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc. when: (i) A grantee's or subgrantee's procurement procedures or operation fails to comply with the procurement standards in this section; or (ii) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation; or (iii) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a "brand name" product; or (iv) The proposed award is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or (v) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold. (3) A grantee or subgrantee will be exempt from the pre -award review in paragraph (g)(2) of this section http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 28 of 38 if the awarding agency determines that its procurement systems comply with the standards of this section. (i) A grantee or subgrantee may request that its procurement system be reviewed by the awarding agency to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews shall occur where there is a continuous high - dollar funding, and third - party contracts are awarded on a regular basis. (ii) A grantee or subgrantee may self- certify its procurement system. Such self- certification shall not limit the awarding agency's right to survey the system. Under a self- certification procedure, awarding agencies may wish to rely on written assurances from the grantee or subgrantee that it is complying with these standards. A grantee or subgrantee will cite specific procedures, regulations, standards, etc., as being in compliance with these requirements and have its system available for review. (h) Bonding requirements. For construction or facility improvement contracts or subcontracts exceeding the simplified acquisition threshold, the awarding agency may accept the bonding policy and requirements of the grantee or subgrantee provided the awarding agency has made a determination that the awarding agency's interest is adequately protected. If such a determination has not been made, the minimum requirements shall be as follows: (1) A bid guarantee from each bidder equivalent to five percent of the bid price. The "bid guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified. (2) A performance bond on the part of the contractor for 100 percent of the contract price. A "performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract. (3) A payment bond on the part of the contractor for 100 percent of the contract price. A "payment bond' is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract. (i) Contract provisions. A grantee's and subgrantee's contracts must contain provisions in paragraph (i) of this section. Federal agencies are permitted to require changes, remedies, changed conditions, access and records retention, suspension of work, and other clauses approved by the Office of Federal Procurement Policy. (1) Administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate. (Contracts more than the simplified acquisition threshold) (2) Termination for cause and for convenience by the grantee or subgrantee including the manner by which it will be effected and the basis for settlement. (All contracts in excess of $10,000) (3) Compliance with Executive Order 11246 of September 24, 1965, entitled "Equal Employment Opportunity," as amended by Executive Order 11375 of October 13, 1967, and as supplemented in Department of Labor regulations (41 CFR chapter 60). (All construction contracts awarded in excess of $10,000 by grantees and their contractors or subgrantees) (4) Compliance with the Copeland "AntiKickback" Act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR part 3). (All contracts and subgrants for construction or repair) (5) Compliance with the DavisBacon Act (40 U.S.C. 276a to 276a -7) as supplemented by Department of http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 29 of 38 Labor regulations (29 CFR part 5). (Construction contracts in excess of $2000 awarded by grantees and subgrantees when required by Federal grant program legislation) (6) Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327 -330) as supplemented by Department of Labor regulations (29 CFR part 5). (Construction contracts awarded by grantees and subgrantees in excess of $2000, and in excess of $2500 for other contracts which involve the employment of mechanics or laborers) (7) Notice of awarding agency requirements and regulations pertaining to reporting. (8) Notice of awarding agency requirements and regulations pertaining to patent rights with respect to any discovery or invention which arises or is developed in the course of or under such contract. (9) Awarding agency requirements and regulations pertaining to copyrights and rights in data. (10) Access by the grantee, the subgrantee, the Federal grantor agency, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract for the purpose of making audit, examination, excerpts, and transcriptions. (11) Retention of all required records for three years after grantees or subgrantees make final payments and all other pending matters are closed. (12) Compliance with all applicable standards, orders, or requirements issued under section 306 of the Clean Air Act (42 U.S.C. 1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency regulations (40 CFR part 15). (Contracts, subcontracts, and subgrants of amounts in excess of $100,000) (13) Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub. L. 94- 163, 89 Stat. 871). (j) 23 U.S.C. 112(a) directs the Secretary to require recipients of highway construction grants to use bidding methods that are "effective in securing competition." Detailed construction contracting procedures are contained in 23 CFR part 635, subpart A. (k) Section 3(a)(2)(C) of the UMT Act of 1964, as amended, prohibits the use of grant or loan funds to support procurements utilizing exclusionary or discriminatory specifications. (1) 46 U.S.C. 1241(b)(1) and 46 CFR part 381 impose cargo preference requirements on the shipment of foreign made goods. (m) Section 165 of the Surface Transportation Assistance Act of 1982, 49 U.S.C. 1601, section 337 of the Surface Transportation and Uniform Relocation Assistance Act of 1987, and 49 CFR parts 660 and 661 impose Buy America provisions on the procurement of foreign products and materials. (n) Section 105(0 of the Surface Transportation Assistance Act of 1982, section 106(c) of the Surface Transportation and Uniform Relocation Assistance Act of 1987, and 49 CFR part 23 impose requirements for the participation of disadvantaged business enterprises. (o) Section 308 of the Surface Transportation Assistance Act of 1982, 49 U.S.C. 1068(b)(2), authorizes the use of competitive negotiation for the purchase of rolling stock as appropriate. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 30 of 38 (p) 23 U.S.C. 112(b) provides for an exemption to competitive bidding requirements for highway construction contracts in emergency situations. (q) 23 U.S.C. 112 requires concurrence by the Secretary before highway construction contracts can be awarded, except for projects authorized under the provisions of 23 U.S.C. 171. (r) 23 U.S.C. 112(e) requires standardized contract clauses concerning site conditions, suspension or work, and material changes in the scope of the work for highway construction contracts. (s)23 U.S.C. 140(b) authorizes the preferential employment of Indians on Indian Reservation road projects and contracts. (t) FHWA, UMTA, and Federal Aviation Administration (FAA) grantees and subgrantees shall extend the use of qualifications -based (e.g., architectural and engineering services) contract selection procedures to certain other related areas and shall award such contracts in the same manner as Federal contracts for architectural and engineering services are negotiated under Title IX of the Federal Property and Administrative Services Act of 1949, or equivalent State (or airport sponsor for FAA) qualifications -based requirements. For FHWA and UMTA programs, this provision applies except to the extent that a State adopts or has adopted by statute a formal procedure for the procurement of such services. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087, Mar. 11, 1988; 60 FR 19639, 19647, Apr. 19, 1995] Sec. 18.37 Subgrants. (a) States. States shall follow state law and procedures when awarding and administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. States shall: (1) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations; (2) Ensure that subgrantees are aware of requirements imposed upon them by Federal statute and regulation; (3) Ensure that a provision for compliance with Sec. 18.42 is placed in every cost reimbursement subgrant; and (4) Conform any advances of grant funds to subgrantees substantially to the same standards of timing and amount that apply to cash advances by Federal agencies. (b) All other grantees. All other grantees shall follow the provisions of this part which are applicable to awarding agencies when awarding and administering subgrants (whether on a cost reimbursement or fixed amount basis) of financial assistance to local and Indian tribal governments. Grantees shall: (1) Ensure that every subgrant includes a provision for compliance with this part; (2) Ensure that every subgrant includes any clauses required by Federal statute and executive orders and their implementing regulations; and (3) Ensure that subgrantees are aware of requirements imposed upon them by Federal statutes and regulations. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 31 of 38 (c) Exceptions. By their own terms, certain provisions of this part do not apply to the award and administration of subgrants: (1) Section 18.10; (2) Section 18.11; (3) The letter -of- credit procedures specified in Treasury Regulations at 31 CFR part 205, cited in Sec. 18.21; and (4) Section 18.50. Reports, Records, Retention, and Enforcement Sec. 18.40 Monitoring and reporting program performance. (a) Monitoring by grantees. Grantees are responsible for managing the day -to -day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity. (b) Nonconstruction performance reports. The Federal agency may, if it decides that performance information available from subsequent applications contains sufficient information to meet its programmatic needs, require the grantee to submit a performance report only upon expiration or termination of grant support. Unless waived by the Federal agency this report will be due on the same date as the final Financial Status Report. (1) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi - annual reports. However, performance reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi -annual reports shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for unnecessary performance reports may be waived by the Federal agency. (2) Performance reports will contain, for each grant, brief information on the following: (i) A comparison of actual accomplishments to the objectives established for the period. Where the output of the project can be quantified, a computation of the cost per unit of output may be required if that information will be useful. (ii) The reasons for slippage if established objectives were not met. (iii) Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs. (3) Grantees will not be required to submit more than the original and two copies of performance reports. (4) Grantees will adhere to the standards in this section in prescribing performance reporting requirements for subgrantees. (c) Construction performance reports. For the most part, on -site technical inspections and certified percentage - of- completion data are relied on heavily by Federal agencies to monitor progress under construction grants and subgrants. The Federal agency will require additional formal performance reports only when considered http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 32 of 38 necessary, and never more frequently than quarterly. (1) Section 12(h) of the UMT Act of 1964, as amended, requires pre -award testing of new buses models. (2) [Reserved] (d) Significant developments. Events may occur between the scheduled performance reporting dates which have significant impact upon the grant or subgrant supported activity. In such cases, the grantee must inform the Federal agency as soon as the following types of conditions become known: (1) Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the award. This disclosure must include a statement of the action taken, or contemplated, and any assistance needed to resolve the situation. (2) Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more beneficial results than originally planned. (e) Federal agencies may make site visits as warranted by program needs. (f) Waivers, extensions. (1) Federal agencies may waive any performance report required by this part if not needed. (2) The grantee may waive any performance report from a subgrantee when not needed. The grantee may extend the due date for any performance report from a subgrantee if the grantee will still be able to meet its performance reporting obligations to the Federal agency. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087, Mar. 11, 1988] Sec. 18.41 Financial Reporting. (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of this section, grantees will use only the forms specified in paragraphs (a) through (e) of this section, and such supplementary or other forms as may from time to time be authorized by OMB, for: (i) Submitting financial reports to Federal agencies, or (ii) Requesting advances or reimbursements when letters of credit are not used. (2) Grantees need not apply the forms prescribed in this section in dealing with their subgrantees. However, grantees shall not impose more burdensome requirements on subgrantees. (3) Grantees shall follow all applicable standard and supplemental Federal agency instructions approved by OMB to the extent required under the Paperwork Reduction Act of 1980 for use in connection with forms specified in paragraphs (b) through (e) of this section. Federal agencies may issue substantive supplementary instructions only with the approval of OMB. Federal agencies may shade out or instruct the grantee to disregard any line item that the Federal agency finds unnecessary for its decisionmaking purposes. (4) Grantees will not be required to submit more than the original and two copies of forms required under this part. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 33 of 38 (5) Federal agencies may provide computer outputs to grantees to expedite or contribute to the accuracy of reporting. Federal agencies may accept the required information from grantees in machine usable format or computer printouts instead of prescribed forms. (6) Federal agencies may waive any report required by this section if not needed. (7) Federal agencies may extend the due date of any financial report upon receiving a justified request from a grantee. (b) Financial Status Report (1) Form. Grantees will use Standard Form 269 or 269A, Financial Status Report, to report the status of funds for all nonconstruction grants and for construction grants when required in accordance with Sec. 18.41(e)(2)(iii). (2) Accounting basis. Each grantee will report program outlays and program income on a cash or accrual basis as prescribed by the awarding agency. If the Federal agency requires accrual information and the grantee's accounting records are not normally kept on the accrual basis, the grantee shall not be required to convert its accounting system but shall develop such accrual information through and analysis of the documentation on hand. (3) Frequency. The Federal agency may prescribe the frequency of the report for each project or program. However, the report will not be required more frequently than quarterly. If the Federal agency does not specify the frequency of the report, it will be submitted annually. A final report will be required upon expiration or termination of grant support. (4) Due date. When reports are required on a quarterly or semiannual basis, they will be due 30 days after the reporting period. When required on an annual basis, they will be due 90 days after the grant year. Final reports will be due 90 days after the expiration or termination of grant support. (c) Federal Cash Transactions Report (1) Form. (i) For grants paid by letter or credit, Treasury check advances or electronic transfer of funds, the grantee will submit the Standard Form 272, Federal Cash Transactions Report, and when necessary, its continuation sheet, Standard Form 272a, unless the terms of the award exempt the grantee from this requirement. (ii) These reports will be used by the Federal agency to monitor cash advanced to grantees and to obtain disbursement or outlay information for each grant from grantees. The format of the report may be adapted as appropriate when reporting is to be accomplished with the assistance of automatic data processing equipment provided that the information to be submitted is not changed in substance. (2) Forecasts of Federal cash requirements. Forecasts of Federal cash requirements may be required in the "Remarks" section of the report. (3) Cash in hands of subgrantees. When considered necessary and feasible by the Federal agency, grantees may be required to report the amount of cash advances in excess of three days needs in the hands of their subgrantees or contractors and to provide short narrative explanations of actions taken by the grantee to reduce the excess balances. (4) Frequency and due date. Grantees must submit the report no later than 15 working days following the end of each quarter. However, where an advance either by letter of credit or electronic transfer of funds is http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 34 of 38 authorized at an annualized rate of one million dollars or more, the Federal agency may require the report to be submitted within 15 working days following the end of each month. (d) Request for advance or reimbursement (1) Advance payments. Requests for Treasury check advance payments will be submitted on Standard Form 270, Request for Advance or Reimbursement. (This form will not be used for drawdowns under a letter of credit, electronic funds transfer or when Treasury check advance payments are made to the grantee automatically on a predetermined basis.) (2) Reimbursements. Requests for reimbursement under nonconstruction grants will also be submitted on Standard Form 270. (For reimbursement requests under construction grants, see paragraph (e)(1) of this section.) (3) The frequency for submitting payment requests is treated in Sec. 18.41(b)(3). (e) Outlay report and request for reimbursement for construction programs. (1) Grants that support construction activities paid by reimbursement method. (i) Requests for reimbursement under construction grants will be submitted on Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. Federal agencies may, however, prescribe the Request for Advance or Reimbursement form, specified in Sec. 18.41(d), instead of this form. (ii) The frequency for submitting reimbursement requests is treated in Sec. 18.41(b)(3). (2) Grants that support construction activities paid by letter of credit, electronic funds transfer or Treasury check advance. (i) When a construction grant is paid by letter of credit, electronic funds transfer or Treasury check advances, the grantee will report its outlays to the Federal agency using Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs. The Federal agency will provide any necessary special instruction. However, frequency and due date shall be governed by Sec. 18.41(b) (3) and (4). (ii) When a construction grant is paid by Treasury check advances based on periodic requests from the grantee, the advances will be requested on the form specified in Sec. 18.41(d). (iii) The Federal agency may substitute the Financial Status Report specified in Sec. 18.41(b) for the Outlay Report and Request for Reimbursement for Construction Programs. (3) Accounting basis. The accounting basis for the Outlay Report and Request for Reimbursement for Construction Programs shall be governed by Sec. 18.41(b)(2). (f) Notwithstanding the provisions of paragraphs (a)(1) of this section, recipients of FHWA and National Highway Traffic Safety Administration (NHTSA) grants shall use FHWA, NHTSA or State financial reports. [53 FR 8086 and 8087, Mar. 11, 1988, as amended at 53 FR 8087, Mar. 11, 1988] Sec. 18.42 Retention and access requirements for records. (a) Applicability. http: / /www. dot .gov /ost/m60 /grantl49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 35 of 38 (1) This section applies to all financial and programmatic records, supporting documents, statistical records, and other records of grantees or subgrantees which are: (i) Required to be maintained by the terms of this part, program regulations or the grant agreement, or (ii) Otherwise reasonably considered as pertinent to program regulations or the grant agreement. (2) This section does not apply to records maintained by contractors or subcontractors. For a requirement to place a provision concerning records in certain kinds of contracts, see Sec. 18.36(i)(10). (b) Length of retention period. (1) Except as otherwise provided, records must be retained for three years from the starting date specified in paragraph (c) of this section. (2) If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the 3 -year period, the records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular 3 -year period, whichever is later. (3) To avoid duplicate recordkeeping, awarding agencies may make special arrangements with grantees and subgrantees to retain any records which are continuously needed for joint use. The awarding agency will request transfer of records to its custody when it determines that the records possess long -term retention value. When the records are transferred to or maintained by the Federal agency, the 3 -year retention requirement is not applicable to the grantee or subgrantee. (a) Starting date of retention period (1) General. When grant support is continued or renewed at annual or other intervals, the retention period for the records of each funding period starts on the day the grantee or subgrantee submits to the awarding agency its single or last expenditure report for that period. However, if grant support is continued or renewed quarterly, the retention period for each year's records starts on the day the grantee submits its expenditure report for the last quarter of the Federal fiscal year. In all other cases, the retention period starts on the day the grantee submits its final expenditure report. If an expenditure report has been waived, the retention period starts on the day the report would have been due. (2) Real property and equipment records. The retention period for real property and equipment records starts from the date of the disposition or replacement or transfer at the direction of the awarding agency. (3) Records for income transactions after grant or subgrant support. In some cases grantees must report income after the period of grant support. Where there is such a requirement, the retention period for the records pertaining to the earning of the income starts from the end of the grantee's fiscal year in which the income is earned. (4) Indirect cost rate proposals, cost allocations plans, etc. This paragraph applies to the following types of documents, and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates). (i) If submitted for negotiation. If the proposal, plan, or other computation is required to be submitted to the Federal Government (or to the grantee) to form the basis for negotiation of the rate, then the 3 -year retention period for its supporting records starts from the date of such submission. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 36 of 38 (ii) If not submitted for negotiation. If the proposal, plan, or other computation is not required to be submitted to the Federal Government (or to the grantee) for negotiation purposes, then the 3 -year retention period for the proposal plan, or computation and its supporting records starts from the end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation. (d) Substitution of microfilm. Copies made by microfilming, photocopying, or similar methods may be substituted for the original records. (e) Access to records (1) Records of grantees and subgrantees. The awarding agency and the Comptroller General of the United States, or any of their authorized representatives, shall have the right of access to any pertinent books, documents, papers, or other records of grantees and subgrantees which are pertinent to the grant, in order to make audits, examinations, excerpts, and transcripts. (2) Expiration of right of access. The right of access in this section must not be limited to the required retention period but shall last as long as the records are retained. (f) Restrictions on public access. The Federal Freedom of Information Act (5 U.S.C. 552) does not apply to records unless required by Federal, State, or local law, grantees and subgrantees are not required to permit public access to their records. Sec. 18.43 Enforcement. (a) Remedies for noncompliance. If a grantee or subgrantee materially fails to comply with any term of an award, whether stated in a Federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere, the awarding agency may take one or more of the following actions, as appropriate in the circumstances: (1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee or more severe enforcement action by the awarding agency, (2) Disallow (that is, deny both use of funds and matching credit for) all or part of the cost of the activity or action not in compliance, (3) Wholly or partly suspend or terminate the current award for the grantee's or subgrantee's program, (4) Withhold further awards for the program, or (5) Take other remedies that may be legally available. (b) Hearings appeals. In taking an enforcement action, the awarding agency will provide the grantee or subgrantee an opportunity for such hearing, appeal, or other administrative proceeding to which the grantee or subgrantee is entitled under any statute or regulation applicable to the action involved. (c) Effects of suspension and termination. Costs of grantee or subgrantee resulting from obligations incurred by the grantee or subgrantee during a suspension or after termination of an award are not allowable unless the awarding agency expressly authorizes them in the notice of suspension or termination or subsequently. Other grantee or subgrantee costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if: (1) The costs result from obligations which were properly incurred by the grantee or subgrantee before the effective date of suspension or termination, are not in anticipation of it, and, in the case of a http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 37 of 38 termination, are noncancellable, and, (2) The costs would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect. (d) Relationship to debarment and suspension. The enforcement remedies identified in this section, including suspension and termination, do not preclude grantee or subgrantee from being subject to "Debarment and Suspension" under E.O. 12549 (see Sec. 18.35). Sec. 18.44 Termination for convenience. Except as provided in Sec. 18.43 awards may be terminated in whole or in part only as follows: (a) By the awarding agency with the consent of the grantee or subgrantee in which case the two parties shall agree upon the termination conditions, including the effective date and in the case of partial termination, the portion to be terminated, or (b) By the grantee or subgrantee upon written notification to the awarding agency, setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. However, if, in the case of a partial termination, the awarding agency determines that the remaining portion of the award will not accomplish the purposes for which the award was made, the awarding agency may terminate the award in its entirety under either Sec. 18.43 or paragraph (a) of this section. Subpart D -- After - The -Grant Requirements Sec. 18.50 Closeout. (a) General. The Federal agency will close out the award when it determines that all applicable administrative actions and all required work of the grant has been completed. (b) Reports. Within 90 days after the expiration or termination of the grant, the grantee must submit all financial, performance, and other reports required as a condition of the grant. Upon request by the grantee, Federal agencies may extend this timeframe. These may include but are not limited to: (1) Final performance or progress report. (2) Financial Status Report (SF 269) or Outlay Report and Request for Reimbursement for Construction Programs (SF271) (as applicable). (3) Final request for payment (SF270) (if applicable). (4) Invention disclosure (if applicable). (5) Federally -owned property report. In accordance with Sec. 18.32(0, a grantee must submit an inventory of all federally owned property (as distinct from property acquired with grant funds) for which it is accountable and request disposition instructions from the Federal agency of property no longer needed. (c) Cost adjustment. The Federal agency will, within 90 days after receipt of reports in paragraph (b) of this section, make upward or downward adjustments to the allowable costs. http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 PART 18 - UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOP... Page 38 of 38 (d) Cash adjustments. (1) The Federal agency will make prompt payment to the grantee for allowable reimbursable costs. (2) The grantee must immediately refund to the Federal agency any balance of unobligated (unencumbered) cash advanced that is not authorized to be retained for use on other grants. Sec. 18.51 Later disallowances and adjustments. The closeout of a grant does not affect: (a) The Federal agency's right to disallow costs and recover funds on the basis of a later audit or other review; (b) The grantee's obligation to return any funds due as a result of later refunds, corrections, or other transactions; (c) Records retention as required in Sec. 18.42; (d) Property management requirements in Secs. 18.31 and 18.32; and (e) Audit requirements in Sec. 18.26. Sec. 18.52 Collection of amounts due. (a) Any funds paid to a grantee in excess of the amount to which the grantee is finally determined to be entitled under the terms of the award constitute a debt to the Federal Government. If not paid within a reasonable period after demand, the Federal agency may reduce the debt by: (1) Making an administrative offset against other requests for reimbursements, (2) Withholding advance payments otherwise due to the grantee, or (3) Other action permitted by law. (b) Except where otherwise provided by statutes or regulations, the Federal agency will charge interest on an overdue debt in accordance with the Federal Claims Collection Standards (4 CFR Ch. II). The date from which interest is computed is not extended by litigation or the filing of any form of appeal. Subpart E-- Entitlements [Reserved] http: / /www. dot .gov /ost/m60 /grant/49cfr18.htm 8/30/2012 EXHIBIT D OMB CIRCULAR A -87 COST PRINCIPLES FOR STATE, LOCAL AND INDIAN TRIBAL GOVERNMENTS 51910 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations OFFICE OF MANAGEMENT AND BUDGET 2 CFR Part 225 Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A-87) AGENCY: Office of Management and Budget ACTION: Relocation of policy guidance to 2 CFR chapter II. SUMMARY: The Office of Management and Budget (OMB) is relocating Circular A -87, "Cost Principles for State, Local, and Indian Tribal Governments," to Title 2 in the Code of Federal Regulations (2 CFR), Subtitle A, Chapter II, part 225 as part of an initiative to provide the public with a central location for Federal government policies on grants and other financial assistance and nonprocurement agreements. Consolidating the OMB guidance and co- locating the agency regulations provides a good foundation for streamlining and simplifying the policy framework for grants and agreements as part of the efforts to implement the Federal Financial Assistance Management Improvement Act of 1999 (Pub. L. 106 -107). DATES: This document is effective August 31, 2005. This document republishes the existing OMB Circular A -87, which already is in effect. FOR FURTHER INFORMATION CONTACT: Gil Tran, Office of Federal Financial Management, Office of Management and Budget, telephone 202 - 395 -3052 (direct) or 202 - 395 -3993 (main office) and e -mail: Hai_M._Tran©omb.eop.gov. SUPPLEMENTARY INFORMATION: On May 10, 2004 [69 FR 259701, we revised the three OMB circulars containing Federal cost principles. The purpose of those revisions was to simplify the cost principles by making the descriptions of similar cost items consistent across the circulars where possible, thereby reducing the possibility of misinterpretation. Those revisions, a result of OMB and Federal agency efforts to implement Public Law 106- 107, were effective on June 9, 2004. In this document, we relocate OMB Circular A -87 to the CFR, in Title 2 which was established on May 11, 2004 [69 FR 262761 as a central location for OMB and Federal agency policies on grants and agreements. Our relocation of OMB Circular A -87 does not change the substance of the circular. Other than adjustments needed to conform to the formatting requirements of the CFR, this notice relocates in 2 CFR the version of OMB Circular A -87 as revised by the May 10, 2004 notice. List of Subjects in 2 CFR Part 225 Accounting, Grant administration, Grant programs, Reporting and recordkeeping requirements, State, local, and Indian tribal governments. Dated: August 8, 2005. Joshua B. Bolten, Director. Authority and Issuance ■ For the reasons set forth above, the Office of Management and Budget amends 2 CFR Subtitle A, Chapter II, by adding a part 225 as set forth below. PART 225 —COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (OMB CIRCULAR A -87) Sec. 225.5 Purpose. 225.10 Authority 225.15 Background 225.20 Policy. 225.25 Definitions. 225.30 OMB responsibilities. 225.35 Federal agency responsibilities. 225.40 Effective date of changes. 225.45 Relationship to previous issuance. 225.50 Policy review date. 225.55 Information Contact. Appendix A to Part 225 — General Principles for Determining Allowable Costs Appendix B to Part 225— Selected Items of Cost Appendix C to Part 225— State /Local -Wide Central Service Cost Allocation Plans Appendix D to Part 225— Public Assistance Cost Allocation Plans Appendix E to Part 225 —State and Local Indirect Cost Rate Proposals Authority: 31 U.S.C. 503; 31 U.S.C. 1111; 41 U.S.C. 405; Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR 10737, 3 CFR, 1966- 1970, p. 939. § 225.5 Purpose. This part establishes principles and standards for determining costs for Federal awards carried out through grants, cost reimbursement contracts, and other agreements with State and local governments and federally - recognized Indian tribal governments (governmental units). §225.10 Authority. This part is issued under the authority of the Budget and Accounting Act of 1921, as amended; the Budget and Accounting Procedures Act of 1950, as amended; the Chief Financial Officers Act of 1990; Reorganization Plan No. 2 of 1970; and Executive Order No. 11541 ( "Prescribing the Duties of the Office of Management and Budget and the Domestic Policy Council in the Executive Office of the President"). §225.15 Background. As part of the government -wide grant streamlining effort under Public Law 106 -107, Federal Financial Award Management Improvement Act of 1999, OMB led an interagency workgroup to simplify and make consistent, to the extent feasible, the various rules used to award Federal grants. An interagency task force was established in 2001 to review existing cost principles for Federal awards to State, local, and Indian tribal governments; colleges and universities; and non - profit organizations. The task force studied "Selected Items of Cost" in each of the three cost principles to determine which items of costs could be stated consistently and /or more clearly. §225.20 Policy. This part establishes principles and standards to provide a uniform approach for determining costs and to promote effective program delivery, efficiency, and better relationships between governmental units and the Federal Government. The principles are for determining allowable costs only. They are not intended to identify the circumstances or to dictate the extent of Federal and governmental unit participation in the financing of a particular Federal award. Provision for profit or other increment above cost is outside the scope of this part. § 225.25 Definitions. Definitions of key terms used in this part are contained in Appendix A to this part, Section B. §225.30 OMB responsibilities. The Office of Management and Budget (OMB) will review agency regulations and implementation of this part, and will provide policy interpretations and assistance to insure effective and efficient implementation. Any exceptions will be subject to approval by OMB. Exceptions will only be made in particular cases where adequate justification is presented. §225.35 Federal agency responsibilities. Agencies responsible for administering programs that involve cost reimbursement contracts, grants, and other agreements with governmental units shall issue regulations to implement the provisions of this part and its appendices. § 225.40 Effective date of changes. This part is effective August 31, 2005. § 225.45 Relationship to previous issuance. (a) The guidance in this part previously was issued as OMB Circular Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51911 A -87. Appendix A to this part contains the guidance that was in Attachment A (general principles) to the OMB circular; Appendix B contains the guidance that was in Attachment B (selected items of cost); Appendix C contains the information that was in Attachment C (state /local -wide central service cost allocation plans); Appendix D contains the guidance that was in Attachment D (public assistance cost allocation plans); and Appendix E contains the guidance that was in Attachment E (state and local indirect cost rate proposals). (b) This part supersedes OMB Circular A -87, as amended May 10, 2004, which superseded Circular A -87, as amended and issued May 4, 1995. § 225.50 Policy review date. This part will have a policy review three years from the date of issuance. § 225.55 Information contact. Further information concerning this part may be obtained by contacting the Office of Federal Financial Management, Financial Standards and Reporting Branch, Office of Management and Budget, Washington, DC 20503, telephone 202 - 395 -3993. Appendix A to Part 225 - General Principles for Determining Allowable Costs Table of Contents A. Purpose and Scope 1. Objectives 2. Policy guides 3. Application B. Definitions 1. Approval or authorization of the awarding or cognizant Federal agency 2. Award 3. Awarding agency 4. Central service cost allocation plan 5. Claim 6. Cognizant agency 7. Common rule 8. Contract 9. Cost 10. Cost allocation plan 11. Cost objective 12. Federally- recognized Indian tribal government 13. Governmental unit 14. Grantee department or agency 15. Indirect cost rate proposal 16. Local government 17. Public assistance cost allocation plan 18. State C. Basic Guidelines 1. Factors affecting allowability of costs 2. Reasonable costs 3. Allocable costs 4. Applicable credits D. Composition of Cost 1. Total cost 2. Classification of costs E. Direct Costs 1. General 2. Application 3. Minor items F. Indirect Costs 1. General 2. Cost allocation plans and indirect cost proposals 3. Limitation on indirect or administrative costs G. Interagency Services H. Required Certifications General Principles for Determining Allowable Costs A. Purpose and Scope 1. Objectives. This Appendix establishes principles for determining the allowable costs incurred by State, local, and federally - recognized Indian tribal governments (governmental units) under grants, cost reimbursement contracts, and other agreements with the Federal Government (collectively referred to in this appendix and other appendices to 2 CFR part 225 as "Federal awards "). The principles are for the purpose of cost determination and are not intended to identify the circumstances or dictate the extent of Federal or governmental unit participation in the financing of a particular program or project. The principles are designed to provide that Federal awards bear their fair share of cost recognized under these principles except where restricted or prohibited by law. Provision for profit or other increment above cost is outside the scope of 2 CFR part 225. 2. Policy guides. a. The application of these principles is based on the fundamental premises that: (1) Governmental units are responsible for the efficient and effective administration of Federal awards through the application of sound management practices. (2) Governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (3) Each governmental unit, in recognition of its own unique combination of staff, facilities, and experience, will have the primary responsibility for employing whatever form of organization and management techniques may be necessary to assure proper and efficient administration of Federal awards. b. Federal agencies should work with States or localities which wish to test alternative mechanisms for paying costs for administering Federal programs. The Office of Management and Budget (OMB) encourages Federal agencies to test fee -for- service alternatives as a replacement for current cost - reimbursement payment methods in response to the National Performance Review's (NPR) recommendation. The NPR recommended the fee - for - service approach to reduce the burden associated with maintaining systems for charging administrative costs to Federal programs and preparing and approving cost allocation plans. This approach should also increase incentives for administrative efficiencies and improve outcomes. 3. Application. a. These principles will be applied by all Federal agencies in determining costs incurred by governmental units under Federal awards (including subawards) except those with (1) publicly - financed educational institutions subject to, 2 CFR part 220, Cost Principles for Educational Institutions (OMB Circular A -21), and (2) programs administered by publicly -owned hospitals and other providers of medical care that are subject to requirements promulgated by the sponsoring Federal agencies. However, 2 CFR part 225 does apply to all central service and department /agency costs that are allocated or billed to those educational institutions, hospitals, and other providers of medical care or services by other State and local government departments and agencies. b. All subawards are subject to those Federal cost principles applicable to the particular organization concerned. Thus, if a subaward is to a governmental unit (other than a college, university or hospital), 2 CFR part 225 shall apply; if a subaward is to a commercial organization, the cost principles applicable to commercial organizations shall apply; if a subaward is to a college or university, 2 CFR part 220 (Circular A -21) shall apply; if a subaward is to a hospital, the cost principles used by the Federal awarding agency for awards to hospitals shall apply, subject to the provisions of subsection A.3.a. of this Appendix; if a subaward is to some other non - profit organization, 2 CFR part 230, Cost Principles for Non - Profit Organizations (Circular A -122), shall apply. c. These principles shall be used as a guide in the pricing of fixed price arrangements where costs are used in determining the appropriate price. d. Where a Federal contract awarded to a governmental unit incorporates a Cost Accounting Standards (CAS) clause, the requirements of that clause shall apply. In such cases, the governmental unit and the cognizant Federal agency shall establish an appropriate advance agreement on how the governmental unit will comply with applicable CAS requirements when estimating, accumulating and reporting costs under CAS - covered contracts. The agreement shall indicate that 2 CFR part 225 (OMB Circular A -87) requirements will be applied to other Federal awards. In all cases, only one set of records needs to be maintained by the governmental unit. e. Conditional exemptions. (1) OMB authorizes conditional exemption from OMB administrative requirements and cost principles for certain Federal programs with statutorily - authorized consolidated planning and consolidated administrative funding, that are identified by a Federal agency and approved by the head of the Executive department or establishment. A Federal agency shall consult with OMB during its consideration of whether to grant such an exemption. (2) To promote efficiency in State and local program administration, when Federal non- entitlement programs with common purposes have specific statutorily - authorized consolidated planning and consolidated administrative funding and where most of the State agency's resources come from non- Federal sources, Federal agencies may exempt these covered State - administered, non - entitlement grant programs from certain OMB grants management requirements. The 51912 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations exemptions would be from all but the allocability of costs provisions of Appendix A subsection C.3 of 2 CFR part 225, Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87); Appendix A, Section C.4 of 2 CFR 220, Cost Principles for Educational Institutions (Circular A -21); Appendix A, subsection A.4 of 2 CFR 230 Cost Principles for Non -Profit Organizations (Circular A -122); and from all of the administrative requirements provisions of 2 CFR part 215, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations (Circular A -110), and the agencies' grants management common rule. (3) When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this option, a State must adopt its own written fiscal and administrative requirements for expending and accounting for all funds, which are consistent with the provisions of 2 CFR part 225 (OMB Circular A -87), and extend such policies to all subrecipients. These fiscal and administrative requirements must be sufficiently specific to ensure that: Funds are used in compliance with all applicable Federal statutory and regulatory provisions, costs are reasonable and necessary for operating these programs, and funds are not used for general expenses required to carry out other responsibilities of a State or its subrecipients. B. Definitions 1. "Approval or authorization of the awarding or cognizant Federal agency" means documentation evidencing consent prior to incurring a specific cost. If such costs are specifically identified in a Federal award document, approval of the document constitutes approval of the costs. If the costs are covered by a State /local -wide cost allocation plan or an indirect cost proposal, approval of the plan constitutes the approval. 2. "Award" means grants, cost reimbursement contracts and other agreements between a State, local and Indian tribal government and the Federal Government. 3. "Awarding agency" means (a) with respect to a grant, cooperative agreement, or cost reimbursement contract, the Federal agency, and (b) with respect to a subaward, the party that awarded the subaward. 4. "Central service cost allocation plan" means the documentation identifying, accumulating, and allocating or developing billing rates based on the allowable costs of services provided by a governmental unit on a centralized basis to its departments and agencies. The costs of these services may be allocated or billed to users. 5 "Claim" means a written demand or written assertion by the governmental unit or grantor seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of award terms, or other relief arising under or relating to the award. A voucher, invoice or other routine request for payment that is not a dispute when submitted is not a claim. Appeals, such as those filed by a governmental unit in response to questioned audit costs, are not considered claims until a final management decision is made by the Federal awarding agency. 6. "Cognizant agency" means the Federal agency responsible for reviewing, negotiating, and approving cost allocation plans or indirect cost proposals developed under 2 CFR part 225 on behalf of all Federal agencies. OMB publishes a listing of cognizant agencies. 7. "Common Rule" means the "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments; Final Rule" originally issued at 53 FR 8034 -8103 (March 11, 1988). Other common rules will be referred to by their specific titles. 8. "Contract" means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to): Awards and notices of awards; job orders or task orders issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and, bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301 et seq. 9. "Cost" means an amount as determined on a cash, accrual, or other basis acceptable to the Federal awarding or cognizant agency. It does not include transfers to a general or similar fund. 10. "Cost allocation plan" means central service cost allocation plan, public assistance cost allocation plan, and indirect cost rate proposal. Each of these terms is further defined in this section. 11. "Cost objective" means a function, organizational subdivision, contract, grant, or other activity for which cost data are needed and for which costs are incurred. 12. "Federally- recognized Indian tribal government" means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any native village as defined in Section 3 of the Alaska Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary of the Interior as eligible for the special programs and services provided through the Bureau of Indian Affairs. 13. "Governmental unit" means the entire State, local, or federally - recognized Indian tribal government, including any component thereof. Components of governmental units may function independently of the governmental unit in accordance with the term of the award. 14. "Grantee department or agency" means the component of a State, local, or federally - recognized Indian tribal government which is responsible for the performance or administration of all or some part of a Federal award. 15. "Indirect cost rate proposal" means the documentation prepared by a governmental unit or component thereof to substantiate its request for the establishment of an indirect cost rate as described in Appendix E of 2 CFR part 225. 16. "Local government" means a county, municipality, city, town, township, local public authority, school district, special district, intrastate district, council of governments (whether or not incorporated as a non -profit corporation under State law), any other regional or interstate government entity, or any agency or instrumentality of a local government. 17. "Public assistance cost allocation plan" means a narrative description of the procedures that will be used in identifying, measuring and allocating all administrative costs to all of the programs administered or supervised by State public assistance agencies as described in Appendix D of 2 CFR part 225. 18. "State" means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments. C. Basic Guidelines 1. Factors affecting allowability of costs. To be allowable under Federal awards, costs must meet the following general criteria: a. Be necessary and reasonable for proper and efficient performance and administration of Federal awards. b. Be allocable to Federal awards under the provisions of 2 CFR part 225. c. Be authorized or not prohibited under State or local laws or regulations. d. Conform to any limitations or exclusions set forth in these principles, Federal laws, terms and conditions of the Federal award, or other governing regulations as to types or amounts of cost items. e. Be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the governmental unit. f. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. g. Except as otherwise provided for in 2 CFR part 225, be determined in accordance with generally accepted accounting principles. h. Not be included as a cost or used to meet cost sharing or matching requirements of any other Federal award in either the current or a prior period, except as specifically provided by Federal law or regulation. i. Be the net of all applicable credits. j. Be adequately documented. 2. Reasonable costs. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when governmental units or components are predominately federally - funded. In determining reasonableness of a given cost, consideration shall be given to: a. Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the governmental unit or the performance of the Federal award. Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51913 b. The restraints or requirements imposed by such factors as: Sound business practices; arm's- length bargaining; Federal, State and other laws and regulations; and, terms and conditions of the Federal award. c. Market prices for comparable goods or services. d. Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the governmental unit, its employees, the public at large, and the Federal Government. e. Significant deviations from the established practices of the governmental unit which may unjustifiably increase the Federal award's cost. 3. Allocable costs. a. A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. b. All activities which benefit from the governmental unit's indirect cost, including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs. c. Any cost allocable to a particular Federal award or cost objective under the principles provided for in 2 CFR part 225 may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by law or terms of the Federal awards, or for other reasons. d. Where an accumulation of indirect costs will ultimately result in charges to a Federal award, a cost allocation plan will be required as described in Appendices C, D, and E to this part. 4. Applicable credits. a. Applicable credits refer to those receipts or reduction of expenditure -type transactions that offset or reduce expense items allocable to Federal awards as direct or indirect costs. Examples of such transactions are: Purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the governmental unit relate to allowable costs, they shall be credited to the Federal award either as a cost reduction or cash refund, as appropriate. b. In some instances, the amounts received from the Federal Government to finance activities or service operations of the governmental unit should be treated as applicable credits. Specifically, the concept of netting such credit items (including any amounts used to meet cost sharing or matching requirements) should be recognized in determining the rates or amounts to be charged to Federal awards. (See Appendix B to this part, item 11, "Depreciation and use allowances," for areas of potential application in the matter of Federal financing of activities.) D. Composition of Cost 1. Total cost. The total cost of Federal awards is comprised of the allowable direct cost of the program, plus its allocable portion of allowable indirect costs, less applicable credits. 2. Classification of costs. There is no universal rule for classifying certain costs as either direct or indirect under every accounting system. A cost may be direct with respect to some specific service or function, but indirect with respect to the Federal award or other final cost objective. Therefore, it is essential that each item of cost be treated consistently in like circumstances either as a direct or an indirect cost. Guidelines for determining direct and indirect costs charged to Federal awards are provided in the sections that follow. E. Direct Costs 1. General. Direct costs are those that can be identified specifically with a particular final cost objective. 2. Application. Typical direct costs chargeable to Federal awards are: a. Compensation of employees for the time devoted and identified specifically to the performance of those awards. b. Cost of materials acquired, consumed, or expended specifically for the purpose of those awards. c. Equipment and other approved capital expenditures. d. Travel expenses incurred specifically to carry out the award. 3. Minor items. Any direct cost of a minor amount may be treated as an indirect cost for reasons of practicality where such accounting treatment for that item of cost is consistently applied to all cost objectives. F. Indirect Costs 1. General. Indirect costs are those: Incurred for a common or joint purpose benefiting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. The term "indirect costs," as used herein, applies to costs of this type originating in the grantee department, as well as those incurred by other departments in supplying goods, services, and facilities. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of indirect costs within a governmental unit department or in other agencies providing services to a governmental unit department. Indirect cost pools should be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived. 2. Cost allocation plans and indirect cost proposals. Requirements for development and submission of cost allocation plans and indirect cost rate proposals are contained in Appendices C, D, and E to this part. 3. Limitation on indirect or administrative costs. a. In addition to restrictions contained in 2 CFR part 225, there may be laws that further limit the amount of administrative or indirect cost allowed. b. Amounts not recoverable as indirect costs or administrative costs under one Federal award may not be shifted to another Federal award, unless specifically authorized by Federal legislation or regulation. G. Interagency Services. The cost of services provided by one agency to another within the governmental unit may include allowable direct costs of the service plus a pro rate share of indirect costs. A standard indirect cost allowance equal to ten percent of the direct salary and wage cost of providing the service (excluding overtime, shift premiums, and fringe benefits) may be used in lieu of determining the actual indirect costs of the service. These services do not include centralized services included in central service cost allocation plans as described in Appendix C to this part. H. Required Certifications. Each cost allocation plan or indirect cost rate proposal required by Appendices C and E to this part must comply with the following: 1. No proposal to establish a cost allocation plan or an indirect cost rate, whether submitted to a Federal cognizant agency or maintained on file by the governmental unit, shall be acceptable unless such costs have been certified by the governmental unit using the Certificate of Cost Allocation Plan or Certificate of Indirect Costs as set forth in Appendices C and E to this part. The certificate must be signed on behalf of the governmental unit by an individual at a level no lower than chief financial officer of the governmental unit that submits the proposal or component covered by the proposal. 2. No cost allocation plan or indirect cost rate shall be approved by the Federal Government unless the plan or rate proposal has been certified. Where it is necessary to establish a cost allocation plan or an indirect cost rate and the governmental unit has not submitted a certified proposal for establishing such a plan or rate in accordance with the requirements, the Federal Government may either disallow all indirect costs or unilaterally establish such a plan or rate. Such a plan or rate may be based upon audited historical data or such other data that have been furnished to the cognizant Federal agency and for which it can be demonstrated that all unallowable costs have been excluded. When a cost allocation plan or indirect cost rate is unilaterally established by the Federal Government because of failure of the governmental unit to submit a certified proposal, the plan or rate established will be set to ensure that potentially unallowable costs will not be reimbursed. Appendix B to Part 225 — Selected Items of Cost Table of Contents 1. Advertising and public relations costs 2. Advisory councils 3. Alcoholic beverages 4. Audit costs and related services 5. Bad debts 6. Bonding costs 7. Communication costs 8. Compensation for personal services 9. Contingency provisions 10. Defense and prosecution of criminal and civil proceedings, and claims 11. Depreciation and use allowances 12. Donations and contributions 13. Employee morale, health, and welfare costs 14. Entertainment costs 15. Equipment and other capital expenditures 16. Fines and penalties 17. Fund raising and investment management costs 18. Gains and losses on disposition of depreciable property and other capital 51914 Federal Register /Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations assets and substantial relocation of Federal programs 19. General government expenses 20. Goods or services for personal use 21. Idle facilities and idle capacity 22. Insurance and indemnification 23. Interest 24. Lobbying 25. Maintenance, operations, and repairs 26. Materials and supplies costs 27. Meetings and conferences 28. Memberships, subscriptions, and professional activity costs 29. Patent costs 30. Plant and homeland security costs 31. Pre -award costs 32. Professional service costs 33. Proposal costs 34. Publication and printing costs 35. Rearrangement and alteration costs 36. Reconversion costs 37. Rental costs of building and equipment 38. Royalties and other costs for the use of patents 39. Selling and marketing 40. Taxes 41. Termination costs applicable to sponsored agreements 42. Training costs 43. Travel costs Sections 1 through 43 provide principles to be applied in establishing the allowability or unallowability of certain items of cost. These principles apply whether a cost is treated as direct or indirect. A cost is allowable for Federal reimbursement only to the extent of benefits received by Federal awards and its conformance with the general policies and principles stated in Appendix A to this part. Failure to mention a particular item of cost in these sections is not intended to imply that it is either allowable or unallowable; rather, determination of allowability in each case should be based on the treatment or standards provided for similar or related items of cost. 1. Advertising and public relations costs. a. The term advertising costs means the costs of advertising media and corollary administrative costs. Advertising media include magazines, newspapers, radio and television, direct mail, exhibits, electronic or computer transmittals, and the like. b. The term public relations includes community relations and means those activities dedicated to maintaining the image of the governmental unit or maintaining or promoting understanding and favorable relations with the community or public at large or any segment of the public. c. The only allowable advertising costs are those which are solely for: (1) The recruitment of personnel required for the performance by the governmental unit of obligations arising under a Federal award; (2) The procurement of goods and services for the performance of a Federal award; (3) The disposal of scrap or surplus materials acquired in the performance of a Federal award except when governmental units are reimbursed for disposal costs at a predetermined amount; or (4) Other specific purposes necessary to meet the requirements of the Federal award. d. The only allowable public relations costs are: (1) Costs specifically required by the Federal award; . (2) Costs of communicating with the public and press pertaining to specific activities or accomplishments which result from performance of Federal awards (these costs are considered necessary as part of the outreach effort for the Federal award); or (3) Costs of conducting general liaison with news media and government public relations officers, to the extent that such activities are limited to communication and liaison necessary keep the public informed on matters of public concern, such as notices of Federal contract /grant awards, financial matters, etc. e. Costs identified in subsections c and d if incurred for more than one Federal award or for both sponsored work and other work of the governmental unit, are allowable to the extent that the principles in Appendix A to this part, sections E. ( "Direct Costs ") and F. ( "Indirect Costs ") are observed. f. Unallowable advertising and public relations costs include the following: (1) All advertising and public relations costs other than as specified in subsections 1.c, d, and e of this appendix; (2) Costs of meetings, conventions, convocations, or other events related to other activities of the governmental unit, including: (a) Costs of displays, demonstrations, and exhibits; (b) Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows and other special events; and (c) Salaries and wages of employees engaged in setting up and displaying exhibits, making demonstrations, and providing briefings; (3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs; (4) Costs of advertising and public relations designed solely to promote the governmental unit. 2. Advisory councils. Costs incurred by advisory councils or committees are allowable as a direct cost where authorized by the Federal awarding agency or as an indirect cost where allocable to Federal awards. 3. Alcoholic beverages. Costs of alcoholic beverages are unallowable. 4. Audit costs and related services. a. The costs of audits required by , and performed in accordance with, the Single Audit Act, as implemented by Circular A- 133, "Audits of States, Local Governments, and Non -Profit Organizations" are allowable. Also see 31 U.S.C. 7505(b) and section 230 ( "Audit Costs ") of Circular A -133. b. Other audit costs are allowable if included in a cost allocation plan or indirect cost proposal, or if specifically approved by the awarding agency as a direct cost to an award. c. The cost of agreed -upon procedures engagements to monitor subrecipients who are exempted from A -133 under section 200(d) are allowable, subject to the conditions listed in A -133, section 230 (b)(2). 5. Bad debts. Bad debts, including losses (whether actual or estimated) arising from uncollectable accounts and other claims, related collection costs, and related legal costs, are unallowable. 6. Bonding costs. a. Bonding costs arise when the Federal Government requires assurance against financial loss to itself or others by reason of the act or default of the governmental unit. They arise also in instances where the governmental unit requires similar assurance. Included are such bonds as bid, performance, payment, advance payment, infringement, and fidelity bonds. b. Costs of bonding required pursuant to the terms of the award are allowable. c. Costs of bonding required by the governmental unit in the general conduct of its operations are allowable to the extent that such bonding is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances. 7. Communication costs. Costs incurred for telephone services, local and long distance telephone calls, telegrams, postage, messenger, electronic or computer transmittal services and the like are allowable. 8. Compensation for personal services. a. General. Compensation for personnel services includes all remuneration, paid currently or accrued, for services rendered during the period of performance under Federal awards, including but not necessarily limited to wages, salaries, and fringe benefits. The costs of such compensation are allowable to the extent that they satisfy the specific requirements of this and other appendices under 2 CFR Part 225, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established policy of the governmental unit consistently applied to both Federal and non - Federal activities; (2) Follows an appointment made in accordance with a governmental unit's laws and rules and meets merit system or other requirements required by Federal law, where applicable; and (3) Is determined and supported as provided in subsection h. b. Reasonableness. Compensation for employees engaged in work on Federal awards will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the governmental unit. In cases where the kinds of employees required for Federal awards are not found in the other activities of the governmental unit, compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing government competes for the kind of employees involved. Compensation surveys providing data representative of the labor market involved will be an acceptable basis for evaluating reasonableness. c. Unallowable costs. Costs which are unallowable under other sections of these principles shall not be allowable under this section solely on the basis that they constitute personnel compensation. d. Fringe benefits. (1) Fringe benefits are allowances and services provided by employers to their Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51915 employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave, employee insurance, pensions, and unemployment benefit plans. Except as provided elsewhere in these principles, the costs of fringe benefits are allowable to the extent that the benefits are reasonable and are required by law, governmental unit - employee agreement, or an established policy of the governmental unit. (2) The cost of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, holidays, court leave, military leave, and other similar benefits, are allowable if: They are provided under established written leave policies; the costs are equitably allocated to all related activities, including Federal awards; and, the accounting basis (cash or accrual) selected for costing each type of leave is consistently followed by the governmental unit. (3) When a governmental unit uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable in the year of payment provided they are allocated as a general administrative expense to all activities of the governmental unit or component. (4) The accrual basis may be only used for those types of leave for which a liability as defined by Generally Accepted Accounting Principles (GAAP) exists when the leave is earned. When a governmental unit uses the accrual basis of accounting, in accordance with GAAP, allowable leave costs are the lesser of the amount accrued or funded. (5) The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in section 22, Insurance and indemnification); pension plan costs (see subsection e.); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, whether treated as indirect costs or as direct costs, shall be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities. e. Pension plan costs. Pension plan costs may be computed using a pay -as- you -go method or an acceptable actuarial cost method in accordance with established written policies of the governmental unit. (1) For pension plans financed on a pay - as- you -go method, allowable costs will be limited to those representing actual payments to retirees or their beneficiaries. (2) Pension costs calculated using an actuarial cost -based method recognized by GAAP are allowable for a given fiscal year if they are funded for that year within six months after the end of that year. Costs funded after the six month period (or a later period agreed to by the cognizant agency) are allowable in the year funded. The cognizant agency may agree to an extension of the six month period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal Government and related Federal reimbursement and the governmental unit's contribution to the pension fund. Adjustments may be made by cash refund or other equitable procedures to compensate the Federal Government for the time value of Federal reimbursements in excess of contributions to the pension fund. (3) Amounts funded by the governmental unit in excess of the actuarially determined amount for a fiscal year may be used as the governmental unit's contribution in future periods. (4) When a governmental unit converts to an acceptable actuarial cost method, as defined by GAAP, and funds pension costs in accordance with this method, the unfunded liability at the time of conversion shall be allowable if amortized over a period of years in accordance with GAAP. (5) The Federal Government shall receive an equitable share of any previously allowed pension costs (including earnings thereon) which revert or inure to the governmental unit in the form of a refund, withdrawal, or other credit. f. Post - retirement health benefits. Post - retirement health benefits (PRHB) refers to costs of health insurance or health services not included in a pension plan covered by subsection 8.e. of this appendix for retirees and their spouses, dependents, and survivors. PRHB costs may be computed using a pay -as- you -go method or an acceptable actuarial cost method in accordance with established written polices of the governmental unit. (1) For PRHB financed on a pay as- you -go method, allowable costs will be limited to those representing actual payments to retirees or their beneficiaries. (2) PRHB costs calculated using an actuarial cost method recognized by GAAP are allowable if they are funded for that year within six months after the end of that year. Costs funded after the six month period (or a later period agreed to by the cognizant agency) are allowable in the year funded. The cognizant agency may agree to an extension of the six month period if an appropriate adjustment is made to compensate for the timing of the charges to the Federal Government and related Federal reimbursements and the governmental unit's contributions to the PRHB fund. Adjustments may be made by cash refund, reduction in current year's PRHB costs, or other equitable procedures to compensate the Federal Government for the time value of Federal reimbursements in excess of contributions to the PRHB fund. (3) Amounts funded in excess of the actuarially determined amount for a fiscal year may be used as the government's contribution in a future period. (4) When a governmental unit converts to an acceptable actuarial cost method and funds PRHB costs in accordance with this method, the initial unfunded liability attributable to prior years shall be allowable if amortized over a period of years in accordance with GAAP, or, if no such GAAP period exists, over a period negotiated with the cognizant agency. (5) To be allowable in the current year, the PRHB costs must be paid either to: (a) An insurer or other benefit provider as current year costs or premiums, or (b) An insurer or trustee to maintain a trust fund or reserve for the sole purpose of providing post - retirement benefits to retirees and other beneficiaries. (6) The Federal Government shall receive an equitable share of any amounts of previously allowed post- retirement benefit costs (including earnings thereon) which revert or inure to the governmental unit in the form of a refund, withdrawal, or other credit. g. Severance pay. (1) Payments in addition to regular salaries and wages made to workers whose employment is being terminated are allowable to the extent that, in each case, they are required by law, employer - employee agreement, or established written policy. (2) Severance payments (but not accruals) associated with normal turnover are allowable. Such payments shall be allocated to all activities of the governmental unit as an indirect cost. (3) Abnormal or mass severance pay will be considered on a case -by -case basis and is allowable only if approved by the cognizant Federal agency. h. Support of salaries and wages. These standards regarding time distribution are in addition to the standards for payroll documentation. (1) Charges to Federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with generally accepted practice of the governmental unit and approved by a responsible official(s) of the governmental unit. (2) No further documentation is required for the salaries and wages of employees who work in a single indirect cost activity. (3) Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications will be prepared at least semi - annually and will be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee. (4) Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation which meets the standards in subsection 8.h.(5) of this appendix unless a statistical sampling system (see subsection 8.h.(6) of this appendix) or other substitute system has been approved by the cognizant Federal agency. Such documentary support will be required where employees work on: (a) More than one Federal award, (b) A Federal award and a non - Federal award, (c) An indirect cost activity and a direct cost activity, (d) Two or more indirect activities which are allocated using different allocation bases, or (e) An unallowable activity and a direct or indirect cost activity. 51916 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations (5) Personnel activity reports or equivalent documentation must meet the following standards: (a) They must reflect an after -the -fact distribution of the actual activity of each employee, (b) They must account for the total activity for which each employee is compensated, (c) They must be prepared at least monthly and must coincide with one or more pay periods, and (d) They must be signed by the employee. (e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes, provided that: (i) The governmental unit's system for establishing the estimates produces reasonable approximations of the activity actually performed; (ii) At least quarterly, comparisons of actual costs to budgeted distributions based on the monthly activity reports are made. Costs charged to Federal awards to reflect adjustments made as a result of the activity actually performed may be recorded annually if the quarterly comparisons show the differences between budgeted and actual costs are less than ten percent; and (iii) The budget estimates or other distribution percentages are revised at least quarterly, if necessary, to reflect changed circumstances. (6) Substitute systems for allocating salaries and wages to Federal awards may be used in place of activity reports. These systems are subject to approval if required by the cognizant agency. Such systems may include, but are not limited to, random moment sampling, case counts, or other quantifiable measures of employee effort. (a) Substitute systems which use sampling methods (primarily for Temporary Assistance to Needy Families (TANF), Medicaid, and other public assistance programs) must meet acceptable statistical sampling standards including: (i) The sampling universe must include all of the employees whose salaries and wages are to be allocated based on sample results except as provided in subsection 8.h.(6)(c) of this appendix; (ii) The entire time period involved must be covered by the sample; and (iii) The results must be statistically valid and applied to the period being sampled. (b) Allocating charges for the sampled employees' supervisors, clerical and support staffs, based on the results of the sampled employees, will be acceptable. (c) Less than full compliance with the statistical sampling standards noted in subsection 8.h.(6)(a) of this appendix may be accepted by the cognizant agency if it concludes that the amounts to be allocated to Federal awards will be minimal, or if it concludes that the system proposed by the governmental unit will result in lower costs to Federal awards than a system which complies with the standards. (7) Salaries and wages of employees used in meeting cost sharing or matching requirements of Federal awards must be supported in the same manner as those claimed as allowable costs under Federal awards. i. Donated services. (1) Donated or volunteer services may be furnished to a governmental unit by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services is not reimbursable either as a direct or indirect cost. However, the value of donated services may be used to meet cost sharing or matching requirements in accordance with the provisions of the Common Rule. (2) The value of donated services utilized in the performance of a direct cost activity shall, when material in amount, be considered in the determination of the governmental unit's indirect costs or rate(s) and, accordingly, shall be allocated a proportionate share of applicable indirect costs. (3) To the extent feasible, donated services will be supported by the same methods used by the governmental unit to support the allocability of regular personnel services. 9. Contingency provisions. Contributions to a contingency reserve or any similar provision made for events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance of their happening, are unallowable. The term "contingency reserve" excludes self - insurance reserves (see section 22.c. of this appendix), pension plan reserves (see section 8.e.), and post - retirement health and other benefit reserves (section 8.f.) computed using acceptable actuarial cost methods. 10. Defense and prosecution of criminal and civil proceedings, and claims. a. The following costs are unallowable for contracts covered by 10 U.S.C. 2324(k), "Allowable costs under defense contracts." (1) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of false certification brought by the United States where the contractor is found liable or has pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification). (2) Costs incurred by a contractor in connection with any criminal, civil or administrative proceedings commenced by the United States or a State to the extent provided in 10 U.S.C. 2324(k). b. Legal expenses required in the administration of Federal programs are allowable. Legal expenses for prosecution of claims against the Federal Government are unallowable. 11. Depreciation and use allowances. a. Depreciation and use allowances are means of allocating the cost of fixed assets to periods benefiting from asset use. Compensation for the use of fixed assets on hand may be made through depreciation or use allowances. A combination of the two methods may not be used in connection with a single class of fixed assets (e.g., buildings, office equipment, computer equipment, etc.) except as provided for in subsection g. Except for enterprise funds and internal service funds that are included as part of a State /local cost allocation plan, classes of assets shall be determined on the same basis used for the government -wide financial statements. b. The computation of depreciation or use allowances shall be based on the acquisition cost of the assets involved. Where actual cost records have not been maintained, a reasonable estimate of the original acquisition cost may be used. The value of an asset donated to the governmental unit by an unrelated third party shall be its fair market value at the time of donation. Governmental or quasi - governmental organizations located within the same State shall not be considered unrelated third parties for this purpose. c. The computation of depreciation or use allowances will exclude: (1) The cost of land; (2) Any portion of the cost of buildings and equipment borne by or donated by the Federal Government irrespective of where title was originally vested or where it presently resides; and (3) Any portion of the cost of buildings and equipment contributed by or for the governmental unit, or a related donor organization, in satisfaction of a matching requirement. d. Where the depreciation method is followed, the following general criteria apply: (1) The period of useful service (useful life) established in each case for usable capital assets must take into consideration such factors as type of construction, nature of the equipment used, historical usage patterns, technological developments, and the renewal and replacement policies of the governmental unit followed for the individual items or classes of assets involved. In the absence of clear evidence indicating that the expected consumption of the asset will be significantly greater in the early portions than in the later portions of its useful life, the straight line method of depreciation shall be used. (2) Depreciation methods once used shall not be changed unless approved by the Federal cognizant or awarding agency. When the depreciation method is introduced for application to an asset previously subject to a use allowance, the annual depreciation charge thereon may not exceed the amount that would have resulted had the depreciation method been in effect from the date of acquisition of the asset. The combination of use allowances and depreciation applicable to the asset shall not exceed the total acquisition cost of the asset or fair market value at time of donation. e. When the depreciation method is used for buildings, a building's shell may be segregated from the major component of the building (e.g., plumbing system, heating, and air conditioning system, etc.) and each major component depreciated over its estimated useful life, or the entire building (i.e., the shell and all components) may be treated as a single asset and depreciated over a single useful life. f. Where the use allowance method is followed, the following general criteria apply: (1) The use allowance for buildings and improvements (including land improvements, such as paved parking areas, fences, and sidewalks) will be computed at an annual rate not exceeding two percent of acquisition costs. Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51917 (2) The use allowance for equipment will be computed at an annual rate not exceeding 62/3 percent of acquisition cost. (3) When the use allowance method is used for buildings, the entire building must be treated as a single asset; the building's components (e.g., plumbing system, heating and air condition, etc.) cannot be segregated from the building's shell. The two percent limitation, however, need not be applied to equipment which is merely attached or fastened to the building but not permanently fixed to it and which is used as furnishings or decorations or for specialized purposes (e.g., dentist chairs and dental treatment units, counters, laboratory benches bolted to the floor, dishwashers, modular furniture, carpeting, etc.). Such equipment will be considered as not being permanently fixed to the building if it can be removed without the destruction of, or need for costly or extensive alterations or repairs, to the building or the equipment. Equipment that meets these criteria will be subject to the 62/3 percent equipment use allowance limitation. g. A reasonable use allowance may be negotiated for any assets that are considered to be fully depreciated, after taking into consideration the amount of depreciation previously charged to the government, the estimated useful life remaining at the time of negotiation, the effect of any increased maintenance charges, decreased efficiency due to age, and any other factors pertinent to the utilization of the asset for the purpose contemplated. h. Charges for use allowances or depreciation must be supported by adequate property records. Physical inventories must be taken at least once every two years (a statistical sampling approach is acceptable) to ensure that assets exist, and are in use. Governmental units will manage equipment in accordance with State laws and procedures. When the depreciation method is followed, depreciation records indicating the amount of depreciation taken each period must also be maintained. 12. Donations and contributions. a. Contributions or donations rendered. Contributions or donations, including cash, property, and services, made by the governmental unit, regardless of the recipient, are unallowable. b. Donated services received: (1) Donated or volunteer services may be furnished to a governmental unit by professional and technical personnel, consultants, and other skilled and unskilled labor. The value of these services is not reimbursable either as a direct or indirect cost. However, the value of donated services may be used to meet cost sharing or matching requirements in accordance with the Federal Grants Management Common Rule. (2) The value of donated services utilized in the performance of a direct cost activity shall, when material in amount, be considered in the determination of the governmental unit's indirect costs or rate(s) and, accordingly, shall be allocated a proportionate share of applicable indirect costs. (3) To the extent feasible, donated services will be supported by the same methods used by the governmental unit to support the allocability of regular personnel services. 13. Employee morale, health, and welfare costs. a. The costs of employee information publications, health or first -aid clinics and/ or infirmaries, recreational activities, employee counseling services, and any other expenses incurred in accordance with the governmental unit's established practice or custom for the improvement of working conditions, employer - employee relations, employee morale, and employee performance are allowable. b. Such costs will be equitably apportioned to all activities of the governmental unit. Income generated from any of these activities will be offset against expenses. 14. Entertainment. Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities) are unallowable. 15. Equipment and other capital expenditures. a. For purposes of this subsection 15, the following definitions apply: (1) "Capital Expenditures" means expenditures for the acquisition cost of capital assets (equipment, buildings, land), or expenditures to make improvements to capital assets that materially increase their value or useful life. Acquisition cost means the cost of the asset including the cost to put it in place. Acquisition cost for equipment, for example, means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges, such as taxes, duty, protective in transit insurance, freight, and installation may be included in, or excluded from the acquisition cost in accordance with the governmental unit's regular accounting practices. (2) "Equipment" means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the governmental unit for financial statement purposes, or $5000. (3) "Special purpose equipment" means equipment which is used only for research, medical, scientific, or other technical activities. Examples of special purpose equipment include microscopes, x -ray machines, surgical instruments, and spectrometers. (4) "General purpose equipment" means equipment, which is not limited to research, medical, scientific or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles. b. The following rules of allowability shall apply to equipment and other capital expenditures: (1) Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except where approved in advance by the awarding agency. (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5000 or more have the prior approval of the awarding agency. (3) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior approval of the awarding agency. (4) When approved as a direct charge pursuant to section 15.b(1), (2), and (3)of this appendix, capital expenditures will be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate and negotiated with the awarding agency. In addition, Federal awarding agencies are authorized at their option to waive or delegate the prior approval requirement. (5) Equipment and other capital expenditures are unallowable as indirect costs. However, see section 11 of this appendix, Depreciation and use allowance, for rules on the allowability of use allowances or depreciation on buildings, capital improvements, and equipment. Also, see section 37 of this appendix, Rental costs, concerning the allowability of rental costs for land, buildings, and equipment. (6) The unamortized portion of any equipment written off as a result of a change in capitalization levels may be recovered by continuing to claim the otherwise allowable use allowances or depreciation on the equipment, or by amortizing the amount to be written off over a period of years negotiated with the cognizant agency. (7) When replacing equipment purchased in whole or in part with Federal funds, the governmental unit may use the equipment to be replaced as a trade -in or sell the property and use the proceeds to offset the cost of the replacement property. 16. Fines and penalties. Fines, penalties, damages, and other settlements resulting from violations (or alleged violations) of, or failure of the governmental unit to comply with, Federal, State, local, or Indian tribal laws and regulations are unallowable except when incurred as a result of compliance with specific provisions of the Federal award or written instructions by the awarding agency authorizing in advance such payments. 17. Fund raising and investment management costs. a. Costs of organized fund raising, including financial campaigns, solicitation of gifts and bequests, and similar expenses incurred to raise capital or obtain contributions are unallowable, regardless of the purpose for which the funds will be used. b. Costs of investment counsel and staff and similar expenses incurred to enhance income from investments are unallowable. However, such costs associated with investments covering pension, self- insurance, or other funds which include Federal participation allowed by this and other appendices of 2 CFR part 225 are allowable. c. Fund raising and investment activities shall be allocated an appropriate share of indirect costs under the conditions described in subsection C.3.b. of Appendix A to this part. 18. Gains and losses on disposition of depreciable property and other capital assets 51918 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations and substantial relocation of Federal programs. a. (1) Gains and losses on the sale, retirement, or other disposition of depreciable property shall be included in the year in which they occur as credits or charges to the asset cost grouping(s) in which the property was included. The amount of the gain or loss to be included as a credit or charge to the appropriate asset cost grouping(s) shall be the difference between the amount realized on the property and the undepreciated basis of the property. (2) Gains and losses on the disposition of depreciable property shall not be recognized as a separate credit or charge under the following conditions: (a) The gain or loss is processed through a depreciation account and is reflected in the depreciation allowable under sections 11 and 15 of this appendix. (b) The property is given in exchange as part of the purchase price of a similar item and the gain or loss is taken into account in determining the depreciation cost basis of the new item. (c) A loss results from the failure to maintain permissible insurance, except as otherwise provided in subsection 22.d of this appendix. (d) Compensation for the use of the property was provided through use allowances in lieu of depreciation. b. Substantial relocation of Federal awards from a facility where the Federal Government participated in the financing to another facility prior to the expiration of the useful life of the financed facility requires Federal agency approval. The extent of the relocation, the amount of the Federal participation in the financing, and the depreciation charged to date may require negotiation of space charges for Federal awards. c. Gains or losses of any nature arising from the sale or exchange of property other than the property covered in subsection 18.a. of this appendix, e.g., land or included in the fair market value used in any adjustment resulting from a relocation of Federal awards covered in subsection b. shall be excluded in computing Federal award costs. 19. General government expenses. a. The general costs of government are unallowable (except as provided in section 43 of this appendix, Travel costs). These include: (1) Salaries and expenses of the Office of the Governor of a State or the chief executive of a political subdivision or the chief executive of federally- recognized Indian tribal government; (2) Salaries and other expenses of a State legislature, tribal council, or similar local governmental body, such as a county supervisor, city council, school board, etc., whether incurred for purposes of legislation or executive direction; (3) Costs of the judiciary branch of a government; (4) Costs of prosecutorial activities unless treated as a direct cost to a specific program if authorized by program statute or regulation (however, this does not preclude the allowability of other legal activities of the Attorney General); and (5) Costs of other general types of government services normally provided to the general public, such as fire and police, unless provided for as a direct cost under a program statute or regulation. b. For federally - recognized Indian tribal governments and Councils Of Governments (COGs), the portion of salaries and expenses directly attributable to managing and operating Federal programs by the chief executive and his staff is allowable. 20. Goods or services for personal use. Costs of goods or services for personal use of the governmental unit's employees are unallowable regardless of whether the cost is reported as taxable income to the employees. 21. Idle facilities and idle capacity. As used in this section the following terms have the meanings set forth below: (1) "Facilities" means land and buildings or any portion thereof, equipment individually or collectively, or any other tangible capital asset, wherever located, and whether owned or leased by the governmental unit. (2) "Idle facilities" means completely unused facilities that are excess to the governmental unit's current needs. (3) "Idle capacity" means the unused capacity of partially used facilities. It is the difference between: that which a facility could achieve under 100 percent operating time on a one -shift basis less operating interruptions resulting from time lost for repairs, setups, unsatisfactory materials, and other normal delays; and the extent to which the facility was actually used to meet demands during the accounting period. A multi -shift basis should be used if it can be shown that this amount of usage would normally be expected for the type of facility involved. (4) "Cost of idle facilities or idle capacity" means costs such as maintenance, repair, housing, rent, and other related costs, e.g., insurance, interest, property taxes and depreciation or use allowances. b. The costs of idle facilities are unallowable except to the extent that: (1) They are necessary to meet fluctuations in workload; or (2) Although not necessary to meet fluctuations in workload, they were necessary when acquired and are now idle because of changes in program requirements, efforts to achieve more economical operations, reorganization, termination, or other causes which could not have been reasonably foreseen. Under the exception stated in this subsection, costs of idle facilities are allowable for a reasonable period of time, ordinarily not to exceed one year, depending on the initiative taken to use, lease, or dispose of such facilities. c. The costs of idle capacity are normal costs of doing business and are a factor in the normal fluctuations of usage or indirect cost rates from period to period. Such costs are allowable, provided that the capacity is reasonably anticipated to be necessary or was originally reasonable and is not subject to reduction or elimination by use on other Federal awards, subletting, renting, or sale, in accordance with sound business, economic, or security practices. Widespread idle capacity throughout an entire facility or among a group of assets having substantially the same function may be considered idle facilities. 22. Insurance and indemnification. a. Costs of insurance required or approved and maintained, pursuant to the Federal award, are allowable. b. Costs of other insurance in connection with the general conduct of activities are allowable subject to the following limitations: (1) Types and extent and cost of coverage are in accordance with the governmental unit's policy and sound business practice. (2) Costs of insurance or of contributions to any reserve covering the risk of loss of, or damage to, Federal Government property are unallowable except to the extent that the awarding agency has specifically required or approved such costs. c. Actual losses which could have been covered by permissible insurance (through a self- insurance program or otherwise) are unallowable, unless expressly provided for in the Federal award or as described below. However, the Federal Government will participate in actual losses of a self insurance fund that are in excess of reserves. Costs incurred because of losses not covered under nominal deductible insurance coverage provided in keeping with sound management practice, and minor losses not covered by insurance, such as spoilage, breakage, and disappearance of small hand tools, which occur in the ordinary course of operations, are allowable. d. Contributions to a reserve for certain self- insurance programs including workers compensation, unemployment compensation, and severance pay are allowable subject to the following provisions: (1) The type of coverage and the extent of coverage and the rates and premiums would have been allowed had insurance (including reinsurance) been purchased to cover the risks. However, provision for known or reasonably estimated self- insured liabilities, which do not become payable for more than one year after the provision is made, shall not exceed the discounted present value of the liability. The rate used for discounting the liability must be determined by giving consideration to such factors as the governmental unit's settlement rate for those liabilities and its investment rate of return. (2) Earnings or investment income on reserves must be credited to those reserves. (3) Contributions to reserves must be based on sound actuarial principles using historical experience and reasonable assumptions. Reserve levels must be analyzed and updated at least biennially for each major risk being insured and take into account any reinsurance, coinsurance, etc. Reserve levels related to employee - related coverages will normally be limited to the value of claims submitted and adjudicated but not paid, submitted but not adjudicated, and incurred but not submitted. Reserve levels in excess of the amounts based on the above must be identified and justified in the cost allocation plan or indirect cost rate proposal. (4) Accounting records, actuarial studies, and cost allocations (or billings) must recognize any significant differences due to types of insured risk and losses generated by the various insured activities or agencies of the governmental unit. If individual departments or agencies of the governmental Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51919 unit experience significantly different levels of claims for a particular risk, those differences are to be recognized by the use of separate allocations or other techniques resulting in an equitable allocation. (5) Whenever funds are transferred from a self- insurance reserve to other accounts (e.g., general fund), refunds shall be made to the Federal Government for its share of funds transferred, including earned or imputed interest from the date of transfer. e. Actual claims paid to or on behalf of employees or former employees for workers' compensation, unemployment compensation, severance pay, and similar employee benefits (e.g., subsection 8.f. for post retirement health benefits), are allowable in the year of payment provided the governmental unit follows a consistent costing policy and they are allocated as a general administrative expense to all activities of the governmental unit. f. Insurance refunds shall be credited against insurance costs in the year the refund is received. g. Indemnification includes securing the governmental unit against liabilities to third persons and other losses not compensated by insurance or otherwise. The Federal Government is obligated to indemnify the governmental unit only to the extent expressly provided for in the Federal award, except as provided in subsection 22.d of this appendix. h. Costs of commercial insurance that protects against the costs of the contractor for correction of the contractor's own defects in materials or workmanship are unallowable. 23. Interest. a. Costs incurred for interest on borrowed capital or the use of a governmental unit's own funds, however represented, are unallowable except as specifically provided in subsection b. or authorized by Federal legislation. b. Financing costs (including interest) paid or incurred which are associated with the otherwise allowable costs of building acquisition, construction, or fabrication, reconstruction or remodeling completed on or after October 1, 1980 is allowable subject to the conditions in section 23.b.(1) through (4) of this appendix. Financing costs (including interest) paid or incurred on or after September 1, 1995 for land or associated with otherwise allowable costs of equipment is allowable, subject to the conditions in section 23.b. (1) through (4) of this appendix. (1) The financing is provided (from other than tax or user fee sources) by a bona fide third party external to the governmental unit; (2) The assets are used in support of Federal awards; (3) Earnings on debt service reserve funds or interest earned on borrowed funds pending payment of the construction or acquisition costs are used to offset the current period's cost or the capitalized interest, as appropriate. Earnings subject to being reported to the Federal Internal Revenue Service under arbitrage requirements are excludable. (4) For debt arrangements over $1 million, unless the governmental unit makes an initial equity contribution to the asset purchase of 25 percent or more, the governmental unit shall reduce claims for interest cost by an amount equal to imputed interest earnings on excess cash flow, which is to be calculated as follows. Annually, non - Federal entities shall prepare a cumulative (from the inception of the project) report of monthly cash flows that includes inflows and outflows, regardless of the funding source. Inflows consist of depreciation expense, amortization of capitalized construction interest, and annual interest cost. For cash flow calculations, the annual inflow figures shall be divided by the number of months in the year (i.e., usually 12) that the building is in service for monthly amounts. Outflows consist of initial equity contributions, debt principal payments (less the pro rata share attributable to the unallowable costs of land) and interest payments. Where cumulative inflows exceed cumulative outflows, interest shall be calculated on the excess inflows for that period and be treated as a reduction to allowable interest cost. The rate of interest to be used to compute earnings on excess cash flows shall be the three -month Treasury bill closing rate as of the last business day of that month. (5) Interest attributable to fully depreciated assets is unallowable. 24. Lobbying. a. General. The cost of certain influencing activities associated with obtaining grants, contracts, cooperative agreements, or loans is an unallowable cost. Lobbying with respect to certain grants, contracts, cooperative agreements, and loans shall be governed by the common rule, "New Restrictions on Lobbying" (see Section J.24 of Appendix A to 2 CFR part 220), including definitions, and the Office of Management and Budget "Government -wide Guidance for New Restrictions on Lobbying" and notices published at 54 FR 52306 (December 20, 1989), 55 FR 24540 (June 15, 1990), and 57 FR 1772 (January 15, 1992), respectively. b. Executive lobbying costs. Costs incurred in attempting to improperly influence either directly or indirectly, an employee or officer of the Executive Branch of the Federal Government to give consideration or to act regarding a sponsored agreement or a regulatory matter are unallowable. Improper influence means any influence that induces or tends to induce a Federal employee or officer to give consideration or to act regarding a federally- sponsored agreement or regulatory matter on any basis other than the merits of the matter. 25. Maintenance, operations, and repairs. Unless prohibited by law, the cost of utilities, insurance, security, janitorial services, elevator service, upkeep of grounds, necessary maintenance, normal repairs and alterations, and the like are allowable to the extent that they: keep property (including Federal property, unless otherwise provided for) in an efficient operating condition, do not add to the permanent value of property or appreciably prolong its intended life, and are not otherwise included in rental or other charges for space. Costs which add to the permanent value of property or appreciably prolong its intended life shall be treated as capital expenditures (see sections 11 and 15 of this appendix). 26. Materials and supplies costs. a. Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable. b. Purchased materials and supplies shall be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms should be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials and supplies costs. c. Only materials and supplies actually used for the performance of a Federal award may be charged as direct costs. d. Where federally- donated or furnished materials are used in performing the Federal award, such materials will be used without charge. 27. Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental of facilities, speakers' fees, and other items incidental to such meetings or conferences. But see section 14, Entertainment costs, of this appendix. 28. Memberships, subscriptions, and professional activity costs. a. Costs of the governmental unit's memberships in business, technical, and professional organizations are allowable. b. Costs of the governmental unit's subscriptions to business, professional, and technical periodicals are allowable. c. Costs of membership in civic and community, social organizations are allowable as a direct cost with the approval of the Federal awarding agency. d. Costs of membership in organizations substantially engaged in lobbying are unallowable. 29. Patent costs. a. The following costs relating to patent and copyright matters are allowable: cost of preparing disclosures, reports, and other documents required by the Federal award and of searching the art to the extent necessary to make such disclosures; cost of preparing documents and any other patent costs in connection with the filing and prosecution of a United States patent application where title or royalty -free license is required by the Federal Government to be conveyed to the Federal Government; and general counseling services relating to patent and copyright matters, such as advice on patent and copyright laws, regulations, clauses, and employee agreements (but see sections 32, Professional service costs, and 38, Royalties and other costs for use of patents and copyrights, of this appendix). b. The following costs related to patent and copyright matter are unallowable: Cost of preparing disclosures, reports, and other documents and of searching the art to the extent necessary to make disclosures not required by the award; costs in connection with filing and prosecuting any foreign patent application; or any United States patent application, where the Federal award does not require conveying title or a royalty - free license to the Federal Government (but see section 38, Royalties and other costs for use of patents and copyrights, of this appendix). 51920 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 30. Plant and homeland security costs. Necessary and reasonable expenses incurred for routine and homeland security to protect facilities, personnel, and work products are allowable. Such costs include, but are not limited to, wages and uniforms of personnel engaged in security activities; equipment; barriers; contractual security services; consultants; etc. Capital expenditures for homeland and plant security purposes are subject to section 15, Equipment and other capital expenditures, of this appendix. 31. Pre -award costs. Pre -award costs are those incurred prior to the effective date of the award directly pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with the proposed delivery schedule or period of performance. Such costs are allowable only to the extent that they would have been allowable if incurred after the date of the award and only with the written approval of the awarding agency. 32. Professional service costs. a. Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the governmental unit, are allowable, subject to subparagraphs b and c when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government. In addition, legal and related services are limited under section 10 of this appendix. b. In determining the allowability of costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors are relevant: (1) The nature and scope of the service rendered in relation to the service required. (2) The necessity of contracting for the service, considering the governmental unit's capability in the particular area. (3) The past pattern of such costs, particularly in the years prior to Federal awards. (4) The impact of Federal awards on the governmental unit's business (i.e., what new problems have arisen). (5) Whether the proportion of Federal work to the governmental unit's total business is such as to influence the governmental unit in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under Federal grants and contracts. (6) Whether the service can be performed more economically by direct employment rather than contracting. (7) The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non - Federal awards. (8) Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, and termination provisions). c. In addition to the factors in subparagraph b, retainer fees to be allowable must be supported by available or rendered evidence of bona fide services available or rendered. 33. Proposal costs. Costs of preparing proposals for potential Federal awards are allowable. Proposal costs should normally be treated as indirect costs and should be allocated to all activities of the governmental unit utilizing the cost allocation plan and indirect cost rate proposal. However, proposal costs may be charged directly to Federal awards with the prior approval of the Federal awarding agency. 34. Publication and printing costs. a. Publication costs include the costs of printing (including the processes of composition, plate - making, press work, binding, and the end products produced by such processes), distribution, promotion, mailing, and general handling. Publication costs also include page charges in professional publications. b. If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the governmental unit. c. Page charges for professional journal publications are allowable as a necessary part of research costs where: (1) The research papers report work supported by the Federal Government; and (2) The charges are levied impartially on all research papers published by the journal, whether or not by federally- sponsored authors. 35. Rearrangement and alteration costs. Costs incurred for ordinary and normal rearrangement and alteration of facilities are allowable. Special arrangements and alterations costs incurred specifically for a Federal award are allowable with the prior approval of the Federal awarding agency. 36. Reconversion costs. Costs incurred in the restoration or rehabilitation of the governmental unit's facilities to approximately the same condition existing immediately prior to commencement of Federal awards, less costs related to normal wear and tear, are allowable. 37. Rental costs of buildings and equipment. a. Subject to the limitations described in subsections b. through d. of this section, rental costs are allowable to the extent that the rates are reasonable in light of such factors as: rental costs of comparable property, if any; market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of the property leased. Rental arrangements should be reviewed periodically to determine if circumstances have changed and other options are available. b. Rental costs under "sale and lease back" arrangements are allowable only up to the amount that would be allowed had the governmental unit continued to own the property. This amount would include expenses such as depreciation or use allowance, maintenance, taxes, and insurance. c. Rental costs under "less- than- arm's- length" leases are allowable only up to the amount (as explained in section 37.b of this appendix) that would be allowed had title to the property vested in the governmental unit. For this purpose, a less - than- arm's - length lease is one under which one party to the lease agreement is able to control or substantially influence the actions of the other. Such leases include, but are not limited to those between divisions of a governmental unit; governmental units under common control through common officers, directors, or members; and a governmental unit and a director, trustee, officer, or key employee of the governmental unit or his immediate family, either directly or through corporations, trusts, or similar arrangements in which they hold a controlling interest. For example, a governmental unit may establish a separate corporation for the sole purpose of owning property and leasing it back to the governmental unit. d. Rental costs under leases which are required to be treated as capital leases under GAAP are allowable only up to the amount (as explained in subsection 37.b of this appendix) that would be allowed had the governmental unit purchased the property on the date the lease agreement was executed. The provisions of Financial Accounting Standards Board Statement 13, Accounting for Leases, shall be used to determine whether a lease is a capital lease. Interest costs related to capital leases are allowable to the extent they meet the criteria in section 23 of this appendix. Unallowable costs include amounts paid for profit, management fees, and taxes that would not have been incurred had the governmental unit purchased the facility. 38. Royalties and other costs for the use of patents. a. Royalties on a patent or copyright or amortization of the cost of acquiring by purchase a copyright, patent, or rights thereto, necessary for the proper performance of the award are allowable unless: (1) The Federal Government has a license or the right to free use of the patent or copyright. (2) The patent or copyright has been adjudicated to be invalid, or has been administratively determined to be invalid. (3) The patent or copyright is considered to be unenforceable. (4) The patent or copyright is expired. b. Special care should be exercised in determining reasonableness where the royalties may have been arrived at as a result of less -than- arm's - length bargaining, e.g.: (1) Royalties paid to persons, including corporations, affiliated with the governmental unit. (2) Royalties paid to unaffiliated parties, including corporations, under an agreement entered into in contemplation that a Federal award would be made. (3) Royalties paid under an agreement entered into after an award is made to a governmental unit. c. In any case involving a patent or copyright formerly owned by the governmental unit, the amount of royalty allowed should not exceed the cost which would have been allowed had the governmental unit retained title thereto. 39. Selling and marketing. Costs of selling and marketing any products or services of the governmental unit are unallowable (unless allowed under section 1. of this appendix as allowable public relations costs or under section 33. of this appendix as allowable proposal costs. 40. Taxes. a. Taxes that a governmental unit is legally required to pay are allowable, except for self- Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51921 assessed taxes that disproportionately affect Federal programs or changes in tax policies that disproportionately affect Federal programs. This provision is applicable to taxes paid during the governmental unit's first fiscal year that begins on or after January 1, 1998, and applies thereafter. b. Gasoline taxes, motor vehicle fees, and other taxes that are in effect user fees for benefits provided to the Federal Government are allowable. c. This provision does not restrict the authority of Federal agencies to identify taxes where Federal participation is inappropriate. Where the identification of the amount of unallowable taxes would require an inordinate amount of effort, the cognizant agency may accept a reasonable approximation thereof. 41. Termination costs applicable to sponsored agreements. Termination of awards generally gives rise to the incurrence of costs, or the need for special treatment of costs, which would not have arisen had the Federal award not been terminated. Cost principles covering these items are set forth below. They are to be used in conjunction with the other provisions of this appendix in termination situations. a. The cost of items reasonably usable on the governmental unit's other work shall not be allowable unless the governmental unit submits evidence that it would not retain such items at cost without sustaining a loss. In deciding whether such items are reasonably usable on other work of the governmental unit, the awarding agency should consider the governmental unit's plans and orders for current and scheduled activity. Contemporaneous purchases of common items by the governmental unit shall be regarded as evidence that such items are reasonably usable on the governmental unit's other work. Any acceptance of common items as allocable to the terminated portion of the Federal award shall be limited to the extent that the quantities of such items on hand, in transit, and on order are in excess of the reasonable quantitative requirements of other work. b. If in a particular case, despite all reasonable efforts by the governmental unit, certain costs cannot be discontinued immediately after the effective date of termination, such costs are generally allowable within the limitations set forth in this and other appendices of 2 CFR part 225, except that any such costs continuing after termination due to the negligent or willful failure of the governmental unit to discontinue such costs shall be unallowable. c. Loss of useful value of special tooling, machinery, and equipment is generally allowable if: (1) Such special tooling, special machinery, or equipment is not reasonably capable of use in the other work of the governmental unit, (2) The interest of the Federal Government is protected by transfer of title or by other means deemed appropriate by the awarding agency, and (3) The loss of useful value for any one terminated Federal award is limited to that portion of the acquisition cost which bears the same ratio to the total acquisition cost as the terminated portion of the Federal award bears to the entire terminated Federal award and other Federal awards for which the special tooling, machinery, or equipment was acquired. d. Rental costs under unexpired leases are generally allowable where clearly shown to have been reasonably necessary for the performance of the terminated Federal award less the residual value of such leases, if: (1) The amount of such rental claimed does not exceed the reasonable use value of the property leased for the period of the Federal award and such further period as may be reasonable, and (2) The governmental unit makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There also may be included the cost of alterations of such leased property, provided such alterations were necessary for the performance of the Federal award, and of reasonable restoration required by the provisions of the lease. e. Settlement expenses including the following are generally allowable: (1) Accounting, legal, clerical, and similar costs reasonably necessary for: (a) The preparation and presentation to the awarding agency of settlement claims and supporting data with respect to the terminated portion of the Federal award, unless the termination is for default (see Subpart .44 of the Grants Management Common Rule (see § 215.5) implementing OMB Circular A -102); and (b) The termination and settlement of subawards. (2) Reasonable costs for the storage, transportation, protection, and disposition of property provided by the Federal Government or acquired or produced for the Federal award, except when grantees or contractors are reimbursed for disposals at a predetermined amount in accordance with Subparts _.31 and _.32 of the Grants Management Common Rule (see § 215.5) implementing OMB Circular A -102. f. Claims under subawards, including the allocable portion of claims which are common to the Federal award, and to other work of the governmental unit are generally allowable. An appropriate share of the governmental unit's indirect expense may be allocated to the amount of settlements with subcontractors and /or subgrantees, provided that the amount allocated is otherwise consistent with the basic guidelines contained in Appendix A to this part. The indirect expense so allocated shall exclude the same and similar costs claimed directly or indirectly as settlement expenses. 42. Training costs. The cost of training provided for employee development is allowable. 43. Travel costs. a. General. Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the governmental unit. Such costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in like circumstances in the governmental unit's non- federally- sponsored activities. Notwithstanding the provisions of section 19 of this appendix, General government expenses, travel costs of officials covered by that section are allowable with the prior approval of an awarding agency when they are specifically related to Federal awards. b. Lodging and subsistence. Costs incurred by employees and officers for travel, including costs of lodging, other subsistence, and incidental expenses, shall be considered reasonable and allowable only to the extent such costs do not exceed charges normally allowed by the governmental unit in its regular operations as the result of the governmental unit's written travel policy. In the absence of an acceptable, written governmental unit policy regarding travel costs, the rates and amounts established under subchapter I of Chapter 57, Title 5, United States Code ( "Travel and Subsistence Expenses; Mileage Allowances "), or by the Administrator of General Services, or by the President (or his or her designee) pursuant to any provisions of such subchapter shall apply to travel under Federal awards (48 CFR 31.205- 46(a)). c. Commercial air travel. (1) Airfare costs in excess of the customary standard commercial airfare (coach or equivalent), Federal Government contract airfare (where authorized and available), or the lowest commercial discount airfare are unallowable except when such accommodations would: (a) Require circuitous routing; (b) Require travel during unreasonable hours; (c) Excessively prolong travel; (d) Result in additional costs that would offset the transportation savings; or (e) Offer accommodations not reasonably adequate for the traveler's medical needs. The governmental unit must justify and document these conditions on a case -by -case basis in order for the use of first -class airfare to be allowable in such cases. (2) Unless a pattern of avoidance is detected, the Federal Government will generally not question a governmental unit's determinations that customary standard airfare or other discount airfare is unavailable for specific trips if the governmental unit can demonstrate either of the following: (aa) That such airfare was not available in the specific case; or (b) That it is the governmental unit's overall practice to make routine use of such airfare. d. Air travel by other than commercial carrier. Costs of travel by governmental unit- owned, - leased, or - chartered aircraft include the cost of lease, charter, operation (including personnel costs), maintenance, depreciation, insurance, and other related costs. The portion of such costs that exceeds the cost of allowable commercial air travel, as provided for in subsection 43.c. of this appendix, is unallowable. e. Foreign travel. Direct charges for foreign travel costs are allowable only when the travel has received prior approval of the awarding agency. Each separate foreign trip 51922 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations must receive such approval. For purposes of this provision, "foreign travel" includes any travel outside Canada, Mexico, the United States, and any United States territories and possessions. However, the term "foreign travel" for a governmental unit located in a foreign country means travel outside that country. Appendix C to Part 225— State/Local- Wide Central Service Cost Allocation Plans Table of Contents A. General B. Definitions 1. Billed central services 2. Allocated central services 3. Agency or operating agency C. Scope of the Central Service Cost Allocation Plans D. Submission Requirements E. Documentation Requirements for Submitted Plans 1. General 2. Allocated central services 3. Billed services a. General b. Internal service funds c. Self - insurance funds d. Fringe benefits 4. Required certification F. Negotiation and Approval of Central Service Plans G. Other Policies 1. Billed central service activities 2. Working capital reserves 3. Carry - forward adjustments of allocated central service costs 4. Adjustments of billed central services 5. Records retention 6. Appeals 7. OMB assistance State /Local -Wide Central Service Cost Allocation Plans A. General. 1. Most governmental units provide certain services, such as motor pools, computer centers, purchasing, accounting, etc., to operating agencies on a centralized basis. Since federally- supported awards are performed within the individual operating agencies, there needs to be a process whereby these central service costs can be identified and assigned to benefitted activities on a reasonable and consistent basis. The central service cost allocation plan provides that process. All costs and other data used to distribute the costs included in the plan should be supported by formal accounting and other records that will support the propriety of the costs assigned to Federal awards. 2. Guidelines and illustrations of central service cost allocation plans are provided in a brochure published by the Department of Health and Human Services entitled "A Guide for State and Local Government Agencies: Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government." A copy of this brochure may be obtained from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20401. B. Definitions. 1. "Billed central services" means central services that are billed to benefitted agencies and /or programs on an individual fee -for- service or similar basis. Typical examples of billed central services include computer services, transportation services, insurance, and fringe benefits. 2. "Allocated central services" means central services that benefit operating agencies but are not billed to the agencies on a fee - for - service or similar basis. These costs are allocated to benefitted agencies on some reasonable basis. Examples of such services might include general accounting, personnel administration, purchasing, etc. 3. "Agency or operating agency" means an organizational unit or sub - division within a governmental unit that is responsible for the performance or administration of awards or activities of the governmental unit. C. Scope of the Central Service Cost Allocation Plans. The central service cost allocation plan will include all central service costs that will be claimed (either as a billed or an allocated cost) under Federal awards and will be documented as described in section E. Costs of central services omitted from the plan will not be reimbursed. D. Submission Requirements. 1. Each State will submit a plan to the Department of Health and Human Services for each year in which it claims central service costs under Federal awards. The plan should include a projection of the next year's allocated central service cost (based either on actual costs for the most recently completed year or the budget projection for the coming year), and a reconciliation of actual allocated central service costs to the estimated costs used for either the most recently completed year or the year immediately preceding the most recently completed year. 2. Each local government that has been designated as a "major local government" by the Office of Management and Budget (OMB) is also required to submit a plan to its cognizant agency annually. OMB periodically lists major local governments in the Federal Register. 3. All other local governments claiming central service costs must develop a plan in accordance with the requirements described in this appendix and maintain the plan and related supporting documentation for audit. These local governments are not required to submit their plans for Federal approval unless they are specifically requested to do so by the cognizant agency. Where a local government only receives funds as a sub - recipient, the primary recipient will be responsible for negotiating indirect cost rates and /or monitoring the sub - recipient's plan. 4. All central service cost allocation plans will be prepared and, when required, submitted within six months prior to the beginning of each of the governmental unit's fiscal years in which it proposes to claim central service costs. Extensions may be granted by the cognizant agency on a case - by -case basis. E. Documentation Requirements for Submitted Plans. The documentation requirements described in this section may be modified, expanded, or reduced by the cognizant agency on a case -by -case basis. For example, the requirements may be reduced for those central services which have little or no impact on Federal awards. Conversely, if a review of a plan indicates that certain additional information is needed, and will likely be needed in future years, it may be routinely requested in future plan submissions. Items marked with an asterisk ( *) should be submitted only once; subsequent plans should merely indicate any changes since the last plan. 1. General. All proposed plans must be accompanied by the following: An organization chart sufficiently detailed to show operations including the central service activities of the State /local government whether or not they are shown as benefiting from central service functions; a copy of the Comprehensive Annual Financial Report (or a copy of the Executive Budget if budgeted costs are being proposed) to support the allowable costs of each central service activity included in the plan; and, a certification (see subsection 4.) that the plan was prepared in accordance with this and other appendices to this part, contains only allowable costs, and was prepared in a manner that treated similar costs consistently among the various Federal awards and between Federal and non - Federal awards/ activities. 2. Allocated central services. For each allocated central service, the plan must also include the following: A brief description of the service *, an identification of the unit rendering the service and the operating agencies receiving the service, the items of expense included in the cost of the service, the method used to distribute the cost of the service to benefitted agencies, and a summary schedule showing the allocation of each service to the specific benefitted agencies. If any self - insurance funds or fringe benefits costs are treated as allocated (rather than billed) central services, documentation discussed in subsections 3.b. and c. shall also be included. 3. Billed services. a. General. The information described below shall be provided for all billed central services, including internal service funds, self - insurance funds, and fringe benefit funds. b. Internal service funds. (1) For each internal service fund or similar activity with an operating budget of $5 million or more, the plan shall include: A brief description of each service; a balance sheet for each fund based on individual accounts contained in the governmental unit's accounting system; a revenue /expenses statement, with revenues broken out by source, e.g., regular billings, interest earned, etc.; a listing of all non - operating transfers (as defined by Generally Accepted Accounting Principles (GAAP)) into and out of the fund; a description of the procedures (methodology) used to charge the costs of each service to users, including how billing rates are determined; a schedule of current rates; and, a schedule comparing total revenues (including imputed revenues) generated by the service to the allowable costs of the service, as determined under this and other appendices of this part, with an explanation of how variances will be handled. Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51923 (2) Revenues shall consist of all revenues generated by the service, including unbilled and uncollected revenues. If some users were not billed for the services (or were not billed at the full rate for that class of users), a schedule showing the full imputed revenues associated with these users shall be provided. Expenses shall be broken out by object cost categories (e.g., salaries, supplies, etc.). c. Self- insurance funds. For each self - insurance fund, the plan shall include: The fund balance sheet; a statement of revenue and expenses including a summary of billings and claims paid by agency; a listing of all non - operating transfers into and out of the fund; the type(s) of risk(s) covered by the fund (e.g., automobile liability, workers' compensation, etc.); an explanation of how the level of fund contributions are determined, including a copy of the current actuarial report (with the actuarial assumptions used) if the contributions are determined on an actuarial basis; and, a description of the procedures used to charge or allocate fund contributions to benefitted activities. Reserve levels in excess of claims submitted and adjudicated but not paid, submitted but not adjudicated, and incurred but not submitted must be identified and explained. d. Fringe benefits. For fringe benefit costs, the plan shall include: A listing of fringe benefits provided to covered employees, and the overall annual cost of each type of benefit; current fringe benefit policies *; and procedures used to charge or allocate the costs of the benefits to benefitted activities. In addition, for pension and post- retirement health insurance plans, the following information shall be provided: the governmental unit's funding policies, e.g., legislative bills, trust agreements, or State - mandated contribution rules, if different from actuarially determined rates; the pension plan's costs accrued for the year; the amount funded, and date(s) of funding; a copy of the current actuarial report (including the actuarial assumptions); the plan trustee's report; and, a schedule from the activity showing the value of the interest cost associated with late funding. 4. Required certification. Each central service cost allocation plan will be accompanied by a certification in the following form: Certificate of Cost Allocation Plan This is to certify that I have reviewed the cost allocation plan submitted herewith and to the best of my knowledge and belief: (1) All costs included in this proposal [identify date] to establish cost allocations or billings for [identify period covered by plan] are allowable in accordance with the requirements of 2 CFR Part 225, Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87), and the Federal award(s) to which they apply. Unallowable costs have been adjusted for in allocating costs as indicated in the cost allocation plan. (2) All costs included in this proposal are properly allocable to Federal awards on the basis of a beneficial or causal relationship between the expenses incurred and the awards to which they are allocated in accordance with applicable requirements. Further, the same costs that have been treated as indirect costs have not been claimed as direct costs. Similar types of costs have been accounted for consistently. I declare that the foregoing is true and correct. Governmental Unit: Signature: Name of Official: Title: Date of Execution: F. Negotiation and Approval of Central Service Plans. 1. All proposed central service cost allocation plans that are required to be submitted will be reviewed, negotiated, and approved by the Federal cognizant agency on a timely basis. The cognizant agency will review the proposal within six months of receipt of the proposal and either negotiate/ approve the proposal or advise the governmental unit of the additional documentation needed to support /evaluate the proposed plan or the changes required to make the proposal acceptable. Once an agreement with the governmental unit has been reached, the agreement will be accepted and used by all Federal agencies, unless prohibited or limited by statute. Where a Federal funding agency has reason to believe that special operating factors affecting its awards necessitate special consideration, the funding agency will, prior to the time the plans are negotiated, notify the cognizant agency. 2. The results of each negotiation shall be formalized in a written agreement between the cognizant agency and the governmental unit. This agreement will be subject to re- opening if the agreement is subsequently found to violate a statute or the information upon which the plan was negotiated is later found to be materially incomplete or inaccurate. The results of the negotiation shall be made available to all Federal agencies for their use. 3. Negotiated cost allocation plans based on a proposal later found to have included costs that: Are unallowable as specified by law or regulation, as identified in Appendix B of this part, or by the terms and conditions of Federal awards, or are unallowable because they are clearly not allocable to Federal awards, shall be adjusted, or a refund shall be made at the option of the Federal cognizant agency. These adjustments or refunds are designed to correct the plans and do not constitute a reopening of the negotiation. G. Other Policies. 1. Billed central service activities. Each billed central service activity must separately account for all revenues (including imputed revenues) generated by the service, expenses incurred to furnish the service, and profit/ loss. 2. Working capital reserves. Internal service funds are dependent upon a reasonable level of working capital reserve to operate from one billing cycle to the next. Charges by an internal service activity to provide for the establishment and maintenance of a reasonable level of working capital reserve, in addition to the full recovery of costs, are allowable. A working capital reserve as part of retained earnings of up to 60 days cash expenses for normal operating purposes is considered reasonable. A working capital reserve exceeding 60 days may be approved by the cognizant Federal agency in exceptional cases. 3. Carry - forward adjustments of allocated central service costs. Allocated central service costs are usually negotiated and approved for a future fiscal year on a "fixed with carry - forward" basis. Under this procedure, the fixed amounts for the future year covered by agreement are not subject to adjustment for that year. However, when the actual costs of the year involved become known, the differences between the fixed amounts previously approved and the actual costs will be carried forward and used as an adjustment to the fixed amounts established for a later year. This "carry- forward" procedure applies to all central services whose costs were fixed in the approved plan. However, a carry- forward adjustment is not permitted, for a central service activity that was not included in the approved plan, or for unallowable costs that must be reimbursed immediately. 4. Adjustments of billed central services. Billing rates used to charge Federal awards shall be based on the estimated costs of providing the services, including an estimate of the allocable central service costs. A comparison of the revenue generated by each billed service (including total revenues whether or not billed or collected) to the actual allowable costs of the service will be made at least annually, and an adjustment will be made for the difference between the revenue and the allowable costs. These adjustments will be made through one of the following adjustment methods: A cash refund to the Federal Government for the Federal share of the adjustment, credits to the amounts charged to the individual programs, adjustments to future billing rates, or adjustments to allocated central service costs. Adjustments to allocated central services will not be permitted where the total amount of the adjustment for a particular service (Federal share and non - Federal) share exceeds $500,000. 5. Records retention. All central service cost allocation plans and related documentation used as a basis for claiming costs under Federal awards must be retained for audit in accordance with the records retention requirements contained in the Common Rule. 6. Appeals. If a dispute arises in the negotiation of a plan between the cognizant agency and the governmental unit, the dispute shall be resolved in accordance with the appeals procedures of the cognizant agency. 7. OMB assistance. To the extent that problems are encountered among the Federal agencies and /or governmental units in connection with the negotiation and approval process, OMB will lend assistance, as required, to resolve such problems in a timely manner. 51924 Federal Register / Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations Appendix D to Part 225 - Public Assistance Cost Allocation Plans Table of Contents A. General B. Definitions 1. State public assistance agency 2. State public assistance agency costs C. Policy D. Submission, Documentation, and Approval of Public Assistance Cost Allocation Plans E. Review of Implementation of Approved Plans F. Unallowable Costs A. General. Federally- financed programs administered by State public assistance agencies are funded predominately by the Department of Health and Human Services (HHS). In support of its stewardship requirements, HHS has published requirements for the development, documentation, submission, negotiation, and approval of public assistance cost allocation plans in Subpart E of 45 CFR part 95. All administrative costs (direct and indirect) are normally charged to Federal awards by implementing the public assistance cost allocation plan. This appendix extends these requirements to all Federal agencies whose programs are administered by a State public assistance agency. Major federally- financed programs typically administered by State public assistance agencies include: Temporary Assistance to Needy Families (TANF), Medicaid, Food Stamps, Child Support Enforcement, Adoption Assistance and Foster Care, and Social Services Block Grant. B. Definitions. 1. "State public assistance agency" means a State agency administering or supervising the administration of one or more public assistance programs operated by the State as identified in Subpart E of 45 CFR part 95. For the purpose of this appendix, these programs include all programs administered by the State public assistance agency. 2. "State public assistance agency costs" means all costs incurred by, or allocable to, the State public assistance agency, except expenditures for financial assistance, medical vendor payments, food stamps, and payments for services and goods provided directly to program recipients. C. Policy. State public assistance agencies will develop, document and implement, and the Federal Government will review, negotiate, and approve, public assistance cost allocation plans in accordance with Subpart E of 45 CFR part 95. The plan will include all programs administered by the State public assistance agency. Where a letter of approval or disapproval is transmitted to a State public assistance agency in accordance with Subpart E, the letter will apply to all Federal agencies and programs The remaining sections of this appendix (except for the requirement for certification) summarize the provisions of Subpart E of 45 CFR part 95. D. Submission, Documentation, and Approval of Public Assistance Cost Allocation Plans. 1. State public assistance agencies are required to promptly submit amendments to the cost allocation plan to HHS for review and approval. 2. Under the coordination process outlined in subsection E, affected Federal agencies will review all new plans and plan amendments and provide comments, as appropriate, to HHS. The effective date of the plan or plan amendment will be the first day of the quarter following the submission of the plan or amendment, unless another date is specifically approved by HHS. HHS, as the cognizant agency acting on behalf of all affected Federal agencies, will, as necessary, conduct negotiations with the State public assistance agency and will inform the State agency of the action taken on the plan or plan amendment. E. Review of Implementation of Approved Plans. 1. Since public assistance cost allocation plans are of a narrative nature, the review during the plan approval process consists of evaluating the appropriateness of the proposed groupings of costs (cost centers) and the related allocation bases. As such, the Federal Government needs some assurance that the cost allocation plan has been implemented as approved. This is accomplished by reviews by the funding agencies, single audits, or audits conducted by the cognizant audit agency. 2. Where inappropriate charges affecting more than one funding agency are identified, the cognizant HHS cost negotiation office will be advised and will take the lead in resolving the issue(s) as provided for in Subpart E of 45 CFR part 95. 3. If a dispute arises in the negotiation of a plan or from a disallowance involving two or more funding agencies, the dispute shall be resolved in accordance with the appeals procedures set out in 45 CFR part 75. Disputes involving only one funding agency will be resolved in accordance with the funding agency's appeal process. 4. To the extent that problems are encountered among the Federal agencies and /or governmental units in connection with the negotiation and approval process, the Office of Management and Budget will lend assistance, as required, to resolve such problems in a timely manner. F. Unallowable Costs. Claims developed under approved cost allocation plans will be based on allowable costs as identified in 2 CFR part 225. Where unallowable costs have been claimed and reimbursed, they will be refunded to the program that reimbursed the unallowable cost using one of the following methods: a cash refund, offset to a subsequent claim, or credits to the amounts charged to individual awards. Appendix E to Part 225 -State and Local Indirect Cost Rate Proposals Table of Contents A. General B. Definitions 1. Indirect cost rate proposal 2. Indirect cost rate 3. Indirect cost pool 4. Base 5. Predetermined rate 6. Fixed rate 7. Provisional rate 8. Final rate 9. Base period C. Allocation of Indirect Costs and Determination of Indirect Cost Rates 1. General 2. Simplified method 3. Multiple allocation base method 4. Special indirect cost rates D. Submission and Documentation of Proposals 1. Submission of indirect cost rate proposals 2. Documentation of proposals 3. Required certification E. Negotiation and Approval of Rates F. Other Policies 1. Fringe benefit rates 2. Billed services provided by the grantee agency 3. Indirect cost allocations not using rates 4. Appeals 5. Collections of unallowable costs and erroneous payments 6. OMB assistance A. General. 1. Indirect costs are those that have been incurred for common or joint purposes. These costs benefit more than one cost objective and cannot be readily identified with a particular final cost objective without effort disproportionate to the results achieved. After direct costs have been determined and assigned directly to Federal awards and other activities as appropriate, indirect costs are those remaining to be allocated to benefitted cost objectives. A cost may not be allocated to a Federal award as an indirect cost if any other cost incurred for the same purpose, in like circumstances, has been assigned to a Federal award as a direct cost. 2. Indirect costs include the indirect costs originating in each department or agency of the governmental unit carrying out Federal awards and the costs of central governmental services distributed through the central service cost allocation plan (as described in Appendix C to this part) and not otherwise treated as direct costs. 3. Indirect costs are normally charged to Federal awards by the use of an indirect cost rate. A separate indirect cost rate(s) is usually necessary for each department or agency of the governmental unit claiming indirect costs under Federal awards. Guidelines and illustrations of indirect cost proposals are provided in a brochure published by the Department of Health and Human Services entitled "A Guide for State and Local Government Agencies: Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government." A copy of this brochure may be obtained from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20401. 4. Because of the diverse characteristics and accounting practices of governmental units, the types of costs which may be classified as indirect costs cannot be specified in all situations. However, typical examples of indirect costs may include certain State /local -wide central service costs, general administration of the grantee department or agency, accounting and personnel services performed within the grantee department or agency, depreciation Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations 51925 or use allowances on buildings and equipment, the costs of operating and maintaining facilities, etc. 5. This appendix does not apply to State public assistance agencies. These agencies should refer instead to Appendix D to this part. B. Definitions. 1. "Indirect cost rate proposal" means the documentation prepared by a governmental unit or subdivision thereof to substantiate its request for the establishment of an indirect cost rate. 2. "Indirect cost rate" is a device for determining in a reasonable manner the proportion of indirect costs each program should bear. It is the ratio (expressed as a percentage) of the indirect costs to a direct cost base. 3. "Indirect cost pool" is the accumulated costs that jointly benefit two or more programs or other cost objectives. 4. "Base" means the accumulated direct costs (normally either total direct salaries and wages or total direct costs exclusive of any extraordinary or distorting expenditures) used to distribute indirect costs to individual Federal awards. The direct cost base selected should result in each award bearing a fair share of the indirect costs in reasonable relation to the benefits received from the costs. 5. "Predetermined rate" means an indirect cost rate, applicable to a specified current or future period, usually the governmental unit's fiscal year. This rate is based on an estimate of the costs to be incurred during the period. Except under very unusual circumstances, a predetermined rate is not subject to adjustment. (Because of legal constraints, predetermined rates are not permitted for Federal contracts; they may, however, be used for grants or cooperative agreements.) Predetermined rates may not be used by governmental units that have not submitted and negotiated the rate with the cognizant agency. In view of the potential advantages offered by this procedure, negotiation of predetermined rates for indirect costs for a period of two to four years should be the norm in those situations where the cost experience and other pertinent facts available are deemed sufficient to enable the parties involved to reach an informed judgment as to the probable level of indirect costs during the ensuing accounting periods. 6. "Fixed rate" means an indirect cost rate which has the same characteristics as a predetermined rate, except that the difference between the estimated costs and the actual, allowable costs of the period covered by the rate is carried forward as an adjustment to the rate computation of a subsequent period. 7. "Provisional rate" means a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on Federal awards pending the establishment of a "final" rate for that period. 8. "Final rate" means an indirect cost rate applicable to a specified past period which is based on the actual allowable costs of the period A final audited rate is not subject to adjustment. 9. "Base period" for the allocation of indirect costs is the period in which such costs are incurred and accumulated for allocation to activities performed in that period. The base period normally should coincide with the governmental unit's fiscal year, but in any event, shall be so selected as to avoid inequities in the allocation of costs. C. Allocation of Indirect Costs and Determination of Indirect Cost Rates. 1. General. a. Where a governmental unit's department or agency has only one major function, or where all its major functions benefit from the indirect costs to approximately the same degree, the allocation of indirect costs and the computation of an indirect cost rate may be accomplished through simplified allocation procedures as described in subsection 2 of this appendix. b. Where a governmental unit's department or agency has several major functions which benefit from its indirect costs in varying degrees, the allocation of indirect costs may require the accumulation of such costs into separate cost groupings which then are allocated individually to benefitted functions by means of a base which best measures the relative degree of benefit. The indirect costs allocated to each function are then distributed to individual awards and other activities included in that function by means of an indirect cost rate(s). c. Specific methods for allocating indirect costs and computing indirect cost rates along with the conditions under which each method should be used are described in subsections 2, 3 and 4 of this appendix. 2. Simplified method. a. Where a grantee agency's major functions benefit from its indirect costs to approximately the same degree, the allocation of indirect costs may be accomplished by classifying the grantee agency's total costs for the base period as either direct or indirect, and dividing the total allowable indirect costs (net of applicable credits) by an equitable distribution base. The result of this process is an indirect cost rate which is used to distribute indirect costs to individual Federal awards. The rate should be expressed as the percentage which the total amount of allowable indirect costs bears to the base selected. This method should also be used where a governmental unit's department or agency has only one major function encompassing a number of individual projects or activities, and may be used where the level of Federal awards to that department or agency is relatively small. b. Both the direct costs and the indirect costs shall exclude capital expenditures and unallowable costs. However, unallowable costs must be included in the direct costs if they represent activities to which indirect costs are properly allocable. c. The distribution base may be total direct costs (excluding capital expenditures and other distorting items, such as pass - through funds, major subcontracts, etc.), direct salaries and wages, or another base which results in an equitable distribution. 3. Multiple allocation base method. a. Where a grantee agency's indirect costs benefit its major functions in varying degrees, such costs shall be accumulated into separate cost groupings. Each grouping shall then be allocated individually to benefitted functions by means of a base which best measures the relative benefits. b. The cost groupings should be established so as to permit the allocation of each grouping on the basis of benefits provided to the major functions. Each grouping should constitute a pool of expenses that are of like character in terms of the functions they benefit and in terms of the allocation base which best measures the relative benefits provided to each function. The number of separate groupings should be held within practical limits, taking into consideration the materiality of the amounts involved and the degree of precision needed. c. Actual conditions must be taken into account in selecting the base to be used in allocating the expenses in each grouping to benefitted functions. When an allocation can be made by assignment of a cost grouping directly to the function benefitted, the allocation shall be made in that manner. When the expenses in a grouping are more general in nature, the allocation should be made through the use of a selected base which produces results that are equitable to both the Federal Government and the governmental unit. In general, any cost element or related factor associated with the governmental unit's activities is potentially adaptable for use as an allocation base provided that: it can readily be expressed in terms of dollars or other quantitative measures (total direct costs, direct salaries and wages, staff hours applied, square feet used, hours of usage, number.of documents processed, population served, and the like), and it is common to the benefitted functions during the base period. d. Except where a special indirect cost rate(s) is required in accordance with subsection 4, the separate groupings of indirect costs allocated to each major function shall be aggregated and treated as a common pool for that function. The costs in the common pool shall then be distributed to individual Federal awards included in that function by use of a single indirect cost rate. e. The distribution base used in computing the indirect cost rate for each function may be total direct costs (excluding capital expenditures and other distorting items such as pass - through funds, major subcontracts, etc.), direct salaries and wages, or another base which results in an equitable distribution. An indirect cost rate should be developed for each separate indirect cost pool developed. The rate in each case should be stated as the percentage relationship between the particular indirect cost pool and the distribution base identified with that pool. 4. Special indirect cost rates. a. In some instances, a single indirect cost rate for all activities of a grantee department or agency or for each major function of the agency may not be appropriate. It may not take into account those different factors which may substantially affect the indirect costs applicable to a particular program or group of programs. The factors may include the physical location of the work, the level of administrative support required, the nature of the facilities or other resources 51926 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations employed, the organizational arrangements used, or any combination thereof. When a particular award is carried out in an environment which appears to generate a significantly different level of indirect costs, provisions should be made for a separate indirect cost pool applicable to that award. The separate indirect cost pool should be developed during the course of the regular allocation process, and the separate indirect cost rate resulting therefrom should be used, provided that: the rate differs significantly from the rate which would have been developed under subsections 2. and 3. of this appendix, and the award to which the rate would apply is material in amount. b. Although 2 CFR part 225 adopts the concept of the full allocation of indirect costs, there are some Federal statutes which restrict the reimbursement of certain indirect costs. Where such restrictions exist, it may be necessary to develop a special rate for the affected award. Where a "restricted rate" is required, the procedure for developing a non- restricted rate will be used except for the additional step of the elimination from the indirect cost pool those costs for which the law prohibits reimbursement. D. Submission and Documentation of Proposals. 1. Submission of indirect cost rate proposals. a. All departments or agencies of the governmental unit desiring to claim indirect costs under Federal awards must prepare an indirect cost rate proposal and related documentation to support those costs. The proposal and related documentation must be retained for audit in accordance with the records retention requirements contained in the Common Rule. b. A governmental unit for which a cognizant agency assignment has been specifically designated must submit its indirect cost rate proposal to its cognizant agency. The Office of Management and Budget (OMB) will periodically publish lists of governmental units identifying the appropriate Federal cognizant agencies. The cognizant agency for all governmental units or agencies not identified by OMB will be determined based on the Federal agency providing the largest amount of Federal funds. In these cases, a governmental unit must develop an indirect cost proposal in accordance with the requirements of 2 CFR 225 and maintain the proposal and related supporting documentation for audit. These governmental units are not required to submit their proposals unless they are specifically requested to do so by the cognizant agency. Where a local government only receives funds as a sub - recipient, the primary recipient will be responsible for negotiating and /or monitoring the sub - recipient's plan. c. Each Indian tribal government desiring reimbursement of indirect costs must submit its indirect cost proposal to the Department of the Interior (its cognizant Federal agency). d. Indirect cost proposals must be developed (and, when required, submitted) within six months after the close of the governmental unit's fiscal year, unless an exception is approved by the cognizant Federal agency. If the proposed central service cost allocation plan for the same period has not been approved by that time, the indirect cost proposal may be prepared including an amount for central services that is based on the latest federally- approved central service cost allocation plan. The difference between these central service amounts and the amounts ultimately approved will be compensated for by an adjustment in a subsequent period. 2. Documentation of proposals. The following shall be included with each indirect cost proposal: a. The rates proposed, including subsidiary work sheets and other relevant data, cross referenced and reconciled to the financial data noted in subsection b of this appendix. Allocated central service costs will be supported by the summary table included in the approved central service cost allocation plan. This summary table is not required to be submitted with the indirect cost proposal if the central service cost allocation plan for the same fiscal year has been approved by the cognizant agency and is available to the funding agency. b. A copy of the financial data (financial statements, comprehensive annual financial report, executive budgets, accounting reports, etc.) upon which the rate is based. Adjustments resulting from the use of unaudited data will be recognized, where appropriate, by the Federal cognizant agency in a subsequent proposal. c. The approximate amount of direct base costs incurred under Federal awards. These costs should be broken out between salaries and wages and other direct costs. d. A chart showing the organizational structure of the agency during the period for which the proposal applies, along with a functional statement(s) noting the duties and/ or responsibilities of all units that comprise the agency. (Once this is submitted, only revisions need be submitted with subsequent proposals.) 3. Required certification. Each indirect cost rate proposal shall be accompanied by a certification in the following form: Certificate of Indirect Costs This is to certify that I have reviewed the indirect cost rate proposal submitted herewith and to the best of my knowledge and belief: (1) All costs included in this proposal [identify date] to establish billing or final indirect costs rates for [identify period covered by rate] are allowable in accordance with the requirements of the Federal award(s) to which they apply and 2 CFR part 225, Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87). Unallowable costs have been adjusted for in allocating costs as indicated in the cost allocation plan. (2) All costs included in this proposal are properly allocable to Federal awards on the basis of a beneficial or causal relationship between the expenses incurred and the agreements to which they are allocated in accordance with applicable requirements. Further, the same costs that have been treated as indirect costs have not been claimed as direct costs. Similar types of costs have been accounted for consistently and the Federal Government will be notified of any accounting changes that would affect the predetermined rate. I declare that the foregoing is true and correct. Governmental Unit: Signature: Name of Official: Title: Date of Execution: E. Negotiation and Approval of Rates. 1. Indirect cost rates will be reviewed, negotiated, and approved by the cognizant Federal agency on a timely basis. Once a rate has been agreed upon, it will be accepted and used by all Federal agencies unless prohibited or limited by statute. Where a Federal funding agency has reason to believe that special operating factors affecting its awards necessitate special indirect cost rates, the funding agency will, prior to the time the rates are negotiated, notify the cognizant Federal agency. 2. The use of predetermined rates, if allowed, is encouraged where the cognizant agency has reasonable assurance based on past experience and reliable projection of the grantee agency's costs, that the rate is not likely to exceed a rate based on actual costs. Long -term agreements utilizing predetermined rates extending over two or more years are encouraged, where appropriate. 3. The results of each negotiation shall be formalized in a written agreement between the cognizant agency and the governmental unit. This agreement will be subject to re- opening if the agreement is subsequently found to violate a statute, or the information upon which the plan was negotiated is later found to be materially incomplete or inaccurate. The agreed upon rates shall be made available to all Federal agencies for their use. 4. Refunds shall be made if proposals are later found to have included costs that are unallowable as specified by law or regulation, as identified in Appendix B to this part, or by the terms and conditions of Federal awards, or are unallowable because they are clearly not allocable to Federal awards. These adjustments or refunds will be made regardless of the type of rate negotiated (predetermined, final, fixed, or provisional). F. Other Policies. 1. Fringe benefit rates. If overall fringe benefit rates are not approved for the governmental unit as part of the central service cost allocation plan, these rates will be reviewed, negotiated and approved for individual grantee agencies during the indirect cost negotiation process. In these cases, a proposed fringe benefit rate computation should accompany the indirect cost proposal. If fringe benefit rates are not used at the grantee agency level (i.e., the agency specifically identifies fringe benefit costs to individual employees), the governmental unit should so advise the cognizant agency. 2. Billed services provided by the grantee agency. In some cases, governmental units provide and bill for services similar to those covered by central service cost allocation plans (e.g., computer centers). Where this Federal Register/Vol. 70, No. 168 / Wednesday, August 31, 2005 / Rules and Regulations 51927 occurs, the governmental unit should be guided by the requirements in Appendix C to this part relating to the development of billing rates and documentation requirements, and should advise the cognizant agency of any billed services. Reviews of these types of services (including reviews of costing/billing methodology, profits or losses, etc.) will be made on a case - by -case basis as warranted by the circumstances involved. 3. Indirect cost allocations not using rates. In certain situations, a governmental unit, because of the nature of its awards, may be required to develop a cost allocation plan that distributes indirect (and, in some cases, direct) costs to the specific funding sources. In these cases, a narrative cost allocation methodology should be developed, documented, maintained for audit, or submitted, as appropriate, to the cognizant agency for review, negotiation, and approval. 4. Appeals. If a dispute arises in a negotiation of an indirect cost rate (or other rate) between the cognizant agency and the governmental unit, the dispute shall be resolved in accordance with the appeals procedures of the cognizant agency. 5. Collection of unallowable costs and erroneous payments. Costs specifically identified as unallowable and charged to Federal awards either directly or indirectly will be refunded (including interest chargeable in accordance with applicable Federal agency regulations). 6. OMB assistance. To the extent that problems are encountered among the Federal agencies and /or governmental units in connection with the negotiation and approval process, OMB will lend assistance, as required, to resolve such problems in a timely manner. [FR Doc. 05 -16649 Filed 8- 30 -05; 8:45 am] BILLING CODE 3110 -01 -P OFFICE OF MANAGEMENT AND BUDGET 2 CFR Part 230 Cost Principles for Non - Profit Organizations (OMB Circular A -122) AGENCY: Office of Management and Budget. ACTION: Relocation of policy guidance to 2 CFR chapter II. SUMMARY: The Office of Management and Budget (OMB) is relocating Circular A -122, "Cost Principles for Non - Profit Organizations," to Title 2 in the Code of Federal Regulations (CFR), subtitle A, chapter II, part 230. This relocation is part of our broader initiative to create 2 CFR as a single location where the public can find both OMB guidance for grants and agreements and the associated Federal agency implementing regulations. The broader initiative provides a good foundation for streamlining and simplifying the policy framework for grants and agreements, one objective of OMB and Federal agency efforts to implement the Federal Financial Assistance Management Improvement Act of 1999 (Pub. L. 106- 107). DATES: Part 230 is effective August 31, 2005. This document republishes the existing OMB Circular A -122, which already is in effect. FOR FURTHER INFORMATION CONTACT: Gil Tran, Office of Federal Financial Management, Office of Management and Budget, telephone 202 - 395 -3052 (direct) or 202 - 395 -3993 (main office) and e-mail: Hai_M._Tran@omb.eop.gov. SUPPLEMENTARY INFORMATION: On May 10, 2004 [69 FR 25970], we revised the three OMB circulars containing Federal cost principles. The purpose of those revisions was to simplify the cost principles by making the descriptions of similar cost items consistent across the circulars where possible, thereby reducing the possibility of misinterpretation. Those revisions, a result of OMB and Federal agency efforts to implement Public Law 106- 107, were effective on June 9, 2004. In this document, we relocate OMB Circular A -122 to the CFR, in Title 2 which was established on May 11, 2004 [69 FR 26276] as a central location for OMB and Federal agency policies on grants and agreements. Our relocation of OMB Circular A- 122 does not change the substance of the circular. Other than adjustments needed to conform to the formatting requirements of the CFR, this document relocates in 2 CFR the version of OMB Circular A -122 as revised by the May 10, 2004 notice. List of Subjects in 2 CFR Part 230 Accounting, Grant programs, Grants administration, Non - profit organizations, Reporting and recordkeeping requirements. Dated: August 8, 2005. Joshua B. Bolten, Director. Authority and Issuance • For the reasons set forth above, the Office of Management and Budget amends 2 CFR Subtitle A, chapter II, by adding a part 230 as set forth below. PART 230 —COST PRINCIPLES FOR NON - PROFIT ORGANIZATIONS (OMB CIRCULAR A -122) Sec. 230.5 Purpose. 230.10 Scope. 230.15 Policy. 230.20 Applicability. 230.25 Definitions 230.30 OMB responsibilities. 230.35 Federal agency responsibilities. 230.40 Effective date of changes. 230.45 Relationship to previous issuance. 230.50 Information Contact. Appendix A to Part 230 — General Principles Appendix B to Part 230 — Selected Items of Cost Appendix C to Part 230 — Non -Profit Organizations Not Subject to This Part Authority: 31 U.S.C. 503; 31 U.S.C. 1111; 41 U.S.C. 405; Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR 10737, 3 CFR, 1966- 1970, p. 939 §230.5 Purpose. This part establishes principles for determining costs of grants, contracts and other agreements with non - profit organizations. §230.10 Scope. (a) This part does not apply to colleges and universities which are covered by 2 CFR part 220 Cost Principles for Educational Institutions (OMB Circular A -21); State, local, and federally- recognized Indian tribal governments which are covered by 2 CFR part 225 Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87); or hospitals. (b) The principles deal with the subject of cost determination, and make no attempt to identify the circumstances or dictate the extent of agency and non- profit organization participation in the financing of a particular project. Provision for profit or other increment above cost is outside the scope of this part. § 230.15 Policy. The principles are designed to provide that the Federal Government bear its fair share of costs except where restricted or prohibited by law. The principles do not attempt to prescribe the extent of cost sharing or matching on grants, contracts, or other agreements. However, such cost sharing or matching shall not be accomplished through arbitrary limitations on individual cost elements by Federal agencies. §230.20 Applicability. (a) These principles shall be used by all Federal agencies in determining the costs of work performed by non - profit organizations under grants, cooperative agreements, cost reimbursement contracts, and other contracts in which costs are used in pricing, administration, or settlement. All of these instruments are hereafter referred to as awards. The principles do not apply to awards under which an organization is not required to account to the Federal Government for actual costs incurred. EXHIBIT E FTA MASTER AGREEMENT UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION FEDERAL TRANSIT ADMINISTRATION MASTER AGREEMENT For Federal Transit Administration Agreements authorized by 49 U.S.C. chapter 53, Title 23, United States Code (Highways), the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, as amended by the SAFETEA -LU Technical Corrections Act of 2008, the Transportation Equity Act for the 21st Century, as amended, the National Capital Transportation Act of 1969, as amended, the American Recovery and Reinvestment Act of 2009, Pub. L. 111 -5, February 17, 2009, or other Federal laws that FTA administers. FTA MA(18) October 1, 2011 http://www.fta.dot.gov/documents/18-Master.pdf TABLE OF CONTENTS Section 1. Definitions. 13 Section 2. Project Implementation. 20 a. General. 20 b. U.S. DOT Administrative Requirements. 21 c. Application of Federal, State, and Local Laws, Regulations, and Directives. 22 d. Recipient's Primary Responsibility to Comply with Federal Requirements. 23 e. Recipient's Responsibility to Extend Federal Requirements to Other Entities. 24 f. No Federal Government Obligations to Third Parties. 25 g. Changes in Project Performance. 25 Section 3. Ethics. 26 a. Ethical Standards. 26 b. Debarment and Suspension. 27 c. Bonus or Commission. 28 d. Lobbying Restrictions. 28 e. Political Activity. 28 f. False or Fraudulent Statements or Claims 29 g. Trafficking in Persons. 30 Section 4. Federal Assistance. 32 a. Maximum Federal Assistance. 32 b. Basis for FTA Funding. 33 Section 5. Local Share. 33 a. Restrictions on the Source of the Local Share. 34 b. Duty to Obtain the Local Share. 34 c. Prompt Payment of the Local Share. 34 d. Reductions or Refunds of the Local Share. 34 Section 6. Approved Project Budget. 34 a. Development and Approval. 34 b. Restrictions. 34 c. Amendment. 35 d. Transfer of Funds. 35 e. Budget Revision. 35 f. Additional Federal Funding. 35 g. Unspent Federal Funds. 35 Section 7. Accounting Records. 35 a. Retain Records. 35 b. Maintain Records. 36 c. Control of Project Funds. 36 FTA Master Agreement MA(18), 10 -1 -2011 2 d. Documentation of Project Costs and Program Income. 36 e. Checks, Orders, and Vouchers. 36 Section 8. Reporting, Record Retention, and Access. 37 a. Types of Reports. 37 b. U.S. Office of Management and Budget (U.S. OMB) Special Reporting Provisions. 37 c. Report Formats. 43 d. Record Retention. 43 e. Access to Records of Recipients and Subrecipients. 44 f. Project Closeout. 45 Section 9. Payments. 45 a. Recipient's Payment Requests. 45 b. FTA Payments. 45 c. Costs Reimbursed. 48 d. Bond Interest and Other Financing Costs. 49 e. Ineligible Costs. 49 f. Effect of Federal Payments. 50 g. Final Eligibility Determination. 50 h. Closeout. 50 i. Notification. 50 j. Recovery of Improper Payments. 50 k. Program Income. 50 1. Federal Claims and Debts, Excess Payments, Disallowed Costs, Refunds Due, and 51 Other Amounts Owed the Federal Government, Including Interest. m. De- obligation of Federal Funds. 51 Section 10. Project Completion, Audit, Settlement, and Closeout. 51 a. Project Completion. 51 b. Audit of Recipients. 52 c. Amounts Owed to the Federal Government. 53 d. Project Closeout. 53 Section 11. Right of the Federal Government to Terminate. 53 a. Justification. 53 b. Financial Implications. 53 c. Expiration of Project Time Period. 54 Section 12. Civil Rights. 54 a. Nondiscrimination in Federal Public Transportation Programs. 54 b. Nondiscrimination - Title VI of the Civil Rights Act. 55 c. Equal Employment Opportunity. 56 d. Disadvantaged Business Enterprise. 57 e. Nondiscrimination on the Basis of Sex. 57 FTA Master Agreement MA(18), 10 -1 -2011 3 f. Nondiscrimination on the Basis of Age. 58 g. Accessibility. 58 h. Drug or Alcohol Abuse - Confidentiality and Other Civil Rights Protections. 59 i. Access to Services for People with Limited English Proficiency. 59 j. Environmental Justice. 60 k. Other Nondiscrimination Laws. 60 Section 13. Planning and Private Enterprise. 60 a. General. 60 b. Governmental and Private Nonprofit Providers of Nonemergency Transportation. 61 c. Infrastructure Investment. 61 Section 14. Preference for United States Products and Services. 61 a. Buy America. 62 b. Cargo Preference - Use of United States -Flag Vessels. 62 c. Fly America. 62 Section 15. Procurement. 62 a. Federal Laws, Regulations, and Guidelines. 62 b. Full and Open Competition. 63 c. Exclusionary or Discriminatory Specifications. 63 d. Geographic Restrictions. 63 e. In -State Bus Dealer Restrictions. 63 f. Project Labor Agreements. 63 g. Federal Supply Schedules. 63 h. Force Account. 63 i. FTA Technical Review. 63 j. Relationship of Project Approval to Third Party Contract Approval. 63 k. Preference for Recycled Products. 63 1. Clean Air and Clean Water. 64 m. National Intelligent Transportation Systems Architecture and Standards. 64 n. Rolling Stock. 64 o. Bonding. 65 p. Architectural Engineering or Related Services. 66 q. Design -Build Projects. 66 r. Award to Other than the Lowest Bidder. 67 s. Award to Responsible Contractors. 67 t. Access to Third Party Contract Records. 67 u. Electronic and Information Technology. 68 Section 16. Leases. 68 a. Capital Leases. 68 b. Leases Involving Certificates of Participation. 68 FTA Master Agreement MA(18), 10 -1 -2011 4 Section 17. Patent Rights. 68 a. General. 68 b. Federal Rights. 69 c. License Fees and Royalties. 69 Section 18. Rights in Data and Copyrights. 69 a. Definition of "Subject Data." 70 b. General. 70 c. Federal Rights in Data and Copyrights. 71 d. Special Federal Rights in Data for Research, Development, Demonstration, and 71 Special Studies Projects. e. License Fees and Royalties. 72 f. Hold Harmless. 72 g. Restrictions on Access to Patent Rights. 73 h. Data Developed Without Federal Funding or Support. 73 i. Requirements to Release Data. 73 Section 19. Use of Real Property, Equipment, and Supplies. 74 a. Use of Project Property. 74 b. General Federal Requirements. 75 c. Maintenance. 75 d. Records. 76 e. Incidental Use. 76 f. Encumbrance of Project Property. 76 g. Useful Life of Project Property. 77 h. Calculating the Value of Prematurely Withdrawn Project Property. 78 i. Insurance Proceeds. 79 j. Transportation - Hazardous Materials. 79 k. Misused or Damaged Project Property. 79 1. Disposition of Project Property. 79 m. Responsibilities After Project Closeout. 80 Section 20. Insurance. 80 a. Minimum Requirements. 80 b. Flood Hazards. 81 Section 21. Relocation. 81 a. Relocation Protections. 81 b. Nondiscrimination in Housing. 81 c. Prohibition Against the Use of Lead -Based Paint. 81 Section 22. Real Property. 82 a. Land Acquisition. 82 b. Covenant Assuring Nondiscrimination. 82 FTA Master Agreement MA(18), 10 -1 -2011 5 c. Recording Title to Real Property. 82 d. FTA Approval of Changes in Real Property Ownership. 82 Section 23. Construction. 82 a. Drafting, Review, and Approval of Construction Plans and Specifications. 82 b. Supervision of Construction. 82 c. Construction Reports. 82 d. Project Management for Major Capital Projects. 83 e. Seismic Safety. 83 Section 24. Employee Protections. 83 a. Construction Activities. 83 b. Activities Not Involving Construction. 84 c. Activities Involving Commerce. 84 d. Public Transportation Employee Protective Arrangements. 84 Section 25. Environmental Protections. 87 a. National Environmental Policy. 87 b. Air Quality. 88 c. Clean Water. 89 d. Use of Certain Public Lands. 89 e. Wild and Scenic Rivers. 90 f. Coastal Zone Management. 90 g. Wetlands. 91 h. Floodplains. 91 i. Endangered Species and Fishery Conservation. 91 j. Waste Management. 91 k. Hazardous Waste. 91 1. Historic Preservation. 91 m. Indian Sacred Sites. 92 n. Mitigation of Adverse Environmental Effects. 92 Section 26. Energy Conservation. 93 a. State Energy Conservation Plans. 93 b. Energy Assessment. 93 Section 27. State Management and Monitoring Systems. 93 Section 28. Charter Service Operations. 93 a. Applicability. 93 b. Prohibition. 94 c. Charter Service Agreement. 94 d. Violations. 94 Section 29. School Transportation Operations. 95 a. Applicability. 95 FTA Master Agreement MA(18), 10 -1 -2011 6 b. Prohibition. 95 c. School Transportation Agreement. 95 d. Violations. 95 Section 30. Metric System. 96 a. Use. 96 b. Deliverables. 96 Section 31. Geographic Information and Related Spatial Data. 96 Section 32. Substance Abuse. 96 a. Drug -Free Workplace. 96 b. Alcohol Misuse and Prohibited Drug Use. 97 Section 33.' Federal $1 Coin Requirements 97 Section 34. State Safety Oversight of Rail Fixed Guideway Public Systems. 97 Section 35. Motor Carrier Safety. 98 a. Financial Responsibility. 98 b. Safety Requirements. 98 c. Driver Qualifications. 98 d. Substance Abuse Rules for Motor Carriers. 98 Section 36. Safe Operation of Motor Vehicles. 99 a. Seat Belt Use. 99 b. Distracted Driving, Including Text Messaging While Driving. 99 Section 37. Protection of Sensitive Security Information. 99 Section 38. Special Notification Requirements for States. 101 a. Required Information. 101 b. Documents Affected. 101 Section 39. Special Provisions for the Urbanized Area Formula Program. 102 a. General. 102 b. Fares and Services. 102 c. Audit Requirements. 102 d. Half -Fare Requirements. 103 e. Operations. 104 f. Public Transportation Security. 104 g. Public Transportation Enhancements. 104 h. Reporting Requirements. 104 i. Participation of Subrecipients. 104 Section 40. Special Provisions for the Elderly Individuals and Individuals with Disabilities 105 Formula Program and Pilot Program. a. Programs. 105 b. General. 105 c. Participation of Subrecipients. 105 FTA Master Agreement MA(18), 10 -1 -2011 7 d. Eligible Subrecipients. 106 e. Eligible Project Activities. 106 £ Leasing of Vehicles. 106 g. Transfer of Project Property. 106 Section 41. Special Provisions for the New Freedom Program. 107 a. General. 107 b. Participation of Subrecipients. 107 Section 42. Special Provisions for the Nonurbanized Area Formula Program. 107 a. General. 108 b. Participation of Subrecipients. 108 c. Eligible Project Activities. 108 d. Transfer of Project Property. 109 e. Intercity Transportation. 109 f. Reporting Requirements. 109 g. Provisions Applicable to Indian Tribes. 110 Section 43. Special Provisions for the Clean Fuels Grant Program. 110 Section 44. Special Provisions for Research, Development, Demonstration, and 110 Special Studies Projects. a. General. 110 b. Project Report. 111 c. Project Identification. 112 d. Protection of Human Subjects. 113 e. Protection of Animals. 113 f. Export Control. 113 Section 45. Special Provisions for Medical Transportation Projects. 114 Section 46. Special Provisions for the National Technical Assistance Center for Senior 114 Transportation. Section 47. Special Provisions for Human Resources Fellowships. 114 a. General. 114 b. Fellowship Awards. 115 Section 48. Special Provisions for the Job Access and Reverse Commute (JARC) Formula 115 Grant Program. a. General. 115 b. Participation of Subrecipients. 115 Section 49. Special Provisions for the Paul S. Sarbanes Transit in Parks Program. 116 a. General. 116 b. FTA Notice. 116 c. Order of Precedence. 116 Section 50. Special Provisions for the Over - the -Road Bus Accessibility Projects. 116 a. General. 116 FTA Master Agreement MA(18), 10 -1 -2011 8 b. Accessibility. 117 c. Employee Protective Arrangements. 117 d. FTA Notice. 117 e. Order of Precedence. 117 Section 51. Special Provisions for State Infrastructure Bank Projects. 117 a. General. 117 b. Limitations on Accessing Federal Funds in the Transit Account. 118 Section 52. Special Provisions for TIFIA Projects. 119 a. General. 119 b. Default. 119 c. Order of Precedence 119 Section 53. Special Provisions for Recovery Act Projects. 119 a. Identification of Recovery Act Funding. 119 b. Identification of Project(s). 120 c. Prompt Implementation. 120 d. Federal Requirements. 120 e. U.S. OMB Provisions. 121 f. One -Time Funding. 122 g. Funding Limits. 122 h. Integrity. 123 i. Violations of Law. 123 j. Maintenance of Effort. 123 k. Emblems. 123 1. Contracts Financed With Recovery Act Funds. 123 m. Future Federal Requirements and Directives. 123 Section 54. Special Provisions for Joint FTA - FRA Recovery Act Projects. 124 a. General Legal Requirements. 124 b. Disadvantaged Business Enterprises. 124 c. Buy America. 124 d. Force Account — Procurement. 125 e. Procurement of Rolling Stock. 125 f. Use of Real Property, Equipment, and Supplies. 125 g. Davis - Bacon. 125 h. Employee Protective Arrangements. 125 i. Motor Carrier Safety. 126 j. Railroad Safety. 126 Section 55. Freedom of Information Act. 126 a. Applicability. 126 b. Project Records. 126 FTA Master Agreement MA(18), 10 -1 -2011 9 c. Confidentiality. 126 Section 56. Disputes, Breaches, Defaults, or Other Litigation. 127 a. Notification to FTA. 127 b. Federal Interest in Recovery. 127 c. Enforcement. 127 d. FTA Concurrence. 128 e. Alternative Dispute Resolution. 128 Section 57. Amendments to the Project. 128 a. Changed Circumstances. 128 b. Changed Information. 129 Section 58. FTA's Electronic Management System. 129 a. Recipient Use. 129 b. TEAM System Terms. 129 Section 59. Information Obtained Through Internet Links. 129 a. Accuracy. 129 b. Relationship to Master Agreement. 129 c. Official Sources. 129 Section 60. Severability. 129 FTA Master Agreement MA(18), 10 -1 -2011 10 UNITED STATES DEPARTMENT OF TRANSPORTATION FEDERAL TRANSIT ADMINISTRATION MASTER AGREEMENT This is the official Federal Transit Administration (FTA) Master Agreement containing the standard terms and conditions governing the administration of a Project FTA supports with Federal assistance (funds or funding) awarded through a Grant Agreement or Cooperative Agreement with the Recipient (underlying Agreement), or a Transportation Infrastructure Loan, Loan Guarantee, or Line of Credit FTA extends to the Recipient (also, underlying Agreement). This edition of FTA's Master Agreement has been extensively rewritten to comply with the Plain Writing Act of 2010, Pub. L. 111 -274, October 13, 2010, 5 U.S.C. § 301 note. Statutory Authorities This Master Agreement applies to Federal funds authorized by: • Federal transit laws, 49 U.S.C. chapter 53, • Title 23, United States Code (Highways), • The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA -LU), Pub. L. 109 -59, August 10, 2005, as amended by the SAFETEA- LU Technical Corrections Act of 2008, Pub. L. 110 -244, June 6, 2008, • The Transportation Equity Act for the 21st Century (TEA -21), Pub. L. 105 -178, June 9, 1998, as amended, • The National Capital Transportation Act of 1969, • The D.C. Official Code, 9- 1111.01 et seq., • The American Recovery and Reinvestment Act of 2009, Pub. L. 111 -5, February 17, 2009 ( "Recovery Act "), or • Other Federal legislation FTA administers as FTA so determines. Compliance FTA and the Recipient understand and agree that they both must comply with all applicable Federal laws and regulations, and should follow applicable Federal directives, except as FTA determines otherwise in writing. FTA Master Agreement MA(18), 10 -1 -2011 11 In addition, the Recipient needs to be sure that others participating in its Project, whether as subrecipients, lessees, third party contractors, third party subcontractors, or otherwise (third party participants) comply with Federal laws, and regulations, and follow directives to the extent that the Recipient's compliance with Federal requirements will not be compromised. A Recipient or a third party participant that violates a Federal law or regulation, or fails to follow a Federal directive that applies to itself or the Project, may incur penalties. FTA and the Recipient understand and agree that not every provision of this Master Agreement will apply to every Recipient or every Project for which FTA provides Federal funds. The type of Project, the Federal laws authorizing the Federal funding for the Project, the Federal regulations governing how the Project is implemented, and the Recipient's legal status as a "State," "local government," "private non - profit entity," or "private for - profit entity" will determine which Federal laws, regulations, and directives apply. FTA will enforce only those Federal laws, regulations, and directives that apply to the Recipients, their third party participants, and their activities related to the Project as required by Federal law and regulations. Federal laws, regulations, and directives that do not apply will not be enforced. Terminology To determine the extent to which the provisions of this Master Agreement do apply, however, FTA and the Recipient understand and agree that each provision of the Master Agreement must be interpreted in view of the requirements of the Master Agreement as a whole. For the most part, we have eliminated repetitive phrases with the result that a single provision of the Master Agreement, read apart from the rest, will not convey the extent of the requirement expressed. For example, in this Master Agreement: • References to "Federal law(s)," "Federal regulation(s)," and "Federal directive(s)" mean references to those parts of those Federal laws, Federal regulations, and Federal directives that apply to the Recipient, the specific third party participant, or the Project, as the context may require. FTA and the Recipient understand and agree that any requirement in this Master Agreement for compliance with "Federal law(s)," "Federal regulation(s)," and "Federal directive(s)" means compliance with "applicable Federal law(s)," "applicable Federal regulation(s)," and "applicable Federal directive(s)." • New terms used in this Master Agreement, such as "third party participant," "third party agreement," or "underlying agreement," as well as terms used previously have the precise meaning as specifically stated in their definitions in Section 1 of this Master Agreement. FTA Master Agreement MA(18), 10 -1 -2011 12 Expiration Date This Master Agreement does not have an Expiration Date. It continues to apply to the Project until modified or superseded by: • Federal laws, regulations, or directives that become effective at a later date, or • An amendment to the underlying Agreement or this Master Agreement issued at a later date. Thus, in consideration of the mutual covenants, promises, and representations herein, FTA and the Recipient agree as follows: Section 1. Definitions. The Recipient understands and agrees that the following definitions apply throughout this Master Agreement, and control the meaning of the terms and conditions in this Master Agreement: a. Application means the Recipient's signed and dated request for Federal funds, including any amendment to its application, with all explanatory, supporting, and supplementary documents filed with FTA by or on behalf of the Recipient and that FTA has accepted or approved. b. Approval means a deliberate written statement of a Federal Government official who is authorized to permit the Recipient to take or omit an action that may not be taken or omitted without the Federal Government's permission. Except as FTA determines otherwise in writing: (1) Approval of a specific action does not include permission to take or omit other similar actions, (2) An oral permission or interpretation has no legal force, authority, or effect, and (3) That permission may be transmitted in typewritten hard copy or electronically. For purposes of this Master Agreement, the definition of "approval" also applies to "concurrence" and "waiver." c. Approved Project Budget (1) Means the most recent statement of: (a) Project costs, FTA Master Agreement MA(18), 10 -1 -2011 13 (b) The maximum amount of Federal funds for which the Recipient is currently eligible, (c) The specific tasks (including specific contingencies) covered, and (d) The estimated cost of each task FTA has approved. (2) As used in the "Approved Project Budget," (1) "Scopes" means categories of activities within a Project, and (2) "Scope Level Codes" means category codes of activities within a Project. (3) Data in the "Approved Project Budget" does not establish the precise boundaries of limits of the "Scope of the Project." FTA reserves the right to consider information other than the data displayed in the "Approved Project Budget" to establish what constitutes the "Scope of the Project" for legal or other purposes. d. Concurrence, has the same meaning as the definition of Approval in Section 1.b e. Cooperative Agreement means an instrument FTA uses to award Federal funds to a specific Recipient to support a particular Project in which FTA takes an active role or retains substantial control over, as provided in 31 U.S.C. § 6305. The Cooperative Agreement: (1) Usually includes: (a) The FTA Award establishing the Project's boundaries or limits, including: 1 The Federal Role, and 2 The Recipient Role, (b) The Recipient's signed Execution statement, (c) FTA's latest Master Agreement, which is incorporated by reference and made part of the Cooperative Agreement, and (2) Sometimes includes: (a) Special Conditions, (b) Special Requirements, (c) Special Provisions, or FTA Master Agreement MA(18), 10 -1 -2011 14 (d) Conditions of Award. f. Federal Directive includes: (1) Any Executive Order of the President of the United States, (2) Any Federal document signed by an authorized Federal official that provides official instructions or advice about a Federal program, such as: g. (a) FTA or U.S. DOT Directives, and (b) Published policies, (c) Administrative practices, (d) Circulars, (e) Guidelines, (f) Guidance, or (g) Letters signed by an authorized Federal official. Federal Government means the United States of America and any executive department or agency thereof. h. Federal Transit Administration means: (1) An operating administration of the U.S. Department of Transportation (U.S. DOT), and (2) Designates the former Urban Mass Transportation Administration (also referred to as UMTA), so that any reference to the Urban Mass Transportation Administration is recognized to be a reference to the Federal Transit Administration, when appearing in any of the following records of the United States: (a) Law, (b) Map, (c) Regulation, (d) Document, (e) Paper, or FTA Master Agreement MA(18), 10 -1 -2011 15 (f) Other. i. Federal Transit Administrator means: (1) The head of the Federal Transit Administration, and (2) Designates the former Urban Mass Transportation Administrator, so that any reference to the Urban Mass Transportation Administrator is recognized to be a reference to the Federal Transit Administrator, when appearing in any of the following records of the United States: J. (a) Law, (b) Map, (c) Regulation, (d) Document, (e) Paper, or (0 Other. FTA is the acronym for the Federal Transit Administration, an operating administration of the U.S. Department of Transportation (U.S. DOT). "FTA" replaces the acronym "UMTA." k. Grant Agreement means an instrument FTA uses to award Federal funds to a specific Recipient to support a particular Project in which FTA does not takes an active role or retain substantial control over, as provided in 31 U.S.C. § 6304. The Grant Agreement: (1) Usually includes: (a) The FTA Award establishing the Project's boundaries or limits, (b) The Recipient's signed Execution statement, (c) FTA's latest Master Agreement, which is incorporated by reference and made part of the Grant Agreement, and (2) Sometimes includes: (a) Special Conditions, (b) Special Requirements, (c) Special Provisions, or FTA Master Agreement MA(18), 10 -1 -2011 16 (d) Conditions of Award. 1. Local Government includes, but is not limited to: (1) A public transportation authority, (2) Any of the following entities established under State law (whether or not incorporated as a private nonprofit organization under State law): (a) A county, (b) A municipality, (c) A city, (d) A town, (e) A township, (f) A special district, (g) A council of governments, (h) A public corporation, (i) A board, or (j) A commission, (3) A regional governmental entity, (4) An interstate governmental entity, (5) An Indian tribal government, or (6) Any agency or instrumentality of local government. m. Project means, for purposes of this Master Agreement, (1) The activity or activities (task or tasks) of a Grant or Cooperative Agreement listed m: (a) The Project Description, (b) The Approved Project Budget, FTA Master Agreement MA(18), 10 -1 -2011 17 (c) Any modifications identified in the Conditions of Award of the underlying Agreement, and (d) Any other Special Conditions, Requirements, or Provisions that apply to the Project. (2) "Program," or "Each Project in the Program," if funding for the Project is conditioned on a statutory requirement for a "Program of Projects." (3) The transportation activities financed by a Loan, Loan Guarantee, or Line of Credit funded under the Transportation Infrastructure Finance and Innovation Act of 1998, as amended, 23 U.S.C. §§ 601 — 609. (4) For purposes of legal interpretations and other matters, FTA reserves the right to consider information other than the data displayed in FTA's electronic management system under "Scopes" and "Scope Level Codes" of the "Approved Project Budget" to determine what constitutes the "Scope of the Project" or eligible Project activities. n. Public Transportation, for purposes of the Federal transit program, has the same meaning as "transit," and "mass transportation," and: (1) Includes transportation by a conveyance that provides regular and continuing: (a) General transportation to the public, or (b) Special transportation to the public, but (2) Does not include: (a) Schoolbus transportation, (b) Charter transportation, (c) Sightseeing transportation, (d) Intercity bus transportation, or (e) Intercity passenger rail transportation provided by Amtrak or a successor to the entity described in 49 U.S.C. chapter 243 (Amtrak). o. Recipient means the entity that receives Federal funds directly from FTA to support its Project, including: FTA Master Agreement MA(18), 10 -1 -2011 18 (1) A "Grant Recipient" or "Grantee" that receives Federal funds directly from FTA through a Grant Agreement, (2) A Recipient that receives Federal funds directly from FTA through a Cooperative Agreement, (3) Unless FTA determines otherwise in writing, it includes: (a) The entire legal entity of which the "Recipient" identified in the underlying Agreement is a part, and (b) Each party to, member of, or participant in the multi -party entity identified as the "Recipient" in the underlying Agreement, including: 1 A consortium, 2 A partnership, 3 A joint venture, 4 A team, or 5 Other multi -party organization, p. Subagreement means an agreement through which a Recipient awards Federal assistance funds to a subrecipient. The term "subagreement" also includes the term "subgrant," but does not include the terms "third party contract," "third party subcontract" or "lease." q. Subrecipient means any entity that receives Federal assistance funds awarded by an FTA Recipient, rather than by FTA directly. The term "subrecipient" also includes the terms "subgrantee," but does not include "third party contractor," "third party subcontractor," or "lessee." r. Third Party Agreement, for purposes of this Master Agreement unless FTA determines otherwise in writing, includes all of the following agreements or arrangements financed in whole or part with Federal funds awarded to a Recipient by FTA, such as: (1) Subagreements with subrecipients, (2) Leases, (3) Third party contracts, (4) Third party subcontracts, and FTA Master Agreement MA(18), 10 -1 -2011 19 (5) Other similar arrangements or agreements. s. Third Party Contract means a contract or purchase order awarded by the Recipient or subrecipient to a contractor or vendor, financed in whole or in part with Federal funds awarded by FTA. It does not include the terms "subagreement," or "lease." t. Third Party Participant, for purposes of this Master Agreement unless FTA determines otherwise in writing, includes all participants in the Recipient's Project that are not the Recipient or FTA, such as: (1) Subrecipients, (2) Lessees, (3) Third party contractors, (4) Third party subcontractors, and (5) Other participants in the Recipient's Project. u. Third Party Subcontract means a subcontract that is entered into by the third party contractor or third party subcontractor at any tier and that is financed in whole or in part with Federal funds originally derived from FTA. v. Underlying Agreement, for purposes of this Master Agreement unless FTA determines otherwise in writing, means the instrument that provides a specific amount of Federal funding for the Project and may include a: (1) Specific Grant Agreement for the Project, (2) Specific Cooperative Agreement for the Project, (3) Specific Transportation Infrastructure Loan financing the Project, (4) Specific Transportation Infrastructure Loan Guarantee supporting the Project, or (5) Specific Transportation Infrastructure Line of Credit financing the Project. w. Waiver has the same meaning as the definition of Approval in Section 1.b. Section 2. Project Implementation. a. General. The Recipient agrees to carry out the Project as follows: FTA Master Agreement MA(18), 10 -1 -2011 20 (1) Project Description. Because the "Project Description" in the FTA Award section of the underlying Agreement provides only a brief description of the Project or Projects, the Recipient agrees to perform the work described in both the "Project Description" and in its Application that is incorporated by reference in the underlying Agreement for the Project. (2) Effective Date. The Effective Date of the underlying Agreement, or later Amendment is the date when the FTA Authorized Official has awarded Federal funds for the Project, which is displayed in the underlying Agreement or Amendment. The Recipient agrees to undertake Project work promptly after receiving notice that FTA has awarded Federal funds for the Project. (3) Recipient's Capacity. The Recipient agrees to maintain sufficient legal, financial, technical, and managerial capacity to: (a) Plan, manage, and complete the Project and provide for the use of Project property, (b) Carry out the safety and security aspects of the Project, and (c) Comply with: 1 The underlying Agreement, 2 This Master Agreement, 3 The Approved Project Budget, 4 Project schedules, 5 Its annual Certifications and Assurances, and 6 Federal laws and regulations, and (4) Follow Federal directives, except as FTA determines otherwise in writing. (4) Completion Dates. The Recipient agrees to complete the Project within a reasonable time. Nevertheless, except in the case of a Full Funding Grant Agreement or as otherwise specified, FTA and the Recipient agree that milestone dates and other Project completion dates are to be treated as good faith estimates rather than precise and firm legal requirements. b. U.S. DOT Administrative Requirements. The Recipient agrees to comply with the applicable U.S. DOT regulations establishing uniform administrative requirements for recipients of its type: (1) State, Local Government, or Indian Tribal Government. U.S. DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 C.F.R. Part 18, apply to a Recipient that is a State, local government, or Indian tribal government. FTA Master Agreement MA(18), 10 -1 -2011 21 (2) Institution of Higher Education or Nonprofit Organization. U.S. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations," 49 C.F.R. Part 19, apply to a Recipient that is an institution of higher education or a nonprofit organization. (3) Private For - Profit Organization. Except as FTA determines otherwise in writing, U.S. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - profit Organizations," 49 C.F.R. Part 19, apply to a Recipient that is a private for - profit organization. c. Application of Federal, State, and Local Laws, Regulations, and Directives. (1) Federal Laws, Regulations, and Directives. The Recipient agrees that: (a) Federal laws and regulations are Federal requirements that control Project award and implementation. The Recipient understands and agrees it may violate Federal laws or regulations, the underlying Agreement, or this Master Agreement if it adopts an alternative procedure or course of action without first securing FTA's approval in writing. (b) Federal directives, as defined in this Master Agreement, provide Federal guidance. FTA strongly encourages the Recipient to follow Federal directives to ensure compliance with Federal requirements. (c) Federal laws, regulations, and directives that apply to the Project and Recipient when the FTA Authorized Official awards Federal funds for the Project may be modified from time to time. (d) New Federal laws, regulations, and directives may become effective after the Recipient executes the underlying Agreement, and might apply to that Agreement. (e) The most recent of Federal laws, regulations, and directives will apply to its Project at any specific time, except as FTA determines otherwise in writing by: 1 Special Condition within the underlying Agreement, 2 Special Requirement within the underlying Agreement, 3 Special Provision within the underlying Agreement, 4 Condition of Award within the underlying Agreement, 5 Change to an FTA directive, or 6 Letter to the Recipient signed by an authorized FTA official. FTA Master Agreement MA(18), 10 -1 -2011 22 (d) All standards or limits in the underlying Agreement and this Master Agreement are minimum requirements, except as FTA determines otherwise in writing. (e) It will include in each third party agreement notice that Federal laws, regulations, and directives may change and that the changed provisions will apply to the Project, except as FTA determines otherwise in writing. (2) Pre - emption of State, Territorial, and Local Law. If a Federal law pre -empts a State, territorial, or local law, regulation, or ordinance: (a) The Recipient must comply with Federal law and regulations. (b) The underlying Agreement and this Master Agreement, however, do not require the Recipient to take any action that would violate State, territorial, or local law, regulations, or ordinances. (c) If compliance with any provision of Federal law or regulations, the underlying Agreement, or this Master Agreement violates or would require the Recipient to violate any State, territorial, or local law, regulation, or ordinance, the Recipient agrees to: 1 Notify FTA immediately in writing, and 2 Make appropriate arrangements with FTA to: a Proceed with the Project or, b Terminate the Project expeditiously, if necessary. d. Recipient's Primary Responsibility to Comply with Federal Requirements. Irrespective of involvement by any other entity in the Project, the Recipient agrees that: (1) It, rather than any other entity, including a third party participant, is ultimately responsible for full compliance with Federal laws and regulations, Federal directives, the underlying Agreement, and this Master Agreement, except as FTA determines otherwise in writing. (2) Exceptions. It is not responsible for compliance with Federal requirements when: (a) It is a Designated Recipient of Urbanized Area Formula Program funds as defined in 49 U.S.C. § 5307(a)(2) that has entered into a Supplemental Agreement with FTA and a Grant Recipient or Grantee covering a specific Project, or (b) The Federal Government, through appropriate official action, relieves the Recipient of part or all responsibility to the Federal Government. FTA Master Agreement MA(18), 10 -1 -2011 23 e. Recipient's Responsibility to Extend Federal Requirements to Other Entities. (1) Entities Affected. Only the Recipient and FTA, as defined in Section 1 of this Master Agreement, are parties to the underlying Agreement. Nevertheless, the Recipient and FTA need the cooperation of other third party participants to attain compliance with certain Federal laws. regulations, and directives. Therefore, (a) The Recipient agrees to ensure that each third party participant complies with applicable Federal laws and regulations, and follows Federal directives, except as FTA determines otherwise in writing. (b) If a third party participant is expected to fulfill any responsibilities typically performed by the Recipient, the Recipient agrees to ensure that the third party participant carries out the Recipient's responsibilities as provided in the underlying Agreement or this Master Agreement. (2) Agreements Affected. The applicability provisions of Federal laws, regulations, and directives determine the extent to which they affect a third party participant and the Project. Thus, the Recipient agrees to use a written third party agreement to ensure that the third party participant complies with Federal laws and regulations and follows Federal directives, except as FTA determines otherwise in writing. Specifically, the Recipient agrees that: (a) Required Provisions. Its third party agreement will include all appropriate provisions stating the third party participant's responsibilities under Federal laws, regulations, and directives, except as FTA determines otherwise in writing. (b) Flowdown. Its third party agreement will include any necessary provisions requiring the third party participant to include Federal provisions in its subagreements and other third party agreements to the lowest tier required, except as FTA determines otherwise in writing. (c) Performance of Recipient's Responsibilities. When a third party agreement requires the third party participant to undertake Project activities and responsibilities usually performed by the Recipient, that third party agreement must include appropriate provisions that would extend the provisions normally applicable to the Recipient by the underlying Agreement or this Master Agreement to the third party participant performing the Recipient's responsibilities, except as FTA determines otherwise in writing. f. No Federal Government Obligations to Third Parties. Except as the Federal Government expressly consents in writing, the Recipient agrees that: (1) The Federal Government shall not be subject to any obligations or liabilities related to: (a) The Project, FTA Master Agreement MA(18), 10 -1 -2011 24 (b) Any third party participant at any tier, or (c) Any other person or entity that is not a party (Recipient or FTA) to the underlying Agreement. (2) Notwithstanding that the Federal Government may have concurred in or approved any solicitation or third party agreement at any tier that has affected the Project, the Federal Government has no obligations or liabilities to any: (a) Third party participant, or (b) Any other person or entity that is not a party (Recipient or FTA) to the underlying Agreement. g. Changes in Project Performance. The Recipient agrees to notify the FTA Regional Counsel for the Region in which it operates public transportation or implements the Project, or the Headquarters manager for the Project and Chief Counsel immediately in writing in the following circumstances: (1) Changes in Laws or Conditions. Any change that may adversely affect its ability to carry out the Project, such as: (a) A change in State or local law, (b) Changed conditions, including its: 1 Legal capacity, 2 Financial capacity, 3 Technical capacity, or (c) Any other serious event, (2) Adverse Actions. Any current or prospective legal matter with potentially serious consequences, such as: (a) A major dispute, (b) A breach, (c) A default, or (d) Litigation, FTA Master Agreement MA(18), 10 -1 -2011 25 (3) Federal Concerns. Any matter, including any change or adverse action described in Sections 2.g(1) and 2.g.(2) of this Master Agreement, that may adversely affect the Federal Government' s: (a) Interests in the Project, or (b) Administration or enforcement of Federal laws or regulations, (4) Federal Government as "Party." An action such as naming the Federal Government as a party to litigation in any forum for any reason. Section 3. Ethics. a. Ethical Standards. The Recipient agrees to maintain, and assures that its subrecipients will also maintain, a written code or standards of conduct governing the performance of their officers, employees, or agents engaged in selection, the award, and administration of third party contracts, providing, at a minimum that: (1) Conflicts of Interest. The Recipient or subrecipient's officers, employees, board members or agents may not participate in selection, award, or administration of a federally funded third party agreement at any tier if a real or apparent personal or organizational conflict of interest would result. (a) Personal Conflicts of Interest. A personal conflict of interest occurs when: 1 Any of the following people affiliated with the Recipient or subrecipient: a An officer, employee, board member, or agent, b Any immediate family member, an officer, employee, board member, or agent, or c The partner of an officer, employee, board member, or agent, 2 Either: a Has a financial or other interest in an entity under consideration or selected for award, or b Is an employee, or about to be an employee, of an entity under consideration or selected for award. (b) Organizational Conflicts of Interest. An organizational conflict of interest includes, FTA Master Agreement MA(18), 10 -1 -2011 26 but is not limited to, a condition that occurs when the Project work, without appropriate restrictions on certain future activities, results in an unfair competitive advantage to: 1 That third party participant or another third party participant performing the Project work, or 2 Impairs that third party participant's objectivity in performing the Project work. (2) Gifts. Gifts include gratuities, favors, or anything of monetary value. (a) Prohibitions. The Recipient and the subrecipient's officers, employees, board members, or agents may not solicit or accept anything of monetary value (gift) from a present or potential third party participant of any type. (b) Exceptions. The Recipient and subrecipient may permit its officers, employees, board members, or agents to accept a gift, however, provided that: 1 The financial value of the gift is insubstantial, or 2 The gift is an unsolicited item of nominal intrinsic value. (3) Penalties. Penalties, sanctions, or other disciplinary actions must be established for violations of the code or standards of conduct by the Recipient or subrecipient's officers, employees, board members, or agents, or by their third party participants or their agents, as permitted by State or local law or regulations. b. Debarment and Suspension. The Recipient agrees that: (1) It will not engage third party participants that are debarred or suspended except as authorized by: (a) U.S. DOT regulations, "Nonprocurement Suspension and Debarment," 2 C.F.R. Part 1200, which adopt and supplement the following U.S. Office of Management and Budget (U.S. OMB) Guidelines and Executive Order, (b) U.S. OMB, "Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)," 2 C.F.R. Part 180, and (c) Executive Orders Nos. 12549 and 12689, "Debarment and Suspension," 31 U.S.C. § 6101 note, (2) It will review the "Excluded Parties Listing System" at http: / /epls.gov /, if required by U.S. DOT regulations, 2 C.F.R. Part 1200, and FTA Master Agreement MA(18), 10 -1 -2011 27 (3) It will include, and require its third party participants to include a similar condition in each lower tier covered transaction, assuring that the lower tier third party participant will comply with: (a) Federal debarment and suspension requirements, and (b) Review the "Excluded Parties Listing System" at http: / /epls.gov /, if needed for compliance with U.S. DOT regulations, 2 C.F.R. Part 1200. c. Bonus or Commission. The Recipient affirms that it has not paid, and agrees not to pay, any bonus or commission to obtain Federal funding for its Project. d. Lobbying Restrictions. The Recipient agrees that: (1) As provided by 31 U.S.C. § 1352(a), it will not use Federal funds to pay the costs of influencing any officer or employee of a Federal agency, Member of Congress, officer of Congress or employee of a Member of Congress, to award or extend the underlying Agreement, (2) It will comply with other Federal laws and regulations prohibiting the use of Federal funds for activities designed to influence Congress or a State legislature concerning legislation or appropriations, except through proper, official channels, and (3) It will comply, and will assure the compliance of each third party participant with U.S. DOT regulations, "New Restrictions on Lobbying," 49 C.F.R. Part 20, modified as necessary by 31 U.S.C. § 1352, as amended. e. Political Activity. The Hatch Act limits the political activities of State and local agencies and their officers and employees, whose principal employment activities are financed in whole or part with Federal funds including the underlying Agreement. The Recipient agrees to comply with: (1) The Hatch Act, 5 U.S.C. §§ 1501 — 1508, 7324 — 7326, (2) U.S. Office of Personnel Management regulations, "Political Activity of State or Local Officers or Employees," 5 C.F.R. Part 151, (3) 49 U.S.C. § 5307(k)(2)(B) and 23 U.S.C. § 142(g), which provide that the Hatch Act does not apply to a nonsupervisory employee, to whom the Hatch Act would not otherwise apply, (a) Of a public transportation system receiving FTA funds, or (b) Of any other agency or entity that performs functions related to public transportation and is receiving FTA funds. FTA Master Agreement MA(18), 10 -1 -2011 28 f. False or Fraudulent Statements or Claims. (1) Civil Fraud. The Recipient acknowledges and agrees: (a) That the following Federal law and regulations apply to itself and its Project: 1 The Program Fraud Civil Remedies Act of 1986, as amended, 31 U.S.C. 3801 et seq., and 2 U.S. DOT regulations, "Program Fraud Civil Remedies," 49 C.F.R. Part 31. (b) By executing the underlying Agreement: 1 It certifies or affirms the truthfulness and accuracy of each statement it has made, it makes, or it will make to the Federal Government in connection with the Project. 2 It acknowledges that the Federal Government may impose the penalties of the Program Fraud Civil Remedies Act of 1986, as amended, in addition to other penalties, if the Recipient makes, presents, or submits to the Federal Government, a false, fictitious, or fraudulent: a Claim, b Statement, c Submission, d Certification, e Assurance, or f Representation. (2) Criminal Fraud. The Recipient acknowledges and agrees: (a) That the following Federal laws apply to itself and its Project: 1 Federal transit law, specifically 49 U.S.C. § 5323(1), and 2 18 U.S.C. § 1001 (b) That Federal Government may impose the penalties of 18 U.S.C. § 1001, in addition to other penalties, if it makes a false, fictitious, or fraudulent: 1 Claim to the Federal Government, FTA Master Agreement MA(18), 10 -1 -2011 29 2 Statement to the Federal Government, 3 Submission to the Federal Government, 4 Certification to the Federal Government, 5 Assurance to the Federal Government, or 6 Representation to the Federal Government. g. Trafficking in Persons. The Recipient agrees to comply with, and assures the compliance of each subrecipient with: (1) Subsection 106(g) of the Trafficking Victims Protection Act of 2000 (TVPA), as amended, 22 U.S.C. § 7104(g), and (2) This Section 3.g(2) of this Master Agreement, containing the following award terms excerpted from "U.S. OMB guidance, "Trafficking in Persons: Grants and Cooperative Agreements," 2 C.F.R. Part 175, which FTA has included at the direction of U.S. OMB: (a) Definitions. For purposes of this Section 3.g, the Recipient agrees that: 1 Employee means either: a An individual who is employed by the Recipient or a subrecipient, and who is participating in the underlying Agreement, or b Another person who is participating in the underlying Agreement and who is not compensated by the Recipient including, but not limited to, a volunteer or individual whose services are contributed by a third party as an in -kind contribution toward cost sharing or matching requirements of that underlying Agreement and this Master Agreement. 2 Forced labor means labor obtained by any of the following methods: the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery. 3 Private entity: a Means any entity other than a State, local government, Indian tribe, or foreign public entity, as those terms are defined in 2 C.F.R. § 175.25, and FTA Master Agreement MA(18), 10 -1 -2011 30 b Includes a for - profit organization, and also a nonprofit organization, including any nonprofit institution of higher education, hospital, or tribal organization other than one included in the definition of Indian tribe in 2 C.F.R. § 175.25(b). 4 Severe forms of trafficking in persons has the meaning given in section 103 of the TVPA, as amended, 22 U.S.C. § 7102. 5 Commercial sex act has the meaning given in section 103 of the TVPA, as amended, 22 U.S.C. § 7102. 6 Coercion has the meaning given in section 103 of the TVPA, as amended, 22 U.S.C. § 7102. (b) Duties of Each Recipient. The Recipient agrees: 1 To inform FTA immediately of any information it receives from any source alleging a violation of a prohibition in Section 3.g(2)(c)1 of this Master Agreement below. 2 That FTA may unilaterally terminate its funding for the underlying Agreement as provided in Section 3.g(2)(d) or Section 3.g(2)(e) of this Master Agreement. FTA's right to terminate unilaterally: a Implements subsection 106(g) of the TVPA, as amended, 22 U.S.C. § 7104(g), and b Is in addition to all other remedies for noncompliance that are available to the Federal Government under this Master Agreement. 3 To include Section 3.g(3)(a) of this Master Agreement in any subagreement it enters into with a private entity, as defined in Section 3.g(2)(a)3 of this Master Agreement. (c) Prohibitions. The Recipient agrees that it, its employees, its subrecipients and its subrecipients' employees that participate in the underlying Agreement, may not -- 1 Engage in severe forms of trafficking in persons during the period of time that the underlying Agreement, is in effect, 2 Procure a commercial sex act during the period of time that the underlying Agreement is in effect, or 3 Use forced labor in the performance of the underlying Agreement or subagreements. FTA Master Agreement MA(18), 10 -1 -2011 31 (d) For Each Recipient That is a Private Entity. FTA may unilaterally terminate the underlying Agreement, without penalty to the Federal Government, if the Recipient or a subrecipient that is a private entity -- 1 Is determined to have violated a prohibition in Section 3.g(2)(c)1 of this Master Agreement, or 2 Has an employee whose conduct is determined by an FTA official authorized to terminate the underlying Agreement to have violated a prohibition in Section 3.g(2)(c)1) of this Master Agreement because that employee's conduct is either -- a Associated with his or her participation in the underlying Agreement, or b Imputed to the Recipient or the subrecipient using the standards and due process for imputing the conduct of an individual to an organization provided in U.S. OMB "Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)," 2 C.F.R. Part 180, and U.S. DOT regulations, "Nonprocurement Suspension and Debarment," 2 C.F.R. Part 1200. (e) For Each Recipient Other Than a Private Entity. FTA may unilaterally terminate the underlying Agreement, without penalty to the Federal Government, if a subrecipient that is other than a private entity -- 1 Is determined to have violated a prohibition in Section 3.g(2)(c)1 of this Master Agreement, or 2 Has an employee whose conduct is determined by an FTA official authorized to terminate the underlying Agreement to have violated a prohibition in Section 3.g(2)(c)1 of this Master Agreement because that employee's conduct is either -- a Associated with his or her participation in the underlying Agreement, or b Imputed to the subrecipient using the standards and due process of U.S. OMB "Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)," 2 C.F.R. Part 180, as implemented by U.S. DOT regulations, "Nonprocurement Suspension and Debarment," 2 C.F.R. Part 1200, for imputing the conduct of an individual to an organization. Section 4. Federal Assistance. a. Maximum Federal Assistance. The Recipient agrees that: (1) As may be modified by the Conditions of Award, Special Conditions, Special Requirements, or Special Provisions of the underlying Agreement, FTA will provide Federal funds through the underlying Agreement equal to the smallest of the following amounts: FTA Master Agreement MA(18), 10 -1 -2011 32 (a) The maximum amount permitted by Federal law or regulations, (b) The "Maximum FTA Amount Awarded," as stated on the underlying Agreement, or (c) The amount calculated on the basis of the "Maximum Percentage(s) of FTA Participation." (2) FTA's responsibility to provide Federal funding is limited to the amounts listed in the Approved Project Budget for the Project. (3) The amount stated as the "Estimated Total Eligible Cost" on the underlying Agreement is the amount that forms the basis on which FTA determines the "Maximum FTA Amount Awarded." b. Basis for FTA Funding. (1) "Net Project Cost." For any Project required by Federal law or by FTA to be financed on the basis of its "Net Project Cost" as defined in 49 U.S.C. § 5302(a)(8): (a) FTA will provide Federal funds for the portion of the eligible Project costs that the Recipient cannot reasonably finance from its revenues, which is the "Net Project Cost." (b) The amount stated as the "Estimated Total Eligible Cost" on the underlying Agreement is actually the "Estimated Net Project Cost," and (c) FTA will use the amount stated as the "Estimated Total Eligible Cost" on the underlying Agreement to determine the "Maximum FTA Amount Awarded." (2) Other Basis for FTA Participation. For any Project not required by Federal law or FTA to be financed on the basis of its "Net Project Cost" as defined by 49 U.S.C. § 5302(a)(8): (a) FTA will provide Federal funds for all or part of the total Project cost that is eligible for Federal funding. (b) FTA will use the amount stated as the "Estimated Total Eligible Cost" on the underlying Agreement to determine the "Maximum FTA Amount Awarded." Section 5. Local Share. A Recipient that is required to provide a local share for the Project agrees to provide sufficient funds or approved in -kind resources, together with the Federal funds awarded, that will assure payment of the actual cost of each Project activity covered by the underlying Agreement. The Recipient also agrees that: FTA Master Agreement MA(18), 10 -1 -2011 33 a. Restrictions on the Source of the Local Share. Except as permitted by law or regulation, it will not provide any local share funds derived from: (1) Receipts from the use of Project facilities or equipment, (2) Revenues of the public transportation system in which such facilities or equipment are used, or (3) Other Federal funds, except as permitted by Federal law or regulation. b. Duty to Obtain the Local Share. It will: (1) Complete all proceedings necessary to provide the local share and promptly pay its part of the Project costs, except as FTA permits otherwise in writing. (2) Notify FTA of any changed circumstances adversely affecting its ability to pay its local share, and include in that notification: (a) The actions it has taken or will take to ensure adequate resources to provide the local share, and (b) A Reaffirmation of its commitment to provide the local share. c. Prompt Payment of the Local Share. It will provide the proportionate amount of the local share promptly, except as FTA determines otherwise in writing. d. Reductions or Refunds of the Local Share. Except as FTA permits otherwise in writing, (1) The Recipient will not reduce the local share unless, at the same time, it reduces the proportionate amount of Federal share it seeks. (2) The Recipient will not accept a refund of the local share unless, at the same time, it provides a proportionate amount of its refund to the Federal Government. Section 6. Approved Project Budget. Except as FTA determines otherwise in writing, the Recipient agrees that: a. Development and Approval. It will prepare a Project budget, which, upon approval by FTA, will be designated the "Approved Project Budget," and which will be incorporated by reference and made part of the underlying Agreement. b. Restrictions. It will incur Project costs and withdraw Project funds only as permitted by the FTA Master Agreement MA(18), 10 -1 -2011 34 latest Approved Project Budget. c. Amendment. It will obtain FTA approval: (1) Before: (a) Amending the Approved Project Budget, and (b) Seeking an accompanying amendment to the underlying Agreement, (2) Except if the amended "Approved Project Budget" would be only a re- allocation among budget items or fiscal years that: (a) Does not increase the total amount of Federal funding, or (b) Change the scope of the underlying Agreement. d. Transfer of Funds. It will obtain written FTA approval before making transfers of funds not expressly authorized in Federal laws, regulations, FTA circulars, or other applicable Federal directives. e. Budget Revision. It will obtain advance written approval for any budget revision that would require additional Federal funding. f. Additional Federal Funding. An award of additional Federal funds will require a new Approved Project Budget. g. Unspent Federal Funds. It will inform FTA promptly if it believes it will have unspent Federal funds after the Project's performance period ends. Section 7. Accounting Records. As provided by Federal laws, regulations, and directives, except as FTA determines otherwise in writing, the Recipient agrees that: a. Retain Records. It will retain all Project account and financial documents related in whole or in part to the Project, including: (1) Checks, (2) Payrolls, (3) Invoices, FTA Master Agreement MA(18), 10 -1 -2011 35 (4) Contracts, (5) Vouchers, (6) Orders, (7) Other financial documents, and (8) Other accounting documents. b. Maintain Records. It will maintain Project account and financial records: (1) Readily accessible for review, (2) Clearly identified with the Project, and (3) As feasible, separate from records not related to the Project. c. Control of Project Funds. It will: (1) Deposit all Federal funds it receives in a financial institution; FTA encourages the use of financial institutions owned at least fifty (50) percent by minority group members, and (2) Record in the Project account all amounts the Federal Government provides to the Recipient and all other funds provided for, accruing to, or otherwise received on account of the Project (Project funds) as provided by Federal laws, regulations, and Federal directives, except as FTA determines otherwise in writing. d. Documentation of Project Costs and Program Income. The Recipient agrees that: (1) Project Costs. It will support Project costs, including any approved services or property the Recipient or others have contributed, that are accompanied by properly executed payrolls, time records, invoices, contracts, vouchers, or other appropriate records describing in detail the nature and justification for the costs. (2) Program Income. It will maintain accurate records of all program income derived from Project implementation, except certain income FTA determines to be exempt from Federal program income requirements. e. Checks, Orders, and Vouchers. The Recipient agrees that, until it has received and filed a properly signed voucher or other appropriate record describing in proper detail the purpose for the expenditure, it will not draw checks, drafts, or orders for property or services to be charged against the Project Account. FTA Master Agreement MA(18), 10 -1 -2011 36 Section 8. Reporting, Record Retention, and Access. a. Types of Reports. Except as determined otherwise in writing, the Recipient agrees to provide to FTA, and to others if FTA so directs: (1) All reports required by Federal laws, regulations, and directives, (2) The underlying Agreement, this Master Agreement, and (2) Any other reports FTA may specify. b. U.S. OMB Special Reporting Provisions. (1) Authority. U.S. OMB has issued regulatory guidance in Title 2, Code of Federal Regulations, instructing Federal agencies to include the following special "award terms" as authorized by the following Federal laws: (a) Federal Funding Accountability and Transparency Act of 2006 (FFATA), (b) Section 6202 of the Department of Defense Appropriations Act for Fiscal Year 2008, Pub. L. 110 -252, June 30, 2008, which amended the FFATA, and (c) Section 872 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Pub. L. 110 -417, Oct. 14, 2008, which further amended the FFATA. (2) Universal Identifier and Central Contractor Registration. The Recipient agrees to comply with the following award terms in "Appendix A" of U.S. OMB guidance, "Universal Identifier and Central Contractor Registration," 2 C.F.R. Part 25, which FTA has included in this Master Agreement at the direction of U.S. OMB: (a) Requirement for Central Contractor Registration (CCR). Unless exempted from the Central Contractor Registration Requirement (CCR) as provided by 2 C.F.R. § 25.110, the Recipient agrees: 1 To maintain the currency of its information in the CCR until the later of the following: a It submits its final financial report required by the underlying Agreement and this Master Agreement, or b It receives the final payment under the Project, whichever is later. 2 That it must review and update its information in the CCR at least annually after the initial registration, and more frequently if required by changes in its information or another provision of a Federal or federally assisted agreement, law, regulation, or regulatory guidance FTA Master Agreement MA(18), 10 -1 -2011 37 that U.S. OMB might issue. (b) Requirement for Data Universal Numbering System (DUNS) Numbers. If it is authorized to make subawards under the underlying Agreement, the Recipient agrees: 1 It must notify potential subrecipients that no entity (as defined in Section 8.b(2)(c)3 of this Master Agreement) may receive a subaward through the underlying Agreement unless the entity has provided its DUNS number to the Recipient. 2 It must not make any subaward to an entity unless the entity has provided its DUNS number to the Recipient. (c) Definitions. For purposes of Section 8.b(2) of this Master Agreement, the Recipient agrees that the following definitions apply: 1 Central Contractor Registration (CCR) means the Federal repository into which an entity must provide information required for the conduct of business as a recipient. Additional information about registration procedures may be found at the CCR Internet site (currently at http: / /www.ccr.gov). 2 Data Universal Numbering System (DUNS) number means the nine -digit number established and assigned by Dun and Bradstreet, Inc. (D &B) to uniquely identify business entities. You may obtain a DUNS number from D &B by telephone (currently at 866- 705 -5711) or the Internet (currently at http: / /fedgov.dnb.com/webform). 3 Entity, as it is used in this Section 8.b(2) of this Master Agreement, means all of the following (as defined in 2 C.F.R. Part 25, Subpart C): Tribe, a A Governmental organization that is a State, local government, or Indian b A foreign public entity, c A domestic or foreign nonprofit organization, d A domestic or foreign for - profit organization, and e A Federal agency, but only as a subrecipient under an award or subaward to a non - Federal entity. 4 Subaward, as it is used in this Section 8.b(2) of the Master Agreement (see also, Subpart B, Sec. .210 of U.S. OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations "): a Means a legal instrument to provide support for the performance of any FTA Master Agreement MA(18), 10 -1 -2011 38 portion of the Project or Program for which the Recipient received Federal funds for the underlying Agreement and that the Recipient awards to an eligible subrecipient. b Does not include the Recipient's procurement of property and services necessary to carry out its Project or Program. c May be provided through any legal agreement, including an agreement that the Recipient considers a contract. 5 Subrecipient means an entity that: a Receives a subaward from the Recipient through the underlying Agreement, and b Is accountable to the Recipient for the use of the Federal funds provided by the subaward. (3) Reporting Subawards and Executive Compensation. The Recipient agrees to comply with the following award terms in "Appendix A" of U.S. OMB guidance, "Reporting Subaward and Executive Compensation Information," 2 C.F.R. Part 170, included at the direction of U.S. OMB: (a) Reporting of first -tier subawards. 1 Applicability. Unless it is exempt as provided in Section 8.b(3)(d) of this Master Agreement, the Recipient agrees to report each action that obligates $25,000 or more in Federal funds (not including Recovery Act funds as defined in section 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111 -5) for a subaward to an entity (see definitions in Section 8.b(2)(c) of this Master Agreement). 2 Where and when to report. a The Recipient agrees to report each obligating action described in Section 8.b(3).al of this Master Agreement to http: / /www.fsrs.gov. b The Recipient agrees to report subaward information no later than the end of the month after the month in which the obligation was made (for example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010). 3 What to report. The Recipient agrees to report the information about each obligating action required by the submission instructions posted at http: / /www.fsrs.gov specify. (b) Reporting Total Compensation of Recipient Executives. FTA Master Agreement MA(18), 10 -1 -2011 39 1 Applicability and what to report. The Recipient agrees to report the total compensation for each of its five most highly compensated executives for the preceding completed fiscal year, if: a The total Federal funding authorized to date for the underlying Agreement is $25,000 or more, b In the preceding fiscal year, the Recipient received: (i) 80 percent or more of the Recipient's annual gross revenues from Federal procurement contracts (and subcontracts) and Federal funds subject to the Transparency Act, as defined in 2 C.F.R. § 170.320 (and subawards), and (ii) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal funds subject to the Transparency Act, Pub. L. 109 -282, as defined in 2 C.F.R. § 170.320 (and subawards), and c The public does not have access to information about the compensation of the Recipient executives through periodic reports filed under: § 78m(a), § 78o(d), or (i) Section 13(a) of the Securities Exchange Act of 1934, 15 U.S.C. (ii) Section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. (iii) Section 6104 of the Internal Revenue Code of 1986. To determine if the public has access to the compensation information, see the U.S. Securities and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm. 2 Where and when to report. The Recipient agrees to report executive total compensation described in Section 8.b(3)(b) of this Master Agreement: a As part of the Recipient's registration profile at http: / /www.ccr.gov. b By the end of the month after the month in which the underlying Agreement is made, and annually thereafter. (c) Reporting of Total Compensation of Subrecipient Executives. 1 Applicability and what to report. Unless exempt as provided in Section 8.b(3)(d) of this Master Agreement, the Recipient agrees to report the names and total FTA Master Agreement MA(18), 10 -1 -2011 40 compensation of each first -tier subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: a The subrecipient received in its preceding fiscal year: (i) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal funds subject to the Transparency Act, as defined in 2 C.F.R. § 170.320 (and subawards), and (ii) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial funds subject to the Transparency Act (and subawards), and b The public does not have access to information about the compensation of the subrecipient's executives through periodic reports filed under: § 78m(a), § 78o(d), or (i) Section 13(a) of the Securities Exchange Act of 1934, 15 U.S.C. (ii) Section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. (iii) Section 6104 of the Internal Revenue Code of 1986. To determine if the public has access to the compensation information, see the U.S. Securities and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm. 2 Where and when to report. The Recipient agrees to report the subrecipient executive's total compensation described in Section 8.b(3)(c) of this Master Agreement: a To FTA and elsewhere as may be determined by the Government. b By the end of the month following the month during which the Recipient makes the subaward. For example, if a subaward is obligated on any date during the month of October of a given year (i. e., between October 1 and 31), the Recipient must report any required compensation information of the subrecipient by November 30 of that year. (d) Exemptions. If, in the previous tax year, any Recipient had gross income, from all sources, under $300,000, that Recipient is exempt from the requirements to report: 1 Subawards, and 2 The total compensation of the five most highly compensated executives of any subrecipient. FTA Master Agreement MA(18), 10 -1 -2011 41 (e) Definitions. For purposes of this Section 8.b3 of the Master Agreement: 1 Entity has the same meaning as defined in Section 8.b(2)(c)3 of this Master Agreement. 2 Executive means officers, managing partners, or any other employees in management positions. Agreement. Agreement. 3 Subaward has the same meaning as defined in Section 8.b2(c)4 of this Master 4 Subrecipient has the same meaning as defined in Section 8.b2(c)5 of this Master 5 Total compensation means the cash and noncash dollar value earned by the executive during the Recipient's or subrecipient's preceding fiscal year and includes the following: a Salary, b Bonus, c Awards of stock, stock options, and stock appreciation rights (use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year as provided in the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments), d Earnings for services under non - equity incentive plans (this does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees), e Change in pension value (this is the change in present value of defined benefit and actuarial pension plans), f Above - market earnings on deferred compensation which is not tax - qualified, and g Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee, perquisites or property) for the executive exceeds $10,000. For more information, see 17 C.F.R. § 229.402(c)(2). (4) Other Prospective U.S. OMB Reporting Guidance. U.S. OMB has issued proposed FTA Master Agreement MA(18), 10 -1 -2011 42 guidance, "Recipient Integrity and Performance Matters," to be published in 2 C.F.R. Part 35, containing a mandatory "award term" that, if unchanged, would affect the Recipient when U.S. OMB issues final guidance. c. Report Formats. The Recipient agrees that: (1) FTA may specify the formats of all reports, documents, or information: (a) Developed under the Project, (b) Required to be submitted to FTA, and (c) Intended to be provided to the public, (2) FTA may specify: (a) Typewritten hard copy formats, (b) Electronic formats, and (c) Other formats as FTA determines. (3) Electronic submissions must comply with the Federal electronic accessibility requirements of: (a) Section 508 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794d, and (b) U.S. Architectural and Transportation Barriers Compliance Board (ATBCB) regulations, "Electronic and Information Technology Accessibility Standards," 36 C.F.R. Part 1194. d. Record Retention. As the Federal Govemment may require, the Recipient agrees to maintain intact and readily accessible all: (1) Types of Records. Records related in whole or in part to the Project as follows: (a) Data, (b) Documents, (c) Reports, (d) Records, (e) Subagreements, FTA Master Agreement MA(18), 10 -1 -2011 43 (1) (g) Leases, Third party contracts, Arrangements, Other third party agreements of any type, and Supporting materials related to the foregoing records. (2) Retention Period. All records listed in Section 8.d(1), from the beginning of the Project, through the course of the Project, until three years after the Recipient has submitted its final expenditure report and other pending matters are closed. e. Access to Records of Recipients and Subrecipients. The Recipient agrees that: (1) It will provide, and also require its third party participants at each tier to provide, the following people sufficient access to inspect and audit the Project, as required by 49 U.S.C. § 5325(g): (a) The U.S. Secretary of Transportation, and the Secretary's duly authorized representatives, (b) The Comptroller General of the United States, and his or her duly authorized representatives, and (c) State officials, and their duly authorized representatives. (2) The people listed in the preceding Section 8.e(1) of this Master Agreement will have access to: (a) Inspect all of the following, whether owned or maintained by the Recipient, subrecipient, or other third party participant: 1 Project work, 2 Project materials, 3 Project payrolls, and 4 Other Project data, and (b) Audit any information about the Project, whether owned or maintained by the Recipient, subrecipient, or other third party participant, in their: FTA Master Agreement MA(18), 10 -1 -2011 44 1 Books, 2 Records, or 3 Accounts. f. Project Closeout. The Recipient agrees that Project closeout does not alter the reporting and record retention requirements of this Section 8. Section 9. Payments. The Recipient agrees that it will not seek FTA payment for Project costs until it has executed the underlying Agreement. a. Recipient's Payment Requests. Except as FTA determines otherwise in writing, when seeking Federal payments for Project costs, the Recipient agrees that: (1) Unless FTA has stated in writing that the Recipient may defer the local share, if required to provide a local share: (a) It will not request or obtain more Federal funds than justified by the local share it has provided, or (b) It will not cause the proportion of Federal funds available to the Project at any time to exceed the percentage authorized by the underlying Agreement, (2) It will demonstrate that, when combined with Federal payments, it will provide adequate local funds that will cover all costs to be incurred for the Project, (3) It will identify all sources of Federal funds from which the payment is to be derived. (4) It will submit to FTA all financial and progress reports required to date, and b. FTA Payments. The Recipient agrees that FTA will make all payments of Federal funds through the Automated Clearing House (ACH) payment method regardless of the amount, but not before the Recipient has executed the underlying Agreement, except as FTA determines otherwise in writing. FTA determines whether permit payments will be through a "letter of credit" or require "requisitions." (1) Electronic Clearing House Operation Payments. The Recipient agrees that if payment is made by letter of credit through the FTA Electronic Clearinghouse Operation (ECHO) using an ECHO Control Number, the Recipient agrees: FTA Master Agreement MA(18), 10 -1 -2011 45 (a) Federal Regulations and Directives. It will comply with: 1 FTA ECHO requirements, which implement: a U.S. Department of Treasury (U.S. Treasury), "Treasury Financial Manual," Vol. 1, Part 6, Chapter 2000, "Cash Advances Under Federal Grant and Other Programs," and b U.S. Treasury Circular 1075, Part 205, "Withdrawal of Cash from the Treasury for Advances Under Federal Grants and Other Programs," contained within the preceding "Treasury Financial Manual," Vol. 1, Part 6, Chapter 2000. 2 The ECHO System Operations Manual, "Guidelines for Disbursements," and 3 This Section 9.b(1) of this Master Agreement. (b) Limited to Project Expenses. It will withdraw Federal funds only to pay eligible Project expenses. (c) Major Withdrawals. When a single withdrawal will exceed $50,000,000, the Recipient agrees to notify the appropriate FTA Regional or Program Office at least three days before the withdrawal is anticipated. (c) Immediate Use. The Recipient agrees that: 1 It will not withdraw Federal funds until actually needed for immediate payment of Project expenses, and 2 It will use those funds for payments of Project expenses no later than three (3) days after receipt, except as the Federal Government permits otherwise in writing. (d) Limits. It will not withdraw more than the sum of Federal funds the Federal Government has awarded in the underlying Agreement for its Project or the current available balance for its Project, whichever is less. (e) Control. It will provide for control and accountability for all Federal funds consistent with Federal requirements and procedures for use of the ECHO system. (f) Reporting. It will report its cash payments and balances promptly, unless FTA determines otherwise in writing. (g) Penalties. If it fails to comply with this Section 9.b(1), it may incur or be subjected to remedies and penalties, including, but not limited to the following: 1 Access to FTA's ECHO System. The Federal Government may revoke or suspend the Recipient's ECHO Control Number and access to the ECHO System if the FTA Master Agreement MA(18), 10 -1 -2011 46 Recipient: a Fails to use those funds to pay Project costs within three (3) days, b Fails to return withdrawn but unspent funds to the Federal Government within a reasonable time, or c Fails to establish procedures to minimize the time elapsing between advances of Federal funds and payments of Project costs. 2 Interest. The Recipient agrees to pay interest to the Federal Government on any Federal funds withdrawn prematurely, irrespective of whether the Federal funds have been deposited in an interest - bearing account. If the Recipient is: a A State or State instrumentality. The Recipient agrees to pay interest calculated as provided by: (i) Section 5(b) of the Cash Management Improvement Act of 1990, as amended, 31 U.S.C. § 6503(b), and (ii) U.S. Treasury regulations, "Rules and Procedures for Efficient Federal - State Funds Transfers," 31 C.F.R. Part 205. b Not a State or State instrumentality. The Recipient agrees to pay prejudgment common law interest determined by the Federal Government, as authorized by joint U.S. Treasury and U.S. Department of Justice (joint U.S. Treasury and U.S. DOJ) regulations, "Standards for the Administrative Collection of Claims," specifically 31 C.F.R. § 901.9(i). The amount of interest due may be determined by: (i) The amount of interest the Recipient demonstrates it earned on its premature withdrawals of Federal funds, (ii) The amount of interest based on the "Treasury tax and loan account" rate prescribed by 31 U.S.C. § 3717 for debts owed to the United States, or (iii) An amount of interest as the Federal Government otherwise determines. 3 Revocation of Funds. The Federal Government may revoke the unexpended portion of Federal funds awarded for the Project. (2) Requisition. If FTA uses the requisition payment method, the Recipient agrees that: (a) Recipient Responsibilities. The Recipient agrees that it will complete and submit: 1 "Payment Information Form — Echo -ACH Payment System, Revised 10/92" to FTA Master Agreement MA(18), 10 -1 -2011 47 FTA's Accounting Division, and 2 Standard Form 270, "Request for Advance or Reimbursement" to the designated FTA office. (b) FTA Responsibilities. Upon receiving a request for payment and adequate supporting information: 1 FTA will approve payment by direct deposit, provided that the Recipient: a Has complied with the underlying Agreement and this Master Agreement, b Has satisfied FTA that the Federal funds requested are needed for Project purposes in that requisition period, and c Is making adequate progress toward Project completion. 2 After demonstrating satisfactory compliance with the requirements of the preceding Section 9.b(2) of this Master Agreement, FTA may reimburse the Recipient's apparent allowable costs incurred (or to be incurred in the requisition period), if consistent with the Approved Project Budget for the Project, but not to exceed the maximum amount of Federal funds that may be paid through the Federal fiscal year of that requisition. c. Costs Reimbursed. Except as FTA determines otherwise in writing, the Recipient agrees that Project costs must be: (1) Consistent with the Project Description, the Approved Project Budget, the underlying Agreement, and this Master Agreement, (2) Necessary to carry out the Project, (3) Reasonable for the property or services acquired, (4) The actual net costs (the price paid minus any refunds, rebates, or other items of value it has received that reduced the costs it actually incurred, excluding program income), (5) Incurred for work performed after the Effective Date of the underlying Agreement, (6) Satisfactorily documented, (7) Treated consistently as provided in federally approved accounting principles and procedures, and (8) Eligible for Federal funding under Federal laws, regulations, and directives, including U.S. DOT regulations pertaining to allowable costs, specifically 49 C.F.R. § 18.22(b) and FTA Master Agreement MA(18), 10 -1 -2011 48 49 C.F.R. § 19.27, which identify the applicable Federal cost principles as follows: (a) U.S. OMB, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 C.F.R. Part 225, which applies to Project costs incurred by a State, local government, or Indian tribal government. (b) U.S. OMB, "Cost Principles for Educational Institutions (OMB Circular A -21)," 2 C.F.R. Part 220, which applies to Project costs incurred by an institution of higher education. (c) U.S. OMB, "Cost Principles for Non - profit Organizations (OMB Circular A- 122)," 2 C.F.R. Part 230, which applies to Project costs incurred by a private nonprofit organization. (d) The FAR, specifically 48 C.F.R. Chapter 1, Subpart 31.2, "Contracts with Commercial Organizations," which applies to Project costs incurred by a for - profit organization. d. Bond Interest and Other Financing Costs. The Recipient agrees as follows: (1) Allowability. Bond interest and other financing costs are allowable as permitted by Federal laws, regulations, and directives. (2) Federal Share. FTA's share of Project interest and financing costs will be limited to an amount that does not exceed the most favorable financing terms reasonably available for the Project at the time of borrowing, except as FTA determines otherwise in writing. e. Ineligible Costs. The Recipient understands and agrees that, except as FTA determines otherwise in writing, FTA will treat the following ineligible costs as excluded costs: (1) Any Project cost the Recipient has incurred before the Effective Date of the underlying Agreement or any Amendment to the underlying Agreement, unless otherwise permitted by Federal law, regulation, or directive, accompanied by FTA's written approval, (2) Any cost not included in the latest Approved Project Budget, (3) Any cost for Project property or services received in connection with a third party agreement that is required to be, but has not been, concurred in or approved in writing by FTA, (4) Any ordinary governmental or nonproject operating cost as prohibited by 49 U.S.C. § 5323(h), (5) Any profit or fee the Recipient seeks for its services in connection with the underlying Agreement, and (6) Any cost ineligible for FTA participation as provided by Federal laws or regulations, as provided in Federal directives. FTA Master Agreement MA(18), 10 -1 -2011 49 f. Effect of Federal Payments. The Recipient understands and agrees that any payment made for a Project cost does not constitute: (1) The Federal Government's final decision about the eligibility of the cost for payment under the Project, and (2) A waiver of any violation of any Federal law or regulation, the underlying Agreement, or this Master Agreement. g. Final Eligibility Determination. The Recipient acknowledges that the Federal Government will not make a final determination about the eligibility of any cost until the Project audit has been completed. h. Closeout. The Recipient agrees that Project closeout will not alter: (1) Its responsibility to return any amounts due the Federal Government resulting from later refunds, corrections, or other similar transactions; (2) The Federal Government's right to disallow costs and recover funds based on a later audit or other review. i. Notification. The Federal Government will notify the Recipient in writing if it determines that the Recipient is not entitled to receive any portion of the Federal funds paid. j. Recovery of Improper Payments. Unless prohibited by Federal law or regulation, the Federal Government may recover any funds necessary to satisfy any outstanding monetary claims it may have against the Recipient. k. Program Income. (1) State, Local, or Indian Tribal Governments. After FTA and the Recipient have entered into the underlying Agreement, FTA may permit a Recipient that must comply with 49 C.F.R. Part 18 to add program income to funds committed to that Project, and use that program income for purposes of and under the conditions of the underlying Agreement, in addition to uses authorized by 49 C.F.R. § 18.25. (2) Institutions of Higher Education, Private Non - Profit Entities, and Private For - Profit Entities. After FTA and the Recipient have entered into the underlying Agreement, FTA may permit a Recipient that must comply with 49 C.F.R. Part 19 to add the program income to the funds committed to that Project, and use the program income to further eligible project or program objectives, in addition to uses authorized by 49 C.F.R. § 19.24. (3) Costs Associated With Program Income. Except as FTA determines otherwise in writing, the costs incident to the earning program income may be deducted from the Recipient's FTA Master Agreement MA(18), 10 -1 -2011 50 gross income when determining program income, if these costs have not been charged to the underlying Agreement. 1. Federal Claims and Debts, Excess Payments, Disallowed Costs, Refunds Due, and Other Amounts Owed the Federal Government, Including Interest. (1) Recipient's Responsibility to Pay. After receiving notice of specific amounts due, whether for excess payments, disallowed costs, amounts recovered from third parties or other sources, or other funds it owes to the Federal Government, the Recipient agrees to pay the Federal Government the amounts owed, including interest, penalties, and administrative charges. (2) Amount of Interest. The Recipient agrees that the method by which interest is calculated depends on which process the Federal Government uses to recover the funds owed. The Recipient therefore understands and agrees to pay the amount of interest to the Federal Government determined as follows: (a) Federal Claims or Debts Under the Debt Collection Act. When the Federal Government uses the procedures of the Debt Collection Act of 1982, as amended, 31 U.S.C. 3701 et seq. to collect claims or debts owed by the Recipient for any reason as authorized under that Act (including excess payments and disallowed costs), the Recipient agrees that the amount of interest it will owe will be determined by: 1 Joint U.S. Treasury and U.S. DOJ regulations, "Standards for the Administrative Collection of Claims," 31 C.F.R. Part 900, specifically 31 C.F.R. § 901.9(a) — (g), or 2 Common law interest authorized by 31 C.F.R. § 901.9(i), as the Federal Government determines. (b) Other Processes. When the Federal Government uses methods other than the 31 U.S.C. 3701 et seq. and 31 C.F.R. Part 900 procedures to recover moneys owed by the Recipient for any reason, the Recipient agrees that common law interest due will be determined: 1 By joint U.S. Treasury and U.S. DOJ regulations, "Standards for the Administrative Collection of Claims," 31 C.F.R. Part 900, specifically 31 C.F.R. § 901.9(i), or 2 As FTA may determine otherwise. m. De- obligation of Federal Funds. The Recipient agrees that the Federal Government may de- obligate unexpended Federal funds before Project closeout. Section 10. Project Completion, Audit, Settlement, and Closeout. a. Project Completion. Within ninety (90) calendar days after Project completion or termination, the Recipient agrees to submit: FTA Master Agreement MA(18), 10 -1 -2011 51 (1) Its final Financial Status Report, either electronically or on Federal Financial Report Standard Form 425 (SF -425), (2) A certification of Project expenses, and (3) The necessary Project audit reports. b. Audit of Recipients. Except as the Federal Government determines otherwise in writing, the Recipient acknowledges and agrees that: (1) Audits Required. It will obtain the following audits: (a) Annual "Single Audit ". Financial and compliance audits that comply with: 1 The Single Audit Act Amendments of 1996, 31 U.S.C. 7501 et seq., 2 49 C.F.R. § 18.26, if the Recipient is a State, Local, or Indian Tribal Government, 3 49 C.F.R. § 19.26, if the Recipient is an institution of higher learning, or a private nonprofit entity, 4 OMB Circular A -133, Revised, "Audits of States, Local Governments, and Non - Profit Organizations," 5 The latest OMB A -133 Compliance Supplement for U.S. DOT Supplement, and any revision to that OMB Compliance Supplement, and (b) Other Audits. Other audits the Federal Government may require. (2) Auditing Standards. Conform to U.S. Government Accountability Office (U.S. GAO) "Government Auditing Standards" in conducting audits. (3) Costs of Audits. That audit costs for Project administration and management are allowable as authorized by Federal Cost Principles in: (a) U.S. OMB, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 C.F.R. Part 225, (b) U.S. OMB, "Cost Principles for Educational Institutions (OMB Circular A -21)," 2 C.F.R. Part 220, (c) U.S. OMB, "Cost Principles for Non - profit Organizations (OMB Circular A -122), 2 C.F.R. Part 230, or FTA Master Agreement MA(18), 10 -1 -2011 52 (d) The FAR, specifically 48 C.F.R. Chapter I, Subpart 31.2. c. Amounts Owed to the Federal Government. The Recipient agrees to return to the Federal Government: (1) Any excess Federal payments it receives for disallowed costs, (2) Any amounts it recovers from third parties or other sources, and (3) Any penalties and any interest required by Section 9.1 of this Master Agreement. d. Project Closeout. The Recipient agrees that Project closeout: (1) Occurs when FTA notifies the Recipient that the Project is closed, and either: (a) Approves the final Federal payment, or (b) Acknowledges receipt of the proper refund. (2) Does not alter its audit responsibilities, and (3) Does not invalidate any continuing requirements of Federal law, regulations, or directives, the underlying Agreement, this Master Agreement, or FTA's final notice or acknowledgment of Project closeout. Section 11. Right of the Federal Government to Terminate. a. Justification. After receiving notice, the Recipient agrees that the Federal Government may suspend, suspend then terminate, or terminate all or any part of the Federal funding to be provided for the Project for the following reasons: (1) The Recipient has violated the underlying Agreement or this Master Agreement, especially if that violation would endanger substantial performance of the Project, or (2) Any failure to make reasonable progress on the Project, or (3) The Federal Government determines that the continuation of Federal funding for the Project does not adequately serve the purposes of the law authorizing the Project. b. Financial Implications. The Recipient agrees that: (1) In general, termination of Federal funding for the Project will not invalidate obligations properly incurred before the termination date to the extent those obligations cannot be canceled. FTA Master Agreement MA(18), 10 -1 -2011 53 (2) The Federal Government may require the Recipient to refund the entire amount of Federal funds provided for the Project or any lesser amount as the Federal Government may determine, if the Federal Government determines that the Recipient has willfully misused Federal funds by: (a) Failing to make adequate progress, (b) Failing to make appropriate use of Project property, or (c) Failing to comply with the underlying Agreement or this Master Agreement. c, Expiration of Project Time Period. Except in the case of Full Funding Grant Agreements, expiration of any Project time period established for the Project does not, by itself, constitute an expiration or termination of the underlying Agreement. Section 12. Civil Rights. The Recipient understands and agrees that it must comply with Federal civil rights laws and regulations, and follow Federal directives, except as the Federal Government determines otherwise in writing. These include, but are not limited to, the following: a. Nondiscrimination in Federal Public Transportation Programs. The Recipient agrees to, and assures that each third party participant will, comply with Federal transit law, specifically 49 U.S.C. § 5332, which prohibits the following: (1) Types of Discrimination. (a) Exclusion from participation, (b) Denial of program benefits, or (c) Discrimination, including discrimination in employment or business opportunity, (2) Basis for Discrimination: (a) Race, (b) Color, (c) Creed, (d) National origin, FTA Master Agreement MA(18), 10 -1 -2011 54 (e) Sex, or (f) Age. b. Nondiscrimination — Title VI of the Civil Rights Act. The Recipient agrees to, and assures that each third party participant will, prohibit discrimination on the basis of race, color, or national origin and: (1) Comply with: (a) Title VI of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000d et seq., (b) U.S. DOT regulations, "Nondiscrimination in Federally- Assisted Programs of the Department of Transportation — Effectuation of Title VI of the Civil Rights Act," 49 C.F.R. Part 21, and (c) Federal transit law, specifically 49 U.S.C. § 5332, as stated in Section 12.a, and (2) Follow FTA Circular 4702.1A, "Title VI and Title VI- Dependent Guidelines for Federal Transit Administration Recipients," and any other applicable Federal directives that may be issued, except as FTA determines otherwise in writing. c. Equal Employment Opportunity. (1) Federal Requirements and Directives. The Recipient agrees to, and assures that each third party participant will, prohibit discrimination on the basis of race, color, religion, sex, or national origin, and: (a) Comply with Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq. (b) Follow and facilitate compliance with Executive Order No. 11246, "Equal Employment Opportunity," as amended by Executive Order No. 11375, "Amending Executive Order No. 11246 Relating to Equal Employment Opportunity," 42 U.S.C. § 2000e note, (c) Comply with Federal transit law, specifically 49 U.S.C. § 5332, as stated in Section 12.a, and (d) Comply with other applicable EEO laws and regulations, as provided in directives, including laws and regulations prohibiting discrimination on the basis of disability, except as the Federal Government determines otherwise in writing. (2) General. Recipient agrees to (a) Ensure that applicants for employment and employees are treated during FTA Master Agreement MA(18), 10 -1 -2011 55 employment without discrimination on the basis of their: 1 Race, 2 Color, 3 Creed, 4 Sex, 5 Disability, 6 Age, or 7 National origin. (b) Take affirmative action that includes, but is not limited to: 1 Recruitment advertising, 2 Recruitment, 3 Employment, 4 Rates of pay, 5 Other forms of compensation, 6 Selection for training, including apprenticeship, 7 Upgrading, 8 Transfers, 9 Demotions, 10 Layoffs, and 11 Terminations. (3) Equal Employment Opportunity Requirements for Construction Activities. In addition to the foregoing, when undertaking "construction" as recognized by the U.S. Department of Labor (U.S. DOL), the Recipient agrees to comply, and assures the compliance of each third party participant, with: FTA Master Agreement MA(18), 10 -1 -2011 56 (a) U.S. DOL regulations, "Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor," 41 C.F.R. Parts 60 et seq., (b) Executive Order No. 11246, "Equal Employment Opportunity," as amended by Executive Order No. 11375, "Amending Executive Order No. 11246 Relating to Equal Employment Opportunity," 42 U.S.C. § 2000e note, and d. Disadvantaged Business Enterprise. To the extent authorized by Federal law, the Recipient agrees to facilitate, and assures that each third party participant will facilitate, participation by Disadvantaged Business Enterprises (DBEs) in the Project as follows: (1) Requirements. The Recipient agrees to comply with: (a) Section 1101(b) of SAFETEA -LU, 23 U.S.C. § 101 note, as amended by Section 451 of the Hiring Incentives to Restore Employment (HIRE) Act, Pub. L. 111 -147, March 18, 2010, 23 U.S.C. § 101 note, (b) U.S. DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 C.F.R. Part 26 [U.S. DOT published final rule, "Disadvantaged Business Enterprise: Program Improvements, " 49 C.F.R. Part 26, on January 28, 2011 (see 76 Fed. Reg. 5083)], and (c) Federal transit law, specifically 49 U.S.C. § 5332, as stated in Section 12.a. (2) Assurance. The Recipient assures that it shall not discriminate on the basis of race, color, sex, or national origin in the award and performance of any third party agreement supported with Federal funds derived from U.S. DOT in the administration of its DBE program and shall comply with the requirements of 49 C.F.R. Part 26. The Recipient agrees to take all necessary and reasonable steps provided in 49 C.F.R. Part 26 to ensure nondiscrimination in the award and administration of all third party agreements supported with Federal funds derived from U.S. DOT. If U.S. DOT has approved the Recipient's DBE program, that DBE program is incorporated by reference and made part of the underlying Agreement. The Recipient agrees that it has a legal obligation to implement its approved DBE program, and that its failure to carry out its DBE program shall be treated as a violation of the underlying Agreement and this Master Agreement. If U.S. DOT finds and notifies the Recipient that it has not implemented its approved DBE program, U.S. DOT may impose sanctions provided by the underlying Agreement, 49 C.F.R. Part 26, and, in certain cases, seek enforcement under 18 U.S.C. § 1001, or the Program Fraud Civil Remedies Act, 31 U.S.C. 3801 et seq., or both. e. Nondiscrimination on the Basis of Sex. The Recipient agrees to comply with the following Federal prohibitions against discrimination on the basis of sex: (1) Title IX of the Education Amendments of 1972, as amended, 20 U.S.C. 1681 et seq., (2) U.S. DOT regulations, "Nondiscrimination on the Basis of Sex in Education Programs FTA Master Agreement MA(18), 10 -1 -2011 57 or Activities Receiving Federal Financial Assistance," 49 C.F.R. Part 25, and (3) Federal transit law, specifically 49 U.S.C. § 5332, as stated in Section 12.a. f. Nondiscrimination on the Basis of Age. The Recipient agrees to comply with the following Federal prohibitions against discrimination on the basis of age: (1) The Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621 — 634, which prohibits discrimination on the basis of age, (2) U.S. Equal Employment Opportunity Commission (U.S. EEOC) regulations, "Age Discrimination in Employment Act," 29 C.F.R. Part 1625, which implements the ADEA, (3) The Age Discrimination Act of 1975, as amended, 42 U.S.C. 6101 et seq., which prohibits discrimination against individuals on the basis of age in the administration of programs or activities receiving Federal funds, (4) U.S. Health and Human Services regulations, "Nondiscrimination on the Basis of Age in Programs or Activities Receiving Federal Financial Assistance," 45 C.F.R. Part 90, which implements the Age Discrimination Act of 1975, and (5) Federal transit law, specifically 49 U.S.C. § 5332, as stated in Section 12.a. g. Accessibility. The Recipient agrees to comply with Federal prohibitions against discrimination against elderly individuals or individuals with disabilities of: (1) The following Federal laws: (a) 49 U.S.C. § 5301(d), which acknowledges that elderly individuals and individuals with disabilities have the same right as others to use public transportation, and that special efforts must be made to plan and assure that they do have similar access to public transportation, (b) Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794, which prohibits discrimination on the basis of disability in the administration of federally funded programs or activities, (c) The Americans with Disabilities Act of 1990 (ADA), as amended, 42 U.S.C. 12101 et seq., which requires that accessible facilities and services be made available to individuals with disabilities, (d) The Architectural Barriers Act of 1968, as amended, 42 U.S.C. 4151 et seq., which requires that buildings and public accommodations be accessible to individuals with disabilities, (e) Other applicable laws and amendments pertaining to access for elderly individuals or individuals with disabilities, FTA Master Agreement MA(18), 10 -1 -2011 58 (2) The following Federal regulations: (a) U.S. DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 C.F.R. Part 37, (b) U.S. DOT regulations, "Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance," 49 C.F.R. Part 27, (c) Joint U.S. Architectural and Transportation Barriers Compliance Board (U.S. ATBCB) and U.S. DOT regulations, "Americans With Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 C.F.R. Part 1192 and 49 C.F.R. Part 38, (d) U.S. DOJ regulations, "Nondiscrimination on the Basis of Disability in State and Local Government Services," 28 C.F.R. Part 35, (e) U.S. DOJ regulations, "Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities," 28 C.F.R. Part 36, (f) U.S. General Services Administration (U.S. GSA) regulations, "Accommodations for the Physically Handicapped," 41 C.F.R. Subpart 101 -19, (g) U.S. EEOC, "Regulations to Implement the Equal Employment Provisions of the Americans with Disabilities Act," 29 C.F.R. Part 1630, (h) U.S. Federal Communications Commission regulations, "Telecommunications Relay Services and Related Customer Premises Equipment for the Hearing and Speech Disabled," 47 C.F.R. Part 64, Subpart F, (i) U.S. ATBCB regulations, "Electronic and Information Technology Accessibility Standards," 36 C.F.R. Part 1194, (j) FTA regulations, "Transportation for Elderly and Handicapped Persons," 49 C.F.R. Part 609, and (3) Other applicable Federal civil rights and nondiscrimination directives. h. Drug or Alcohol Abuse - Confidentiality and Other Civil Rights Protections. The Recipient agrees to comply with the confidentiality and civil rights protections of: (1) The Drug Abuse Office and Treatment Act of 1972, as amended, 21 U.S.C. 1101 et seq., (2) The Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment and Rehabilitation Act of 1970, as amended, 42 U.S.C. 4541 et seq., and FTA Master Agreement MA(18), 10 -1 -2011 59 (3) The Public Health Service Act of 1912, as amended, 42 U.S.C. 290dd — 290dd -2. i. Access to Services for People with Limited English Proficiency. Except as the Federal Government determines otherwise in writing, the Recipient agrees to promote accessibility of public transportation services to people whose understanding of English is limited by: (1) Facilitating compliance with and following Executive Order No. 13166, "Improving Access to Services for Persons with Limited English Proficiency," 42 U.S.C. § 2000d -1 note, and (2) Following U.S. DOT Notice, "DOT Policy Guidance Concerning Recipients' Responsibilities to Limited English Proficiency (LEP) Persons," 70 Fed. Reg. 74087, December 14, 2005, except as the Federal Government determines otherwise in writing. j. Environmental Justice. Except as the Federal Government determines otherwise in writing, the Recipient agrees to promote environmental justice by: (1) Following and facilitating compliance with Executive Order No. 12898, "Federal Actions to Address Environmental Justice in Minority Populations and Low - Income Populations," 42 U.S.C. § 4321 note, and (2) Following DOT Order 5620.3, "Department of Transportation Actions To Address Environmental Justice in Minority Populations and Low - Income Populations," 62 Fed. Reg. 18377, April 15, 1997. k. Other Nondiscrimination Laws. The Recipient agrees to comply with other applicable Federal nondiscrimination laws and regulations, and follow Federal directives prohibiting discrimination, except as the Federal Government determines otherwise in writing. Section 13. Planning and Private Enterprise. a. General. The Recipient agrees to implement the Project consistent with plans that comply with the following Federal planning and private enterprise requirements of: (1) Federal transit law, specifically 49 U.S.C. §§ 5303, 5304, 5306, and 5323(a)(1), (2) Joint FHWA and FTA regulations, "Statewide Transportation Planning; Metropolitan Transportation Planning," 23 C.F.R. Part 450 and 49 C.F.R. Part 613 and any amendments to these regulations, and (3) FTA regulations, "Major Capital Investment Projects," 49 C.F.R. Part 611, (a) To the extent that those regulations are consistent with the SAFETEA -LU amendments to the public transportation planning and private enterprise laws, FTA Master Agreement MA(18), 10 -1 -2011 60 (b) Any amendments to those regulations when issued, and (c) The latest FTA "Guidance on New Starts /Small Starts Policies and Procedures." b. Governmental and Private Nonprofit Providers of Nonemergency Transportation. Federal transit law, specifically 49 U.S.C. § 5323(k): (1) Assures the following entities opportunities to become involved in FTA projects: (a) Federally funded governmental agencies that: 1 Receive funds for nonemergency transportation, but 2 Do not receive funds for nonemergency transportation from U.S. DOT, and (b) Federally funded nonprofit organizations that: 1 Receive funds for nonemergency transportation, but 2 Do not receive funds for nonemergency transportation from U.S. DOT, and (2) Provides those entities described in the preceding Section 13(b)(1) of this Master Agreement, as feasible, the opportunity to: (a) Participate and coordinate with FTA recipients in the design and delivery of FTA funded transportation services, and (b) Be included in planning FTA funded transportation services. c. Infrastructure Investment. During the implementation of the Project, the Recipient agrees to consider the infrastructure recommendations of: (1) Executive Order No. 12803, "Infrastructure Privatization," 31 U.S.C. § 501 note, and (2) Executive Order No. 12893, "Principles for Federal Infrastructure Investments," 31 U.S.C. § 501 note. Section 14. Preference for United States Products and Services. Except as the Federal Government determines otherwise in writing, the Recipient agrees to comply with the following U.S. domestic preference requirements and follow applicable Federal directives regarding: FTA Master Agreement MA(18), 10 -1 -2011 61 a. Buy America. Acquisition requirements of: (1) 49 U.S.C. § 5323(j), and (2) FTA regulations, `Buy America Requirements," 49 C.F.R. Part 661. b. Cargo Preference - Use of United States -Flag Vessels. Shipping requirements of: (1) 46 U.S.C. § 55305, and (2) U.S. Maritime Administration regulations, "Cargo Preference - U.S. -Flag Vessels," 46 C.F.R. Part 381. c. Fly America. Air transportation requirements of: (1) Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974, as amended, 49 U.S.C. § 40118, and (2) U.S. GSA regulations, "Use of United States Flag Air Carriers," 41 C.F.R. §§ 301- 10.131 — 301 - 10.143. Section 15. Procurement. The Recipient agrees not to use FTA funds for third party procurements unless they comply with Federal requirements. Therefore: a. Federal Laws, Regulations, and Guidance. The Recipient agrees: (1) To comply with the requirements of 49 U.S.C. chapter 53 and other applicable Federal laws and regulations now in effect or later that affect its third party procurements, (2) To comply with U.S. DOT third party procurement regulations, specifically 49 C.F.R. § 18.36 or 49 C.F.R. §§ 19.40 — 19.48, and other applicable Federal regulations that affect its third party procurements as may be later amended, (3) To follow the most recent edition and any revisions of FTA Circular 4220.1F, "Third Party Contracting Guidance," except as FTA determines otherwise in writing, and (4) That although the FTA "Best Practices Procurement Manual" provides additional third party contracting guidance, the Manual may lack the necessary information for compliance with certain Federal requirements that apply to specific third party contracts at this time. b. Full and Open Competition. The Recipient agrees to conduct all its third party procurements using full and open competition as provided in 49 U.S.C. § 5325(a), and as determined by FTA. FTA Master Agreement MA(18), 10 -1 -2011 62 c. Exclusionary or Discriminatory Specifications. The Recipient agrees not to use any FTA Project funds for any procurement based on exclusionary or discriminatory specifications, as provided by 49 U.S.C. § 5325(h), unless authorized by other applicable Federal law or regulations. d. Geographic Restrictions. The Recipient agrees not to use any State or local geographic preference, except: (1) A preference expressly mandated by Federal law, or (2) A preference permitted by FTA. For example, in procuring architectural engineering, or related services, the contractor's geographic location may be a selection criterion, provided that a sufficient number of qualified firms are eligible to compete. e. In -State Bus Dealer Restrictions. The Recipient agrees that any State law requiring buses to be purchased through in -State dealers will not apply to purchases of vehicles funded by 49 U.S.C. chapter 53, as provided by 49 U.S.C. § 5325(i). f. Project Labor Agreements. As a condition of contract award, the Recipient may require a third party contractor or subcontractor to have an affiliation with a labor organization, such as a project labor agreement, consistent with Executive Order No. 13502, "Use of Project Labor Agreements [PLA] for Federal Construction Projects," February 6, 2009, 41 U.S.C. ch. 39, Refs. & Annos., except as the Federal Government determines otherwise in writing. g. Federal Supply Schedules. A Recipient that is a State, local government, or nonprofit entity, agrees that it may not use Federal Supply Schedules to acquire federally assisted property or services, except as permitted by Federal laws or regulations, U.S. GSA, U.S. DOT, FTA, or as provided in Federal directives or determinations. h. Force Account. The Recipient agrees that FTA may determine the amount of Federal funds it may use for its force account costs. i. FTA Technical Review. The Recipient agrees that FTA may review and approve its technical specifications and requirements as FTA believes necessary to ensure proper Project administration. j. Relationship of Project Approval to Third Party Contract Approval. The Recipient agrees that FTA's award of Federal funds for the Project does not, by itself, constitute pre - approval of any non - competitive third party contract associated with the Project, except as FTA determines otherwise in writing. k. Preference for Recycled Products. Except as the Federal Government determines otherwise in writing, the Recipient agrees to provide a competitive preference for products and services that conserve natural resources, protect the environment, and are energy efficient by: FTA Master Agreement MA(18), 10 -1 -2011 63 (1) Complying and facilitating compliance with Section 6002 of the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6962, and (2) Complying with U.S. Environmental Protection Agency (U.S. EPA), "Comprehensive Procurement Guideline for Products Containing Recovered Materials," 40 C.F.R. Part 247. 1. Clean Air and Clean Water. The Recipient agrees to include in each third party agreement exceeding $100,000, adequate provisions to ensure that each third party participant will agree to: (1) Report the use of facilities placed on or likely to be placed on the U.S. EPA "List of Violating Facilities," (2) Refrain from using any violating facilities, (3) Report violations to FTA and the Regional U.S. EPA Office, and (4) Comply with inspection and other applicable requirements of: (a) Section 306 of the Clean Air Act, as amended, 42 U.S.C. § 7606, and other applicable provisions of the Clean Air Act, as amended, 42 U.S.C. §§ 7401 — 7671q, and (b) Section 508 of the Clean Water Act, as amended, 33 U.S.C. § 1368, and other applicable requirements of the Clean Water Act, as amended, 33 U.S.C. §§ 1251 — 1377. m. National Intelligent Transportation Systems Architecture and Standards. The Recipient agrees to: (1) Conform to the National Intelligent Transportation Systems (ITS) Architecture and Standards as required by SAFETEA -LU § 5307(c), 23 U.S.C. § 512 note, and (2) Follow FTA Notice, "FTA National ITS Architecture Policy on Transit Projects," 66 Fed. Reg. 1455, January 8, 2001, and any other applicable implementing Federal directives, except as the Federal Government determines otherwise in writing. n. Rolling Stock. The Recipient agrees to comply, and assures its subrecipients will comply, with the following procurement requirements for FTA funded rolling stock: (1) Method of Acquisition. Each third party contract award for rolling stock will be based on any of the following factors in compliance with 49 U.S.C. § 5325(0: (a) Initial capital costs, (b) Performance, FTA Master Agreement MA(18), 10 -1 -2011 64 (c) Standardization, (d) Life cycle costs, (e) Other relevant factors, or (f) Another competitive procurement process, (2) Multi -year Options. As required by 49 U.S.C. § 5325(e)(1), a multi -year third party contract to purchase additional rolling stock and replacement parts with options supported with funds authorized by 49 U.S.C. chapter 53 may not exceed five (5) years after the date of the original contract, (3) Preaward and Post Delivery Requirements. It will complete the pre -award and post - delivery reviews required by: (a) Federal transit law, specifically 49 U.S.C. § 5323(m), and (b) FTA regulations, "Pre -Award and Post - Delivery Audits of Rolling Stock Purchases," 49 C.F.R. Part 663, and (4) Bus Testing. Complete the bus testing required by: (a) Federal transit law, specifically 49 U.S.C. § 5318(e), and (b) FTA regulations, "Bus Testing," 49 C.F.R. Part 665. o. Bonding. The Recipient agrees to comply with the following bonding requirements and restrictions as required by Federal regulations and guidance, except to the extent FTA determines otherwise in writing: (1) Construction. As provided by Federal regulations and modified by FTA directives, it will provide the following bonds for construction activities: (a) Bid guarantee, (b) Contract performance, and (c) Payment bonds. (2) Activities Not Involving Construction. For project activities not involving construction: (a) It will not impose excessive bonding, and (b) It will follow applicable FTA guidance. FTA Master Agreement MA(18), 10 -1 -2011 65 p. Architectural Engineering or Related Services. When procuring architectural engineering or related services funded under 49 U.S.C. chapter 53 or under any other law requiring the Project to be administered under 49 U.S.C. chapter 53, the Recipient agrees to comply, and assures its subrecipients will comply, with the following requirements or 49 U.S.C. § 5325(b): (1) It and its subcontractors at any tier: (a) Will negotiate for these services in the same manner as a contract for those services is negotiated under chapter 11 of Title 40, United States Code, or (b) Will comply with an equivalent State qualifications -based requirement for contracting for those services, if the State has adopted that type of law before August 10, 2005. (2) Upon awarding a contract for architectural engineering or related services, it and its subcontractors at any tier will: (a) Will use the FAR cost principles of 48 C.F.R. Part 31 when carrying out and auditing its third party contracts or subcontracts. (b) Will accept the indirect cost rates established by a cognizant Federal or State government agency consistent with FAR requirements that apply for one -year accounting periods, if those rates are not currently under dispute. (c) After the indirect cost rates are accepted by a cognizant Federal or State government agency, will use those indirect cost rates for contract or subcontract estimation, negotiation, administration, reporting, and payment without limitation by administrative or de facto ceilings. (d) As required by 49 U.S.C. § 5325(b)(2)(D), together with the members of any group of entities sharing cost or rate data described in the preceding Section 15.p(2)(c) of this Master Agreement, do the following: 1 Will notify any affected firm before requesting or using that data, 2 Will maintain the confidentiality of that data, and assure that the data is not accessible or provided to others, and 3 Will not disclose that data under any circumstances if prohibited by 49 U.S.C. § 5325(b) or other applicable law. q. Design -Build Projects. As provided in 49 U.S.C. § 5325(d)(2), the Recipient may use a design -build procurement to carry out its Project after it has complied with Federal laws, and regulations, as provided in Federal directives, except as the Federal Government determines otherwise in writing. FTA Master Agreement MA(18), 10 -1 -2011 66 r. Award to Other than the Lowest Bidder. Except as FTA determines otherwise in writing, the Recipient may award a third party contract to other than the lowest bidder, as provided in 49 U.S.C. § 5325(c), if the award furthers an objective (for example, improved long -term operating efficiency and lower long -term costs) consistent with the purposes of 49 U.S.C. chapter 53, and any implementing Federal regulations or directives that FTA may issue. s. Award to Responsible Contractors. The Recipient agrees that: (1) Capability. It will award third party contracts only to contractors able to carry out the procurement successfully, as provided by 49 U.S.C. § 5325(j), and (2) Criteria. Before awarding a third party contract, it will consider the proposed contractor' s: (a) Integrity, (b) Compliance with public policy, (c) Past performance, including any performance reported in Contractor Performance Assessment Reports required by 49 U.S.C. § 5309(1)(2), and (d) Financial and technical resources. t. Access to Third Party Contract Records. The Recipient agrees to require, and assures that its subrecipients will require, their third party contractors and subcontractors at each tier, to provide: (1) The U.S. Secretary of Transportation and the Comptroller General of the United States, the State, or their duly authorized representatives, access to all third party contract records (at any tier) as required by 49 U.S.C. § 5325(g), and (2) Sufficient access to all third party contract records (at any tier) as needed for compliance with Federal laws and regulations or to assure proper Project management as determined by FTA. u. Electronic and Information Technology. The Recipient agrees that reports or information it provides to or on behalf of the Federal Government will use electronic or information technology that complies with the accessibility requirements of: (1) Section 508 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794d, and (2) U.S. ATBCB regulations, "Electronic and Information Technology Accessibility Standards," 36 C.F.R. Part 1194. FTA Master Agreement MA(18), 10 -1 -2011 67 Section 16. Leases. The Recipient agrees that: a. Capital Leases. It will comply with FTA regulations, "Capital Leases," 49 C.F.R. Part 639. b. Leases Involving Certificates of Participation. It will obtain FTA concurrence before entering into any FTA assisted leasing arrangement involving certificates of participation. Section 17. Patent Rights. a. General. The Recipient agrees that: (1) Depending on the nature of the Project, the Federal Government may acquire rights when the Recipient or third party participant produces a patented or patentable: (a) Invention, (b) Improvement, or (c) Discovery. (2) The Federal Government's rights arise when the patent or patentable information is: (a) Conceived under the Project, or (b) Reduced to practice under the Project. (3) When a patent is issued or patented information becomes available as described in the preceding Section 17.a(1) of this Master Agreement, the Recipient agrees to: (a) Notify FTA immediately, and (b) Provide a detailed report satisfactory to FTA. b. Federal Rights. The Recipient agrees that: (1) Its rights and responsibilities, and those of each third party participant, in that invention, improvement, or discovery will be determined as provided by Federal laws, regulations, and directives, including any waiver thereof. (2) Unless the Federal Government determines otherwise in writing, irrespective of its status or that of any third party participant as a large business, small business, State government, State instrumentality, local government, Indian tribe, nonprofit organization, institution of higher education, or individual, the Recipient agrees to transmit the Federal Government's patent rights to FTA as specified in: FTA Master Agreement MA(18), 10 -1 -2011 68 (a) 35 U.S.C. 200 et seq., and (b) U.S. Department of Commerce regulations, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements," 37 C.F.R. Part 401. c. License Fees and Royalties. As permitted by 49 C.F.R. Parts 18 and 19: (1) License fees and royalties for patents, patent applications, and inventions derived from Project are program income. (2) The Recipient has no obligation to the Federal Government with respect to those license fees or royalties, except: (a) For compliance with 35 U.S.C. 200 et seq., which applies to patent rights developed under a federally funded research -type project, and (b) As FTA determines otherwise in writing. Section 18. Rights in Data and Copyrights. a. Definition of "Subject Data ". As used in this Section 18 of this Master Agreement, "subject data" means recorded information that: (1) Copyright. Are copyrighted or not copyrighted, (2) Delivery. Are delivered or specified to be delivered by the underlying Agreement, and (3) Examples. Include, but are not limited to: (a) Computer software, (b) Standards, (c) Specifications, (d) Engineering drawings and associated lists, (e) Process sheets, (f) Manuals, (g) Technical reports, FTA Master Agreement MA(18), 10 -1 -2011 69 (h) Catalog item identifications, and (i) Related information. (4) Exceptions. "Subject data" do not include: (a) Financial reports, (b) Cost analyses, or (c) Other similar information used for Project administration. b. General. The following restrictions apply to all subject data first produced in the performance of the underlying Agreement: (1) Prohibitions. The Recipient may not: (a) Publish or reproduce subject data in whole or in part, or in any manner or form, or (b) Permit others to do so. (2) Exceptions. The prohibitions of the preceding Section 18.b(1) of this Master Agreement do not apply: (a) To publications or reproductions for the Recipient's own internal use, (b) To an institution of higher learning, (c) To the portion of data that the Federal Government has previously released or approved for release to the public, or (d) To the portion of data that has the Federal Government's prior written consent for release. c. Federal Rights in Data and Copyrights. The Recipient agrees as follows: (1) License Rights. The Recipient must provide the Federal Government a license to "subject data" that is: (a) Royalty -free, (b) Non - exclusive, and (c) Irrevocable. FTA Master Agreement MA(18), 10 -1 -2011 70 (2) Uses. The Federal Government's license must the permit it to: (a) Reproduce the subject data, (b) Publish the subject data, (c) Otherwise use the subject data, and (d) Permit others to use the subject data for Federal Government purposes. (3) Federal Government Purposes. As used in this Section 18 of this Master Agreement, "for Federal Government purposes," means that: (a) The Federal Government may use its license only for its own direct purposes, and (b) The Federal Government may not provide or otherwise extend to other parties, without the copyright owner's consent, its license to: 1 Any subject data developed and funded at any tier through the underlying Agreement, and 2 Any rights of copyright to which the Recipient or third party participant purchases ownership using Federal funds. d. Special Federal Rights in Data for Research, Development, Demonstration, and Special Studies Projects. In general, FTA's purpose in providing Federal funds for a research, development, demonstration, or special studies Project is to increase transportation knowledge, rather than limit the benefits of the Project to the Recipient and its third party participants. Therefore, the Recipient agrees that: (1) Publicly Available Report. When the Project is completed, it must provide a Project report that FTA may publish or make available for publication on the Internet. (2) Other Reports. It must provide other reports pertaining to the Project that FTA may request. (3) Availability of Subject Data. FTA may make available to any FTA Recipient or any of its third party participants at any tier of the Project, either FTA's copyright license to the subject data or a copy of the subject data, except as FTA determines otherwise in writing. (4) Identification of Information. It must identify clearly any specific confidential, privileged, or proprietary information submitted to FTA. FTA Master Agreement MA(18), 10 -1 -2011 71 (5) Incomplete Project. If the Project is not completed for any reason whatsoever, all data developed under the Project becomes "subject data" and must be delivered as the Federal Government may direct. (6) Exception. This Section 18.d does not apply to an adaptation of automatic data processing equipment or program that is both: (a) For the Recipient's use, and (b) Acquired with FTA capital program funding. e. License Fees and Royalties. As permitted by 49 C.F.R. Parts 18 and 19: (1) License fees and royalties for copyrighted material or trademarks derived from Project are program income. (2) The Recipient has no obligation to the Federal Government with respect to those license fees or royalties, except: (a) For compliance with 35 U.S.C. 200 et seq., which applies to patent rights developed under a federally funded research -type project, and (b) As FTA determines otherwise in writing. f Hold Harmless. Upon request by the Federal Government, the Recipient agrees that: (1) Violation by Recipient. Except as prohibited or otherwise limited by State law, it will indemnify, save, and hold harmless the Federal Government's officers, employees, and agents acting within the scope of their official duties, against any liability, including costs and expenses, (a) If it willfully or intentionally violates: 1 Any proprietary rights, 2 Copyrights, or 3 Right of privacy, (b) Occurring from any of the following uses of Project data: 1 Publication, 2 Translation, 3 Reproduction, FTA Master Agreement MA(18), 10 -1 -2011 72 4 Delivery, 5 Use, or 6 Disposition. (2) Violation by Federal Officers, Employees or Agents. The Recipient will not be required to indemnify the Federal Government for any liability described in the preceding Section 18.f(1) caused by the wrongful acts of Federal employees or agents. g. Restrictions on Access to Patent Rights. Nothing in Section 18 of this Master Agreement pertaining to rights in data either: (1) Implies a license to the Federal Government under any patent, or (2) May be construed to affect the scope of any license or other right otherwise granted to the Federal Government under any patent. h. Data Developed Without Federal Funding or Support. The Recipient understands and agrees that it may need to provide data developed without any Federal funding or support to FTA. (1) Protections. Sections 18.a, 18.b, 18.c, and 18.d of this Master Agreement do not apply to data developed without Federal funding, even though that data may have been used in connection with the Project. (2) Identification of Information. The Recipient understands and agrees that the Federal Government will not be able to protect data developed without Federal funding or support from unauthorized disclosure unless that data is clearly marked "Proprietary" or "Confidential." i. Requirements to Release Data. The Recipient understands and agrees that the Federal Government may be required to release Project data and information the Recipient submits to the Federal Government as required by: (1) The Freedom of Information Act, 5 U.S.C. § 552, (2) Another Federal law requiring access to Project records, (3) U.S. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations," specifically 49 C.F.R. § 19.36(d), or (4) Other Federal regulations requiring access to Project records. FTA Master Agreement MA(18), 10 -1 -2011 73 Section 19. Use of Real Property, Equipment, and Supplies. The Recipient understands and agrees that the Federal Government retains a Federal interest in all federally funded real property, equipment, and supplies (Project property) until, and to the extent, the Federal Government removes that Federal interest. Therefore: a. Use of Project Property. The Recipient agrees to maintain continuing control of the use of Project property satisfactory to FTA. (1) Use for Project Purposes. The Recipient agrees to use Project property for appropriate Project purposes (including joint development purposes as well as uses that provide program income to support public transportation): (a) For the duration of the useful life of that property, which may extend beyond the duration of the underlying Agreement, and (b) Consistent with other requirements FTA may impose. (2) Delay or Failure to Use Project Property. The Recipient agrees that the Federal Government may require it to return the entire amount of Federal funds spent on that property if, during its useful life, the Recipient has: (a) Unreasonably delayed using its Project property, or (b) Failed to use its Project property. (3) The Recipient further agrees to notify FTA immediately when: (a) It uses any Project property in a manner substantially different from: 1 The representations in its Application or other documents submitted in support of the underlying Agreement, or 2 The requirements of the underlying Agreement including this Master Agreement. or (b) It withdraws any Project property from Project use. b. General Federal Requirements. (1) State, Local Government, or Indian Tribal Government. A Recipient that is a State, local government, or Indian tribal government agrees that it will: (a) Comply with the property management standards of 49 C.F.R. §§ 18.31 — 18.34, FTA Master Agreement MA(18), 10 -1 -2011 74 (b) Comply with other Federal regulations as applicable, and (c) Follow Federal directives as applicable, except as FTA determines otherwise in writing. (2) Institution of Higher Education or Private Nonprofit Entity. A Recipient that is an institution of higher education or private nonprofit entity agrees that it will: (a) Comply with the property management standards of 49 C.F.R. §§ 19.30 — 19.37, (b) Comply with other Federal regulations as applicable, and (c) Follow Federal directives as applicable, except as FTA determines otherwise in writing. (3) For - Profit Entity. A Recipient that is a for - profit entity agrees that it will comply with property management standards satisfactory to FTA. (4) Reimbursement. The Recipient also agrees that it will comply with FTA's reimbursement requirements for premature dispositions of certain Project equipment, as set forth in this Section 19.g of this Master Agreement and FTA directives, except as FTA determines otherwise in writing. c. Maintenance. The Recipient agrees that it will maintain its Project property in good operating order, as required by Federal laws and regulations, and as provided in Federal directives, except as FTA determines otherwise in writing. d. Records. The Recipient agrees that: (1) Record - keeping. It will keep satisfactory records of its use of the Project property, and (2) Provide Information. Upon request, it will provide FTA the information required to assure compliance with this Section 19 of this Master Agreement. e. Incidental Use. The Recipient agrees that: (1) General. Any incidental use of Project property will not exceed that permitted under Federal laws or regulations and as provided in Federal directives. (2) Alternative Fueling Facilities. As provided in 49 U.S.C. § 5323(p), it may permit nontransit public entities and private entities to have incidental use of its federally funded alternative fueling facilities and equipment, only if: (a) The incidental use does not interfere with its public transportation operations or the Project, FTA Master Agreement MA(18), 10 -1 -2011 75 (b) It fully recaptures all costs related to the incidental use from the nontransit public entity or private entity, (c) It uses revenues it receives from the incidental use in excess of costs for planning, capital, and operating expenses that are incurred in providing public transportation, and (d) Private entities pay all applicable excise taxes on fuel. f. Encumbrance of Project Property. Absent the express written consent of the Federal Government, the Recipient agrees to preserve the Federal interest in and maintain satisfactory continuing control of its Project property as follows: (1) Written Transactions. The Recipient agrees that it will not execute any of the following documents if doing so would either adversely affect the Federal interest in or impair its continuing control of the use of its Project property: (a) Transfer of title, (b) Lease, (c) Lien, (d) Pledge, (e) Mortgage, (f) Encumbrance, (g) Third party contract, (h) Subagreement, (i) Grant anticipation note, (j) Alienation, (k) Innovative finance arrangement, such as: 1 A cross border lease, 2 A leveraged lease, or 3 Otherwise, or FTA Master Agreement MA(18), 10 -1 -2011 76 (1) Any other obligation affecting the Project property, (2) Oral Transactions. The Recipient agrees it will not obligate itself in any way through an oral statement to any third party with respect to its Project property that would either adversely affect the Federal interest in or impair its continuing control of the use of its Project property, and (3) Other Actions. The Recipient agrees that it will not take any other action that would either adversely affect the Federal interest in or impair its continuing control of the use of its Project property. g. Useful Life of Project Property. The Recipient agrees that: (1) Determining the Useful Life. FTA may establish the useful life of Project property, and (2) Required Use. It will use Project property continuously and appropriately throughout the useful life of that property. (3) Expired Useful Life. When the useful life of Project property has expired, it will comply with FTA's disposition requirements. (4) Premature Withdrawal. The Federal Government retains a Federal interest in the fair market value of Project property prematurely withdrawn from appropriate use. Therefore: (a) Notice. It will notify FTA immediately when any Project property is prematurely withdrawn from appropriate use, whether by: 1 Planned withdrawal, 2 Misuse, or 3 Casualty loss. (b) Amount of Federal Interest. The Federal interest in the Project property will be determined on the basis of the ratio of the Federal funds provided for the Project property to the actual cost of that property. (c) Financial Obligations to the Federal Government. Unless otherwise approved in writing by the Federal Government, the Recipient agrees that if its Project property is prematurely withdrawn from appropriate use: 1 It will return an amount equal to the remaining Federal interest in the withdrawn Project property to the Federal Government, or 2 With FTA approval, it will invest an amount equal to the remaining Federal FTA Master Agreement MA(18), 10 -1 -2011 77 interest in the withdrawn property in like -kind property that is eligible for funding within the scope of the Project that provided Federal funds for the property that has been prematurely withdrawn from use. h. Calculating the Value of Prematurely Withdrawn Project Property. The Recipient agrees that the fair market value of Project property prematurely withdrawn from Project use will be calculated as follows: (1) Equipment and Supplies. Except as FTA determines otherwise in writing: (a) The fair market value of Project equipment and supplies will be calculated by straight -line depreciation, based on the useful life of the equipment or supplies as established or approved by FTA. (b) The fair market value of the withdrawn Project equipment and supplies will be based on their value immediately before the occurrence prompting their withdrawal from appropriate use, 1 Irrespective of whether the Project property was withdrawn from use due to fire, casualty, or natural disaster, and 2 Irrespective of the extent of insurance coverage. (d) As authorized by 49 C.F.R. § 18.32(b), a State may use its own property disposition procedures, provided that those procedures comply with the laws of that State. (2) Real Property. The Recipient agrees that the fair market value of real property financed under the Project shall be determined by: (a) Competent appraisal based on an appropriate date approved by FTA, as provided by 49 C.F.R. Part 24, (b) Straight line depreciation of improvements to the real property coupled with the value of the land as determined by FTA on the basis of appraisal, or (c) Other applicable Federal law or regulations. (3) Exceptional Circumstances. The Recipient agrees as follows: (a) The Federal Government may require another method to be used to determine the fair market value of Project property withdrawn from service. (b) In unusual circumstances, the Recipient may request that another reasonable valuation method be used including, but not limited to: FTA Master Agreement MA(18), 10 -1 -2011 78 1 Accelerated depreciation, 2 Comparable sales, or 3 Established market values. (c) In determining whether to approve such a request, the Federal Government may consider any: 1 Action the Recipient took, 2 Omission the Recipient made, or 3 Unfortunate occurrence the Recipient suffered. i. Insurance Proceeds. The Recipient agrees to use any insurance proceeds it receives for the damaged or destroyed Project property as follows: (1) Replacement. It may apply those insurance proceeds to the cost of replacing the damaged or destroyed Project property, or (2) Return to the Federal Government. It may return to the Federal Government an amount equal to the remaining Federal interest in the damaged or destroyed Project property. j. Transportation - Hazardous Materials. When transporting any hazardous materials, the Recipient agrees to comply with U.S. Pipeline and Hazardous Materials Safety Administration regulations, "Shippers - General Requirements for Shipments and Packagings," 49 C.F.R. Part 173. k. Misused or Damaged Project Property. If any damage to Project property results from abuse or misuse occurring with the Recipient's knowledge and consent, the Recipient agrees that: (1) Restore. It will restore the damaged property to its original condition, or (2) Refund. It will refund the value of the Federal interest in that property, as the Federal Government may require. 1. Disposition of Project Property. The Recipient understands and agrees as follows: (1) Methods. With prior FTA approval, the Recipient may dispose of Project property in the following ways and use the proceeds to reduce the gross project cost of other eligible capital public transportation projects as permitted by 49 U.S.C. § 5334(h)(4). (a) Lease. Except as the Federal Government has determined otherwise in writing, if it leases Project property to another party, it will: FTA Master Agreement MA(18), 10 -1 -2011 79 1 Use a written lease or another similar document to: a Retain ownership of the leased property, b Assure that the lessee will use the property appropriately, and 2 Provide a copy of the lease and any relevant documents to FTA upon request. (b) Transfer. 1 Recipient Request. It may transfer any Project property funded under 49 U.S.C. chapter 53 to a local governmental authority provided if: a The Project property will be used for a public purpose, b The Federal Transit Administrator approves the transfer, and c The transfer conforms with 49 U.S.C. §§ 5334(h)(1) — 5334(h)(3). 2 Federal Government Direction. The Recipient agrees that the Federal Government may require it to transfer title to any federally funded Project property, as provided by 49 C.F.R. Parts 18 or 19. (c) Sale. If it sells Project property, the Recipient agrees to use the sales procedures in 49 C.F.R. Part 18 or Part 19. (2) Use of Proceeds. As permitted by 49 U.S.C. § 5334(h)(4), the Recipient may use the proceeds to reduce the gross project cost of other eligible capital public transportation projects. m. Responsibilities After Project Closeout. Except as the Federal Government determines otherwise in writing, the Recipient agrees that Project closeout will not change the Recipient's Project property management responsibilities provided in: (1) Federal laws, regulations, and directives effective now or at a later date, and (2) This Section 19 of this Master Agreement. Section 20. Insurance. In addition to other insurance requirements that may apply, the Recipient agrees that: a. Minimum Requirements. At a minimum, it will comply with the insurance requirements normally imposed by its State and local laws, regulations, and ordinances, except as the Federal FTA Master Agreement MA(18), 10 -1 -2011 80 Government determines otherwise in writing. b. Flood Hazards. It will comply with the flood insurance purchase provisions of section 102(a) of the Flood Disaster Protection Act of 1973, as amended, 42 U.S.C. § 4012a(a), with respect to any Project activity involving: (1) Construction, or (2) An acquisition having an insurable cost of $10,000 or more. Section 21. Relocation. The Recipient agrees to provide fair and equitable treatment to displaced people and businesses resulting from any interest in real property acquired for the Project, irrespective of whether Federal funding is used to pay the cost of that real property interest. The Recipient agrees that: a. Relocation Protections. When people or businesses must be relocated for Project purposes, it will comply with: (1) Federal transit law, specifically 49 U.S.C. § 5324(a), (2) The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. 4601 et seq., and (3) U.S. DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs," 49 C.F.R. Part 24. b. Nondiscrimination in Housing. When it must provide housing to comply with Federal relocation requirements for individuals, it will: (1) Comply with Title VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. 3601 et seq., and (2) Facilitate and follow Executive Order No. 12892, "Leadership and Coordination of Fair Housing in Federal Programs: Affirmatively Furthering Fair Housing," 42 U.S.C. § 3608 note, except as the Federal Government determines otherwise in writing. c. Prohibition Against the Use of Lead -Based Paint. If it constructs or rehabilitates residential structures on behalf of people displaced by the Project, it will not use lead -based paint, and will comply with: (1) Section 401(b) of the Lead -Based Paint Poisoning Prevention Act, 42 U.S.C. § 4831(b), and FTA Master Agreement MA(18), 10 -1 -2011 81 (2) U.S. Housing and Urban Development regulations, "Lead -based Paint Poisoning Prevention in Certain Residential Structures," 24 C.F.R. Part 35. Section 22. Real Property. The Recipient agrees to provide fair and equitable treatment to persons whose real property or interests in real property is acquired for the Project resulting from any interest in real property acquired for the Project. The Recipient agrees that: a. Land Acquisition. Irrespective of Federal participation in the cost of real property acquired for the Project, it will comply with: (1) Federal transit law, specifically 49 U.S.C. § 5324(a), (2) The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. 4601 et seq., and (3) U.S. DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs," 49 C.F.R. Part 24. b. Covenant Assuring Nondiscrimination. It will include a covenant in the title of the real property acquired for the Project to assure nondiscrimination during the useful life of the Project. c. Recording Title to Real Property. To the extent required by FTA, it will record the Federal interest in title to real property used in connection with the Project. d. FTA Approval of Changes in Real Property Ownership. It will not dispose of, modify the use of, or change the real property title or any other interests in the site and facilities used in the Project without permission and instructions from FTA. Section 23. Construction. Except as the Federal Government determines otherwise in writing, the Recipient agrees that: a. Drafting, Review, and Approval of Construction Plans and Specifications. It will comply with FTA recommendations and determinations pertaining to the drafting, review, and approval of its construction plans and specifications. b. Supervision of Construction. It will maintain competent and adequate engineering supervision at the construction site of the Project to ensure that the completed work conforms to the approved plans and specifications. c. Construction Reports. It will provide progress reports, information, and other data required FTA Master Agreement MA(18), 10 -1 -2011 82 by FTA or the State in which the construction takes place. d. Project Management for Major Capital Projects. The Recipient agrees that: (1) It will comply with FTA regulations, "Project Management Oversight," 49 C.F.R. Part 633, and any amendments to these regulations, and (2) It will follow the most recent edition of FTA Circular 5800.1, "Safety and Security Management Guidance for Major Capital Projects" except as FTA determines otherwise in writing. e. Seismic Safety. The Recipient agrees that: (1) It will comply with: (a) The Earthquake Hazards Reduction Act of 1977, as amended, 42 U.S.C. 7701 et seq., (b) U.S. DOT regulations, "Seismic Safety," 49 C.F.R. Part 41, specifically, 49 C.F.R. § 41.117, and (2) Except as the Federal Government determines otherwise in writing, it will facilitate and follow Executive Order No. 12699, "Seismic Safety of Federal and Federally- Assisted or Regulated New Building Construction," 42 U.S.C. § 7704 note. Section 24. Employee Protections. a. Construction Activities. The Recipient agrees to comply, and assures that each third party participant will comply, with the following Federal laws and regulations providing protections for construction employees involved in Project activities: (1) Prevailing Wage Requirements. (a) FTA's Davis -Bacon Related Act, specifically 49 U.S.C. § 5333(a), (b) The Davis -Bacon Act, 40 U.S.C. 3141 et seq., and (c) U.S. DOL regulations, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 C.F.R. Part 5, (2) Wage and Hour Requirements. FTA Master Agreement MA(18), 10 -1 -2011 83 (a) Section 102 of the Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C. §§ 3702, and other relevant parts of that Act, 40 U.S.C. 3701 et seq., and (b) U.S. DOL regulations, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 C.F.R. Part 5, (3) "Anti- Kickback" Prohibitions. (a) Section 1 of the Copeland "Anti- Kickback" Act, as amended, 18 U.S.C. § 874, (b) Section 2 of the Copeland "Anti- Kickback" Act, as amended, 40 U.S.C. § 3145, and (c) U.S. DOL regulations, "Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in part by Loans or Grants from the United States," 29 C.F.R. Part 3, and (4) Safety at the Construction Site. (a) Section 107 of that Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C. § 3704, and other relevant parts of that Act, 40 U.S.C. 3701 et seq., and (b) U.S. DOL regulations, "Safety and Health Regulations for Construction," 29 C.F.R. Part 1926. b. Activities Not Involving Construction. The Recipient agrees to comply, and assures that each third party participant will comply, with the following Federal laws and regulations providing Wage and Hour protections for nonconstruction employees: (1) Section 102 of the Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C. § 3702, and other relevant parts of that Act, 40 U.S.C. 3701 et seq., and (2) U.S. DOL regulations, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 C.F.R. Part 5. c. Activities Involving Commerce. The Recipient agrees to comply with the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. to the extent that the FSLA applies to employees performing Project work involving commerce, and as otherwise determined applicable. d. Public Transportation Employee Protective Arrangements. As provided by Federal law, regulations, U.S. Department of Labor guidelines, the U.S. Secretary of Labor, or the Secretary's FTA Master Agreement MA(18), 10 -1 -2011 84 designee, when an FTA funded Project involves transportation operations, the Recipient agrees to, and assures that its subrecipients will, provide the applicable employee protective arrangements as follows: (1) Standard Public Transportation Employee Protective Arrangements. When the Project involves public transportation operations, the Recipient understands and agrees that: (a) It will carry out the Project under the terms and conditions that the U.S. Secretary of Labor has determined to be fair and equitable to protect the interests of any employees affected by the Project, (b) It will comply with Federal transit law, specifically 49 U.S.C. § 5333(b), (c) It will follow U.S. DOL guidelines, "Section 5333(b), Federal Transit Law," 29 C.F.R. Part 215, (d) It will comply with the U.S. DOL' s certification of public transportation employee protective arrangements for the Project, dated as displayed on the underlying Agreement, (e) The U.S. DOL certification dated as displayed on the underlying Agreement is incorporated in and made part of that Agreement, and (f) The preceding Sections 24.d(1)(a), (b), (c), (d), and (e) of this Master Agreement do not apply to: 1 Projects for elderly individuals or individuals with disabilities funded under 49 U.S.C. § 5310(a)(2) or subsection 3012(b) of SAFETEA-LU (see Section 24.d(2) of this Master Agreement for separate employee protective requirements for these Projects), 2 Projects for nonurbanized areas funded under 49 U.S.C. § 5311 (see Section 24.d(3) of this Master Agreement for separate employee protective requirements for these Projects), or 3 Over - the -road bus accessibility projects funded under section 3038 of TEA -21, as amended by section 3039 of SAFETEA -LU, 49 U.S.C. § 5310 note, (see Section 24.d(4) of this Master Agreement for separate employee protective requirements for these Projects). (2) Public Transportation Employee Protective Arrangements for the Elderly Individuals and Individuals with Disabilities Formula Program and for the Elderly Individuals and Individuals with Disabilities Formula Program Pilot Program. If the U.S. Secretary of Transportation has determined or determines in the future that employee protective arrangements are necessary or appropriate for any governmental authority that is a subrecipient participating in a Project funded under 49 U.S.C. § 5310(b)(2) or subsection 3012(b) of SAFETEA-LU, 49 U.S.C. § 5310 note, the Recipient and that subrecipient understands and agrees that: FTA Master Agreement MA(18), 10 -1 -2011 85 (a) It will carry out the Project under the terms and conditions that the U.S. Secretary of Labor has determined to be fair and equitable to protect the interests of any employees affected by the Project, (b) It will comply with Federal transit law, specifically 49 U.S.C. § 5333(b), (c) It will follow U.S. DOL guidelines, "Section 5333(b), Federal Transit Law," 29 C.F.R. Part 215, (d) It will comply with the U.S. DOL's certification of public transportation employee protective arrangements for the Project, dated as displayed on the underlying Grant Agreement, and (e) That the U.S. DOL certification dated as displayed on the underlying Grant Agreement is incorporated in and made part of that Grant Agreement. (3) Public Transportation Employee Protective Arrangements for Projects in Nonurbanized Areas Authorized by 49 U.S.C. § 5311. The Recipient and each subrecipient understands and agrees that: (a) It will comply with Federal transit law, specifically 49 U.S.C. § 5333(b), (b) It will follow U.S. DOL guidelines, "Section 5333(b), Federal Transit Law," 29 C.F.R. Part 215, (c) It will comply with the U.S. DOL's Special Warranty for the Nonurbanized Area Program and documents cited therein, that is most current on the date when it executed the underlying Grant Agreement, including any alternative comparable arrangements, or revisions that U.S. DOL has specified for the Project, and (d) That the U.S. DOL Special Warranty, documents cited therein, special arrangements, or revisions as described in Section 24.d(3)(c) above, are incorporated in and made part of that Grant Agreement. (4) Employee Protective Arrangements for Projects Financed by the Over - the -Road Bus Accessibility Program. The Recipient understands and agrees that: (a) It will comply with Federal transit law, specifically 49 U.S.C. § 5333(b), (b) It will follow U.S. DOL guidelines, "Section 5333(b), Federal Transit Law," 29 C.F.R. Part 215, (c) It will comply with the U.S. DOL's Special Warranty for the Over - the -Road Bus Accessibility Program and documents cited therein that is most current on the date when it executed the underlying Grant Agreement, including any alternative comparable arrangements, FTA Master Agreement MA(18), 10 -1 -2011 86 or revisions that U.S. DOL has specified for the Project, and (d) That the U.S. DOL Special Warranty, documents cited therein, special arrangements, or revisions as described in Section 24.d(4)(c) above, are incorporated in and made part of that Grant Agreement. Section 25. Environmental Protections. The Recipient recognizes that many Federal, State, and local environmental and resource use laws, regulations, and directives, in effect now or in the future, may apply to the Project. This Master Agreement identifies some of the Federal laws, regulations, and directives that may apply to its Project. The Recipient understands and agrees that those Federal laws, regulations, and directives cited in this Master Agreement may be an incomplete list of environmental and resource use requirements that might apply to its Project. Nor, in some cases, may Federal requirements be sufficient to meet its State and local environmental and resource use requirements. In addition to other environmental or resource use requirements that might apply to the Recipient or the Project, to the extent applicable, the Recipient agrees to comply, and assures that its third party participants will comply, with the following Federal laws and regulations and follow Federal directives in effect now or that become effective in the future, except as the Federal Government determines otherwise in writing. a. National Environmental Policy. Federal funding requires the full compliance with applicable environmental laws and regulations. Accordingly, the Recipient agrees to, and assures that its third party participants will: (1) Comply and facilitate compliance with the following Federal laws, regulations, and executive orders: (a) Federal transit law, specifically 49 U.S.C. § 5324(b), (b) The National Environmental Policy Act of 1969, as amended (NEPA), 42 U.S.C. §§ 4321 — 4335 (as restricted by 42 U.S.C. § 5159, if applicable), (c) U.S. Council on Environmental Quality regulations pertaining to compliance with NEPA, 40 C.F.R. Parts 1500 through 1508, (d) Joint FHWA and FTA regulations, "Environmental Impact and Related Procedures," 23 C.F.R. Part 771 and 49 C.F.R. Part 622, (e) Executive Order No. 11514, as amended, "Protection and Enhancement of Environmental Quality," 42 U.S.C. § 4321 note, and FTA Master Agreement MA(18), 10 -1 -2011 87 (f) Other Federal environmental protection laws, regulations, and executive orders that apply to the Project or Recipient. (2) Follow the Federal directives stated herein, except as the Federal Government determines otherwise in writing: (a) Joint FHWA and FTA final guidance, "SAFETEA -LU Environmental Review Process (Public Law 109 -59)," 71 Fed. Reg. 66576, November 15, 2006, especially: 1 Guidance on implementing 23 U.S.C. § 139 pertaining to environmental procedures, 2 Guidance on implementing 23 U.S.C. § 326, pertaining to State responsibility for categorical exclusions, and (b) Other Federal environmental directives that apply to the Project or the Recipient. b. Air Quality. The Recipient agrees to, and assures that its third party participants will, comply with the Clean Air Act, as amended, 42 U.S.C. §§ 7401 — 7671q, and implementing Federal regulations, as provided in Federal directives, except as the Federal Government determines otherwise in writing. Among its responsibilities, the Recipient agrees that: (1) Public Transportation Operators. It will comply with: (a) U.S. EPA regulations, "Control of Air Pollution from Mobile Sources," 40 C.F.R. Part 85, (b) U.S. EPA regulations, "Control of Air Pollution from New and In -Use Motor Vehicles and New and In -Use Motor Vehicle Engines," 40 C.F.R. Part 86, and (c) U.S. EPA regulations "Fuel Economy of Motor Vehicles," 40 C.F.R. Part 600, and any revisions to these regulations. (2) State Implementation Plans. It will support State Implementation Plans (SIP) by: (a) Implementing each air quality mitigation or control measure incorporated in the documents accompanying the approval of the Project, (b) Assuring that any Project identified as a Transportation Control Measure in its State's SIP will be wholly consistent with the design concept and scope of the Project described in the SIP, (c) Complying with: FTA Master Agreement MA(18), 10 -1 -2011 88 1 Subsection 176(c) of the Clean Air Act, 42 U.S.C. § 7506(c), 2 U.S. EPA regulations, "Determining Conformity of Federal Actions to State or Federal Implementation Plans," 40 C.F.R. Part 93, Subpart A, and 3 Other Federal conformity regulations that may be promulgated at a later date. (3) Violating Facilities. It will: (a) Comply with the notice of violating facility provisions of section 306 in the Clean Air Act, as amended, 42 U.S.C. § 7414, and (b) Facilitate compliance with Executive Order No. 11738, "Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans," 42 U.S.C. § 7606 note. c. Clean Water. The Recipient agrees to, and assures that its third party participants will, comply with the Clean Water Act, as amended, 33 U.S.C. §§ 1251 — 1377, and implementing Federal regulations, as provided in Federal directives, except as the Federal Government determines otherwise in writing. Among its responsibilities, the Recipient agrees that: (1) Drinking Water. It will protect underground sources of drinking water in compliance with the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §§ 300f — 300j -6. (2) Violating Facilities. It will: (b) Comply with the notice of violating facility provisions in section 508 of the Clean Water Act, as amended, 33 U.S.C. § 1368, and (b) Facilitate compliance with Executive Order No. 11738, "Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans," 42 U.S.C. § 7606 note. d. Use of Certain Public Lands. The Recipient agrees to comply with, and assures that its third party participants will comply with: (1) U.S. DOT law, specifically 49 U.S.C. § 303, which requires certain findings to be made before a Project may be carried out using any publicly owned land from a: (a) Park of: 1 National significance as determined by Federal officials authorized under law, 2 State significance as determined by State officials authorized under law, or FTA Master Agreement MA(18), 10 -1 -2011 89 3 Local significance as determined by local officials authorized under law, (b) Recreation area of: 1 National significance as determined by Federal officials authorized under law, 2 State significance as determined by State officials authorized under law, or 3 Local significance as determined by local officials authorized under law, (c) Wildlife refuge of: 1 National significance as determined by Federal officials authorized under law, 2 State significance as determined by State officials authorized under law, or 3 Local significance as determined by local officials authorized under law, or (d) Waterfowl refuge of: 1 National significance as determined by Federal officials authorized under law, 2 State significance as determined by State officials authorized under law, or 3 Local significance as determined by local officials authorized under law. (2) Joint FHWA and FTA regulations, "Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites," 23 C.F.R. Part 774, and referenced in 49 C.F.R. Part 622. e. Wild and Scenic Rivers. The Recipient agrees to comply with, and assures that its third party participants will comply with, Federal protections for the national wild and scenic rivers system of: (1) The Wild and Scenic Rivers Act of 1968, as amended, 16 U.S.C. §§ 1271 — 1287, relating to protecting components of the national wild and scenic rivers system, (2) U.S. Forest Service regulations, "Wild and Scenic Rivers," 36 C.F.R. Part 297, and (3) U.S. Bureau of Land Management regulations, "Management Areas," 43 C.F.R. Part 8350. f. Coastal Zone Management. The Recipient agrees to assure Project consistency with the approved State management program developed under the Coastal Zone Management Act of 1972, as amended, 16 U.S.C. §§ 1451 — 1465. FTA Master Agreement MA(18), 10 -1 -2011 90 g. Wetlands. The Recipient agrees to, and assures that its third party participants will, facilitate compliance with the protections for wetlands provided in Executive Order No. 11990, as amended, "Protection of Wetlands," 42 U.S.C. § 4321 note. h. Floodplains. The Recipient agrees to, and assures that its third party participants will, facilitate compliance with the flood hazards protections in floodplains provided in Executive Order No. 11988, as amended, "Floodplain Management," 42 U.S.C. § 4321 note. i. Endangered Species and Fishery Conservation. The Recipient agrees to comply with, and assures that its third party participants will comply with, the protections for endangered species of: (1) The Endangered Species Act of 1973, as amended, 16 U.S.C. §§ 1531 — 1544, and (2) The Magnuson Stevens Fishery Conservation and Management Act, as amended, 16 U.S.C. 1801 et seq. j. Waste Management. The Recipient agrees to comply with, and assures that its third party participants will comply with, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901 — 6992k. k. Hazardous Waste. The Recipient agrees to, and assures that its third party participants will, facilitate compliance with the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. §§ 9601 — 9675, which establishes requirements for the treatment of areas affected by hazardous waste. 1. Historic Preservation. The Recipient agrees to, and assures that its third party participants will: (1) Comply with U.S. DOT law, specifically 49 U.S.C. § 303, which requires certain findings to be made before a Project may be carried out using any land from a historic site that is on or eligible for inclusion on the National Register of Historic Places. (2) Encourage compliance with the Federal historic and archaeological preservation requirements of section 106 of the National Historic Preservation Act, as amended, 16 U.S.C. § 470f, (3) Facilitate compliance with Executive Order No. 11593, "Protection and Enhancement of the Cultural Environment," 16 U.S.C. § 470 note, and (4) Comply with the Archaeological and Historic Preservation Act of 1974, as amended, 16 U.S.C. §§ 469a — 469c, (5) Comply with U.S. Advisory Council on Historic Preservation regulations, "Protection of Historic and Cultural Properties," 36 C.F.R. Part 800, which requires, among other things, the FTA Master Agreement MA(18), 10 -1 -2011 91 Recipient to: (a) Consult with the State Historic Preservation Officer concerning investigations to identify properties and resources included in or eligible for inclusion in the National Register of Historic Places that may be affected by the Project, and (b) Notify FTA of affected properties, and (6) Comply with Federal regulations and follow Federal directives to avoid or mitigate adverse effects on those historic properties, except as the Federal Government determines otherwise in writing. m. Indian Sacred Sites. The Recipient agrees to, and assures that its third party participants will, facilitate compliance with Federal efforts to promote the preservation of places and objects of religious importance to American Indians, Eskimos, Aleuts, and Native Hawaiians, as provided in the: (1) The American Indian Religious Freedom Act, 42 U.S.C. § 1996, and (2) Executive Order No. 13007, "Indian Sacred Sites," 42 U.S.C. § 1996 note, except as the Federal Government determines otherwise in writing. n. Mitigation of Adverse Environmental Effects. If the Project causes or results in any adverse environmental effect, the Recipient agrees to, and assures its third party participants will, make reasonable efforts to minimize the impact of every adverse effect by: (1) Complying with: (a) All environmental mitigation measures that may be identified as commitments in applicable environmental documents, such as: 1 Environmental assessments, 2 Environmental impact statements, 3 Memoranda of agreement, 4 Documents required by 49 U.S.C. § 303, and 5 Other applicable environmental documents, and (b) Any conditions the Federal Government might impose in a finding of no significant impact or record of decision, and (2) Assuring that: FTA Master Agreement MA(18), 10 -1 -2011 92 (a) Any mitigation measures agreed on will be incorporated by reference and made part of the underlying Agreement: (b) Any deferred mitigation measures will be incorporated by reference and made part of the underlying Agreement as soon as agreement with the Federal Government is reached, and (c) Any mitigation measures agreed on will not be modified or withdrawn without the written approval of the Federal Government. Section 26. Energy Conservation. The Recipient agrees to, and assures its subrecipients will: a. State Energy Conservation Plans. Comply with the mandatory energy standards and policies of its State energy conservation plans under the Energy Policy and Conservation Act, as amended, 42 U.S.C. 6321 et seq., except as the Federal Government determines otherwise in writing. b. Energy Assessment. Perform an energy assessment for any building constructed, reconstructed, or modified with FTA funds FTA regulations, "Requirements for Energy Assessments," 49 C.F.R. Part 622, Subpart C. Section 27. State Management and Monitoring Systems. The Recipient agrees to comply with: a. Joint FHWA and FTA regulations, "Management and Monitoring Systems," 23 C.F.R. Part 500, and b. FTA regulations, "Transportation Infrastructure Management," 49 C.F.R. Part 614. Section 28. Charter Service Operations. The Recipient understands and agrees that: a. Applicability. To the extent required by Federal law and regulations, FTA's "Charter Service" requirements apply to it and any third party participant involved in a Project funded under: (1) Federal transit laws, 49 U.S.C. chapter 53, (2) 23 U.S.C. § 133, or FTA Master Agreement MA(18), 10 -1 -2011 93 (3) 23 U.S.C. § 142. b. Prohibition. Neither it nor any third party participant involved in its Project will engage in charter service operations, except as permitted under: (1) Federal transit law, specifically 49 U.S.C. § 5323(d), (2) FTA regulations, "Charter Service," 49 C.F.R. Part 604, (3) Any other Federal Charter Service regulations, or (4) Federal directives, except as FTA determines otherwise in writing. c. Charter Service Agreement. The Charter Service Agreement it has selected in its latest annual Certifications and Assurances is incorporated by reference and made part of the underlying Agreement. d. Violations. (1) If: (a) It has failed to select the Charter Service Agreement in its latest annual Certifications and Assurances, and (b) It or any subrecipient has conducted charter service operations prohibited by FTA's Charter Service regulations: (2) Then: (a) FTA's Charter Service regulations and any amendments to these regulations will apply to any charter service it or its third party participants provide, (b) The definitions in FTA's Charter Service regulations will apply to it and its third party participants that conduct charter operations, and (c) A pattern of violations of FTA's Charter Service regulations may require corrective measures and imposition of remedies, including: 1 Barring it or any third party participant operating public transportation under the Project that has provided prohibited charter service from receiving FTA funds, or 2 Withholding an amount of Federal funds as provided by Appendix D to FTA's Charter Service regulations. FTA Master Agreement MA(18), 10 -1 -2011 94 Section 29. School Transportation Operations. The Recipient understands and agrees that: a. Applicability. To the extent required by Federal law and regulations, Federal "School Operations" requirements apply to it and any third party participant in a Project funded under: (1) 49 U.S.C. chapter 53, or (2) 23 U.S.C. § 133, or (3) 23 U.S.C. § 142. b. Prohibition. Neither it nor any third party participant that is participating in its Project will engage in school transportation service exclusively for the transportation of students or school personnel in competition with private school transportation operators, except as permitted under: (1) Federal transit law, specifically 49 U.S.C. § 5323(0 or (g), (2) FTA regulations, "School Bus Operations," 49 C.F.R. Part 605, to the extent those regulations are consistent with 49 U.S.C. § 5323(0 or (g), (3) Any other Federal "School Operations" regulations, or (4) Federal directives, except as FTA determines otherwise in writing. c. School Transportation Agreement. The School Transportation Agreement it has selected in its latest annual Certifications and Assurances is incorporated by reference and made part of the underlying Agreement. d. Violations. (1) If: (a) It has failed to select the School Transportation Agreement in its latest annual Certifications and Assurances to FTA, and (b) It or any subrecipient has conducted school transportation service prohibited by FTA's School Bus Operations regulations, 49 C.F.R. Part 605, to the extent those regulations are consistent with 49 U.S.C. §§ 5323(0 or (g): (2) Then: (a) FTA's School Bus Operations regulations, 49 C.F.R. Part 605, to the extent consistent with 49 U.S.C. §§ 5323(0 or (g), will apply to any school transportation service it or FTA Master Agreement MA(18), 10 -1 -2011 95 its third party participants provide, (b) The definitions in FTA's School Bus Operations regulations will apply to it and any third party participant that conducts school transportation operations, and (c) FTA will bar a Recipient or any third party participant that has operated school transportation service in violation of FTA's School Transportation laws and regulations from receiving Federal transit funds in an amount FTA considers appropriate. Section 30. Metric System. As U.S. DOT or FTA may direct, the Recipient agrees that: a. Use. It will use metric measurements for the Project, as provided by: (1) The Metric Conversion Act, as amended by the Omnibus Trade and Competitiveness Act, 15 U.S.C. 205a et seq., and other applicable Federal law, (2) Executive Order No. 12770, "Metric Usage in Federal Government Programs," 15 U.S.C. § 205a note, and (3) Other applicable U.S. DOT or FTA Federal directives, except as the Federal Government determines otherwise in writing, and b. Deliverables. It will accept products and services with dimensions expressed in metric measurement. Section 31. Geographic Information and Related Spatial Data. Except as FTA determines otherwise in writing, the Recipient agrees that any Project activities directly or indirectly involving spatial data or geographic information systems will conform to the Federal Geographic Data Committee's National Spatial Data Infrastructure, consistent with: a. U.S. OMB Circular A -16, "Coordination of Geographic Information and Related Spatial Data Activities," August 19, 2002, and b. OMB Circular A -16 Supplemental Guidance, "Geospatial Line of Business," November 10, 2010. Section 32. Substance Abuse. a. Drug -Free Workplace. The Recipient agrees to: FTA Master Agreement MA(18), 10 -1 -2011 96 (1) Comply with the Drug -Free Workplace Act of 1988, as amended, 41 U.S.C. 8103 et seq., (2) Facilitate compliance with U.S. OMB guidance, " Governmentwide Requirements for Drug -Free Workplace (Financial Assistance)," 2 C.F.R. Part 182, and (3) Comply with U.S. DOT regulations, "Governmentwide Requirements for Drug -Free Workplace (Financial Assistance)," 49 C.F.R. Part 32, and any amendments to those regulations when they are issued. b. Alcohol Misuse and Prohibited Drug Use. The Recipient agrees to comply with, and assures its third party participants will comply with: (1) Federal transit law, specifically 49 U.S.C. § 5331, and (2) FTA regulations, "Prevention of Alcohol Misuse and Prohibited Drug Use in Transit Operations," 49 C.F.R. Part 655. Section 33. Federal "$1 Coin" Requirements. As required by the Federal Government, the Recipient agrees that: a. It will comply with section 104 of the Presidential $1 Coin Act of 2005, 31 U.S.C. § 5112(0, b. Its equipment and facilities will be fully capable of accepting and dispensing $1 coins when coins or currency are required for their use, and c. It will display signs and notices of the $1 coin capability of the equipment and facilities on its premises, including vending machines, where coins or currency are used. Section 34. State Safety Oversight of Rail Fixed Guideway Public Systems. The Recipient agrees that: a. It will comply with Federal transit law, specifically 49 U.S.C. § 5330, and b. It will comply with FTA regulations, "Rail Fixed Guideway Systems; State Safety Oversight," 49 C.F.R. Part 659, and c. It will follow Federal directives, except as FTA determines otherwise in writing. FTA Master Agreement MA(18), 10 -1 -2011 97 Section 35. Motor Carrier Safety. The Recipient agrees to comply with, and assures its third party participants will comply with, the following U.S. Federal Motor Carrier Safety Administration (U.S. FMCSA) regulations, as applicable: a. Financial Responsibility. The economic and insurance registration requirements of: (1) The economic registration and insurance requirements of U.S. FMCSA regulations, "Minimum Levels of Financial Responsibility for Motor Carriers," 49 C.F.R. Part 387, if it: (a) Is engaged in operations requiring compliance with 49 C.F.R. Part 387, (b) Is engaged in interstate commerce, and (c) Is not within a defined commercial zone, and (2) 49 U.S.C. § 31138(e)(4), which modifies 49 C.F.R. Part 387 by reducing the amount of insurance that must be provided to the highest amount required by any State in which the transit provider operates, if it: (a) Operates within a transit service area, (b) Is engaged in interstate commerce, and (c) Receives Federal funding under 49 U.S.C. §§ 5307, 5310, and 5311. b. Safety Requirements. The safety requirements of U.S. FMCSA regulations, "Federal Motor Carrier Safety Regulations," 49 C.F.R. Parts 390 through 396, if it: (1) Is engaged in operations by the requiring compliance with 49 C.F.R. Parts 390 through 396, (2) Is engaged in interstate commerce, (3) Is not within a defined commercial zone, and (4) Is not a unit of government (defined as the Federal Government, a State, any political subdivision of a State or any agency established under a compact between States), c. Driver Qualifications. The driver's license requirements of U.S. FMCSA's regulations, "Commercial Driver's License Standards, Requirements, and Penalties," 49 C.F.R. Part 383, and d. Substance Abuse Rules for Motor Carriers. The substance abuse requirements and guidance of U.S. FMCSA's regulations, "Drug and Alcohol Use and Testing Requirements," 49 C.F.R. FTA Master Agreement MA(18), 10 -1 -2011 98 Part 382, and implementing Federal guidance, if it, including a transit provider, operates a commercial motor vehicle that: (1) Has a gross vehicle weight rating of more than 26,000 pounds, or (2) Is designed to transport sixteen (16) or more passengers, including the driver. Section 36. Safe Operation of Motor Vehicles. a. Seat Belt Use. FTA encourages the Recipient to facilitate compliance with Executive Order No. 13043, "Increasing Seat Belt Use in the United States," April 16, 1997, 23 U.S.C. § 402 note, by: (1) Adopting and promoting on-the-job seat belt use policies and programs for its employees and other personnel that operate: (a) Company -owned vehicles, (b) Company- rented vehicles, or (c) Personally operated vehicles, and (2) Including a "Seat Belt Use" provision in each third party agreement related to the Project. b. Distracted Driving, Including Text Messaging While Driving. FTA encourages the Recipient to facilitate compliance with: (1) Executive Order No. 13513, "Federal Leadership on Reducing Text Messaging While Driving," October 1, 2009, 23 U.S.C. § 402 note, (2) DOT Order 3902.10, "Text Messaging While Driving," December 30, 2009, (3) The following Special Provision: (a) Definitions. As used in this Special Provision: 1 "Driving ": a Means operating a motor vehicle on a roadway, including while temporarily stationary because of traffic, a traffic light, stop sign, or otherwise. b Does not include being in your vehicle (with or without the motor running) in a location off the roadway where it is safe and legal to remain stationary. FTA Master Agreement MA(18), 10 -1 -2011 99 2 "Text Messaging ": a Means reading from or entering data into any handheld or other electronic device, including a device for the purpose of short message service texting, e- mailing, instant messaging, obtaining navigational information, or engaging in any other form of electronic data retrieval or electronic data communication. b Does not include the use of a cell phone or other electronic device for the limited purpose of entering a telephone number to make an outgoing call or answering an incoming call, unless the practice is prohibited by State or local law. (b) Safety. The Recipient agrees to adopt and enforce workplace safety policies to decrease crashes caused by distracted drivers, including policies to ban text messaging while: 1 Using an employer supplied electronic device, and 2 Driving: a A vehicle you own or rent, b A vehicle the Government owns, leases or rents, c A privately -owned vehicle when on official Project - related business or when performing any work for or on behalf of the Project, or d Any vehicle, on or off duty. (c) Recipient Size. The Recipient agrees to conduct workplace safety initiatives in a manner commensurate with its size, such as establishing: 1 New rules and programs or re- evaluating existing programs to prohibit text messaging while driving, and 2 Education, awareness, and other outreach to employees about the safety risks associated with texting while driving. (d) Extension of Provision. The Recipient agrees: 1 To include this Special Provision in its third party agreements, and 2 To encourage its third party participants: a To comply with this Special Provision, and FTA Master Agreement MA(18), 10 -1 -2011 100 b Include this Special Condition in each third party subagreement at each tier financed with Federal funds. Section 37. Protection of Sensitive Security Information. The Recipient agrees to comply with the protections for sensitive security information of: a. 49 U.S.C. § 40119(b), b. 49 U.S.C. § 114(r), c. U.S. DOT regulations, "Protection of Sensitive Security Information," 49 C.F.R. Part 15, and d, U.S. Department of Homeland Security, Transportation Security Administration regulations, "Protection of Sensitive Security Information," 49 C.F.R. Part 1520. Section 38. Special Notification Requirements for States. As required by Federal law, the State agrees that: a. Required Information. It will provide the following information FTA funding for its Programs or Projects: (1) FTA is the Federal agency providing the Federal funds for the Program or Project, (2) The Catalog of Federal Domestic Assistance Number of the Program from which the Federal funding is authorized, and (3) The amount of Federal funds FTA has provided for the Program or Project. b. Documents Affected. It will provide the information about FTA funding in the following documents related to the Program or Project: (1) Requests for proposals, (2) Solicitations, (3) Grant or cooperative agreement applications, (4) Forms, (5) Notifications, FTA Master Agreement MA(18), 10 -1 -2011 101 (6) Press releases, and (7) Other publications. Section 39. Special Provisions for the Urbanized Area Formula Program. The Recipient agrees that the following Special Provisions apply to the Urbanized Area Formula Program (Section 5307 Program), and agrees that: a. General. In administering its Section 5307 Program: (1) It will comply with: (a) 49 U.S.C. § 5307 (Section 5307), and (b) Other Federal laws and regulations applicable to the Project and Recipient. (2) Except as FTA determines otherwise in writing, it will follow: (a) The latest edition of FTA Circular 9030.1D, "Urbanized Area Formula Program: Program Guidance and Application Instructions," and (b) Other Federal directives and guidance. b. Fares and Services. It will use its established administrative process to solicit and consider public comment before: (1) Increasing fares, or (2) Instituting a major reduction of service. c. Audit Requirements. (1) The Federal Government may: (a) Conduct audits, or (b) Require the Recipient to engage an independent entity to conduct audits, (2) Those audits may include: (a) Audits required by 49 U.S.C. § 5307(h), (b) "Single Annual Audits" required by OMB Circular A -133, and FTA Master Agreement MA(18), 10 -1 -2011 102 (c) More frequent reviews and audits required by other applicable laws and regulations and as provided in Federal directives, except as FTA determines otherwise in writing, and (3) U.S. GAO "Government Auditing Standards" applies to those audits. d. Half -Fare Requirements. It assures that elderly or handicapped people that use public transportation services or property during nonpeak hours: (1) Will be charged rates not exceeding one -half the rates that generally apply to other people during peak hours, (2) The half -fare rates will apply irrespective of whether it or any third party participant operates the services, and (3) The half -fare rates will be provided to anyone presenting a properly issued Medicare card under Title II or Title XVIII of the Social Security Act, 42 U.S.C. 401 et seq., and 42 U.S.C. 1395 et. seq., respectively. e. Operations. If authorized under 49 U.S.0 § 5307 to use Section 5307 funds to support public transportation operations: (1) It will comply with: (a) Section 5307(b) by operating in an urbanized area with a population of less than 200,000, and (b) Section 5307(1), which limits the amount of operating assistance when two States are involved. (2) Its Section 5307 funding may be: (a) Applied to the Net Project Cost of its operating expenses incurred during the Project time period m its Approved Project Budget, and (b) With FTA approval, extended to a later date as permitted by law, provided that Federal operating assistance limits are not exceeded. f. Public Transportation Security. Each fiscal year: (1) It will spend at least one (1) percent of its Section 5307 funds for public transportation security projects described in Section 5307(d)(1)(J)(i), unless it has determined that it is unnecessary to incur those expenses, and (2) If it serves an urbanized area with a population of 200,000 or more, it may use its Section 5307 funding only for activities that qualify as capital projects, even if other activities FTA Master Agreement MA(18), 10 -1 -2011 103 relate to public transportation security. g. Public Transportation Enhancements. If it serves an urbanized area with a population of 200,000 or more, it or other recipients of Section 5307 funds, or both, will: (1) Each fiscal year, spend at least one (1) percent of the Section 5307 funding apportioned for its urbanized area for public transportation enhancements as defined in 49 U.S.C. § 5302(a), and (2) Submit an annual report listing the projects carried out in the preceding fiscal year with those Section 5307 funds. h. Reporting Requirements. It will provide, and assures that, for each fiscal year it provides Section 5307 funding to any public transportation operator, that public transportation operator will: (1) Conform to: (a) FTA's National Transit Database reporting system, and (b) FTA's uniform system of accounts and records, (2) Facilitate compliance with 49 U.S.C. § 5335(a) that established FTA's national transit database, (3) Comply with FTA regulations, "Uniform System of Accounts and Records and Reporting System," 49 C.F.R. Part 630, (4) Comply with any other reporting regulations as provided in FTA directives, and (5) Follow FTA directives, except as FTA determines otherwise in writing. i. Participation of Subrecipients. It will enter into a written agreement with each subrecipient, which agreement will include provisions: (1) Describing the subrecipient's responsibilities, and (2) Assuring that the subrecipient will not compromise the Recipient's compliance with: (a) Any Federal requirements that apply to the Project, and (b) The Recipient's obligations under the underlying Grant Agreement and this Master Agreement. FTA Master Agreement MA(18), 10 -1 -2011 104 Section 40. Special Provisions for the Elderly Individuals and Individuals with Disabilities Formula Program and Pilot Program. The State, as the Recipient, agrees that: a. Programs. Special Provisions apply to: (1) The Elderly Individuals and Individuals with Disabilities Formula Program (Section 5310 Program) funded by 49 U.S.C. § 5310 (Section 5310), and (2) The Elderly Individuals and Individuals with Disabilities Pilot Program (Section 5310 Pilot Program) funded by subsection 3012(b) of SAFETEA -LU, 49 U.S.C. § 5310 note (Subsection 3012(b) of SAFETEA-LU): b. General. In administering its Section 5310 Program and any Section 5310 Pilot Program: (1) It will comply with: (a) Section 5310, (b) Subsection 3012(b) of SAFETEA-LU, and (c) Other applicable Federal laws and regulations. (2) Except as FTA determines otherwise in writing, it will follow: (a) The latest edition of FTA Circular 9070.1 F, "Elderly Individuals and Individuals with Disabilities Program Guidance and Application Instructions," and (b) Other applicable Federal directives and guidance. c. Participation of Subrecipients. It will enter into a written agreement with each subrecipient, including provisions that: (1) Describe the subrecipient's responsibilities, and (2) Assure that the subrecipient will not compromise the State's compliance with: (a) Any Federal requirements that apply to the Project, and (b) The State's obligations under the underlying Grant Agreement, and this Master Agreement d. Eligible Subrecipients. It will provide Section 5310 funds only to a subrecipient that qualifies as: FTA Master Agreement MA(18), 10 -1 -2011 105 (1) A private nonprofit organization meeting the public transportation service needs of elderly individuals and individuals with disabilities for whom public transportation services are: (a) Unavailable, (b) Insufficient, or (c) Inappropriate, (2) A governmental authority approved by the State to coordinate services for elderly individuals, and individuals with disabilities, or (3) A governmental authority that certifies to the chief executive officer of its State that its area does not have any nonprofit organizations readily available to provide public transportation services meeting the special needs of elderly individuals and individuals with disabilities. e. Eligible Project Activities. It will use Federal funds provided for the underlying Grant Agreement and subagreements for projects that support the public transportation needs of elderly individuals and individuals with disabilities, as described in Section 5310 or subsection 3012(b) of SAFETEA -LU. (1) Projects eligible for Section 5310 funding include: (a) Capital projects, (b) Operations assistance, but only if: 1 The State is selected to participate in the Section 5310 Pilot Program, and 2 It uses no more than 33 percent of its Section 5310 fiscal year apportionment for operations, and (c) Meal delivery service, as permitted by 49 U.S.C. § 5310(g). (2) Funds transferred from other Federal programs must be used for projects eligible for Section 5310 funding. f. Leasing of Vehicles. It and its subrecipients may lease Section 5310 funded vehicles to local governmental authorities to improve transportation services to meet the special needs of elderly individuals or individuals with disabilities. g. Transfer of Project Property. As provided by 49 U.S.C. § 5310(h), it may transfer Section 5310 funded property to another entity eligible to receive funding under 49 U.S.C. chapter 53, provided that: FTA Master Agreement MA(18), 10 -1 -2011 106 (1) The subrecipient possessing the property consents to the transfer, and (2) The transferred property will continue to be used to meet the special needs of elderly individuals or individuals with disabilities for public transportation service. Section 41. Special Provisions for the New Freedom Program. The Recipient agrees that the following special provisions apply to the New Freedom Program funded by 49 U.S.C. § 5317 (Section 5317): a. General. In administering its New Freedom program: (1) It will comply with: (a) Section 5317, and (b) Other applicable Federal laws and regulations, (2) Except as FTA determines otherwise in writing, it will follow: (a) The latest edition of FTA Circular 9045.1, "New Freedom Program Guidance and Application Instructions," and (b) Other applicable Federal directives and guidance. b. Participation of Subrecipients. It agrees to enter into a written agreement with each subrecipient, including provisions that: (1) Describe the subrecipient's responsibilities, and (2) Assure that the subrecipient will not compromise the Recipient's compliance with: (a) Any Federal requirements that apply to the Project, and (b) The Recipient's obligations under the underlying Grant Agreement and this Master Agreement. Section 42. Special Provisions for the Nonurbanized Area Formula Program. The State, as the Recipient, agrees that the following special provisions apply to the Nonurbanized Area Formula Program (Section 5311 Program) funded for 49 U.S.C. § 5311(b) (Section 5311(b)): FTA Master Agreement MA(18), 10 -1 -2011 107 a. General. In administering its Section 5311(b) program: (1) It will comply with: (a) Section 5311(b), and (b) Other Federal laws and regulations. (2) Except as FTA determines otherwise in writing, it will follow: (a) The latest edition of FTA Circular 9040.1F, "Nonurbanized Area Formula Program Guidance and Grant Application Instructions," and (b) Other applicable Federal directives and guidance. b. Participation of Subrecipients. It agrees to enter into a written agreement with each subrecipient, including provisions that: (1) Describe the subrecipient's responsibilities, and (2) Assure that the subrecipient will not compromise the Recipient's compliance with: (a) Any Federal requirements that apply to the Project, and (b) The Recipient's obligations under the underlying Grant Agreement, and this Master Agreement. c. Eligible Project Activities. Federal funds provided for the underlying Grant Agreement and subagreements may be used for public transportation Projects in areas other than urbanized areas. (1) Projects eligible for funding under Section 5311(b) include: (a) Purchase of service agreements with private providers of public transportation service, (b) Capital assistance, (c) Operating assistance, and (d) Meal delivery service, as permitted by 49 U.S.C. § 5310(g). (2) Funds transferred from other Federal programs must be used for Projects eligible for Section 5311(b) funding. FTA Master Agreement MA(18), 10 -1 -2011 108 d. Transfer of Project Property. As provided by 49 U.S.C. § 5311(h), the Recipient may transfer Section 5311 funded property to another entity eligible to receive funding under 49 U.S.C. chapter 53, provided that: (1) The subrecipient possessing the property consents to the transfer, and (2) The transferred property will continue to be used for public transportation services in nonurbanized areas, as provided in Section 5311(b). e. Intercity Transportation. Each fiscal year, it will: (1) Spend a minimum of at least fifteen (15) percent of its 49 U.S.C. § 5311(0 funds for intercity transportation Projects, or (2) Provide a certification of the State's chief executive officer or that person's authorized designee that the intercity bus service needs within the State are adequately fulfilled. f. Reporting Requirements. It will, and assures that for each fiscal year it provides Section 5311 funding to any public transportation operator, that public transportation operator will: (1) Conform to: (a) The National Transit Database reporting system, (b) The uniform system of accounts and records, (2) Facilitate compliance with 49 U.S.C. § 5335(a) that established FTA's national transit database, (3) Comply with FTA regulations, "Uniform System of Accounts and Records and Reporting System," 49 C.F.R. Part 630, (4) Comply with any other applicable reporting regulations as provided in FTA directives, and (5) Follow FTA directives, except as FTA determines otherwise in writing. g. Provisions Applicable to Indian Tribes. (1) Nonurbanized Area Program. An Indian tribe subrecipient that receives funds authorized under 49 U.S.C. § 5311(c)(2) for the Nonurbanized Area Formula Program agrees to comply with the requirements of this Section 42 of this Master Agreement when using its Nonurbanized Area Formula funding, except as FTA determines otherwise in writing. FTA Master Agreement MA(18), 10 -1 -2011 109 (2) Tribal Transit Program. Sections 42.a, 42.b, 42.c, 42.d, 42.e, 42.f, and 42.g(1) of this Master Agreement do not apply to a Tribal Transit Project financed with Federal funds authorized under 49 U.S.C. § 5311(c)(1). Section 43. Special Provisions for the Clean Fuels Grant Program. The Recipient of Clean Fuels Grant Program funds under 49 U.S.C. § 5308 agrees to: a. Comply with: (1) 49 U.S.C. § 5308, (2) 49 U.S.C. § 5307, (3) FTA regulations, "Clean Fuels Grant Program," 49 C.F.R. Part 624, and (4) Other applicable Federal laws and regulations, and b. Follow Federal directives, except as FTA determines otherwise in writing. Section 44. Special Provisions for Research, Development, Demonstration, and Special Studies Projects. The Recipient agrees to comply with the following provisions pertaining to Projects financed with Federal funds authorized for research, development, demonstration, or special studies, except as FTA determines otherwise in writing: a. General. In administering research, development, demonstration, and special studies projects funded under 49 U.S.C. § 5314, the Recipient agrees to: (1) Comply with: (a) 49 U.S.C. § 5314, (b) 49 U.S.C. § 5312, as applicable and (c) Other applicable Federal laws and regulations, and (2) Except as FTA determines otherwise in writing, follow: (1) FTA Circular 6100.1D, "Research, Technical Assistance, and Training Programs Application and Program Management Guidelines," and FTA Master Agreement MA(18), 10 -1 -2011 110 (b) Other applicable Federal directives. b. Project Report. The Recipient agrees to prepare and make available a Project Report, in addition to any other Report FTA may require, that: (1) Describes: (a) The subject (or subjects) investigated, (b) The methods used, (c) The Project results, and (d) The conclusions reached, (2) Excepting confidential, privileged, or proprietary information, FTA may: (a) Publish, and (b) Make available for publication on the Internet. (3) To the extent FTA deems satisfactory, is sufficiently: (a) Organized, (b) Well written, and (c) Comprehensive, (4) Complies with: (a) The accessibility requirements of: 1 Section 508 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 794d, and 2 U.S. ATBCB regulations, `Electronic and Information Technology Accessibility Standards," 36 C.F.R. Part 1194, and (b) The specific publication elements and report style guide at http:// www .fta.dot.gov /research/program requirements, (5) Identifies clearly and precisely any specific information or data that is: (a) Confidential, FTA Master Agreement MA(18), 10 -1 -2011 111 (b) Privileged, or (c) Proprietary information or data contained within any report or document, and (6) Contains the following disclaimer: This document is disseminated under the sponsorship of the United States Department of Transportation, Federal Transit Administration, in the interest of information exchange. The United States government assumes no liability for the contents or use thereof. The United States government does not endorse products or manufacturers. Trade or manufacturers' names appear herein solely because they are considered essential to the contents of the report. c. Project Identification. Unless FTA determines otherwise in writing, the Recipient agrees that any product developed with Section 5314 funding will incorporate an appropriate sign, designation, or notice that the U.S. Department of Transportation, Federal Transit Administration provided Federal funds to develop the product if the product: (11 Is Tangible and: (a) Is produced from the Project, or (b) Is a result of the Project, and (2) Is a Project deliverable, (3) Is visible to the public, or (4) Is or will be made available to: (a) Other research organizations, or (b) Public transportation providers, and (5) Consists of: (a) Equipment, (b) A prototype, FTA Master Agreement MA(18), 10 -1 -2011 112 (c) Hardware, (d) Construction, (e) Reports, (f) Data, (g) Software, (h) Internet pages, or (i) Any similar item. d. Protection of Human Subjects. The Recipient agrees to comply with protections for human subjects involved in Project activities as required by: (1) The National Research Act, as amended, 42 U.S.C. 289 et seq., and (2) U.S. DOT regulations, "Protection of Human Subjects," 49 C.F.R. Part 11. e. Protection of Animals. The Recipient agrees to comply with protections for animals involved in Project activities as required by: (1) The Animal Welfare Act, as amended, 7 U.S.C. 2131 et seq., and (2) U.S. Department of Agriculture regulations, "Animal Welfare," 9 C.F.R. Chapter I, Subchapter A, Parts 1, 2, 3, and 4. f. Export Control. The Recipient understands and agrees that before exporting any information or direct product of information that is subject to Federal export requirements, it must first: (1) Obtain the necessary Federal license(s), and (2) Comply with the applicable Federal export control regulations of the: (a) U.S. Department of Commerce, Bureau of Export Administration, "Export Administration Regulations," specifically, 15 C.F.R. Parts 730 et seq., or (b) U.S. Department of State, (c) U.S. Department of the Treasury, or (d) U.S. Department of Defense. FTA Master Agreement MA(18), 10 -1 -2011 113 Section 45. Special Provisions for the Medical Transportation Demonstration Projects. The Recipient of Federal funding for the Medical Transportation Demonstration Program agrees to: a. Comply with: (1) Federal transit law, specifically 49 U.S.C. § 5314(a)(6), and (2) Other applicable Federal laws and regulations, and b. Except as FTA determines otherwise in writing, follow: (1) FTA Circular 6100.1D, "Research, Technical Assistance, and Training Programs Application and Program Management Guidelines," and (b) Other applicable Federal directives. Section 46. Special Provisions for the National Technical Assistance Center for Senior Transportation. The Recipient of Federal funding for the National Technical Assistance Center for the Senior Transportation Program agrees to: a. Comply with: (1) Federal transit law, specifically 49 U.S.C. § 5314(c), and (2) Other applicable Federal laws and regulations, and b. Except as FTA determines otherwise in writing, follow: (1) FTA Circular 6100.1D, "Research, Technical Assistance, and Training Programs Application and Program Management Guidelines," and (2) Other applicable Federal directives. Section 47. Special Provisions for Human Resources Fellowships. The Recipient of funding for the Human Resources Fellowships Program agrees that: a. General. It will: FTA Master Agreement MA(18), 10 -1 -2011 114 (1) Comply with: (a) Federal transit law, specifically 49 U.S.C. § 5322(b), and (b) Other applicable Federal laws and regulations, and (2) Except as FTA determines otherwise in writing, follow: (1) FTA Circular 6100.1D, "Research, Technical Assistance, and Training Programs Application and Program Management Guidelines," and (b) Other applicable Federal directives. b. Fellowship Awards. Any person who receives a fellowship financed with Federal funds provided for the Human Resources Fellowships Program will be selected on the basis of: (1) That person's demonstrated ability, and (2) The contribution that person can reasonably be expected to make for an efficient public transportation operation. Section 48. Special Provisions for Job Access and Reverse Commute (JARC) Formula Grant Program. The Recipient agrees that the following provisions apply to Job Access and Reverse Commute (JARC) Formula Grant Program funds authorized under 49 U.S.C. § 5316, except as FTA determines otherwise in writing: a. General. It agrees to: (1) Comply with: (a) 49 U.S.C. § 5316, (b) 49 U.S.C. § 5307, and (c) Other applicable Federal laws and regulations, and (2) Follow the most recent edition of FTA Circular, 9050.1, "The Job Access And Reverse Commute (JARC) Program Guidance And Application Instructions," except as FTA determines otherwise in writing. b. Participation of Subrecipients. It agrees to enter into a written agreement with each FTA Master Agreement MA(18), 10 -1 -2011 115 subrecipient, including provisions that: (1) Describe the subrecipient's responsibilities, and (2) Assure that the subrecipient will not compromise the Recipient's compliance with: (a) Any Federal requirements that apply to the Project, and (b) The Recipient's obligations under the underlying Grant Agreement, and this Master Agreement. Section 49. Special Provisions for the Paul S. Sarbanes Transit in Parks Program. The Recipient agrees to carry out any Project funded under the Paul S. Sarbanes Transit in Parks Program, 49 U.S.C. § 5320, as follows: a. General. It agrees to comply with: (1) 49 U.S.C. § 5320, (2) 49 U.S.C. § 5307, and (3) Other applicable Federal laws and regulations. b. FTA Notice. It agrees to follow: (1) The most recent FTA Notice pertaining to the Paul S. Sarbanes Transit in Parks Program (Parks Program), and (2) Other FTA directives, except as FTA determines otherwise in writing. c. Order of Precedence. FTA and the Recipient agree that the latest FTA Parks Program Notice supersedes conflicting provisions of this Master Agreement. Section 50. Special Provisions for Over - the -Road Bus Accessibility Projects. The Recipient agrees that the following provisions apply to Federal funds for the Over - the -Road Bus Accessibility Program, except as FTA determines otherwise in writing: a. General. The Recipient agrees to comply with: (1) Section 3038 of TEA -21, as amended by section 3039 of SAFETEA -LU, 49 U.S.C. § 5310 note, and FTA Master Agreement MA(18), 10 -1 -2011 116 (2) Other Federal laws and regulations that apply to the Over - the -Road Bus Accessibility Program, as provided in Federal directives, when issued. b. Accessibility. The Recipient agrees to comply with: (1) The "Over- the -Road Buses" regulations in U.S. DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 C.F.R. Part 37, Subpart H, and (2) Joint U.S. ATBCB and U.S. DOT regulations, "Americans With Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 C.F.R. Part 1192 and 49 C.F.R. Part 38. c. Employee Protective Arrangements. The Recipient agrees that it will comply with Section 24.d(4) of this Master Agreement, which applies the employee protections of the U.S. DOL Special Warranty for Projects funded under the Over - the -Road Bus Accessibility Program. d. FTA Notice. The Recipient agrees to follow the most recent FTA Notice pertaining to Over - the -Road Bus Accessibility Program Grants, and any later revision of the Notice, except as FTA determines otherwise in writing. e. Order of Precedence. FTA and the Recipient agree that the most recent FTA Notice pertaining to the Over - the -Road Bus Accessibility Program supersedes conflicting provisions of this Master Agreement. Section 51. Special Provisions for State Infrastructure Bank Projects. The Recipient agrees that the following provisions apply to a Project financed with Federal funds deposited in a State Infrastructure Bank (SIB), and agrees to comply with the following requirements: a. General. The Recipient agrees to administer its SIB funded Project consistent with Federal laws and regulations as provided in Federal directives, that apply to the SIB providing Federal funds for the Project, which may include: (1) 23 U.S.C. § 610, (2) Section 1511 of TEA -21, 23 U.S.C. § 181 note, to the extent this section has not been superseded by 23 U.S.C. § 610, (3) Section 350 of the National Highway System Designation Act of 1995, as amended, (NHS Act), 23 U.S.C. § 101 note, to the extent this section has not been superseded by 23 U.S.C. § 610, FTA Master Agreement MA(18), 10 -1 -2011 117 (4) Any Federal law amending the laws listed in the preceding Sections 51.a(1) — (3) of this Master Agreement, (5) Any Federal law enacted and regulations promulgated at a later date applicable to the Project, (6) Any other applicable Federal directives that may be issued, except as FTA determines otherwise in writing, (7) The terms and conditions of any U.S. DOL Certification(s) of Public Transportation Employee Protective Arrangements, (8) The Cooperative Agreement establishing the SIB program in the State, entered into by the Federal Highway Administrator, Federal Transit Administrator, and authorized State official(s), and (9) The FTA Grant Agreement providing Federal funds for the SIB Project, except to the extent the SIB program is involved, except that: (a) Any provision of this Master Agreement does not apply to the underlying Grant Agreement or the Project if it conflicts with: 1 Federal law, 2 Federal SIB Guidelines, 3 The Cooperative Agreement establishing the SIB program within the State, or 4 The underlying Grant Agreement (b) Except that the conflicting provision of this Master Agreement will prevail, however, if FTA expressly determines so in writing. b. Limitations on Accessing Federal Funds in the Transit Account. (1) The Recipient understands that the total amount of Federal funds awarded under the Grant Agreement for the Project to be supported under the SIB may not be available for immediate withdrawal, and (2) Therefore, the State agrees to restrict the amount of Federal funds it withdraws to an amount not exceeding the limits specified in its Grant Agreement for the SIB Project or the Approved Project Budget for that Grant Agreement. FTA Master Agreement MA(18), 10 -1 -2011 118 Section 52. Special Provisions for TIFIA Projects. a. General. The Recipient agrees to administer each Project financed with Federal credit assistance authorized by the Transportation Infrastructure Finance and Innovation Act, as amended (TIFIA), as required by: (1) 23 U.S.C. §§ 601 — 609, including any later amendments to these provisions, (2) 49 U.S.C. §§ 5307, 5309, and 5323(o), and (3) Joint U.S. DOT and FTA regulations, "Credit Assistance for Surface Transportation Projects," 49 C.F.R. Parts 80 and 640, that have not been superseded by SAFETEA -LU. (4) Any Federal law enacted and regulations promulgated at a later date applicable to the Project. b. Default. The Recipient agrees that FTA may declare the Recipient in violation of the Master Agreement if: (1) It has defaulted on a TIFIA Loan, Loan Guarantee, or Line of Credit, and (2) That default has not been cured within 90 days. c. Order of Precedence. Any provision of this Master Agreement that conflicts with the laws and regulations identified in this Section 52.a of the Master Agreement will not apply to the TIFIA Loan, Loan Guarantee, or Line of Credit made available for the Project, unless FTA determines otherwise in writing. Section 53. Special Provisions for Recovery Act Projects. The Recipient agrees that the following provisions apply to funds made available under the American Recovery and Reinvestment Act of 2009 ( "Recovery Act "), Pub. L. 111 -5, February 17, 2009, and agrees to comply with the requirements under the Recovery Act, except as FTA determines otherwise in writing: a. Identification of Recovery Act Funding. An underlying Agreement financed with Recovery Act funds will indicate that the Recovery Act is the source of funding as follows: (1) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement displays "49 USC 5307 — Urbanized Area - Economic Recovery," the Project or Projects are financed with Recovery Act funds appropriated for the Transit Capital Assistance for the Urbanized Area Formula Grant Program authorized by 49 U.S.C. § 5307. (2) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement FTA Master Agreement MA(18), 10 -1 -2011 119 displays "49 USC 5307 — Urbanized Area - Economic Recovery Flex," the Project or Projects are financed with Recovery Act funds appropriated for highways transferred to support the FTA Urbanized Area Formula Grant Program authorized by 49 U.S.C. § 5307. (3) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement displays "49 USC 5309 — New Starts - Economic Recovery," the Project is financed with Recovery Act funds appropriated for Capital Investment Grants authorized for Small Starts or New Starts by 49 U.S.C. § 5309(d) or (e), respectively. (4) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement displays "49 USC 5309 — Fixed Guideway - Economic Recovery," the Project is financed with Recovery Act funds appropriated for Fixed Guideway Infrastructure Investment for Modernization, authorized by 49 U.S.C. § 5309(b)(2). (5) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement displays "49 USC 5311 — Nonurbanized Area - Economic Recovery," the Project is financed with Recovery Act funds appropriated for Transit Capital Assistance for the Nonurbanized Area Formula Program authorized by 49 U.S.C. § 5311. (6) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement displays "49 USC 5311 — Nonurbanized Area - Economic Recovery Flex," the Project or Projects are financed with Recovery Act funds appropriated for highways transferred to support the Nonurbanized Area Formula Grant Program authorized by 49 U.S.C. § 5311. (7) If the "Citation of Statute(s) Authoring Project" of the underlying Grant Agreement or Cooperative Agreement displays "PL 111 -5 — Transp. Invest /Greenhouse Gas & Energy Red. Economic Recovery," the Project is financed with Recovery Act funds specified in Title XII for Federal Transit Administration capital investments that will assist in reducing the energy consumption or greenhouse gas emissions of the Recipient's public transportation systems. (8) If the "Citation of Statute(s) Authorizing Project" of the underlying Grant Agreement displays "PL 111 -5 — OST Surface Transportation — Economic Recovery," the Project is financed with Recovery Act funds specified in Title XII for the U.S. DOT Office of the Secretary Supplemental Discretionary Grants for a National Surface Transportation System, also referred to as the "TIGER Discretionary Grant Program." b. Identification of Project(s). The Project or Projects financed with Recovery Act funds are identified in the Recipient's Project application and reflected in the Approved Project Budget. c. Prompt Implementation. The Recipient agrees to begin work on its Recovery Act Project promptly after FTA has awarded Recovery Act funds for that Project, and agrees to continue to expend those Recovery Act funds expeditiously for Project purposes. d. Federal Requirements. In addition to Recovery Act statutory and regulatory requirements, the Recipient agrees that applicable requirements of 49 U.S.C. chapter 53 apply to each federally FTA Master Agreement MA(18), 10 -1 -2011 120 assisted public transportation Project financed with Recovery Act funds, except that the Federal share of the costs for which any Recovery Act award is made under this heading shall be, at the option of the Recipient, up to 100 percent of the cost of the Project. e. U.S. OMB Provisions. The Recipient agrees to comply with U.S. OMB, "Requirements for Implementing Sections 1512, 1605, and 1606 of the American Recovery and Reinvestment Act of 2009 for Financial Assistance Awards," 2 C.F.R. Part 176, 74 Fed. Reg. 18449, April 23, 2009. Specifically, the Recipient acknowledges and agrees that: (1) Reporting and Registration Requirements under Section 1512 of the Recovery Act. (a) This award requires it to complete projects or activities funded under the Recovery Act and to report on its use of Recovery Act funds provided through this award. Information from these reports will be made available to the public. (b) It will submit the requisite reports no later than ten calendar days after each calendar quarter in which it receives the Federal award funded in whole or in part by the Recovery Act. (c) It will have, and require its subrecipients to have, a Dun and Bradstreet Data Universal Numbering System (DUNS) Number (http: / /www.dnb.com). (d) It will maintain a current registration in the Central Contractor Registration (http: / /www.ccr.gov) at all times during which it has an active Federal award funded with Recovery Act funds. If it has delegated any of its reporting requirements under Section 1512 of the Recovery Act to any subrecipient, it will require that subrecipient to maintain a current registration in the Central Contractor Registration (http: / /www.ccr.gov) at all times during which it is participating in a Project financed through an active Federal award funded with Recovery Act funds. (e) It will report the information described in section 1512(c) of the Recovery Act using the reporting instructions and data elements that will be provided online at http: / /www.FederalReporting.gov and ensure that any information that is pre - filled is corrected or updated as needed. (2) Buy America Requirements under Section 1605 of the Recovery Act. Statutory provisions of 49 U.S.C. chapter 53 impose Buy America requirements sufficient for compliance with Section 1605 of the Recovery Act. (3) Wage Rate Requirements under Section 1606 of the Recovery Act. Statutory provisions of 49 U.S.C. chapter 53 impose Wage Rate requirements involving construction, alteration, maintenance, or repair sufficient for compliance with Section 1606 of the Recovery Act. (4) Recovery Act Transactions Listed in Schedule of Expenditures of Federal Awards and Recipient Responsibilities for Informing Subrecipients. FTA Master Agreement MA(18), 10 -1 -2011 121 (a) To maximize the transparency and accountability of funds authorized under the Recovery Act, as required by Congress and as provided in 49 C.F.R. § 18.20 and 49 C.F.R. § 19.21, it will maintain records that identify adequately the source and application of Recovery Act funds. (b) If it must comply with the Single Audit Act Amendments of 1996, and U.S. OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations," it will separately identify its Recovery Act expenditures on the Schedule of Expenditures of Federal Awards (SEFA) and the Data Collection Form (SF -SAC) required by U.S. OMB Circular A -133, by: 1 Identifying Recovery Act expenditures separately on the SEFA, and 2 Identifying Recovery Act expenditures as separate rows under Item 9 of Part III on the SF -SAC by CFDA number, and 3 Including the prefix "ARRA -" in identifying the name of the Federal program on the SEFA and as the first characters in Item 9d of Part III on the SF -SAC. (c) It will: 1 Separately identify to each subrecipient, and document at the time of subaward, and at the time of disbursement of funds, the Federal award number, CFDA number, and amount of Recovery Act funds. 2 Furnish sufficient information to each subrecipient that distinguishes the subawards of incremental Recovery Act funds from regular subawards under the existing program, when it awards funds for an existing program. (d) It will require each subrecipient to include on its SEFA information to identify specifically Recovery Act funding similar to the requirements for the Recipient's SEFA described above. This information is needed to permit the Recipient to monitor subrecipient expenditures of Recovery Act funds properly as well as permit oversight by FTA, U.S. DOT, Offices of Inspector General and the Government Accountability Office. f. One -Time Funding. It acknowledges that receipt of Recovery Act funds is a "one- time" disbursement that does not create any future obligation by FTA to advance similar funding amounts. g. Funding Limits. (1) The total amount of Recovery Act funds for the entire period of Project performance is the amount displayed on the underlying Agreement, including the latest amendment to the underlying Agreement. FTA Master Agreement MA(18), 10 -1 -2011 122 (2) The Government's liability to make payments to the Recipient is limited to the eligible Project costs that can be financed with those Recovery Act funds as displayed on the underlying Agreement, including the latest amendment to that underlying Agreement. h. Integrity. All data it submits to FTA in compliance with Recovery Act requirements will be accurate, objective, and of the highest integrity. i. Violations of Law. It and each of its subrecipients must report to the U.S. DOT Inspector General or other appropriate Inspector General any credible evidence that a principal, employee, agent, contractor, subrecipient, subcontractor, or other person: (1) Has submitted a false claim under the False Claims Act, 31 U.S.C. 3729 et seq., or (2) Has committed a criminal or civil violation of law pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving Recovery Act funds. j. Maintenance of Effort. If it is a State, it will comply with the maintenance of effort certification it has made in compliance with Section 1201 of the Recovery Act. k. Emblems. U.S. DOT encourages it to use signs and materials that display both the American Recovery and Reinvestment Act (Recovery Act) emblem and the Transportation Investment Generating Economic Recovery (TIGER) program emblem to identify its Project(s) financed with Recovery Act funds that are provided by U.S. DOT in a manner consistent with Federal guidance, and to include this provision in each third party agreement used in connection with its Recovery Act Project(s). 1. Contracts Financed With Recovery Act Funds. In compliance with Section 1554 of the Recovery Act, it will: (1) Award contracts financed under this Act as fixed -price contracts through the use of competitive procedures to the maximum extent possible, and (2) Post a summary of the contract on the Recovery Act web site maintained by the Recovery Accountability and Transparency Board when it does not award fixed price contracts or does not use competitive procedures. m. Future Federal Requirements and Directives. It will: (1) Comply with future Federal requirements that may be imposed on the use of Recovery Act funds, and (2) Follow Federal directives that may be issued, except as Federal Government determines otherwise in writing. FTA Master Agreement MA(18), 10 -1 -2011 123 Section 54. Special Provisions for Joint FTA - FRA Recovery Act Projects. The Recipient agrees that the following provisions of this Master Agreement apply when both the Federal Transit Administration and the U.S. Federal Railroad Administration (FRA) make funding appropriated for their projects available for the same Project, including any project that FRA has funded under the American Recovery and Reinvestment Act of 2009 ( "Recovery Act "), Pub. L. 111 -5, February 17, 2009, and FTA has also funded under 49 U.S.C. chapter 53. a. General Legal Requirements: The Recipient agrees that: (1) It will administer the Project to achieve maximum compliance with: (a) FTA's statutory and regulatory requirements, (b) FRA's statutory and regulatory requirements, and (c) Recovery Act requirements, if applicable. (2) It will carry out the jointly funded Project as described in the following Sections 54.b through 54.j of this Master Agreement, which address conflicting legal and regulatory requirements imposed on FTA and FRA projects. b. Disadvantaged Business Enterprises. The statutory and regulatory provisions relating to disadvantaged business enterprises (DBE) differ significantly between FTA and FRA. (1) Section 1101(b) of SAFETEA -LU (23 U.S.C. § 101 note) and the HIRE Act apply to FTA, but not to FRA. (2) U.S. DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 C.F.R. Part 26, which implement Section 1101(b) of SAFETEA -LU and the HIRE Act, apply to FTA, but not to FRA. (3) FRA is not authorized to use FTA's DBE regulations. (4) Consequently, the Recipient agrees that: (a) It will comply with the statutory and regulatory DBE provisions that apply to FTA funds when using FTA funds for purchases, and (b) It will use the "contracting with small and minority firms, women's business enterprise" provisions of 49 C.F.R. § 18.36(e) or 49 C.F.R. § 19.44(b), when using FRA funds. c. Buy America. The statutory and regulatory Buy America provisions that apply to FTA funds differ from those that apply to FRA funds. The Recipient agrees that: FTA Master Agreement MA(18), 10 -1 -2011 124 (1) It will comply with the statutory and regulatory Buy America provisions that apply to FTA funds when using FTA funds for purchases. (2) It will use the Buy American statutory provisions and regulatory that apply to FRA funds, specifically section 301(a) of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), Pub L. 110 -432, October 16, 2008, 49 U.S.C. § 24405(a), when using FRA funds for purchases. (3) If it uses both FTA and FRA funds to finance a purchase, the Recipient agrees to comply with the most restrictive statutory and regulatory provisions that apply to either FTA or FRA funds. d. Force Account — Procurement. FTA deems Subsection 15(h) of this Master Agreement to be satisfied if the work is performed by the railroad's force account employees if: (1) The project is being conducted on the property of a railroad, and (2) Under the railroad's collective bargaining agreements with its employees, certain work to be performed for the Recipient must be performed by force account employees. e. Procurement of Rolling Stock. If FRA requires the Recipient to acquire any rolling stock for the Project from the Next Generation Corridor Equipment Pool Committee that has been established under section 305 of PRIIA, FTA deems Section 15(n)(1) of this Master Agreement to be satisfied. f. Use of Real Property, Equipment, and Supplies. Application of Section 19 of this Master Agreement is reserved pending resolution by the U.S. Internal Revenue Service of whether Recovery Act grant funds invested in railroad property constitute non - taxable contributions to equity. g. Davis - Bacon. As provided in 49 U.S.C. § 24312, wages paid to railroad employees at rates provided in a collective bargaining agreement negotiated under the Railway Labor Act, 45 U.S.C. 151 et seq., are deemed to comply with the Davis -Bacon Act, 40 U.S.C. §§ 3141- 3144, 3146, and 3147. h. Employee Protective Arrangements. The Recipient will: (1) Pass down to a railroad employee subject to the Railway Labor Act, 45 U.S.C. 151 et seq., protective arrangements as provided in a special Attachment to FTA's Grant Agreement or Cooperative Agreement with the Recipient. (2) Not pass down employee protective arrangements provided in Section 24(d) of this Master Agreement. FTA Master Agreement MA(18), 10 -1 -2011 125 i. Motor Carrier Safety. (1) Railroad signal employees and their employers must comply with the hours of service requirements of: (a) 49 U.S.C. § 21104, see 49 U.S.C. § 21104(e), and (b) FRA's hours of service regulation, specifically 49 C.F.R. Part 228. (2) Section 24(b) of this Master Agreement does not apply to railroad signal employees concerning hours of service. j. Railroad Safety. A railroad subject to FRA's safety jurisdiction must comply with the Federal railroad safety laws. Section 55. Freedom of Information Act. The Recipient understands and agrees that: a. Applicability. The Freedom of Information Act (FOIA), 5 U.S.C. § 552, applies to information submitted to FTA and U.S. DOT, on typewritten hard copy or electronically. b. Project Records. All applications and materials submitted to FTA related to its Project: (1) Will become Federal agency records, and (2) Are or will be subject to FOIA and to public release through individual FOIA requests, unless FTA determines that a valid exemption under FOIA or another statute applies. c. Confidentiality. President Obama's January 21, 2009, Memorandum for the Heads of Executive Departments and Agencies on the Freedom of Information Act directs Federal agencies to adopt a presumption of disclosure. Therefore: (1) FTA does not consent to honor any "routine" confidentiality statements that may appear on any typewritten hard copy or electronic information or that accompanies submission of Project information, unless a Federal law or regulation requires that the information or document must be kept confidential. (2) As permitted by Federal law and regulations, FTA will review information and documents that are the subject of each FOIA request to determine the extent to which FTA must or should exercise its discretion to withhold the information or those documents. (3) Any genuinely confidential or privileged information should be: FTA Master Agreement MA(18), 10 -1 -2011 126 (a) Marked clearly and specifically, and (b) Justified as confidential or privileged under FOIA standards. Section 56. Disputes, Breaches, Defaults, or Other Litigation. The Recipient agrees that FTA has a vested interest in the settlement of any dispute, breach, default, or litigation involving the Project. Accordingly, the Recipient agrees that: a. Notification to FTA. It will notify the FTA Chief Counsel or Regional Counsel immediately of any current or prospective legal matter: (1) Such as: (a) A major dispute, (b) A breach, (c) A default, (d) Litigation, or (e) Naming the Federal Government as a party to litigation or a legal disagreement in any forum for any reason, (2) That may affect the Federal Government's: (a) Interests in the Project, or (b) Administration or enforcement of Federal laws or regulations. b. Federal Interest in Recovery. (1) General. The Federal Government retains the right to a proportionate share of any proceeds recovered from any third party, based on the percentage of the Federal share for the Project. (2) Liquidated Damages. However, the Recipient may return all liquidated damages it receives to its Project Account rather than return the Federal share of those liquidated damages to the Federal Government. c. Enforcement. It will pursue its legal rights and remedies available under any third party agreement or available under Federal, State, or local laws or regulations. FTA Master Agreement MA(18), 10 -1 -2011 127 d. FTA Concurrence. FTA reserves the right to concur in any compromise or settlement of any claim involving the Project and the Recipient. e. Alternative Dispute Resolution. FTA encourages the Recipient to use alternative dispute resolution procedures, as may be appropriate. Section 57. Amendments to the Project. The Recipient agrees that: a. Changed Circumstances. It will execute an Amendment to the underlying Agreement when a change in Project circumstances causes an inconsistency with: (1) The underlying Agreement, or (2) This Master Agreement. b. Changed Information. When the fundamental information in its Application has changed, it will: (1) Amend its Application if the change takes place before FTA awards funding for the Project, and if necessary, (2) Execute an amendment to the underlying Agreement if the change takes place after FTA awards funding for the Project. Section 58. FTA's Electronic Management System. a. Recipient Use. (1) Unless FTA permits otherwise in writing, the Recipient agrees to use FTA's electronic management system to submit information and reports to FTA. (2) FTA, however, may determine the extent to which the Recipient may use its electronic management system to execute legal documents. b. TEAM System Terms. The Recipient and FTA agree that: (1) Except as FTA states otherwise in writing, the terms in the current FTA Transportation Electronic Award and Management (TEAM) system do not necessarily reflect, and are not intended to be treated as, the exclusive evidence of such matters as: (a) The "Project," FTA Master Agreement MA(18), 10 -1 -2011 128 (b) The "Scope" of the Project, (c) Project "Activities," and (d) Other similar terms. (2) FTA may treat information other than that reflected in its current TEAM system as determinative of what constitutes: (a) The "Project," (b) The "Scope" of the Project, (c) Project "Activities," and (d) Other similar terms. Section 59. Information Obtained Through Internet Links. a. Accuracy. The Recipient understands and agrees that any information obtained through any electronic link in this Master Agreement: (1) Does not represent an official version of a Federal law, regulation, or directive, and (2) Might be inaccurate. b. Relationship to the Master Agreement. Information obtained through electronic links in this Master Agreement is: (1) Not incorporated by reference into this Master Agreement, and (2) Not made part of this Master Agreement. c. Official Sources. Official sources of Federal regulatory information are: (1) The Federal Register, and (2) The Code of Federal Regulations. Section 60. Severability. The Recipient agrees that if any provision of the underlying Agreement or this Master FTA Master Agreement MA(18), 10 -1 -2011 129 Agreement is determined invalid, the remaining provisions that conform to Federal laws and regulations will continue in effect. FTA Master Agreement MA(18), 10 -1 -2011 130 EXHIBIT F FTA CIRCULAR 5010.1D - GRANT MANAGEMENT REQUIREMENTS 0 U.S. Department of Transportation Federal Transit Administration Subject: GRANT MANAGEMENT REQUIREMENTS CIRCULAR FTA C 5010.1D November 1, 2008 1. PURPOSE. This circular is a re- issuance of guidance for post -award grant administration and project management activities for all applicable Federal Transit Administration (FTA) grant programs. This revision incorporates provisions of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA —LU), and includes the most current guidance for the Federal public transportation program as of the date of publication. These requirements are intended to assist grantees in administering FTA- funded projects and in meeting grant responsibilities and reporting requirements. Grantees have a responsibility to comply with regulatory requirements and to be aware of all pertinent material to assist in the management of federally assisted grants. 2. CANCELLATION. This circular cancels FTA Circular 5010.1C, "Grant Management Guidelines," dated 10 -1 -98. 3. AUTHORITY. a. Federal Transit Laws, codified at 49 U.S.C. Chapter 53. b. 49 CFR 1.51. 4. WAIVER. FTA reserves the right to waive any provision of this circular to the extent permitted by Federal law or regulation. 5. FEDERAL REGISTER NOTICE. In conjunction with publication of this circular, a Federal Register notice was published on September 30, 2008 (73 FR 56892), addressing comments received during the development of the circular. 6. AMENDMENTS TO THE CIRCULAR. FTA reserves the right to update this circular to reflect changes in other revised or new guidance and regulations that undergo notice and comment without further notice and comment on this circular. FTA will post updates on our website: www.fta.dot.gov. The website allows the public to register for notification when FTA issues Federal Register notices or new guidance; visit the website and click on "sign up for e-mail updates." Distribution: FTA Headquarters Offices (T -W -2) OPI: Office of Program FTA Regional Offices (T -X -2) Management Page 2 Proposed FTA C 5010.1D 11/01/2008 7. ACCESSIBLE FORMATS. This document is available in accessible formats upon request. To obtain paper copies of this circular as well as information regarding these accessible formats, telephone FTA's Administrative Services Help Desk, at 202 - 366 -4865. Individuals with hearing impairments may contact the Federal Relay Service at 1 -800- 877 -8339 for assistance with the call. /S/ Original Signed by James S. Simpson Administrator FTA C 5010.1D 11/01/2008 PROGRAM CIRCULAR TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION AND BACKGROUND I -1 1. The Federal Transit Administration (FTA) I -1 2. Authorizing Legislation I -1 3. How to Contact FTA I -1 4. Grants.gov 1 -2 5. Definitions 1 -2 II. CIRCULAR OVERVIEW II -1 1. General II -1 2. Applicable Program Descriptions II -1 3. Responsibilities of Grant Management I1 -6 4. Civil Rights Requirements II -8 5. Cross - Cutting Requirements II -12 Page i III. GRANT ADMINISTRATION III -1 1. Overview III -1 2. Grant Application Process III -1 3. Reporting Requirements III -2 4. Grant Modifications 111 -9 5. Grant Close -Out 111 -15 6. Suspension and Termination III -16 7. Retention and Access Requirements for Records 11I -17 IV. PROJECT MANAGEMENT IV -1 1. General IV -1 2. Real Property IV -1 3. Equipment, Supplies, and Rolling Stock IV -13 4. Design and Construction of Facilities IV -32 V. FTA OVERSIGHT V -1 1. General V -1 2. General Reviews V -2 3. Program - Specific Reviews V -3 4. Project Level Reviews V -6 VI. FINANCIAL MANAGEMENT VI -1 1. General VI -1 2. Internal Controls VI -1 3. Local Match VI -5 Page ii FTA C 5010.1D 11/01/2008 CHAPTER PAGE 4. Financial Plan VI -5 5. General Principles for Determining Allowable Costs VI -5 6. Indirect Costs VI -7 7. Program Income VI -9 8. Annual Audit VI -10 9. Payment Procedures VI -11 10. De- Obligation of Funds VI -15 11. Debt Service Reserve VI -15 12. Right of FTA to Terminate VI -15 TABLES, GRAPHS, AND ILLUSTRATIONS 1. Application of Insurance Proceeds: Example 1 IV -30 2. Application of Insurance Proceeds: Example 2 IV -31 3. Table of FTA Circulars A -1 4. Example: Rolling Stock Status Report D -2 5. Exhibit 1: ACH Vendor/Miscellaneous Payment Enrollment Form (SF3881) F -3 6. Instructions for Completing SF 3881 Form F-4 7. Exhibit 2: Request for Advance or Reimbursement (SF -270) F -5 8. Instructions for Completing SF -270 Form F -6 APPENDICES APPENDIX A TABLE OF FTA CIRCULARS A -1 APPENDIX B REAL ESTATE ACQUISITION MANAGEMENT PLAN B -1 1. General B -1 2. RAMP Content B -1 APPENDIX C GUIDE FOR PREPARING AN APPRAISAL SCOPE OF WORK C -1 1. General C -1 2. Example C -1 APPENDIX D ROLLING STOCK STATUS REPORT D -1 1. General D -1 2. Replacements at the End of Minimum Useful Life D -1 3. Early Disposition D -1 4. Example: Rolling Stock Status Report/TransAmerica Buses D -2 FTA C 5010.1D 11/01/2008 CHAPTER PAGE APPENDIX E COST ALLOCATION PLANS E -1 1 Requirements E -1 2. Content E -1 3. Purpose of the Plan E -1 4. Development of Cost Allocation Plan E -2 5. Submission of Cost Allocation Plan/Indirect Cost Rate Proposals E -3 6. Plan Approval E -3 APPENDIX F REQUEST FOR ADVANCE OR REIMBURSEMENT (SF -270) F -1 1. General F -1 2. Instructions F -1 3. Review of the SF -270 F -2 APPENDIX G REFERENCES G -1 APPENDIX H FTA REGIONAL AND METROPOLITAN CONTACT INFORMATION H -1 INDEX SUBJECT AND LOCATION IN CIRCULAR Page iii Page iv This page intentionally left blank FTA C 5010.1D 11/01/2008 FTA C 5010.1D 11/01/2008 CHAPTER I INTRODUCTION AND BACKGROUND Page I -1 1. THE FEDERAL TRANSIT ADMINISTRATION (FTA). FTA is one of ten modal administrations within the U.S. Department of Transportation (DOT). Headed by an Administrator who is appointed by the President of the United States, FTA functions through a Washington, DC, headquarters office, ten regional offices, and five metropolitan offices that assist transit agencies in all 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, Northern Mariana Islands, and American Samoa and federally recognized Indian tribes. Public transportation includes buses, subways, light rail, commuter rail, monorail, passenger ferry boats, trolleys, inclined railways, people movers, and vans. Public transportation can be either fixed -route or demand - response service. The Federal Government, through FTA, provides financial assistance to develop new transit systems and improve, maintain, and operate existing systems. FTA oversees thousands of grants to hundreds of State and local transit providers, primarily through its regional and metropolitan offices. These grantees are responsible for managing their programs in accordance with Federal requirements, and FTA is responsible for ensuring that grantees follow Federal statutory and administrative requirements. 2. AUTHORIZING LEGISLATION. Most Federal transit laws are codified at 49 U.S.C. Chapter 53. Authorizing legislation is substantive legislation enacted by Congress that establishes or continues the legal operation of a Federal program or agency. Congress typically amends FTA's authorizing legislation every four to six years. FTA's most recent authorizing legislation is the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA —LU), Public Law 109 -59, signed into law August 10, 2005. SAFETEA —LU authorizes FTA programs from Federal Fiscal Year (FY) 2006 through FY 2009. Changes have been added to this circular to reflect the SAFETEA —LU changes to Federal transit law and to reflect changes required by other laws that have become effective since the circular was last published in 1998. 3. HOW TO CONTACT FTA. FTA's regional and metropolitan offices are responsible for the provision of financial assistance to FTA grantees and oversight of grant implementation for most FTA programs. Certain specific programs are the responsibility of FTA headquarters. Inquiries should be directed to either the regional or metropolitan office responsible for the geographic area in which you are located. See Appendix H of this circular for additional information. Visit FTA's website, http: / /www.fta.dot.gov, or contact FTA Headquarters at the following address and phone number: Federal Transit Administration Office of Communication and Congressional Affairs Page I -2 1200 New Jersey Avenue SE. Room E56 -205 Washington, DC 20590 Phone: 202 - 366 -4043 Fax: 202 - 366 -3472 FTA C 5010.1D 11/01/2008 4. GRANTS.GOV. FTA posts all competitive grant opportunities on Grants.gov. Grants.gov is the one website for information on all discretionary Federal grant opportunities. Led by the U.S. Department of Health and Human Services (DHHS) and in partnership with Federal grant- makers including 26 agencies, 11 commissions, and several States, Grants.gov is one of 24 Federal cross - agency E- government initiatives. It is designed to improve access to government services via the Internet. More information about Grants.gov is available at http: / /www.grants.gov. 5. DEFINITIONS. All definitions in 49 U.S.C. 5302(a) apply to this circular as well as the following definitions: a. Accrual Basis of Accounting: The accounting method where income is recorded when earned instead of when received, and expenses are recorded when incurred instead of when paid. b. Administrative Amendment: A minor change in a Grant Agreement normally initiated by FTA to modify or clarify certain terms, conditions, or provisions of a grant. c. Administrative Settlement: Purchase price for property may exceed the amount offered as just compensation when reasonable efforts to negotiate an agreement at that amount have failed and an authorized Agency official approves such an arrangement. Such an arrangement must be reasonable, prudent, and in the public interest. d. Acquisition Cost of Project Property and Purchased Equipment: The purchase price of equipment. This is the net invoice unit price, including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the equipment usable for the intended purpose. Other charges such as the cost of inspection, installation, transportation, taxes, duty or protective in- transit insurance should be treated in accordance with the grantee's regular accounting practices, as separate line items. The cost of items separately installed and removable from rolling stock, such as fareboxes and radios, is treated as a separate acquisition and not as part of the cost of the vehicle. e. Air Rights: The space located above, at, or below (subterranean) the surface of the ground, lying within a project's property limits. f. Brownfields: The Environmental Protection Agency (EPA) defines "Brownfields" (one type of contaminated property), as abandoned, idled, or under -used industrial and commercial land, often found in urban areas, where redevelopment is complicated by real or perceived hazardous contamination. These properties have lower levels of FTA C 5010.1D 11/01/2008 g. Page I -3 contamination than Superfund sites, but they are a health risk and economic detriment to the communities where they are located. Budget Revision: Any change within the scope that has impact on budget allocations of the original grant. A budget revision may be a transfer of funds within a project scope or between existing activity line items (ALIs) within an approved grant. It could also include the addition or deletion of an ALI. h. Capital Asset: Facilities or equipment with a useful life of at least one year, which are eligible for capital assistance. i. Capital Lease: Any transaction whereby the grantee acquires the right to use a capital asset without obtaining ownership. J. Cash Basis of Accounting: Cash basis of accounting is the method when revenue is recorded when received, rather than when earned, and expenses are recorded when paid, rather than incurred. FTA does not allow the Financial Status Report to be prepared in the cash method of accounting. k. Catalog of Federal Domestic Assistance (CFDA): The Catalog of Federal Domestic Assistance is a government -wide compendium of Federal programs, projects, services, and activities that provide assistance or benefits to the American public. It contains financial and nonfinancial assistance programs administered by departments and establishments of the Federal Government. As the basic reference source of Federal programs, the primary purpose of CFDA is to assist users in identifying programs that meet specific objectives of the potential applicant, and to obtain general information on Federal assistance programs. In addition, the intent of CFDA is to improve coordination and communication between the Federal Government and State and local governments. The CFDA number assigned to each program is used to report and track audit findings related to Federal grants. 1. Concurrent Non - Project Activities: Also known as betterments, concurrent non - project activities are improvements to the transit project desired by the grant recipient that are nonintegral to the planned functioning of the Federal transit project and are carried out simultaneous with grant execution and are not included in the Federal grant. m. Contingency Fleet: Inactive rolling stock reserved/retained for emergencies and separate from spare fleet. n. Cost of Project Property: The purchase price of project property. This is the net invoice unit price, including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the equipment usable for the intended purpose. Other charges, such as the cost of inspection, installation, transportation, taxes, duty, or in- transit insurance, should be treated in accordance with the grantee's regular accounting practices, in the same or as separate line items. The cost of items separately installed and removable from rolling stock, such as fareboxes and radios, is treated as a Page I -4 FTA C 5010.1D 11/01/2008 separate acquisition and not as part of the cost of the vehicle if not included in the procurement of rolling stock. o. Depreciation: Method used to calculate the reduction in value of an item of personal or real property over time. Is the term most often used to indicate that personal property has declined in service potential. For the purpose of this circular, it is also a method of determining fair market value when disposing of an asset prior to the end of its useful life. P. q. Discretionary Funding: Grant funds distributed at the discretion of the agency as distinct from formula funding. Economic Useful Life: The period over which an improvement or structure contributes to property value. This concept is used in conjunction with the concept of "Economic Age," which is defined as the age of a structure that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age. Appraisers sometimes use an "age- life" ratio to estimate a building's depreciation. This factor is developed by dividing the structure's "Economic Age" by its "Economic/Useful Life." Available building cost services provide guidelines for estimating the economic life of property structures using various construction materials and architectural designs and thus assist in conducting this analysis. Useful life assumes a normal level of on going maintenance of the structure. This applies only to real estate (for vehicular useful life see "Useful Life" in definitions). r. Electronic Clearing House Operation (ECHO):. ECHO is a Web -based application that processes draw down requests and makes payments to FTA grantees. s. Equipment: An article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the governmental unit for financial statement purposes, or $5,000. Includes rolling stock and all other such property used in the provision of public transit service. t. Equipment Inventory: A physical inventory of project (non -real) property taken and results reconciled with the personal property records. u. Excess Property: Property which the grantee determines is no longer required for its needs or fulfillment of its responsibilities and has not met its useful life under an FTA assisted grant. v. Excess Real Property Inventory and Utilization Plan: The document which lists each real estate parcel acquired with participation of Federal funds that is no longer needed for approved FTA project purposes and which states how the grantee plans to use or dispose of the excess real property. FTA C 5010.1D 11/01/2008 Page I -5 w. Facilities: All or any portion of a building or structure including roads, walks, and parking lots. x. Fair Market Value: The most probable price equipment or project property would bring in a competitive and open market. y• Federally Recognized Indian Tribal Government: The governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community, (including any native village as defined in Section 3 of the Alaska Native Claims Settlement Act (ANCSA), (43 U.S.C. 1601 et seq.) certified by the Secretary of the Interior as eligible for the special programs and service provided through the Bureau of Indian Affairs. z. Fleet Management Plan: The management plan includes an inventory of all buses among other items, such as operating policies, peak vehicle requirements, maintenance and overhaul programs, system and service expansions, rolling stock procurements and related schedules, and spare ratio justification. The plan also calculates the number of rolling stock needed to operate at peak normal days. aa. Force Account: The use of a grantee's own labor force to accomplish a capital grant project. bb. Formula Funding: Grant funding allocated using factors that are specified in the law, or in an administrative formula developed by FTA. cc. Global Settlement: In real estate this means the combination of all payments, acquisition and relocation, into one payment. This is not permitted on FTA projects as global settlements are considered in conflict with the intent of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Under the Uniform Act, an appraisal sets Just Compensation for the real estate and is made prior to the initiation of negotiations on a particular parcel. The relocation of personal property, on the other hand, is reimbursed based upon the actual, reasonable, and necessary costs that most often cannot be determined until after the move is complete. dd. Grant: An award of financial assistance, including Cooperative Agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible grantee or recipient. Used interchangeably with Grant Agreement. ee. Grant Amendment: The modification of a grant that includes a change in scope and /or change in Federal funds. ff. Grantee: An entity to which a grant is awarded directly by FTA to support a specific project in which FTA does not take an active role or retain substantial control, as set forth in 31 U.S.C. 6304. In this circular FTA uses the term grantee interchangeably with grant recipient and recipient. Page I -6 FTA C 5010.1D 11/01/2008 gg. Grant Scope: The broad purpose or objectives of a grant. The scope of a grant may encompass one or more specific projects identified by scope codes in each grant project budget. hh. Incidental Use of Project Property and Equipment: The authorized use of real property and equipment acquired with FTA funds for purposes of transit service but which also has limited non - transit use due to transit operating circumstances. Such use must be compatible with the approved purposes of the project and not interfere with intended public transportation uses of project assets. ii. Lapsed Funds: Funds no longer available for obligation to a grantee or project. jj. Large Urbanized Area: Any urbanized area with a population of at least 200,000. kk. Legal Settlement: Used in the context of an eminent domain property acquisition. A legal settlement can occur in one of several ways. First, once an acquisition case is referred to legal counsel to initiate condemnation proceedings, a settlement between the parties may occur before a condemnation complaint is filed. The second situation, involves the settlement of a case after the condemnation action has been filed. This may be referred to as a legal or stipulated settlement. In this case a stipulation agreement is prepared and signed by the parties involved after which the court may approve or issue an order approving the stipulation agreement and dismissing the court case. In either case such a settlement would necessarily be justified in writing similarly to an administrative settlement as described in 49 CFR 24.102(i) of the URA regulations. 11. Local Governmental Authority: Includes (A) a political subdivision of a State; (B) an authority of at least one State or political subdivision of a State; (C) an Indian tribe; or (D) a public corporation, board, or commission established under the laws of a State. mm. Master Agreement: The official FTA document containing FTA and other cross- cutting Federal requirements applicable to the FTA recipient and its project. The Master Agreement is typically revised annually in October. The Master Agreement is incorporated by reference and made part of each FTA grant, Cooperative Agreement, and amendment thereto. nn. NEPA: National Environmental Policy Act (NEPA), signed into law by President Nixon January 1, 1970, 42 USC Section 4321 -4370d declared a national policy to safeguard the environment and created the Council on Environmental Quality in the Executive Office of the President. To implement the national environmental policy, NEPA requires that environmental factors such as historic resources, noise, air, vibration, groundwater, habitat, and wildlife be considered when Federal agencies make decisions and that a detailed statement of environmental impacts be prepared for all major Federal actions significantly affecting the quality of the human environment. FTA C 5010.1D 11/01/2008 Page I -7 oo. Net Present Value: The discounted monetized value of expected net benefits (i.e., benefits minus costs). It is calculated by assigning monetary values to benefits and costs, discounting future benefits and costs using an appropriate discount rate to obtain a present value, and subtracting the sum total of discounted costs from the sum total of discounted benefits. pp. Net Proceeds from the Sale of Project Equipment and Real Property: The amount realized from the sale of property no longer needed for transit purposes less the expense of any actual and reasonable selling and any necessary expenses associated with repairs to make saleable. qq. Overhaul: Systematic replacement or upgrade of systems whose useful life is less than the useful life of the entire vehicle in a programmed manner. Overhaul is performed as a planned or concentrated preventive maintenance activity and is intended to enable the rolling stock to perform to the end of the original useful life. rr. Preventive Maintenance: Is defined as all maintenance costs related to vehicles and non - vehicles. Specifically, it is defined as all the activities, supplies, materials, labor, services, and associated costs required to preserve or extend the functionality and serviceability of the asset in a cost effective manner, up to and including the current state of the art for maintaining such an asset. ss. Program Income: Gross income received by the grantee or subgrantee directly generated by a grant supported activity, or earned only as a result of the Grant Agreement during the grant period (the time between the effective date of the grant and the ending date of the grant reflected in the final financial report). tt. Program of Projects (POP): A list of projects to be funded in a grant application submitted to FTA by a designated recipient. The POP lists the subrecipients and indicates whether they are private non -profit agencies, governmental authorities, or private providers of transportation service, designates the areas served (including rural areas), and identifies any tribal entities. In addition, the POP includes a brief description of the projects, total project cost, and Federal share for each project. uu. Project: For the purposes of the FTA program, public transportation improvement activities funded under an executed grant. vv. Project Activity Line Item (ALI): The description and dollar amount contained in the budget for an approved grant activity associated within a particular scope approved as part of a grant. ALIs under each scope are informational and are used as tools for FTA and the grantee to manage the grant. ww. Project Property: Includes equipment, real property, supplies, and rolling stock. xx. Project Scope: The broad purpose of a specific project within a grant. There may be multiple scopes identifying each of the different projects within a grant and each Page I -8 FTA C 5010.1D 11/01/2008 scope may contain a number of activities which represent the estimate of actions needed to complete the project. FTA reserves the right to consider other information in determining the "scope of the project" when that term is used for legal purposes. See the Master Agreement. yy. Public Transportation: Transportation by a conveyance that provides regular and continuing general or special transportation to the public, but does not include school bus, charter, sightseeing or intercity bus transportation or intercity passenger rail transportation provided by AMTRAK. The terms "transit," "mass transportation," and "public transportation" are used interchangeably in transit law. zz. Real Property: Land, including affixed land improvements, structures, and appurtenances. It does not include movable machinery and equipment. aaa. Realty/Personalty Report: A realty /personalty report is a listing of items of real estate to be appraised and items of personalty to be moved. Real estate is the land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, which if removed, deface the structure or integrality of the building, such as plumbing, heating fixtures, etc. Personal property, on the other hand, is the right or interest in things of a temporary or moveable nature. State law varies on the definition of real property and personal property; therefore, the grantee should rely on its State law's definition of real property and personal property. bbb. Rebuild: A recondition at the end of useful life that creates additional useful life. Rebuild is a capital expense incurred at or near the end of the rolling stock's useful life that results in a new useful life of the rolling stock that is consistent with the extent of the rebuilding. ccc. Recipient: An entity that receives funds from FTA, whether as a direct recipient or a subrecipient. For purpose of this circular, FTA uses the term recipient interchangeably with the terms grant recipient and grantee and subgrantee. ddd. Refurbishment: Same as overhaul. eee. Remaining Federal Interest for Dispositions Before the End of Useful Life: Is the amount calculated by multiplying the current fair market value or proceeds from sale by FTA's share of the equipment. Fair market value is the greater of the unamortized value of the remaining service life based on straight line depreciation of the original purchase price or the Federal share of the sales proceeds. fff. Remaining Federal Interest for Real Property: Federal interest is the greater of the Federal share of the fair market value of the property, or the straight line depreciated value of improvements plus the Federal share of the current appraised land value. FTA C 5010.1D 11/01/2008 ggg. Page I -9 Rent Schedules: This refers to a method used to document an array of rent and utilities charged in an area or neighborhood for various sized dwellings based on a survey of available dwellings listed for rent. hhh. Rolling Stock Status Report: A report that identifies rolling stock to be retired, or disposed of and identifies both its mileage and age at the time of removal from service, and it discusses the proposed anticipated spare ratio. iii. Sales Proceeds: Sales Proceeds are the net proceeds generated by the disposition of excess real property or equipment that was purchased in whole or in part with FTA grant funds. Shared Use: Those instances in which a project partner, separate from the transit agency or grantee, occupies part of a larger facility and pays for its pro rata share of the construction, maintenance, and operation costs. Shared uses are declared at the time of grant award. kkk. Straight Line Depreciation: In absence of fair market value, straight line depreciation method is used to determine the remaining useful life of property. This method is considered as a function of time instead of a function of usage. This method is widely used in practice because of its simplicity. It basically assumes that the asset's economic usefulness is the same each year. 111. Subrecipient: A State or local government authority, non - profit organization, or operator of public transportation services that receives a grant indirectly through a recipient. mmm. Supplies: All tangible project property other than equipment with a unit value of less than $5,000. nnn. TEAM -Web: Web -based application used to apply for, administer, and manage FTA grants most commonly referred to as "TEAM." TEAM stands for Transportation Electronic Award and Management (TEAM) system. 000. Transit Enhancements: Projects or project elements that are designed to enhance public transportation service or use and are physically or functionally related to transit facilities. Eligible enhancements include historic preservation, rehabilitation and operation of historic public transportation buildings, structures, and facilities; bus shelters; landscaping and other scenic beautification; public art; pedestrian access and walkways; bicycle access; transit connections to parks within the grantee's transit service area; signage; and enhanced access for persons with disabilities to public transportation. PPP. Uneconomical Remnant: A parcel of real property in which the owner is left with an interest after the partial acquisition or use of the owner's property, and which the acquiring agency has determined has little or no value or utility to the owner. Page I -10 FTA C 5010.1D 11/01/2008 qqq. Uniform Act: Refers to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 91 -646, 84 Stat. 1894; 42 U.S.C. 4601 et seq. as amended). This act also is referred to with the abbreviation URA per the regulations codified at 49 CFR part 24. All real estate acquisition and relocation assistance undertaken with FTA Federal assistance must be compliant with this act and its implementing regulations at 49 CFR part 24. rrr. Unliquidated Obligations: Funding commitments that have been incurred, but for which outlays have not yet been recorded because goods and services have not been received. Unliquidated obligations should be accounted for on Line D of the Financial Status Report (FSR). sss.Urbanized Area: An urbanized area is an incorporated area with a population of 50,000 or more that is designated as such by the Bureau of the Census. ttt. Useful Life: The expected lifetime of project property, or the acceptable period of use in service. Useful life of revenue rolling stock begins on the date the vehicle is placed in revenue service and continues until it is removed from service. See Chapter IV of this circular; and current Circular 9030.1 and Circular 9300.1 Capital Program. Used interchangeably with "service life." Note: Land does not depreciate and therefore does not have a useful Life. uuu. Value Engineering: Value engineering is the systematic application of recognized techniques that identify the function of a product or service, establish a value for that function, and provide the necessary function reliably at the lowest overall cost. In all instances, the required function should be achieved at the lowest possible life -cycle cost consistent with requirements for performance, maintainability, safety, security, and aesthetics. FTA C 5010.1D 11/01/2008 CHAPTER II CIRCULAR OVERVIEW Page II -1 1. GENERAL. This circular provides requirements and procedures for management of all Federal Transit Administration (FTA) programs at 49 U.S.C. Chapter 53, where grant management requirements unique to a particular FTA program are not described in the specific program circular. FTA implements the requirements of the Uniform Administrative Requirements for States and Local Governments (49 CFR part 18) that have specific provisions to states in the areas of equipment, procurement, and financial management. These requirements apply to those programs that have States as grantees, including 49 U.S.C. Sections 5305, 5310, 5311, 5316, and 5317. FTA implements the requirements of the Uniform Administrative Requirements (49 CFR part 19) to manage grants to Institutions of Higher Education, Hospitals, and Non - Profit Organizations. FTA regional and metropolitan offices have responsibility for management oversight of most grants and projects. References in this circular to the cognizant agency mean the FTA regional or metropolitan office, unless otherwise defined. 2. APPLICABLE PROGRAM DESCRIPTIONS. FTA provides formula and discretionary funding under a variety of programs by awarding grants to eligible recipients. While this circular contains the post -award guidance applicable to all FTA programs, several of the programs including research programs described below have individual program circulars that contain pre -award instructions and unique grant administration and project management guidance. If there is a conflict between 5010 and program specific circulars, program specific circulars should prevail. Please reference FTA's public website at http: / /www.fta.dot.gov for a complete listing of FTA programs and their current FTA circulars. a. Metropolitan Planning, Statewide Planning, and Planning Programs (Section 5303, Section 5304, and Section 5305). These programs provide funding to support cooperative, continuous, and comprehensive planning for making transportation investment decisions in metropolitan areas and statewide. For planning activities that: (1) support the economic vitality of the metropolitan area, especially by enabling global competitiveness, productivity, and efficiency; (2) increase the safety of the transportation system for motorized and nonmotorized users; Page II -2 FTA C 5010.1D 11/01/2008 (3) increase the security of the transportation system for motorized and nonmotorized users; (4) increase the accessibility and mobility of people and for freight; (5) protect and enhance the environment, promote energy conservation, improve the quality of life, and promote consistency between transportation improvements and State and local planned growth and economic development patterns; (6) enhance the integration and connectivity of the transportation system, across and between modes, for people and freight; (7) promote efficient system management and operation; and (8) emphasize the preservation of the existing transportation system. Funds are apportioned annually by a formula to States that include consideration of each State's urbanized area population in proportion to the urbanized area population for the entire nation as well as other factors. States receive no less than 0.5 percent of the amount apportioned. These funds are sub - allocated by States to Metropolitan Planning Organizations (MPOs) by a formula that considers each MPO's urbanized area population, their individual planning needs, and a minimum distribution. For more information, please refer to the Joint Planning Regulations at 49 CFR part 613 and FTA Circular 8100.1. To be eligible for funding under these programs, projects and strategies must come from the applicable transportation planning process. b. Urbanized Area Formula Program (Section 5307). The Urbanized Area Formula Program makes Federal resources available to urbanized areas and to the Chief Executive Officer of a State (Governor) for transit planning, capital, and operating assistance in urbanized areas. An urbanized area is an incorporated area with a population of 50,000 or more that is designated as such by the Bureau of the Census. For urbanized areas with a population of 200,000 or more, Urbanized Area Formula Program funds are apportioned and flow directly to a designated grantee(s) selected by the Governor to apply for and receive Federal funds. For urbanized areas under 200,000 in population, the funds are apportioned to the Governor of each State for distribution, unless such an area has been designated as a transportation management area at the request of the Governor and the MPO. These areas also receive apportionments directly. Guidance for Section 5307 is found in FTA Circular 9030.1. To be eligible for funding under this program, project and strategies must come from the applicable transportation planning process and contained in a local Transportation Improvement Plan and State Transportation Improvement Plan. c. Nonurbanized Area Formula Program (Section 5311). This program provides formula funding to States for the purpose of supporting public transportation in population areas of less than 50,000. It is apportioned in proportion to each State's nonurbanized FTA C 5010.1D 11/01/2008 Page II -3 population and density factors. Each State prepares an annual program of projects (POP), which must provide for fair and equitable distribution of funds within the States, including Indian reservations, and must provide for maximum feasible coordination with transportation services assisted by other Federal sources. Funds may be used for capital, operating, and administrative assistance to State agencies, local public bodies, and non - profit organizations (including Indian tribes and groups), and operators of public transportation services. The State must use 15 percent of its annual apportionment to support intercity bus service, unless the Governor certifies that these needs of the State are adequately met. Guidance for Section 5311 is found in FTA Circular 9040.1. To be eligible for funding under this program, projects and strategies must come from the applicable transportation planning process. d. Capital Investment Program (Section 5309). The Section 5309 Capital Investment Grants Program funds three different programs: (1) fixed guideway modernization in areas with populations over 200,000 with fixed guideway segments at least seven years old (based on a formula); (2) construction and extension of new fixed guideway systems (New Starts, Small Starts, and Very Small Starts Programs); and, (3) purchase of bus and bus related equipment and facilities in both urbanized and nonurbanized areas (Bus and Bus Facility Program). States and local governmental authorities are eligible applicants for Section 5309 funds. Eligible applicants may apply for Section 5309 bus grants on behalf of private non - profit agencies, private providers of public transportation services, and public subrecipients. Many recipients look to the Bus Capital Program to supplement vehicles acquired under formula programs or to construct facilities. While distribution of capital program funds is often determined according to Congressional direction, FTA encourages States to apply on behalf of nonurbanized areas and transit operators to apply in behalf of non- profit agencies in their service area that receive earmarks. Guidance for Section 5309 is found in FTA Circular 9300.1. To be eligible for funding under this program, projects and strategies must come from the applicable transportation planning process. e. Elderly Individuals and Individuals with Disabilities (Section 5310). The goal of the Section 5310 program is to improve mobility of elderly individuals and individuals with disabilities throughout the country. Toward this goal, FTA provides financial assistance for transportation services planned, designed, and carried out to meet the special transportation needs of elderly individuals and individuals with disabilities in all areas — urbanized, small urban, and rural. Funds for the Section 5310 program are available for capital expenses as defined in Section 5302(a)(1) to support the provision of transportation services to meet the special needs of elderly persons and persons with disabilities. Section 5310 funds are apportioned among the States by a formula which is based on the number of elderly persons and persons with disabilities in each State according to Page II -4 FTA C 5010.1D 11/01/2008 the latest available U.S. census data. Up to 10 percent of the States total fiscal year (FY) apportionment may be used to fund program administration costs including administration, planning, and technical assistance. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA —LU) requires that projects selected for funding under the Section 5310 program be derived from a locally developed, coordinated public transit -human services transportation plan. Guidance on the Section 5310 program is contained in FTA Circular 9070.1. f. Job Access and Reverse Commute Program (Section 5316). The JARC formula grant program aims to improve access to transportation services to employment and employment related activities for welfare recipients and eligible low- income individuals and to transport residents of urbanized areas and nonurbanized areas to suburban employment opportunities. Funds from the JARC program are available for capital, planning, and operating expenses that support the development and maintenance of transportation services designed to transport low - income individuals to and from jobs and activities related to their employment and to support reverse commute projects. g. Of the total JARC funds available, FTA apportions 60 percent among designated recipients in large urbanized areas; 20 percent to the States for small urbanized areas; and 20 percent to the States for rural and small urban areas under 50,000 in population. JARC funds are apportioned by formula. The formula is based on the ratio that the number of eligible low - income individuals and welfare recipients in each area bears to the number of eligible low - income individuals and welfare recipients in all such areas. Up to 10 percent of the recipient's total FY apportionment may be used to fund program administration costs including administration, planning, and technical assistance. SAFETEA —LU requires that projects selected for funding under the New Freedom program be derived from a locally developed, coordinated public transit - human services transportation plan. Guidance on the JARC program is contained in FTA Circular 9050.1. New Freedom Program (Section 5317). The New Freedom formula grant program aims to provide additional tools to overcome existing barriers facing Americans with disabilities seeking integration into the work force and full participation in society. New Freedom program funds are available for capital and operating expenses that support new public transportation services beyond those required by the ADA and new public transportation alternatives beyond those required by the ADA designed to assist individuals with disabilities with accessing transportation services. Of the total New Freedom funds available, FTA apportions 60 percent among designated recipients in large urbanized areas; 20 percent to the States for small urbanized areas; and 20 percent to the States for rural and small urban areas under 50,000 in population. New Freedom funds are apportioned among the recipients by formula. The formula is based on the ratio that the number of individuals with FTA C 5010.1D 11/01/2008 Page II -5 disabilities in each area bears to the number of individuals with disabilities in all such areas. Up to 10 percent of the recipient's total FY apportionment may be used to fund program administration costs including administration, planning, and technical assistance. SAFETEA –LU requires that projects selected for funding under the New Freedom program be derived from a locally developed, coordinated public transit - human services transportation plan. Guidance for the New Freedom Program is contained in FTA Circular 9045.1. h. Paul S. Sarbanes Transit in the Parks Program — formerly Alternative Transportation in Parks and Public Lands (ATPPL) (Section 5320). The Paul S. Sarbanes Transit in the Parks Program, 49 U.S.C. 5320, was established by SAFETEA –LU. The program's purpose is to enhance the protection of national parks and Federal lands, and increase the enjoyment of those visiting them. The program makes available FTA assistance toward capital and planning expenses in projects designed to improve alternative transportation systems in parks and public lands. Eligible applicants are Federal land management agencies and State, tribal, and local governments with jurisdiction over land in the vicinity of an eligible area. All applicants for funds under the parks' program must have the consent of a Federal land management agency. FTA carries out the program in consultation with the Department of the Interior (DOI) and other Federal land management agencies. Applicants must submit an application in a competitive selection process established by FTA and the Federal land management agencies. The Secretary of the Interior, after consultation with and in cooperation with the Secretary of Transportation, determines the final selection of qualified projects and the funding levels. To be eligible for funding under this program, project and strategies must come from the applicable transportation planning process. i. Clean Fuels Grant Program (Section 5308). SAFETEA –LU amended 49 U.S.C. 5308 and changed this program from a formula -based program to a discretionary grant program. This program assists in financing the acquisition of clean -fuel rolling stock and clean -fuel related facilities for agencies providing public transportation and operating in an urbanized area designated as a non - attainment area for ozone or carbon monoxide under Section 107(d) of the Clean Air Act (CAA), 42 U.S.C. Section 7407(d), or a maintenance area for ozone or carbon monoxide. Eligible grant recipients are designated recipients as defined in 5307(a)(2), an urbanized areas over 200,000 in population, and States for urbanized areas with populations of less than 200,000, for areas that are designated as non - attainment areas for ozone or carbon monoxide under Section 107(d) of the CAA, 42 U.S.C. Section 7407(d); or are maintenance areas for ozone or carbon monoxide. Nonurbanized areas are not eligible recipients under this program. Eligible projects include the following: the purchase or lease of clean -fuel rolling stock, the construction or lease of clean -fuel electrical- recharging facilities, and improvement of existing facilities to accommodate clean -fuel rolling stock. In addition, clean -fuel, bio- diesel, hybrid - electric, or zero - emissions - technology rolling Page II -6 FTA C 5010.1D 11/01/2008 stock that exhibit emissions reductions equivalent or superior to existing clean -fuel or hybrid- electric technologies may be eligible at FTA's discretion, provided that the Administrator of the Environmental Protection Agency (EPA) has certified the project sufficiently reduces harmful emissions. Section 5308 states that not more than 25 percent of the amount authorized for this program may be used for clean - diesel projects. FTA has implemented this program through a rulemaking to revise 49 CFR part 624. The final rule was published in the Federal Register (72 FR 15049, Mar. 30, 2007). Applications are solicited through a notice in the Federal Register in each FY that discretionary funds are appropriated by Congress for the program. Grants under this program are subject to the applicable requirements of 49 U.S.C. Section 5307. To be eligible for funding under this program, projects and strategies must come from the applicable transportation planning process. 3. RESPONSIBILITIES OF GRANT MANAGEMENT. Grantees are responsible for the day - to -day management of their Federal grants and of grant supported activities. FTA monitors grants and federally funded projects to confirm that grantees establish and follow procedures that comply with Federal requirements. Chapter III of this circular describes the mechanics and requirements for grant administration, and Chapter IV describes the requirements for managing federally funded projects. a. Grantee's Role. A grantee must monitor grant supported activities to ensure compliance with applicable Federal requirements. This includes the administration and management of the grant in compliance with the Federal regulations, Grant Agreement, and applicable FTA circulars. A grantee is also responsible for funds that "pass through" to a subrecipient. In general, submission of Annual Certifications and Assurances stands in lieu of detailed FTA oversight before approval of a grant; however, the results of ongoing or routine FTA oversight activities also will be considered as applicable. Annual independent organization wide audits (A -133 audits), audits of grantees, and other recurring and specialized reviews give FTA an opportunity to verify the grantee's Certifications and Assurances (see Chapter V, "Oversight," of this circular). The grantee's responsibilities include but are not limited to actions that: (1) Demonstrate legal, financial, and technical capacity to carry out the program, including safety and security aspects of the program. (2) Provide administrative and management support of project implementation. (3) Provide, directly or by contract, adequate technical inspection and supervision by qualified professionals of all work in progress. (4) Ensure conformity to Grant Agreements, applicable statutes, codes, ordinances, and safety standards. FTA C 5010.1D 11/01/2008 Page II -7 (5) Maintain the project work schedule agreed to by FTA and the grantee and monitor grant activities to assure that schedules are met and other performance goals are achieved. (6) Keep expenditures within the latest approved project budget. (7) Ensure compliance with FTA and Federal requirements on the part of agencies, consultants, contractors, and subcontractors working under approved third party contracts or inter - agency agreements. (8) Request and withdraw Federal funds for eligible activities only in amounts and at times as needed to make payments that are due and payable within three business days and retain receipts to substantiate withdrawals. Account for project property and maintain property inventory records that contain all the elements required. (9) (10) Demonstrate and retain satisfactory continuing control over the use of project property. (11) Demonstrate procedures for asset management and adequate maintenance of equipment and facilities. (12) Ensure that an annual independent organization -wide audit is conducted in accordance with Office of Management and Budget (OMB) Circular, A -133, "Audits of States, Local Governments, and Non - Profit Organizations." (13) Prepare force account and Cost Allocation Plans (CAPs) and submit and obtain approval if applicable before incurring costs. (14) Prepare and submit FTA required reports (see Chapter III, Section 3. "Reporting Requirements "). (15) Update and retain FTA required reports and records for availability during audits or oversight reviews. (16) Ensure that effective control and accountability are maintained for all grants and subgrants, cash, real and personal property, and other assets. Grantees and subgrantees must ensure that resources are properly used and safeguarded, and used solely for authorized purposes. b. FTA Role. FTA Headquarters in Washington, DC, serves a broad, program -level role in the administration of the programs. FTA Headquarters performs the following functions: (1) Provides overall policy and is primarily responsible for policy and program guidance for all FTA programs; ensures that programs are consistent with the law. Page I1 -8 FTA C 5010.1D 11/01/2008 (2) Ensures consistent administration of programs by regional and metropolitan offices. (3) Prepares and publishes annual apportionment of funds to the States and designated grantees. (4) Develops and implements financial management procedures. (5) Initiates and manages program- support activities, such as training, courses, regional consistency, and oversight reviews. (6) Conducts national program reviews and evaluations. (7) Carries out responsibility for national compliance with program requirements. (8) Develops national standard operating practices. c. FTA Regional and Metropolitan Offices are responsible for the day -to -day administration of grants, projects, and programs. Regional and metropolitan offices responsibilities include, but are not limited to, actions that: (1) Review and approve grant applications, grant amendments, and budget revisions, as necessary. (2) Obligate and deobligate funds. (3) Work with grantees to implement and manage the programs and projects and ensure grantee compliance. (4) Provide technical assistance. (5) Receive designated grantee's certifications and amendments to the POP. (6) Review Milestone Progress Reports and Financial Status Reports as well as monitor and close grants. Conduct triennial reviews and other reviews as necessary. (7) 4. CIVIL RIGHTS REQUIREMENTS. The recipient agrees to comply with all applicable civil rights statutes and implementing regulations including, but not limited to, the following: a. Nondiscrimination in Federal Public Transportation Programs. The recipient agrees to comply, and ensures the compliance of each third party contractor at any tier and each subrecipient at any tier under the project, with the provisions of 49 U.S.C. 5332. These provisions prohibit discrimination on the basis of race, color, creed, national origin, sex, or age and prohibit discrimination in employment or business opportunity. FTA C 5010.1D 11/01/2008 Page II -9 b. Nondiscrimination —Title VI. The recipient agrees to comply, and ensures the compliance of each third party contractor at any tier and each subrecipient at any tier of the project, with all of the following requirements under Title VI of the Civil Rights Act of 1964: (1) Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000d et seq.), provides that no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance; (2) DOT regulations, "Nondiscrimination in Federally- Assisted Programs of the Department of Transportation— Effectuation of Title VI of the Civil Rights Act," 49 CFR part 21; (3) FTA Circular 4702.1 "Title VI and Title VI— Dependent Guidelines for Federal Transit Administration Recipients." This document provides FTA recipients and subrecipients with guidance and instructions necessary to carry out DOT's Title VI regulations (49 CFR part 21): DOT's order 5610.0 on Environmental Justice (62 FR 18377, Apr. 15, 1997), and DOT Policy Guidance Concerning Recipient's Responsibilities to Limited English Proficient (LEP) persons (70 FR 74087, Dec. 14, 2005); (4) DOT Order to Address Environmental Justice in Minority Populations and Low - Income Populations. This Order describes the process that the Office of the Secretary of Transportation and each operating administration will use to incorporate environmental justice principles (as embodied in Executive Order 12898 on Environmental Justice) into existing programs, policies, and activities; and (5) Pursuant to Executive Order 13166 and DOT Policy Guidance Concerning Recipients' Responsibilities to Limited English Proficient (LEP) Persons. This guidance clarifies the responsibilities of recipients of Federal financial assistance from DOT and assists them in fulfilling their responsibilities to Limited English Proficient (LEP) persons, pursuant to Title VI of the Civil Rights Act of 1964 and implementing regulations. c. Equal Employment Opportunity. The recipient agrees to comply, and ensures the compliance of each third party contractor and each subrecipient at any tier of the project, with all Equal Employment Opportunity (EEO) requirements of Title VII of the Civil Rights Act of 1964, as amended, (42 U.S.C. Section 2000e), and 49 U.S.C. Section 5332, and FTA Circular 4704.1, "Equal Employment Program Guidelines for Grant Recipients" and any implementing requirements FTA may issue. Grantees who receive $1 million dollars in FTA assistance (or $250,000 in FTA planning assistance) and have 50 transit - related employees must submit an EEO program to FTA. Both criteria must be met in order to meet the requirement for program submission. Page II -10 FTA C 5010.1D 11/01/2008 d. Nondiscrimination on the Basis of Sex. The recipient agrees to comply with all applicable requirements of Title IX of the Education Amendments of 1972, as amended, (20 U.S.C. Section 1681 et seq.), with implementing DOT implementing regulations, "Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance," 49 CFR part 25, and with any implementing directives that DOT or FTA may promulgate, which prohibit discrimination on the basis of sex. e. Nondiscrimination on the Basis of Age. The recipient agrees to comply with all applicable requirements of the Age Discrimination Act of 1975, as amended, (42 U.S.C. Section 6101 et seq.), and Health and Human Services' implementing regulations, "Nondiscrimination on the Basis of Age in Programs or Activities Receiving Federal Financial Assistance," (45 CFR part 90), which prohibit discrimination against individuals on the basis of age (40 years or older). In addition, the recipient agrees to comply with all applicable requirements of the Age Discrimination Act (ADEA), 29 U.S.C. 621 through 634, and Equal Employment Opportunity Commission (EEOC) implementing regulations, "Age Discrimination in Employment Act" (29 CFR part 1625), which prohibits discrimination against individuals on the basis of age. f. Nondiscrimination on the Basis of Disability. The recipient agrees to comply, and ensures the compliance of each third party contractor and each subrecipient at any tier of the project, with the applicable laws and regulations, discussed below, for nondiscrimination on the basis of disability. (1) The Rehabilitation Act of 1973 (Section 504), as amended (29 U.S.C. Section 794), prohibits discrimination on the basis of disability by recipients of Federal financial assistance. (2) Section 508 of the rehabilitation Act of 1973, (Section 508), as amended (29 U.S.C. Section 794(d)), requires reports and other information prepared in electronic format developed in connection with a third party contract, whether as a contract end item or in compliance with contract administration provisions, must comply with the accessibility standards established under Architectural and Transportation Barriers Compliance Board (ATBCB) regulations, "Electronic and Information Technology Accessibility Standards," 36 CFR part 1194. (3) The Americans with Disabilities Act of 1990 (ADA), as amended (42 U.S.C. Section 12101 et seq.), prohibits discrimination against qualified individuals with disabilities in all programs, activities, and services of public entities as well as imposes specific requirements on public and private providers of transportation. (4) DOT regulations implementing Section 504 and the ADA include 49 CFR parts 27, 37, and 38. Among other provisions, the regulations specify accessibility requirements for the design and construction of new transportation facilities; require that vehicles acquired (with limited exceptions) be accessible to and usable FTA C 5010.1D 11/01/2008 (5) Page II -11 by individuals with disabilities, including individuals using wheelchairs; require public entities, including a private non - profit entity of the State as a subrecipient providing fixed -route service, to provide complementary paratransit service to individuals with disabilities who cannot use the fixed -route service; and include service requirements intended to ensure that individuals with disabilities are afforded equal opportunity to use transportation systems and services. In addition, recipients of any FTA funds should be aware that they also have responsibilities under Titles I, III, IV, and V of the ADA in the areas of employment, public services, public accommodations, telecommunications, and other provisions, many of which are subject to regulations issued by other Federal agencies. g. Disadvantaged Business Enterprise (DBE). To the extent required by Federal law, regulation, or directive, the recipient agrees to take the following measures to make it possible for DBEs to participate in the project: (1) The recipient agrees and ensures that it will comply with Section 1101(b) of SAFETEA —LU, which requires FTA to make available not less than 10 percent of its funding under that Act for contracts with small business concerns owned and controlled by socially and economically disadvantaged persons. The DOT DBE Regulation at 49 CFR 26.21(2) states that FTA recipients receiving planning, capital and /or operating assistance who will award prime contracts (excluding transit vehicle purchases) exceeding $250,000 in FTA funds in a Federal FY are required to have a DBE program. Grantees must comply with applicable requirements of DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR part 26, (DBE regulations), in order to receive FTA funding. Contracts funded in whole or in part with FTA funds and subject to FTA's procurement rule are also subject to the grantee's DBE Program and are included to the extent of FTA funding in determining (i) whether the grantee meets the DBE threshold for goal setting; and, (ii) the goal if the threshold is met. (2) The recipient agrees and ensures that it will comply with DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR part 26. Among other provisions, this regulation requires recipients of DOT Federal financial assistance meeting a threshold funding level of $250,000 to have a DBE program. This applies to all who receive planning, capital and /or operating assistance including State and local transportation agencies, to establish goals for the participation of disadvantaged entrepreneurs and certify the eligibility of DBE firms to participate in their DOT - assisted contracts. FTA recipients are instructed by 49 CFR 26.49 to require in their DBE program that each transit vehicle manufacturer, as a condition of being authorized to bid or propose on a FTA- assisted transit vehicle Page II -12 (3) FTA C 5010.1D 11/01/2008 procurement (new vehicles only), certify that it complied with the requirements of the DBE program. The recipient agrees and ensures that it shall not discriminate on the basis of race, color, sex, national origin, or disability in the award and performance of any third party contract, or subagreement supported with Federal assistance derived from DOT or in the administration of its DBE program and will comply with the requirements of 49 CFR part 26. The recipient agrees to take all necessary and reasonable steps set forth in 49 CFR part 26 to ensure nondiscrimination in the award and administration of all third party contracts and subagreements supported with Federal assistance derived from DOT. As required by 49 CFR part 26 and approved by DOT, the recipient's DBE program is incorporated by reference and made part of the Grant Agreement or Cooperative Agreement. The recipient agrees that implementation of this DBE program is a legal obligation, and that failure to carry out its terms shall be treated as a violation of the Grant Agreement or Cooperative Agreement. Upon notification by DOT to the recipient of a failure to implement its approved DBE program, DOT may impose sanctions as provided for under 49 CFR part 26 and may, in appropriate cases, refer the matter for enforcement under 18 U.S.C. 1001, and /or the Program Fraud Civil Remedies Act, (31 U.S.C. 3801 et seq). 5. CROSS - CUTTING REQUIREMENTS. The grantee understands and agrees that it must comply with all applicable Federal laws, regulations, and directives, except to the extent that FTA determines otherwise, in writing. Refer to FTA's Master Agreement for a list of applicable laws, regulations, and directives. FTA updates the Master Agreement annually. FTA C 5010.1D 11/01/2008 CHAPTER III GRANT ADMINISTRATION Page III -1 1. OVERVIEW. This chapter discusses the mechanics and requirements for post -award grant administration. Project management requirements are described in Chapter IV. The following sections emphasize the requirements associated with administering and managing a grant after the grant has been awarded and executed in the Transportation Electronic Award and Management (TEAM) system. 2. GRANT APPLICATION PROCESS. The Federal Transit Administration's (FTA's) pre - award, program- specific circulars describe the grant application process and requirements. Refer to these circulars for instructions for completing a grant application. For a full listing of FTA program circulars, see Appendix A of this circular or visit www.fta.dot.2ov. FTA provides a streamlined electronic interface between grantees and FTA that allows complete electronic grant application submission, review, approval, and management of all grants. This is done through a Web -based electronic system, commonly known by the acronym "TEAM." Among other things, grantees apply for grants, inquire about the status of grants, file the required financial status and milestone progress reports, and submit annual Certifications and Assurances in TEAM. The TEAM User Guide can be found at FTA's website in the "Grants and Financing" section under "Apply for and Manage Grants" located at: http: / /ftateamweb.fta.dot.gov /static /userguide.html. The TEAM Grant Life Cycle is as follows: a. Grant application created, b. Grant number assigned, c. Signoffs and Approvals, d. Grant funds reserved, e. Grant awarded, f. Grant award executed, g. Grant managed, and h. Grant closed. FTA staff notifies grantees by phone or e-mail of grant approval. Grantees also can check the status of grant applications in TEAM to determine when it has been awarded. The Grant Agreement includes the notification of award and the approved project budget. Special conditions of the approval may be included in the award, the current Master Page 1II -2 FTA C 5010.1D 11/01/2008 Agreement, the electronic grant (screen), or the conditions for using pre -award authority if applicable. In certain cases, pre -award authority may be available for incurring project - related costs prior to approval of an application. Once a grantee receives the notification of grant award, the grantee executes the grant in TEAM. The electronic execution of the Grant Agreement signifies the grant is active and post -award grant requirements apply. 3. REPORTING REQUIREMENTS. Once a grant is active, a grantee is subject to one or more of the following types of post -award reporting requirements, several of which can be done using TEAM. The reporting requirements may vary depending on the size of the grantee, the type of funding, or the amount of funding a grantee receives. Please contact the regional or metropolitan office with questions regarding the applicability of the following reporting requirements: a. Financial Status and Milestone/Progress Reports. FTA uses the Financial Status and Milestone Progress Reports to evaluate several elements of the grant status, such as: (1) The purposes of the grant are being achieved; (2) The project is progressing on time and within budget; (3) The grantee is demonstrating competence and control in executing the project; (4) The project meets all program requirements; (5) There is a problem developing which may require FTA resources to resolve. FTA monitors grant activities to ensure proper grantee stewardship of Federal funds and compliance with the laws and regulations that govern its grant programs. FTA also must be able to report on program results, industry trends, and its own oversight responsibilities. The information FTA needs for program forecasting, management, and reporting is furnished through the Financial Status Reports (FSRs) and narrative Milestone/Progress Reports (MPRs) submitted by grantees about significant events, relevant grant activities, and any changes to or variances in the grant schedule or budget. With respect to the level of detail required for these reports, FTA treats all approved activity line items (ALIs) alike. Thus, an activity contained in a grant must be presented in the reports in sufficient detail that important information is not lost in aggregation. For example, the number of full -sized buses in a grant must not be reported together with vans under the scope "rolling stock," but instead should be reported separately under the applicable ALI. FTA staff is available to meet with grantees to agree on the appropriate level of reporting detail and formats for reporting in TEAM. This will ensure that FTA has the information needed to manage its overall program. FTA C 5010.1D 11/01/2008 Page II1 -3 All grantees should report significant developments or changes as they occur during the year, including any problems, delays, or adverse conditions that may materially impair the ability to meet the objective of the award, as well as any favorable developments that may enable meeting time schedules and objectives sooner or at a cost substantially less than expected in FSRs. If necessary, attachments can accompany FSRs and MPRs by using the "paperclip" feature in TEAM. FTA may withhold payment for failure to submit either FSRs or MPRs in a timely manner. In individual cases, FTA may grant extensions of report due dates for good cause. Report due dates and additional information about the FSRs and MPRs are described below. Please contact your regional or metropolitan office for questions regarding any of these reports. b. Financial Status Report (FSR). A grantee must submit an FSR for each active /executed grant. The requirement for an FSR applies to all FTA grants covered by this circular. The FSR accompanies the MPR (described below) and is used to monitor project funds. The purpose of the FSR is to provide a current, complete, and accurate financial picture of the grant. This report is submitted electronically in TEAM and must be prepared on the accrual basis of accounting; that is, income is recorded when earned instead of when received, and expenses are recorded when incurred instead of when paid. FTA does not allow the FSR to be prepared in the cash method of accounting. A grantee may keep its books on the cash basis during its accounting year. If this is the case, at the submission of the FSR, the grantee must prepare the necessary accruals and submit the FSR on the accrual basis of accounting. The FSR must contain the following elements: (1) All financial facts (e.g., expenditures and obligations) relating to the scope and purpose of each financial report and applicable reporting period should be completely and clearly displayed in the reports. (2) Reported financial data should be accurate and up to date. The requirement for accuracy does not rule out inclusion of reasonable estimates when precise measurement is impractical, uneconomical, unnecessary, or conducive to delay. (3) Financial reports should be based on the required supporting documentation maintained in the grantee's official financial management system that produces information which objectively discloses financial aspects of events or transactions. (4) Financial data reported should be derived from accounts that are maintained on a consistent, periodic basis; material changes in accounting policies or methods and their effect must be clearly explained. Page III -4 (5) FTA C 5010.1D 11/01/2008 Reporting terminology used in financial reports to FTA should be consistent with receipt and expense classifications included in the latest approved project. (6) The FSR screen in TEAM consists of three tabs: Summary, Financial Status and Remarks, and Comments. (7) The Summary tab provides basic information, with entry fields for the Period of the FSR, Initial Submission, and Last Update dates. It also allows the grantee to select whether it is a Final Report, a Paper Award, or if the grantee used Pre - Award Authority. It is important to enter in this tab whether the grantee is charging indirect costs to the grant. (8) In the Financial Status tab the grantee enters in the cumulative total column the actual financial information related to Outlays, Recipient Share of Outlays, Unliquidated Obligations, and Recipient Share of Unliquidated Obligations. The remaining information is generated by TEAM. (a) The entry in Line A, Total Outlays, must be 1 Sum of actual cash disbursement for direct charges such as but not limited to: a Project construction costs b Fuel c Driver wages d Other operating expenses e Less: Farebox revenues (if operating assistance received), rebates, refunds, or other credits. 2 Indirect expense incurred— Overhead costs 3 Value of in -kind contributions: a Use of facilities b Land, right -of -way Donated services (e.g., legal, architectural) 4 Accounts Payable —Goods or services received, but not yet paid. (b) The entry in Line B, Recipient Share of Outlays, as the name indicates, is how much of the amount entered in Line A is locally funded. Any overmatch is FTA C 5010.1D 11/01/2008 Page III -5 shown only when it is actually paid. If the grant was approved for deferred local share, the amount on Line B should be zero until the local share is paid. (c) In line C, the FSR will show how much of the Outlays (line A) is to be funded by FTA. The grantee must compare the amount on line C to the amount of actual drawdowns received. These two numbers should be fairly close, and this comparison will indicate whether the grantee has excess Federal funds on hand. (d) The entry in Line D, Total Unliquidated Obligations, is for obligations (commitments) the grantee has entered into and cannot cancel without substantial penalties. Examples of these obligations include: 1 Signed contract for purchase of buses when delivery has not yet occurred; 2 Contract for construction services not yet rendered; 3 Open purchase orders; 4 Contract retention; 5 Goods and services not yet received. (e) The entry in line E, Recipient Share of Unliquidated Obligations, as the name indicates, is how much of the amount entered in Line D will be locally funded. (f) The amount in Line I, Unobligated Balance of Federal Funds, which TEAM computes is very important. It means how much of the amount of the grant the grantee has "not put to work" yet. FTA monitors this amount closely. c. Milestone/Progress Reports. The MPR must be submitted for all active /executed grants. The requirement for a MPR applies to all FTA grants covered by this circular. The MPR is the primary written communication between the grantee and FTA. This report should be submitted electronically in TEAM. If only operating assistance is included in the grant, the reporting requirements are limited to the estimated and actual dates when all funding has been expended. Each MPR must include the following data as appropriate: (1) Current status of each open ALI within the active /executed grant. (2) A narrative description of projects, status, any problems encountered in implementation, specification preparation, bid solicitation, resolution of protests, and contract awards. (3) Detailed discussion of all budget or schedule changes. (4) The dates of expected or actual requests for bid, delivery, etc. Page III -6 (5) Actual completion dates for completed milestones. FTA C 5010.1D 11/01/2008 (6) Revised estimated completion dates when original estimated completion dates are not met. (7) Explanation of why scheduled milestones or completion dates were not met. Identification of problem areas and narrative on how the problems will be solved. Discussion of the expected impacts and the efforts to recover from the delays. (8) Analysis of significant project cost variances. Completion and acceptance of equipment and construction or other work should be discussed, together with a breakout of the costs incurred and those costs required to complete the project. Use quantitative measures, such as hours worked, sections completed, or units delivered. (9) A list of all outstanding claims exceeding $100,000, and all claims settled during the reporting period. This list should be accompanied by a brief description, estimated costs, and the reasons for the claims. (10) A list of all potential and executed change orders and amounts exceeding $100,000, pending or settled, during the reporting period. This list should be accompanied by a brief description. (11) A list of claims or litigation involving third party contracts and potential third party contracts that: (a) Have a value exceeding $100,000, (b) Involve a controversial matter, irrespective of amount, or (c) Involve a highly publicized matter, irrespective of amount. (12) A list of all real property acquisition actions, including just compensation, property(s) under litigation, administrative settlements, and condemnation for each parcel during the reporting period. d. Report Due Dates. (1) Grantees located in urbanized areas over 200,000 population. FSRs and MPRs are due to FTA within 30 days after the end of each calendar quarter, i.e., by January 30, April 30, July 30, and October 30. (2) Grantees located in urbanized areas under 200,000 population. Grantees in areas with less than 200,000 in population submit FSRs and MPRs annually. Annual reports are due October 30, one month after the Federal fiscal year (FY) ends. The FTA regional or metropolitan office may request more frequent reporting or additional reports if circumstances warrant additional reporting. FTA C 5010.1D 11/01/2008 (3) Exceptions: Page III -7 (a) Section 5309 Grants: All grant recipients, regardless of location and population area, are required to submit quarterly reports in TEAM according to the dates in Subsection 3.d.(1) above when grants include construction of facility. (b) State Departments of Transportation (State DOTs): State DOTs are required to report annually for all State administered programs; this includes Section 5303, 5304, 5307 (Governor's Apportionment), 5310, 5311, 5316, and 5317 Programs. The exception described in the preceding paragraph applies to the State DOTs. (c) Depending on project complexity, at its discretion, FTA may also request other special reports or quarterly project management meetings. e. Transit Enhancement Reports. Transit Enhancement Reports must be submitted by grantees with population areas of 200,000 and above who receive funds under the Urbanized Area Formula Program (Section 5307). Recipients of these funds are required under Section 5307(d)(K)(ii) to submit a report listing the projects carried out during the previous FY with those funds including the amounts expended. This report should be submitted as a narrative attachment to the electronic 4th quarter MPR in TEAM. Certification that this report has been submitted is required as part of the Annual List of Certifications and Assurances. f. Civil Rights Reports. Grantees must submit, on a triennial basis, a report on their compliance with the objectives of the current Circular 4702.1, "Title VI and Title VI Dependent Guidelines for FTA Recipients." This circular provides details on the contents of compliance reports. Grantees covered under FTA's Equal Employment Opportunity (EEO) Circular must submit triennial reports on their compliance with this circular. Grantees who meet the $250,000 funding threshold of FTA's Disadvantaged Business Enterprise (DBE) regulations must submit annual DBE goals to FTA by August 1 of each FY. If they do not anticipate reaching the threshold, then they are not required to develop annual goal for that FY in which the contracting opportunities are not available. Grantees must submit a one -time DBE program submission to FTA the first time they meet the threshold. For the first year it is a program and goal submission; the next year it is only a goal submission. Reports and goals are submitted to the Regional Civil Rights Officer. See Chapter III, Subsections 3.f.(1) and (2) below for applicability of these two reporting requirements. Grantees must also submit semi- annual DBE progress reports to the Regional Office. Grantees may also be required to submit, on an as- requested basis, reports on their activities and progress to address findings identified in civil rights compliance reviews and assessments. (1) Equal Employment Opportunity (EEO). FTA's EEO program reporting requirements apply to grantees employing 50 or more people and receiving $1 million or more of FTA assistance. Page III -8 g. FTA C 5010.1D 11/01/2008 (2) Disadvantaged Business Enterprise (DBE). FTA's DBE goal setting requirements apply to grantees who will award prime contracts (excluding vehicle purchases) exceeding $250,000 in FTA funds in any given FY. These grantees are required to provide DBE goals to FTA on an annual basis. Reports of Significant Events. Unforeseen events that impact the schedule, cost, capacity, usefulness, or purpose of a project should be reported to FTA immediately after detection and then reflected in the next quarterly progress report. Special reports should be submitted when: (1) Problems, delays, or adverse conditions will affect the grantee's ability to achieve project objectives within the scheduled time period or within the approved project budget. The report should discuss actions taken and /or contemplated and any Federal assistance needed to resolve the situation; or (2) Favorable developments will enable the grantee to achieve project goals /complete project activities ahead of schedule or at lower cost. (3) Local events that effect transit in general. Events such as bond issues, major new employer, loss of employer, public policy or transit district in news. h. National Transit Database (NTD) Reporting. The NTD was established by Congress to be the Nation's primary source for information and statistics on the transit systems of the United States. NTD data is used to support numerous DOT programs and to "help meet the needs of individual public transportation systems, the United States Government, State and local governments, and the public for information on which to base public transportation service planning." (49 U.S.C. 5335). Recipients or beneficiaries of grants from FTA under the Urbanized Area Formula Program (Section 5307) or Other Than Urbanized Area Formula Program (Section 5311) are required by statute to submit data to the NTD. The legislative requirement for the NTD is in 49 U.S.C. 5335. FTA implemented this legislative requirement through the NTD Rule at 49 CFR part 630. A recipient or beneficiary of FTA grants that is required to report to the NTD, must provide a complete report to the NTD of all transit operations, regardless of whether those operations are or are not funded in whole or part by FTA. Financial information reported to the NTD must be reported in accordance with the Uniform System of Accounts (USOA). The complete reporting requirements for the NTD, along with information on due dates, extensions, and waivers can be found in the current versions of the NTD Reporting Manuals. The NTD Rule, the USOA, and the most recent versions of the NTD Reporting Manuals can be found on FTA's NTD website at http://www.ntdprogram.gov/. (1) Annual Reports. Recipients or beneficiaries of FTA's Urbanized Area Formula Program (Section 5307) or Nonurbanized Area Formula Program (Section 5311) are required by statute to report to the NTD. Recipients of the Urbanized Area FTA C 5010.1D 11/01/2008 Page III -9 Formula Program funding must also submit monthly operations reports to the Monthly Module (2) and monthly reports to the Safety and Security Module. (a) Annual Report (Urbanized). Recipients or beneficiaries of Section 5307 Grants must annually report financial and non - financial data in accordance with the USOA as well as other data on operations, organizational relationships, available resources, and capital assets. The NTD Annual Manual, published by FTA each year, contains the specific reporting requirements, detailed reporting instructions, and information on due dates, waivers, and extensions. (b) Rural Report (non- Urbanized). Recipients of Section 5311 Grants must annually report financial and non - financial data in accordance with the USOA as well as other data on operations, organizational relationships, available resources, and capital assets. Recipients also need to report on behalf of their beneficiaries or subrecipients. The NTD Rural Manual, published by FTA each year, contains the specific reporting requirements, detailed reporting instructions, and information on due dates, waivers, and extensions. (2) Monthly Report (Urbanized). Recipients or beneficiaries of Section 5307 Grants are required to file monthly reports on transit operations to the NTD. These monthly reports include information on unlinked passenger trips, vehicle revenue miles, vehicle revenue hours, vehicles operated in maximum service, and regular service days for each month. The NTD Monthly Manual, published by FTA each year, contains the specific reporting requirements, detailed reporting instructions, and information on due dates, waivers, and extensions. (3) Safety and Security Report (Urbanized). Recipients or beneficiaries of Section 5307 Grants are required to file monthly safety and security reports. These monthly reports include information on fatalities, injuries, collisions, derailments, fires, hazardous material spills, evacuations, arrests, and significant security events. The NTD Safety & Security Manual, published by FTA each year, contains the specific reporting requirements, detailed reporting instructions, and information on due dates, waivers, and extensions. i. Value Engineering Reports. Grantees with major capital projects are required to submit a VE report to the appropriate FTA Regional Office at the end of each Federal fiscal year (FY) (October 1) indicating the results of their VE efforts. Copies of the VE report form are available in each Regional Office. 4. GRANT MODIFICATIONS. At times, it may be necessary to modify a grant after it has been awarded by revising the budget or amending the grant. The grantee is responsible for controlling and monitoring all grant activities to ensure that they are carried out in accordance with the approved budget. Each grant program has specific requirements that are included in each program grant application circular that should be referenced before contemplating a grant modification. For example, for Section 5307 grants, transit Page III -10 FTA C 5010.1D 11/01/2008 enhancement funds must be used for eligible activities, and the funding for the Americans with Disabilities Act (ADA) complementary paratransit service as a capital project cannot exceed 10 percent of the annual apportionment. Section 5310 and 5311 grants also have specific requirements for grant modifications that are addressed in the program grant application circulars. Also, funds flexed from other programs, such as the Congestion Mitigation and Air Quality (CMAQ) Improvement Program or Surface Transportation Program (STP), may have additional requirements that are addressed in other guidance that must be considered before modifying an approved grant. The manner in which a budget is initially structured during the grant application phase can facilitate or impede project management, particularly when unforeseen events require changes in the project. There are three ways to modify a grant after it has been awarded — either through a budget revision, an administrative amendment, or a grant amendment. Whether a budget revision may be permitted (with or without prior FTA approval before incurring costs) or whether an amendment to the project will be necessary, depends on the effect of the proposed change on the scope of the project. If an ALI is added to an existing scope, the budget revision may be sent to the Department of Labor (DOL) for informational purposes but the labor protection arrangements for the original grant will apply to any modifications without further DOL certification. Grantees should contact the FTA regional or metropolitan office for questions relating to grant modification requests, including which type of grant modification is appropriate for the proposed action. Grant modifications are electronically submitted, reviewed, and approved in TEAM. a. Budget Revision. (1) General. Budget revisions may be made as long as there is no change in the grantee purpose, scope codes, and Federal funding of the grant, regardless of the FY the funds were appropriated. Budget revisions are generally changes to ALIs amount or descriptions. Budget revisions must be consistent with the activities contained in an approved Transportation Improvement Program (TIP) and Statewide Transportation Improvement Program (STIP) and satisfy applicable National Environmental Policy Act (NEPA) requirements. Useful life of new activities must be addressed in the budget revision, as applicable. (2) Procedures. A grantee must submit a budget revision in TEAM using the "Revise Project Budget" screen. Budget revision requests must include a reason for the revision. For each ALI being adjusted, either by quantity or dollar amount, a grantee must include a brief explanation and impact to the project or grant in the "Details" section for the change being requested. If necessary, additional information can be provided by using the attachments feature in TEAM. Incomplete budget revisions will be returned to the grantee by the FTA reviewer for inclusion of additional information. For assistance with completing budget revisions, please contact the FTA regional or metropolitan office. FTA C 5010.1D 11/01/2008 (3) Page III -11 A grantee may request a budget revision either before or after incurring costs, depending on the nature of the request. If the budget revision meets the criteria outlined in (3) below, FTA concurrence is required before incurring costs associated with the proposed change. Budget Revisions that Require Prior Approval. Under certain circumstances, a grantee must obtain FTA approval before incurring costs for proposed budget revisions. For these grants, the proposed budget revision must be submitted in TEAM and approved before incurring costs associated with the budget revision. If FTA determines the proposed budget revision does not meet the criteria for a budget revision, alternate methods for modifying the grant, such as a grant amendment, may be recommended. The FTA regional or metropolitan office will make this determination during its review. Prior FTA approval must be obtained if the proposed budget revision meets any of the following criteria: (a) The Federal share of the grant exceeds $100,000 and the change in the cumulative amount of funds allocated to each scope from the originally approved scope exceeds 20 percent. (b) Federal funds are transferred between ALIs with different Federal matching ratios, such as moving funds from a capital activity with a match ratio of 80/20 to an operating activity with a match ratio of 50/50. This activity also requires a financial purpose code (FPC) transfer. See Chapter III, Subsection 4.a.(4) below. (c) Changing the Federal share of an existing ALI, such as changing an ALI from 80/20 to 83/17 to account for compliance with ADA or CAA requirements. (d) For revenue rolling stock, when the budget revision changes the number of vehicles to be purchased by more than two units (for grants with fewer than 10 vehicles) or more than 20 percent from the quantity identified in the original grant. The grantee must continue to meet FTA bus spare ratio requirements for any change in the number of revenue rolling stock. If the change in the number of revenue rolling stock exceeds 20 percent, the budget revision must be supported by a Rolling Stock Status Report. (e) The budget revision changes the size or physical characteristics of the items in the ALIs without changing the project scope. (f) The addition or deletion of an ALI to an existing scope included in the grant, provided that the request does not change the amount of Federal funds awarded in the original grant or change the scope of the project contained in the grant. The addition of an activity within an approved scope requires that the grantee affirm in the budget revision request that the new activity is Page III -12 FTA C 5010.1D 11/01/2008 consistent with the approved STIP and, if applicable, has satisfied NEPA requirements. (4) Financial Purpose Code Transfers. When a budget revision includes a transfer of funds between capital /operating /planning activities, an FPC change is required to be made by the FTA Project Manager before the grantee is able to draw funds for this purpose. Budget revisions with FPC transfers of any kind require prior FTA concurrence and Regional Office notification to FTA's Office of Accounting. (5) Examples. The following are examples of typical budget revisions. Please note that if the examples below meet any of the criteria outlined above in Chapter III, Subsection 4.a.(3), the grantee must request FTA concurrence before incurring the costs for the requested activities. (a) Budget revisions to existing ALIs. Grant AB -90 -1234 includes a scope for vehicles (111 -00) with the ALI to purchase 40' buses (11.12.01) and a scope for stations stops /terminals (113 -00) with the ALI for construction of a bus terminal (11.33.01). The construction costs for the station are expected to be higher than originally anticipated, and there is a surplus in the vehicle line item because the vehicle costs were less than anticipated. A grantee may request to move funds from ALI 11.12.01 to 11.33.01 to cover additional construction expenses. Following the process described above in Chapter III, Subsection 4.a.(2) and after determining if the request meets the threshold for prior FTA approval, the grantee may request to move the excess funds from 11.12.01 to 11.33.01. (b) Budget revisions that require an FPC transfer. Grant AB -90 -1234 has an approved budget for $250,000 in Federal funds for operating assistance (30.09.01 at a 50 percent Federal /50 percent local funding ratio, and $50,000 in Federal funds for the purchase of vans (11.12.15) at an 80 percent Federal /20 percent local funding ratio). The grantee has $5,000 in Federal funds remaining under operating assistance and would like to use the remaining operating funds toward the purchase of vans, a capital line item. With prior concurrence from FTA, this can be accomplished through a budget revision. Since these two scopes have different funding ratios, the local share must be adjusted to ensure the correct funding ratio is maintained for each ALI. The example below shows the budget before and after the revision. As shown, the Federal share remains the same, and the local share and total eligible cost are adjusted to reflect the correct funding ratios in each line item. FTA C 5010.1D 11/01/2008 Approved Project Bud t et Exam le Project Budget SCOPE 300-00 OPERATING ASSISTANCE ACTIVITY Page III -13 FTA Amount $250,000.00 Tot. Elig. Cost $500,000.00 30.09.01 UP TO 50% FEDERAL SHARE $250,000.00 $500,000.00 SCOPE 111-00 BUS — ROLLING STOCK ACTIVITY 11.12.15 BUY REPLACEMENT VANS $50,000.00 ........................... $50,000.00 Estimated Total Eligible Cost: $62,500.00 $62,500.00 $562,500.00 Federal Share: $300,000.00 Local Share: $262,500.00 Revised Project Budget Example Project Budget FTA Amount Tot. Elig. Cost SCOPE 300-00 OPERATING ASSISTANCE ACTIVITY $245,000.00 $490,000.00 30.09.01 UP TO 50% FEDERAL SHARE SCOPE 111-00 BUS — ROLLING STOCK ACTIVITY 11.12.15 BUY REPLACEMENT VANS 0 $245,000.00 $490,000.00 1 $55,000.00 $68,750.00 $55,000.00 Estimated Total Eli ible Cost: $68,750.00 $558,750.00 Federal Share: Local Share: $300,000.00 $258,750.00 Page III -14 FTA C 5010.1D 11/01/2008 The result of the budget revision is an FPC transfer completed by the FTA Project Manager. FTA will reduce Federal funds in the operating FPC (04) by $5,000, and increase the Federal funds in the capital FPC (02) by $5,000. (c) Adding an ALI to an existing scope. The scope for Stations Stops /Terminals (113 -00) exists in the grant, and funds are allocated to acquire route signing (11.32.09). However, the grantee determines that the agency prefers to use the funds to construct passenger shelters (11.33.10), which is an activity within the scope 113 -00. The grantee may request a budget revision to add the ALI- 11.33.10 and shift the funds from 11.32.09 with prior FTA concurrence. In addition, the grantee must confirm that the approved STIP includes construction of bus shelters, and applicable NEPA requirements have been satisfied. (6) Operating Assistance Changes. A grantee may use a budget revision to reflect time period changes, adjustments or extensions to the operating period provided the total amount of Federal funds previously awarded under the grant remains unchanged. b. Administrative Amendment. (1) General. An administrative amendment is usually initiated by FTA and may only be used when no change will result in the scope, amount, or purpose of the grant. An administrative amendment may be used to change or clarify the terms, conditions, or provisions of a Grant Agreement. An administrative amendment is also used to change the year or type of funds obligated for a grant, to transfer equipment from one grantee to another, to reflect a change in the grantee or grantee's name, or to deobligate Federal funds that are no longer needed to complete the approved project scope or purpose. c. Grant Amendment. (1) General. A grant amendment is required when there is either a change in the scope or an addition of Federal funds to an existing grant. Grant amendments are subject to the same application requirements as a new grant request. All grant amendments are subject to DOL certification. (2) Procedure. Grantees submit grant amendments in TEAM using the "Create Amendment" screen. Grant amendments require a revised Grant Agreement, revised budget, and may require a change in the amount of funds obligated for the grant. An amendment is subject to the same requirements as a new grant request except that the grantee need not resubmit portions of the original grant application that are unaffected by the change. The grantee must submit a detailed description of the changes and a revised project budget. For example, in TEAM under the project Details section of the grant, grantees should include a header, "Amendment FTA C 5010.1D 11/01/2008 (3) Page III -15 #1," and describe the reason for the amendment and the changes to the grant and budget. Change of Scope. FTA requires a grant amendment if the request changes the overall scope of a grant or changes the project scopes within a grant. Examples and an exception to changes in scope that result in a grant amendment include: (a) Examples of change in scope. 1 A change in the quantity of items to be purchased or constructed that materially change the purpose or intent of the approved grant. 2 The addition of a new project scope code or the deletion a project scope code if the deletion affects the intent or objectives of the grant. 3 The addition of an ALI that results from an amendment to the approved TIP /STIP. (b) Exception to change in scope. For earmarks, all changes to the grant after award must be consistent with the original intent of the Congressional language. Your FTA Regional Office will assist you in making this determination. For example, if the earmark is only for a facility, a grant amendment cannot be executed to add a scope for vehicles without explicit direction from Congress to FTA to change the earmark. (4) Change in Federal Funds. FTA requires a grant amendment if the request changes the total amount of Federal funds in the grant. The one exception is if the scope of a grant is unchanged and the only action is the deobligation of funds; an administrative amendment is used to process the grant modification. See Chapter III, Subsection 4.b., "Administrative Amendment," above. 5. GRANT CLOSE -OUT. Grant close -out is the term used to signify the process by which FTA determines that all activities in a grant are complete and Federal funds have been expended. Grant closeout does not preclude FTA's ability to seek repayment or other remedies for a grantee's breach of grant terms and conditions. a. Grantee's Role and Responsibilities. The grantee must initiate close -out of a grant when all approved activities are completed and/or applicable Federal funds expended. All close -out documentation must be submitted within 90 days of the completion of all activities in the grant. This requires notifying FTA by letter or e-mail that the grant is ready for close -out. The grantee should electronically submit the following in TEAM as part of the grant close -out process: (1) a final budget reflecting actual project costs by scope and activity; (2) a final FSR; Page II1 -16 (3) FTA C 5010.1D 11/01/2008 a final narrative MPR indicating the actual completion date of each ALI; a discussion of each ALI contained in the final budget and list of project property purchased under the grant; (4) a request to deobligate any unexpended balance of Federal funds; and (5) any other reports required as part of the terms and conditions of the grant. b. Close -Out by FTA. FTA may unilaterally initiate grant close -out. Circumstances that could cause FTA to close -out a grant in whole or in part at any time before project completion include: (1) Grantee failure to comply with the terms or conditions of the Grant Agreement or other Federal requirements; (2) Continuation of the project would not produce results commensurate with further expenditure of funds; (3) Funds are no longer needed to accomplish the grant purpose; (4) Failure by the grantee to make reasonable progress to complete approved grant activities; or (5) Determination that the project has been essentially completed and /or approved funds have been substantially drawn down. c. Adjustments to Federal Share of Costs. Necessary adjustments to the Federal share of cost are made after FTA receives and reviews the required close -out information. Adjustments may also be necessary after the audit required by OMB Circular A -133 is performed. FTA funds are not available for audit or other grant activities after a grant has been closed. Additional information on the A -133 audit is contained in Chapter VI, Financial Management. Any Federal grant funds received by the grantee but not expended must be returned to FTA. For more information on returning funds to FTA, see Chapter VI, "Financial Management." 6. SUSPENSION AND TERMINATION. a. Suspension. The suspension of a grant is an action by FTA which temporarily suspends Federal assistance for a project pending corrective action by the grantee or pending a decision to terminate the grant by FTA. If FTA determines that the grantee has failed to comply with the terms and conditions of the Grant Agreement, including the civil rights requirements, FTA notifies the grantee in writing of its intent to suspend the grant. FTA may withhold further payments and /or prohibit the grantee from incurring additional obligations pending corrective action by the grantee or a decision to terminate the project for cause. This includes work being performed by third party contractors or consultants. Unless FTA notifies the grantee otherwise, suspension will FTA C 5010.1D 11/01/2008 Page III -17 not invalidate obligations properly incurred by the grantee prior to the date of suspension to the extent that they cannot be cancelled. b. Termination for Cause. FTA may terminate a grant, in whole or in part, at any time before project completion, whenever it determines that the grantee failed to comply with the conditions of the grant including failure to make reasonable progress. FTA will promptly notify the grantee in writing of its intent to terminate and the reasons therefore and the effective date. Payments made to the grantee or recoveries by FTA are in accordance with the terms of the Grant Agreement and the legal rights and liabilities of both parties as defined in the agreement. c. Termination for Convenience. FTA or the grantee may terminate a grant in whole or part, when both parties agree that continuation of the project would not produce results commensurate with the further expenditure of funds. By signing the Grant Agreement, the grantee agrees at the outset to a termination for convenience in the event FTA makes such a finding. Both parties must agree upon the termination conditions, including the effective date and, in case of partial termination, the portions to be terminated. The grantee may not incur new obligations for the terminated portion after the effective date and must cancel as many outstanding obligations as possible. FTA evaluates each obligation to determine its eligibility for inclusion in project costs. Settlement is made in accordance with terms and conditions of the Grant Agreement. FTA allows full credit to the recipient for the Federal share of the obligations (that cannot be cancelled) properly incurred by the grantee prior to termination. d. Partial Termination. In some cases, FTA may deobligate funds in an approved grant before close -out because the funds are no longer needed to accomplish the grant purpose. 7. RETENTION AND ACCESS REQUIREMENTS FOR RECORDS. a. Applicability. This section applies to all financial and programmatic records, supporting documents, statistical records, and other records of grantees. Records retention and access requirements shall apply to grantee contractors, subcontractors, and subgrantees. Grantees shall include this requirement in grantee contracts and/or subgrants. These records are: (1) Records required to be maintained by this circular or the terms of the Grant Agreement, or otherwise considered pertinent to FTA program requirements or the Master Agreement. (2) Records executed electronically may be retained in that manner. Copies made by mii•✓rofilming, photocopying, or similar methods may be substituted for the original records. Files must be accessible for possible review, audit, or down - loading to paper copy when required. (3) This section does not apply to records maintained by contractors or subcontractors. Page III -18 b. Length of Retention Period. (1) FTA C 5010.1D 11/01/2008 Except as otherwise specified, records must be retained for three years from the starting date specified in Chapter III, Subsection 7.c., below. (2) If any litigation, claim, negotiation, audit, or other action involving the records has been started before the expiration of the three -year period, the records must be retained for three years after completion of the action and resolution of all issues which arise from it. To avoid duplicate record keeping, FTA may make special arrangements with grantees (including subgrantees, as appropriate) to retain any records which are continually needed for joint use. FTA will request transfer of records to its custody when it determines that the records possess long -term retention value. When the records are transferred to or maintained by FTA, the three -year retention requirement is not applicable to the grantee. c. Starting Date of Retention Period. (1) General. The starting date for retention of records related to multi -year projects is the date of submission of the final FSR upon project completion or, if waived, the date it would have been due. (2) Equipment Records. The three year retention period for the equipment records starts from the date of the equipment's disposition or replacement or transfer at FTA's direction. (3) Records for Income Transactions after Grant Close -out. In some cases, grantees must report income after a grant is closed out. Where there is such a requirement, the retention period for the records pertaining to the earning of the income starts from the end of the grantee's FY in which the income is earned. (4) Indirect Cost Rate Proposals, Cost Allocation Plans (CAPs) and Similar Rate, and Rate Allocation Methods. This paragraph applies to the following types of documents, and their supporting records: indirect cost rate computations or proposals, CAPs, and any similar accounting computations or the rate at which a particular group of costs is chargeable (such as computer usage charge back rates or composite fringe benefit rates). (a) If submitted for negotiation: If the proposal, plan, or other computation is required to be submitted to the Federal Government (or to the grantee) to form the basis for negotiation of the rate, then the three year retention period for its supporting records starts from the date of such submission. (b) If not submitted for negotiation: If the proposal, plan, or other computation is not required to be submitted to the Federal Government (or to the grantee) for FTA C 5010.1D 11/01/2008 (5) Page III -19 negotiation purposes, then the three year retention period for the proposal, plan, or computation and its supporting records starts from the end of the FY (or other accounting period) covered by the proposal, plan, or other computation. Contract Records. The retention period for all required contract records commences after the grantees or subgrantees make final payments, and all other pending matters are closed (49 CFR 18.36(i)(1 1)). d. Substitution of Photocopies. Copies of documents may be substituted for the originals. e. Access to Records. (1) Records of Grantees and Subgrantees. FTA, DOT Office of Inspector General, and the Comptroller General of the United States, or any of their authorized representatives, have the right of access to any books, documents, papers, or other records of the grantee which are pertinent to the grant, in order to perform audits, or make examinations, excerpts, or transcripts. (2) Expiration of Right of Access. The right of access in this section is not limited to the required retention period but continues as long as the records are retained. f. Restrictions on Public Access. The Federal Freedom of Information Act (FOIA)(5 U.S.C. 552) does not apply to grantee records owned and possessed by the grantee. Unless required by State or local law, grantees and subgrantees are not required to provide periodic public access to their records. However, FTA may request a grantee to provide access to those records the grantee maintains on behalf of FTA, (i.e., records required by Federal statute or regulation, such as Davis -Bacon wage records), or other records necessary to determine compliance with Federal requirements established as conditions of eligibility for recipients of Federal funding. FTA C 5010.1D 11/01/2008 This page intentionally left blank FTA C 5010.1D 11/01/2008 CHAPTER IV PROJECT MANAGEMENT Page IV -1 1. GENERAL. Real property, equipment and supplies, rolling stock, and facilities purchased or constructed for project purposes must be managed, used, and disposed of in accordance with applicable laws and regulations. This chapter provides guidance on the management, use, and disposition of Federal Transit Administration (FTA) funded real property, equipment, supplies, rolling stock, and facilities. 2. REAL PROPERTY. Real property must be acquired, managed, and used in accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (Uniform Act or URA) (PL 91 -646) and 49 CFR part 24, the implementing regulation. The following requirements govern the acquisition, use, or disposition of real property purchased with Federal funds. All regulatory references in this Section are to 49 CFR part 24, unless specified otherwise. a. General. If a grantee is using Federal funds to acquire real property or provide relocation assistance necessary to secure property for a project, the grantee must comply with the requirements in the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act or URA), as amended. The Uniform Act is implemented by regulation (49 CFR part 24). The objective of the Uniform Act is to ensure equitable treatment of property owners of real property to be acquired for Federal and federally assisted projects; that people displaced by a federally supported project be treated fairly, consistently, and equitably; and that acquiring agencies implement the regulations in a manner that is efficient and cost effective. The regulations implementing the Uniform Act are very specific in naming the means to achieve those legislated objectives. FTA must review and concur in appraisals and review appraisals for acquisitions over $500,000 or in -kind contributions of any value before Federal funds are expended, or the value is used as local match. The requirements and processes for conducting appraisals, review appraisals, providing relocation assistance, and requesting FTA's concurrence are described as follows: (1) To ensure eligibility for Federal funding, the grantee should follow the typical process sequence when acquiring real property for a project: National Environmental Policy Act (NEPA) Approval —* Title Search —* Appraisal —* Appraisal Review --* Just Compensation Determination —* FTA Concurrence (if required) —> Offer to Owner —* Settlement. (2) If a grantee is considering leasing real property, whether facilities or equipment, rather than outright purchase of the same, and such lease is a capital not operating Page IV -2 FTA C 5010.1D 11/01/2008 lease, then the grantee must comply with 49 CFR part 639 including these specific procedures: (a) Section 639.11 requires the grantee to demonstrate that the lease of a capital asset is more cost effective than the purchase or construction of the asset. (b) Section 639.23 requires the calculation of the purchase or construction cost and Section 639.25 requires the calculation of the lease cost. These two calculations are used to determine which is the most cost effective approach. b. Appraisal of Real Estate. (1) General. Except as discussed in Chapter IV, Subsections b.(2 )–(4) below, an offer of just compensation will be established on the basis of a recent independently prepared appraisal that estimates a fair market value. (2) Appraisers. Appraisers must be certified or licensed with a State Appraisal Board as required by the URA regulations at Section 24.103(d)(2). However, staff employees may be exempt from this requirement. FTA recommends that appraisals and review appraisals be completed by appraisers experienced with State and Federal laws for valuing properties for public acquisitions under the threat of eminent domain. Appraisers and grantees making appraisal assignments should be familiar with the implementing regulations of the Uniform Act (49 CFR part 24), especially Subpart B —Real Property Acquisition. State subrecipients may use the State's staff appraisers to prepare required independent appraisals and appraisal reviews. (3) Requirements. Appraisals must be fully compliant with all of the appraisal requirements as cited in Section 24.103(a). This includes compliance with the Scope of Work, i.e., defining the appraisal requirements and, as appropriate, a realty /personalty report. The appraiser will also appropriately address the requirements of Section 24.103 (b) and (c) in the report concerning the effects of project influence and owner retention of improvements. Depending on the individual State Appraisal Board, certified /licensed appraisers may need to utilize the jurisdictional exception provisions of Uniform Standards of Professional Appraisal Practice (USPAP) in order to complete the assignment for a public agency in full compliance with the requirements of Section 24.103. If the acquisition leaves the owner with an uneconomic remnant, the appraiser or review appraiser may be assigned the responsibility to make this determination and appraise the fair market value of the remnant. See Section 24.102(k). The owner also has a right to accompany the appraiser during the inspection of the property pursuant to Section 24.102(c)(1). FTA C 5010.1D 11/01/2008 Page IV -3 When valuing properties that contain contamination or hazardous material, the appraiser must consider the effect, if any, the contamination's or material's presence has on the market value. Grantees should update appraisals over six months old in an active real estate market before fair market value is determined and submit to the FTA Regional Office for review and concurrence, when required. If the documents are not updated, the letter of transmittal to FTA shall provide adequate justification explaining why the appraisal was not updated. (4) Exceptions. Full appraisal and /or negotiation procedures are not necessary in certain instances. While an appraisal of the property may not be required in some of the following instances, the agency must have some reasonable basis for its determination of fair market value in accordance with Section 24.101(b) and Appendix A. In the case of a donation an appraisal may not be required; however, an appraisal is required if the grantee proposes to use the property as an in -kind contribution as part of the local matching share. FTA should be contacted for further guidance when any one of the following situations occurs: (a) The owner is donating the property, reference Sections 24.102(c)(2) and 24.108. (b) The grantee does not have authority to acquire property by eminent domain as set out in Section 24.101(b). (c) The property qualifies as a voluntary acquisition as defined in Section 24.101(b). (d) The valuation is uncomplicated, and the fair market value is estimated at $10,000 or less, based on a review of available data, using the waiver valuation provision found at Section 24.102(c) and Section 24.2(a)(33). (e) State subrecipients may use the State's staff appraisers to prepare required independent appraisals. c. Appraisal Review of Real Estate. (1) General. All appraisals for acquisition of real property are to be reviewed in accordance with the Uniform Act and 49 CFR 24.104. The review appraisal should determine the soundness of the report's value estimate. A qualified review appraiser (see Section 24.103(d)(1) and Appendix A thereof, and Section 24.104) shall examine the presentation and analysis of market information in all appraisals to assure that they meet the definition of an appraisal found in Section 24.2(a)(3), as well as other appraisal requirements found in Section 24.103 and other applicable State and local requirements. Page IV -4 FTA C 5010.1D 11/01/2008 The review appraiser is often expected to determine if the value conclusion is consistent with State laws as to what is compensable in eminent domain for public acquisitions and with the Uniform Act. The review appraiser is also responsible for assuring that value estimates are consistent when multiple parcels of property are needed for the project. The review appraiser cannot determine the soundness of a report's value estimate without possessing familiarity with the subject property, the comparable sales used, and other market factors; thus rarely will only a desk review be sufficient. The appraisal review report is expected to be a technical analysis of the appraisal, not merely an administrative review. (2) Requirements. In accordance with Section 24.104(a), the review appraiser shall prepare a written report identifying each appraisal report as: (3) (a) Recommended (as the basis for the establishment of the amount believed to be just compensation) or, (b) Accepted (meets all requirements, but not selected as recommended or approved), or (c) Not accepted. Establishment of Just Compensation. If authorized by the grantee, a staff review appraiser may also establish the approved appraisal amount as the offer of just compensation. Under no circumstances can the establishment of the just compensation amount be delegated to a contractor (i.e., a fee review appraiser) who is not a governmental official of the agency. If the review appraiser is unable to recommend (or approve) an appraisal as an adequate basis for the establishment of the offer of just compensation, and it is determined by the acquiring agency that it is not practical to obtain an additional appraisal, the review appraiser may, as part of the review, present and analyze market information in conformance with Section 24.103 to support a recommended (or approved) value (see Section 24 Appendix A related to Section 24.104(b)). Review appraisers who are not staff employees must be State certified appraisers. d. Appraisal Concurrence Process. Prior FTA concurrence is required when the grantee's recommended offer of just compensation exceeds $500,000, or when a property appraised at $500,000 or more must be condemned. Appraisals under $500,000, not requiring FTA concurrence, must follow the applicable appraisal standards (see Section 24.103). The grantee is required to maintain a parcel file with the proper support and documentation. Appraisals and Review Appraisals must be submitted to FTA for review and concurrence for acquisitions over $500,000 or in -kind contribution of any value before Federal funds are expended, or the value is used as local match. FTA C 5010.1D 11/01/2008 e. Acquisition of Real Estate and Concurrence Requirements. Page IV -5 (1) General. In accordance with URA requirements every effort should be made to acquire real property by negotiation based on the approved just compensation amount that has been determined by the acquiring agency and considering the requirements described in the following: (2) Market Value. Before making an offer to the property owner, the grantee must first establish market value of the parcel to be purchased. Property acquisition activities will be conducted in compliance with the requirements of Section 24.101 and 102. Market value is to be established through a current appraisal and appraisal review accomplished in accordance with the requirements of Section 24.103 and 104 respectively. Once the appraisal and the appraisal review are complete, a determination of just compensation must be made by the grantee in accordance with Section 24.102(d). (3) Making an Offer. After the just compensation determination has been made by the agency, with FTA concurrence, if required, an offer can be made to the owner. No owner shall be required to surrender possession of real property without either payment of the agreed purchase price to the owners or deposit of the established just compensation amount in condemnation court as set out in Section 24.102(j). The full amount of the deposit must be made available to the owner without prejudice pending the ultimate determination of just compensation by the judicial process. The grantee must expeditiously reimburse property owners for actual, reasonable, and necessary expenses incidental to transfer of title pursuant to Section 24.106. (4) Uneconomic remnant. If the acquisition leaves the owner with an uneconomic remnant, the grantee must offer to acquire that remnant; and its value will be presented as an element of the written offer that is made (see Section 24.102(k)). (5) Filing Condemnation. Additionally FTA concurrence is required before filing for condemnation if the appraised amount exceeds $500,000. (6) Administrative Settlements. Any settlement in excess of the grantee's approved just compensation must be addressed as an administrative settlement (see definition, Chapter 1, Subsection 5.c. and Section 24.102(i). The term "administrative settlements" encompasses both negotiated settlements and legal settlements. Legal settlements are those arrived at prior to a trial on the merits. (a) Requirements. Administrative settlements in excess of $50,000 more than the current fair market value require prior FTA concurrence. Instead of using its power of eminent domain when a property cannot be purchased at appraised value, a grantee may propose acquisition through negotiated settlement, as explained previously in Chapter IV, Subsection 2.e.(6). The grantee must Page IV -6 FTA C 5010.1D 11/01/2008 document that reasonable efforts to purchase the property at the appraised amount have failed and prepare written justification supporting why the settlement is reasonable, prudent, and in the public interest. Such a settlement will be handled in accordance with administrative settlement requirements at Section 24.102(i). If the settlement request represents a significant increase over the just compensation and if trial risks are a key factor in the settlement justification, a litigation attorney for the agency must be consulted to provide advice in this regard. The decision to recommend a settlement should evaluate among other relevant matters, the risks of settling for the proposed amount versus the risks of trying the condemnation in court. Note: Any global settlements of a property acquisition that involve the inclusion of relocation payments based on other than relocation costs that are actual, reasonable, and necessary are not eligible for FTA reimbursement in accordance with Section 24.207(0 of the URA regulations. (b) Settlement Concurrence Process. All settlements must be justified in writing and be available in the project files. The justification shall be thorough, document the entire settlement process, demonstrate the logic and reason supporting the settlement, and be able to withstand the scrutiny of an independent review. If either type of settlement exceeds FTA's threshold for approval, it must be submitted to FTA for advance concurrence before the settlement is consummated. f. Relocation Assistance. The relocation assistance program provides a variety of advisory services and benefits to displaced people, businesses, and non - profit organizations. The highlights of this program element and FTA policies related to it are summarized in the following: (1) Early provision of written notices and explanations of acquisition and relocation programs must be provided to displacees as required by 49 CFR part 24. (2) No individual, family, business, farm, partnership, corporation, or association will be required to move without at least 90 days advance notice per Section 24.203(c). (3) In the case of residential displacees, the 90 -day notice must also include the availability of at least one comparable replacement dwelling. Rental assistance and replacement housing payments are provided to make the dwellings affordable and available at the time the notice is given. See Section 24.203(c)(3). (4) All displacees, both business and residential, are reimbursed for certain moving expenses per Section 24.301 through Section 24.306. (5) There must be as many residential dwellings available as there are families who will be displaced. The dwellings must be comparable to the ones from which the people are displaced. In addition, the comparable replacement dwellings must be decent, safe, and sanitary (DSS); located in the same area or in areas generally not FTA C 5010.1D 11/01/2008 g. Page IV -7 less desirable in regard to public utilities and public and commercial facilities; reasonably accessible to the displacees' places of employment and within the financial means of the displaced families; and adequate in size to accommodate the occupants in accordance with 49 CFR 24.204. (a) The definition of DSS at Section 24.2(a)(8) contains the following requirements regarding the number of rooms and area of living space for the displacee. "The number of persons occupying each habitable room used for sleeping purposes shall not exceed that permitted by local housing codes or, in the absence of local codes, the policies of the displacing Agency. In addition, the displacing Agency shall follow the requirements for separate bedrooms for children of the opposite gender included in local housing codes or in the absence of local codes, the policies of such agencies." (b) In the absence of applicable housing codes, FTA's policy requires separate bedrooms and gender separation for children over 12 years of age. (6) Replacement housing must be open to all people regardless of race, color, religion, sex, or national origin as required by Section 24.8 of the URA regulations. (7) Any relocation benefits required by State or local law exceeding the specified limits in the Uniform Act will not be reimbursed by FTA. (8) Any global type settlements of a property acquisition that involve the inclusion of relocation payments based on other than relocation costs that are actual, reasonable, and necessary are not eligible for FTA reimbursement in accordance with Section 24.207(1) of the URA regulations. (9) Rental and for -sale dwellings used in the determination of replacement housing benefits must be actually and currently available for sale or rent. A rent schedule method cannot be used to calculate a rental differential payment, since the grantee is required to offer the displacee specific rental replacement properties that are actually available as explained in Chapter 1, Section 5., "Definitions," of this circular. FTA does not allow the use of rent schedules for the calculation of rental housing cost differentials as it is not compliant with Sections 24.2(a)(6), 24.204(a), 24.402(b)(1)(i), and_24.403(a) of the URA regulations that require that three comparable and currently available rental properties be identified and provided to the displacee. Special Real Estate Acquisition Program Strategies /Issues. Several real estate program strategies or issues are worthy of discussion in some detail as follows: (1) Alternative Procedure. A grantee with a qualified and fully staffed real estate department conducting a major capital project may request an alternative process, which permits higher dollar thresholds before FTA prior concurrence is needed. Page IV -8 FTA C 5010.1D 11/01/2008 An FTA real estate specialist will review the acquisition process and grantee capabilities. Grantees may request a review through the FTA Regional Office. The request for the approval for alternative real property procedures at a minimum should include the following: (a) A statement providing an overall justification and reasoning for why the alternative procedure is requested; (b) Copy of Real Estate department operating procedures; (c) Real Estate department organization staffing chart; and (d) Strategy for using and qualifying Real Estate services contractors, if used; (e) Estimate of the number of transactions that may exceed requested threshold(s); (f) Discussion of Real Estate acquisition schedule /status relative to the overall project schedule; and (g) Discuss Real Estate department program Quality Assurance /Quality Control procedures that are in place to assure program delivery is in compliance with Uniform Act requirements and effective /efficient operational standards given the higher thresholds requested. (2) In -Kind Contributions. Grantees may use in -kind contributions of real property as part of the local matching share so long as the property to be donated is needed to carry out the scope of the approved project. The property can be owned and donated by the grantee or by a third party. The in -kind contribution allowance will be based on the current market value as independently appraised. Appraisals for property being donated, regardless of appraised value, must be submitted to the FTA regional or metropolitan office. Credit can only be allowed for the value of the portion of real property used or consumed by the project. If part of a larger parcel is to be used as local match and the remaining sub - parcel is intended to be used at a future date for future match, the grantee is cautioned to clearly indicate the limits of the sub - parcel to be used as local match and the appraised amount associated with the sub - parcel. The remnant sub - parcel can then follow the same procedure for future local match. If the entire parcel is provided as a local match and no delineation is made related to possible use of the excess sub - parcel as over - match, eligibility of the over -match sub - parcel may be lost. If Federal funds were used to purchase the property, only the non - Federal share of such property may be counted as the value of the in -kind contribution, see 49 CFR 18.24(0. FTA C 5010.1D 11/01/2008 (3) Page IV -9 Functional Replacement. Functional replacement provides a method of paying the cost necessary to replace a publicly owned facility (i.e., a fire station or public school) being acquired with a similar needed facility. The FTA regional or metropolitan office should be contacted for further information. A determination to use functional replacement should be made early in the project development process. The use of this approach would usually be addressed during the environmental assessment (EA) phase of the project and be presented as a mitigation measure to be undertaken by the project. (4) Contaminated Property (including Brownfields). Appropriate due diligence for contamination is conducted as a part of the NEPA process and discussed in the NEPA document before selection of a contaminated property in a capital project. Appraisals should consider the effect, if any, contamination has on the market value of the property being valued. The terms, "contamination" and "hazardous material" should be interpreted broadly to include all contaminants that can affect property value. (a) The legal responsibility for hazardous material clean up and disposal rests with parties within the property title chain and with parties responsible for the placement of the material on the property. Grantees must attempt to identify and seek legal recourse from those potentially responsible parties or substantiate the basis for not seeking reimbursement. (b) During the NEPA process, the grant applicant will have considered not only the estimated project cost of appropriate remediation (remediation being any action, developed in consultation with appropriate regulatory agencies, to reduce, remove, or contain contamination), the applicant will also have considered and taken action regarding the short and long -term liabilities associated with Brownfields, if applicable. (c) To encourage the complete assessment of contamination prior to project decisionmaking, FTA generally will not participate in the remediation of contamination discovered during construction. (d) The grantee should contact FTA for technical assistance regarding contaminated property. h. Real Estate Acquisition Management Plan (RAMP). A RAMP is required for all major capital projects as a part of the Project Management Plan (PMP) under 49 CFR 633.25 and in accordance with 49 CFR part 24. A full RAMP is not required for other capital projects with real estate acquisition; however, all capital projects must be in compliance with 49 CFR part 24, if real estate acquisition or relocation assistance is involved. The RAMP is a planning document for the acquiring agency and is a control document for FTA that includes real estate goals and methodology from the perspective of timing, staffing, statutory, and policy issues. The RAMP should be periodically reviewed for Page IV -10 FTA C 5010.1D 11/01/2008 needed changes. See Appendix B of this circular for a model in the development of a RAMP. i. Property Management and Joint Development. (1) General. This area concerns the post construction management of property acquired for the facility during project development to ensure that it is properly maintained and operated efficiently for the benefit of the transit system. (2) Incidental Use and Joint Development. Title to real property is vested in the grantees or other public bodies. FTA's policy is to permit grantees maximum flexibility in determining the best and most cost - effective use of FTA- funded property. To this end, FTA encourages incidental uses and joint development of real property that can raise additional revenues for the transit system or, at a reasonable cost, enhance system ridership. For example, grantees may be able to encourage joint development of air rights at and over transit facilities and project areas. FTA approval is required for both joint development and for incidental uses of real property and must be compatible with the original purposes of the grant. Incidental and joint development uses of real property are subject to the following considerations: (a) Needed Property. This policy applies only to property that continues to be needed and used for an FTA project or program. It is FTA's intention to assist only in the purchase of property that is needed for an FTA project. (b) Purpose & Activity. The use must not compromise the safe conduct of the intended purpose and activity of the initial public transit project activity. (c) Continuing Control. The use must not in any way interfere with the grantee's continuing control over the use of the property or the grantee's continued ability to carry out the project or program. (d) Non - Profit Use. While FTA is particularly interested in encouraging incidental use as a means of supplementing transit revenues, non - profit uses are also permitted under certain circumstances. (e) Income. Proceeds from licensing and leasing of air rights or other real property interest should be based on competitive market rents and rates of return based on the appraised fair market value. Income received from the authorized incidental or joint development uses of air rights may be retained by the grantees (without returning the Federal share) if the income is used for eligible transit capital, and operating expenses. This income cannot be used as part of the local share of the grant from which it was derived. However, it may be used as part of the local share of another FTA grant. FTA C 5010.1D 11/01/2008 Page IV -11 j. Disposition. (1) Excess Real Property Inventory and Utilization Plan. The grantee shall prepare and keep up to date an excess property inventory and utilization plan for all property that is no longer needed to carry out any transit purpose. The inventory list should include such things as property location; summary of any conditions on the title, original acquisition cost, and the Federal participation ratio; FTA grant number, appraised value and date; a brief description of improvements; current use of the property; and the anticipated disposition or action proposed. Grantees are also required to notify FTA when property is removed from the service originally intended at grant approval and if property is put to additional or substitute uses. The grantee's plan should identify and explain the reason for excess property. Such reasons may include one or more of the following: (a) The parcel, when purchased, exceeded the grantee's need (uneconomic remnant, purchased to logical boundary, part of administrative settlement, etc.); (b) The property was purchased for construction staging purposes such as access, storage or underpinning, and construction is completed; (c) The intended use of the parcel is no longer possible because of system changes, such as alignment, or amendments to the project Grant Agreement; (d) Improvements to real property were damaged or destroyed, and therefore the property is not being used for project purposes, but it is still needed for the project. If so, the improvements may be renovated or replaced. In this case, applicable cost principles must be observed; and /or (e) A portion of the parcel remains unused, will not be used for project purposes in the foreseeable future, and can be sold or otherwise disposed. Unless FTA and the grantee agree otherwise, the excess real property inventory and updated excess property utilization plan is to be retained by the grantee, available upon FTA request and during the triennial review process. (2) Disposition Alternatives. If the grantee determines that real property is no longer needed, FTA may approve use of the property for other purposes. This may include use in other Federal grant programs or in non - Federal programs that have consistent purposes with those authorized for support by FTA. (a) Valuation of Property Pending Disposal. For properties no longer needed for transit purposes, the grantee is expected to follow the valuation requirements of 49 CFR part 24 and obtain an appraisal to ascertain the value of the property considered for disposal. Page IV -12 FTA C 5010.1D 11/01/2008 (b) Net Proceeds from Disposition. In those situations where a grantee or subgrantee no longer needs the real property for any transit purpose and is disposing of real property acquired with grant funds and acquiring replacement real property under the same program, FTA may permit the net proceeds from the disposition to be used as an offset to the cost of the replacement property. (c) Alternative Disposition Methods. When real property is no longer needed for any transit purpose, the grantee will request disposition instructions from FTA. The allowable alternative disposition methods are as follows: 1 Sell and Reimburse FTA. Competitively market and sell the property and pay FTA the greater of its share of the fair market value of the property or the straight line depreciated value of the improvements plus land value. FTA's share of the fair market value is the percentage of FTA participation in the original grant multiplied by the best obtainable price, net of reasonable sales costs. 2 Offset. Sell property and apply the net proceeds from the sale to the cost of replacement property under the same program. Return any excess proceeds to FTA in accordance with 49 CFR 18.31. 3 Sell and Use Proceeds for Other Capital Projects. Sell property and use the proceeds to reduce the gross project cost of another FTA eligible capital transit project. See 49 U.S.C., 5334(h)(4). The grantee is expected to record the receipt of the proceeds in the grantee's accounting system, showing that the funds are restricted for use in a subsequent capital project, and reduce the liability as the proceeds are applied to one or more FTA approved capital projects. FTA must approve the application of the proceeds to a subsequent capital grant, which should clearly show that the gross project cost has been reduced with proceeds from the earlier transaction. 4 Sell and Keep Proceeds in Open Project. If the grant is still open, the grantee may sell excess property and apply the proceeds to the original cost of the total real property purchased for that project. This may reduce the Federal share of the grant. 5 Transfer to Public Agency for Non - Transit Use. Follow procedures for publication in Federal Register to transfer property (land or equipment) to a public agency with no repayment to FTA. This is a competitive process, and there is no guarantee that a particular public agency will be awarded the excess property. See 49 U.S.C., 5334(h)(1)— (h)(3). 6 Transfer to Other Project. Transfer property to another FTA eligible project. The Federal interest continues. FTA C 5010.1D 11/01/2008 Page IV -13 7 Retain Title With Buyout. Compensate FTA by computing percentage of FTA participation in the original cost. Multiply the current fair market value of the property by this percentage. The grantee must document the basis for value determination; typically, this is an appraisal or market survey. Alternatively, the grantee may pay the straight line depreciated value of improvements plus land value, if this is greater than FTA's share of the fair market value. 8 Sales Procedure. Sales procedures shall be followed that provide for competition to the extent practicable and result in the highest possible return or at least payment of appraised fair market value. 9 Joint Development. A transfer meeting the tests for joint development is not a disposition, and the proceeds are deemed program income. For additional information on use and eligibility of joint development projects see FTA Guidance (72 FR 5788, Feb. 7, 2007) as the final agency guidance on the "Eligibility of Joint Development Improvements Under Federal Transit Law." See also the definition of a capital project at 49 USC 5302(a)(1)(G). k. FTA Management and Project Oversight of Property Acquisition. FTA project stewardship includes various strategies, and in some cases involves the application of risk management techniques. Based on various conditions including dollar thresholds and the complexity of the property acquisitions involved, FTA may require the submission of all transactions meeting certain criteria for prior approval. Refer to the discussion of prior concurrence for certain appraisal, condemnation, and settlements issues discussed in Chapter IV of this circular. FTA may also conduct process or transactional reviews at any time during or after project implementation of the real estate acquisition program to ensure compliance with governing laws and regulations. 3. EQUIPMENT, SUPPLIES, AND ROLLING STOCK. Certain management standards apply to equipment, supplies, and rolling stock purchased with Federal funds. The term, project property, as used in this section, includes equipment, supplies, and rolling stock. Light duty vehicles such as vans, sedans, and pick -up trucks employed in administrative and maintenance purposes are considered equipment. Light duty vehicles employed to transport passengers are considered rolling stock. The following requirements are for the acquisition, use, management, and disposition of project property: a. State Recipients. A State will use, manage, and dispose of project property acquired under a grant by the State in accordance with State laws and procedures (49 CFR 18.32(b)) as long as they comply with Federal requirements. Grantees, other than States, will follow FTA requirements and procedures outlined below. Page IV -14 FTA C 5010.1D 11/01/2008 b. Title. Subject to the obligations and conditions, the grantee holds title to project property acquired under a grant. c. Federal Interest. FTA retains a Federal interest in any project property financed with Federal assistance until, and to the extent that, FTA relinquishes its Federal interest in that project property. d. Acquisition. Acquisition cost of project property means the purchase price of project property. This is the net invoice unit price, including the cost of modifications, attachment, accessories, or auxiliary apparatus necessary to make the project property usable for the intended purpose. Other charges such as the cost of inspection, installation, transportation, taxes, duty, or protective in- transit insurance should be treated in accordance with the grantee's regular accounting practices as separate line items. Grantees must follow procurement procedures set forth in the current version of Circular 4220.1; additional guidance is provided in FTA's Best Practices Procurement Manual. Two areas of particular importance for rolling stock procurements are: (1) Buy America. With certain exceptions, FTA may not obligate funds for a public transportation project unless the steel, iron, and manufactured goods used in the project are produced in the Unites States (49 CFR part 661). FTA's Buy America requirements at 49 CFR part 661 differ from Federal Buy American regulations at 48 CFR part 25. The former applies to third party contracts funded by FTA. The latter applies to direct Federal procurements. FTA strongly advises recipients to review these regulations before undertaking any procurement. (2) Pre -Award and Post Delivery Audits for Rolling Stock. FTA requires that grantees purchasing revenue passenger rolling stock undertake reviews of the rolling stock before award of the bid, during manufacture, and following vehicle delivery. Grant applicants seeking to acquire rolling stock must certify that they will comply with Pre -Award and Post - Delivery Review requirements. The requirement to undertake the pre -award and post - delivery reviews arises from 49 U.S.C. 5323(m) and is implemented by FTA regulations at 49 CFR part 663. The reviews are intended to improve compliance with Buy America requirements, the grantee's bid specifications, and Federal motor vehicle safety standards. FTA has tried to carry out the intent of the law in a way that builds on current practices by many grantees and that improves the monitoring of compliance in the least burdensome manner. Reviews may be conducted by the grantee's staff or by a contractor for the grantee. The regulations require a resident inspector who is not an agent or an employee of the manufacturer to review specification compliance for the grantee at the manufacturing site, unless the procurement is for unmodified vans, 10 or fewer buses acquired by an operator serving an urbanized area with a population of over 200,000 persons, or 20 or fewer buses acquired by an operator serving other than urbanized areas or urbanized areas with populations of 200,000 or fewer. The grantee must keep on file and make available to FTA upon request FTA C 5010.1D 11/01/2008 Page IV -15 written reports resulting from the reviews. Compliance must be certified on the Annual List of Certifications and Assurances. FTA has published a handbook titled "Conducting Pre -Award and Post - Delivery Audits for Bus Procurements," which contains copies of all the required certifications to assist grantees in complying with this requirement. A copy of this handbook can be found at: http: / /www.fta.dot.gov/laws/leg reg 5423.html. e. Use of Project Property. Project property is to be used by the grantee in the programs or project for the purpose it was acquired as long as needed, whether or not the program or project continues to be supported by Federal funds. When need no longer exists, see disposition requirements in Chapter IV, Subsection 3.1., "Disposition," of this circular. (1) Continuing Control. The grantee agrees to maintain continuing control of the use of project property and constructed improvements to the extent satisfactory to FTA. The grantee agrees to use project property for appropriate project purposes for the duration of the useful life of that property, as required by FTA. If the grantee unreasonably delays or fails to use the project property during the useful life of that property, the grantee agrees that it may be required to return the entire amount of the Federal assistance expended on that property. The grantee further agrees to notify FTA immediately when any project property is withdrawn from project use or when any project property is used in a manner substantially different from the representations the grantee made in the Grant Agreement or Cooperative Agreement for the project. The grantee may make project property available for use on other projects or programs currently or previously supported by the Federal Government, providing such use will not interfere with the work on the project or program for which it was originally acquired. FTA reserves the right in the Grant Agreement to require the grantee, with FTA approval, to transfer title to project property no longer needed or used for the purposes of the grant (or program) to the Federal Government or an otherwise eligible grantee. (49 CFR 18.32). The grantee must not use project property acquired with grant funds to provide services to compete unfairly with private companies that provide equivalent services. Non - transit use of FTA financially assisted project property is acceptable so long as it is incidental, does not interfere with transit use (transit has priority), and income generated is retained by the grantee for transit use. See Chapter IV, Subsection 3.e.(3) below for more information on incidental use. The grantee agrees that it will not execute any transfer of title, lease, lien, pledge, mortgage, encumbrance, third party contract, subagreement, grant anticipation note, alienation, innovative finance arrangement, or any other obligation pertaining to project property, that in any way would affect the continuing Federal interest in that project property, without written FTA approval. Page IV -16 FTA C 5010.1D 11/01/2008 (2) Shared Use. Shared use of project property requires prior written FTA approval except when it involves coordinated public transit human services transportation. Shared use projects should be clearly identified and sufficient detail provided to FTA at the time of grant review to determine allocable costs related to non - transit use for construction, maintenance, and operation costs. (3) Incidental Use. Any incidental use of project property will not exceed that permitted under applicable Federal laws, regulations, and directives. Incidental use requires prior FTA approval except when it involves coordinated public transit human services transportation. Consult your FTA regional or metropolitan office prior to incorporating incidental use activities in projects. Incidental use will be permitted if: (a) The incidental use does not interfere with the grantee's project or public transportation operations; (b) The grantee fully recaptures all costs related to the incidental use from the non - transit public entity or private entity, including all applicable excise taxes on fuel for fueling facilities and wear and tear to capital improvements; (c) The grantee uses revenues received from the incidental use for capital and /or operating expenses that were or will be incurred to provide the public transportation; and (d) Private entities pay all applicable excise taxes on fuel. f. Useful Life of Project Property. FTA provides a useful life policy for rolling stock, trolleys, ferries, facilities, and some equipment. Where a useful life policy has not been defined by FTA, the grantee, in consultation with the FTA regional or metropolitan office shall "make the case" by identifying a useful life period for all equipment and facilities with an acquisition value greater than $5,000 to be procured with Federal funds. In the grant application, the grantee shall propose and identify a useful life for the capital asset to be purchased with Federal funds. FTA approval of the grant represents FTA concurrence of the final determination of useful life for the purpose of project property acquisition. This in turn will identify the useful life of the Federal interest for the disposition of the project property in later years. (1) Determining Useful Life for Project Property. The grantee should identify the method used to determine the useful life. Acceptable methods to determine useful life include but are not limited to: (a) Generally accepted accounting principles. (b) Independent evaluation. (c) Manufacturer's estimated useful life. FTA C 5010.1D 11/01/2008 Page IV -17 (d) Internal Revenue Service guidelines. (e) Industry standards. (f) Grantee experience. (g) The grantee's independent auditor who needs to concur that the useful life is reasonable for depreciation purposes. (h) Proven useful life developed at a Federal test facility. (2) Bus, Van, Trolley, Rail Rolling Stock, and Ferries Useful Life Policy. Useful life of rolling stock begins on the date the vehicle is placed in revenue service and continues until it is removed from revenue service. The useful life in years refers to total time in revenue transit service, not time spent stockpiled or otherwise unavailable for regular transit use. Grant applicants need to specify the expected useful life category in requests for bids when acquiring new vehicles. Minimum useful life of rail rolling stock is 25 years. Minimum useful life for buses, vans, and trolleys is determined by years of service or accumulation of miles whichever comes first as follows: (a) Buses: 1 Large, heavy -duty transit buses including over the road buses (approximately 35' -40', and articulated buses): at least 12 years of service or an accumulation of at least 500,000 miles. 2 Small size, heavy -duty transit buses (approximately 30'): at least 10 years or an accumulation of at least 350,000 miles. 3 Medium -size, medium -duty transit buses (approximately 25' -35'): at least seven years or an accumulation of at least 200,000 miles. 10 Medium -size, light -duty transit buses (approximately 25' -35'): at least five years or an accumulation of at least 150,000 miles. 11 Other light -duty vehicles used as equipment and in transport of passengers (revenue service) such as regular and specialized vans, sedans, and light - duty buses including all bus models exempt from testing in the current 49 CFR part 665: at least four years or an accumulation of at least 100,000 miles. (b) Trolleys: The term "trolley" is often applied to a wide variety of vehicles. Thus, the useful life depends on the type of "trolley." FTA classifies "trolleys" and the suggested useful life as described in Chapter IV, Page IV -18 g. FTA C 5010.1D 11/01/2008 Subsections 3.f.(2)(b) 1 -3 below. For disposition actions, FTA will use the following minimum useful life determinations: 1 A fixed guideway steel - wheeled "trolley" (streetcar or other light rail vehicle): at least 25 years. 2 A fixed guideway electric trolley -bus with rubber tires obtaining power from overhead catenary: at least 15 years. 3 Simulated trolleys, with rubber tires and internal combustion engine (often termed "trolley- replica buses "): please refer to bus useful life criteria in Chapter IV, Subsection 3.f.(2)(a) above. (c) Rail Vehicles: At least 25 years. At time of grant application, the grantee may propose an alternative useful life to be reviewed by FTA. A grantee that regularly measures lifespan by hours of operations, or by any other measure, may develop an appropriate methodology for converting its system to years of service. The reasonableness of such methodologies will be subject to examination, particularly if the grantee proposes to retire a rail vehicle before reaching FTA's useful life. (d) Ferries: The useful life of a ferry depends on several factors, including the type and use of the ferry. FTA recommends using one of the methods outlined in Chapter IV, Subsection 3.f.(2)(a) above or offers the following suggested minimum service lives: 1 Passenger Ferries: 25 years 2 Other Ferries (without refurbishment): 30 years 3 Other Ferries (with refurbishment): 60 years (e) Facilities: Determining the useful life of a facility must take into consideration such factors as type of construction, nature of the equipment used, historical usage patterns, and technological developments. Based on any of methods identified in Chapter IV, Subsection 3.f.(2)(a) above, a railroad or highway structure has a minimum useful life of 50 years, and most other buildings and facilities (concrete, steel, and frame construction) 40 years. Rolling Stock Rebuilding Policies. FTA laws, regulations, policies, and procedures allow the use of capital funds for vehicle rebuilding programs that meet the vehicle requirements in Federal Motor Carrier Vehicle Safety Standards and Americans with Disabilities Act Accessibility Specifications for Transportation (49 CFR part 571 and 49 CFR part 38). Requirements for Bus and Rail fleets are summarized below: FTA C 5010.1D 11/01/2008 (1) Page IV -19 Buses to be rebuilt should be at the end of the minimum useful life and in need of major structural and /or mechanical rebuilding. The age of the bus to be rebuilt is its years of service at the time the rebuilding begins. The eligibility of this major capital bus rebuild work is in addition to the eligibility of vehicle overhauls as described in Chapter IV, Subsection 3.h., "Rolling Stock Overhauls," below. Grantees should contact the regional or metropolitan office to determine the extent which the useful life of the bus is affected by the rebuild. The minimum extension of useful life is four years. (2) Rail cars to be rebuilt must have reached the end of its minimum useful life (end - of -life rebuild). The minimum extension of useful life is ten years. The eligibility of this major capital rail rebuild work is in addition to the eligibility for vehicle overhauls as described in Chapter IV, Subsection 3.h., "Rolling Stock Overhauls," below. Depending upon the extent of rebuilding planned, the rebuild may be subject to the Americans with Disabilities Act (ADA) requirements. h. Rolling Stock Overhauls. Rolling stock overhauls are an eligible capital expense as preventive maintenance. This eligibility for capital assistance applies also to leasing and to contracted service. Overhauls are usually done to make sure rolling stock reaches its useful life. Overhaul does not extend the useful life of rolling stock. This eligibility is in addition to eligibility of rebuilding specifically discussed above in Chapter IV, Subsection 3.g. For rolling stock to be overhauled, it must have accumulated at least 40 percent of its useful life. i. Rolling Stock Spare Ratio Policies. Spare ratios will be taken into account in the review of projects proposed to replace, rebuild, or acquire additional vehicles. Spare ratio is defined as the number of spare vehicles divided by the vehicles required for annual maximum service. Spare ratio is usually expressed as a percentage, e.g., 100 vehicles required and 20 spare vehicles is a 20 percent spare ratio. (1) Bus Fleet. The basis for determining a reasonable spare bus ratio takes local circumstances into account. The number of spare buses in the active fleet for grantees operating 50 or more fixed -route revenue vehicles should not exceed 20 percent of the number of vehicles operated in maximum fixed -route service. For purposes of the spare ratio calculation, "vehicles operated in maximum fixed - route service" is defined as the total number of revenue vehicles operated to meet the annual maximum service requirement. This is the revenue vehicle count during the peak season of the year, on the week and day that maximum service is provided. It excludes atypical days and special events that do not accurately depict normal peak maximum service requirements. Whether vehicles are locally funded, FTA- funded, or have exceeded their service life, the vehicles are not relevant factors. Scheduled standby vehicles are permitted to be included as "vehicles operated in maximum service." Page IV -20 FTA C 5010.1D 11/01/2008 Buses delivered for future expansion and buses that have been replaced, but are in the process of being disposed of, should not be included in the calculation of spare ratio. For each grant application identified to acquire vehicles, a grant applicant must address the subjects of current spare ratio, the spare ratio anticipated at the time the new vehicles are introduced into service, disposition of vehicles to be replaced including information on age and mileage, and the applicant's conformance with FTA's spare ratio guideline. An applicant is required to notify FTA if the spare ratio computation on which the grant application is based is significantly altered prior to the grant award. (2) Rail Fleet. Because rail transit operations tend to be highly individualized, FTA has not established a specific number to serve as an acceptable spare ratio for rail transit operations. Nevertheless, rail operators should be aware that the grantee's rail vehicle spare ratio and the rationale underlying that spare ratio will be examined during the triennial review whenever FTA assistance is used to purchase or rebuild rail vehicles. The following guidance should be used to support an operator's proposed rail vehicle spare ratio when the spare ratio is under review by FTA: (a) An operator of a rail system must have in its file available upon request by FTA a rail fleet management plan that addresses operating policies (level of service requirements, train failure definitions, and actions); peak vehicle requirements (service period and make -up, e.g., standby trains); maintenance and overhaul program (schedules, unscheduled, and overhaul); system and service expansions; rail car procurements and related schedules; and spare ratio justification. (b) Spare ratio justification should consider: average number of cars out of service for scheduled maintenance, unscheduled maintenance and overhaul program; allowance for ridership variation (historical data); ridership changes that affect car needs caused by expansion of system or services; contingency for destroyed cars; and car procurements for replacements and system expansions. (c) Cars delivered for future expansion and cars that have been replaced, but are in the process of being disposed of, should not be included in the calculation of spare ratio. (d) Peak Vehicle Requirement includes "standby" trains that are scheduled, ready for service, and have a designated crew. (e) Factors that may influence spare ratio are: equipment make -up (locomotive hauled trains; married pair units or single cars; equipment design, reliability FTA C 5010.1D 11/01/2008 J• (3) Page IV -21 and age); environmental conditions (weather, above ground or underground operation, loading and track layout); operational policies (standby trains, load factors, headways); maintenance policies (conditions for removing cars from service, maintenance during nights and weekends, and labor agreement conditions); and maintenance facilities and staff capabilities. Contingency Fleet. FTA recognizes two types of vehicles — active and contingency. Revenue rolling stock stockpiled in a contingency fleet in preparation for emergencies must have met their minimum normal service life requirements and must be properly stored, maintained, and documented in a contingency plan. These vehicles are not included in the calculation of spare ratio. Contingency plans are subject to review during triennial reviews and other FTA oversight reviews. Any rolling stock not supported by a contingency plan will be considered part of the active fleet. Leases. FTA and standard accounting rules distinguish between operating and capital leases. A grantee may enter into an operating lease as Lessee (the party leasing the property from another) without following any special rules if it receives no Federal operating assistance. If it receives Federal operating assistance, it is FTA's policy that this business opportunity be competed. A grantee may enter into a capital lease as a Lessee as described below in Chapter IV, Subsection 3.j (2). In all instances in which the grantee is a Lessor (the party leasing an asset to another), the grantee must obtain FTA's written concurrence (as described in Section 2(a) of this Chapter) before leasing FTA- funded assets to others. In addition, for equipment leasing, grantees must comply with both the Charter Rule and with requirements below: (1) Leasing FTA- funded Assets to Others for Transit Service. The grantee may enter into a contract for leasing its project property to a private operator (the lessee). The lease shall be subject to and incorporate by reference the terms and conditions of the FTA grant. Under this arrangement, the grantee (the lessor) should include the following provisions in the proposed lease agreement: (a) The project property shall be operated by the lessee to serve the best interest and welfare of the project sponsor lessor and the public. The terms and conditions for operation of service imposed by the grantee shall be evidenced in a service agreement. (b) The lessee shall maintain project property at a high level of cleanliness, safety, and mechanical soundness under maintenance procedures outlined by the project sponsor. The project sponsor lessor and/or FTA shall have the right to conduct periodic maintenance inspections for the purpose of confirming the existence, condition, and the proper maintenance of the project property. (c) The lease needs to cross reference a service agreement. A default under the lease is a default under the service agreement and vice versa. Page IV -22 FTA C 5010.1D 11/01/2008 (2) Capital Lease. A capital lease is any transaction whereby the grantee acquires the right to use a capital asset. If a lease does not have the following characteristics, it is an operating lease: (3) (a) the lease cannot be cancelled; and (b) any one of the following is true: 1 the term of the lease is equal to or greater than 75 percent of the useful life of the asset; 2 the grantee will become the owner of the asset at the end of the lease term; 3 the lease contains a bargained for option date; 4 the present value of the rent is equal to 90 percent of the value of the property. (c) Based on standard FTA project management guidelines, grantees must maintain an inventory of assets acquired through capital leasing and must maintain on their accounting records the lease liability. Eligible lease costs may include: charges including interest, legal fees, and financial advisor fees; ancillary costs such as delivery and installation charges; and maintenance costs. The purchase calculation should include an estimate of residual value. A lease may qualify for capital assistance if it meets the following criteria: 1 The capital asset to be acquired by lease is eligible for capital assistance; 2 There is or will be no existing Federal interest in the capital asset as of the date the lease will take effect; and 3 Leasing the capital asset is more cost - effective than purchase or construction of the asset. Cost Effectiveness. Grantees shall obtain FTA review of the cost- effectiveness determination prior to entering into any capital lease. Grantees should reference Circular A -94 for cost - effectiveness calculations and to obtain the most recent discount rate for the purpose of calculating the net present value of a future benefit. (4) Calculation of Lease Cost. The estimated lease costs must be reasonable, based on realistic market conditions applicable to the grantee and must be expressed in present value terms. The lease cost of the asset or operations function is the cost to lease the asset or operations function for the same use and the same time period as that time specified in any purchase or construction documents or scope of any operations activity. The lease cost also includes any ancillary costs, such as FTA C 5010.1D 11/01/2008 (5) Page IV -23 delivery and installation costs, and it includes the net present value of the estimated future cost to provide any other service or benefit. Calculation of Purchase /Construction Cost or Operations Cost. The purchase /construction or operations cost is the estimated costs for that activity plus ancillary costs such as delivery and installation costs plus the net present value of the estimated future cost to provide any other service or benefit for that activity. The estimated cost must be reasonable, based on realistic current market conditions and based on the expected useful life of the item to be utilized. k. Project Property Management. Rolling stock and equipment management procedures include the following minimum requirements: (1) Rail systems are required to submit a rail fleet management plan that addresses operating policies (level of service requirements, train failure definitions, and actions); peak vehicle requirements (service period and make -up, e.g., standby trains); maintenance and overhaul program (scheduled, unscheduled, and overhaul); system and service expansions; rail car procurements and related schedules; and spare ratio justification. (2) A transit system with a fixed guideway system must also submit a Bus Fleet Management Plan along with its PMP for approval of funding through the Section 5309 New Starts program. This requirement is applicable to all transit agencies that are expanding an existing fixed guideway system or planning a new fixed guideway system to be funded with Section 5309 New Starts funding. This requirement is explained in detail in the current FTA Circular 5200.1, "Full - Funding Grant Agreements Guidance." (3) Equipment records must be maintained by the grantee. Records must include: (a) a description of the asset, (b) identification number, (c) source of property (the grant project number under which it was procured), (d) acquisition date, (e) cost, (f) percentage of Federal participation in the cost, (g) location, (h) use and condition, (i) useful life , Page IV -24 FTA C 5010.1D 11/01/2008 (j) any disposition data, including the date of disposal and sale price, or, where applicable, method used to determine its fair market value, and (k) who holds title to the equipment including rolling stock. (4) A physical inventory of equipment must be taken and the results reconciled with equipment records at least once every two years. Any differences must be investigated to determine the cause of the difference. (5) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of project property. Any loss, damage, or theft must be investigated and documented by the grantee. (6) Tagging or otherwise identifying property as government property. (7) Adequate maintenance procedures must be developed and implemented to keep the project property in good condition. These procedures should be consistent with the maintenance plan required of grantees for equipment funded under 49 U.S.C. 5309 and 5307 and should be documented and available during an audit or triennial review. (8) Warranty standards, when part of rolling stock and equipment contracts, should provide for correction of defective or unacceptable materials or workmanship. These should specify coverage and duration and meet currently available industry standards. General warranty incorporating industry standards and extended warranty are eligible capital costs. FTA's Best Practices Procurement Manual encourages grantees to evaluate the cost of an extended warranty in an analysis separate from the equipment's acquisition cost, in order to make a good business decision. Grantees are responsible for: (a) Establishing and maintaining a system for recording warranty claims. This system should provide information needed by the grantee on the extent and provisions of coverage and on claims processing procedures; (b) Identifying and diligently enforcing warranty system for recording warranty claims; and 1. Disposition. (1) Replacement at End of Minimum Useful Life. Project property to be replaced must have achieved at least the minimum useful life. For purposes of bus replacement projects, the age of the bus to be replaced is its years of service or mileage at the time the proposed new bus is introduced into service. For purposes of a rail vehicle replacement project, the age of the vehicle to be replaced is its age at the time the new vehicle is introduced into service. Official property records (or a FTA C 5010.1D 11/01/2008 Page IV -25 Rolling Stock Status Report), in which future needs (expansion and replacement) are discussed, must be available upon request by FTA. (2) ` Disposition Before the End of Useful Life. Any disposition of project property before the end of its useful life requires prior FTA approval. FTA is entitled to its share of the remaining Federal interest. The Federal interest is determined by calculating the fair market value of the project property immediately before the occurrence prompting the withdrawal of the project property from appropriate use. If project property is being removed from service before the end of its useful life, the Federal interest and the return to FTA is the greater of FTA's share of the unamortized value of the remaining service life per unit, based on straight line depreciation of the original purchase price, or the Federal share of the sales price (even though the unamortized value is $5,000 or less). The following example is provided to determine the straight -line depreciation of a vehicle: for a 12 -year, 500,000 mile minimum service life, the vehicle's value decreases each year by one - twelfth of its original purchase price. Alternatively, the value decreases for each mile driven 1 /500,000 of its original purchase price. The unamortized value of the remaining service life per unit is the greater value obtained by calculating the straight line depreciation based on either miles or years, whichever is more advantageous to the grantee. (3) Retain and Use Elsewhere. After the minimum useful life of project property is reached and is no longer needed for the original project or program, it may be used by the grantee for other transit projects or programs. FTA prior approval of this alternative is not required. FTA retains its interest if the fair market value of the project property is over $5,000. (4) Fair Market Value of Over $5,000. After the service life of project property is reached, rolling stock and equipment with a current market value exceeding $5,000 per unit, or unused supplies with a total aggregate fair market value of more than $5,000, may be retained or sold. Reimbursement to FTA shall be an amount calculated by multiplying the total aggregate fair market value at the time of disposition, or the net sale proceeds, by the percentage of FTA's participation in the original grant. The grantee's transmittal letter should state whether the equipment will be retained or sold. Use of sales proceeds are discussed elsewhere in Chapter IV of this circular. (5) Fair Market Value of Less than $5,000 Value. After the service life of project property is reached, rolling stock and equipment with a unit market value of $5,000 or less, or supplies with a total aggregate market value of $5,000 or less, may be retained, sold, or otherwise disposed of with no obligation to reimburse FTA. Records of this action must be retained. (6) Like -Kind Exchange Policy. With prior FTA approval, a vehicle may be traded in or sold before the end of its minimum normal service life, if a grantee so chooses. Page IV -26 FTA C 5010.1D 11/01/2008 In lieu of returning the Federal share to FTA, a grantee may elect to use the trade - in value or the sales proceeds from the vehicle to acquire a replacement vehicle of like kind. "Like- Kind" is defined as a bus for a bus with a similar service life and a rail vehicle for a rail vehicle. Under the Like -Kind Exchange Policy, proceeds from the vehicle sales are not returned to FTA; instead, all proceeds are re- invested in acquisition of the like -kind replacement vehicle. If sales proceeds are less than the amount of the Federal interest in the vehicle at the time it is being replaced, the grantee is responsible for providing the difference, along with the grantee's local share of the cost of the replacement vehicle. If sales proceeds are greater than the amount of the Federal interest of the vehicle traded in or sold, the investment of all proceeds in acquisition of the like -kind replacement vehicle results in reduction of the gross project cost. An example of like -kind exchange is: (a) A recipient purchased a new bus in 2002 for $220,000; 80 percent of the total price, or $176,000, was Federal funding while 20 percent, or $44,000, was local. Thus, there was an initial $176,000 "Federal interest" in the new vehicle. (b) Instead of keeping the bus in service for 12 years, the useful life under FTA guidelines, the recipient chose to sell the bus after six years and replace it with a new vehicle. (c) Since the bus had a minimum useful life of 12 years and its depreciation was determined on a "straight- line" basis, the depreciated value of the vehicle after six years was half the original price, or $110,000. The remaining Federal interest was 80 percent of that figure, $88,000. (d) Assume, for example, the recipient realized $80,000 from the sale of the six - year -old bus, or $30,000 less than the straight -line depreciated value of the original vehicle. The recipient then purchased a new bus in 2008 for $240,000. The transaction looked like this: Net project cost calculation: Gross project cost of new bus $240,000 Less straight -line depreciated - 110,000 value of replaced bus. Net project cost $130,000 Federal share 80% 104,000 Local share 20% 26,000 Sources of funds for new bus: Net sales proceeds from $ 80,000 replaced bus New local cash Straight -line depreciated value - 30,000 shortfall Local share of net project cost 26,000 FTA C 5010.1D 11/01/2008 (7) Federal share TOTAL 104,000 $240,000 Page IV -27 The Federal interest in the new bus is $192,000 ($88,000 transferred from the old vehicle and $104,000 in the new). Transfer of Rolling Stock — Grantee -to- Grantee. For property where the useful life has been met and with prior FTA approval, a grantee may transfer rolling stock to another grantee. In such event that transfer of rolling stock is desired prior to the end of useful life, the Federal interest of the vehicles will be transferred, and therefore, there is no obligation to reimburse FTA. However, no additional FTA funds may be used to acquire the vehicles. Both grantees should coordinate with their FTA Regional Office and the following information should be submitted: (a) A written request for approval to transfer /receive vehicles. The request should include the transferor /transferee grantee name, list of vehicles (year, make, model), date placed in revenue service, date removed from revenue service, grant number which originally funded the vehicle, mileage, remaining useful life, Federal share of remaining useful life, reasons for transfer. (b) A Board Resolution (or other appropriate legal action) from each grantee. The transferring grantee's board resolution (or other appropriate legal action) should identify the receiving grantee, a statement that the vehicles are no longer required, a list of the vehicles to be transferred including VINs, and the remaining Federal interest that is transferred to the receiving grantee. The receiving grantee's board resolution (or other appropriate legal action) should identify the transferring grantee, a statement that the vehicles are needed for revenue service, a list of the vehicles to be acquired including VINs, the remaining Federal interest for each vehicles, agreement that the vehicles will be maintained in accordance and in compliance with FTA requirements, and that the transferred vehicles will be included in its equipment inventory records. (c) A Rolling Stock Status Report. Each grantee should provide a Rolling Stock Status Report that includes all information as identified in Chapter IV, Subsection 3.1.(1). The Rolling Stock Status report should reflect the impact that the transfer /addition of the vehicles will have on the grantee's total fleet and spare ratio. If approved, the receiving grantee will be directed to include the transferred vehicles in its next grant application. (8) Transfer of assets no longer needed [49 U.S.C. 5334(h)(1) –(3)]. For property that has not met its useful life and with prior FTA approval, the grantee may follow Page IV -28 (9) FTA C 5010.1D 11/01/2008 procedures for publication in the Federal Register to transfer project property (including land or equipment) to a public agency for non - public transportation use and can be approved if FTA confirms: (a) the asset will remain in public use for at least five years after the date the asset is transferred; (b) there is no purpose eligible for assistance for which the asset should be used; (c) the overall benefit of allowing the transfer is greater than the FTA interest in liquidation and return of the FTA remaining Federal interest in the asset, after considering fair market value and other factors; and (d) through an appropriate screening or survey process (usually by following procedures for publication in the Federal Register), that there is no interest in acquiring the asset for the Federal Government use if the asset is a facility or land. Additional information regarding this type of disposition is available from the FTA regional or metropolitan office. Sell and Use Proceeds for Other Capital Projects [49 U.S.C. 5334(h)(4)1. After the useful life is met and with prior FTA approval, the grantee may sell project property for which there is no longer any public transportation purposes and use the proceeds to reduce the gross project cost of other FTA eligible capital transit grants. The grantee is expected to record the receipt of the proceeds in the grantee's accounting system, showing that the funds are restricted for use in a subsequent capital grant, and reduce the liability as the proceeds are applied to one or more FTA approved capital grants. The subsequent capital grant application should contain information showing FTA that the gross project cost has been reduced with proceeds from the earlier transaction. (10) Unused Supplies. For the disposition of supplies for which there is no transit use with a total aggregate fair market value that exceeds $5,000, the grantee shall compensate FTA for its share, or transfer the sales proceeds to reduce the gross project cost of other capital project(s). (49 U.S.C. 5334(h)(4)). (11) Casualty, Fire, Natural Disaster, and Misused Property. When project property is lost or damaged by fire, casualty, or natural disaster, the fair market value shall be calculated on the basis of the condition of the equipment or supplies immediately before the fire, casualty, or natural disaster, irrespective of the extent of insurance coverage. If any damage to project property results from abuse or misuse occurring with the grantee's knowledge and consent, the grantee agrees to restore the project property to its original condition or refund the value of the Federal interest in that property. The grantee may fulfill its obligations to remit the Federal interest by either: FTA C 5010.1D 11/01/2008 Page IV -29 (a) With prior FTA approval, investing an amount equal to the remaining Federal interest in like -kind property eligible for assistance, if the like -kind property is within the scope of the project that provided Federal assistance for the property prematurely withdrawn from use; or (b) Returning to FTA an amount equal to the remaining Federal interest in the withdrawn project property. (12) Insurance Proceeds. If the grantee receives insurance proceeds when project property has been lost or damaged by fire, casualty, or natural disaster, the grantee agrees to: (a) Apply those proceeds to the cost of replacing the damaged or destroyed project property taken out of service (Listed below are two examples of the application of insurance proceeds.), or (b) Return to FTA an amount equal to the remaining Federal interest in the lost, damaged, or destroyed project property. The Federal interest is not dependent on the extent of insurance coverage or on the insurance adjustment received. Application of Insurance Proceeds: Page IV -30 FTA C 5010.1D 11/01/2008 Example 1: Insurance Proceeds Greater than the Remaining Federal Interest in the Damaged or Destroyed Property. The remaining Federal interest in the damaged or destroyed property is $1,800. The grantee receives insurance proceeds in the amount of $2,500. The grantee is required to apply $1,800 of the $2,500 insurance proceeds towards the Federal share of replacing the destroyed property. Cost of replacement property: $6,000 Less Federal Share of Insurance Proceeds: < 1,800> The remaining funds needed : $4,200 If the funding ratio for this property were 80 percent Federal and 20 percent local, the replacement property could be purchased for $4,800 Federal/$1,200 Local funds. The insurance proceeds of $1,800 needed to cover the remaining Federal interest in the damaged and destroyed property must be applied to the Federal share of the replacement property. The grantee could use an additional $3000 in Federal funds. The grantee must provide $1,200 in local match to replace the property. FTA C 5010.1D 11/01/2008 Example 2: Insurance Proceeds Less than the Remaining Federal Interest in the Damaged or Destroyed Property: If the Federal interest in the damaged or destroyed property is $1,800 and the grantee receives insurance proceeds in the amount of $500, the grantee is required to apply the $500 of insurance proceeds and $1,300 of non - Federal funds to equal the remaining Federal interest, towards the cost of the replacement property. Cost of replacement property: $6,000 Less: Insurance Proceeds: $500 Non - Federal Funds to cover: $1,300 the rest of the Federal Interest The remaining funds needed: $4,200 If the funding ratio for this property were 80 percent Federal and 20 percent local, the replacement property could be purchased for $4,800 Federal /$1,200 Local funds. The insurance proceeds of $500 plus an additional $1,300 in non - Federal funds are needed to cover the remaining Federal interest in the damaged and destroyed property. These funds must be applied to the Federal share of the replacement property. The grantee could use an additional $3,000 in Federal funds, and an additional $1,200 in other local match, to replace the property. Page IV -31 m. Maintenance. The grantee agrees to maintain project property in good operating order and in compliance with any applicable Federal regulations or directives that may be issued, except to the extent that FTA determines otherwise in writing. The grantee agrees to keep satisfactory records pertaining to the use of project property, and to submit to FTA upon request such information as may be required to assure compliance with Federal requirements. The grantee is required to have a written vehicle maintenance plan and facility /equipment maintenance plan. These plans should describe a system of periodic inspections and preventive maintenance to be performed at certain defined intervals. n. Insurance. At a minimum, the grantee agrees to comply with the insurance requirements normally imposed by its State and local laws, regulations, and ordinances, except to the extent that the Federal Government determines otherwise in writing. This includes the requirements of Section 102(a) of the Flood Disaster Protection Act of Page IV -32 FTA C 5010.1D 11/01/2008 1973, 42 U.S.C. Section 4012a.(a), related to flood insurance provisions for any project activity involving construction or an acquisition having an insurable cost of $10,000 or more. 4. DESIGN AND CONSTRUCTION OF FACILITIES. Grantees are encouraged to consult FTA's website to review the Project and Construction Management Guidelines and the Construction Project Management Handbook for guidance on the development and management of construction projects. The two resources can be found at http:// www .fta.dot.gov /funding/oversight /grants financing 104.html. The Project and Construction Management Guidelines have been developed to assist those involved in advancing transit capital projects to achieve implementation success in terms of the project scope, function, schedule, cost, and quality. Use of the Project and Construction Management Guidelines should contribute to effective project management on the part of the grantee, and effective oversight and guidance by FTA and the Project Management Oversight (PMO) contractor. Each project phase should: 1) start with inputs or a baseline, 2) have a process that refines the project definition and generates outputs that, 3) become the inputs or baseline for the subsequent phase. By defining the requirements for each phase and sound approaches to their accomplishment, the Project and Construction Management Guidelines allow grantees to define project requirements, allocate resources, perform project activities, monitor progress, and make adjustments, as required, to obtain the proper information and assure decisions are made at the appropriate time. Adherence to the guidelines should minimize scope changes, schedule slippages, cost overruns, and quality problems, and contribute to fully meeting all the performance objectives of the transit capital project. The purpose of the Construction Project Management Handbook is to provide guidelines for use by public transit agencies undertaking substantial construction projects, either for the first time or with little prior experience with construction project management. The handbook provides a comprehensive introduction to construction project management, including the applicability of the principles of project management and of all phases of project development —from project initiation through planning, environmental clearance, real estate acquisition, design, construction, commissioning, and closeout. The handbook provides guidance tailored more to agencies that are constructing maintenance and operational facilities, intermodal terminals, park- and -ride stations, and other similar supporting transit facilities. a. Environmental Mitigation. Many Federal environmental statutes and Executive Orders establish requirements for transit projects that must be considered before FTA and the grantee take any action that limits the choice of reasonable alternatives or that have an adverse environmental impact. FTA tends to refer to the multiplicity of Acts and Orders as the "NEPA Process." More specifically, NEPA is the National Environmental Policy Act (42 U.S.C. Section 4321). FTA's implementing procedures for environmental reviews (23 CFR part 771) require that the environmental effects of proposed transit projects be documented and that environmental protection be considered before a decision can be made to proceed with a project. According to 49 FTA C 5010.1D 11/01/2008 Page IV -33 U.S.C. Section 5324(b), FTA is required to take into account the economic, social, and environmental interests affected, and requires that alternatives be considered to avoid those effects. If there is no feasible and prudent alternative which avoids the adverse environmental effects, then all reasonable steps must be taken to minimize those effects. If effects cannot be avoided or minimized, they must be mitigated. Measures to avoid or mitigate environmental harm are described in the environmental documents prepared for projects. These measures are developed jointly by FTA and the grantee to respond to State and local as well as Federal environmental requirements. The mitigation measures in final environmental documents are expressed as commitments on the part of the grantee which must be implemented if the project receives Federal funding. When a grant is made, the mitigation measures are incorporated by reference in the Grant Agreement for construction and become legally binding terms and conditions of the grant which cannot be withdrawn or substantively changed without FTA's approval. The progress in implementing adopted mitigation measures is monitored by FTA regional staff through periodic project reviews, on -site inspections, and special meetings when necessary. The grantee has the responsibility to apprise FTA at the earliest possible time of any problems in implementing the adopted measures and any need for changes. Where mitigation options are being considered, FTA will maintain a role in the decision - making process to ensure continuing compliance with Department of Transportation (DOT) Regulation 23 CFR part 771 implementing 49 U.S.C. Section 5324 (b). Information about FTA's environmental review process is available through the FTA Regional Office. b. Project Management Plan. A written PMP is required by 49 U.S.C. 5327 for all major capital projects. Grantees are required to develop and implement a PMP for all major capital projects funded by FTA as part of the PMO Program. This plan covers a grantee's detailed project management strategy to control the project scope, budget, schedule, and quality (49 CFR part 633). The requirements for PMP can be found in the most recent version of Project Management Oversight Rule and FTA's website at http: / /fta.dot.gov. As a general rule, if the project meets the definition of major capital project, the grantee must submit the PMP during the grant application review process. FTA may also request that a PMP must be submitted for other projects as deemed appropriate. If FTA determines the project is major capital project after the grant has been approved or if FTA determines that a PMP be submitted for other projects after the grant has been approved, FTA will inform the grantee of its determination and will require submission of the plan. An approval of a PMP can be made after grant approval. Page IV -34 c. Utility Relocation. FTA C 5010.1D 11/01/2008 (1) General. The construction of transit systems may require the relocation and /or rearrangement of privately and publicly owned utilities. These utilities include, but are not limited to, systems and physical plants for producing, transmitting, or distributing communications, electricity, gas, oil, crude oil products, water, steam, waste storm water, or other substances; publicly owned fire and police signal systems; and railroads and streets which directly or indirectly serve the public. Relocating and /or rearranging utilities and facilities necessary to accommodate an FTA- funded transit project may be considered an eligible expense as part of the project. Exceptions to this include those situations where State and local law expressly prohibit the financing of such by the public entity. (2) Eligibility for FTA Funding. In order to qualify for FTA funding, the grantee must execute an agreement for relocating or rearranging facilities with the entity responsible for the facilities prescribing the procedures for the relocation and /or rearrangement of the facilities for the purpose of accommodating the construction of the FTA funded project. Prior FTA approval is not required in reaching a utility relocation agreement. (3) Utility Relocation Agreement. These agreements are distinguishable from third party contracts in that: Only actual allowable, allocable, and reasonable costs are reimbursable. Where the work is to be performed by the public utility's forces, no profit is allowed; and reimbursement is limited to the amount necessary to relocate and/or rearrange the facilities to effect a condition equal to the existing utility facilities. Generally, reimbursement would not provide for greater capacity, capability, durability, efficiency or function, or other betterments or enhancements to the existing utility system, except for meeting current State and local codes. Indirect costs of governmental entities incurred under a utility relocation agreement are eligible for FTA reimbursement only in accordance with an approved Cost Allocation Plan (CAP) as prescribed in OMB Circular A -87. d. Force Account. One of four conditions may warrant the use of a grantee's own labor forces. These are: (1) cost savings, (2) exclusive expertise, (3) safety and efficiency of operations, and (4) union agreement. Force account is the use of a grantee's own labor force to carry out a capital grant project. Force account work may consist of design, construction, refurbishment, inspection, and construction management activities, if eligible for reimbursement under the grant. Incremental labor costs from flagging protection, service diversions, or other activities directly related to the capital grant may also be defined as force account work. Force account work does not include grant or project administration activities which are otherwise direct project costs. Force account can include major capital project work on rolling stock. An example of this is preventive maintenance activities. FTA C 5010.1D 11/01/2008 Page IV -35 FTA prior review of a force account plan and justification are required where the total estimated cost of force account work to be performed under the grant is greater than $10,000,000. When work to be performed is less than $10,000,000 but over $100,000, a force account plan is required to be in the grantee's file, but does not require prior FTA approval. When work to be performed using force account is less than $100,000, a detailed plan is not required. e. Basis for Reimbursement. To be eligible for reimbursement for force account work, the grantee must provide the following before incurring costs: (1) Justification for using grantee forces; (2) Preparation of a force account plan; (3) A description of the Scope of Work; (4) A copy of the construction plans and specifications which includes: (a) A detailed estimate of costs; (b) A detailed schedule and budget; and (c) A copy of the proposed Cooperative Agreement when another public agency is involved. (5) Submit documentation equivalent to a sole source justification stating the basis for a determination that no private sector contractor has the expertise to perform the work. In addition, the required documentation must provide the basis for the grantee decision to use force account labor including the following information; (6) Provide the present worth of the estimated cash drawdown for both the force account and private sector contract options. In the analysis, use the current interest rate paid on one -year Treasury Bills as the discount rate; (7) Include the cost of preparing documents; cost of administration and inspection; cost of labor, materials and specialized equipment; cost of overhead; and profit for private contract; (8) Include the unit prices for labor; materials and equipment; overhead; and profit, if applicable for private contract; (9) Provide certification that costs presented are fair and reasonable; (10) Provide an analysis of force account labor availability, considering normal operations and maintenance activities as well as other programmed and existing capital projects. This must be consistent with costs of labor, material, and specialized equipment; and Page IV -36 FTA C 5010.1D 11/01/2008 (11) Provide relevant citations from labor union agreements and an analysis of how it pertains to the work in question. Base the present value calculation on the midpoint of construction; and if the time for completion of the work differs for force account and a private sector contract, include an estimate of the cost of not using the completed improvement in the present worth calculation. For example, if the work is to replace leased facilities, the cost of continuing the lease until the work is complete should be taken into account in the cost estimate for each option considered. Safety considerations may be addressed by a statement of the transit operator's safety officer that performing the work with private sector contractors would have an adverse effect on public safety. Efficiency concerns may be addressed by a present worth calculation, including an estimate of the value of lost transit operation efficiency. Special care must be taken to ensure that requirements of OMB Circular A -87 are followed, especially for charging expendable property to force account projects and making sure that allowable costs are assigned to the correct activity codes. Most general purpose equipment and tools can be used in force account work and thereby benefit more than one project. Therefore, the cost of these items normally should not be treated as a direct charge to the project. However, an appropriate use or depreciation charge is an allowable indirect cost if otherwise provided for in the project budget. Unusual circumstances may call for purchase of specialized equipment that is unique to the force account work that is being performed. If such equipment is required, prior FTA approval must be obtained. The usual FTA equipment disposition requirements apply. The progress and status of force account activities should be separately discussed in milestone /project reports, with emphasis on schedule and budget. f. Seismic Standards and Reporting. New federally funded buildings, and additions to existing buildings and bridges, built with Federal assistance must be designed and constructed in accordance with State, local, and industry required standards or codes. The applicant is responsible for determining before accepting delivery that the building complies with the seismic design and construction requirements and certifies to the same through the annual Certifications and Assurances, as required by 49 CFR part 41. g. Value Engineering. Value Engineering (VE) is the systematic, multi - disciplined approach designed to optimize the value of each dollar spent. To accomplish this goal, a team of architects /engineers identifies, analyzes, and establishes a value for a function of an item or system. The objective of VE is to satisfy the required function at the lowest total costs (capital, operating, and maintenance) over the life of a project consistent with the requirements of performance, reliability, maintainability, safety, and esthetics. FTA C 5010.1D 11/01/2008 (1) Applicability. Page IV -37 (a) Major Capital Projects. VE must be used on major capital projects. A major capital project is usually identified during the grant application process. (See, Chapter IV, Subsection 4.b., "Project Management Plan," for a definition of major capital project.) (b) Non -Major Capital Projects. Grantees are encouraged to conduct VE on all construction projects including but not limited to bus maintenance and storage facilities, intermodal facilities, transfer facilities, revenue railcar acquisition and rehabilitation, and offices, with the level of VE study to be commensurate with the size of the project. (2) Timing. VE on a project should be performed early in the design process before major decisions have been completely incorporated into the design, at or near the end of preliminary engineering (PE) or prior to final design. Some large or complex projects may need to conduct two VE studies. (3) Reporting. Grantees with major capital projects are required to submit a VE report to the appropriate FTA Regional Office at the end of each Federal fiscal year (FY) (October 1) indicating the results of their VE efforts. Copies of the VE report form are available in each Regional Office. h. Constructability and Design Peer Reviews. Peer review is a process used by the grantee in the planning, design, and implementation of capital projects. The concept of peer review can be applied to any problem or situation where a second opinion can be useful to decision makers. FTA encourages the grantee to confer with other transit operations and maintenance experts in order to benefit from their experience. These reviews have been used to review rail extensions, New Starts projects, and transit facilities. These reviews have provided an in -depth critique of designs at the preliminary and final engineering stages. They have provided operations and maintenance information with respect to a variety of subsystems and have validated the process used by a grantee's planning staff to locate bus facilities. The purpose of constructability and design peer reviews is to improve the performance of the process or product being reviewed and optimize the design and subsequent construction of the project. The review should be able to answer such questions as: Can this be constructed? Is there a better process that could be employed to achieve the desired results? Is the product safe? Although the grantee is encouraged to conduct peer reviews with all capital projects, in some instances it may be required by FTA, and the process should be fully documented through the recipient's document control process. i. Crime Prevention and Security Review. Grantees are encouraged to develop, refine, and train on security and emergency response plans. Emergency response drills should be conducted with public transportation agencies and fully coordinated with local first response agencies. Other security training should be provided for public transportation employees that will serve to better prepare an agency during an emergency including Page IV -38 J• FTA C 5010.1D 11/01/2008 such things as bomb treats, detection of chemical and biological agents, and other disruptive incidents. Grantees are encouraged to perform crime prevention reviews during the design phase of all FTA funded transit facilities with particular focus on the incorporation and use of crime prevention through environmental design techniques. This review should serve to improve and increase the safety and security of an existing or planned transit system or facility for both transit patrons and transit employees. The level of review should be commensurate with the project size and scope. Local crime prevention professionals should be included in the review process. Review documentation should remain on file by the grantee and be available for FTA review upon request. Safety and security publications and training information can be found at http: // transit- safety.volpe.dot.gov /Publications and at http: / /transit- safety.volpe.dot.fov /Training. Concurrent Non - Project Activities. Concurrent Non - Project Activities, also known as betterments, are improvements to the transit project desired by the grant recipient that are not part of the base functioning of the Federal transit project. They are not integral to the base functioning of the transit project and are viewed as enhancements or upgrades to a level beyond what is normally required for the base functioning of the transit project. The concurrent non - project activities are performed in conjunction with grant- funded project work to afford the opportunity to have the non - project work performed economically and efficiently in conjunction with grant- funded project work. Examples of betterments include; increased utility pipe sizes, road widening projects for local reasons, environmental mitigation measures not identified in an environmental document, increased landscaping, signal upgrades beyond the base requirements of the transit project, etc. Costs for Concurrent Non - Project Activities are to be paid for by the grantee. Related but different than Concurrent Non - Project Activities are activities involving an overbuild situation. Guidance should be obtained from the FTA Regional Office related to any overbuild situation to determine the Federal eligibility of such an activity. An example of an over -build situation is over - designing the foundation and base stories of a multi -story facility in order to better accommodate future vertical expansion of the project. Outside of a joint development project, such an over -build is generally not an allowable grant cost. k. FTA Technical and Construction Oversight Review. The grantee agrees to permit FTA to review, as deemed necessary by FTA, the technical plans and specifications and requirements to the extent FTA believes necessary to ensure project execution, consistency with scope and need, and incorporation of FTA requirements. The grantee agrees to comply with any FTA request pertaining to its review of construction plans and specifications. The FTA Regional Office should be consulted to determine if FTA review of construction plans and specifications is necessary to advance the project to the next level of design. The grantee agrees to provide and maintain competent and adequate engineering supervision at the construction site to ensure that the completed work conforms to the plans and specifications and that the intent of the scope of the project is carried out. To the extent applicable, the grantee agrees to comply with FTA PMO regulations, 49 CFR part 633. FTA C 5010.1D 11/01/2008 Page IV -39 1. Energy Conservation. The grantee agrees to comply with applicable mandatory energy efficiency standards and policies of applicable State energy conservation plans issued in accordance with the Energy Policy and Conservation Act, as amended, 42 U.S.C. 6321 et seq. The grantee, to the extent applicable, agrees to perform an energy assessment for any building constructed, reconstructed, or modified with FTA assistance, as provided in FTA regulations, "Requirements for Energy Assessments," 49 CFR part 622, Subpart C. FTA assistance for the construction, reconstruction, or modification of buildings for which applications are submitted to FTA will be approved only after the completion of an energy assessment. An energy assessment shall consist of an analysis of the total energy requirements of a building, within the scope of the proposed construction activity and at a level commensurate with the project size and scope. The Energy Assessment should consider: overall design of the facility or modification; materials and techniques used in construction or rehabilitation; special innovative conservation features that may be used; fuel requirements for heating, cooling, and operations essential to the function of the structure, projected over the life of the facility and including projected costs of this fuel; and energy to be used. m. Intelligent Transportation System (ITS). Grantees that have transportation projects that include ITS must be participants in a regional or statewide ITS Architecture process and their ITS projects must be included in the locally approved Regional ITS Architecture. Grantees are required to use a Systems Engineering process for the development of ITS projects. The project level requirements include undergoing a Systems Engineering Analysis for the ITS and communications components of the project or grant, and developing ITS Project Architectures for all Major ITS Projects (prior to the adoption of the regional ITS architecture). The ITS components and FTA National ITS Architecture Consistency Policy for Transit Projects conformity status also should be included in FTA grant applications within TEAM. The policy can be found at: http: / /www.fta.dot.2ov /documents/FTA ITS Policy.pdf. A systems engineering analysis is a "structured process for arriving at a final design of a system," and is a method for identifying needs and developing /procuring the best possible configuration for a particular situation. The Policy requires that the systems engineering analysis includes how the project fits into the regional (or National) ITS architecture, how the system will be implemented and operated (roles, requirements), and analyses of alternatives for system configuration, financing, and procurement. Applicable (DOT - developed and supported) ITS standards also must be identified. Prior to the adoption of a regional ITS architecture, all Major ITS Projects must also include the development of a project level architecture. Major ITS Projects are any projects that implement part of a regional ITS initiative that is multi jurisdictional, multi- modal, or otherwise affects regional integration of ITS systems. Examples include regional traveler information, regional electronic payment, new AVL systems that may set the standard for the region, or transit signal priority systems. A project Page IV -40 FTA C 5010.1D 11/01/2008 architecture is similar to a regional ITS architecture but focuses on the project and its implementation. Again, all agreements that are needed to implement and operate the ITS systems must be included as part of the project architecture. n. Americans with Disabilities Act (ADA). New facilities and any /all additions and /or alterations to existing facilities are required to comply with regulations issued by DOT implementing the transportation provisions of ADA (49 CFR parts 27, 37 & 38). Compliance is a condition of eligibility for Federal funding under 49 CFR part 27, but is required whether or not the facility or alteration is federally funded. Depending upon the nature of the facility, compliance with implementing regulations issued by other Federal agencies with ADA responsibilities may also be required. The applicant is responsible for ensuring that new facilities and additions /alterations to existing facilities are designed in accordance with DOT and ADA regulations and related guidance in effect as of the date construction begins and for verifying compliance prior to accepting delivery. FTA C 5010.1D 11/01/2008 CHAPTER V FTA OVERSIGHT Page V -1 1. GENERAL. The Federal Transit Administration (FTA) evaluates grantee adherence to program and administrative requirements through a comprehensive oversight program. FTA's Master Agreement, which each grantee receives, specifies these requirements. FTA determines compliance through self - certification, oversight review, audits, and site visits. On an annual basis, FTA completes an individual Grantee Oversight Assessment Questionnaire, which serves as baseline information for each grantee's capacity to comply and determines the risk the grantee's program may represent for the Federal program. Based on this information, FTA makes decisions about which grantees will receive oversight reviews during the coming year. Regional staff use the information to develop regional oversight plans and to allocate oversight resources within the region for the upcoming fiscal year (FY), which may include oversight reviews, regional meetings, and /or regional site visits. FTA's Oversight Review Program includes 15 review areas. They are: a. Grant Oversight Assessment b. Triennial Review c. State Management Review d. State Safety Oversight Program e. Planning Certification Review f. Financial Management Reviews g. Procurement System Review h. Americans with Disabilities Act (ADA) i. Title VI j. Disadvantaged Business Enterprise (DBE) k. Equal Employment Opportunity (EEO) 1. Safety and Security Industry Guidance m. Drug and Alcohol Audit n. Research and Cooperative Agreements o. Oversight Guidance Page V -2 FTA C 5010.1D 11/01/2008 FTA oversight reviews are categorized by general, program - specific, and project specific. The general reviews are the triennial reviews of grantees receiving Section 5307 Urbanized Area Formula Grants and the State Management Reviews of grantees receiving Section 5311 Non - Urbanized Area Formula Grants and Section 5310 Elderly Individuals and Individuals with Disabilities Programs. Program - specific reviews assess grantees compliance in a particular program, such as Financial Management Systems, Procurement, Civil Rights, or Safety and Security. Project level oversight includes the assignment of a Project Management Oversight (PMO) consultant and is applied to major capital projects and /or projects participating in the New Starts Program. FTA may conduct on -site inspections of projects to evaluate the grantee's effectiveness in implementing the project in conformance with the Grant Agreement. Inspection visits may be made, for example, to follow up on information received from the grantee about an event with significant impact on a project, or to determine whether the grantee has adequately complied with civil rights laws, regulations, and agreements. Inspection and concurrence by FTA in project work does not relieve the grantee of its responsibilities and liabilities as the responsible party for carrying out the grant. 2. GENERAL REVIEWS. a. Triennial Review. FTA is required by law to perform reviews and evaluations of Urbanized Area Formula Program (Section 5307) grantees to evaluate formula grant management performance and grantee compliance with current FTA requirements. The reviews must be conducted for each formula grant recipient at least once every three years and integrated into FTA's grant management functions. The reviews are conducted by teams formed by FTA staff and outside contractors following an annual work program. Desk reviews are followed by a site visit. The team documents its findings and recommendations in a draft triennial review report, which is furnished to the grantee for comment before it is released in final form to interested local, State, and Federal officials. The triennial reviews use a process of taking samplings of various practices and actions of a grantee in complying with the Federal requirements. As such, it is not an exhaustive review and should not be considered by the grantee as FTA's full and complete review of compliance by the grantee of any particular Federal requirement. FTA reserves the right to conduct compliance reviews and make findings of non - compliance. When appropriate, corrective actions are recommended to resolve a grantee's program management deficiencies. FTA monitors the grantee's actions until compliance with identified program requirements is achieved. If needed, FTA can invoke sanctions to assure that the grantee acts to correct any noted program deficiencies. b. State Management Review. The State Management Review assesses a State's implementation and management of the Elderly Individuals and Individuals with Disabilities (Section 5310) and the Nonurbanized Area Formula Programs (Section 5311) to ensure the programs meet FTA requirements and program objectives. The review follows a format similar to the triennial review and is conducted every three FTA C 5010.1D 11/01/2008 Page V -3 years. For more information on these programs, please reference the latest version of FTA Circulars 9040.1 and 9070.1. 3. PROGRAM - SPECIFIC REVIEWS. a. Financial Management Oversight (FMO) Program. Under the FMO program, FTA conducts several types of reviews: (1) The Full Scope Systems (Full Scope) review determines that the grantee's financial management system meets the requirements of the Common Rule (49 CFR 18.20). The intent of the review is to assure FTA that the grantee has in place proper financial controls and checks and balances to manage and track Federal funds. FMO contractors conduct a series of interviews, full transaction review, and appropriate substantive tests. The contractors then express an objective, external, independent, professional opinion to FTA, in accordance with established public accounting standards, on the effectiveness of the grantees internal control environment. An average review takes three to four weeks at the grantee's site. (2) Follow -ups to a Full Scope review are primarily performed to ensure those recommendations resulting from full scope reviews are implemented and working properly. If FTA conducts this type of review, it will normally occur between 12- 18 months after the Full Scope review. (3) Cost Allocation Plan (CAP) review purpose is to determine whether the methodology for allocating indirect cost to a Federal grant is calculated in a manner consistent with the applicable OMB circular. The CAP is a financial document which is used to distribute the cost of a State or local government's executive and central level support functions to those operating organizations within the government that benefit from them. If a grantee wishes to be reimbursed for its indirect costs under an FTA grant, it must substantiate those costs with an indirect cost calculation. (4) On a case -by -case basis, FTA conducts Financial Management Oversight Special Assignments or also called special reviews related to grantees' financial management issues. FTA may request special analyses, special reviews, meeting attendance, audits, presentations, and reports. These special reviews are developed based on particular issues. The reviews could encompass financial reporting and general accounting; internal control —fixed assets; allowable cost — procurement; allowable cost — payroll; cash management; allowable cost — overhead; and /or project change —grant management. b. Procurement Reviews. A procurement system review ensures that the requirements and standards of the Common Rule on administrative requirements for grants, 49 CFR 18.36 and the most recent version of FTA C 4220.1 as it specifically applies to procurements, are met. These reviews are conducted on site and involve review of Page V -4 FTA C 5010.1D 11/01/2008 previous typical procurement as well as documentation of policies, processes, and controls. c. Civil Rights Reviews. Civil rights compliance is required by recipients and subrecipients of Federal assistance. FTA's Master Agreement specifies that compliance is required, and sets forth the terms and conditions governing the administration of a transit project or projects supported with FTA financial assistance. FTA grantees should be aware, however, that they may be subject to civil rights requirements established and enforced by other Federal agencies that may not recognize the FTA Master Agreement as dispositive of their responsibilities, and that some responsibilities exist independent of FTA or other Federal funding. FTA retains the right to review grantee compliance status at any time during the life of the project. Civil Rights reviews include Title VI, DBE, ADA, and EEO. d. Safety and Security Reviews. (1) Drug and Alcohol Program. To support compliance with Department of Transportation (DOT) Drug and Alcohol requirements, FTA conducts audits to assess grantee and State implementation of 49 CFR part 655. These audits provide in -depth reviews of grantee and State programs, and include a detailed examination of records and interviews with appropriate grantee personnel and their contractors and service agents, such as collection sites, medical review officers, substance abuse professionals, and third party administrators. FTA assigns its own staff, plus contractor support, to audit grantees' drug and alcohol testing programs. FTA monitors based on data collected and analyzed from the Drug and Alcohol Management Information System (DAMIS). FTA monitors industry drug and alcohol testing rates and results. These audits are scheduled based on analysis of DAMIS information and annual grantee evaluation. FTA manages this program using a Web -based auditing and reporting system. (2) Security and Emergency Management Technical Assistance Reviews. In partnership with the Department of Homeland Security (DHS), Transportation Security Administration (TSA) and the Federal Emergency Management Agency (FEMA), National Preparedness Directorate, FTA may provide on -site technical assistance and reviews to assess grantee activities to enhance the personal security of passengers and employees and to support core emergency response capabilities. FTA also coordinates with DHS regarding reviews it conducts with grantees. (a) FTA Safety Oversight Audit Program. FTA is required to monitor and evaluate compliance with FTA's State Safety Oversight Rule (49 CFR part 659). FTA conducts triennial audits of each State designated to implement FTA's State Safety Oversight Rule for the rail transit agencies operating in its jurisdiction. For each audit, FTA assigns its own staff, plus contractor support, to review each State's program. These audits are scheduled based on analyses of annual reporting information provided by the States and use the FTA C 5010.1D 11/01/2008 (3) Page V -5 grantee assessment. These audits provide in -depth reviews of each State's program, and include a detailed examination of records and interviews with appropriate personnel and their contractors, at both the State Oversight Agency and the regulated rail transit agencies. The audits also provide a forum to recommend improvements to the effectiveness of the oversight program established by each State. (b) Safety and Security Management Plan Review. Historically, recipients of FTA funding with projects covered under 49 CFR part 633 described their safety and security management strategies and controls as sub - elements of other required Project Management Plan (PMP) sections. Some recipients performed specific safety and security activities, such as safety and security certification or pre- revenue operational readiness assessments, while other recipients did not. There was no consistent approach to safety and security in projects covered under 49 CFR part 633. FTA Circular 5800.1, "Safety and Security Management Guidance for Major Capital Projects," explains FTA safety and security requirements for major capital projects. With this circular, FTA addresses the shortcomings and strengthens the role of safety and security oversight and management in all phases of project development. FTA requires grantees to develop a Safety and Security Management Plan (SSMP), as a chapter or plan within the PMP. Before approving each PMP, FTA reviews the SSMP submission, and conducts site assessments at grantees that include records review, interviews, and on -site observation. This review must be completed before FTA can approve a grantee's PMP. FTA Voluntary Bus Transit Safety and Security Reviews. To implement the terms of the Memorandum of Agreement (MOU) signed by FTA, the American Association of State Highway and Transportation Officials (AASHTO), the American Public Transportation Association (APTA), and the Community Transportation Association of America (CTAA), FTA conducts voluntary safety and security reviews at bus agencies throughout the country. These reviews assess each bus agency's safety and security activities against FTA's technical assistance baseline, and provide recommendations, effective practices, and model materials to support improvements in critical safety and security functions. The Transit Bus Safety and Security Program is based on objectives designed to improve safety and security for passengers, employees, and others that share the roadways with America's urban and rural public transit bus operations. The Program encompasses public transit bus agencies of all sizes, including urban, small urban, rural, and community transit, and FTA is committed to the broadest possible implementation of Program strategies and tools. (a) The mission of the program is: Page V -6 FTA C 5010.1D 11/01/2008 1 Emphasize coordination and collaboration with industry stakeholders to identify an effective and comprehensive set of techniques and strategies to implement Program objectives. 2 Promote an approach of incremental innovation through a cycle of implementation, evaluation, revision, and communication to reach optimal Program performance. 3 Strive for ongoing improvement in industry safety and security through the advancement of technical assistance that is practical, effective, and targeted to meet the needs of transit bus agencies implementing the Program. (b) Bus Transit Safety and Security Reviews strategies include: 1 Collaborate through a Program Working Group to leverage its expertise to speed initiatives into action. 2 Effectively communicate the Program's mission so that the grantee can move from "why" to "how" more effectively. 3 Enhance distribution of safety and security- related technical assistance materials to public transit bus providers via easy -to -use electronic means. 4 Establish a performance culture from which we evaluate Program implementation and effectiveness by conducting voluntary on -site technical reviews and promote self - assessment checklists. 5 Use available safety and security data and risk assessment models to target the most frequent and/or catastrophic risks to passengers and employees. 4. PROJECT LEVEL REVIEWS. a. Project Management Oversight (PMO). FTA conducts PMO for major capital projects, using its own staff or a combination of FTA and contractor staff. For general guidance, grantees are required to provide all needed information about each project selected for this oversight. PMO begins as early in project implementation as practical, usually during the preliminary engineering process. FTA may assign its own or contractor staff to provide special oversight or monitoring of major construction or equipment acquisition projects. Contractor staff is generally used for major projects. b. Financial Capacity. FTA conducts these reviews during the New Starts evaluation process and includes the results in the Annual Report on Funding Recommendations. A more detailed Financial Capacity Assessment (FCA) review determines the financial capacity and condition of the grantee to manage FTA Full- Funding Grant Agreement FTA C 5010.1D 11/01/2008 Page V -7 (FFGA) obligations and maintain its existing and planned transit operation. In cases where projects have progressed into construction, the contractors evaluate the financial capacity of grantees to complete the undertaking according to the terms, conditions, budgets, schedules, and commitments in the FFGA. FCAs analyze plans to mitigate the risks associated with: (1) provision of the required local share, (2) the ability to complete the project on schedule in the face of delayed or reduced Congressional appropriations, unanticipated conditions, or budget overruns, and (3) the ability to operate and maintain the existing system as well as the project. c. Specialized Oversight Strategies. From time to time, FTA has determined that a grantee presents the need for additional specialized oversight. In a few cases, FTA has designated a grantee as a high -risk grantee under 49 CFR 18.12. In theses cases, FTA may impose specific requirements as a condition to receive FTA funding. These conditions are usually the result of specialized review provided by one or more or a combination of FTA contractors. d. Quarterly Project Management Meetings. Quarterly project management meetings may be instituted with selected grantees. These meetings provide a forum for management briefings, status /progress reports, discussion of accomplishments and problems, and, as appropriate, an opportunity for site inspection. The quarterly meetings do not replace quarterly written reports unless a specific exemption is granted by FTA. e. Other Project Management Meetings. Other project management meetings may be instituted with select grantees on other time intervals at the discretion of the Regional Office. These meetings provide a forum for management briefings, status /progress reports, discussion of accomplishments and problems, and, as appropriate, an opportunity for site inspection. The quarterly meetings do not replace quarterly written reports unless a specific exemption is granted by FTA. FTA C 5010.1D 11/01/2008 This page intentionally left blank FTA C 5010.1D 11/01/2008 CHAPTER VI FINANCIAL MANAGEMENT Page VI -1 1. GENERAL. This chapter discusses the proper use and management of Federal funds the Federal Transit Administration (FTA) expects from its grantees. Financial management is one of the most important practices in the management of Federal funds. 2. INTERNAL CONTROLS. a. Definition. Internal controls are the organization plan, methods, and procedures adopted by the grantee to ensure that effective control and accountability is maintained for all grants and subgrants, cash, real and personal property, and other assets. Grantees and subgrantees must ensure that resources are properly used and safeguarded, and that they are used solely for authorized purposes. b. General. FTA payments to a grantee are made electronically to meet the Federal share of eligible expenses incurred under a grant. The grantee's acceptance of an FTA grant obligates the grantee to use funds it receives as specified in the Grant Agreement. This creates a vested interest by the Federal Government in unused grant balances, any improperly applied funds and property, or facilities purchased or otherwise acquired under the grant, whether funds are received by the grantee as an advance or by reimbursement. Grantees and subgrantees are responsible for establishing and maintaining adequate internal controls over all their functions that affect implementation of a grant. For proper management of grants, these controls must be used by each grantee in all its operating, accounting, financial, and administrative systems. To ensure proper accountability for grant funds, internal controls must be integrated with the management systems used by the grantee to regulate and guide its operations. c. Objectives. Resources must be used in accordance with applicable State, local, and Federal laws, regulations and policies, and the grant assistance agreement. Resources must be safeguarded against waste, loss, and misuse. Reliable data on resource use and safeguards must be accumulated, maintained, and fairly disclosed in reports to grantee management and FTA. A proper system of internal controls will help the grantee to: (1) Operate efficiently and economically; (2) Keep obligations and costs within the limits of authorizations and legal requirements, consistent with accomplishing the purpose of the grant; (3) Safeguard assets against waste, loss, and misuse; Page VI -2 FTA C 5010.1D 11/01/2008 (4) Ensure timely collection and proper accounting of the grantee's operating and other revenues; and (5) Ensure accuracy and reliability in financial, statistical, and other reports. d. Necessary Elements. Certain elements are necessary to achieve the objectives mentioned in Chapter VI, Subsection 2.c. above and meet the standards discussed in Chapter VI, Subsection 2.e. below. The following objectives and standards facilitate the grantee's use of internal controls: (1) Reasonable assurance that internal controls are an integral part of the grantee's management systems; (2) Existence of a positive and supportive attitude among grantee managers and employees; (3) (4) Identification of specific internal control objectives to ensure that needs are identified and that valid controls are planned and implemented; Assignment of internal control functions to competent and experienced employees; (5) Adoption of internal control policies, plans and procedures that reasonably ensure their effectiveness, such as organizational separation of duties and physical arrangements, such as locks and fire alarms; and (6) Regular program of testing to identify vulnerabilities in the internal control system. e. Standards of Internal Control and Audit Resolutions. (1) General. (a) Grantee management policies that govern grant implementation must be clearly stated, understood throughout the organization, and conformed to applicable legislative and administrative requirements. (b) The grantee's formal organization structure must clearly define, assign, and delegate appropriate authority for all duties. (c) Responsibility for duties and functions must be segregated within the organization to ensure that adequate internal checks and balances exist. Grantees should pay particular attention to authorization, performance, recording, inventory control, and review functions to reduce the opportunity for unauthorized or fraudulent acts. (d) A system of organizational planning should exist to determine financial, property, and personnel resource needs. FTA C 5010.1D 11/01/2008 Page VI -3 (e) Written operating procedures must exist and be simply stated, yet meet the grantee's operating, legal, and regulatory requirements. In developing its procedures, the grantee should consider such factors as feasibility, cost, risk of loss or error, and availability of suitable personnel. Other important considerations are the prevention of illegal or unauthorized transactions or acts. (f) The grantee's information system must reliably provide needed operating and financial data for decisionmaking and performance review. (g) The grantee must provide proper supervision and performance must be subject to review of an effective internal audit program. (h) All personnel must be properly qualified for their assigned responsibilities, duties, and functions. Education, training, experience, competence, and integrity should be considered in assigning work. All must be held fully accountable for the proper discharge of their assignments. Expenditures must be controlled so that construction, equipment, goods, and services are acquired and received as contracted for (as to quality, quantity, price, and time of delivery). Authorizations for expenditures must conform to applicable statutes, regulations, and policies. (j) All real property, equipment, expendables, and funds must be safeguarded to prevent misuse, misappropriation, waste, or unwarranted deterioration or destruction. (i) (2) Internal Control Self - Assessment. Grantees should evaluate its internal control and financial management systems to ensure that it has effective internal controls and financial management systems. To assist with the evaluation, FTA developed an example of an Internal Control Self - Assessment Form. The optional form is designed to provide transit agency management staff with the information necessary to evaluate the agency's internal control and financial management system. The form is based on the criteria for effective internal control as set forth in Internal Control— Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Committee (the COSO Report), as well as the criteria for effective financial management systems established by FTA, based on 49 CFR part 18, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (the "Common Rule "). Grantees may access Internal Control Self - Assessment Form at the following website: http: / /www.fta.dot.2ov /documents/FTA Internal Control Self - Assessment Tool.pdf. Page VI -4 (3) Financial Management Systems. FTA C 5010.1D 11/01/2008 (a) States: A State must expend and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost -type contractors, must be sufficient to: 1 Permit preparation of reports required by the Common Rule, 49 CFR part 18 and the statutes authorizing the grant, and 2 Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) Entities Other than a State: The financial management systems of other grantees and subgrantees must meet the following standards: 1 Financial Reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with financial reporting. 2 Accounting Records. Grantees and subgrantees must maintain records which adequately identify the source and application of funds provided for financially- assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. 3 Internal Control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must ensure that it is used solely for authorized purposes. 4 Budget Control. Actual expenditure or outlays must be compared with budgeted amounts for each grant or subgrant. Financial information must be related to performance or productivity data, including the development of unit cost information whenever appropriate or specifically required in the grant or subgrant agreement. If the unit cost data are required, estimates based on available documentation will be accepted whenever possible. 5 Allowable Cost. Applicable Office of Management and Budget (OMB) cost principles, or stated in 2 CFR parts 225 and 230, agency program regulations, and the terms of grant and subgrant agreements will be followed in allowability and allocability of costs. FTA C 5010.1D 11/01/2008 Page VI -5 6 Source Documentation. Accounting records must be supported by such source documentation as cancelled checks, paid bills, payrolls, time and attendance records, contracts, and subgrant award documents. 7 Cash Management. Procedures for minimizing the time elapsing between the transfer of funds from the Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the reports on subgrantees' cash balances and cash disbursements are received in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by electronic transfer of funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to ensure that they conform substantially to the same standards of timing and amount that apply to advances to the grantees. Payment received from FTA must be disbursed within three business days. If not disbursed within three days, funds become excess funds and must be returned to FTA with interest. 3. LOCAL MATCH. The grantee agrees to provide sufficient funds or approved in -kind resources to serve as local match for all federally assisted projects in compliance with 49 U.S.C. Chapter 53. The grantee certifies that it has or will have available the proportionate amount of local share promptly as project costs are incurred or become due, except to the extent that the Federal Government determines in writing that the local share may be deferred. The grantee may not use an amount as match for more than one grant. 4. FINANCIAL PLAN. Upon request from FTA, the grantee agrees to provide a financial plan delineating the source of local share, the amounts applicable to the different sources, and the time frame for acquisition of local share. (See Category 15 in Annual Certifications and Assurances.) Grantees shall have multi -year financial plans (3 -5 years) that project operating and capital revenues and expenses. The financial plans should indicate adequate revenues to maintain and operate the existing system and to complete the annual program of projects (POP). If grantees are involved in a New Starts project, the financial plan must have a 20 -year horizon. 5. GENERAL PRINCIPLES FOR DETERMINING ALLOWABLE COSTS. a. General. A grantee must follow the applicable cost principles circulars, currently in Title 2 of the Code of Federal Regulations, in determining whether project costs are allowable or unallowable. Title 2 CFR part 225, also known as OMB Circular A -87, establishes principles and standards for determining costs applicable to grants, contracts, and other agreements with State and local governments and federally recognized Indian tribal governments. Title 2 CFR part 230 also known as OMB Circular A -122 establishes cost principles for nonprofits. Page VI -6 FTA C 5010.1D 11/01/2008 Project costs must specifically relate to the purpose of the grant contract and the latest approved project budget. Grantees may incur costs of both a direct and indirect nature. Direct costs are costs that can be identified specifically with a particular cost objective and may be charged directly to a grant, contracts, or to other programs. All direct costs, even for project administration activities, must be adequately supported with proper documentation. For example, all labor charges must be supported with T &A records. Indirect costs are costs incurred for a common or joint purpose benefiting more than one cost objective. Indirect costs must be supported by an approved Cost Allocation Plan (CAP) and /or Indirect Cost Rate Proposal. Care must be exercised when incurring costs to ensure that all expenditures meet the criteria of eligible costs. Failure to exercise proper discretion may result in expenditures for which use of project funds cannot be authorized. b. Allowable Costs. The criteria that govern the eligibility of project costs are listed below. These criteria come from 2 CFR part 225, also known as OMB Circular A -87. To be allowable under a grant program, costs must meet the following general criteria: (1) Be necessary and reasonable for proper and efficient administration of the grant program, be allowable under the principles contained in the OMB circulars and except as specifically provided in this circular, not be general expenses required to carry out the overall responsibilities of State or local governments; (2) Be authorized or not prohibited under State or local laws or regulations; (3) Be able to conform to any limitation or exclusions set forth in the principles, Federal laws, or other governing limitations as to types or amounts of cost items; (4) Be consistent with policies, regulations, and procedures that apply uniformly to both federally assisted and other activities of the unit of government of which recipient is a part; (5) Be treated consistently. A cost may not be assigned to a Federal grant as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal grant as an indirect cost; (6) Be determined in accordance with generally accepted accounting principles (GAAP) appropriate to the circumstances; (7) Not be allocable to or included as a cost of any other federally financed program in either current or prior periods; (8) Be net of all applicable credits; (9) Be adequately documented, and FTA C 5010.1D 11/01/2008 Page VI -7 (10) Not be incurred prior to grant award unless specifically provided for in a Letter of No Prejudice (LONP) or equivalent document approved by FTA, or in the pre - award authority as described in the Federal Register listing of the Annual Apportionments. c. Disallowed Costs. In determining the amount of Federal assistance FTA will provide, FTA will exclude: (1) Any project costs incurred by the grantee prior to the date of either the approved grant or the approved project budget (whichever is earlier), unless specifically provided for in a LONP or equivalent document approved by FTA, or in the pre - award authority as described in the Federal Register listing of the Annual Apportionments; and (2) Any costs attributable to goods or services received under a contract or other arrangement that is required to be, but has not been, concurred in or approved in writing by FTA. The grantee agrees that reimbursement of any cost in accordance with indicated payment methods for an approved grant or Cooperative Agreement does not constitute a final FTA decision about the allowability of that cost and does not constitute a waiver of any violation by the grantee of the terms of approved grant or Cooperative Agreement. If the government determines that the grantee is not entitled to receive any part of the Federal funds requested, the government will notify the grantee stating the reasons. Project closeout will not alter the recipient's obligation to return any funds due to FTA as a result of later refunds, corrections, or other transactions. Nor will project closeout alter FTA's right to disallow costs and recover funds on the basis of a later audit or other review. Unless prohibited by law, FTA may offset any Federal assistance funds to be made available under a grant necessary to satisfy any outstanding monetary claims that FTA may have against the grantee. Exceptions pertaining to disallowed costs are set forth in FTA directives or in other written Federal guidance. 6. INDIRECT COSTS. a. General. Title 2 CFR part 225, also known as, OMB Circular A -87, "Cost Principles for State, Local, and Indian Tribal Governments," requires grantees who intend to seek payment for indirect costs to prepare a CAP or an Indirect Cost Rate Proposal. CAPs and /or Indirect Cost Rate Proposals must be approved by FTA or another cognizant Federal agency. b. Definitions. Indirect costs, as defined in 2 CFR part 225, are costs that are: (1) Incurred for a common or joint purpose benefiting more than one cost objective; (2) Not readily assignable to the cost objectives specifically benefited, without effort disproportionate to the results achieved; and Page VI -8 FTA C 5010.1D 11/01/2008 (3) Originating in the grantee department as well as those incurred by other departments in supplying goods, services, and facilities to the grantee department. Examples of indirect costs are administrative, operational, and expenses of unit heads and their immediate staff. Principles and standards for determining costs applicable to grants and contracts with grantees or other State or local agencies are presented in 2 CFR part 225, and the appropriate Department of Health and Human Services (DHHS) publication, ASMB C -10. c. Cognizant Federal Agency. Cognizance is generally assigned to the Federal agency that provides the predominant amount of dollar involvement with a grantee organization within a given State or locality. (OMB has assigned cognizant audit agencies for State and local governments. See Federal Register (51 FR 552, Jan. 6, 1986). In those cases where a grant recipient is not assigned a cognizant agency, these grantees will be under the general oversight of the Federal agency that provides them the most funds; which will also be identified as the "lead" Federal agency. d. Types of Plans. The following two types of cost plans are discussed in 2 CFR part 225: (1) The first type of plan covers a CAP that distributes the costs of a State /local government's executive and central level support functions to those operating organizations (usually at a lower tier level) within the government which benefit from them. These documents are also referred to as a Statewide or local -wide cost allocation plans (SWCAPs/LWCAPs). All SWCAPs must be submitted annually to DHHS for approval. DHHS is the cognizant agency for all States. Unless required by FTA or the cognizant agency, the LWCAPs do not have to be submitted for review and approval. However, they must be updated annually and kept for audit purposes. The costs approved under these plans may, at the option of the State or local government, be incorporated in the Indirect Cost Rate Proposals of a grantee agency within the government. (2) The second type of plan covers an Indirect Cost Rate Proposal which is a financial document that is updated annually, at the operating agency level, which distributes the administrative support and /or overhead costs of that agency to the programs (and the grants and contracts) which benefit from them. An Indirect Cost Rate Proposal may include the allocable portion of State or local central service costs approved in the SWCAP/LWCAP. As required by 2 CFR part 225, DHHS has issued an implementing guide, ASMB C -10, for State, local, and Indian tribal governments. This guide was developed in coordination with OMB, and can be ordered from the Government Printing Office (GPO), Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402 -9328, telephone: 202 -512 -1800, or, on the DHHS website at: http: // rates. psc .gov /fms /dca /asmb %20c- 10.pdf. FTA C 5010.1D 11/01/2008 Page VI -9 Refer to Appendix E of this circular regarding additional information on CAP and /or Indirect Cost Rate Proposal development. 7. PROGRAM INCOME. a. General. FTA's program income policy for State, local governments, and Indian tribes are in the Common Rule at 49 CFR 18.25. Although similar, the program income requirements for non -profit organizations are in 49 CFR 19.24. Grantees are encouraged to earn income to defray program costs. Program income means: (1) gross income received by the grantee or subgrantee directly generated by a grant supported activity, or (2) earned only as a result of the Grant Agreement during the grant period (the time between the effective date of the grant and the ending date of the grant reflected in the final financial report. b. Program income includes income: (1) from fees for services performed, (2) from the use or rental of real or personal property acquired with grant funds, (3) from the sale of commodities or items fabricated under a Grant Agreement, and (4) from payments of principal and interest on loans made with grant funds. Except as otherwise provided in regulations of the Federal agency, program income does not include interest on grant funds, rebates, credits, discounts, refunds, etc., and interest earned on any of them. c. Cost of generating program income. If authorized by Federal regulations or the Grant Agreement, costs incident to the generation of program income may be deducted from gross income to determine program income. d. Governmental revenues. Taxes, special assessments, levies, fines, and other such revenues raised by a grantee or subgrantee are not program income unless the revenues are specifically identified in the Grant Agreement or Federal agency regulations as program income. e. Property. Proceeds from the sale of real property or equipment will be handled in accordance with the requirements of Sections 18.31 and 18.32. f. Use of program income. FTA allows its grantee to keep program income and use it for capital and operating expenses. Program income may not be used to reduce the local share of the grant from which it was earned, but may be used in future grants. Page VI -10 g. FTA C 5010.1D 11/01/2008 If grantees choose not to use program income for public transportation purposes, then it shall be deducted from total allowable costs to determine the net allowable costs. Income after the grant period. There are no Federal requirements governing the disposition of program income earned after the end of the grant period (i.e., after the ending date of the final financial report), unless the terms of the agreement or the Federal agency regulations provide otherwise. 8. ANNUAL AUDIT. a. General. OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations" and the current OMB Circular A -133 Compliance Supplement provide the requirements for annual audits of grant recipients. Both documents are available on the OMB website at: http: / /www.whitehouse.gov /omb /circulars /a133 /a133.html. b. Requirement. Grantees that expend $500,000 or more in a year in Federal funds from all sources shall have a single audit conducted, except when they elect to have a program - specific audit conducted. The audit must be completed within nine months of the end of the grantee's fiscal year (FY). FTA grantees are required to obtain the services of an independent auditor to conduct a single audit each year in conformance with OMB Circular A -133, except where a State constitution or statute provides for a single biennial audit. Grantees are required to submit one copy of their annual single audit report to FTA if the audit report contains any findings and recommendations related to the FTA program or other Department of Transportation (DOT) program findings; or in those cases where the audit report does not contain any FTA findings or recommendations, a copy of only Federal Clearinghouse transmittal sheet "the Data Collection Form for Reporting on Audits of States, Local Governments, and Non -Profit Organizations, OMB Form SF —SAC" should be submitted to the FTA regional or metropolitan office. Grantees shall keep one copy of the data collection form and one copy of the audit reporting package on file for three years from the date of submission to the Federal clearinghouse. Pass - through entities shall keep subrecipients' submissions on file for three years from date of receipt. c. Purpose. The purpose of the single annual audit report is to determine whether the grantee: (1) Prepared financial statements that fairly present its financial position and the results of its financial position and the results of its financial operations in accordance with generally accepted accounting principles; FTA C 5010.1D 11/01/2008 Page VI -11 (2) Has in place internal accounting and other control systems to provide reasonable assurance that it is managing Federal financial assistance programs in compliance with applicable laws and regulations; and (3) Has complied with laws and regulations that may have material effect on its financial statements and on each of its major Federal assistance programs. The annual single audit is to be performed by an independent auditor who is required to determine and report on whether the grantee has internal control systems that reasonably assure it is managing Federal assistance programs in compliance with applicable laws and regulations. Grantees are required to determine whether certain subgrantees spend Federal assistance funds they receive in accordance with applicable laws and regulations. Audit judgment concerning the grantee's determination is left to the independent auditor. d. Resolution of Audit Findings. Grantees and subgrantees are responsible for prompt resolution of all audit findings and recommendations. This responsibility requires that the grantee: (1) Promptly evaluate the report; (2) Determine the appropriate follow -up actions and establish a date for their completion; and (3) Complete all required actions within the established period of time. Deficiencies or opportunities for improvement identified in an audit must be resolved by the grantee. The resolution of audits begins with FTA's report to the grantee and continues until the grantee corrects identified deficiencies, implements needed improvements, or demonstrates that the findings or recommendations are not valid or do not warrant management action. The audit cannot be closed until FTA concurs in the documentation of steps taken to implement any needed corrective actions. The status of outstanding audit findings and recommendations should be monitored and reported by the grantee in quarterly progress reports and, where appropriate, significant events reported. 9. PAYMENT PROCEDURES. a. General. Provisions in 49 CFR 18.21 and 19.22 and 31 CFR part 205 govern payments to recipients for financing operations under Federal grant and other programs. These regulations require that payment to a grantee be limited to the minimum amounts needed and timed so as to be in accord only with the actual, immediate cash requirements of the grantee in carrying out the approved project. Page VI -12 FTA C 5010.1D 11/01/2008 Before a potential grantee requests funds, it should verify in TEAM that funds are available for the project. Funds should not be requested in amounts greater than the "Available Funds" reported in TEAM. b. Payment Methods. FTA makes all payments by the Treasury's Automated Clearing House (ACH) method of payment, regardless of the dollar amount involved. ACH electronically sends payment to a payee's bank for deposit to its bank account. The payments to grantees are made using various methods of payments. (1) Electronic Clearing House Operation (ECHO) Payment. ECHO is a personal computer (PC) based application that processes drawdown requests and makes payments to FTA grantees. ECHO consists of a Web -based application which grantees can access via the Internet to submit their drawdown data. ECHO then transmits requests approved for payment to the Grantee's financial institution through Treasury's ACH process. For further information, see FTA's "ECHO System Users Manual for Grantees," at: http : / /www.fta.dot.gov/ documents /ECHOWebGranteeUserManual.pdf. (2) Requisition Payment. If the requisition payment method is used, the Standard Form 270 (SF -270), "Request for Advance or Reimbursement" form is required to be submitted to the Federal Aviation Administration, Enterprise Service Center (ESC) in Oklahoma City. Instructions for completing SF -270 and the ESC's mailing address can be found in Appendix F. c. Policy for ECHO Payments. If payment is made under ECHO, by means of an ECHO Control Number (ECN), the grantee agrees to comply with the requirements of 49 CFR 18.21 and 19.22, and 31 CFR part 205, and as described in FTA's ECHO System User Manual for Grantees. Disbursement guidelines are in accordance with policies established in Department of Treasury Circular 1075, part 205, "Withdrawal Of Cash From The Treasury For Advances Under Federal Grant And Other Programs," and by FTA financing agreements. These guidelines state that the recipient organization shall commit itself to: (1) Initiating cash drawdowns for immediate disbursement needs meaning three business days. Excess Federal funds held more than three days must be returned to FTA along with any interest earned. See Chapter VI, Subsection 9.e., "Repayment to FTA," below for detailed information on requirements to remit interest. (2) Large disbursements must be reported to the appropriate FTA Regional Office in advance of the transaction settlement date. A minimum of two business days notice is required for disbursements totaling $50 million or more. If a disbursement of over $500 million is anticipated, a minimum of five business days is required. When specific information has not been finalized, inform the FTA Regional Office of approximate amount(s) and approximate deposit date(s). The FTA C 5010.1D 11/01/2008 (3) Page VI -13 FTA Headquarters Accounting Office should be notified by the Regional Office due to the requirement that FTA must provide the Treasury 48 hours prior notification to drawdown funds exceeding $50 million. Timely reporting of cash disbursements and balances as required by the Federal program agency, which is FTA. (4) Imposing the same standards of timing and amount upon any secondary recipient organizations. Limiting drawdowns to eligible project costs, which would include NOT drawing down funds for a project in an amount that would exceed the sum obligated by FTA or the current available balance for that project. (5) (6) Providing control and accountability for all project funds consistent with FTA requirements and procedures for use of the ECHO System. (7) Furnishing reports of cash disbursements and balances, when required by means of the Financial Status Report (FSR). d. Excessive or Premature Withdrawals. (1) General. For excess payments made by the Federal Government to the grantee that do not qualify as a "claim" for purposes of the Debt Collection Act of 1982, as amended, 31 U.S.C. 3701 et seq., the recipient agrees that the amount of interest owed to the Federal Government depends on whether the recipient is a State or State instrumentality. (a) A recipient that is a State or State instrumentality agrees that interest owed to the Federal Government will be determined in accordance with Treasury regulations, "Rules and Procedures for Efficient Federal State Funds Transfers," 31 CFR part 205 that implements Section 5(b) of the Cash Management Improvement Act of 1990, as amended, 31 U.S.C. 6503(b). (b) A recipient that is neither a State nor a State instrumentality agrees that common law interest owed to the Federal Government will be determined in accordance with joint Treasury/DOJ regulations, "Standards for the Administrative Collection of Claims," at 31 CFR 901.9(i). (2) Exceptions. The only exceptions to the requirement for prompt refunding are when the funds involved: (a) Will be disbursed by the grantee within seven calendar days; or (b) Are less than $10,000 and will be disbursed within 30 calendar days. Page VI -14 FTA C 5010.1D 11/01/2008 These exceptions to the requirement for prompt refunding should not be construed as approval for a grantee to maintain excessive funds. They are applicable only to excessive amounts of funds which are erroneously drawn. (3) Return of Funds. The return of funds is accomplished as follows: (a) FTA requests the recipients to electronically remit the excessive cash and any interest to FTA using the U.S. Treasury's Pay.Gov Financial Collection System (https: / /www.Pay.Gov). (b) Although paper checks are discouraged, grantees may mail refund checks to FAA (FTA's Accounting Service Center) in Oklahoma City. If a single check is used to remit the premature withdrawal and the interest, the amount of each must be separately identified and accompanied by a letter explaining the purpose of the check(s) and identifying the project number. A copy of the check and the letter should be sent to the grantee's Regional Office. Additional information pertaining to the mailing of checks is located below in Chapter VI, Subsection 9.f. e. Repayment to FTA. FTA program managers will be alert to any information which may indicate a potential repayment. The following are possible reasons for payments becoming due to FTA: (1) insufficient non - Federal funds to match Federal payments; (2) the sale of project equipment; or (3) excessive Federal funds in the project account. f. Repayment Procedure. Required repayments must be made promptly to FTA. Grantees can submit repayments through the Treasury's Pay.Gov Financial Collection System (https://www.Pay.Gov) for all refunds and repayments. Refunds by check should be processed using the following steps: (1) Make the check payable to "Federal Transit Administration." (2) Mail all checks to the FAA/Federal Transit Account. (3) Specify applicable project number(s) on the check. (4) Provide written explanation as to purpose of payment. (5) Send a copy of the check and the explanatory letter to the grantee's regional or metropolitan office. (6) If the grantee is on ECHO -Web, the amount may be repaid through a credit on the FTA drawdown message. This credit must be shown in full and not netted against FTA C 5010.1D 11/01/2008 g. Page VI -15 any amount being claimed on the same project, unless an appropriate credit is shown for the original project, with a charge to the new project or FPC (financial purpose code) whichever is applicable. In addition, documentation for credits through FTA ECHO -Web should be forwarded to the FTA Accounting Office within three business days after the drawdown. Documentation not received within the specified period of time, could result in the grantee's project being suspended for reimbursement. Requirement to Remit Interest. Under Section 9b(1)(h) of FTA's Master Agreement, company or grantee organizations shall be required to remit any interest earned on excess Federal funds drawn down and failed to spend for eligible project activities, or were held in excess of three calendar days. Payments of interest must be made by using the Pay.Gov Financial Collection System. Unless waived by FTA, interest will be calculated at rates imposed by the Department of the Treasury (http: / /fms.treas.gov/) beginning on the fourth day after the funds were deposited in the company or grantee organization's bank or other financial depository. Upon notice by FTA to the company or grantee organization of specific amounts due, the company or grantee organization shall promptly remit to FTA any excess Federal fund payments, including any interest due. 10. DE- OBLIGATION OF FUNDS. FTA reserves the right to deobligate unspent Federal funds prior to project closeout. 11. DEBT SERVICE RESERVE. Transit agencies that use debt financing in the form of bonds are often required by the terms of the Bond Indenture to establish Debt Service Reserve (DSR). The Bond Trustee is required to establish a DSR with the proceeds of the bond issue. Usually, the DSR remains untouched for the term of the bonds, and is used to make a subsequent debt service payment ONLY if the recipient has insufficient funds to do so. If the DSR is used in this way, the recipient must replenish the DSR from its own funds and within the time frames outlined in the Bond Indenture or be in default. When there is no default, the balances remaining in the DSR are used to make the last debt service payment to the extent of such balances. Required DSRs may now be funded with FTA grant funds. However to the extent of FTA funding, any particular DSR may only be used to pay principal and /or interest on the bonds. Therefore, grantees intending to fund a DSR with FTA funds may also wish to include some non -FTA funds if the terms of the Bond Indenture allow use of DSR for other items, such as late fees or Bond Trustee expenses related to default. 12. RIGHT OF FTA TO TERMINATE. The grantee agrees that, upon written notice, FTA may suspend or terminate all or part of the financial assistance provided herein if the grantee is, or has been, in violation of the terms of the approved grant, or if FTA determines that the purposes of the statute under which the project is authorized would not be adequately served by continuation of Federal financial assistance for the project. Any failure to make reasonable progress or other violation of the approved grant that Page VI -16 FTA C 5010.1D 11/01/2008 significantly endangers substantial performance of the project shall be deemed to be a breach of the approved grant. In general, termination of any financial assistance under the approved grant will not invalidate obligations properly incurred by the grantee and concurred in by FTA before the termination date, to the extent those obligations cannot be canceled. However, if FTA determines that the grantee willfully misused FTA assistance funds by failing to make adequate progress; to make reasonable use of the project real property, facilities, or equipment; or to honor the terms of the approved grant, FTA reserves the right to require the grantee to refund the entire amount of Federal funds provided herein or any lesser amount as may be determined by FTA. Expiration of any project time period established for this project, does not, by itself constitute an expiration or termination of the approved grant. Neither the receipt by the grantee of any Federal funds for the project nor the closeout of Federal financial participation on the project shall constitute a waiver of any claim that FTA may otherwise have arising out of the approved grant. FTA C 5010.1D 11/01/2008 Circular C 2710.1A Topic C 2710.2A C 2710.4A Accounting Accounting Accounting C 2710.7 C 4220.1F C 4702.1A C 4704.1 C 4715.1A Accounting APPENDIX A TABLE OF FTA CIRCULARS Date Title Appendix A Page 1 of 4 Sampling Procedures for Obtaining Fixed -Route 07 -18 -88 Bus Operating Data Required Under the Section 15 Reporting System Sampling Procedures for Obtaining Demand - Responsive Bus System Operating Data Required Under the Section 15 Reporting System 07 -01 -88 Accounting 07 -01 -88 Procurement Civil Rights Civil Rights Civil Rights Grants C 5010.1D Management — General C 5200.1A Grants Management — General Grants C 5620.1 = Management— General C 5800.1 Revenue Based Sampling Procedures for Obtaining Fixed -Route Bus Operating Data Required Under the Section 15 Reporting System Section 15 Accounting and Reporting Release Number 1 Section 15 Accounting and Reporting Release Number 2 10 -01 -08 Third Party Contracting Guidance 05 -13 -07 Title VI and Title VI– Dependent Guidelines for FTA Recipients Equal Employment Opportunity Program Guidelines for Grant Recipients Human Resource Programs (Section 20) 07 -26 -88 Application and Project Management Guidelines 11 -01 -08 Grant Management Requirements 12 -05 -02 10 -16 -79 Full - Funding Grant Agreements Guidance Guidelines for Preparing Environmental Assessments Safety and 08 -01 -07 Safety and Security Management Guidance for Appendix A Page 2 of 4 Circular Topic Security for Major Capital Projects Date C 6100.1C Technology Development and Deployment Policy and P i R C 7008.1A Program I Development Policy and C 7020.1 Program Development C 8100.1C Planning 05 -02 -03 01 -30 -02 04 -26 -90 Title ........................... Major Capital Projects FTA C 5010.1D 11/01/2008 Transit Research And Technology Programs: Application Instructions And Program Management Guidelines Financial Capacity Policy Cross - Border Leasing Guidelines Program Guidance for Metropolitan Planning 09 -01 -08 and State Planning and Research Program Grants Capital C 9030.1C Facilities and 1 Formula Grant Programs C 9040.1F C 9045.1 C 9050.1 Capital Facilities and Formula Grant Programs 10 -01 -98 Urbanized Area Formula Program: Grant Application Instructions 04 -01 -07 C 9070.1F C 9300.1B Nonurbanized Area Formula Program Guidance and Grant Application Instructions Formula Grant Programs OS —01 -07 __.._...... ...... 1 Formula Grant & Direct Apportionment Programs Capital Facilities and Formula Grant Program Capital Facilities and Formula Grant Programs 05 -01 -07 05 -01 -07 10 -01 -08 New Freedom Program Guidance and Application Instructions The Job Access and Reverse Commute (JARC) Program Guidance and Application Instructions Elderly Individuals and Individuals with Disabilities Program Guidance and Application Instructions Capital Investment Program Guidance and Application Instructions FTA C 5010.1D 11/01/2008 Appendix A Page 3 of 4 Circular Topic Date Title Capital C 9400.1A Facilities and Formula Grant Programs Capital Facilities and C 9500.1 E Formula Grant Programs 03 -30 -84 Federal Transit Administration Design and Art in Transit Projects Intergovernmental Review of FTA Planning, Capital and Operating Programs and Activities Appendix A Page 4 of 4 This page intentionally left blank FTA C 5010.1D 11/01/2008 FTA C 5010.1D 11/1/08 Appendix B Page 1 of 4 APPENDIX B REAL ESTATE ACQUISITION MANAGEMENT PLAN A Model for the development of a Real Estate Acquisition Management Plan (RAMP) 1. GENERAL. The purpose of a RAMP is to guide the assessment of real estate goals and the methodology for real estate acquisition. RAMPs are the grantee's planning tool. If done correctly, they will identify schedule issues, difficult parcels, the need for expanded advisory assistance, and staff issues. For projects participating in the New Starts or Small Starts programs, RAMPs are required as part of the Project Management Plan (PMP). 2. RAMP CONTENT. a. Introduction. (1) Short history of pertinent elements of project (2) Control agreements; intergovernmental contracts, pending solicitations, etc. (3) Legal requirements; Uniform Act, various State laws, local requirements, etc. (4) Geographical description of project (5) Physical description of proposed acquisitions; number of parcels, total acquisitions, partial acquisitions, anticipated number of relocations; etc. (6) General outline of process; and authority to condemn b. Organizational Structure. (1) Identification of staff functions (2) Identification of contractual functions (3) Identification of plan source; process for plan changes, corrections, modifications as a result of negotiations, etc. (4) Party who can establish offer of just compensation (5) Party who can authorize condemnation c. Acquisition Schedule. (1) Set out the timeframe for acquisition and relocation; total length of time needed (2) Date for initiation of negotiations for project Appendix B Page 2 of 4 FTA C 5010.1D 11/1/08 (3) Difficulties and potential delays (4) How will progress reporting be handled; who will receive this information (5) Identification of a critical path for right -of -way d. Real Estate Cost Estimate. (1) Background of estimate; when was it done; what was the basis of the estimate (2) Need for any update of cost estimate (3) How will estimate be compared to actual costs as project progresses e. Acquisition Process. (1) Plans —who prepares, who can modify, what is process for considering property owner's request to modify, etc. (2) Ownership and title information —how is this gathered, what is the contractual requirements, are those contracts in place, what is the process to update and correct errors and omissions (3) Appraisal —who will do appraisals, what are the contracting requirements if necessary, what is the estimate duration of this task, how many copies of appraisals will be obtained, will appraisals be shared with property owners (4) Appraisal Review process —who will do this task, what is the scope of the task in general, what is the turn around time for this work, will review handle updates of appraisals, will review handle modification of appraisals based on owner claims, will review be used to support administrative settlements (5) Establishment of offer of Just Compensation —who does this, what is the basis of this offer (6) Negotiations —who will negotiate, what is their authority, who must approve administrative settlements and other concessions to property owners, what documentation is required for the negotiations' process, who signs letter of offer, will negotiator also handle relocation payments, how is interface between negotiations and condemnation handled, what documents will negotiator be expected to provide to legal for settlement and condemnation, will negotiator be present at closing (7) Closing/Escrows —who will provide this service, how will it function, what is the estimated length of time to deposit funds to escrow for closing, what documents will be necessary, how will closings be conducted, what form of deeds will be used, how will property taxes be paid and exempted FTA C 5010.1D 11/1/08 Appendix B Page 3 of 4 (8) Condemnation —who will authorize suits, who will file, what is relationship between grantee and its legal personnel, what authority does attorney have for settlement, what are the progress reporting requirements f. Relocation. (1) Staffing and Administration —how will the relocation function be staffed, who is authorized to compute payments, who will approve payments, what is the relocation process to be utilized in the project, what level of advisory services will be needed, who will provide advisory services, what is the claims payment process, what is the time to pay a relocation claim, what authority and controls will be needed for advanced claims, what documentation will be retained in the files, what forms will be used (2) Appeals —what are the legal requirements for administrative appeals, how will the agency establish and staff an appeal function, who is the recipient of appeal requests, what is the appeal process g. Other Components. (1) Document Control —How are documents filed, what length of time will original paper documents be maintained, what is the organization of parcel files, condemnation files, etc., what is the contents of a typical file (2) Property management —who will perform property management, what is included in the Scope of Work for property management, who contracts for demolition, what are contracting requirements, what are reporting requirements, what is the statement of policy regarding rental property for extended possession by tenants and owners (3) Excess property inventory and utilization plan —who will prepare and track excess parcels, what is the process to evaluate these tracts, who will determine when to sell excess, what is the disposition of proceeds, what are agency, State, or local restrictions on the sale of public property Appendix B Page 4 of 4 This page intentionally left blank FTA C 5010.1D 11/1/08 FTA C 5010.1D 11/01/2008 APPENDIX C GUIDE FOR PREPARING AN APPRAISAL SCOPE OF WORK Appendix C Page 1 of 4 1 GENERAL. The Scope of Work is a written set of expectations that form an agreement or understanding between the appraiser and the agency as to the specific requirements of the appraisal, resulting in a report to be delivered to the agency by the appraiser. It includes identification of the intended use and intended user; definition of market value; statement of assumptions and limiting conditions; and certifications. It should specify performance requirements, or it should reference them from another source, such as the agency's approved Right -of -Way or Appraisal Manual. The Scope of Work must address the unique, unusual, and variable appraisal performance requirements of the appraisal. Either the appraiser or the agency may recommend modifications to the initial Scope of Work, but both parties must approve changes. 2. EXAMPLE. The example below is intended to be a guide for agencies preparing a Scope of Work for real estate appraisals. a. Scope of Work: The appraiser must, at a minimum: (1) Provide an appraisal meeting the agency's definition of an appraisal, or, at a minimum, the definition must be compatible with the definition found at 49 CFR 24.2(a)(3). (2) Afford the property owner or the owner's designated representative the opportunity to accompany the appraiser on the inspection of the property. Perform an inspection of the subject property. The inspection should be appropriate for the appraisal problem, and the Scope of Work should address: (a) The extent of the inspection and description of the neighborhood and proposed project area, (3) (b) The extent of the subject property inspection, including interior and exterior areas, and (c) The level of detail of the description of the physical characteristics of the property being appraised (and, in the case of a partial acquisition, the remaining property). (4) In the appraisal report, include a sketch of the property and provide the location and dimensions of any improvements. Also, it should include adequate photographs of the subject property and comparable sales and provide location maps of the property and comparable sales. (5) In the appraisal report, include items required by the acquiring agency, usually including the following list: Appendix C Page 2 of 4 FTA C 5010.1D 11/01/2008 (a) The property right(s) to be acquired, e.g., fee simple, easement, etc., (b) The value being appraised (usually fair market value), and its definition, (c) Appraised as if free and clear of contamination (or as specified), (d) The date of the appraisal report and the date of valuation, (e) The realty /personalty report required at 49 CFR 24.103(a)(3)(i) —(v), (f) The known and observed encumbrances, if any, (g) Title information, (h) Location, (i) Zoning, (j) Present use, and (k) At least a 5 -year sales history of the property. (6) In the appraisal report, identify the highest and best use. If highest and best use is in question or different from the existing use, provide an appropriate analysis identifying the market -based highest and best use. (7) Present and analyze relevant market information. Specific requirements should include research, analysis, and verification of comparable sales. Inspection of the comparable sales should also be specified. (8) In developing and reporting the appraisal, disregard any decrease or increase in the fair market value of the real property caused by the project for which the property is to be acquired or by the likelihood that the property would be acquired for the project. If necessary, the appraiser may cite the Jurisdictional Exception or Supplemental Standards Rules under Uniform Standards of Professional Appraisal Practice (USPAP) to ensure compliance with USPAP while following this Uniform Act requirement. (9) Report his or her analysis, opinions, and conclusions in the appraisal report. b. Additional Requirements for a Scope of Work: (1) Intended Use: This appraisal is to estimate the fair market value of the property, as of the specified date of valuation, for the proposed acquisition of the property rights specified (i.e., fee simple, etc.) for a federally assisted project. FTA C 5010.1D 11/01/2008 Appendix C Page 3 of 4 (2) Intended User: The intended user of this appraisal report is primarily the acquiring agency, but its funding partners may review the appraisal as part of their program oversight activities. (3) Definition of Market Value: This is determined by State law, but includes the following: (a) Buyer and seller are typically motivated; (b) Both parties are well informed or well advised, each acting in what he or she considers his or her own best interest; (c) A reasonable time is allowed for exposure in the open market; (d) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (e) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (4) Certification: The required certification should be in the State's approved Appraisal Procedures or part of State law. (5) Assumptions and Limiting Conditions: The appraiser shall state all relevant assumptions and limiting conditions. In addition, the acquiring agency may provide other assumptions and conditions that may be required for the particular appraisal assignment, such as: (a) The data search requirements and parameters that may be required for the project. (b) Identification of the technology requirements, including approaches to value, to be used to analyze the data. (c) Need for machinery and equipment appraisals, soil studies, potential zoning changes, etc. (d) Instructions to the appraiser to appraise the property "As Is" or subject to repairs or corrective action. (e) As applicable include any information on property contamination to be provided and considered by the appraiser in making the appraisal. FTA C 5010.1D 11/01/2008 This page intentionally left blank FTA C 5010.1D 11/01/2008 APPENDIX D ROLLING STOCK STATUS REPORT Appendix D Page 1 of 2 1. GENERAL. When an agency is disposing of vehicles that have met the minimum useful life that have a fair market value greater than $5,000 or disposing of vehicles before they reach the minimum useful life, or requesting a budget revision affecting vehicles, the Rolling Stock Status Report (see example on next page) should include the following information: a. Vehicle Number b. Year c. Make/Model d. Vehicle Identification Number (VIN) e. Date Placed in Revenue Service f. Date Removed from Revenue Service g. Minimum Useful Life (Years and Miles) h. Mileage (At the time Removed from Revenue Service) i. Total Number of Vehicles j. Total Number of Peak Vehicle Requirements k. Total Number of Spare Vehicles 2. REPLACEMENTS AT THE END OF MINIMUM USEFUL LIFE. Rolling Stock Status Reports must accompany a request for a replacement vehicle that has met its minimum useful life. The report will be used to verify that a vehicle has met the minimum useful life and that there is no remaining Federal interest. Note: Though the remaining Federal interest might be zero, if the asset's value exceeds $5,000, FTA may still be entitled to reimbursement. See Chapter IV, Subsection 3.1., "Disposition," for more information about project property valued over $5,000. 3. EARLY DISPOSITION. Rolling Stock Status Reports must accompany a request for early disposition of vehicles. The report will be used to verify the remaining Federal interest in the vehicles. A Appendix D Page 2 of 2 FTA C 5010.1D 11/01/2008 4. EXAMPLE. An example of a Rolling Stock Status Report for vehicles pending disposal with and without remaining Federal interest or budget revision affecting vehicles is shown below. B c D E F Rolling Stock Status Report TransAmerica Buses G H J K L M N 0 Veh # Vehicle Year Make /Model or Vehicle Description Date in Service Out of Service Fed Useful Life (yr) Actual Service (yr) Remaining yrs Remaining % based on yrs Actual Mileage Minimum Useful life Mileage Remaining % based on miles Total Federal Share Remaining Fed Share based on yrs Remaining Fed Share based on miles 151 2000 30' New Flyers 09/01/00 09/01/07 7 7.0 0.00 -0.04% 200,000 200,000 0.00% $120,000 - - 152 2000 30' New Flyers 09/01/00 09/03/07 7 7.0 -0.01 -0.12% 200,000 200,000 0.00% $120,000 - - 154 2000 30' New Flyers 09/01/00 09/02/07 7 7.0 -0.01 -0.08% 210,000 200,000 -5.00% $120,000 - - 155 2000 30' New Flyers 09/01/00 09/02/07 7 7.0 -0.01 -0.08% 205,000 200,000 -2.50% $120,000 - - 156 2000 30' New Flyers 03/01/01 03/01/06 7 5.0 2.00 28.53% 140,851 200,000 29.57% $120,000 $34,239 $35,489 157 2000 30' New Flyers 03/01/01 03/01/06 7 5.0 2.00 28.53% 154,649 200,000 22.68% $120,000 $34,239 $27,211 158 2000 35' Flexible 03/01/01 06/03/06 10 5.3 4.74 47.40% 200,000 350,000 42.86% $120,000 $56,877 $51,429 159 2001 35' Flexible 03/01/01 06/03/06 10 5.3 4.74 47.40% 300,000 350,000 14.29% $195,000 $92,425 $27,857 160 2001 35' Flexible 03/01/01 11/02/07 10 6.7 3.32 33.23% 300,000 350,000 14.29% $195,000 $64,804 $27,857 161 2001 35' Flexible 03/01/01 07/02/07 10 6.3 3.66 36.60% 325,000 350,000 7.14% $195,000 $71,375 $13,929 163 2001 35' Flexible 03/01/01 11/02/07 10 6.7 3.32 33.23% 325,000 350,000 7.14% $195,000 $64,804 $13,929 164 1996 40' Buses 03/21/96 04/03/06 12 10.0 1.96 16.32% 425,000 500,000 15.00% $295,000 $48,156 $44,250 165 1996 40' Buses 06/19/96 04/03/07 12 10.8 1.21 10.05% 435,000 500,000 13.00% $295,000 $29,635 $38,350 166 1996 40' Buses 06/19/96 04/03/07 12 10.8 1.21 10.05% 450,000 500,000 10.00% $295,000 $29,635 $29,500 167 1996 40' Buses 06/20/96 06/02/07 12 11.0 1.04 8.70% 450,000 500,000 10.00% $295,000 $25,661 $29,500 168 1996 40' Buses 06/23/96 06/02/07 12 10.9 1.05 8.77% 450,000 500,000 10.00% $295,000 $25,863 $29,500 FTA C 5010.1D 11/01/2008 APPENDIX E COST ALLOCATION PLANS Appendix E Page 1 of 4 1. REQUIREMENTS. Grantees who intend to seek Federal Transit Administration (FTA) reimbursement for indirect costs must prepare a Cost Allocation Plan (CAP) and /or Indirect Cost Rate Proposal. The following are basic requirements for preparing a CAP. a. CAPs and Indirect Cost Rate Proposals must be updated annually. b. The updated plans must be retained and made available for review at the grantees' annual single audit. c. Updated CAPs may be used on a provisional basis for the following fiscal year (FY) with the provision that year -end adjustments must be made to actual costs. d. The initial plan must be approved by FTA or another cognizant Federal agency. For subsequent approvals, please refer to Appendix E, Section 4., of this circular. e. Additionally, all costs in the plan must be supported by formal accounting records to substantiate the propriety of eventual charges. The allocation plan of the grantee should cover all applicable costs. It should also cover costs allocated under plans of other agencies or organizational units which are to be included in the costs of other federally sponsored programs. To the extent feasible, CAPS of all agencies rendering assistance to the grantee should be presented in a single document. 2. CONTENT. The CAP should contain, but need not be limited to the following: a. Nature and extent of services provided and their relevance to federally sponsored programs; b. Items of expense to be included; c. Methods to be used in distributing cost; and d. Appropriate Civil Rights data. 3. PURPOSE OF THE PLAN. The purpose of the plan is to guide the grantees' allocation of costs. The plan should ensure: a. All activities of local government departments or State agencies have been considered; b. Distribution of indirect costs is based on a method(s) reasonably indicative of the amount of services provided; c. Services provided are necessary for successful conduct of Federal programs; Appendix E Page 2 of 4 d. Level of costs incurred are reasonable; FTA C 5010.1D 11/01/2008 e. Costs of State of local centralized government services may be charged in conformance with government -wide cost allocations plans; and f. Costs claimed are allowable in accordance with the Office of Management and Budget (OMB) Circular A -87, as applicable. 4. DEVELOPMENT OF COST ALLOCATION PLAN. In planning the development of a CAP, grantees should develop a CAP that identifies costs of supporting service units and allocates those costs to benefiting units on an equitable basis. The following is a list of components that should be included in a CAP: a. An Organization Chart; b. Financial Statements; c. Cost Allocation Methodology; d. Cost Allocation Rate Proposal: (1) Identification of costs of each type of service to be claimed, (2) Determination of the method for allocating each type of service cost to users, (3) Identification of units rendering /receiving service and associated costs, (4) Description of services, (5) Description of Allocation Base (Consistency is important), and (6) Summary Allocation Schedule for each service. e. Proposal Reconciliation with Financial Statements. (Note: Allocated costs must be reasonable and trackable to the financial Statements); f. Identification of Federal Award Direct Cost Base; and g. Certification of Conformance with OMB Circular A -87. A proposal to establish a CAP or an Indirect Cost Rate Proposal will be unacceptable if the CAP Certificate of or Certificate of Indirect Costs is omitted. The certificate must be signed on behalf of the governmental unit by an individual at a level no lower than chief financial officer of the governmental unit that submits the proposal or component covered by the proposal. FTA C 5010.1D 11/01/2008 Appendix E Page 3 of 4 5. SUBMISSION OF COST ALLOCATION PLAN/INDIRECT COST RATE PROPOSALS. OMB Circular A -87 requires that the plan (called a proposal) be submitted to a grantee's Federal Cognizant Agency for approval. The CAP /Indirect Cost Rate Proposal should be submitted to the "cognizant" or "lead" Federal Agency when: a. The grantee is working on its first assistance project or has not previously had a CAP /Indirect Cost Rate Proposal reviewed and accepted; b. The grantee has made a change in its accounting system, thereby affecting the previously approved CAP/Indirect Cost Rate Proposal and its basis of application; c. The grantee's proposed CAP /Indirect Cost Rate Proposal exceeds the amounts and rate approved for the previous year(s) by more than 20 percent; or d. The grantee changes the CAP /Indirect Cost Rate Proposal methodology. 6. PLAN APPROVAL. Most transit agencies are under the cognizance of the Department of Transportation (DOT). Whenever the cognizant agency gives prior approval to a government -wide CAP or an Indirect Cost Rate Proposal, such approval is formalized, distributed to all interested Federal agencies, and applicable to all Federal grants in accordance with OMB Circular A -87. An approved CAP or Indirect Cost Rate Proposal must be updated annually. The update should be retained and made available for review at the time of the grantee's organization - wide audit. Appendix E Page 4 of 4 This page intentionally left blank FTA C 5010.1D 11/01/2008 FTA C 5010.1D 11/01/2008 Appendix F Page 1 of 6 APPENDIX F REQUEST FOR ADVANCE OR REIMBURSEMENT (SF -270) 1. GENERAL. If the requisition method of payment is used, the grantee agrees to: a. Complete and submit "ACH Vendor/Miscellaneous Payment Enrollment Form" (See Appendix F, Section 3., "Exhibit -1," of this circular) to FTA's Accounting Division. b. Complete and submit an original Standard Form 270, "Request for Advance or Reimbursement," (See Appendix F, Section 3., "Exhibit -2," of this circular) to the Federal Aviation Administration, Enterprise Service Center (ESC), FTA's designated Accounting Service Center at: FAA Mike Monroney Aeronautical Center; Library, AMA -300A; 6500 S. MacArthur Blvd.; Oklahoma City, OK 73169. All supporting documentation needed to support and justify the reimbursement of funds and satisfy the FTA Project Manager must accompany the SF 270. Upon receipt of the SF 270 payment request, FTA will authorize payment by Automated Clearing House (ACH) deposit if the grantee is complying with its obligations under the approved grant; has satisfied FTA that it needs the requested Federal funds during the requisition period; and is making adequate progress toward the timely completion of the project. If all these circumstances are present, FTA may reimburse apparent allowable costs incurred (or to be incurred during the requisition period) by the grantee up to the maximum amount of Federal funds payable through the fiscal year (FY) in which the requisition is submitted, as stated in the project budget. 2. INSTRUCTIONS. Instructions for completing an SF -270 are printed on its reverse side. In addition, the following instructions should assist grantees in completing this form: a. Only the total column on this form should be completed, unless the project involves more than one funding ratio. In such instances, the other columns are also to be used. In addition, grantees should round all figures to the nearest dollar, i.e., amounts of $.50 or over would be rounded to the higher dollar. For example, if the non - Federal share is computed to be $2,572.70, the amount reported would be $2,573. b. Block #5 —All requisitions should be numbered consecutively beginning with #1 as the first requisition. Suggested format should include the FY and sequential number for each individual voucher. For example, the payment request number for the Grantee's first voucher submitted in FY 2007 would appear on the SF 270 as follows: 2007 -001. c. Block #8 —The first requisition covers the date the grant was awarded, (unless the grant had pre -award authority), through the end of the period for which reimbursement is requested. When a requisition requests reimbursement only, the "ending" date will be the same date on which outlays are reported on line 11 a of this form. If the Appendix F Page 2 of 6 FTA C 5010.1D 11/01/2008 reimbursement and /or an advance is being requested, the "ending" date should reflect the period through which the advance funds are needed. All requisition report periods should run consecutively. For example, if a requisition is submitted for the period 1/1/07 to 3/31/07, the next requisition will begin 4/1/07. d. Block #9 —The name of the grantee should be exactly as indicated on the Grant Agreement. Grantees should not use abbreviations but spell out the entire name of the organization. e. Block #11 —Line A —The "as of' date should be the date for which the grantee has actual costs recorded. This date should be the same as the "to" date, Block #8, unless the grantee is requesting an advance. Line B— Represents the amount applicable to program income that was required to be used for the project or program by terms of the grant or other agreement. Line D— Represents the estimated expenditures for the advance period, both FTA share and the local share. Line F —Non- Federal share of line E, depending on the funding ratio of a particular project. Line G— Federal share of line E, depending on the funding ratio for a particular project. Line H —Total of previous requisition(s) submitted. This line should not represent actual payment received because the grantee may have submitted a requisition that is in the process of being paid. Requisition #1 on this line should be zero. Note: Grantees should only complete the "total" column of Block #11, unless the Grant Agreement specified that there is more than one funding source supporting the project. In such cases, separate columns should be utilized for each funding source. Line I— Federal share now requested represents the total amount of the SF 270 reimbursement that will be forwarded to the grantee. 3. REVIEW OF THE SF -270. Each SF -270 for funds will be reviewed in light of the periodic progress reports and financial reports required for each project. Changes requiring grant amendments or prior approval of a budget revision must be approved before funds for these changes are requisitioned. FTA C 5010.1D 11/01/2008 EXHIBIT 1 ACH VENDOR/MISCELLANEOUS PAYMENT ENROLLMENT FORM Appendix F Page 3 of 6 OMB No. 1510.0056 This form is used for Automated Clearing House (ACH) payments with an addendum record that contains payment - related information processed through the Vendor Express Program. Recipients of these payments should bring this information to the attention of their financial institution when presenting this form for completion. PRIVACY ACT STATEMENT The following information is provided to comply with -the Privacy Act of 1974 (P.L. 93 -579). All information collected on this form is required under the provisions of 31 U.S.C. 3322 and 31 CFR 210. This information will be used by the Treasury Department to transmit payment data, by electronic means to vendor's financial institution. Failure to provide the requested information may delay or prevent the receipt of payments through the Automated Clearing House Payment System. AGENCY INFORMATION NAME: FEDERAL PROGRAM AGENCY DOT, Federal Transit Administration AGENCY IDENTIFIER: AGENCY LOCATION CODE (ACCT 69 -08 -0001 ACH FORMAT: D CCD+ DEPOSITOR ACCOUNT TITLE: CTP Q crx • ADDRESS 1200 New Jersey Avenue S.E., East Building, Fifth Floor (s -54) SIGNATURE AND TITLE OF AUTHORIZED OFFICIAL: (Could be the same as ACH Coordinator) Washington, AC 20590 CONTACT PERSON NAME: Millie Fields TELEPHONE NUMBER: (202 ) 366 -6685 ADDITIONAL INFORMATION : Mail completed ACH form, with original signatures, to the above address. PAYEE /COMPANY INFORMATION NAME SSN NO. OR TAXPAYER ID NO. ADDRESS CONTACT PERSON NAME: Note: Contact name will be verified with the FTA Project Lead TELEPHONE NUMBER: FINANCIAL INSTITUTION INFORMATION NAME: ADDRESS:........... ACH COORDINATOR NAMe TELEPHONE NUMBER: ( } NINE.DIGIT ROUTING TRANSIT NUMBER: _. DEPOSITOR ACCOUNT TITLE: DEPOSITOR ACCOUNT NUMBER: LOCKBOX NUMBER: TYPE OF ACCOUNT: El C]iECKING ❑ SAVINGS ❑ LOCKBOX SIGNATURE AND TITLE OF AUTHORIZED OFFICIAL: (Could be the same as ACH Coordinator) TELEPHONE NUMBER: 1 } 5511 7540.01- 274-9525 Prescribed by Department of homey 31 USG 3322; 31 CFR 210 Appendix F Page 4 of 6 INSTRUCTIONS FOR COMPLETING SF 3881 FORM FTA C 5010.1D 11/01/2008 Instructions for Completing SF 3881 Form 1. Agency Information Section - Federal agency prints or types the name and address of the Federal program agency originating the vendor /miscellaneous payment, agency identifier, agency location code, contact person name and telephone number of the agency. Also, the appropriate box for ACH format is checked. 2. Payee /Company Information Section - Payee prints or types the name of the payee /company and address that will receive ACH vendor /miscellaneous payments, social security or taxpayer ID number, and contact person name and telephone number of the payee /company. Payee also verifies depositor account number, account title, and type of account entered by your financial institution in the Financial Institution Information Section. 3. Financial Institution Information Section - Financial institution prints or types the name and address of the payee /company's financial institution who will receive the ACH payment, ACH coordinator name and telephone number, nine -digit routing transit number, depositor (payee /company) account title and account number. Also, the box for type of account is checked, and the signature, title, and telephone number of the appropriate financial institution official are included. Burden Estimate Statement The estimated average burden associated with this collection of information is 15 minutes per respondent or recordkeeper, depending on individual circumstances. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Financial Management Service, Facilities Management Division, Property and Supply Branch, Room B -101, 3700 East West Highway, Hyattsville, MD 20782 and the Office of Management and Budget, Paperwork Reduction Project (1510- 0056), Washington, DC 20503. FTA C 5010.1D 11/01/2008 EXHIBIT 2 Appendix F Page 5 of 6 REQUEST FOR ADVANCE OR REIMBURSEMENT ($08 InstruciOns on back) 'OMB APPROVAL 110. 434Jth PAGE OF ( PAGES 1- TYPE et PAYMENT REQUEs18° bomm4 a. �r"vaooetradn bofa:.a 0 ADVANCE 0 REIMBURSE- MENT 26A51S OF REQUEST 0 CASH 0 ACCRUAL R Y.'rfle aya.'iaaah bar 0 FINAL 0 PARTIAL a FEDERAL SRONS02WG AGENCY AND ORGANIZA16DNAL ELEMENT TO WHICH T1419 REPORT IS SUPMRTEO 4. FEDERAL GRANTOR OTHER l0E1TiFYMG NUMBER ASSIGNED OY FEDERAL AGENCY 5, PA0T1At PAYMENT REOUEST NUMBER FOR THIS REQUEST 6. EMPLOYER*DENTFICATION NUMBER 7. RECIPIENTS ACCOUNT NUMBER OR theNTIFYING N1M8ER 8. PERIOD COVERED BY Tilts REQUEST FROM (man*, day, 71) TO (man M. may, 7 9. RECIPIENT ORGANIZATION Name: Number and Street: City. State and Z)P Code: 10. PAYEE (Where check is to be sent 1(dnlercn1 than Sent 9) Name: Number and Street: City, State and ZIP Code: TAT ON OF AMOUNT OF REIMBURSEMENTSIA PROGRAMSIFUNCTIONS)ACTIViTIES IM .. (a) (b) (c) TOTAL. a. Total program PAS of outlays to date $ $ $ $ 0.00 - - b. Less: Cumulative program income _ 0.00 c. Net program outlays (tine a minus 0,00 0.00 0.00 0.00 d. Estimated net cash outlays for advance period o.00 e. 'total (Stan oflrnesc8 el) 0.00 0.00 0.00 0.00 f. Non - Federal share of amount on line e 0.00 g. Federal share of amount on line e 0.00 h. Federal payments previously requested 0.00 1. Federal share now requested (Line g minus fine th) 0.00 0.00 0.00 0.00 J. Advances required by month, when requested by Federal grantor agency for use in marling ;rescheduled advances tstmonth 0.00 2nd month 0.00 3rd march _ 0.00 12. a. Estimated federal cash outlays thet will be made during pertaf covered by the advance b. Less: Estimated balance of Federal Gash on hand as of begintang Of advance Period c. Amount requested (Linea minus tine b) AUTHORIZED FOR LOCAL REPRODUCTION ALTERNATE COMPUTATION FOR ADVANC E 0.00 (Continued on Reverse) STANDARD FORM 31D (Re.. 7 97) Prescribed by OMB Circulars A -102 and A -110 13. CERTIFICATION I certify that to the bast of my knowledge and belief the data on the reverse are correct and that se outlays were made in accordance whh the grant Contlarons or other agreement and that payment is due and has not been previously requested. SICNATURE OR AUTHORIZED C£RTIPTINCS OFFICIAL TYPED OR (00066D NAME ANO TITLE GATE REOV0a7 5.91356.1E0 August 13, 2007 TELEPHONE (AREA COD°. NUMBER, M OEN5606-0 is pace for y Use Public reporting burden for this collection of Information Is estimated to average S0 minutes per response, including time for reviewing Instructions, searching evisdng data sources, gathering and maintaining the data needed. and oornpleltng end reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of Information, including suggestions for reducing this burden, to the Office of Management end Budget, Paperwork Reduction Protect (0348 - 0004). Washington, DC 20503. PLEASE DO NOT RETURN YOUR COMPLETED FORM TO THE OFFICE OF MANAGEMENT AND BUDGET. SEND iT TO THE ADDRESS PROVIDED BY THE SPONSORING AGENCY. Appendix F Page 6 of 6 Item INSTRUCTIONS FOR COMPLETING SF -270 FORM INSTRUCTIONS Please type or print legibly. items 1, 3, 5, 9, 10, 11 e, 111, 11g, 1 li, 12 and 13 are self - explanatory; specific instructions for other items are as follows: Entry Ram Entry 2 Indicate whether request is prepared on cash or accrued expenditure basis. All requests for advances shall be prepared on a cash basis. 4 Enter the Federal grant number, or other Identifying number assigned by the Federal sponsoring agency. If the advance or reimbursement is for more than one grant or other agreement, insert NIA; then, show the aggregate amounts. On a separate sheet, list each grant or agreement number and the Federal share of outlays made against the grant or agreement.. 6 Enter the employer identification number assigned by the U.S. Internal Revenue Service, or the FICE (institution) code if requested by the Federal agency. 7 This space is reserved for an account number or other identifying number that may be assigned by the recipient. 8 Enter the month, day, and year for the beginning and ending of the period covered in this request. If the request is for an advance or for both an advance and reimbursement, show the period that the advance will cover. If the request is for reimbursement, show the period for which the reimbursement is requested. Note: The Federal sponsoring agencies have the option of requiring recipients to complete items 11 or 12, but not both. item 12 should be used when only a minimum amount of information is needed to make an advance and outlay information contained in item 11 can be obtained in a timely manner from other reports. 11 The purpose of the vertical columns (a), (b), and (c) is to provide space for separate cost breakdowns when a project has been planned and budgeted by program, function, or FTA C 5010.1D 11/01/2008 1 activity. If additional columns are needed, use as many additional forms as needed and indicate page number in space provided in upper right; however, the summary totals of all programs, functions, or activities should be shown in the "total" column on the first page, a Enter in "as of date," the month, day, and year of the ending of the accounting period to which this amount applies. Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subreciplents. For requests prepared on an accrued expenditure basis, outlays are the sum of the actual cash disbursements, the amount of indirect expenses incurred, and the net increase (or decrease) in the amounts owed by the recipient for goods and other property received and for services performed by employees, contracts, subgrantees and other payees. 11b 11d Enter the cumulative cash income received to date, if requests are prepared on a cash basis. For requests prepared on an accrued expenditure basis, enter the cumulative income earned to date. Under either basis, enter only the amount applicable to program income that was required to be used for the project or program by the terms of the grant or other agreement Only when making requests for advance payments, enter the total estimated amount of cash outlays that will be made during the period covered by the advance. 13 Complete the certification before submitting this request STNIOARO FORM 570 (i v. 747) eicic FTA C 5010.1D Appendix G 11/01/2008 Page 1 of 6 APPENDIX G REFERENCES a. Federal Transit Laws, Title 49, United States Code, Chapter 53. b. Federal -aid highway and surface transportation laws, Title 23, United States Code. c. Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, (SAFETEA —LU) (Pub. L. 109 -59, 119 Stat. 1144, Aug. 10, 2005). d. Transportation Equity Act for the 21st Century (TEA -21) (Pub. L. 105 -178, 112 Stat. 107, June 9, 1998). e. Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) (Pub. L. 102 -240, 105 Stat. 1914, Dec. 18, 1991). f. Federal Public Transportation Act of 1978 (Pub. L. 95 -599, Nov. 6, 1978). g. Americans with Disabilities Act (ADA) of 1990, as amended, 42 U.S.C. 12101 et seq. h. Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 794. i. Title VI of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000d. j. Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e. k. National Environmental Policy Act (NEPA), 42 USC Section 4321 -4370d. 1. Energy Policy and Conservation Act, as amended, 42 U.S.C. 6321 et seq. m. Clean Air Act, as amended, 42 U.S.C. 7401 et seq. n. Section 102(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. Section 4012a. o. Section 404 of the Clean Water Act, as amended, 33 U.S.C. 1344. p. Policy on Lands, Wildlife, and Waterfowl Refuges, and Historic Sites, 49 U.S.C. 303. q. Section 106 of the National Historic Preservation Act, 16 U.S.C. 470f. r. Section 3 of the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. 1601 et seq. Appendix G Page 2 of 6 FTA C 5010.1D 11/01/2008 s. Internal Revenue Code, Non - profit Organizations, 26 U.S.C. 501. t. The Rehabilitation Act of 1973, 29 U.S.C. Section 794, as amended. u. Lobbying Restrictions, 31 U.S.C. 1352. v. Disadvantaged Business Enterprises, 23 U.S.C. 101 note. w. Money and Finance, 31 U.S.C. 6304. x. Congressional Declaration of Policy Respecting Insular Areas, 48 U.S.C. 1469a. y. Program Fraud Civil Remedies Act, 31 U.S.C. 3801 et seq. z. Uniform Relocation Assistance and Real Property Acquisitions Policies Act of 1970, as amended, 42 U.S.C. 4601, et seq. aa. Age Discrimination Act of 1975, as amended, 42 U.S.C. 6101 et seq. bb. Title IX of the Education Amendments of 1972, as amended, 20 U.S.C. 1681 et seq. cc. National Environmental Policy Act of 1969, as amended, 42 U.S.C. 4321 et seq. dd. Federal Funding Accountability and Transparency Act of 2006 (Pub. L 109 -282, 120 Stat. 1186, Sept. 26, 2006). ee. Davis -Bacon Act, as amended, 40 U.S.C. 3141 et seq. ff. Drug -Free Workplace Act of 1988, as amended, 41 U.S.C. 701 et seq. gg. DOT regulations, "Organization and Delegation of Powers and Duties," 49 CFR part 1. hh. DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 CFR part 18. ii. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non -Profit Organizations," 49 CFR part 19. jj. DOT regulations, "New Restrictions on Lobbying," 49 CFR part 20. kk. DOT regulations, "Nondiscrimination in Federally- Assisted Programs of the Department of Transportation— Effectuation of Title VI of the Civil Rights Act of 1964," 49 CFR part 21. FTA C 5010.1D Appendix G 11/01/2008 Page 3 of 6 11. DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally- Assisted Programs," 49 CFR part 24. mm. DOT regulations "Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance," 49 CFR part 25. nn. DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR part 26. oo. DOT regulations, "Nondiscrimination on the Basis of Disability in Programs or Activities Receiving Federal Financial Assistance," 49 CFR part 27. pp. DOT regulations, "Governmentwide Debarment and Suspension (Nonprocurement)," 49 CFR part 29. qq. DOT regulations, " Governmentwide Requirements for Drug -Free Workplace (Financial Assistance)," 49 CFR part 32. rr. DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 CFR part 37. ss. DOT regulations, "Americans with Disabilities Act (ADA) Accessibility Specifications for Transportation Vehicles," 49 CFR part 38. tt. DOT regulations, "Procedures for Transportation Workplace Drug and Alcohol Testing Programs," 49 CFR part 40. uu. FTA regulations, "Requirements for Energy Assessments," 49 CFR part 622, Subpart C. vv. FTA regulations, "Clean Fuels Grant Program," 49 CFR part 624. ww. FTA regulations, Project Management Oversight, 49 CFR part 633. xx. FTA regulations, State Safety Oversight, 49 CFR part 659. yy. Joint Federal Highway Administration/FTA regulations, "Planning Assistance and Standards," 23 CFR part 450 and 49 CFR part 613. zz. Architectural and Transportation Barriers Compliance Board regulations, "Electronic and Information Technology Accessibility Standards," 36 CFR part 1194. Appendix G Page 4 of 6 FTA C 5010.1D 11/01/2008 aaa. Health and Human Services regulations, "Nondiscrimination on the Basis of Age in Programs or Activities Receiving Federal Financial Assistance," 45 CFR part 90. bbb. Equal Employment Opportunity Commission regulations, "Age Discrimination in Employment Act," 29 CFR part 1625. ccc. Office of Management and Budget Circular A -87, "Cost Principles for State, Local, and Indian Tribal Governments," codified at 2 CFR part 225, Aug. 31, 2005. ddd. Office of Management and Budget Circular A -94, "Guidelines and Discount Rates for Benefit -Cost Analysis of Federal Programs," Oct. 29, 1992. eee. Office of Management and Budget Circular A -122, "Cost Principles for Non - Profit Organizations," codified at 2 CFR part 230, Aug. 31, 2005. fff. Office of Management and Budget Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations," June 23, 2003. ggg. U.S. Department of Transportation Order to Address Environmental Justice in Minority Populations and Low - Income Populations, 62 FR 18377 (Apr. 15, 1997). hhh. DOT Policy Guidance Concerning Recipients' Responsibilities to Limited English Proficient (LEP) Persons, 70 FR 74087 (Dec. 14, 2005). iii. FTA Circular 4220.1E, "Third Party Contracting Requirements," June 19, 2003. jjj. FTA Circular 4702.1, "Title VI and Title VI- Dependent Guidelines for FTA Recipients," May 13, 2007. kkk. FTA Circular 4704.1, "Equal Employment Opportunity Program Guidelines for Grant Recipients," July 26, 1988. 111. FTA Circular 5010.1C, "Grant Management Guidelines," Oct. 1, 1998. mmm. FTA Circular 5800.1, "Safety and Security Management Guidance for Major Capital Projects," Aug. 1, 2007. nnn. FTA Circular 8100.1C, "Program Guidance for Metropolitan Planning and State Planning and Research Program Grants," Sept. 1, 2008. 000. FTA Circular 9030.1 C, "Urbanized Formula Program Guidance and Application Instructions," Oct. 1, 1998. ppp. FTA Circular 9040.1F, "Nonurbanized Area Formula Program Guidance and Grant Application Instructions," April 1, 2007. FTA C 5010.1D Appendix G 11/01/2008 Page 5 of 6 qqq. FTA Circular 9045.1, "New Freedom Program Guidance and Application Instructions," May 1, 2007. rrr. FTA Circular 9300.1B, "Capital Program: Grant Application Instructions," Nov. 1, 2008. sss. FTA Circular 4220.1F "Third Party Contracting Guidance ", Nov. 1, 2008. ttt. FTA Master Agreement FTA MA(14), Oct. 1, 2007. uuu. FTA Guidance, "Eligibility of Joint Development Improvements Under Federal Transit Law," 72 FR 5788, February 7, 2007. vvv. FTA ITS Policy, http: / /www.fta.dot.gov /documents/FTA ITS Policy.pdf. www. FTA ECHO -Web System Operations Manual http://www.fta.dot.goy/documents/ECHOWebGranteeUserManual.pdf. Appendix G Page 6 of 6 This page intentionally left blank FTA C 5010.1D 11/01/2008 FTA C 5010.1D 11/01/2008 APPENDIX H Appendix H Page 1 of 2 FTA REGIONAL AND METROPOLITAN CONTACT INFORMATION Office Area Served Contact Information Region I Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont Transportation Systems Center Kendall Square 55 Broadway, Suite 920 Cambridge, MA 02142 -1093 Phone: 617 -494 -2055 Fax: 617 -494 -2865 Region II New York and New Jersey One Bowling Green Room 429 New York, NY 10004 -1415 Phone: 212 -668 -2170 Fax: 212 -668 -2136 Region III Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, and West Virginia 1760 Market St Suite 500 Philadelphia, PA 19103 -4124 Phone: 215 -656 -7100 Fax: 215 -656 -7260 Region IV Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, and U. S. Virgin Islands 230 Peachtree Street NW Suite 800 Atlanta, GA 30303 Phone: 404 - 865 -5600 Fax: 404 - 865 -5605 Region V Illinois, Indiana, Minnesota, Michigan, Ohio, and Wisconsin 200 W Adams St Suite 320 Chicago, IL 60606 Phone: 312- 353 -2789 Fax: 312- 886-0351 Region VI Arkansas, Louisiana, New Mexico, Oklahoma, and Texas 819 Taylor St Room 8A36 Forth Worth, TX 76102 Phone: 817 - 978 -0550 Fax: 817 - 978 -0575 Region VII Iowa, Kansas, Missouri, and Nebraska 901 Locust, Suite 404 Kansas City, MO 64106 Phone: 816 - 329 -3920 Fax: 816 -329 -3921 Appendix H Page 2 of 2 FTA C 5010.1D 11/01/2008 Office Area Served Contact Information Region VIII Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming 12300 W Dakota Ave. Suite 310 Lakewood, CO 80228 -2583 Phone: 720 - 963 -3300 Fax: 720 - 963 -3333 Region IX Arizona, California, Hawaii, Nevada, Guam, American Samoa, and Northern Mariana Islands 201 Mission St Room 1650 San Francisco, CA 94105 -1839 Phone: 415- 744 -3133 Fax: 415- 744 -2726 Region X Alaska, Washington, Oregon, and Idaho Jackson Federal Building 915 Second Ave, Suite 3142 Seattle, WA 98174 -1002 Phone: 206 - 220 -7954 Fax: 206 - 220 -7959 Lower Manhattan Recovery Office Lower Manhattan One Bowling Green, Room 436 New York, NY 10004 Phone: 212 -668 -1770 Fax: 212 -668 -2505 New York Metropolitan Office New York Metropolitan Area One Bowling Green, Room 428 New York, NY 10004 -1415 Telephone: 212-668-2201 Fax: 212 -668 -2136 Philadelphia Metropolitan Office Philadelphia Metropolitan Area 1760 Market Street, Suite 510 Philadelphia, PA 19103 -4124 Telephone: 215 -656 -7070 Fax: 215 -656 -7269 Chicago Metropolitan Office Chicago Metropolitan Office 200 West Adams Street Suite 2410 (24th floor) Chicago, IL 60606 Telephone: 312-886-1616 Fax: 312 - 886 -0351 Los Angeles Metropolitan Office Los Angeles Metropolitan Area 888 S. Figueroa, Suite 1850 Los Angeles, CA 90012 Telephone: 213 -202 -3950 Fax: 213 - 202 -3961 Washington, DC Metropolitan Office Washington, DC Metropolitan Area 1990 K Street NW Suite 510 Washington, DC 20006 Telephone: 202-219-3562/3565 Fax: 202 - 219 -3545 FTA C 5010.1D Index 11/01/2008 Page 1 of 10 INDEX SUBJECT AND LOCATION IN CIRCULAR Subject Chapter/Page Accrual Basis of Accounting I -2; III -3 Definition 1 -2 ACH Vendor/Miscellaneous Payment Enrollment Form App. F -1; F -3 Activity Line Item (ALI) I -3; I -7; 111-2; 111-5; III -10; III -11; III -12; II1 -14; III -15; 111 -16 Acts and Orders IV -32 Administrative Amendment I -2; III -10; III -14; III -15 Definition 1 -2 Administrative Settlement(s) I -2; 1-6; 111-6; IV -5; IV -6; IV-1 1; App. B -2 Definition 1 -2 Air Rights I -2; IV -10 Definition 1 -2 Alternative Disposition Methods IV-1 2 Alternative Transportation in Parks and Public Lands (ATPPL) II -5 American Association of State Highway and Transportation Officials (AASHTO) V -5 American Public Transportation Association (APTA) V -5 Americans with Disabilities Act (ADA) 11-4; II -10; II -11; III -10; III -11 IV -19; IV -40; V -1; V-4; App. G -1; G -3 Paratransit Service II -11; III -10 Annual Apportionment(s) II -3; II -8; III -10; VI -7 Annual List of Certifications and Assurances III -7; VI -15 Annual Report on Funding Recommendations V-6 Automated Clearing House (ACH) VI -12; App. F -1 Best Practices Procurement Manual IV -14; IV -24 Bond Indenture VI-1 5 Brownfields I -2; IV -9 Definition I -2 Budget Revision(s) 1-3; 11-8; III -10; III -11; I11 -12; I1I -14; App. D -1; D -2; F -2 Definition I -3 Bus and Bus Facility Program I1 -3 Bus Capital Program I -10; II -3 Bus Fleet IV -19; IV -23 Bus Fleet Management Plan IV -23 Buy America IV-1 4 Regulations IV -14 Capital Asset(s) 1 -3; III -9; IV -2; IV -16; IV -22 Definition I -3 Capital Investment Grants Program I-10; 11-3; App. A -2; G -5 Funds II -3 Guidance II -3 Index Page 2 of 10 Subject FTA C 5010.1D 11/01/2008 Chapter /Page Capital Lease(s) I -3; IV -21; IV -22 Definition I -3; IV -22 Cash Management V -3; VI -5 Cash Management Improvement Act VI-1 3 Certificate of Indirect Costs App. E —2 Certification of Conformance App. E -2 Certifications and Assurances II -6; III -1; III -7; IV -36; VI -5 Change of Scope III -15 Civil Rights Act See, Title VI Clean Air Act (CAA) II -5; III -11; App. G -1 Clean Fuels Grant Program 11 -5; App. G -3 Committee of Sponsoring Organizations of the Treadway Committee (COSO Report) VI -3 Common Rule II -1; V -2; V -3; V -4; VI -3; VI -4; VI -9; App. G -2 Community Transportation Association of America (CTAA) V -5 Comptroller General of the United States 111 -19 Concurrent Non - Project Activities 1 -3; IV -38 Costs IV -38 Definition 1 -3; IV-3 8 Construction Project Management Handbook IV -32 Contaminated Property See, Brownfields Contamination I -2; I -3; IV -3; IV -9; App. C -2; C -3 Hazardous Material I -2; IV -9 Superfund Sites I -3 Contingency Fleet I -3; IV -21 Definition I -3 Contract Records III -19 Cooperative Agreement See, Grant Agreement or Cooperative Agreement Cost Allocation Plan(s) (CAP) II -7; III -18; IV -34; V -3; VI-6 VI -7; VI -8; VI -9; App. E -1; E -2; E -3 Certificate App. E -2 Cost of Project Property I -2; I -3; IV -14 Definition I -3; IV -14 Council on Environmental Quality I-4 Davis -Bacon I1I -19; App. G -2 Wage Records III -19; App. G -2 Debt Service Reserve (DSR) VI-1 5 Decent, Safe, and Sanitary (DSS) IV -6; IV -7 Definition IV -7 Department of Health and Human Services (DHHS) I -2; VI -8; VI -8 Website VI -8 Department of Homeland Security (DHS) V-4 Department of Labor (DOL) III -10; II1 -14 Department of Transportation (DOT) I -1; II -9; II -11; II -12; I1I -8; VI-1 0; App. E -3 FTA C 5010.1D 11/01/2008 Subiect Index Page 3 of 10 Chapter/Page Drug and Alcohol Requirements V-4 Office of Inspector General III -19 Regulations II -9; II -10; II -11; IV -33; IV-40; App. G -2 Designated Recipient(s) I -7; 11-4; II -5 Disadvantaged Business Enterprises (DBE),II -11; I1 -12; III -7; III -8; V -1; V-4; App. G -2; G -3 Goals 111 -7; 111 -8 Progress Reports III -7 Discretionary Funding 1-4; II -1 Definition 1-4 Drug and Alcohol Management Information System (DAMIS) V-4 Drug and Alcohol Testing Program V-4; App. G -3 Elderly Individuals and Individuals with Disabilities Program II -1; II -3; I1-4; V -1 Electronic Clearing House Operation (ECHO) 1 -4; VI -12 Definition 1-4 ECHO Control Number (ECN) VI -12 ECHO System (ECHO) VI -12; VI -13; VI -14 ECHO -Web VI -14; VI -15 System Operations Manual App. G -5 Payment VI -12 User Manual VI -12 User Manual Website VI -12 Eligible Recipients II -1; II -5 End -Of -Life Rebuild IV -19 Energy Policy and Conservation Act IV -39; App. G -1 Environmental Assessment (EA) IV -9; App. A -1 Environmental Mitigation IV -32; IV -38 Environmental Protection Agency (EPA) 1-2; 11-6 Equal Employment Opportunity (EEO) I1 -9; III -7; V -1; V-4; App. A -1; G-4 Equal Employment Opportunity Commission (EEOC) II -10; App. G-4 Equipment 1-4 Definition 1-4 Equipment Inventory 1 -4; IV -27 Definition I-4 Excess Property I-4; IV -11; IV -12; App. B -3 Definition I-4 Excess Real Property Inventory and Utilization Plan 1-4; IV -11 Definition I-4 Fair Market Value 1-4; 1 -8; I -9; IV -2; IV -3; IV -5; IV -10; IV -12 IV -13; IV -24; IV -25; IV -26; IV -28; App. C -2; C -3; D -1 Definition 1 -4; App. C -3 Federal Aviation Administration, Enterprise Service Center (ESC) VI -12; App. F -1 Federal Award Direct Cost Base App. E -2 Federal Emergency Management Agency (FEMA) V-4 Index Page 4 of 10 Subiect FTA C 5010.1D 11/01/2008 Chapter /Page Federal Clearinghouse VI -10 Federal Freedom of Information Act (FOIA) 111 -19 Federal Interest I -8; IV -12; IV -14; IV -16; IV -22; IV -25; IV -26 IV -27; IV -28; IV -29; IV -30; IV -31; App. D -1; D -2 Federal Relay Service P -2 Toll Free Access Number P -2 Federal Transit Administration (FTA) P -1; I -1; II -1; III -1; IV -1 V -1; VI -1; VI -14; App. A -3; E -1 Accounting Service Center VI -14; App. F -1 Address I -1 Designated Accounting Center App. F -1 Office of Accounting III -12 Project Manager III -12; III -14; App. F -1 State Safety Oversight Rule V-4 Website P -1; I -1; II -1; III -1 Federal Transit Law P -1; I -1; IV -13; App. G -1; G -5 Financial Capacity Assessment (FCA) V -6; V -7 Financial Management Oversight (FMO) Program V -3 Financial Management System(s) 1II -3; V -2; V -3; VI -3; VI-4 Financial Purpose Code (FPC) III -11; III -12; III -14; VI -15 Financial Status Report (FSR) I -3; I -10; II -8; III -2; III -3; I1I-4 III -5; I1I-6; III -15; III -18; VI -13 Fixed Guideway Modernization II -3 Flood Disaster Protection Act IV-3 1; App. G -1 Force Account I -5; II -7; IV -34; IV -35; IV -36 Definition I -5; IV -34 Formula Funding I -4; I -5; II -2 Definition I -5 Full- Funding Grant Agreement (FFGA) IV -23; V -6; V -7; App. A -1 Guidance IV -23 Full Scope Financial Management System (Full Scope System) V -3 Generally Accepted Accounting Principles (GAAP) IV -16; VI -6; VI -10 Government Printing Office (GPO) VI -8 Grant I -5 Definition I -5 Grant Agreement See, Grant Agreement or Cooperative Agreement Grant Agreement or Cooperative Agreement I -2; I -5; I-6; I -7; II -6; II -12; III -1; III -2 III -14; III -16; III -17; IV -11; IV -15; IV -23; IV -33; IV -35 V -1; V -2; V -6; VI -1; VI -3; VI-4; VI -7; VI -9; App. A -1; F -2; G -2 Grant Scope I -5 Definition I -5 Grantee I -5 Definition I -5 FTA C 5010.1D 11/01/2008 Subiect Index Page 5 of 10 Chapter/Page Grantee Oversight Assessment Questionnaire V -1 Grants.Gov 1 -2 Website 1 -2 Hazardous Material III -9; IV -3; IV -9 Inactive Rolling Stock 1 -3 Incidental Use of Project Property and Equipment I -6 Definition I -6 Indian Reservations II -5 Indian Tribal Governments (Federally Recognized) 1 -5; VI -5; VI -7; VI -8; App. G-4 Definition 1 -5 Indian Tribe(s) I-1; 1-5; I-6; II -3; VI -9 Indirect Cost Rate Proposal 11I -18; VI-6; VI -7; VI -8; VI -9; App. E -1; E -2; E -3 In -Kind Contribution(s) 11I-4; IV -1; IV -3; IV-4; IV -8 Intelligent Transportation Systems (ITS) IV -39; IV -40; App. G -5 Proj ects IV-3 9 Internal Control Self- Assessment Form VI -3 Job Access and Reverse Commute Program (JARC) II -1; 11-4; 111-7; App. A -2 Funding II-4 Funds 11-4 Jurisdictional Exception IV -2; App. C -2 Large Urbanized Area I1 -4; I -6 Definition 1 -6 Leases IV -21 Leasing IV -1; IV -10; IV -19; IV -21; IV -22; App. A -2 Letter of No Prejudice (LONP) VI -7 Limited English Proficient (LEP) Persons II -9; App. G-4 Maintenance Area for Ozone or Carbon Monoxide Market Value Master Agreement I -6; 1 -8; II- Definition Memorandum of Agreement (MOU) Metropolitan Planning Organization(s) (MPO) Milestone/Progress Report(s) (MPR) Monthly Report(s) National Environmental Policy Act (NEPA) Definition Process Requirements National Preparedness Directorate National Transit Database (NTD) Annual Manual Deadline Monthly Manual II -5 See, Fair Market Value 12; III -2; III -17; V -1; V-4; VI -15; App. G -5 1-6 V -5 II -2 I1I -2; 111 -3; III -5; II1 -6; II1 -7; I11 -16 III -9 I-6; IV -1; IV -9; IV -33; App. G -1; G -2 I-6 IV -9; IV -32 III -10; III -12; III -14 V-4 III -8; III -7 III -9 III -8 III -9 Index FTA C 5010.1D Page 6 of 10 11/01/2008 Subiect Chapter /Page Reporting III -8 Reporting Manuals III -8 Reporting Requirements III -8 Reports III -9 Rural Manual III -9 Safety & Security Manual I1I -9 Website III -8 Net Present Value I-6; IV -22; IV -23 Definition I -6 Net Proceeds from the Sale of Project Equipment and Real Property I -7 Definition 1 -7 New Freedom Program I1-4; I1 -5; App. A -2; G-4 New Starts See, New Starts or Small Starts Programs New Starts or Small Starts Programs II -3; IV -23; IV -37; V -2; V -6; VI -5; App. B -1 Non - Attainment Area for Ozone or Carbon Monoxide I1 -5 Nonurbanized Area Formula Program II -1; II -2; 11 -3; II1 -7; III -8 III -9; III -10; V -2; App. A -2; G-4 Office of Management and Budget (OMB) II -7; V -3; VI -4; VI -5; VI -6; VI -8; VI -10; G-4 Circular A -133 I1 -6; 11 -7; 11I -16; VI -10; App. G-4 Circular A -87 IV -34; IV -36; VI -5; VI -6; VI -7; App. E -2; E -3; G-4 Cost Principles Circulars VI -7; App. G-4 Form SF —SAC VI-1 0 Website VI -10 Passenger Shelters III -14 Overhaul I -7; I -8; IV -19; IV -20; IV -23 Definition I -7 Peak Vehicle Requirement(s) I -5; IV -20; IV -21; IV -23; App. D -1 Pre -Award and Post Delivery Audits for Rolling Stock IV -14 Pre -Award Authority 1II -2; III-4; VI -7; App. F -1 Preventive Maintenance I -7; IV -19; IV-3 1; IV -34 Definition I -7 Program Fraud Civil Remedies Act II -12; App. G -2 Program Income I -7; IV -13; VI -9; VI -10; App. F -2 Definition 1 -7 Program of Projects (POP) I -7; II -3; II -8; VI -5 Definition 1 -7 Project Activity Line Item (ALI) I -7 Definition I -7 Project Description for the Grant Agreement or Cooperative Agreement (Continuing Control) IV-1 5 Project Management Oversight (PMO) IV -32; IV -33; IV -38; V -2; V-6; App. G -3 Project Management Plan (PMP) IV -9; IV -23; IV -33; IV -34; IV -37; V -5; App. B -1 Requirement IV -33 FTA C 5010.1D Index 11/01/2008 Page 7 of 10 Subject Chapter/Page Project Property I -2; I -3; 1-7; 1-9 Acquisition Cost 1 -2 Definition 1 -2 Continuing Control IV -15 Cost I -3 Definition 1 -3 Definition 1 -7 Incidental Use I -6; IV -16 Definition 1-6 Maintenance IV -22 Management IV -23 Shared Use IV -16 Useful Life I -10; IV -16; IV -17 Definition I -10 Project Scope I -3; I -7; III -11; II1 -14; III -15; IV -32; IV -33 Code III -11; III -15 Definition 1 -7 Projects 1 -7 Definition 1 -7 Public Transportation I -8; I -9; II -2; II -3; II -4; II -8 II1 -8; IV -16; IV -28; IV -37; VI -10; App. G -1 Definition 1 -8 Eligible Projects 1I -5 Rail Fleet IV -19; IV -20 Rail Fleet Management Plan IV -20; IV -23 Rail Vehicles IV -25; IV -26 Real Estate Acquisition Management Plan (RAMP) IV -9; IV -10; App. B -1 Content App. B -1 Real Property 1-4; 1-7; I -8; I -9; III-6; IV -1; IV -3; IV -5 IV -8; IV -10; IV -11; IV -12; VI -3; VI -9; VI -16; App. C -2; G -2; G -3 Definition 1 -8 Excess I -4; IV -11 Realty/Personalty Report I -8; IV -2; App. C -2 Definition I -8 Recipient I -8 Definition I -8 Refurbishment I -8; IV -18; IV -34 Definition I -8 Regional ITS Architecture IV -39; IV-40 Remaining Federal Interest for Dispositions before the End of Useful Life 1 -8 Definition 1 -8 Remaining Federal Interest for Real Property I -8 Definition I -8 Index FTA C 5010.1D Page 8 of 10 11/01/2008 Subject Chapter /Page Rent Schedule(s) IV -7; I -8 Definition I -8 Right -of -Way or Appraisal Manual App. C -1 Rolling Stock 1-2; 1-3; I-4; I -5; I -6; 1-10; 11-5; III -2; III -11 III -13; IV -1; IV -13; IV -14; IV -16; IV -17; IV -18; IV -19 IV -21; IV -23; IV -24; IV -25; IV -26; IV -27; IV -34; App. D -1; D -2 Federal Interest 1 -8 Less Than $5,000 IV -26 Over $5,000 Per Unit IV -25 Overhauls IV -19 Rebuilding Policies IV -18 Spare Ratio Policies IV -19 Status Report I -9; III -11; IV -25; IV -27; IV -28; App. D -1; D -2 Definition 1 -9 Transfer IV -27 Warranty Standards IV -24 Safe, Accountable, Flexible, Efficient Transportation Equity Act A Legacy for Users (SAFETEA —LU) P -1; I-1; 11-4; II -5; II -11; App. G -1 Safety and Security Management Guidance for Major Capital Projects V -5 Safety and Security Management Plan (SSMP) V -5 Review V -5 Sales Proceeds 1 -9 Definition 1 -9 Scope of Work IV -2; IV -35; App. B -3; C -1 Additional Requirements App. C -2 Section 5307 See, Urbanized Area Formula Program Section 5309 See, Capital Investment Grants Program Section 5310 See, Elderly Individuals and Individuals with Disabilities Program Section 5311 See, Nonurbanized Area Formula Program Section 5313 See, Transit Cooperative Research Program (TCRP) Section 5316 See, Job Access and Reverse Commute Program (JARC) Section 5317 See, New Freedom Program Shared Use I -9; IV -16 Definition 1 -9; IV -16 Small Starts See, New Starts or Small Starts Programs Spare Ratio Policies IV -19 Standard Form 270 (SF -270) VI -12; App. F -1 Instructions VI -12 State Appraisal Board IV -2 State Management Review V -1; V -2 State Oversight Agency V -5 Statewide Cost Allocation Plan (SWCAP) VI -8 Statewide Transportation Improvement Program (STIP) III -10; III -12; III -14; III -15 FTA C 5010.1D Index 11/01/2008 Page 9 of 10 Subiect Chapter/Page Straight Line Depreciation I -8; I -9; IV -25 Definition I -9 Superfund Sites See, Contamniation Superintendent of Documents VI -8 Supplemental Standards Rules App. C -2 Supplies I -9 Definition I -9 TEAM -Web I -9 Definition I -9 Time and Attendance (T &A) Records VI -5; VI-6 Title IX II -10; App. G -2 Title VI II -9; III -7; V -1; V-4; App. A -1; G -1; G -2; G-4 Title VII II -9; App. G -1 Transit Enhancements I -9; III -10 Definition I -9 Reports III -7 Transportation Electronic Award and Management (TEAM) System I -9; III -1; III -2; III -3 I11 -4; III -5; III -7; III -10; III -11; III -14; III -15; IV -39; VI -12 Close -Out Process III -15 Definition I -9 Grant Life Cycle III -1 Procedures III -10; III -14 Reporting Requirements III -2; III -5 User Guide III -1 Transportation Improvement Program (TIP) III -10; III -15 Transportation Security Administration (TSA) V-4 Triennial Review Process IV-1 1 Uneconomical Remnant I -9 Definition I -9 Uniform Act or URA See, Uniform Relocation Assistance and Real Property Acquisition Policies Act Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments See, Common Rule Uniform Relocation Assistance and Real Property Acquisition Policies Act I -5; I -9; IV -1 IV -2; IV -3; IV-4; IV -5; IV-6; IV -7; IV -8; App. B -1; C -2 Definition I -9 Uniform Standards of Professional Appraisal Practice (USPAP) IV -2; App. C -2 Uniform System of Accounts (USOA) III -8; III -9 U.S. Treasury VI -14 Pay.Gov Website VI -14 U.S. Treasury's Pay.Gov Financial Collection System VI -14; VI -15 Unliquidated Obligations I -10; 1II -4; III -5 Definition I -10 Index FTA C 5010.1D Page 10 of 10 11/01/2008 Subiect Chapter/Page Urbanized Area I -10 Definition I -10 Large Urbanized Area 1 -6 Definition 1 -6 Urbanized Area Formula Program II -2; 1I -5; II -6; III -7; I1I -8; II1 -9; IV -24; V -2; App. A -2 Funds II -2; 11-5; 11-6; 111-7 Use of Project Property II -7; IV -15; IV -31 Useful Life I -10; III -10; IV -15; IV -16; IV -17; IV -18; IV -19; IV -22 IV -23; IV -24; IV -25; IV -26; IV -27; IV -28; App. D -1; D -2 Definition 1 -10 Policy IV -16; IV -17 Useful Life of Project Property IV -16; IV -25 Value Engineering (VE) I -10; III -9; IV -36 Definition I -10; IV -36 Report III -9 Vehicle Identification Number (VIN) IV -27; App. D -1 EXHIBIT G FTA CIRCULAR 4220.1F - THIRD PARTY CONTRACTING GUIDANCE U.S. Department of Transportation Federal Transit Administration Subject: THIRD PARTY CONTRACTING GUIDANCE CIRCULAR FTA C 4220.1F November 1, 2008 Rev. 1, April 14, 2009 Rev. 2, July 1, 2010 Rev. 3, February 15, 2011 1. PURPOSE. This circular provides contracting guidance for recipients of Federal assistance awarded by the Federal Transit Administration (FTA) when using that Federal assistance to finance its procurements (third party contracts). This revision incorporates the new procurement provisions of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA -LU), and includes the most current available guidance for the Federal public transportation program as of the date of publication. 2. CANCELLATION. This circular cancels FTA Circular 4220.1E, "Third Party Contracting Requirements," dated 06- 19 -03. 3. AUTHORITY. Federal Transit Laws, Title 49, United States Code, Chapter 53. 4. WAIVER. FTA reserves the right to waive any provision of this circular to the extent permitted by Federal law or regulation. 5. FEDERAL REGISTER NOTICE. In conjunction with publication of this circular, a Federal Register notice was published on September 30, 2008 (73 FR 56896), addressing comments received during the development of the circular. 6. AMENDMENTS TO THE CIRCULAR. FTA reserves the right to update this circular due to changes in other revised or new guidance and regulations that undergo notice and comment, without further notice and comment on this circular. FTA will post updates on our Web site: http: / /www.fta.dot.gov /. The Web site allows the public to register for notification when FTA issues Federal Register notices or new guidance; visit the Web site and click on "Sign -up for e-mail updates." 7. ACCESSIBLE FORMATS. This document is available in accessible formats upon request. To obtain paper copies of this circular as well as information regarding these accessible formats, telephone FTA's Administrative Services Help Desk, 202 - 366 -4865. Individuals with hearing impairments may contact the Federal Relay Service, 1- 800 - 877 -8339 for assistance with the call. James S. Simpson Administrator FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev/ 3, 02/15/2011 THIRD PARTY CONTRACTING GUIDANCE TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION AND ROLE OF THE FEDERAL TRANSIT ADMINISTRATION I -1 1. The Federal Transit Administration (FTA) I -1 2. Authorizing Legislation I -1 3. How to Contact FTA I -1 4. Background 1 -2 5. Definitions 1 -2 6. FTA's Role 1 -8 II. APPLICABILITY II -1 1. Legal Effect of the Circular II -1 2. Applicability of the Circular II -1 3. Federal Laws and Regulations II -8 4. State and Local Laws and Regulations II -10 III. THE RECIPIENT'S RESPONSIBILITIES III -1 1. Written Standards of Conduct III -1 2 Self- Certification III -1 3. Third Party Contracting Capacity III -1 4. Audit III -7 5. Fraud III -7 IV. THE RECIPIENT'S PROPERTY AND SERVICES NEEDS AND FEDERAL REQUIREMENTS AFFECTING THOSE NEEDS IV -1 1. Determining the Recipient's Needs IV -1 2. Federal Requirements That May Affect a Recipient's Acquisitions IV -3 V. SOURCES V -1 1. Force Account V -1 2. Shared Use V -1 3. Joint Procurement V -1 4. State or Local Government Purchasing Schedules or Purchasing Contracts V -2 5. Federal Excess and Surplus Property V -2 6. Federal Supply Schedules V -2 7. Existing Contracts V-4 8. The Open Market V -9 Page i Page ii FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev.2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER PAGE VI. PROCEDURAL GUIDANCE FOR OPEN MARKET PROCUREMENTS VI -1 1. Competition Required VI -1 2. Solicitation Requirements and Restrictions VI -2 3. Methods of Procurement VI -7 4. Eligible Costs VI -20 5. Incentive Costs and Payments VI -20 6. Cost Analysis and Price Analysis VI -20 7. Evaluations VI -22 8. Contract Award VI -23 VII. PROTESTS, CHANGES AND MODIFICATIONS, DISPUTES, CLAIMS, LITIGATION, AND SETTLEMENTS VII -1 1. Protests VII -1 2. Changes and Modifications VII-4 3. Disputes VII -5 4. Claims and Litigation VII -7 5. FTA Participation in Settlements, Arbitration Awards, and Court Awards VII -8 APPENDICES APPENDIX A REFERENCES A -1 APPENDIX B FTA REGIONAL AND METROPOLITAN OFFICE CONTACT INFORMATION B -1 APPENDIX C THIRD PARTY CONTRACTING CHECKLISTS 1 APPENDIX D PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER — MATRICES 1 INDEX SUBJECT AND LOCATION IN CIRCULAR FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 I. CHAPTER I Page I -1 INTRODUCTION AND ROLE OF THE FEDERAL TRANSIT ADMINISTRATION 1. THE FEDERAL TRANSIT ADMINISTRATION (FTA). FTA is one of ten modal administrations within the U.S. Department of Transportation (DOT) and is headed by an Administrator who is appointed by the President of the United States. FTA administers its programs and carries out its other activities through its headquarters office in Washington, DC, ten regional offices, and five metropolitan offices that assist public transportation agencies in all 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, Northern Mariana Islands, American Samoa, and in federally recognized Indian tribal areas. Public transportation includes, but is not limited to, transportation by buses, subways, light rail, commuter rail, monorail, passenger ferry boats, trolleys, inclined railways, people movers, and vans. Public transportation may be either fixed -route or demand - response service. The Federal Government, through FTA, provides financial assistance to develop new public transportation systems and improve, maintain, and operate existing systems. FTA oversees thousands of federally assisted projects to hundreds of State and local public transportation providers, primarily through its ten regional offices. Each FTA recipient is responsible for managing its programs and projects in compliance with applicable Federal requirements, and FTA is responsible for ensuring that recipients comply with those requirements. 2. AUTHORIZING LEGISLATION. Most Federal transit laws are codified at 49 U.S.C. Chapter 53. Authorizing legislation is substantive legislation enacted by Congress that establishes or continues the legal operation of a Federal program or agency. Congress has amended FTA's authorizing legislation every four to six years. FTA's most recent authorizing legislation is the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA -LU), Public Law 109 -59, August 10, 2005, as amended by the SAFETEA -LU Technical Corrections Act, 2008, Public Law 110 -244, June 6, 2008. SAFETEA -LU authorizes FTA programs from Federal Fiscal Year 2006 through Federal Fiscal Year 2009. Revisions to this edition of the circular encompass the SAFETEA -LU changes to Federal transit law and changes required by other laws that have become effective since FTA last issued this circular in 2003. 3. HOW TO CONTACT FTA. FTA's regional and metropolitan offices are responsible for providing financial assistance to FTA recipients and overseeing the implementation of most FTA programs. Certain programs, however, are the responsibility of FTA headquarters. You should direct inquiries to either the regional or metropolitan office responsible for the geographic area in which you are located. See, Appendix B for contact information. Page I -2 FTA C 4220.1F 11/01/2008 Rev. 1. 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 For further information, visit the FTA Web site: http: / /www.fta.dot.gov or contact FTA headquarters at the following address and phone number: Federal Transit Administration Office of Communication and Congressional Affairs 1200 New Jersey Avenue, SE Washington, DC 20590 Phone: 202 - 366 -4043 Fax: 202 - 366 -3472 4. BACKGROUND. Because FTA awards a substantial amount of Federal assistance to support public transportation through its grants and cooperative agreements, Federal laws and regulations require FTA to ensure that its recipients use that Federal assistance prudently and in compliance with all applicable Federal requirements. While FTA's enabling legislation includes several provisions governing recipient procurements financed with FTA assistance (third party contracts), other government -wide Federal requirements seek to ensure fair and economical procurements when Federal assistance is expended. 5. DEFINITIONS. All definitions in 49 U.S.C. Section 5302 apply to this circular. The following additional definitions are provided: a. Approval, Authorization, Concurrence, Waiver means a deliberate written statement (transmitted in typewritten hard copy or in an electronic format or medium) of a Federal Government official authorized to permit the recipient to take or omit an action required by the Grant Agreement or Cooperative Agreement for the Project, Master Agreement, or this circular, which action may not be taken or omitted without that permission. Except to the extent that FTA determines otherwise m writing, that approval, authorization, concurrence, or waiver permitting the performance or omission of a specific action does not constitute permission to perform or omit other similar actions. An oral permission or interpretation has no legal force, authority, or effect. b. Best Value describes a competitive, negotiated procurement process in which the recipient reserves the right to select the most advantageous offer by evaluating and comparing factors in addition to cost or price such that a recipient may acquire technical superiority even if it must pay a premium price. A "premium" is the difference between the price of the lowest priced proposal and the one that the recipient believes offers the best value. The term "best value" also means the expected outcome of an acquisition that, in the recipient's estimation, provides the greatest overall benefit in response to its material requirements. To achieve best value in the context of acquisitions for public transportation purposes, the evaluation factors for a specific procurement should reflect the subject matter and the elements that are most important to the recipient. While FTA does not mandate any specific evaluation factors, the recipient must disclose those factors in its solicitation. Evaluation factors may include, FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page I -3 but are not limited to, technical design, technical approach, length of delivery schedules, quality of proposed personnel, past performance, and management plan. This definition is intended neither to limit nor to dictate qualitative measures a recipient may employ, except that those qualitative measures must support the purposes of the Federal public transportation program. c. Cardinal Change means a major deviation from the original purpose of the work or the intended method of achievement, or a revision of contract work so extensive, significant, or cumulative that, in effect, the contractor is required to perform very different work from that described in the original contract. d. Change Order means an order authorized by the recipient directing the contractor to make changes, pursuant to contract provisions for such changes, with or without the consent of the contractor. e. Common Grant Rules, for purposes of this circular, means: (1) DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 CFR Part 18, which apply to Federal grants and cooperative agreements with governmental recipients of Federal assistance including Indian tribal governments, and (2) DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations," 49 CFR Part 19, which apply to Federal grants and cooperative agreements with non - governmental recipients of Federal assistance. f. Constructive Change means an act or omission by the recipient that, although not identified by a "change order," does in fact cause a change in the contract work. g. Contract means a mutually binding legal relationshipobligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the recipient to an expenditure and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301, et seq. h. Cooperative Agreement means an instrument by which FTA awards Federal assistance to a specific recipient to support a particular project in which FTA takes an active role or retains substantial control, as described in 31 U.S.C. Section 6305. Page I-4 FTA C 4220.1F 11/01/2008 Rev. 1. 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 i. Design- Bid -Build Project means a construction project under which a recipient commissions an architect or engineer to prepare drawings and specifications under a design services contract, and separately contracts for construction, by engaging the services of a contractor through sealed bidding or competitive negotiations to complete delivery of the project. j. Design -Build Project, as defined in 49 U.S.C. Section 5325(d)(1), means (1) a project under which a recipient enters into a contract with a seller, firm, or consortium of firms to design and build a public transportation system, or an operable segment of such system, that conforms to specific performance criteria; and (2) may include an option to finance, or operate for a period of time, the system or segment or any combination of designing, building, operating, or maintaining such system or segment. Apart from the definition at 49 U.S.C. Section 5325(d)(1), a "design -build project" also means a construction project under which a recipient enters into a contract with a seller, firm, or consortium of firms both to design and construct a public transportation facility that is the subject of the project. k. Electronic Commerce (E- Commerce) consists of electronic techniques for accomplishing business transactions including electronic mail or messaging, World Wide Web internet technology, electronic bulletin boards, purchase cards, electronic funds transfer, electronic signatures, and electronic data interchange. 1. Force Account means the recipient's own labor forces and equipment, as discussed in this circular in the context of performing project work. m. FTA means the Federal Transit Administration. n. Full and Open Competition means that all responsible sources are permitted to compete. o. Governmental Recipient means a recipient that must comply with the Common Grant Rule at 49 CFR Part 18. This includes a State or local government or a federally recognized Indian tribal government, as defined in this section of this Chapter. P• q. Grant means the instrument by which FTA awards Federal assistance to a specific recipient to support a particular project in which FTA does not take an active role or retain substantial control, as described in 31 U.S.C. Section 6304. Indian Tribal Government means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community, including any Native village as defined in Section 3 of the Alaska Native Claims Settlement Act, 43 U.S.C. Section 1602, certified by the Secretary of the Interior as eligible for the special programs and services provided by him or her through the Bureau of Indian Affairs. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page I -5 r. Joint Procurement (sometimes informally referred to as "cooperative procurement ") means a method of contracting in which two or more purchasers agree from the outset to use a single solicitation document and enter into a single contract with a vendor for delivery of property or services in a fixed quantity, even if expressed as a total minimum and total maximum. Unlike a State or local government purchasing schedule or contract, a joint procurement is not drafted for the purpose of accommodating the needs of other parties that may later choose to participate in the benefits of that contract. We recognize that some will use the term "cooperative procurement" informally to refer to arrangements we designate as "joint procurement." We also recognize that this may cause confusion with the very different arrangements for the U.S. General Services Administration's (GSA) "Cooperative Purchasing Program" and with similar State or local government purchasing programs that the State or local government might refer to as "cooperative." s. Local Government means a county, municipality, city, town, township, local public authority (including any public and Indian housing agency under the United States Housing Act of 1937) school district, special district, intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under state law), any other regional or interstate government entity, or any agency or instrumentality of a local government. This term does not include a local public institution of higher education. t. Master Agreement means the FTA document incorporated by reference and made part of FTA's standard grant agreements and cooperative agreements, that contains the standard terms and conditions governing the administration of a project supported with Federal assistance awarded by the FTA. u. Modification means any written change to the terms of a contract. v. Non - Governmental Recipient means a recipient that must comply with the Common Grant Rule at 49 CFR Part 19. This includes a public and private institution of higher education, a public or private hospital, and any other quasi - public or private non - profit organization such as, but not limited to, a community action agency, research institute, educational association, and health center. FTA reserves the right to apply the requirements of 49 CFR Part 19 to a commercial organization, a for - profit organization, a foreign or international organization (such as an agency of the United Nations), and an individual. The term does not include a government -owned contractor - operated facility or research center providing continued support for mission - oriented, large -scale programs that is government -owned or controlled, or is designated as a federally funded research and development center. Page I-6 FTA C 4220.1F 11/01/2008 Rev. 1. 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 w. Project Labor Agreement (PLA) means an agreement between the contractor, subcontractors, and the union(s) representing workers. Under a PLA, the contractor, subcontractors, and union(s) working on a project agree on terms and conditions of employment for the project, establishing a framework for labor- management cooperation to advance the buyer's procurement interest in cost, efficiency, and quality. x. Property, as used in this circular, includes real property consisting of land and buildings, structures, or appurtenances on land, equipment, supplies, other expendable property, intellectual property, and intangible property. y. Public Transportation means transportation by a conveyance that provides regular and continuing general or special transportation to the public, but does not include schoolbus, charter, sightseeing, or intercity bus transportation, or intercity passenger rail transportation provided by the entity described in 49 U.S.C. Chapter 243, AMTRAK, (or a successor to such entity). z. Recipient means the public or private entity to which FTA awards Federal assistance through a grant, cooperative agreement, or other agreement. The recipient is the entire legal entity even if only a particular component of the entity is designated in the document through which FTA has awarded the Federal assistance. The term "recipient" includes "grantee," which is a "recipient" of Federal grant assistance. The term "recipient" also includes each member of a consortium, joint venture, team, or partnership awarded FTA assistance through a grant, cooperative agreement, or other agreement. For the purposes of this circular, "recipient" also includes any subrecipient or subgrantee of the recipient. Furthermore, a recipient is responsible for assuring that each of its subrecipients complies with the applicable requirements and standards of this circular, and that each of its subrecipients is aware of the Federal statutory and regulatory requirements that apply to its actions as a subrecipient. Neither a third party contractor nor a third party subcontractor is a "recipient" for purposes of this circular. aa. Revenue Contract means a contract in which the recipient or subrecipient provides access to public transportation assets for the primary purpose of either producing revenues in connection with a public transportation related activity, or creating business opportunities involving the use of FTA assisted property. bb. State means a State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and the Virgin Islands, or any agency or instrumentality of a State exclusive of local governments. "State" does not include any public and Indian housing agency under the United States Housing Act. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page I -7 cc. State or Local Government Purchasing Schedule or Purchasing Contract means an arrangement that a State or local government has established with multiple vendors in which those vendors agree to provide essentially an option to the State or local government, and its subordinate government entities and others it might include in its programs, to acquire specific property or services in the future at established prices. These arrangements are somewhat similar to the GSA's Cooperative Purchasing Program available for Federal Government use. If, at a later date, the State or local government permits others to use its schedules, the State or local government might seek the agreement of the vendor to provide the listed property or services to others with access to the schedules. In the alternative the State or local government establishing the schedules might permit the vendor to determine whether or not it wishes to provide others the same contractual arrangement it affords the State or local government that has established the schedules. We recognize that some will use the term "cooperative" in reference to these State and local programs, possibly because they are somewhat similar to GSA's "Cooperative Purchasing Program." These programs are distinct from "Joint Procurement" as defined this Chapter. dd. Third Party Contract refers to a recipient's contract with a vendor or contractor, including procurement by purchase order or purchase by credit card, which is financed with Federal assistance awarded by FTA. ee. Unsolicited Proposal means a proposal that is: (1) Innovative and unique, (2) Independently originated and developed by the offeror, (3) Prepared without the recipient's supervision, endorsement, direction, or direct involvement, (4) Sufficiently detailed that its benefits in support of the recipient's mission and responsibilities are apparent, (5) Not an advance proposal for property or services that a recipient could acquire through competitive methods, and (6) Not an offer responding to a recipient's previously published expression of need or request for proposals. ff. Value Engineering means the systematic application of recognized techniques that identify the function of a product or service, establish a value for that function, and provide the necessary function reliably at the lowest overall cost. In all instances, the Page I -8 FTA C 4220.1F 11/01/2008 Rev. 1. 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 required function should be achieved at the lowest possible life -cycle cost consistent with requirements for performance, maintainability, safety, security, and aesthetics. 6. FTA'S ROLE. Consistent with the Common Grant Rules' directions to Federal agencies not to substitute their judgment for that of their recipients, FTA does not substitute its judgment for that of its recipients by making third party contract decisions for its recipients. FTA's role in third party procurements complies with the principles of Executive Order No. 13132, "Federalism," August 4, 1999, 5 U.S.C. Section 601 note. The Executive Order directs Federal agencies to refrain from substituting their judgment for that of their State recipients unless the matter is primarily a Federal concern and, to the maximum extent feasible, to permit the States to establish their own standards rather than impose national standards. To ensure compliance with Federal procurement requirements applicable to FTA projects, FTA will continue to provide guidance and technical assistance to its recipients consistent with its Federal oversight responsibilities. a. Reliance on the Recipient's Self- Certification. FTA recognizes that most FTA recipients have experience with the third party contracting requirements of the Common Grant Rules. Therefore, FTA will rely primarily on the recipient's annual "self- certification" (usually submitted in the first quarter of each Federal fiscal year) that its procurement system complies with FTA requirements and that the recipient has the technical capacity to comply with Federal procurement requirements. FTA requests each recipient to "self- certify" its procurement system as part of its Annual Certifications and Assurances. To preclude unnecessary delay of recipient procurements, FTA generally does not conduct preaward reviews of third party contracts or contract specifications as envisioned in the Common Grant Rules, 49 CFR Section 18.36(g)(2) and 49 CFR Section 19.44(e). Instead, FTA relies heavily on the recipient's self - certification of its procurement system. FTA, however, will review compliance with this circular as part of its routine oversight responsibilities. If FTA becomes aware of circumstances that might invalidate a recipient's self - certification, FTA will investigate and recommend appropriate measures to correct the recipient's deficiencies. b. Third Party Contract Reviews. Although the Common Grant Rules authorize FTA to conduct preaward reviews, FTA relies on the validity of the recipient's self - certification rather than on preaward review of third party contracts as a whole (except for certain reviews of portions of rolling stock procurements). FTA will rely on periodic, post - award reviews to ensure that the recipient complies with Federal requirements and standards. Should a recipient fail to self - certify its procurement system, however, FTA reserves the right to conduct preaward reviews as provided by the Common Grant FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page I -9 Rules. Even if a recipient self - certifies its procurement system, the recipient still may request FTA's preaward review of specific procurements as part of FTA's technical assistance program. Conversely, if FTA seeks to review the record of a particular procurement, the recipient must make its procurement documents available for FTA's preaward or post -award review. c. Procurement System Reviews. Under 49 U.S.C. Section 5307(i), a recipient may request the Secretary of Transportation to approve its procurement system, and FTA may approve that procurement system if it complies with Federal requirements. As required by 49 U.S.C. Section 5307(h), FTA must perform reviews and evaluations of the Urbanized Area Formula Program, including full reviews and evaluations of the performance of each recipient that implement Urbanized Area Formula projects, with specific reference to the recipient's compliance with statutory and administrative requirements. Accordingly, FTA will perform procurement system reviews as part of its on -going project oversight responsibilities and will perform procurement system reviews for Urbanized Area Formula Program recipients that self - certify their procurement systems. To assist the recipient in improving its procurement practices, FTA may recommend certain "best practices." In those situations, FTA will identify its recommendations as "advisory." For more information, see FTA's "Procurement Reviews," guidance at the FTA Web site: http : / /www.fta.dot.gov/ funding / oversight /grants_financing_100.html. d. Audits. FTA may perform, contract for, or instruct the recipient to obtain specific audits of particular third party contracts to determine whether payments were made in conformance with the terms of the contract, or for other purposes. e. Training and Technical Assistance. FTA provides procurement training and technical assistance at both regional and national levels by offering various instructional courses, by conducting regional technical assistance conferences, and by providing assistance by a contractor as needed. f Master Agreement. From the inception of its electronic award system in Fiscal Year 1995, FTA has incorporated by reference and made part of each FTA grant and FTA cooperative agreement a Master Agreement that FTA issues annually. Along with the standard terms and conditions governing an FTA assisted project, the most recent FTA Master Agreement, typically issued at the beginning of each Federal fiscal year, contains references to substantially all FTA and other cross - cutting Federal laws and regulations that may apply to a federally assisted project. Several of these Federal requirements must be included in third party contracts to the lowest tier necessary, and others will have a direct or indirect effect on the recipient's third party contracts, and therefore should be included in those third party contracts. Page I -10 g. FTA C 4220.1F 11/01/2008 Rev. 1. 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 "Best Practices Procurement Manual" (BPPM). FTA's "Best Practices Procurement Manual" (BPPM) provides suggested procedures, methods, and examples to advise a recipient how it might conduct its third party procurements in compliance with Federal laws and regulations and FTA Circular 4220.1F guidance. These procedures, methods, and examples are based on the Federal acquisition process, U.S. Comptroller General Decisions, and "Best Practices" of recipients of FTA assistance and others in the industry, and FTA encourages recipients to adopt them as needed. Although the BPPM can be a good resource for the recipient to use in conducting FTA assisted procurements, it is not the source of any FTA or Federal requirements and, as such, is not binding on FTA recipients although the underlying Federal laws and regulations from which the BPPM's advice and recommendations are derived will apply. As such, the text of the BPPM is not and should not be treated as an official description of any FTA or Federal requirement. Moreover, although FTA does revise and update the BPPM periodically, FTA cautions each recipient that relying solely on the BPPM may not ensure compliance with all applicable FTA and Federal requirements. You can obtain access to the BPPM at the FTA Web site: http : / /www.fta. dot.gov/ funding /thirdp artyprocurement /grants_financing_6037.ht ml. h. Third Party Procurement Helpline. This Helpline at the FTA Web site provides another resource through which you may submit your third party contracting questions to FTA. To do so, access the FTA Web site: http://vvww.fta.dot.gov/funding/thirdp artyprocurement /grants_financing_6040.ht ml. i. "Frequently Asked Questions." To review the Frequently Asked Questions pertaining to third party contracting, access the FTA Web site: http : / /www.fta. dot. gov / funding / thirdpartyprocurement /grants_financing_6039.ht ml. j. FTA Offices. You may also contact your FTA regional or metropolitan office or FTA's Office of Administration for assistance. You can find a list of FTA's regional and metropolitan offices in Appendix B of this document. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 II. CHAPTER II APPLICABILITY Page II -1 1. LEGAL EFFECT OF THE CIRCULAR. The Federal Transit Administration (FTA) has developed this circular to assist its recipients and their subrecipients in complying with the various Federal laws and regulations that affect their FTA assisted procurements. FTA considers this circular, in its entirety, to be a guidance document. While this guidance itself does not have the force and effect of Federal law or regulation, it does contain information about Federal laws and regulations for which compliance is mandatory when applicable. As guidance, this circular attempts to describe how a recipient or subrecipient of FTA assistance can comply with those Federal requirements. In some cases, this guidance describes the single method by which an FTA recipient or subrecipient can comply with a specific Federal legal or regulatory requirement. In other cases, Federal laws, regulations, and this guidance provide more flexibility. As guidance, this circular also expresses FTA's preferences about how the procurements it supports should be undertaken. FTA's Master Agreement reflects FTA and the recipient's agreement that FTA's third party contracting circular will apply to its third party contracts. As a guidance document, this circular does not waive any requirements of Federal statutes or regulations restated herein except as permitted by their terms. Because this circular is guidance, FTA is willing to consider methods of compliance with Federal laws and regulations other than those described therein. If a recipient identifies an alternative method for complying with an applicable Federal statute and regulation, it may contact FTA before employing that method to ensure that FTA agrees with the alternative proposed. While FTA's prior concurrence is not required, FTA reserves the right to decline to participate in the costs of third party procurements that fail to comply with Federal laws, regulations, or the terms of the recipient's underlying grant or cooperative agreement. 2. APPLICABILITY OF THE CIRCULAR. Unless FTA determines otherwise in writing, this guidance applies when the recipient uses FTA assistance to support its procurements. a. Participants in FTA Assisted Procurements. Whether and how the circular applies to a specific participant in an FTA assisted project depends on its relationship to the particular FTA assisted procurement: (1) Recipients of FTA Grants or Cooperative Agreements. The circular applies to each FTA recipient of Federal assistance, including each grantee and recipient of Federal assistance under a cooperative agreement or an "other agreement" (whether an individual entity or member of a consortium, joint venture, team, or Page II -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 partnership) when it uses FTA assistance for third party contracts. The extent to which the provisions of this circular apply to a recipient depends on whether the recipient is a State or other than a State. (a) States. When procuring property and services under a grant or cooperative agreement, a State may use the same procurement policies and procedures that it uses for acquisitions not financed with Federal assistance. At a minimum, the State must comply with the federally mandated requirements on contract term limitations for revenue vehicle purchases, competition, prohibitions against geographic preferences, procurement of architectural engineering (A &E) services, and awards to responsible contractors. The State must also ensure that each purchase order and contract financed with FTA assistance includes all provisions required by Federal statutes and their implementing regulations. 1 Governmental Subrecipients of the State. Each State and its governmental subrecipients may use State procurement procedures for their third party contracts. Only those provisions of this circular and the sections of the Common Grant Rule for governmental recipients, 49 CFR Part 18, applicable to the State will apply to procurements by the State's governmental subrecipients. 2 Private Non - Profit Subrecipients of the State. In contrast, the provisions of this circular and the Common Grant Rule for non - governmental recipients, 49 CFR Part 19, will apply to a private non - profit subrecipient of a State. (b) Recipients and Subrecipients that are not States. This circular applies to third party contractors and subcontractors of all other FTA recipients and their subrecipients, including regional public transportation authorities, that are not a State. Even though a recipient or subrecipient is not a State, it may use its own procurement procedures, if those procedures conform to applicable Federal law and regulations, including the applicable Common Grant Rule. (2) Subrecipients of FTA Assistance. This circular also applies to each subrecipient, including each subgrantee (a type of subrecipient), under an FTA grant or cooperative agreement) that enters into contracts with other parties financed with FTA assistance. (3) Recipients of Both Federal Assistance Awarded by FTA and Funds Provided by Another Federal Agency. An FTA recipient that also uses funding provided by another Federal agency or agencies for a third party procurement also supported with FTA assistance must comply with the third party contracting requirements of both FTA and each additional Federal agency providing Federal assistance. If FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page II -3 compliance with all Federal requirements is impossible, the recipient should notify the FTA Chief Counsel for resolution. If an FTA recipient finances an acquisition with funding provided by another Federal agency but not with FTA assistance, this circular would not apply to that procurement. (4) Recipients of "Other Agreement" Assistance. For "other agreements" authorized by 49 U.S.C. Section 5312(a) for research, development, demonstration, and deployment projects or by 49 U.S.C. Section 5312(b) for joint partnership projects for the deployment of public transportation innovation, this circular may be used as an initial starting point from which to consider the Federal requirements and other provisions that should be adopted for the project, and the other standard Federal requirements that should be modified or waived to achieve FTA's and the recipient's objectives. (5) Third Party Contractors and Subcontractors. (a) Status. Neither third party contractors nor third party subcontractors are "recipients" or "subrecipients" for purposes of this circular. Consequently, third party contractors are not directly covered by this circular, the Common Grant Rules at 49 CFR Parts 18 and 19, or FTA's "Best Practices Procurement Manual" (BPPM) in awarding their subcontracts. (b) Effect of Federal Requirements. However, each third party contractor and subcontractor is required to comply with the terms of its third party contract or subcontract, including requirements to extend those federally required clauses and provisions to its subcontractors at the lowest tier required. For that reason, this circular, the Common Grant Rules at 49 CFR Parts 18 and 19, and the BPPM do provide useful information to a third party contractor and third party subcontractor about the constraints under which a recipient may enter into a third party contract financed with FTA assistance. b. Project Types and Third Party Contracts. With limited exceptions, FTA's Master Agreement reflects FTA and the recipient's agreement that FTA's third party contracting circular will apply to its third party contracts. The extent to which this circular applies to a recipient's contract depends on the character of that contract and the project which it supports. (1) Capital Contracts. The provisions of this circular apply to most third party capital contracts except as listed below: (a) Capital Contracts Financed Entirely Without Federal Assistance. Generally, the provisions of this circular do not apply to a recipient's capital contracts that are unrelated to an FTA assisted capital project and can be demonstrated to be entirely financed without FTA assistance or other Federal funds. Page II-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (b) Art. Procurements of art works and the services of artists are now included in this circular at Chapter IV, Subsection 4.g. These procedures are consistent with the procurement procedures of FTA Circular 9400.1A, "Federal Transit Administration Design and Art in Transit Projects," dated 06- 09 -95. FTA's "Best Practices Procurement Manual" still includes extensive non - binding suggestions and advice on procuring art works and the services of artists. FTA also has a Web site dedicated to art issues at http : / /www.fta. d ot.gov/ publication s /rep orts /oth er_rep orts /ab out_FTA_10 641.html. (c) Over - the -Road Bus Accessibility Program. Section 3038 of the Transportation Equity Act for the 21st Century 1998 (TEA -21), as amended by Section 3039 of SAFETEA -LU, 49 U.S.C. Section 5310 note, authorizes the Over - the -Road Bus Accessibility Program to provide Federal assistance to private for - profit companies for the incremental costs of wheelchair lift equipment and the necessary training to implement DOT' s accessibility requirements for over - the -road buses. FTA has determined that the provisions of this circular and the Common Grant Rules do not apply to the acquisition of FTA assisted property or services under that program. As a result, FTA's annual notice of availability of funds for that program does not refer to Common Grant Rule procurement requirements or this circular. The provisions of this circular and the Common Grant Rule at 49 CFR Part 19, however, apply to any over - the -road buses and related equipment for them acquired under another FTA program. (d) Real Property. Procurements of real property consisting of land and any existing buildings and structures on that land are generally beyond the scope of this circular. Real property acquisition is addressed in DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs," 49 CFR Part 24, implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. Sections 4601 et seq., which provide protections for owners and lessees of real property to be acquired as part of an FTA assisted project. More guidance is included in the most recent edition of FTA Circular 5010.1, providing "Grant Management" guidance The third party contracting provisions of this circular, however, do apply to FTA assisted construction of buildings, structures, or appurtenances that were not on land to be used for the project when that land was acquired. The third party contracting provisions of this circular also apply to any alterations or repairs to buildings or structures existing on that land when that land was acquired or made available for the FTA assisted project. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page II -5 (2) Operations Contracts. FTA has reviewed its policies with respect to operations procurements undertaken by FTA recipients and their subrecipients and has adopted the following policies: (a) Operations Contracts Financed With FTA Assistance. The provisions of this circular continue to apply to contracts in support of a recipient's or subrecipient's operations financed with FTA assistance. (b) Operations Contracts Financed Entirely Without FTA Assistance. FTA has determined that its third party contracting requirements will not apply to operations contracts that recipients and their subrecipients finance entirely without FTA assistance. Notwithstanding any other provision of this circular, however, a recipient that enters into third party contracts for operations or planning must comply with the requirements of DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR Part 26, applicable to those contracts, regardless of how or whether it intends to use its FTA assistance for contracts or other purposes. Specifically, a recipient required to have a Disadvantaged Business Enterprise (DBE) program may not structure its operations expenditures so that an unreasonable proportion of contracts that could be performed by DBEs are removed from its DBE program. Other Federal regulations issued by FTA, DOT, or other Federal agencies may also apply a third party contractor, either directly as a covered entity or when the third party contractor is expected to perform activities on behalf of another entity or the Federal Government. Preventive Maintenance Contracts. Third party contracts for preventive maintenance are eligible for FTA capital assistance. This circular applies to a recipient's preventive maintenance contracts fmanced with FTA assistance. If a recipient uses its FTA assistance to support specific preventive maintenance contracts that are separate and distinct from its other maintenance or operations contracts, and if, through its accounting procedures, a recipient can allocate and trace all its Federal assistance for capital preventive maintenance to those separate and distinct preventive maintenance contracts, this circular applies only to those specific FTA assisted contracts. If, however, the recipient applies its Federal capital assistance for preventive maintenance as a percentage of its total maintenance costs, and the recipient cannot allocate all of its Federal assistance for capital maintenance to specific preventive maintenance contracts that are separate and distinct from its other maintenance or operations contracts, this circular applies to all the recipient's preventive maintenance contracts, even if specific maintenance or operations contracts were financed wholly without FTA assistance. (3) Page II-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (4) Revenue Contracts. A revenue contract is a contract in which the recipient or subrecipient provides access to public transportation assets for the primary purpose of either producing revenues in connection with an activity related to public transportation, or creating business opportunities with the use of FTA assisted property. The recipient has broad latitude in determining the extent and type of competition appropriate for a particular revenue contract. Nevertheless, to ensure fair and equal access to FTA assisted property and to maximize revenue derived from such property, the recipient should conduct its revenue contracting as follows: (5) (a) Limited Contract Opportunities. If there are several potential competitors for a limited opportunity (such as advertising space on the side of a bus), then the recipient should use a competitive process to permit interested parties an equal chance to obtain that limited opportunity. (b) Open Contract Opportunities. If, however, one party seeks access to a public transportation asset (such as a utility that might seek cable access in a subway system), and the recipient is willing and able to provide contracts or licenses to other parties similarly situated (since there is room for a substantial number of such cables without interfering with transit operations), then competition would not be necessary because the opportunity to obtain contracts or licenses is open to all similar parties. In the case of joint development, as explained below, FTA will work with the recipient to determine appropriate procedures, as necessary. Joint Development. Many public transportation agencies form partnerships with the private sector in order to promote real estate development in and around transit facilities, which is often referred to as "joint development." Although FTA joint development projects are primarily a means to provide private capital to transit projects, joint development projects combine aspects of federally assisted construction and revenue contracting. FTA has published joint development guidance, including third party contracting guidance in a "Notice of Final Agency Guidance on the Eligibility of Joint Development Improvements under Federal Transit Law," 72 FR 5788, February 7, 2007. Section VI of the Joint Development guidance addresses FTA's third party contracting requirements. (a) Construction Contracts. This circular applies to FTA assisted construction aspects of a joint development project. (b) Revenue Contracts. FTA will work with the recipient on a case -by -case basis to craft approaches suitable for revenue contracts as defined in this circular. FTA's concern is that procedures used satisfy Federal statutory and regulatory FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page II -7 requirements for competition while preserving the benefits of joint development to the maximum possible extent. (c) Other Contracts. If a contract between a recipient and a third party involving a joint development project is not a construction contract or a revenue contract as defined in this circular, then that contract is not covered by FTA's third party contracting provisions. For example, third party contracts to manage, operate, or maintain intercity bus or intercity rail terminals, or tenancy agreements with third party intercity bus or intercity rail operators are the types of operations contracts not covered by FTA's third party contracting provisions. Nevertheless, even in situations not covered by the third party contracting provisions, FTA generally favors full and open competition. (6) Public- Private Partnerships. A Public - Private Partnership (PPP) is a formal contractual arrangement between a public recipient and one or more private partners establishing a mechanism for procuring property and services under which the private sector assumes some of the public sector's customary role in the planning, financing, design, construction, operation, and maintenance of a transportation facility compared to traditional procurement methods, many of which activities are generally controlled by the public sector partner. As part of FTA's interest in fostering PPPs, FTA is considering which procurement and other requirements may be modified to simplify project implementation, including procurement requirements that are redundant with private sector safeguards, incentives, and obligations. While a recipient that has not formed a PPP may use some of the contract delivery arrangements or project delivery systems listed below, FTA is considering the implications for PPPs that use the following types of contracting delivery arrangements or project delivery systems, including, but not limited to: (a) Design - Build, (b) Design -Build with a Warranty, (c) Construction Manager at Risk, (d) Design - Build- Operate - Maintain, (e) Design - Build- Finance- Operate, (f) Build- Operate - Transfer, (g) Build - Own - Operate, and (h) Full Delivery or Program Management. Page II -8 (7) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 For a description of these types of PPPs, see FTA "Notice of establishment of Public- Private Partnership Pilot Program; solicitation of applications," 72 FR 2583, esp. 2584, 2585 -2591, January 19, 2007. As a starting point, FTA expects the parties to the PPP to apply the requirements of this circular to FTA assisted projects they undertake. A PPP recipient seeking an exception from specific provisions of this circular should contact the FTA Project Manager. FTA will work with the recipient to craft processes as necessary to satisfy the statutory and regulatory requirements for competition when FTA assistance is used while preserving the benefits of the innovative contracting strategy proposed to the maximum possible extent. Transactions Involving Complex Financial Arrangements. If a public transportation project involves the services of an "arranger" or similar facilitator, and those services will be financed with Federal assistance or the proceeds from the use of property supported with FTA assistance, FTA expects the recipient to use competitive procedures to select the "arranger." If, however, a public transportation project involves the services of an "arranger" or similar facilitator whose services will not be financed with Federal assistance or the proceeds from the use of property acquired with FTA assistance, FTA encourages, but does not require, competition in the selection of that arranger. FTA also encourages the recipient to impose whatever conflict of interest provisions in its contract with the arranger the recipient may believe desirable. After the arranger is selected and then develops a transaction involving FTA assisted assets, FTA requires competition to the extent permissible in view of the limitations of securities regulations. (8) Force Account. FTA third party contracting guidance does not apply to a recipient's use of its own forces to perform project work. 3. FEDERAL LAWS AND REGULATIONS. Each recipient and subrecipient must comply with applicable Federal laws and regulations including, but not limited to, Federal transit laws at 49 U.S.C. Chapter 53, FTA regulations, and other Federal laws and regulations that contain requirements applicable to FTA recipients and their FTA assisted procurements. a. Common Grant Rules. The following government -wide regulations (frequently referred to as the "Common Grant Rules ") contain the most comprehensive Federal requirements applicable to FTA's assistance programs: (1) Governmental Recipients. DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 CFR Part 18, apply to governmental recipients (apart from institutions of higher education) and Indian tribes, and FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page II -9 (2) Non - Governmental Recipients. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations," 49 CFR Part 19, apply to private non - profit entities, institutions of higher education and, if FTA so determines, to private for - profit organizations. b. Federal Acquisition Regulation. The Federal Acquisition Regulation (FAR), 48 CFR Chapter 1, does not apply to federally assisted procurements, absent Federal laws or regulations to the contrary. In the case of FTA programs, FAR Part 31 cost principles apply to grants and cooperative agreements with private for - profit entities. Audits of A &E services listed in 49 U.S.C. Section 5325 must be carried out under FAR Part 31 cost principles. In other circumstances , in the absence of specific guidance for federally assisted projects, other FAR standards might prove useful if the recipient's circumstances are suitable for application of a specific FAR provision under consideration. One major exception concerns at this time concerns the "simplified acquisition threshold." In this matter, FTA is taking the position that the FAR clause 2.101 definition of "simplified acquisition threshold," which was increased from $100,000 to $150,000, does not apply to FTA's federally assisted programs absent specific guidance from the Office of Management and Budget (OMB) or DOT, which we have not received as of February 2011. Instead FTA is continuing to use the dollar standard of the underlying original statute, establishing the simplified acquisition threshold, 41 U.S.C. Section 403(11), referred to in the Common Grant Rule for governmental recipients. But when Federal regulations or guidance is issued, FTA will implement it appropriately. c. Other Federal Requirements. In addition to the Common Grant Rules, each FTA recipient must comply with applicable Federal transit laws and implementing regulations not addressed in the Common Grant Rules, and with other Federal cross cutting statutes and regulations that affect what a recipient may acquire. (1) Compilation in the Master Agreement. Citations to most Federal requirements are included in the latest edition of FTA's Master Agreement, typically issued at the beginning of each Federal fiscal year, which includes comprehensive information about Federal laws and regulations that may apply to an FTA assisted project. FTA strongly encourages participants in FTA assisted projects to review the Master Agreement when making its procurement decisions. See, Chapter I, subsection 6.f of this circular for additional information about the Master Agreement. (2) Conflicting Federal Requirements. Requirements of the various Federal agencies that may be involved in the project will sometimes differ, with the result that FTA expects the recipient to comply with all those differences. If compliance with all Page II -10 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 applicable Federal requirements is impossible, the recipient should notify the FTA Chief Counsel for resolution. d. Waivers. Requests for waivers of Federal requirements should be addressed to the Federal Transit Administrator 4. STATE AND LOCAL LAWS AND REGULATIONS. The Common Grant Rules provide that recipients and subrecipients will use their own procurement procedures that comply with applicable State and local laws and regulations, and also comply with applicable Federal laws and regulations. a. Inadequate State and Local Requirements. If State or local laws or regulations do not address a particular aspect of procurement adequately, Federal direct procurement principles may often (but not always) provide useful guidance. b. Conflicts between Federal Requirements and State or Local Requirements. If Federal requirements conflict with State or local requirements, the recipient should provide written notification promptly to either the FTA Regional Counsel for the region in which the project takes place or the FTA Assistant Chief Counsel for General Law in the case of projects administered by FTA headquarters staff. FTA will then work with the recipient to make appropriate arrangements to proceed with the project. If unsuccessful, then FTA reserves the right to amend or terminate Federal assistance for the underlying Project. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 III. CHAPTER III THE RECIPIENT'S RESPONSIBILITIES Page III -1 1. WRITTEN STANDARDS OF CONDUCT. The Common Grant Rules require each recipient to maintain written standards of conduct governing the performance of its employees that are engaged in or otherwise involved in the award or administration of third party contracts. a. Personal Conflicts of Interest. As provided in the Common Grant Rules and in the Federal Transit Administration (FTA) Master Agreement, no employee, officer, agent, or board member, or his or her immediate family member, partner, or organization that employs or is about to employ any of the foregoing individuals may participate in the selection, award, or administration of a contract supported with FTA assistance if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when any of those individuals previously listed has a financial or other interest in the firm selected for award. b. Gifts. The recipient's officers, employees, agents, or board members may neither solicit nor accept gifts, gratuities, favors, or anything of monetary value from contractors, potential contractors, or parties to subcontracts. The recipient may set minimum rules when the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. c. Violations. To the extent permitted by State or local law or regulations, such standards of conduct will provide for penalties, sanctions, or other disciplinary action for violation of such standards by the recipient's officers, employees, agents, board members, or by contractors, subcontractors, or subrecipients or their agents. 2. SELF - CERTIFICATION. FTA expects each recipient to self - certify that its procurement system complies with Federal requirements for any FTA assisted third party contract the recipient undertakes and administers. 3. THIRD PARTY CONTRACTING CAPACITY. As part of an FTA recipient's obligation to maintain adequate technical capacity to carry out its project and comply with the Common Grant Rules, the recipient's third party contracting capability must be adequate to undertake its procurements effectively and efficiently in compliance with applicable Federal, State, and local requirements. The Common Grant Rules require the recipient to maintain a contract administration system to ensure that it and its third party contractors comply with the terms, conditions, and specifications of their contracts or purchase orders and applicable Federal, State and local requirements. Many FTA recipients assign contracting duties to technical, financial or management personnel. If the recipient lacks qualified personnel within its organization to undertake the various procurement tasks, such Page III -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 as drafting specifications, evaluating contracts, or performing internal audits for the recipient, FTA expects the recipient to acquire the necessary services from sources outside the recipient's organization. When using outside sources, the recipient should take appropriate steps to prevent or mitigate organizational conflicts of interest that would result in conflicting roles that might bias a contractor's judgment or would result in unfair competitive advantage. a. Written Procurement Procedures. The Common Grant Rule for non - governmental recipients requires the recipient to have written procurement procedures, and by implication, the Common Grant Rule for governmental recipients requires written procurement procedures as a condition of self - certification. The recipient's procurement procedures are expected to address: (1) Solicitations. The following standards apply to solicitations: (a) Clear Descriptions. A clear and accurate description of the technical requirements for the material, product, or service to be procured is required (discussed further in Chapter VI of this circular). (b) Nonrestrictive Specifications. In competitive procurements, the description may not contain features that unduly restrict competition. Notably, FTA may not finance procurements that use exclusionary or discriminatory specifications (discussed further in Chapter VI of this circular). (c) Quality Requirements. A description may include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, describe minimum essential characteristics and standards to which the property or services must conform if it is to satisfy the recipient's intended use (discussed further in Chapter VI of this circular). (d) Preference for Performance Specifications. The Common Grant Rule for governmental recipients advises the recipient that "[d]etailed product specifications should be avoided if at all possible." The Common Grant Rule for non - governmental recipients advises the recipient to describe technical requirements in terms of "functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards" (discussed further in Chapter VI of this circular). (e) Brand Name or Equal. When it is impractical or uneconomical to write a clear and accurate description of the technical requirements of the property or services to be acquired, a "brand name or equal" description may be used to define the performance or other salient characteristics of the property or services sought. The specific features or salient characteristics of the named FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page III -3 brand which must be met by offerors of "an equal" proposal must be clearly stated (discussed further in Chapter VI of this circular). The Common Grant Rule for non - governmental recipients further requires (and governmental recipients should have) written procurement procedures that address: (2) Necessity. The recipient's need for the property or services (discussed further in Chapter VI of this circular). (3) Lease versus Purchase. The use of lease or purchase alternatives to achieve an economical and practical procurement (discussed further in Chapter IV of this circular). (4) Metric Usage. The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement (discussed further in Chapter IV of this circular). (5) Environmental and Energy Efficiency Preferences. A preference, to the extent practicable and economically feasible, for products and services that conserve natural resources, protect the environment, and are energy efficient (discussed further in Chapter IV of this circular). The recipient's procurement procedures should also address the following matters: (6) Procurement Methods. What procurement methods may be used (discussed further in Chapter VI of this circular). (7) (8) (9) Legal Restrictions. Any Federal, State, or local restrictions on the recipient's acquisitions (discussed further in Chapter IV of this circular). Third Party Contract Provisions. The specific third party contract provisions required for each third party contract including requirements that each third party contractor extend those provisions to its subcontractors to the extent required (discussed further in Chapter W of this circular). Sources. The availability and use of various sources of property and services (discussed further in Chapter V of this circular). (10) Resolution of Third Party Contracting Issues. Procedures to resolve third party contracting issues (discussed further in Chapter VII of this circular). b. Adequate Third Party Contract Provisions. The Common Grant Rules require that all third party contracts include provisions adequate to form a sound and complete agreement. Compliance with Federal laws and regulations will usually result in the Page III-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 addition of many other contract provisions to ensure compliance with those laws and regulations. See, Chapter IV of this circular for requirements applicable to third party contractors and the property and services those third party contractors agree to provide. c. Industry Contracts. The recipient should take special care when using an industry developed contract or contract that may be provided by a bidder or offeror. Not only may that contract lack the required Federal provisions, but its terms may also be unfavorable to the recipient. FTA does not intend to prohibit the use of industry forms, specifications, or contract terms when their use would benefit the recipient and would accommodate Federal requirements. Instead, FTA intends to remind the recipient to use industry developed forms, specifications, or contract terms cautiously. d. Record Keeping. The Common Grant Rules require the recipient to prepare and maintain adequate and readily accessible project performance and financial records, covering procurement transactions as well as other aspects of project implementation. The Common Grant Rules require the recipient to maintain these records for three years after the recipient and subrecipients, if any, have made final payment and all other pending matters are closed. The recipient must also prepare, maintain, and distribute the following documents as necessary: (1) Procurement History. The Common Grant Rules require the recipient to maintain and make available to FTA written records detailing the history of each procurement, as follows: (a) Procurement Method. A governmental recipient must (and a non - governmental recipient should) provide its rationale for the method of procurement it used for each contract, including a sole source justification for any acquisition that does not qualify as competitive, while a non - governmental recipient need only provide a justification for lack of competition when it does not obtain competitive bids or proposals for contracts exceeding the simplified acquisition threshold. See, Chapter II, Subsection 3.b for discussion of amount of simplified acquisition threshold; (b) Contract Type. A governmental recipient must (and a non - governmental recipient should) state the reasons for selecting the contract type it used (fixed price, cost reimbursement, and so forth); (c) Contractor Selection. A governmental recipient must state its reasons for contractor selection or rejection. FTA expects the recipient to include a justification for each noncompetitive award. For procurements exceeding the simplified acquisition threshold (formerly the small purchase threshold — see, Chapter II, Subsection 3.b.), a non - governmental recipient must state its reasons for contractor selection, but need not state its reasons for contractor FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page II1 -5 rejection. Each recipient should include a written responsibility determination for the successful contractor; and (d) Cost or Price. Each recipient must evaluate and state its justification for the contract cost or price. (e) Reasonable Documentation. The extent of documentation should be reasonable. Documents included in a procurement history should be commensurate with the size and complexity of the procurement itself. FTA recognizes that these written records will vary greatly for different procurements. For example, a receipt or bill accompanying a $100 credit card purchase might contain all of the required information to support that procurement. Procurements that are more substantial may require extensive documentation. (2) Access to Records. Apart from the more limited record access provisions of the Common Grant Rules, 49 U.S.C. Section 5325(g) provides FTA and DOT officials, the U.S. Comptroller General, or any of their representatives, access to and the right to examine and inspect all records, documents, and papers, including contracts, related to any FTA project financed with Federal assistance authorized by 49 U.S.C. Chapter 53. e. Special Notification Requirements for States. For many years, various Federal appropriations laws imposed notification requirements on all recipients of Federal assistance awards exceeding $500,000. Currently, notification requirements have been limited to States, but the $500,000 threshold has been removed. Therefore, each State must include provisions in all its requests for proposals, solicitations, Federal assistance applications, forms, notifications, press releases, or other publications involving FTA assistance, stating that FTA is or will be providing Federal assistance for the project, the amount of Federal assistance FTA has provided or expects to provide, and the Catalog of Federal Domestic Assistance (CFDA) Number of the program that authorizes the Federal assistance. FTA interprets the statute to require that subrecipients, lessees, or third party contractors of the State at any tier also comply with those notification requirements. Because appropriations laws expire annually and these provisions have not been enacted as permanent legislation or even appear consistently in the same appropriations acts, it is necessary to review the various Federal appropriations acts for the applicable fiscal year to determine the required level of notification. FTA's Master Agreement incorporates the notification requirements in effect when that Master Agreement is issued. f. Use of Technology/Electronic Commerce. Along with other technology the recipient may choose to employ, the recipient may use a well - structured Electronic Commerce system to conduct third party procurements. Page III-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (1) Sufficient System Capacity. The recipient's electronic system must have sufficient system capacity necessary to accommodate all Federal requirements, including applicable accessibility requirements, for full and open competition. (2) Written Procedures. The recipient must establish adequate written procedures before any solicitation takes place. Those procedures must be sufficient to ensure that all the information FTA requires for project administration is entered into the recipient's electronic system and can be made readily available to FTA as needed. Uses. The recipient may undertake third party procurements through: (a) Standard Bidding and Proposal Procedures. Standard procurement procedures may be implemented through an electronic medium or resource to the extent of the system's capacity. (3) (b) Electronic Bidding and Reverse Auctions. FTA recipients may use electronic bidding and reverse auctions. 1 Value. Procurements with a value of $100,000 or less may be conducted through electronic bidding or reverse auctions. If permitted under State or local law, procurements with a greater value may also be conducted through electronic bidding or reverse auctions. The recipient may acquire the services of a contractor to manage electronic bidding and conduct reverse auctions. 2 Procedures. Although neither FTA nor the Office of Federal Procurement Policy have established a formal definition of "reverse auction" or formal procedures for reverse auctions for Federal Government or Federal assistance purposes, the U.S. Comptroller General has approved the following procedures for reverse auctions of less than $100,000: a Notification. The buyer "will notify potential participants of an upcoming auction, specifying the time that the auction will start and close." b Bid or Quote Submission. Those who choose to participate will submit bids or quotations to the online auction Web site. c Information Displayed During the Auction. During the auction, the Web site will display the property to be inspected, the current lowest quotation, and the time remaining in the auction. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page III -7 d Information Not Displayed During the Auction. The Web site will not display the names of vendors, any other identifying information, or the time at which quotations were submitted. e Information Displayed at the End of the Auction. At the close of the auction, competing vendors will be able to view all submitted quotations, as well as the winning quotation, and a purchase order will be sent to the winning vendor. f Information Provided at the End of the Auction. The buyer will provide the name of the winning vendor and its quotation to unsuccessful vendors, but not the identity of the unsuccessful vendors. 4. AUDIT. A third party contract audit can be an important tool for managing procurements. In addition to special audits FTA may initiate, the recipient may find it desirable to perform an audit of one or more specific third party contracts as part of its own management process. The firm performing the recipient's federally required single annual audit may also recommend the audit of a specific third party contract. a. The Recipient's Auditors. In some cases, the recipient has sufficient qualified personnel to perform the third party contract audits it needs. In the alternative, the recipient may engage a qualified independent accountant or accounting firm to perform its audit responsibilities. b. Independent Auditors. The recipient's personnel will not be able to perform certain audits required by the Federal Government, such as audits required by the Single Audit Act of 1984, as amended, 31 U.S.C. Sections 7501 et seq. and OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations" as revised. If the Federal Government requires additional audits, it may also be necessary for the recipient to engage independent auditors not performing other work for the recipient. See also Chapter IV, subparagraph 2.b(19)(a) of this circular. c. Federal Audit Agencies. The Federal Government maintains a continuing Federal audit capability at certain contractor locations. On occasion, these auditors may be used to audit an FTA recipient's third party contracts. In other circumstances, an audit by a Federal agency may best serve the interests of the Federal Government and the recipient. This can be true of audits to determine a contractor's provisional overhead (burden) and General & Administrative (G &A) rates that need to be verified by audit for specific contract periods. Federal audit services, however, might not be available when needed; then the recipient will need to obtain the services of an independent private auditing firm that can perform the audit soon after an audit is requested. 5. FRAUD. As a reminder, 49 U.S.C. Section 5323(1) extends the criminal fraud provisions of 18 U.S.C. Section 1001 to all certificates, submissions, or statements made in connection Page II1 -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 with any program financed under the Federal transit program. In addition, the Program Fraud Civil Remedies Act of 1986, as amended, 31 U.S.C. Sections 3801 et seq., and DOT regulations, "Program Fraud Civil Remedies," 49 CFR Part 31, apply to any false or fraudulent statement or claim made under the Federal transit program. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 IV. CHAPTER IV THE RECIPIENT'S PROPERTY AND SERVICES NEEDS AND FEDERAL REQUIREMENTS AFFECTING THOSE NEEDS Page IV -1 1. DETERMINING THE RECIPIENT'S NEEDS. To support a third party contract with Federal assistance awarded by the Federal Transit Administration (FTA), the Common Grant Rules require the recipient to adopt adequate procedures for determining the type and amount of property and services it needs to acquire: a. Eligibility. The property and services to be acquired must be eligible under the Federal law authorizing the FTA assistance award and any regulations thereunder. For example, FTA prohibits the use of capital assistance for the recipient's operations expenses. If FTA assistance will be used to finance the cost of property or services, the property or services must be within the scope of the specific project from which that FTA assistance will be derived. b. Necessity. The Common Grant Rules require the recipient to establish procedures to avoid the purchase of unnecessary property and services (including duplicative items and quantities or options it does not intend to use or whose use is unlikely). In monitoring whether a recipient has complied with its procedures to determine what property or services are unnecessary, FTA bases its determinations on what would have been a recipient's reasonable expectations at the time the recipient entered into the contract. (1) Unnecessary Reserves. FTA expects the recipient to limit the acquisition of federally assisted property and services to the amount it needs to support its public transportation system. In particular, FTA seeks information about the recipient's fleet to ensure that the recipient does not acquire more vehicles than it needs for public transportation service in its service area. Further guidance on spare ratios is contained in the most recent versions of FTA Circular 5010.1 providing Grant Management guidance, FTA Circular 9030.1 providing Urbanized Area Formula Program guidance, and FTA Circular 9300.1 providing Capital Investment Program guidance. (2) Acquisition for Assignment Purposes. The recipient may contract only for its current and reasonably expected public transportation needs and may not add quantities or options to third party contracts solely to permit assignment to another party at a later date. These limits on assignments, however, do not preclude joint procurements that are entered into simultaneously by two or more parties to obtain advantages unavailable for small procurements. Page IV -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (a) General Prohibition. The recipient may contract only for its current and reasonably expected public transportation needs, and may not add quantities or options to third party contracts solely to permit assignment to another party at a later date. (b) Changes in the Recipient's Needs. FTA recognizes that the quantity of property or services a recipient reasonably believes it may need at the time of contract award may change. A recipient's later needs might decrease due to changed circumstances or honest mistakes. In those situations, the recipient may assign its unneeded contract authority to another entity that would like to acquire the property or services. (c) Exceptions. These limits on assignments, however, do not preclude: 1 Joint Procurements. Two or more recipients may enter into a single procurement at the same time to obtain advantages unavailable for smaller procurements, as discussed more fully in Chapter V, section 3 of this circular. 2 State or Local Government Purchasing Schedules or Purchasing Contracts. A State or local government may enter into contracts that support its purchasing schedules or purchasing contracts established as discussed more fully in Chapter V, section 4 of this circular. c. Procurement Size. The recipient should consider whether to consolidate or break out the procurement to obtain a more economical purchase. (1) Joint Procurements. It may be economically advantageous for a recipient to enter into a joint procurement with others that have similar needs. The recipient responsible for undertaking the joint procurement may, upon contract award, assign to the other participants responsibilities for administering those parts of the contract affecting their property or services. Participation in a joint procurement, however, does not relieve any participating recipient from the requirements and responsibilities it would have if it were procuring the property or services itself, and does not relinquish responsibility for the actions of other participants merely because the primary administrative responsibility for a particular action resides in an entity other than in itself. (2) Small Procurements. In other circumstances, breaking out procurements may provide greater opportunities for Disadvantaged Business Enterprises (DBEs), small and minority firms, and women's business enterprises to participate. As stated in paragraph 1.b(2) of this Chapter, the FTA expects the recipient to ensure that it contracts only for its current and reasonably expected needs. Absent efforts to foster greater opportunities for DBEs, small and minority firms, and women's FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -3 business enterprises, the recipient should not split a large procurement merely to gain the advantages of small purchase available for federally assisted procurements of $100,000 or less identified in 41 U.S.C. Section 403(11). d. Options. The recipient's contracts may include options to ensure the future availability of property or services, so long as the recipient is able to justify those options as needed for its public transportation or project purposes. An option is a unilateral right in a contract by which, for a specified time, a recipient may acquire additional equipment, supplies, or services than originally procured. An option may also extend the term of the contract. Chapter VI of this circular contains procedures for evaluating options. e. Lease versus Purchase. To obtain the best value, the recipient should review lease versus purchase alternatives for acquiring property and, if necessary, should obtain an analysis to determine the more economical alternative. The recipient may use FTA capital assistance to finance the costs of leasing eligible property if leasing is more cost effective than full ownership. Before the recipient may lease an asset, FTA regulations, "Capital Leases," 49 CFR Part 639, Subpart C, require the recipient to make a written comparison of the cost of leasing the asset compared with the cost of purchasing or constructing the asset. Costs used in the comparison must be reasonable, based on realistic current market conditions, and based on the expected useful service life of the asset. f. Specifications. Typically, the recipient is responsible for preparing specifications that describe its needs while assuring that those specifications are not exclusionary, discriminatory, unreasonably restrictive, or otherwise violate Federal laws or regulations. In general, specifications should clearly describe the property or services to be procured and state how the bids or proposals will be evaluated. For additional guidance, see section 2 of this Chapter, and Chapter VI, section 3 of this circular. 2. FEDERAL REQUIREMENTS THAT MAY AFFECT A RECIPIENT'S ACQUISITIONS. Before a recipient may use FTA assistance to support the acquisition of property or services, it must comply with all applicable Federal laws and regulations, whether or not addressed in the Common Grant Rules. Some of those laws and regulations will affect the third party contractor providing the property or services, or even determine which entities may qualify as a third party contractor. Other laws and regulations will affect the nature of the property or services to be acquired or the terms under which the property or services must be acquired. A recipient may not use FTA assistance to support acquisitions that do not comply with all applicable Federal requirements. FTA's Master Agreement contains a current, but not all- inclusive, description of statutory and regulatory requirements that may affect a recipient's procurement (such as Disadvantaged Business Enterprise (DBE) and Clean Air requirements). The Master Agreement states that applicable Federal requirements will apply to project participants to Page IV-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 the lowest tier necessary to ensure compliance with those requirements. A recipient will also need to include applicable Federal requirements in each subagreement, lease, third party contract, or other document as necessary. For specific guidance on cross - cutting requirements administered by other Federal agencies, FTA recommends that the recipient contact those agencies. The recipient may also use the checklists in Appendix C of this circular as a reminder of Federal requirements, and the matrices in Appendix D of this circular for a list of clauses and provisions required by Federal laws and regulations. The recipient may also refer to the Model Clauses in FTA's "Best Practices Procurement Manual" but cautions the recipient also to check the latest edition of FTA's Master Agreement to determine which provisions have been added, changed, or rescinded. Some of the more typical requirements and restrictions that will affect the use of FTA assistance to finance a recipient's third party contracts include: a. Contractor Qualifications. The following Federal laws and regulations may affect contractor selection: (1) "Responsibility" Requirements. In addition to the Common Grant Rules that require contract awards be made only to responsible contractors, Federal transit law at 49 U.S.C. Section 5325(j) limits third party contractor awards to those contractors capable of successfully performing under the terms and conditions of the proposed contract. Before selecting a contractor for award, the recipient must consider such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. Moreover, SAFETEA -LU now requires a recipient entering into a fixed guideway project contract to consider the contractor's past performance, including information reported in FTA's required Contractor Performance Assessment Reports, 49 U.S.C. Section 5325(j)(2)(C). (2) Debarment and Suspension. Debarment and suspension regulations and guidance include the following: (a) DOT Debarment and Suspension Regulations. Department of Transportation (DOT) regulations, "Nonprocurement Suspension and Debarment," 2 CFR Part 1200 apply to each third party contract at any tier of $25,000 or more, to each third party contract at any tier for a federally required audit (irrespective of the contract amount), and to each third party contract at any tier that must be approved by an FTA official irrespective of the contract amount. See, 2 CFR Part 1200. Thus, the recipient must apply DOT's debarment and suspension requirements to itself and each third party contractor at every tier to the extent required by DOT' s regulations that incorporate the requirements of Office of Management and Budget (OMB), FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (3) Page IV -5 "Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)," 2 CFR Part 180. (b) General Services Administration (GSA) Excluded Parties List System. Even though the recipient may collect a debarment and suspension certification from the prospective third party contractor, or include a clause in the third party contract requiring disclosure, FTA strongly recommends that the recipient check the Excluded Parties List System (EPLS) maintained by the GSA and available at the Web site it maintains: http: / /www.epls.gov/ before awarding a third party contract. (c) State Debarment and Suspension Lists. A recipient may also treat any prospective contractor or subcontractor listed on a centralized State government debarment and suspension list as nonresponsible and ineligible for contract award. Conflict of Interest. The Common Grant Rules require the recipient to be aware of conflict of interest issues a prospective contractor might have, including lack of impartiality, impaired objectivity, or unfair competitive advantage, as discussed more fully in Chapter VI, paragraph 2.a(4)(h). (4) Lobbying Certification and Disclosure. If the third party contract will exceed $100,000, the recipient must obtain a lobbying certification before awarding the contract, and if applicable, a lobbying disclosure from a prospective third party contractor. See, DOT regulations, "New Restrictions on Lobbying" 49 CFR Part 20, modified as necessary by 31 U.S.C. Section 1352, which implement the Byrd "Anti- Lobbying" Amendment, 31 U.S.C. Section 1352. Federal Civil Rights Laws and Regulations. Each FTA recipient has agreed that it and its third party contractors at each tier will comply with: (5) (a) Federal Equal Employment Opportunity (EEO) Requirements. These include, but are not limited to: 1 Nondiscrimination in Federal Public Transportation Programs. 49 U.S.C. Section 5332, covering projects, programs, and activities financed under 49 U.S.C. Chapter 53 prohibits discrimination on the basis of race, color, creed, national origin, sex, or age, and prohibits discrimination in employment or business opportunity. 2 Prohibition Against Employment Discrimination. Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e, and Executive Order No. 11246, "Equal Employment Opportunity," September 24, 1965, as amended by Executive Order No. 11375, October 13, 1967, that Page IV-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 prohibit discrimination in employment on the basis of race, color, religion, sex, or national origin. (b) Nondiscrimination on the Basis of Sex. Title IX of the Education Amendments of 1972, as amended, 20 U.S.C. Sections 1681 et seq. and implementing Federal regulations, "Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance," 49 CFR Part 25 prohibit discrimination on the basis of sex. (c) Nondiscrimination on the Basis of Age. The "Age Discrimination Act of 1974, as amended, 42 U.S.C. Sections 6101 et seq., and Department of Health and Human Services implementing regulations, "Nondiscrimination on the Basis of Age in Programs or Activities Receiving Federal Financial Assistance, 45 CFR Part 90, prohibit discrimination by participants in federally assisted programs against individuals on the basis of age. The Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sections 621 et seq., and Equal Employment Opportunity Commission (EEOC) implementing regulations, "Age Discrimination in Employment Act," 29 CFR Part 1625, also prohibit employment discrimination against individuals on the basis of age. (d) Federal Protections for Individuals with Disabilities. The Americans with Disabilities Act of 1990, as amended (ADA), 42 U.S.C. Sections 12101 et seq., prohibits discrimination against qualified individuals with disabilities in programs, activities, and services, and imposes specific requirements on public and private public and private entities. Third party contractors must comply with their responsibilities under Titles I, II, III, IV, and V of the ADA in employment, public services, public accommodations, telecommunications, and other provisions, many of which are subject to regulations issued by other Federal agencies. (6) Socio- Economic Development. Each FTA recipient must comply with applicable Federal laws and regulations that provide competitive opportunities for a contractor that qualifies as a disadvantaged business enterprise (DBE), minority owned firm, women's business enterprise, or small business. (a) Disadvantaged Business Enterprises (DBES). Section 451 of the "Hiring Incentives to Restore Employment Act" (HIRE Act), Pub. L. 111 -147, Title IV, § 451, March 18, 2010, 23 U.S.C. Section 101 note, extends the Federal statutory provisions of Section 1101(b) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, as amended (SAFETEA -LU), to require FTA to make available at least 10 percent of its funding under that Act for contracts with small business FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -7 concerns owned and controlled by socially and economically disadvantaged people. Each FTA recipient assists FTA in meeting this national goal. To receive FTA assistance, each FTA recipient must comply with applicable requirements of DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR Part 26. If the recipient is required to have a DBE program, the third party contracts that the recipient has included in its DBE program determine whether the recipient meets the DBE threshold for goal setting, and the goal if the threshold is met. (b) Small and Minority Firms and Women's Business Enterprises. The Common Grant Rules require each recipient and subrecipient to take steps to ensure that it uses small and minority firms and women's business enterprises (irrespective of whether they qualify as DBEs) to the fullest extent practicable. Notably, some potential contractors may have established their home office m a Historically Underutilized Business Zone (HUBZone). A HUBZone small business is determined, qualified, and certified by the Small Business Administration (SBA) and then added to the List of Qualified HUBZone Small Business Concerns at SBA's website at http: / /www.sba.gov /hubzone. Although the Common Grant Rule for governmental recipients includes labor surplus area firms in the category of firms authorized for special treatment, this circular does not include them because Section 7101(a) of the Federal Acquisition Streamlining Act of 1994, 15 U.S.C. Section 644 note, enacted after publication of the Common Grant Rule for governmental recipients removed nearly all labor surplus area preferences. 1 Notice. The Common Grant Rules require each recipient to make information about procurement opportunities available to potentially qualified firms. Each governmental recipient is directed to include these contractors on solicitation lists and request their participation when they are potential sources. 2 Contract Size. To foster greater participation of small and minority firms and women's business enterprises, the Common Grant Rule for governmental recipients directs the governmental recipient to divide its total contracting requirements into small tasks or quantities, when economically feasible. The Common Grant Rule for non - governmental recipients encourages the non - governmental recipient to contract with consortia when a contract is too large for one of these firms to handle individually. 3 Delivery Schedule. The Common Grant Rules require the recipient to specify delivery schedules that encourage their participation. Page IV -8 (7) (8) (9) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 4 Small Business Administration and the Department of Commerce Minority Business Development Agency. The Common Grant Rules instruct the recipient to use the services and assistance of the Small Business Administration and the Department of Commerce's Minority Business Development Agency. 5 Subcontracting Opportunities. The Common Grant Rule for governmental recipients directs each governmental recipient to require its prime third party contractors to include the preceding provisions in FTA assisted subcontracts. The Common Grant Rule for non - governmental recipients directs each non - governmental recipient to consider whether firms competing for larger contracts intend to subcontract with small businesses, minority -owned firms, and women's business enterprises. In addition, DOT's "Disadvantaged Business Enterprise: Program Improvements" amendments to its DBE regulations, effective February 28, 2011, now state that recipients may use race - neutral (and gender - neutral) small business set - asides for prime contracts under a stated amount, although set - asides restricted to DBEs continue to be prohibited except in limited and extreme circumstances. Sensitive Security Information. Each third party contractor must protect, and take measures to ensure that its subcontractors at each tier protect, "sensitive security information" made available during the administration of a third party contract or subcontract to ensure compliance with 49 U.S.C. Section 40119(b) and implementing DOT regulations, "Protection of Sensitive Security Information," 49 CFR Part 15, and with 49 U.S.C. Section 114(r) and implementing Department of Homeland Security regulations, "Protection of Sensitive Security Information," 49 CFR Part 1520. Seat Belt Use. In compliance with Federal Executive Order No. 13043, "Increasing Seat Belt Use in the United States," April 16, 1997, 23 U.S.C. Section 402 note, FTA encourages each third party contractor to adopt and promote on-the-job seat belt use policies and programs for its employees and other personnel that operate company owned, rented, or personally operated vehicles, and to include this provision in each third party subcontract involving the project. Texting While Driving and Distracted Driving. Consistent with Executive Order No. 13513, "Federal Leadership on Reducing Text Messaging While Driving," October 1, 2009, 23 U.S.C. Section 402 note, and DOT Order 3902.10, "Text Messaging While Driving," December 30, 2009, FTA encourages each third party contractor to promote policies and initiatives for its employees and other personnel that adopt and promote safety policies that to decrease crashes by distracted FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -9 drivers, including policies to ban text messaging while driving, and to include this provision in each third party subcontract involving the project. b. Administrative Restrictions on the Acquisition of Property and Services. The following Federal laws and regulations impose administrative requirements, many of which will affect specific third party procurements. (1) Legal Eligibility. The property or services acquired must be eligible for support under the restrictions accompanying the Federal statute authorizing the Federal assistance to be used. (2) Scope of the Project. The property or services acquired must be eligible for support within the scope of the underlying grant or cooperative agreement from which the Federal assistance to be used is derived. (3) Period of Performance. FTA expects the recipient to use sound business judgment and be judicious in establishing and extending a contract's period of performance. (a) General Standards. The period of performance generally should not exceed the time necessary to accomplish the purpose of the contract. The recipient should also consider competition, pricing, fairness, and public perception. The recipient's procurement files should document its rationale for determining the performance period designated for each contract. (b) Federal Restrictions. Except for procurements of rolling stock and replacement part contracts, which are limited by law to five (5) years as discussed in subsection 2.e of this Chapter, the recipient's other third party contracts (such as property, services, leases, construction, revenue, and so forth) are not encumbered by Federal requirements restricting the maximum periods of performance. Nevertheless, the duration of the recipient's other contracts must be reasonable. (c) Time Extensions. Consistent with the general tone of the circular, contract time extensions will be considered in light of whether they are permissible changes or impermissible cardinal changes. Once the recipient awards the third party contract, an extension of the contract term length that amounts to a cardinal change will require a sole source justification. (4) Federal Cost Principles. The Common Grant Rules require project costs to conform to applicable Federal cost principles for allowable costs. In general, costs must be necessary and reasonable, allocable to the project, authorized or not prohibited by Federal law or regulation, and must comply with Federal cost principles applicable to the recipient. Separate cost principles apply to the following four categories of recipients: Page IV -10 (5) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (a) Governmental Entities. OMB Guidance for Grants and Agreements, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 CFR Part 225, applies to project costs incurred by a recipient that is a State, local, or Indian tribal government. (b) Educational Institutions. OMB Guidance for Grants and Agreements, "Cost Principles for Educational Institutions (OMB Circular A -21)," 2 CFR Part 220, applies to project costs incurred by a recipient that is a public or private institution of higher education. (c) Non - Profit Entities. OMB Guidance for Grants and Agreements "Cost Principles for Non - Profit Organizations (OMB Circular A- 122)," 2 CFR Part 230, applies to project costs incurred by a recipient that is a private non - profit entity. (d) For - Profit Entities. FAR at 48 CFR Chapter 1, Subpart 31.2, "Contracts with Commercial Organizations," applies to project costs incurred by a recipient that is a for - profit entity. Payment Provisions. The recipient may use its own funds to finance its contracts. However, if the recipient intends to use FTA assistance, expects to be reimbursed with FTA assistance, or dedicates its local share funds to support contract costs it has financed, then it must structure its payment provisions carefully. (a) FTA Support for the Project. FTA must indicate its general interest in the project before a recipient may use FTA assistance to finance or reimburse project costs, or use local share funds for project costs. FTA expresses its general interest in the project when it has taken one of the following actions: 1 Award Made. FTA has awarded Federal assistance to the recipient through a grant or cooperative agreement for the underlying project, 2 Preaward Authority. FTA has provided preaward authority for the underlying project through a Federal Register notice, or 3 Letter of No Prejudice. FTA has issued a letter of no prejudice for the underlying project. (b) Advance Payments. Advance payments are payments made to a contractor before the contractor incurs contract costs. The recipient may use its local share funds for advance payments. However, if there is no automatic preaward authority for its project, then advance payments made with local share funds before FTA assistance has been awarded, or before a letter of no prejudice has been issued or other preaward authority has been provided, or FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -11 before FTA approval for the specific advance payment has been obtained, are ineligible for reimbursement. The following principles and restrictions apply: 1 Use of FTA Assistance Prohibited. The recipient may not use FTA assistance to make payments to a third party contractor before the contractor has incurred the costs for which the payments would be attributable. 2 Exceptions for Sound Business Reasons. Apart from advance payments that are customary, as discussed further, FTA does occasionally make exceptions to its advance payment prohibitions, if the recipient can provide sound business reasons for doing so and has obtained FTA's advance written concurrence. A recipient that seeks to use FTA assistance to support advance payments should contact the regional office administering its project to obtain FTA concurrence. a Adequate Security for Advance Payments. FTA recognizes that advance payments may be needed for certain costs supported by sound business judgment. Adequate security for the advance payment is an essential pre- condition to FTA's concurrence in the use of FTA or local share funds. b Customary Advance Payments. FTA recognizes that advance payments are typically required for, but are not limited to, public utility connections and services, rent, tuition, insurance premiums, subscriptions to publications, software licenses, construction mobilization costs, transportation, hotel reservations, and conference and convention registrations. Accordingly, the recipient may use FTA assistance to support or reimburse the costs of such acquisitions. FTA concurrence is required only when such advance payment or payments customarily required in the marketplace exceed $100,000. In summary, if there are sound business reasons justifying the advance payment and adequate security for the payment, FTA will generally concur in a written request for an exception. (c) Progress Payments. Progress payments are payments for contract work that has not been completed. The recipient may use FTA assistance to support progress payments provided the recipient obtains adequate security for those payments and has sufficient written documentation to substantiate the work for which payment is requested. 1 Adequate Security for Progress Payments. Adequate security for progress payments may include taking title or obtaining a letter of credit or taking Page IV-12 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 equivalent measures to protect the recipient's financial interest in the progress payment. Adequate security should reflect the practical realities of different procurement scenarios and factual circumstances. FTA acknowledges the practical reality that taking title to work in progress may not be desirable in some circumstances. The recipient should always consider the costs associated with providing security (for example, the recipient may need to acquire bonds or letters of credit in the commercial marketplace) and the impact of those costs on the contract price, as well as the consequences of incomplete performance. 2 Adequate Documentation. Sufficient documentation is required to demonstrate completion of the amount of work for which progress payments are made. 3 Percentage of Completion Method. The Common Grant Rules require that any progress payments for construction contracts be made on a percentage of completion method described therein. The recipient, however, may not make progress payments for other than construction contracts based on this percentage method. (6) Protections Against Performance Difficulties. The Common Grant Rule for governmental recipients authorizes FTA to require each governmental recipient to include contract provisions that would reduce potential problems that might occur during contract performance. In addition to other clauses that may be approved by the Office of Federal Procurement Policy, FTA expects the governmental recipient to include provisions as described below: (a) Changes. FTA expects a governmental recipient to include changes and changed conditions provisions or clauses in most contracts, except for routine supply contracts. (b) Remedies. The Common Grant Rule for governmental recipients authorizes FTA to require remedies. Accordingly, FTA expectations are as follows: 1 Liquidated Damages. FTA has determined that a recipient may use liquidated damages if the recipient reasonably expects to suffer damages through delayed contract completion, or if weight requirements are exceeded, and the extent or amount of such damages are uncertain and would be difficult or impossible to determine. The rate and measurement standards must be calculated to reasonably reflect the recipient's costs should the standards not be met, and must be specified in the solicitation and contract. The assessment for damages is often established at a specific rate per day for each day beyond the contract's delivery date or performance period. A measurement other than a day or another period of FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -13 time, however, may be established if that measurement is appropriate, such as weight requirements in a rolling stock purchase. The procurement file should include a record of the calculation and rationale for the amount of damages established. Any liquidated damages recovered must be credited to the project account involved unless FTA permits otherwise. We also refer you to Chapter V, paragraph 5(a)(1) for a discussion of how liquidated damages can be used to encourage settlements. 2 Violation or Breach. Third party contracts exceeding $100,000 must include administrative, contractual, or legal remedies for violations or breach of the contract by the third party contractor. 3 Suspension of Work. FTA may require provisions pertaining to suspension of work. 4 Termination. Termination for cause and termination for convenience provisions must be included in contracts exceeding $10,000. The Common Grant Rule for non - governmental recipients requires administrative, contractual, or legal contract remedies in instances in which a contractor violates or breaches terms of a contract that exceeds the small purchase threshold, which FTA recognizes as the simplified acquisition threshold. See, Chapter II, Subsection 3.b. The Common Grant Rule for non - governmental recipients also requires termination clauses for non - governmental recipients when procurements exceed thesmall purchase threshold, which FTA recognizes as the simplified acquisition threshold. See, Chapter II, Subsection 3.b. FTA strongly encourages care in developing appropriate performance remedies in all third party contracts. c. Socio- Economic Requirements for the Acquisition of Property and Services. The following Federal laws and regulations imposing socio - economic requirements may affect a specific procurement: (1) Labor. The following Federal labor protection laws and regulations may affect the types of property and services that may be acquired with FTA assistance: (a) Wage and Hour Requirements. The Common Grant Rules direct the recipient to include provisions in its third party contracts requiring the contractor to compute the wages of every mechanic and laborer based on a standard workweek of 40 hours. Work in excess of the standard workweek is permitted if the worker is compensated at a rate of not less than one and one -half times the basic rate of pay for all hours worked in excess of 40 hours in the workweek. The Common Grant Rules require these provisions for compliance with Sections 102 of the Contract Work Hours and Safety Standards Act, 40 U.S.C. Section 3702, and Department of Labor (DOL) Page IV -14 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 regulations, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 CFR Part 5. Section 4104(c) of the Federal Acquisition Streamlining Act of 1994, 40 U.S.C. Section 3701(b)(3)(A)(iii), increased the wage and hour thresholds of $2,000 for construction work and $2,500 for nonconstruction work set forth in the Common Grant Rules to $100,000. A federally assisted contract must exceed $100,000 before these wage and hour requirements apply to that contract. (b) Fair Labor Standards. The Fair Labor Standards Act, 29 U.S.C. Sections 201 et seq., applies to employees performing work involving commerce. (2) Civil Rights. The following Federal civil rights laws and regulations may affect the types of property and services that may be acquired with FTA assistance: (a) Nondiscrimination in Federal Public Transportation Programs. Federal transit law at 49 U.S.C. Section 5332, covering projects, programs, and activities financed under 49 U.S.C. Chapter 53 prohibits discrimination on the basis of race, color, creed, national origin, sex, or age, and prohibits discrimination in employment or business opportunity. (b) Title VI of the Civil Rights Act. In determining the types of property or services to acquire, no person in the United States shall, on the grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity receiving Federal financial assistance in violation of Title VI of the Civil Rights Act of 1964, as amended, 42 U.S.C. Sections 2000d et seq. and DOT regulations, "Nondiscrimination in Federally Assisted Programs of the Department of Transportation — Effectuation of Title VI of the Civil Rights Act of 1964," 49 CFR Part 21. In addition, FTA Circular 4702.1, "Title VI and Title VI- Dependent Guidelines for FTA Recipients," 05- 13 -07, provides FTA guidance and instructions for implementing DOT's Title VI0020 regulations. (c) Environmental Justice. Executive Order No. 12898, "Federal Actions to Address Environmental Justice in Minority Populations and Low - Income Populations," February 11, 1994, 42 U.S.C. Section 4321 note, and DOT Order 5610.2, "Department of Transportation (DOT) Order To Address Environmental Justice in Minority Populations and Low - Income Populations," 62 FR 18377, April 15, 1997, protect minority populations and low- income populations against disproportionately high and adverse effects of federally assisted programs. FTA Circular 4702.1, "Title VI and Title VI- Dependent FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -15 Guidelines for FTA Recipients," 05- 13 -07, also provides FTA guidance and instructions for implementing the DOT Order on Environmental Justice. (d) Limited English Proficiency (LEP). Executive Order No. 13166, "Improving Access to Services for Persons with Limited English Proficiency," August 11, 2000, 42 U.S.C. Section 2000d -1 note, and DOT, "Policy Guidance Concerning Recipients' Responsibilities to Limited English Proficient (LEP) Persons," December 14, 2005, clarifies the responsibilities of recipients of Federal financial assistance from DOT and assists them in fulfilling their responsibilities to LEP persons, pursuant to Title VI of the Civil Rights Act of 1964 and implementing regulations. FTA Circular 4702.1, "Title VI and Title VI- Dependent Guidelines for FTA Recipients," 05- 13 -07, also provides FTA guidance and instructions for implementing the DOT Policy Guidance. (e) Nondiscrimination on the Basis of Disability. The recipient agrees to comply, and assures the compliance of each third party contractor and each subrecipient at any tier of the project, with the applicable laws and regulations, discussed below, for nondiscrimination on the basis of disability. 1 Section 504 of the Rehabilitation Act of 1973, as amended (Section 504), 29 U.S.C. Section 794, prohibits discrimination on the basis of disability by recipients of Federal financial assistance. 2 The Americans with Disabilities Act of 1990, as amended (ADA), 42 U.S.C. Sections 12101 et seq., prohibits discrimination against qualified individuals with disabilities in all programs, activities, and services of public entities, as well as imposes specific requirements on public and private providers of transportation. 3 DOT Public Transportation Regulations implementing Section 504 and the ADA. These regulations include DOT regulations, "Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance," 49 CFR Part 27, DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 CFR Part 37, and Joint Architectural and Transportation Barriers Compliance Board (ATBCB)/DOT regulations, "Americans With Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 CFR Part 1192 and 49 CFR Part 38. Examples of requirements include, but are not limited to, the following: a Design and Construction. Accessibility requirements for the design and construction of new transportation facilities; Page IV -16 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 b Accessibility and Usability. Requirements that vehicles acquired (with limited exceptions) be accessible to and usable by individuals with disabilities, including individuals using wheelchairs; c Complementary Paratransit Service. Requirements that public entities providing fixed -route service, (including a private non - profit entity providing public transportation service on behalf of the State or designated recipient as a subrecipient providing fixed -route service), provide complementary paratransit service to individuals with disabilities who cannot use the fixed -route service; d Equal Opportunity. Requirements for compliance with service requirements intended to ensure that individuals with disabilities are afforded equal opportunity to use transportation systems and services. (f) Electronic Reports and Information. Reports and other information prepared in electronic format developed in connection with a third party contract that the recipient intends to provide to FTA, among others, whether as a contract end item or in compliance with contract administration provisions, must comply with the accessibility standards of Section 508 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 794d, and ATBCB regulations, "Electronic and Information Technology Accessibility Standards," 36 CFR Part 1194. (3) Environmental Protections. Federal laws and regulations require the recipient to comply with applicable environmental requirements and implement them as necessary through third party contracts. (a) Environmental Mitigation. FTA expects the recipient to include adequate third party contract provisions to facilitate compliance with environmental mitigation measures it has agreed to implement. (b) National Environmental Policy Act. Certain acquisitions and the timing of certain acquisitions can adversely affect the environmental review process for a project constituting a major Federal action, and may result in a violation of the National Environmental Policy Act (NEPA), 42 U.S.C. Sections 4321 through 4335, and joint FHWA/FTA regulations, "Environmental Impact and Related Procedures," 23 C.F.R. Part 771 and 49 C.F.R. Part 622. 1 Property. The recipient may not enter into binding arrangements for the acquisition of property that may or would affect environmental impact determinations with respect to the underlying project or otherwise interfere with any required environmental impact reviews until applicable environmental impact determinations have been made. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -17 2 Services. Council on Environmental Quality regulations, "Other Requirements of NEPA," 40 CFR Part 1506, at Section 1506.5(c), require the recipient to obtain a disclosure statement from the contractor selected to prepare an environmental impact statement specifying that the contractor has no financial or other interest in the outcome of the project. (c) Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites. DOT' s enabling legislation has special requirements designed to protect publicly owned parks, recreation areas, wildlife and waterfowl refuges, and historic sites, at 49 U.S.C. Sections 303(b) and 303(c) (often referred to as "Section 4(f) "), that may affect the timing and methods of recipient procurements. The Federal Highway Administration (FHWA) and FTA have published implementing regulations, "Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites," 23 CFR Parts 771 and 774, and 49 CFR Part 622. (d) Clean Air. The Common Grant Rules specifically prohibit the use of facilities included in the Environmental Protection Agency (EPA) "List of Violating Facilities," in the performance of any third party contract at any tier exceeding $100,000. The contractor must also comply with all applicable standards, orders, or regulations issued under Section 306 of the Clean Air Act, as amended, 42 U.S.C. Section 7414, and other applicable provisions of the Clean Air Act, as amended, 42 U.S.C. Sections 7401 through 7671q. (e) Clean Water. The Common Grant Rules specifically prohibit the use of facilities included in the EPA "List of Violating Facilities," in the performance of any third party contract at any tier exceeding $100,000. The contractor must also comply with all applicable standards, orders, or regulations issued under Section 508 of the Clean Water Act, as amended, 33 U.S.C. Section 1368, and other applicable requirements of the Clean Water Act, as amended, 33 U.S.C. Sections 1251 through 1377. (0 Recycled Products. The Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6962, requires governmental recipients to provide a competitive preference to products and services that conserve natural resources, protect the environment, and are energy efficient. EPA guidelines, "Comprehensive Procurement Guideline for Products Containing Recovered Materials," 40 CFR Part 247, direct that third party contracts of $10,000 or more with governmental recipients specify a competitive preference for products containing recycled materials identified in those EPA guidelines. For information about EPA's recovered materials advisory notices, see EPA's Web site: http: / /www.epa.gov /cpg/backgrnd.htm. Page IV -18 (g) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Other Federal Environmental Protection Requirements. Additional third party contract provisions may be needed for compliance with other Federal laws and regulations. FTA's Master Agreement includes environmental laws and regulations that may affect the acquisition of property or services with FTA assistance such as various provisions to protect wild and scenic rivers, manage coastal zones, protect wetlands, conserve endangered species, and protect fisheries, archeological sites, and Indian sacred sites. (4) Energy Conservation. The Common Grant Rules require third party contract provisions as necessary for compliance with applicable energy efficiency standards and policies of State energy conservation plans issued under the Energy Policy and Conservation Act, as amended, 42 U.S.C. Sections 6321 et seq. (5) Preference for U.S. Property —Buy America. FTA's "Buy America" law and regulations apply to projects that involve the purchase of more than $100,000 of iron, steel, manufactured goods, or rolling stock to be delivered to the recipient to be used in the FTA assisted project. If FTA funds are used for the project, Buy America requirements apply to all procurement contracts under the project irrespective of whether a recipient decides to fund a discrete part of the project without FTA funds. Only if an activity is outside the FTA project and is financed entirely without funds to which FTA's Buy America regulations would apply may the recipient disregard FTA's Buy America requirements. Property that the contractor acquires to fabricate a deliverable for the recipient, such as tools, machinery, and other equipment or facilities, is not subject to FTA's Buy America requirements unless the recipient intends to take possession of that property upon completion of the project. Thus, if a third party contractor is acquiring property for its general inventory of equipment or facilities to conduct its overall business affairs, the recipient may enter the cost of that acquisition into its calculations of overhead amounts applicable to the FTA assisted project irrespective of whether the property acquired would comply with FTA's Buy America regulations. FTA's Buy America statute does not pre -empt State laws with stricter requirements on the use of foreign articles, materials, and supplies. FTA cautions that its Buy America regulations that apply to FTA assisted third party procurements, published at 49 CFR Part 661, differ from Federal "Buy American Act" regulations that apply to direct Federal procurements, published in the FAR at 48 CFR Chapter 1, Subparts 25.1 and 25.2. FTA strongly recommends that the recipient review FTA's Buy America regulations before undertaking any FTA assisted procurement. (6) Shipments of Property —U.S. Flag Requirements. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (7) Page IV -19 (a) Shipments by Ocean Vessel. The Common Grant Rules require third party contract provisions to ensure compliance with 46 U.S.C. Section 55303 and Maritime Administration regulations, "Cargo Preference -U.S. Flag Vessels," 46 CFR Part 381, implementing the codified Cargo Preference Act. With few exceptions, the regulations require that U.S. Flag vessels be used to transport at least 50 percent of any federally assisted property. (b) Shipments by Air Carrier. Third party contracts involving shipments of federally assisted property by air carrier will require provisions to ensure compliance with Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974, as amended ( "Fly America" Act), 49 U.S.C. Section 40118, and GSA regulations, "Use of United States Flag Air Carriers," 41 CFR Sections 301 - 10.131 through 301 - 10.143. The regulations require shipment by U.S. flag air carriers unless such carriers are not reasonably available within the standards of GSA's implementing regulations. Project Travel —Use of U.S. Flag Air Carriers. Third party contracts to acquire transportation by air carrier needed by people participating in a federally assisted project require provisions to ensure compliance with Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974, as amended ( "Fly America" Act), 49 U.S.C. Section 40118, and GSA regulations, "Use of United States Flag Air Carriers," 41 CFR Sections 301- 10.131 through 301 - 10.143. The regulations require transportation by U.S. flag air carriers unless U.S. flag air carriers are not reasonably available within the standards of the GSA's implementing regulations. d. Technical Restrictions on the Acquisition of Property and Services. The following Federal laws and regulations imposing technical requirements may affect a specific procurement: (1) Intelligent Transportation Systems. Intelligent transportation system (ITS) property and services must comply with the National ITS Architecture and Standards to the extent required by Section 5307(c) of SAFETEA -LU, FTA Notice, "FTA National ITS Architecture Policy on Transit Projects," 66 FR 1455 et seq., January 8, 2001, and later published policies or implementing directives FTA may issue. Consequently, third party contracts involving ITS are likely to require provisions to ensure compliance with Federal requirements. (2) Metric Measurements. The Common Grant Rules require the recipient to accept property and services with dimensions expressed in metric measurements, to the extent practicable and feasible, in compliance with the Metric Conversion Act, as amended by the Omnibus Trade and Competitiveness Act, 15 U.S.C. Page IV -20 (3) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Sections 205a et seq.; Executive Order No. 12770, "Metric Usage in Federal Government Programs," July 25, 1991, 15 U.S.C. Section 205a note; and applicable Federal regulations. Use of $1 Coins. To comply with Section 104 of the Presidential $1 Coin Act of 2005, 31 U.S.C. Section 5312(p), FTA assisted property that requires the use of coins or currency in public transportation service or supporting service must be fully capable of accepting and dispensing $1 coins. e. Rolling Stock — Special Requirements. The following Federal laws and regulations impose requirements that may affect rolling stock procurements: (1) Accessibility. Rolling stock must comply with the accessibility requirements of DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 CFR Part 37, and Joint ATBCB /DOT regulations, "Americans with Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 CFR Part 1192 and 49 CFR Part 38. (2) Transit Vehicle Manufacturer Compliance with DBE Requirements. Before a transit vehicle manufacturer (TVM) may submit a bid or proposal to provide vehicles to be financed with FTA assistance, 49 CFR Section 26.49 requires the TVM to submit a certification that it has complied with FTA's DBE requirements. Minimum Service Life. FTA requires each recipient to maintain satisfactory continuing control of FTA assisted property. For buses and certain other vehicles, FTA has established minimum service life policies that may affect the quantity of vehicles that the recipient may acquire. See, the most recent versions of FTA Circular 5010.1, "Grant Management Requirements," FTA Circular 9030.1, "Urbanized Area Formula Program: Grant Application Instructions," and FTA Circular 9300.1, "Capital Program: Grant Application Instructions," that addresses minimum service life for vehicles. (3) (4) Spare Ratios. While all FTA assistance for third party procurements must be limited to property and services the recipient will use in the near future, FTA is concerned that the recipient does not acquire an excessive number of spare vehicles not regularly used in public transportation service. (5) Air Pollution and Fuel Economy. Each third party contract to acquire rolling stock must include provisions to ensure compliance with applicable Federal air pollution control and fuel economy regulations, such as EPA regulations, "Control of Air Pollution from Mobile Sources," 40 CFR Part 85; EPA regulations, "Control of Air Pollution from New and In -Use Motor Vehicles and New and In -Use Motor Vehicle Engines," 40 CFR Part 86; and EPA regulations, "Fuel Economy of Motor Vehicles," 40 CFR Part 600. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -21 (6) Preaward Review and Post Delivery Review. Each third party contract to acquire rolling stock must include provisions for compliance with applicable requirements of 49 U.S.C. Section 5323(m) and those provisions of FTA regulations, "Pre - Award and Post - Delivery Audits of Rolling Stock Purchases," 49 CFR Part 663, that do not conflict with 49 U.S.C. Section 5323(m). (7) (8) (9) Bus Testing. Each third party contract to acquire a new bus model or a bus with significant alterations to an existing model must include provisions to assure compliance with applicable requirements of FTA regulations, "Bus Testing," 49 CFR Part 665. In -State Dealers. The recipient may not limit its third party bus procurements to its in -State dealers, 49 U.S.C. Section 5325(i). Although FTA respects State licensing requirements, FTA is prohibited by law from providing FTA assistance to support bus procurements that have the result of limiting competition to entities that have been able to obtain a State license. Basis for Contract Award. As permitted by 49 U.S.C. Section 5325(0, the recipient may award a third party contract for rolling stock based on initial capital costs, or based on performance, standardization, life cycle costs, and other factors, or by selection through a competitive procurement process. (10) Five -Year Limitation. A recipient may enter into a multi -year contract to buy rolling stock, with an option not exceeding five (5) years to buy additional rolling stock or replacement parts, 49 U.S.C. Section 5325(e)(1). The recipient may not exercise that option later than five (5) years after the date of its original contract. FTA interprets this five -year period as covering the recipient's "material requirements" for rolling stock and replacement needs from the first day when the contract becomes effective to its "material requirements" at the end of the fifth year. In the case of rolling stock, which frequently cannot be delivered expeditiously, FTA recognizes that a recipient's "material requirements" for rolling stock will necessarily precede its actual need to put that rolling stock to use in public transportation service. This means that the contract may not have options for more rolling stock and replacement parts than a recipient's material requirements for a five -year period. The five -year rule does not mean the recipient must obtain delivery, acceptance, or even fabrication in five years. Instead it means only that FTA limits a contract to purchasing no more than the recipient's material requirements for rolling stock or replacement parts for five years based on the effective date of the contract. f. Public Transportation Services— Special Requirements. Although the Common Grant Rules refer to the following Federal requirements in the context of federally assisted procurements, these requirements will affect how a third party contractor implements Page IV-22 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 its contract to provide public transportation services financed with Federal assistance. Consequently, the recipient must include provisions in its third party contract ensuring compliance with the following requirements, or the recipient must obtain the third party contractor's agreement in another form, as a matter of contractor responsibility, to ensure compliance with the following: (1) Protections for Public Transportation Employees. When the recipient acquires public transportation services from a third party contractor, the terms of the recipient's DOL certification of public transportation employee protective arrangements will apply to work under the contract provided by those employees covered by the certification. That certification is required by 49 U.S.C. Section 5333(b) (often referred to as "13(c) ") and implementing DOL guidelines, "Section 5333(b), Federal Transit Law," 29 CFR Part 215. Consequently, the third party contractor must comply with the terms of that DOL certification. The Fair Labor Standards Act, 29 U.S.C. Sections 201 et seq., also applies to public transportation employees performing work involving commerce. (2) Drug Use and Testing and Alcohol Misuse and Testing. A third party contractor providing services involving the performance of safety sensitive activities must comply with 49 U.S.C. Section 5331 and FTA regulations, "Prevention of Alcohol Misuse and Prohibited Drug Use in Transit Operations," 49 CFR Part 655. (3) Accessibility. A third party contractor providing public transportation services must operate its services in compliance with 42 U.S.C. Sections 12101 et seq.; DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)" using facilities and equipment that comply with 49 CFR Part 37; and Joint ATBCB /DOT regulations, "Americans with Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 CFR Part 1192 and 49 CFR Part 38. Private entities must comply with the requirements of 49 CFR Part 37 applicable to public entities with which they contract to provide public transportation services. The recipient should advise its third party contractors operating public transportation services to review the requirements for public entities in this context. (4) Protection of Animals. A third party contractor providing services involving the use of animals must comply with the Animal Welfare Act, 7 U.S.C. Sections 2131 et seq. and Department of Agriculture regulations, "Animal Welfare," 9 CFR Subchapter A, Parts 1, 2, 3, and 4. (5) Charter Service Restrictions. A third party contractor performing services using FTA assisted facilities or equipment may not use those facilities or that equipment to support any charter service operations except as permitted by 49 U.S.C. Section 5323(d) and FTA regulations, "Charter Service," 49 CFR Part 604. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 g. Page IV -23 (6) School Bus Restrictions. A third party contractor performing services using FTA assisted facilities or equipment may not use those facilities or that equipment to support exclusive school bus operations except as permitted by 49 U.S.C. Sections 5323(0 or (g) and FTA regulations, "School Bus Operations," 49 CFR Part 605, to the extent consistent with 49 U.S.C. Sections 5323(0 or (g). Art. FTA recommends the following principles be used in procuring art works or the services of artists: (1) Choosing Art Works and Services of Artists. The appropriate selection process should vary among projects, depending upon the nature and scope of the project, characteristics of the site, resources of the community, and State and local laws and regulations. The recipient's procedures should consist of the following: (a) Process. A justifiable process demonstrating appropriate use of public funds that gives serious consideration to a variety of artists available and capable of working on the project. (b) Nondiscrimination. Artists, regardless of race, color, creed, national origin, sex, or age, are eligible for consideration. (c) Community Participation. The community surrounding the future facility participates in the selection process. This could include all levels of participation, including supplying information, attending panel meetings, and being voting members of the panel. The extent and type of participation should be determined by the commissioning entity and be appropriate to both the project and the community. (d) Selection. Selection of art works or artists, or both, recommended to the recipient is determined by a panel of art and design professionals that may include, but need not be limited to, art administrators, artists, curators, and architects, and may include members of the community. (2) Criteria for Art in Federally Assisted Transit Projects. When artists are involved in the planning and design of transit projects and/or when individual works of art are commissioned, the following should be considered: (a) Quality. Quality of the art or design, (b) Effect. Impact on the public, (c) Relationship. Connection to the site or the adjacent community, or both; art that relates, in form or substance, to the cultures, people, natural or built surroundings, or history of the area in which the project is located, Page IV -24 (3) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (d) Suitability. Appropriateness for the site, including safety and scale, (e) Resilience. Durability of materials and fabrication, (f) Indestructibility. Resistance to vandalism, and (g) Preservation. Minimum maintenance. Compensation of Artists. Artists may be paid a fixed fee or an hourly wage with a cap, similar to other FTA standard fees or wages for procurement of design professional services, in addition to other federally approved costs that may be recognized under the contract. (4) Prohibition. Artistic undertakings that promote specific private or corporate business interests are ineligible for FTA funding. h. Architectural Engineering (A &E) and Related Services— Special Requirements. Federal laws and regulations impose the following requirements on A &E and related procurements: (1) Qualifications -Based Requirements. For projects related to or leading to construction, an FTA recipient must use the qualifications -based procurement procedures of 40 U.S.C. Chapter 11 ( "Brooks Act" procedures) when contracting for A &E services and other services described in 49 U.S.C. Section 5325(b), which include program management, construction management, feasibility studies, preliminary engineering, design, architectural, engineering, surveying, mapping, or related services. (2) Relation to Construction. The nature of the services to be performed and its relationship to construction, not the nature of the prospective contractor, determines whether qualifications -based procurement procedures may be used. (a) Purpose of Services. FTA has long administered the requirement for using qualifications -based procurement procedures for selection of contractors that perform A &E services, generally associated with the construction, alteration, or repair of real property. FTA interprets 49 U.S.C. Section 5325(b) to authorize the use of qualifications -based procurement procedures only for those services that directly support or are directly connected or related to construction, alteration, or repair of real property. FTA's interpretation of 49 U.S.C. Section 5325(b) is consistent with typical Federal policies implementing the "Brooks Act," 40 U.S.C. Section 1102, which limits qualifications -based procurement procedures to research, planning, development, design, construction, alteration, or repair of real property. Thus if services, such as program management, feasibility studies, or mapping, are FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (3) Page IV -25 not directly in support of, directly connected to, or directly related to, or lead to construction, alteration, or repair of real property, then the recipient may not use qualifications -based procurement procedures to select the contractor that will perform those services. (b) Requirements in the Context of a Construction Project. A project involving construction (including an ITS project) does not always require the use of qualifications -based procurement procedures. Whether qualifications -based procurement procedures may be used depends on the actual services to be performed in connection with the construction project. For example: 1 End Products Used in Construction. The design or fabrication of message signs, signals, and movable barriers that will become off -the -shelf items or will be fabricated and delivered as final end products for installation in an FTA assisted construction project, including an (ITS) construction project, are not services for which qualifications -based procurement procedures may be used. 2 Services Related to Design of Construction Projects. In contrast, services of a program manager, project designer, construction manager, or engineer in which the contractor would select the fmished products to be acquired for an FTA assisted construction project are services for which qualifications -based procurement procedures must be used. 3 Actual Construction. The actual construction or improvement to the real property to be used in an FTA assisted construction project, however, are not services for which qualifications -based procurement procedures may be used. (c) Type of Contractor Not Determinative. The nature of the firm performing the services does not determine whether it will be selected through the use of qualifications -based procurement procedures. For example, if a well -known A &E firm offers to provide mapping services not related to construction, alteration, or repair of real property, the recipient may not use qualifications - based procurement procedures to evaluate that contractor's offer. In contrast, if a firm that does not generally provide A &E services offers to provide mapping services that are directly in support of, directly connected to, or directly related to or lead to construction, alteration, or repair of real property, the recipient must evaluate that offer using qualifications -based procurement procedures. Equivalent State Law. SAFETEA -LU also divided the former 49 U.S.C. Section 5325(b) by separating procurement requirements for FTA assisted A &E services from audit requirements for FTA assisted A &E services. As amended by Page IV -26 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 the SAFETEA -LU Technical Corrections Act, 49 U.S.C. Section 5325(b)(1) requires A &E services to be procured using either "Brooks Act" procedures or an equivalent qualifications -based requirement adopted by a State before August 10, 2005. (4) Special Requirements for Indirect Cost Rates. In addition, SAFETEA -LU amended 49 U.S.C. Section 5325 to require the acceptance of FAR indirect cost rates for applicable one -year accounting periods if those rates are not currently in dispute. After the indirect cost rates are accepted as required, the recipient must use those indirect cost rates for contract estimates, negotiation, administration, reporting, and payments, with administrative or de facto ceiling limitations. See, 49 U.S.C. Section 5325(b)(2) and subparagraph 2.j(2)(c) of this Chapter. i. Construction— Special Requirements. The following Federal laws and regulations impose requirements that may affect FTA assisted construction projects: (1) Bonding. The Common Grant Rules require bonds for all construction contracts exceeding the simplified acquisition threshold (see, Chapter II, Subsection 3.b)unless FTA determines that other arrangements adequately protect the Federal interest. FTA's bonding policies are as follows: (a) Bid Guarantee. Both FTA and the Common Grant Rules generally require each bidder to provide a bid guarantee equivalent to 5 percent of its bid price. The "bid guarantee" must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid to ensure that the bidder will honor its bid upon acceptance. (b) Performance Bond. Both FTA and the Common Grant Rules generally require the third party contractor to obtain a performance bond for 100 percent of the contract price. A "performance bond" is obtained to ensure completion of the obligations under the third party contract. (c) Payment Bond. The Common Grant Rules generally require the third party contractor to obtain a standard payment bond for 100 percent of the contract price. A "payment bond" is obtained to ensure that the contractor will pay all people supplying labor and material for the third party contract as required by law. FTA, however, has determined that payment bonds in the following amounts are adequate to protect FTA's interest and will accept a local bonding policy that meets the following minimums. 1 Less Than $1 Million. Fifty percent of the contract price if the contract price is not more than $1 million, FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -27 2 More Than $1 Million but Less Than $5 Million. Forty percent of the contract price if the contract price is more than $1 million but not more than $5 million, or 3 More Than $5 Million. Two and one half million dollars if the contract price is more than $5 million. (d) Acceptable Sureties. The Common Grant Rule for non - governmental recipients requires the non - governmental recipient to obtain construction bonds from companies holding certificates of authority as acceptable sureties under Department of the Treasury regulations, "Surety Companies Doing Business with the United States," 31 CFR Part 223. For a current list of approved sureties, see Department of the Treasury's Listing of Approved Sureties (Department Circular 570), http: / /fms.treas.gov /c570 /c570.html. FTA encourages each governmental recipient to require similarly acceptable sureties. (e) Reduced Bonding. FTA recognizes that bonding costs can be expensive. FTA will accept a local bonding policy that conforms to the minimums described in this subparagraph 2.h(1) of this Chapter. FTA reserves the right to approve bonding amounts that do not conform to these minimums if the local bonding policy adequately protects the Federal interest. A recipient that wishes to adopt less stringent bonding requirements, for a specific class of projects, or for a particular project should submit its policy and rationale to the Regional Administrator for the region administering the project. (0 Excessive Bonding. Compliance with State and local bonding policies that are greater than FTA's bonding requirements do not require FTA approval. FTA recognizes that in some situations bond requirements can be useful if the recipient has a material risk of loss because of a failure of the prospective contractor. This is particularly so if the risk results from the likelihood of the contractor's bankruptcy or financial failure when the work is partially completed. Nevertheless, if the recipient's "excessive bonding" requirements would violate the Common Grant Rules as restrictive of competition, FTA will not provide Federal assistance for procurements encumbered by those requirements. Consequently, if the recipient's bonding policies far exceed those described in this subsection, FTA reminds the recipient that it may find it useful to submit its policy and rationale to the Regional Administrator for the region administering the project. (2) Seismic Safety. The recipient must include seismic safety provisions in its third party contracts for the construction of new buildings or additions to existing buildings as required by 42 U.S.C. Sections 7701 et seq., and DOT regulations, Page IV -28 (3) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 "Seismic Safety," 49 CFR Part 41 at Sections 41.117 and 41.120, implementing the Earthquake Hazards Reduction Act of 1977, as amended, 42 U.S.C. Sections 7701 et seq. Value Engineering. The Common Grant Rule for governmental recipients encourages them to use value engineering provisions in contracts for construction projects, and cautions that value engineering can be a pre- requisite for some Federal assistance awards. FTA generally will not approve a New Starts grant application for final design funding or a full funding grant agreement until value engineering is complete. It is important to note that some contractual arrangements (for example, design -build contracts) may inherently include value engineering. When this is the case, FTA does not require separate value engineering proposals, contract changes, or other processes. From a procurement view, the concept of value engineering is more important than the form it takes. (4) Equal Employment Opportunity. The Common Grant Rules require that third party construction contracts include provisions ensuring compliance with DOL regulations, "Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor," 41 CFR Chapter 60, which implement Executive Order No. 11246, "Equal Employment Opportunity," September 24, 1965, as amended by Executive Order No. 11375, "Amending Executive Order No. 11246 Relating to Equal Employment Opportunity," October 13, 1967. (5) Prevailing Wages. Under 49 U.S.C. Section 5333(a), Davis -Bacon Act prevailing wage protections apply to laborers and mechanics employed on FTA assisted construction, alteration, or repair projects. The Common Grant Rules require third party contracts for construction, alteration, or repair at any contract tier exceeding $2,000 to include provisions requiring compliance with the Davis -Bacon Act, 40 U.S.C. Sections 3141 et seq., and implementing DOL regulations "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction," 29 CFR Part 5. The Davis -Bacon Act requires that contractors pay wages to laborers and mechanics at a rate not less than the minimum wages specified in the wage determination made by the Secretary of Labor. The Davis -Bacon Act also requires contractors to pay wages not less than once a week. The recipient must include a copy of the current prevailing wage determination issued by DOL in each contract solicitation and must condition contract award upon the acceptance of that wage determination. These requirements are in addition to the separate Wage and Hour Requirements addressed in paragraph 2.c(1) of this Chapter IV. (6) Anti- Kickback. Section 1 of the Copeland "Anti- Kickback" Act, at 18 U.S.C. Section 874, prohibits anyone from inducing, by any means, any person employed FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (7) (8) (9) Page IV -29 on construction, prosecution, completion, or repair of a federally assisted building or work, to give up any part of his or her compensation to which he or she is otherwise entitled. Section 2 of that Act, at 40 U.S.C. Section 3145, as amended, and implementing DOL regulations, "Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in part by Loans or Grants from the United States," 29 CFR Part 3, impose record keeping requirement on all third party contracts for construction, alteration, or repair exceeding $2,000. The Common Grant Rules also require provisions for compliance with the Copeland "Anti- Kickback" Act, as amended, and implementing DOL regulations. Construction Safety. The Common Grant Rules require provisions to ensure safety at construction sites so that no laborer or mechanic shall be required to work in surroundings or under working conditions that are unsanitary, hazardous, or dangerous as prohibited by the safety requirements of Section 107 of the Contract Work Hours and Safety Standards Act, 40 U.S.C. Section 3704, and its implementing DOL regulations, "Safety and Health Regulations for Construction," 29 CFR Part 1926. Notably, Section 4104(c) of the Federal Acquisition Streamlining Act of 1994, 40 U.S.C. Section 3701(b)(3)(A)(iii), increased the threshold for construction safety protections to $100,000 from $2,000 as set forth in the Common Grant Rules, so that a federally assisted construction contract must exceed $100,000 before these construction safety requirements apply to that contract. Labor Neutrality. Executive Order No. 13502, "Use of Project Labor Agreements for Federal Construction Projects," February 6, 2009, rescinds Executive Order No. 13202, "Preservation of Open Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction Projects," February 17, 2001, as amended by Executive Order No. 13208, April 6, 2001, 41 U.S.C. Section 251 note. Consequently, a recipient may now require the use of a project labor agreement (PLA) in its third party contract, and a third party contractor or subcontractor may continue to use a PLA should it choose to do so. Preference for U.S. Property —Buy America. For any FTA assisted project having third party construction contracts exceeding $100,000, FTA's Buy America law and regulations require the third party contractor to provide property produced or manufactured in the United States for use in the construction project that the recipient acquires, unless FTA has granted a waiver authorized by those regulations. If FTA funds are used for the project, Buy America requirements apply to all third party procurement contracts under the project irrespective of whether a recipient decides to fund a discrete part of the project without FTA funds. Only if an activity is outside the FTA project and is financed entirely without funds to which FTA's Buy America regulations would apply may the Page IV -30 J• FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 recipient disregard FTA's Buy America requirements. FTA cautions that its Buy America regulations are complex and different from the Federal `Buy American Act" regulations in the Federal Acquisition Regulation(FAR) at 48 CFR Chapter 1, Subchapter D, Part 25, Subparts 25.1 and 25.2. Property that the contractor acquires to perform its construction activities for the recipient, such as tools, machinery, and other equipment or facilities, is not covered by FTA's Buy America requirements unless the recipient intends to take possession of that property upon completion of the project. Thus, if a third party contractor is acquiring property for its general inventory of equipment or facilities to conduct its overall business affairs, the recipient may enter the cost of that acquisition into its calculations of overhead amounts applicable to the FTA assisted project irrespective of whether that property would comply with FTA's Buy America regulations. (10) Accessibility. Facilities to be used in public transportation service must comply with 42 U.S.C. Sections 12101 et seq.; DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 CFR Part 37; and Joint ATBCBDOT regulations, "Americans with Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 CFR Part 1192 and 49 CFR Part 38. Notably, DOT incorporated by reference into Appendix A of its regulations at 49 CFR Part 37 the ATBCB's "Americans with Disabilities Act Accessibility Guidelines" (ADAAG), revised July 2004, which include accessibility guidelines for buildings and facilities. DOT also added specific provisions to Appendix A of 49 CFR Part 37 modifying the ADAAG, with the result that buildings and facilities must comply with both the ADAAG and the DOT amendments. Research, Development, Demonstration, Deployment, and Special Studies— Special Requirements. Procurements of research -type services can involve circumstances that bring special Federal requirements into effect. Among these are: (1) Patent Rights. Irrespective of the status of the recipient, subrecipient, or third party contractor (for example, a large business, small business, State government, State instrumentality, local government, Indian tribe, non - profit organization, institution of higher education, individual, and so forth) the Common Grant Rules require provisions consistent with Department of Commerce regulations, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms," 37 CFR Part 401 (implementing the Bayh -Dole Act, 35 U.S.C. Sections 200 et seq.), unless the Federal Government requires otherwise. Except in the case of an "other agreement" in which the Federal Government has agreed to take more limited rights, the Federal Government is entitled to a non - exclusive, royalty free license to use the resulting invention, or patent to the invention, for Federal Government purposes. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -31 (2) Rights in Data. In general, FTA does not seek greater rights in data or copyright than described in the Common Grant Rules when it provides FTA capital assistance to support acquisitions. But when FTA provides Federal assistance to support the costs of a research, development, demonstration, or a special studies project, FTA generally seeks sufficient rights in the data developed so that the resulting data can be made available to any FTA recipient, subrecipient, third party contractor, or third party subcontractor. FTA's general purpose in providing Federal assistance for a research, development, demonstration, or special studies project is to increase transportation knowledge, rather than limit the benefits of the project to project participants. Therefore, unless FTA determines otherwise in writing, FTA expects the following conditions to apply to rights in data requirements for FTA assisted research, development, demonstration, or special studies projects. (3) (a) Publication Restrictions. Except for its own internal use, the FTA Master Agreement provides that neither the recipient nor the third party contractor may publish or reproduce subject data in whole or in part, or in any manner or form, without the advance written consent of the Federal Government, unless the Federal Government has released or approved the release of that data to the public. These restrictions do not apply to an institution of higher education. (b) Distribution of Data. Except for contracts for adaptation of automatic data processing equipment or data provided in support of an FTA capital project, each recipient and third party contractor must agree that, in addition to the rights in data and copyrights that it must provide to FTA under the Common Grant Rules, FTA may make available to any FTA recipient, subrecipient, third party contractor, or third party subcontractor, either FTA's license in the copyright to the subject data or a copy of the subject data. If, for any reason, the project is not completed, all data developed under the project is expected to be delivered as FTA may direct. In certain circumstances, however, FTA may determine that it is in the public interest to take only those rights in data identified in the Common Grant Rules. Export Control. If data developed in the course of a third party contract is subject directly or indirectly to U.S. Export Control regulations, that data may not be exported to any countries or any foreign persons, without first obtaining the necessary Federal license or licenses and complying with any applicable Department of Commerce, Export Administration Regulations, 15 CFR Part 730. (4) Protection of Human Subjects. A third party contractor providing services involving the use of human subjects must comply with the National Research Act Page IV -32 (5) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 at 42 U.S.C. Sections 289 et seq., and DOT regulations, "Protection of Human Subjects," 49 CFR Part 11. Protection of Animals. A third party contractor providing services involving the use of animals must comply with the Animal Welfare Act, 7 U.S.C. Sections 2131 et seq., and Department of Agriculture regulations, "Animal Welfare," 9 CFR Subchapter A, Parts 1, 2, 3, and 4. k. Audit Services. In general, the procedures of this circular apply to the acquisition of audit services financed with FTA assistance. The following considerations, however, are especially important in procurements of audit services: (1) Single Audit Act. Each recipient that spends $500,000 or more in Federal awards in a single year must obtain an audit as required by the Single Audit Act of 1984, as amended, 31 U.S.C. Sections 7501 et seq., and must ensure compliance with OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations," as revised. (a) Organizational Conflicts of Interest. The auditor selected must be independent of the recipient. (b) Eligibility of Costs. The recipient may charge the costs for audits required by the Single Audit Act to its project as direct or indirect costs as permitted by applicable Federal Cost Principles. A recipient that spends less than $500,000 in Federal awards in a single year is not required to obtain this audit. Nor may a recipient spending less than $500,000 in Federal awards in a single year finance the costs of such an audit with Federal assistance. (2) Other Project Audits. Before procuring audit services for a specific contract or project, the recipient should be aware of the following: (a) Organizational Conflicts of Interest. In general, the recipient must select an auditor that is independent of the third party contractor to be audited. (b) Verification of Indirect Costs. Federal verification of a contractor's indirect cost rates, such as provisional overhead (burden) and General & Administrative (G &A) rates, may be required. To the extent possible, relevant information available through undisputed audits of the contractor by other recipients should be used. (c) Duplication of Services. To prevent duplication and ensure the eligibility of particular audit services for Federal participation, a recipient seeking a third party contract audit should contact FTA before undertaking or contracting for the audit. This is particularly important in connection with the procurement of FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page IV -33 A &E services, because 49 U.S.C. Section 5325(b)(2) requires that FAR Part 31 cost principles be used to audit A &E contracts. In addition, 49 U.S.C. Section 5325(b)(2) requires the recipient and its A &E contractors and subcontractors to accept indirect cost rates established under FAR cost principles if those rates are not under dispute. Thus, the recipient should not obtain duplicative audits because they are likely to produce disparate indirect cost rates and the costs of those audits may be ineligible for Federal assistance. Accordingly, FTA recommends that the recipient seek guidance from the cognizant Federal auditor or agency that approved the third party contractor's indirect cost rates before entering into contracts for audits. (d) Obtaining Indirect Cost Rates. Recipients and third party contractors may obtain indirect cost rates based on FAR cost principles from the following sources: 1 Governmental Entities. Government entities may obtain indirect cost rates through negotiations with OMB. See, OMB Guidance for Grants and Agreements, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 CFR Part 225, App. E, "State and Local Indirect Cost Rate Proposals." 2 Indian Tribes. Indian tribes may obtain indirect cost rates with the Department of the Interior. See, OMB Guidance for Grants and Agreements, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 CFR Part 225, App. E, "State and Local Indirect Cost Rate Proposals." 3 Educational Institutions. Educational institutions may obtain facilities and administrative rates (indirect cost rates) from the Department of Health and Human Services (HHS) or the Department of Defense's Office of Naval Research (DOD), usually depending on which of the two agencies (HHS or DOD) has provided more funds to the educational institution for the most recent three years. See, OMB Guidance for Grants and Agreements, "Cost Principles for Educational Institutions (OMB Circular A -21)," 2 CFR Part 220, App. A, "Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements With Educational Institutions." 4 Non - Profit Entities. Non - profit entities may obtain indirect cost rates from the Federal agency with the largest dollar value of awards with an organization, unless different arrangements are agreed to by the agencies concerned. See, OMB Guidance for Grants and Agreements, "Cost Page IV -34 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Principles for Non - Profit Organizations (OMB Circular A- 122)," 2 CFR Part 230, App. A, "General Principles." 5 Private For - Profit Entities. Private for - profit entities may obtain indirect cost rates from the Defense Contract Audit Agency. See, the DCAA Web site: http: / /www.dcaa.mil. (e) Eligibility of Costs. Costs of third party contract audits and proposal evaluations are eligible for reimbursement by FTA as a direct or indirect charge as permitted by applicable Federal cost principles. FTA reserves the right to disallow payments for duplicative audit charges. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page V -1 V. CHAPTER V SOURCES A recipient will often have several sources from which to acquire the property and services it needs as described below: 1. FORCE ACCOUNT. As used in this circular, "force account" means the recipient's own labor forces and equipment. The use of force account labor is a project management function, rather than a procurement and contract administration function, except in the general sense of the recipient's ability to perform work with its own forces rather than contracting with another entity to acquire the property or services it needs, and the cost implications of the recipient's decision. Although rarely exercised, FTA's grant or cooperative agreement secures FTA the right to determine the extent to which Federal assistance may be used to participate in force account costs. FTA's concern is to assure that the recipient will have adequate technical capacity to perform the work it undertakes reasonably economically and prudently. The third party contracting guidance of this circular does not apply to a recipient's use of its own forces to perform project work. 2. SHARED USE. The Common Grant Rule for governmental recipients encourages recipients and subrecipients to enter into agreements for shared use of property and services. FTA encourages non - governmental recipients to consider shared use if economical and feasible. 3. JOINT PROCUREMENTS. FTA uses the term "joint procurement" to mean a method of contracting in which two or more purchasers agree from the outset to use a single solicitation document and enter into a single contract with a vendor for delivery of property or services in a fixed quantity, even if expressed as a total minimum and total maximum. Unlike a State or local government purchasing schedule, a joint procurement is not drafted for the purpose of accommodating the needs of other parties that may later want to participate in the benefits of that contract. a. Use Encouraged. The Common Grant Rules and FTA encourage recipients to procure goods and services jointly with other recipients to obtain better pricing through larger purchases. Joint procurements offer the advantage of being able to obtain goods and services that may match each participating recipient's requirements better than those likely to be available through an assignment of another recipient's contract rights. If economical and feasible, FTA also participates in the costs of joint procurements by non - governmental recipients. b. All FTA and Federal Requirements Apply. When obtaining goods or services in this manner, recipients participating in the joint procurement must ensure compliance with Page V -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 all applicable FTA and Federal requirements and include all required clauses and certifications in the joint solicitation and contract documents. 4. STATE OR LOCAL GOVERNMENT PURCHASING SCHEDULES OR PURCHASING CONTRACTS. FTA uses the term "state or local government purchasing schedule" to mean an arrangement that a State or local government has established with several or many vendors in which those vendors agree to provide essentially an option to the State or local government, and its subordinate government entities, to acquire specific property or services in the future at established prices. These arrangements are somewhat similar to the General Services Administration's (GSA) Cooperative Purchasing Program available for Federal Government use. If the State or local government wishes to permit others to use its schedules, the State or local government might seek the agreement of the vendor to provide the listed property or services to others with access to the schedules, or it may permit the vendor to determine whether or not it wishes to do so. a. Use Encouraged. The Common Grant Rule for governmental recipients encourages recipients and subrecipients to enter into State and local intergovernmental agreements for procurements of property or services. If so permitted by State or local authorities, a non - governmental recipient may also use State and local sources of property and services. b. All FTA and Federal Requirements Apply. When obtaining property or services in this manner, the recipient must ensure all Federal requirements, required clauses, and certifications (including Buy America) are properly followed and included, whether in the master intergovernmental contract or in the recipient's purchase document. One way of achieving compliance with FTA requirements is for all parties to agree to append the required Federal clauses in the purchase order or other document that effects the recipient's procurement. When buying from these schedules, the recipient should obtain Buy America certification before entering into the purchase order. If the product to be purchased is Buy America compliant, there is no problem. If the product is not Buy America compliant, the recipient will need to obtain a waiver from FTA before proceeding. 5. FEDERAL EXCESS AND SURPLUS PROPERTY. The Common Grant Rule for governmental recipients encourages recipients to use Federal excess and surplus property managed by GSA when feasible and economical rather than procuring new property. The GSA Federal Property Management Regulations, 41 CFR Parts 101 -42 through 101 -46, 101 -48, and 101 -49 govern the eligibility of recipients and subrecipients, as well as others, to acquire supplies and services through GSA's personal property utilization and disposal programs. 6. FEDERAL SUPPLY SCHEDULES. A recipient must be specifically authorized by Federal law before it may use a GSA Federal Supply Schedule. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page V -3 a. Full Use of Federal Supply Schedules. Appendix B of GSA Order ADM 4800.2E, "Eligibility to Use GSA Sources -of Supply and Services," explains that FTA recipients eligible for full use of GSA Schedules are limited by the Federal Property and Administrative Services Act of 1949, as amended, at 40 U.S.C. Section 502(a)(3) to the Washington Metropolitan Area Transit Authority and the District of Columbia Department of Mass Transportation. The Government of American Samoa, the Government of Guam, Virgin Islands Department of Public Works, and the Commonwealth of the Northern Marianas are similarly authorized access to GSA schedules by 48 U.S.C. Section 1469e. b. Limited Use of Federal Supply Schedules. Federal laws authorize State and Local Governments (including institutions of higher education) to use Federal Supply Schedules to acquire information technology (IT) and to purchase products and services to facilitate recovery from a major disaster. In both circumstances, GSA defines the term "State and Local Government" broadly to include many FTA governmental recipients and others as follows: The States of the United States, counties, municipalities, cities, towns, townships, tribal governments, public authorities (including public or Indian housing agencies under the United States Housing Act of 1937), school districts, colleges, and other institutions of higher education, council of governments (incorporated or not), regional or interstate government entities, or any agency or instrumentality of the preceding entities (including any local educational agency or institution of higher education), and including legislative and judicial departments. GSA has determined that the term "State and Local Government" does not include "contractors, or grantees, of State or local governments." Nevertheless, under the GSA Cooperative Purchasing Program, State and local governmental entities (including institutions of higher education) receiving Federal assistance, either as an FTA recipient or subrecipient, are eligible users by virtue of conforming to the definition of State or local government entities; the source of funding for these entities is irrelevant. (1) Information Technology. Section 211 of the E- Government Act of 2002, 40 U.S.C. Section 502(c)(1), authorizes "State and local governments," within limits established by law, to acquire IT of various types through GSA's Cooperative Purchasing Program, Federal Supply Schedule 70. (2) Major Disaster or Emergency Recovery. Since February 1, 2007, Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109 -364, amended 40 U.S.C. Section 502(d), to authorize State and local government entities to use any GSA Federal Supply Schedule to acquire property and services in advance of a major disaster declared by the President of Page V-4 (3) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 the United States, as well as in the aftermath of an emergency event. The State or local government is then responsible for .ensuring that the property or services acquired will be used for recovery. More information about major disaster and emergency recovery acquisition is available at GSA's Web site: http : / / www.gsa.gov/ Portal /gsa /ep /contentView.do ?faq =yes &p ageTypeId =819 9& contentId= 22410 &contentType = GSA_OVERVIEW. Local Preparedness Acquisition. Section 2 of the Local Preparedness Acquisition Act, Pub. L. 110 -248, June 26, 2008, amended 40 U.S.C. Section 502(c) by adding paragraph (2) authorizing "State and local governments" within limits established by law, to acquire law enforcement, security and certain related items of various types through GSA's Cooperative Purchasing Program Federal Supply Schedule 84 or any amended or later version of that Federal supply classification group. Information about cooperative purchasing is available at GSA's Web site: http : / /www.gsa.gov/ Portal /gsa /ep /channelView.do ?pageTyp eId= 8199 &channe IPage=% 252Fep% 252Fchannel% 252FgsaOverview.jsp &channelld =- 13528. c. All FTA and Federal Requirements Apply. When using GSA schedules to acquire property or services in this manner, the recipient must ensure all Federal requirements, required clauses, and certifications (including FTA's Buy America requirements) are properly followed and included, whether in the master intergovernmental contract or in the recipient's purchase document. One way of achieving compliance with FTA requirements is for all parties to agree to append the required Federal clauses in the purchase order or other document that effects the recipient's procurement. When buying from these schedules, the recipient should obtain an FTA Buy America certification before entering into the purchase order. If the property to be purchased is Buy America compliant under FTA regulations, the recipient may proceed with its acquisition. If the property is not Buy America compliant under FTA standards, the recipient will need to obtain a waiver from FTA before proceeding. d. Competition and Price Reasonableness. When using GSA schedules to acquire property or services, a recipient will have fulfilled the Common Grant Rules' competition requirements if it seeks offers from at least three sources. FTA expects a recipient using a price published on a GSA schedule to consider whether the GSA price is reasonable. The recipient may also seek a lower price than that published on the GSA schedules. 7. EXISTING CONTRACTS. Occasionally, a recipient may find it advantageous to use existing contract rights. As used in this circular, "existing contract" means a contract that, when formed, was intended to be limited to the original parties thereto, and does not include State or local government purchasing schedules or purchasing contracts as discussed in sections 4, 5, and 6 of this Chapter. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page V -5 a. Permissible Actions. Within the conditions set forth below, FTA permits a recipient to use existing contract rights held by another recipient: (1) Exercise of Options. A recipient may use contract options held by another recipient with the following limitations: (a) Consistency with the Underlying Contract. FTA expects the recipient to ensure that the terms and conditions of the option it seeks to exercise are substantially similar to the terms and conditions of the option as stated in the original contract at the time it was awarded. (b) Price. The recipient may not exercise an option unless it has determined that the option price is better than prices available in the market, or that when it intends to exercise the option, the option is more advantageous. (c) Awards Treated as Sole Source Procurements. The following actions constitute sole source awards: 1 Failure to Evaluate Options Before Awarding the Underlying Contract. If a contract has one or more options and those options were not evaluated as part of the original contract award, exercising those options after contract award will result in a sole source award. 2 Negotiating a Lower Option Price. Exercising an option after the recipient has negotiated a lower or higher price will also result in a sole source award unless that price can be reasonably determined from the terms of the original contract, or that price results from Federal actions that can be reliably measured, such as changes in Federal prevailing labor rates, for example. In the circumstances described in this paragraph, FTA assistance may be used to support a sole source award only if that award can be justified under FTA's third party contract standards for sole source awards. (2) Assignment of Contract Rights. FTA expects the recipient to limit its procurements to the amount of property and services required to meet its reasonably expected needs without adding excess capacity simply for the purpose of assigning contract rights to others at a later date. FTA expects the recipient to be able to justify the quantities it procures. Having written statements of its anticipated material requirements in the recipient's contract files may prove helpful. For example, if the supplies or services were solicited, competed, and awarded through the use of an indefinite- delivery - indefinite- quantity (IDIQ) contract, the Page V-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 solicitation and also the contract award are expected to contain both a minimum and maximum quantity that represent the recipient's reasonably foreseeable needs. The establishment of State or local government purchasing schedules intended to be available for future use as discussed in section 4 of this Chapter, however, are not usually financed with FTA assistance. FTA assistance would be used to acquire property or services listed on such a contract only to the extent needed for public transportation purposes. Nevertheless, a recipient may find that it has inadvertently acquired contract rights in excess of its needs. The recipient may assign those contract rights to other recipients if the original contract contains an assignability provision that permits the assignment of all or a portion of the specified deliverables under the terms originally advertised, competed, evaluated, and awarded, or contains other appropriate assignment provisions. Some refer to this process as "piggybacking." (a) Acquisition Through Assigned Contract Rights. Although FTA does not encourage the practice, a recipient may find it useful to acquire contract rights through assignment by another recipient. A recipient that obtains contractual rights through assignment may use them after first determining that the original contract price remains fair and reasonable, and the original contract provisions are adequate for compliance with all Federal requirements. The recipient need not perform a second price analysis if a price analysis was performed for the original contract. However, FTA expects the recipient to determine whether the contract price or prices originally established are still fair and reasonable before using those rights. See, FTA's "Best Practices Procurement Manual" for further information about procurements through assignment of another's contract rights. The recipient using assigned contract rights is responsible for ensuring the contractor's compliance with FTA's Buy America requirements and execution of all the required Buy America preaward review and post delivery review certifications. For further details, please refer to FTA's Pre -Award and Post - Delivery Handbook for buses and railcars, which contain copies of those certifications. The recipient seeking to use assigned contract rights will not usually be able to determine whether the assigning recipient originally procured unreasonably large quantities. Before proceeding with the assignment, however, FTA does expect the recipient seeking the assignment to review the original contract to be sure that the quantities the assigning recipient acquired, coupled with the quantities the acquiring recipient seeks, do not exceed the amounts available under the assigning recipient's contract. (b) Alternatives to Assigned Contract Rights. Assignments limit a recipient's choices to specific property and services acquired to meet another recipient's FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page V -7 particular needs, and may be less suited to the needs of the recipient seeking the assignment. More desirable approaches may include: 1 Joint Procurements. Recipients should consider combining or "pooling" their procurements to obtain better pricing. In general, joint procurements are often more desirable than procurements through assignment because an assignment does not represent the combined buying power of more than one purchaser at the time when prices are established. A joint procurement may also offer the advantage of permitting the parties to acquire property and services more closely responsive to each purchaser's material requirements than would be available through assignment of existing contract rights. FTA cautions, however, that if two or more parties jointly solicit and award an IDIQ contract, total minimum and maximum quantities are expected to be stated in the solicitation and contract. 2 Intergovernmental Procurements. As discussed in sections 4, 5, and 6 of this Chapter, Federal, State, and local governmental resources may provide attractive procurement opportunities. b. Impermissible Actions. A recipient may not use Federal assistance to finance: (1) Improper Contract Expansion. A contract has been improperly expanded when it includes a larger scope, greater quantities, or options beyond the original recipient's reasonably anticipated needs. A contract has also been improperly expanded when excess capacity has been added primarily to permit assignment of those contract rights to another entity. The Common Grant Rules require the recipient to have procurement procedures that preclude the recipient from acquiring property or services it does not need. (2) Cardinal Changes. A significant change in contract work (property or services) that causes a major deviation from the original purpose of the work or the intended method of achievement, or causes a revision of contract work so extensive, significant, or cumulative that, in effect, the contractor is required to perform very different work from that described in the original contract, is a cardinal change. Such practices are sometimes informally referred to as "tag -ons." A change within the scope of the contract (sometimes referred to as an "in- scope" change) is not a "tag -on" or cardinal change. (a) Identifying Cardinal Changes. Although FTA has provided additional guidance in its Best Practices Procurement Manual, FTA has not developed a finite list of acceptable contract changes. Recognizing a cardinal change to a third party contract can be difficult. A cardinal change cannot be identified Page V -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 easily by assigning a specific percentage, dollar value, number of changes, or other objective measure that would apply to all cases. (b) Changes in Quantity. To categorize virtually any change in quantity as a prohibited cardinal change (sometimes referred to as an "out -of- scope" change) fails to account for the realities of the marketplace and unnecessarily restricts a recipient from exercising reasonable freedom to make minor adjustments contemplated fairly and reasonably by the parties when they entered into the contract. The U.S. Supreme Court decision in Freund v. United States, 260 U.S. 60 (1922) supports FTA's policy. (c) Tests. Among other things, customary marketing practices can influence the determination of which changes will be "cardinal." Other tests involve the nature and extent of the work to be performed, the amount of effort involved, whether the change was originally contemplated at the time the original contract was entered into, or the cumulative impact on the contract's quantity, quality, costs, and delivery terms. (d) Rolling Stock. In the case of rolling stock, a major change in quantity or a substitution of major end items not contemplated when competition for the original award took place would generally be a cardinal change. Another cardinal change would, at this time, include a change from a high -floor to a low -floor vehicle. Changing an engine might result in a cardinal change depending on the circumstances surrounding the project and whether a compatible replacement could be obtained through competition. FTA, however, considers changes to seating, fabrics, and colors, exterior paint schemes, signage, and floor covering, and other similar changes to be permissible changes. (e) Federal Procurement Standards. The broader standards applied in Federal contracting practice reflected in Federal court decisions, Federal Boards of Contract Appeals decisions, and U.S. Comptroller General decisions provide guidance in determining whether a change would be treated as a cardinal change. FTA does not imply that these Federal procurement decisions are controlling. FTA intends to consider the collective wisdom within these decisions in determining the nature of third party contract changes along the broad spectrum between permissible changes and impermissible cardinal changes. Other guidance can be found in FTA's Best Practices Procurement Manual and "Frequently Asked Questions" at the FTA Web site: http : / /www.fta. dot. gov / funding / thirdpartyprocurement /grants_financing 6039.html. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page V -9 FTA intends to monitor its recipients and oversight contractors to ensure that this concept is well understood and uniformly applied. This approach permits greater latitude but, because it requires analysis, it can sometimes require a greater knowledge of Federal contracting practices. In any event, before attempting to change the terms of its contract, the recipient should review the contract's provisions to ensure that the contract permits the change sought. 8. THE OPEN MARKET. The recipient will probably acquire most of the property and services it needs through procurements in the open market. The next two chapters of this circular will address proper procedures for conducting and administering such procurements. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 VI. CHAPTER VI Page VI -1 PROCEDURAL GUIDANCE FOR OPEN MARKET PROCUREMENTS 1. COMPETITION REQUIRED. Except as permitted by Federal law or regulations, the Common Grant Rules require a recipient of Federal assistance to use third party procurement procedures that provide full and open competition. The Federal Transit Administration's (FTA) enabling legislation at 49 U.S.C. Section 5325(a), also requires an FTA recipient to conduct all third party procurements financed under 49 U.S.C. Chapter 53 in a manner that provides full and open competition as determined by FTA. The recipient may make third party contract awards on the basis of: a. Solicitation by the Recipient. Compliance with the solicitation procedures described in this Chapter will fulfill FTA requirements for "full and open competition." b. Unsolicited Proposals. A recipient may also enter into a third party contract based on an unsolicited proposal, as defined in Chapter I of this circular, when authorized by applicable State or local law or regulation. Receipt of an unsolicited proposal does not, by itself, justify contract award without providing for full and open competition. Unless the unsolicited proposal offers a proprietary concept that is essential to contract performance, FTA expects the recipient to seek competition. To satisfy the requirement for full and open competition, FTA expects the recipient to take the following actions before entering into a contract resulting from an unsolicited proposal: (1) Receipt. Publicize its receipt of the unsolicited proposal, (2) Adequate Description. Publicize an adequate description of the property or services offered without improperly disclosing proprietary information or disclosing the originality of thought or innovativeness of the property or services sought, (3) Interest in the Property or Services. Publicize its interest in acquiring the property or services described in the proposal, (4) Adequate Opportunity to Compete. Provide an adequate opportunity for interested parties to comment or submit competing proposals, and (5) Contract Award Based on Proposals Received. Publicize its intention to award a contract based on the unsolicited proposal or another proposal submitted in response to the publication. If it is impossible to describe the property or services offered without revealing proprietary information or disclosing the originality of thought or innovativeness of the property or services sought, the recipient may make a sole source award to the offeror. Page VI -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 A sole source award may not be based solely on the unique capability of the offeror to provide the specific property or services proposed. c. Prequalification. Prequalification lists are most commonly used in procurements of property involving lengthy evaluations needed to determine whether it satisfies the recipient's standards. The Common Grant Rule for governmental recipients permits a recipient to prequalify people, firms, and property for procurement purposes under the following standards: (1) Lists. The recipient ensures that all prequalification lists it uses are current. (2) Sources. The recipient ensures that all prequalification lists it uses include enough qualified sources to provide maximum full and open competition. Qualification Periods. The recipient permits potential bidders or offerors to qualify during the solicitation period (from the issuance of the solicitation to its closing date). FTA, however, does not require a recipient to hold a particular solicitation open to accommodate a potential supplier that submits property for approval before or during that solicitation. Nor must a recipient expedite or shorten prequalification evaluations of bidders, offerors, or property presented for review during the solicitation period. (3) Prequalification should not be confused with reviews of technical qualifications that are an essential process in two -step procurements and qualifications -based procurements, as discussed further in subsections 3.e and 3.f of this Chapter, respectively. 2. SOLICITATION REQUIREMENTS AND RESTRICTIONS. The Common Grant Rules require that each solicitation provide the following information: a. Description of the Property or Services. The solicitation and the contract awarded must include a clear and accurate description of the recipient's technical requirements for the property or services to be acquired in a manner that provides for full and open competition. (1) What to Include. The description may include a statement of the qualitative nature of the property or services to be acquired. When practicable, the recipient should describe its requirements in terms of functions to be performed or level of performance required, including the range of acceptable characteristics or minimum acceptable standards. The Common Grant Rules for governmental recipients states that "Detailed product specifications should be avoided if at all possible." Both Common Grant Rules express a preference for performance or functional specifications, but do not prohibit the use of detailed technical specifications when appropriate. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -3 (2) Quantities Limited to the Recipient's Actual Needs. FTA limits Federal assistance to the amount necessary to support the quantity of property or extent of services the recipient actually needs at the time of acquisition. The recipient may not add quantities or options to contracts solely to allow assignments at a later date. FTA will not knowingly support the additional cost of contract rights to property or services excess to the recipient's immediate needs, even though the recipient may assign its excess contract rights to others. (3) Brand Name or Equal. When it is impractical or uneconomical to provide a clear and accurate description of the technical requirements of the property to be acquired, a "brand name or equal" description may be used to define the performance or other salient characteristics of a specific type of property. The recipient must identify the salient characteristics of the named brand that offerors must provide. When using a "brand name" specification, the recipient does not need to reverse - engineer a complicated part to identify precise measurements or specifications in order to describe its salient characteristics. FTA's "Best Practices Procurement Manual," (BPPM) contains additional information on preparation of specifications including examples with specific language. (4) Prohibitions. The Common Grant Rules prohibit solicitation requirements that contain features that unduly restrict competition. FTA recipients are also prohibited by 49 U.S.C. Section 5325(h) from using FTA assistance to support an exclusionary or discriminatory specification. Some situations considered to be impermissibly restrictive of competition include, but are not limited to, the following, all of which are identified in one or both Common Grant Rules: (a) Excessive Qualifications. Imposing unreasonable business requirements for bidders or offerors. (b) Unnecessary Experience Imposing unnecessary experience requirements for bidders and offerors. (c) Improper Prequalification. Using prequalification procedures that conflict with the prequalification standards described in subsection 1.c of this Chapter. (d) Retainer Contracts. Making a noncompetitive award to any person or firm on a retainer contract with the recipient if that award is not for the property or services specified for delivery under the retainer contract. (e) Excessive Bonding. To encourage greater contractor participation in FTA assisted projects, FTA does not require the recipient to impose bonding requirements on its third party contractors other than construction bonding specified by the Common Grant Rules and this circular for construction. FTA discourages unnecessary bonding because it increases the cost of the contract Page VI-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 and restricts competition, particularly by disadvantaged business enterprises. Bond companies exercise their discretion and assure their profits primarily by declining to undertake excessive risks. Consequently many bidders have limited "bonding capacity." Unnecessary performance bonding requirements reduce a prospective bidder's or offeror's capability to bid or offer a proposal on bonded work. Small businesses with short histories may have particular difficulty obtaining bonds as may be specified. Nevertheless, even though bonding can be expensive, FTA recognizes that a recipient might find bid, performance, or payment bonds to be desirable. Because bonding requirements can limit contractor participation, FTA expects the recipient's bonding requirements to be reasonable and not unduly restrictive. FTA, however, will not challenge State or local bonding requirements as unreasonably restrictive of competition, even though they might exceed Federal requirements. Nevertheless, if the recipient's bonding policies result in such "excessive bonding" that it would violate the Common Grant Rules as restrictive of competition. FTA will not provide Federal assistance for those procurements. Thus if the recipient's bonding policies far exceed those described in this subparagraph or are permissible under State or local law, the recipient should obtain FTA's written concurrence to ensure the availability of Federal assistance for the project. (f) Brand Name Only. Specifying only a "brand name" product without allowing offers of "an equal" product, or allowing "an equal" product without listing the salient characteristics that the "equal" product must meet to be acceptable for award. (g) In -State or Local Geographic Restrictions. Specifying in -State or local geographical preferences, or evaluating bids or proposals in light of in -State or local geographic preferences, even if those preferences are imposed by State or local laws or regulations. In particular, 49 U.S.C. Section 5325(i) prohibits an FTA recipient from limiting its bus purchases to in -State dealers. Exceptions expressly mandated or encouraged by Federal law include the following: 1 Architectural Engineering (A &E) Services. Geographic location may be a selection criterion if an appropriate number of qualified firms are eligible to compete for the contract in view of the nature and size of the project. 2 Licensing. A State may enforce its licensing requirements, provided that those State requirements do not conflict with Federal law. 3 Major Disaster or Emergency Relief. Federal assistance awarded under the Stafford Act, 42 U.S.C. Section 5150, to support contracts and FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -5 agreements for debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance activities permits a preference, to the extent feasible and practicable, for organizations, firms, and individuals residing or doing business primarily in the area affected by a major disaster or emergency. (h) Organizational Conflicts of Interest. Engaging in practices that result in organizational conflicts of interest as prohibited by the Common Grant Rules: (i) 1 Occurrence. An organizational conflict of interest occurs when any of the following circumstances arise: a Lack of Impartiality or Impaired Objectivity. When the contractor is unable, or potentially unable, to provide impartial and objective assistance or advice to the recipient due to other activities, relationships, contracts, or circumstances. b Unequal Access to Information. The contractor has an unfair competitive advantage through obtaining access to nonpublic information during the performance of an earlier contract. c Biased Ground Rules. During the conduct of an earlier procurement, the contractor has established the ground rules for a future procurement by developing specifications, evaluation factors, or similar documents. 2 Remedies. FTA expects the recipient to analyze each planned acquisition in order to identify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible, and avoid, neutralize, or mitigate potential conflicts before contract award. Restraint of Trade. Supporting or acquiescing in noncompetitive pricing practices between firms or between affiliated companies. Questionable practices would include, but not be limited to submissions of identical bid prices for the same products by the same group of firms, or an unnatural pattern of awards that had the cumulative effect of apportioning work among a fixed group of bidders or offerors. (j) Arbitrary Action. Taking any arbitrary action in the procurement process. b. Evaluation Factors. The solicitation must identify all factors to be used in evaluating bids or proposals. Page VI-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 c. Contract Type Specified. The recipient's specifications should state the type of contract that will be awarded. (1) Typical Contract Types. Contract types may include, but are not limited to, the following: (a) Firm Fixed Price. A firm fixed price contract includes a price that remains fixed irrespective of the contractor's cost experience in performing the contract. A firm fixed price contract may include an economic price adjustment provision, incentives, or both. (b) Cost Reimbursement. A cost - reimbursement contract provides for payment of the contractor's allowable incurred costs, to the extent prescribed in the contract. Allowable costs may include incentives if the recipient believes they can prove helpful. Cost - reimbursement contracts are suitable for use only when the uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed price contract. (2) Prohibited or Restricted Contract Types. The Common Grant Rule for governmental recipients provides more guidance on contract type than does the Common Grant Rule for non - governmental recipients, which merely authorizes the recipient to select the type of contract it will use (for example, fixed price, cost reimbursement, purchase order, or incentive contract) if it is appropriate for the particular procurement and promotes the best interests of the program or project involved. The following contract types are restricted or prohibited: (a) Cost Plus a Percentage of Cost — Prohibited. The Common Grant Rules expressly prohibit the use of the cost plus a percentage of cost method of contracting. (b) Percentage of Construction Cost — Prohibited. The Common Grant Rules expressly prohibit the use of the percentage of construction cost method of contracting. (c) Time and Materials— Restricted. The Common Grant Rule for governmental recipients permits the use of time and material contracts only: 1 When to Use. After determining that no other contract type is suitable; and 2 Firm Ceiling Price. If the contract specifies a ceiling price that the contractor may not exceed except at its own risk. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -7 FTA strongly encourages non - governmental recipients to use similar procedures. d. Other Federal Requirements Affecting the Property or Services to be Acquired. The solicitation and resulting contract must identify those Federal requirements that will affect contract scope and performance. See, Chapter IV, subsection 2.b of this circular, and FTA's latest Master Agreement for references to Federal requirements established following publication of this circular. e. Other Federal Requirements Affecting the Bidder or Offeror and the Contractor. The solicitation and resulting contract must identify all Federal requirements that a bidder or offeror must fulfill before and during contract performance. See, Chapter IV, subsection 2.a of this circular and FTA's latest Master Agreement that may reference more Federal requirements. f. Award to Other Than the Low Bidder. If the recipient intends to reserve its right to award to other than the low bidder or offeror, that information should be stated in the solicitation document. g. Rejection of All Bids or Offers. If the recipient intends to reserve its right to reject all bids or offers, that information should be stated in the solicitation document. 3. METHODS OF PROCUREMENT. The recipient should use competitive procedure(s) appropriate for the acquisition undertaken. The procedures used must comply with State and local law as well as with Federal requirements. Federal restrictions vary with the type of procurement method used. The following guidance is based on the requirements of the Common Grant Rule for governmental recipients, supplemented by FTA policies that address the needs of FTA recipients. a. Micro - Purchases. Consistent with the Federal Acquisition Regulation (FAR), FTA considers micro - purchases to be those purchases of $3,000 or less. (1) When Appropriate. If permitted by State and local law, the recipient may acquire property and services valued at $3,000 or less without obtaining competitive quotations. These purchases are exempt from FTA's Buy America requirements Davis -Bacon prevailing wage requirements, however, will apply to construction contracts exceeding $2,000, even though the recipient uses micro- purchase procurement procedures. FTA does not intend to imply that the recipient must treat any purchase of $3,000 or less as a micro - purchase. The recipient may set lower thresholds for micro - purchases in compliance with State and local law, or otherwise as it considers appropriate. (2) Procedures. The following procedures apply to micro - purchases: Page VI -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (a) Competition. The recipient should distribute micro- purchases equitably among qualified suppliers. (b) Prohibited Divisions. The recipient may not divide or reduce the size of its procurement merely to come within the micro - purchase limit (c) Documentation. FTA's only documentation requirement for micro - purchases is a determination that the price is fair and reasonable and a description of how the recipient made its determination. FTA does not require the recipient to provide its rationale for the procurement method used, selection of contract type, or reasons for contractor selection or rejection. b. Small Purchases. The Common Grant Rule for governmental recipients authorizes governmental recipients to use relatively simple and informal small purchase procedures as follows: (1) When Appropriate. Small purchase procedures may be used to acquire services, supplies, or other property valued at more than the micro - purchase threshold (currently, $3,000) but less than the Federal simplified acquisition threshold at 41 U.S.C. Section 403(11), currently $100,000. (FTA recognizes the small purchase threshold to be the same as the simplified acquisition threshold.) Also see, Chapter II, Subsection 3.b. These purchases are also exempt from FTA's Buy America requirements. FTA does not intend to imply that any purchase of $100,000 or less must be treated as a small purchase. The recipient may set lower thresholds for small purchases in compliance with State and local law, or otherwise as it considers appropriate. (2) Procedures. When using small purchase procedures: (a) Competition. The recipient must obtain price or rate quotations from an adequate number of qualified sources. (b) Prohibited Divisions. The recipient may not divide or reduce the size of its procurement to avoid the additional procurement requirements applicable to larger acquisitions. c. Sealed Bids (Formal Advertising). The Common Grant Rule for governmental recipients acknowledges sealed bidding to be a generally accepted procurement method in which bids are publicly solicited, and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is lowest in price. (1) When Appropriate. The Common Grant Rule for government recipients states a preference for the sealed bids procurement method for acquiring property, FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -9 construction, and other services. Sealed bid procurements should be used when the following circumstances are present: (a) Precise Specifications. A complete, adequate, precise, and realistic specification or purchase description is available. (b) Adequate Sources. Two or more responsible bidders are willing and able to compete effectively for the business. (c) Fixed Price Contract. The procurement generally lends itself to a firm fixed price contract. (d) Price Determinative. The successful bidder can be selected on the basis of price and those price- related factors listed in the solicitation including, but not limited to, transportation costs, life cycle costs, and discounts expected to be taken. Apart from responsibility determinations discussed in later sections of this Chapter, contractor selection may not be determined on the basis of other factors whose costs cannot be measured at the time of award. (e) Discussions Unnecessary. Discussions with one or more bidders after bids have been submitted are expected to be unnecessary as award of the contract will be made based on price and price- related factors alone. This contrasts with Competitive Proposal procedures in which discussions with individual offerors are expected to be necessary and may take place at any time after receipt of proposals. However, a pre -bid conference with prospective bidders before bids have been received can be useful. (2) Procurement Procedures. The following procedures apply to sealed bid procurements: (a) Publicity. The invitation for bids is publicly advertised. (b) Adequate Sources. Bids are solicited from an adequate number of known suppliers. (c) Adequate Specifications. The invitation for bids, including any specifications and pertinent attachments, describes the property or services sought in sufficient detail that a prospective bidder will be able to submit a proper bid. (d) Sufficient Time. Bidders are allowed sufficient time to prepare bids before the date of bid opening. (e) Public Opening. All bids are publicly opened at the time and place prescribed in the invitation for bids. Page VI -10 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (f) Fixed Price Contract. A firm fixed price contract is usually awarded in writing to the lowest responsive and responsible bidder, but a fixed price incentive contract or inclusion of an economic price adjustment provision can sometimes be appropriate. When specified in the bidding documents, factors such as transportation costs and life cycle costs affect the determination of the lowest bid; payment discounts are used to determine the low bid only when prior experience indicates that such discounts are typically taken. (g) Rejection of Bids. Any or all bids may be rejected if there is a sound, documented business reason. FTA strongly encourages non - governmental recipients to use similar procedures. d. Competitive Proposals (Request for Proposals). The Common Grant Rule for governmental recipients acknowledges the use of competitive proposals to be a generally accepted procurement method when the nature of the procurement does not lend itself to sealed bidding and the recipient expects that more than one source will be willing and able to submit an offer or proposal. (1) When Appropriate. Competitive proposals should be used when any of the following circumstances are present: (a) Type of Specifications. The property or services to be acquired are described in a performance or functional specification; or if described in detailed technical specifications, other circumstances such as the need for discussions or the importance of basing the contract award on factors other than price alone are present. (b) Uncertain Number of Sources. Uncertainty about whether more than one bid will be submitted in response to an invitation for bids and the recipient lacks the authority or flexibility under State or local law to negotiate the contract price if it receives only a single bid. (c) Price Alone Not Determinative. Due to the nature of the procurement, contract award need not be based exclusively on price or price - related factors. In different types of negotiated acquisitions, the relative importance of cost or price may vary. When the recipient's material requirements are clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. The less definitive the requirements, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection and supersede low price. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -11 (d) Discussions Expected. Separate discussions with individual offeror(s) are expected to be necessary after they have submitted their proposals. This contrasts with Sealed Bids (Formal Advertising) procedures in which discussions with individual bidders are not likely to be necessary, as award of the contract will be made based on price and price - related factors alone. (2) Procurement Procedures. The following procedures apply to procurements by competitive proposals: (a) Publicity. The request for proposals is publicly advertised. (b) Evaluation Factors. All evaluation factors and their relative importance are specified in the solicitation; but numerical or percentage ratings or weights need not be disclosed. (c) Adequate Sources. Proposals are solicited from an adequate number of qualified sources. (d) Evaluation Method. A specific method is established and used to conduct technical evaluations of the proposals received and to determine the most qualified offeror. (e) Price and Other Factors. An award is made to the responsible offeror whose proposal is most advantageous to the recipient's program with price and other factors considered. (0 Best Value. If permitted under its State or local law, the recipient may award the contract to the offeror whose proposal provides the greatest value to the recipient. To do so, the recipient's solicitation must inform potential offerors that the award will be made on a "best value" basis and identify what factors will form the basis for award. The evaluation factors for a specific procurement should reflect the subject matter and the elements that are most important to the recipient. Those evaluation factors may include, but need not be limited to, technical design, technical approach, length of delivery schedules, quality of proposed personnel, past performance, and management plan. The recipient should base its determination of which proposal represents the "best value" on an analysis of the tradeoff of qualitative technical factors and price or cost factors. Apart from the statutory requirement that the contract must support the recipient's public transportation project consistent with applicable Federal laws and regulations, FTA does not require any specific factors or analytic process. FTA strongly encourages non - governmental recipients to use similar procedures. Page VI -12 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 e. Two -Step Procurement Procedures. If permitted by State and local law, the recipient may use two -step procurement procedures in both sealed bid and competitively negotiated procurements, provided the opportunity for full and open competition is retained. (1) Review of Technical Qualifications and Approach. The first step is a review of the prospective contractors' technical approach to the recipient's request and technical qualifications to carry out that approach. The recipient then may narrow the competitive range to prospective contractors that demonstrate a technically satisfactory approach and have satisfactory qualifications. (2) Review of Bids and Proposals Submitted by Qualified Prospective Contractors. The second step consists of soliciting and reviewing complete bids (sometimes referred to as "two -step sealed bidding ") or proposals (as in "competitive negotiations "), including price, submitted by each prospective contractor determined to be qualified. Absent exceptional circumstances, the recipient should attempt to solicit bids or proposals from at least three qualified prospective contractors. Unlike qualifications -based procurement procedures required for A &E services, and other contracts covered by 49 U.S.C. Section 5325(b) discussed in subsection 3.f of this Chapter, FTA expects the recipient to consider all bid or proposal prices submitted as well as other technical factors, rather than limiting reviews to the most qualified bidder or offeror. f. Architectural Engineering (A &E) Services and Other Services. FTA's enabling legislation at 49 U.S.C. Section 5325(b)(1) requires the use of the qualifications -based procurement procedures contained in the "Brooks Act," 40 U.S.C. Sections 1101 through 1104, to acquire A &E services, but also for program management, construction management, feasibility studies, preliminary engineering, design, architectural, engineering, surveying, mapping and related services. The nature of the work to be performed and its relationship to construction, not the nature of the prospective contractor, determine whether qualifications -based procurement procedures may be used as described below. (1) Qualifications -Based Procurement Procedures Required. The recipient must use qualifications -based procurement procedures not only when contracting for A &E services, but also for other services listed in 49 U.S.C. Section 5325(b)(1) that are directly in support of, directly connected to, directly related to, or lead to construction, alteration, or repair of real property. For example, a contractor performing program management, project design, construction management, or engineering services in which that contractor would select the finished products to be acquired for an FTA assisted construction project must be selected through qualifications -based procurement procedures. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -13 (2) Qualifications -Based Procurement Procedures Prohibited. Unless FTA determines otherwise in writing, a recipient may not use qualifications -based procurement procedures to acquire other types of services if those services are not directly in support of, directly connected to, directly related to, or do not lead to construction, alteration, or repair of real property. Even if a contractor has performed services listed herein in support of a construction, alteration, or repair project involving real property, selection of that contractor to perform similar services not relating to construction may not be made through the use of qualifications -based procurement procedures. (3) A project involving construction does not always require that qualifications -based procurement procedures be used. Whether or not qualifications -based procurement procedures may be used depends on the actual services to be performed in connection with the construction project. For example, the design or fabrication of message signs, signals, movable barriers, and similar property that will become off -the -shelf items or will be fabricated and delivered as final end products for installation in an FTA assisted construction project are not services for which qualifications -based procurement procedures may be used. Nor are actual construction, alteration, or repair to real property the type of services for which qualifications -based procurement procedures may be used. Qualifications -Based Procurement Procedures. The following procedures apply to qualifications -based procurements: (a) Qualifications. Unlike other two -step procurement procedures in which price is an evaluation factor, an offeror's qualifications are evaluated to determine contract award. (b) Price. Price is excluded as an evaluation factor. (c) Most Qualified. Negotiations are first conducted with only the most qualified offeror. (d) Next Most Qualified. Only after failing to agree on a fair and reasonable price may negotiations be conducted with the next most qualified offeror. Then, if necessary, negotiations with successive offerors in descending order may be conducted until contract award can be made to the offeror whose price the recipient believes is fair and reasonable. (e) Effect of State Laws. To the extent that a State has, before August 10, 2005, adopted by law, an equivalent State qualifications- based - procurement requirement for acquiring architectural, engineering, and design services, State procedures, rather than Federal "Brooks Act" procedures (40 U.S.C. Sections 1101 through 1104), may be used. Page VI -14 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (4) Audits and Indirect Costs. As required by 49 U.S.C. Section 5325(b)(2), the following requirements apply to a third party contract for program management, architectural engineering, construction management, feasibility studies, preliminary engineering, design, architectural, engineering, surveying, mapping, or related services: (a) Performance of Audits. The third party contract or subcontract must be performed and audited in compliance with FAR Part 31 cost principles. (b) Indirect Cost Rates. The recipient and the third party contractor, its subcontractors and subrecipients, if any, must accept FAR indirect cost rates for the one -year applicable accounting periods established by a cognizant Federal or State government agency, if those rates are not currently under dispute. (c) Application of Rates. After a firm's indirect cost rates established as described in subparagraph 3.f(4)(b) above are accepted, those rates will apply for purposes of contract estimation, negotiation, administration, reporting, and payments, not limited by administrative or de facto ceilings. (d) Prenotification; Confidentiality of Data. Before requesting or using cost or rate data described in subparagraph 3.f(4)(c) above, a recipient must notify the affected firm(s). That data must be kept confidential and may not be accessible by or provided by the agency or group of agencies that share cost data under this subparagraph, except by written permission of the audited firm. If prohibited by law, that cost and rate data may not be disclosed under any circumstances. FTA recognizes that many States have "Open Records" laws that may make it difficult to maintain confidential cost or rate data. As a result, before requesting or using a firm's cost or rate data, not only should a recipient notify the affected firm, but it must also obtain permission to provide that data in response to a valid request under applicable State law. The confidentiality requirements of 49 U.S.C. 5325(b)(2)(D) cannot be waived, even if those confidentiality requirements conflict with State law or regulations. g. Design- Bid - Build. The design- bid -build procurement method requires separate contracts for design services and for construction. (1) Design Services. For design services, the recipient must use qualifications -based procurement procedures, in compliance with applicable Federal, State and local law and regulations. (2) Construction. Because the recipient may not use qualifications -based procurement procedures for the actual construction, alteration or repair of real property, the FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -15 recipient generally must use competitive procedures for the construction. These may include sealed bidding or competitive negotiation procurement methods, as appropriate. h. Design - Build. The design -build procurement method consists of contracting for design and construction simultaneously with contract award to a single contractor, consortium, joint venture, team, or partnership that will be responsible for both the project's design and construction. FTA's enabling legislation expressly authorizes the use of FTA capital assistance to support design -build projects "after the recipient complies with Government requirements," 49 U.S.C. Section 5325(d)(2). (1) Procurement Method Determined by Value. First, the recipient must separate the various contract activities to be undertaken and classify them as design or construction, and then calculate the estimated total value of each. Because both design and construction are included in a single procurement, the FTA expects the recipient to use the procurement method appropriate for the services having the greatest cost, even though other necessary services would not typically be procured by that method. (a) Construction Predominant. The construction costs of a design -build project are usually predominant so that the recipient would be expected to use competitive negotiations or sealed bids for the entire procurement rather than the qualification -based "Brooks Act" procurement procedures. Specifically, when construction costs will be predominant, unless FTA determines otherwise in writing, an FTA recipient may not use qualifications -based procurement procedures to acquire architectural engineering, program management, construction management, feasibility studies, preliminary engineering, design, architectural and engineering, surveying, mapping, or related A &E services unless required by State law adopted before August 10, 2005. (b) Design Services Predominant. In the less usual circumstance in which the cost of most work to be performed will consist of costs for architectural and engineering, program management, construction management, feasibility studies, preliminary engineering, design, architectural engineering, surveying, mapping, or related A &E services, FTA expects the recipient to use qualifications -based procurement procedures based on the "Brooks Act," 40 U.S.C. Sections 1101 through 1104, as described in subsection 3.e of this Chapter. (2) Selection Processes. The recipient may structure its design -build procurement using one or more steps as described below: Page VI -16 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (a) One -Step Method. The recipient may undertake its design -build procurement in a single step. (b) Two -Step Method. Another procurement method the recipient may use for large design -build projects is a two -step selection process as authorized for Federal Government use by 41 U.S.C. Section 253m. This method consists of: 1 Review of Technical Qualifications and Approach. The first step is a review of the prospective contractors' technical qualifications and technical approach to the project. The recipient may then narrow the competitive range to those prospective contractors with satisfactory qualifications that demonstrate a technically satisfactory approach. 2 Review of Complete Proposals. The second step consists of soliciting and reviewing complete proposals, including price, submitted by prospective contractors first determined to be qualified. By using this two -step method, it will not be necessary for the recipient to undertake extensive proposal reviews, nor will prospective offerors need to engage in expensive proposal drafting. This two -step selection procedure is separate and distinct from prequalification and is but one procurement method available to the recipient. i. Other Than Full and Open Competition. Normally, the recipient must provide for full and open competition when soliciting bids or proposals. The Common Grant Rule for governmental recipients, however, acknowledges that under certain circumstances, a recipient may conduct procurements without providing for full and open competition. (1) When Appropriate. A recipient may use noncompetitive proposals only when the procurement is inappropriate for small purchase procedures, sealed bids, or competitive proposals, and at least one of the following circumstances are present: (a) Adequate Competition. After soliciting several sources, FTA expects the recipient to review its specifications to determine if they are unduly restrictive or if changes can be made to encourage submission of more bids or proposals. After the recipient determines that the specifications are not unduly restrictive and changes cannot be made to encourage greater competition, the recipient may determine the competition adequate. A cost analysis must be performed in lieu of a price analysis when this situation occurs. (b) Sole Source. When the recipient requires supplies or services available from only one responsible source, and no other supplies or services will satisfy its requirements, the recipient may make a sole source award. When the FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -17 recipient requires an existing contractor to make a change to its contract that is beyond the scope of that contract, the recipient has made a sole source award that must be justified. 1 Unique Capability or Availability. The property or services are available from one source if one of the conditions described below is present: a Unique or Innovative Concept. The offeror demonstrates a unique or innovative concept or capability not available from another source. Unique or innovative concept means a new, novel, or changed concept, approach, or method that is the product of original thinking, the details of which are kept confidential or are patented or copyrighted, and is available to the recipient only from one source and has not in the past been available to the recipient from another source. b Patents or Restricted Data Rights. Patent or data rights restrictions preclude competition. c Substantial Duplication Costs. In the case of a follow -on contract for the continued development or production of highly specialized equipment and major components thereof, when it is likely that award to another contractor would result in substantial duplication of costs that are not expected to be recovered through competition. d Unacceptable Delay. In the case of a follow -on contract for the continued development or production of a highly specialized equipment and major components thereof, when it is likely that award to another contractor would result in unacceptable delays in fulfilling the recipient's needs. 2 Single Bid or Single Proposal. Upon receiving a single bid or single proposal in response to a solicitation, the recipient should determine if competition was adequate. This should include a review of the specifications for undue restrictiveness and might include a survey of potential sources that chose not to submit a bid or proposal. a Adequate Competition. FTA acknowledges competition to be adequate when the reasons for few responses were caused by conditions beyond the recipient's control. Many unrelated factors beyond the recipient's control might cause potential sources not to submit a bid or proposal. If the competition can be determined adequate, FTA's competition requirements will be fulfilled, and the procurement will qualify as a valid competitive award. Page VI -18 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 b Inadequate Competition. FTA acknowledges competition to be inadequate when, caused by conditions within the recipient's control. For example, if the specifications used were within the recipient's control and those specifications were unduly restrictive, competition will be inadequate. (c) Unusual and Compelling Urgency. The Common Grant Rule for governmental recipients permits the recipient to limit the number of sources from which it solicits bids or proposals when a recipient has such an unusual and urgent need for the property or services that the recipient would be seriously injured unless it were permitted to limit the solicitation. The recipient may also limit the solicitation when the public exigency or emergency will not permit a delay resulting from competitive solicitation for the property or services. (d) Associated Capital Maintenance Item Exception Repealed. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA -LU) repealed the special procurement preference previously authorized for associated capital maintenance items. Thus, any sole source procurement of associated capital maintenance items must qualify for an exception under the same standards that would apply to other sole source acquisitions. (e) Authorized by FTA. The Common Grant Rules provide Federal agencies authority to permit a recipient to use noncompetitive proposals. Under this authority, FTA has made the following determinations: 1 Consortium, Joint Venture, Team, Partnership. With some exceptions, when FTA awards a grant agreement or enters into a cooperative agreement with a consortium, joint venture, team, or partnership, or provides FTA assistance for a research project in which FTA has approved the participation of a particular firm or combination of firms in the project work, the grant agreement or cooperative agreement constitutes approval of those arrangements. In such cases, FTA expects the recipient to use competition, as feasible, to select other participants in the project. 2 FAR Standards. To ensure that the recipient has flexibility equal to that of Federal contracting officers, FTA authorizes procurement by noncompetitive proposals in all of the circumstances authorized by FAR Part 6.3. In addition to circumstances discussed in the Common Grant Rules, the FAR authorizes less than full and open competitive procurements in one or more of the following circumstances: FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -19 a Statutory Authorization or Requirement. To comply with Department of Transportation (DOT) appropriations laws that include specific statutory requirements, with the result that only a single contractor can perform certain project work. b National Emergency. To maintain a facility, producer, manufacturer, or other supplier available to provide supplies or services in the event of a national emergency or to achieve industrial mobilization. c Research. To establish or maintain an educational or other non - profit institution or a federally funded research and development center that has or will have an essential engineering, research, or development capability. d Protests, Disputes, Claims, Litigation. To acquire the services of an expert or neutral person for any current or anticipated protest, dispute, claim, or litigation. e International Arrangements. When precluded by the terms of an international agreement or a treaty between the United States and a foreign government or international organization, or when prohibited by the written directions of a foreign government reimbursing the recipient for the cost of the acquisition of the supplies or services for that government. f National Security. When the disclosure of the recipient's needs would compromise the national security. g Public Interest. When the recipient determines that full and open competition in connection with a particular acquisition is not in the public interest. (2) When Prohibited. Less than full and open competition is not justified based on: (3) (a) Failure to Plan. The recipient's lack of advance planning, or (b) Limited Availability of Federal Assistance. Concerns about the amount of Federal assistance available to support the procurement (for example, expiration of Federal assistance previously available for award). Procurement Procedures. When less than full and open competition is available to the recipient, the Common Grant Rule for governmental recipients directs the recipient to: Page VI -20 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (a) Potential Sources. Solicit offers from as many potential sources as is practicable under the circumstances. (b) Sole Source Justification. If the recipient decides to solicit an offer from only one source, the recipient must justify its decision adequately in light of the standards of subparagraph 3.i(1)(b) of this Chapter. FTA expects this sole source justification to be in writing. (c) Cost Analysis. Prepare or obtain a cost analysis verifying the proposed cost data, the projections of the data, and the evaluation of the costs and profits. (d) Preaward Review. Submit the proposed procurement to FTA for preaward review if FTA so requests. 4. ELIGIBLE COSTS. Property and services must be eligible for Federal participation under the standards of the Federal cost principles applicable to the recipient before the recipient may use FTA assistance to support its costs (2 CFR Part 220, 2 CFR Part 225, 2 CFR Part 230, or FAR Part 31). A recipient may use its own cost principles that comply with applicable Federal cost principles. FTA assistance may support contract costs or prices based on estimated costs only if the costs incurred or cost estimates included in negotiated prices comply with applicable Federal cost principles, and the property or services are eligible for Federal assistance under the terms of the underlying grant or cooperative agreement. 5. INCENTIVE COSTS AND PAYMENTS. SAFETEA -LU added a new amendment, 49 U.S.C. Section 5309(1), authorizing incentive payments to contractors that provide accurate cost and ridership estimates in connection with a new fixed guideway capital project, and to contractors that enable a new fixed guideway capital project to be completed for less than its original estimated cost. These incentive payments will be allowable costs in addition to other eligible project costs and must be "necessary and reasonable." See, the Questions and Answers pertaining to incentive contracts at FTA's Web site: http : / /www.fta. dot.gov/ funding / thirdpartyprocurement /faq /grants_financing_6148.ht ml. 6. COST ANALYSIS AND PRICE ANALYSIS. The Common Grant Rules require the recipient to perform a cost analysis or price analysis in connection with every procurement action, including contract modifications. The method and degree of analysis depends on the facts and circumstances surrounding each procurement, but as a starting point, the recipient must make independent estimates before receiving bids or proposals. a. Cost Analysis. The recipient must obtain a cost analysis when a price analysis will not provide sufficient information to determine the reasonableness of the contract cost. The recipient must obtain a cost analysis when the offeror submits elements (that is, labor hours, overhead, materials, and so forth) of the estimated cost, (such as FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -21 professional consulting and A &E contracts, and so forth). The recipient is also expected to obtain a cost analysis when price competition is inadequate, when only a sole source is available, even if the procurement is a contract modification, or in the event of a change order. The recipient, however, need not obtain a cost analysis if it can justify price reasonableness of the proposed contract based on a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation. (1) Federal Cost Principles. Federal cost principles contain many requirements about the allowability and allocability of costs. (2) Profit. FTA expects the recipient to negotiate profit as a separate element of the cost for each contract in which there has been no price competition, and in all acquisitions in which the recipient performs or acquires a cost analysis. To establish a fair and reasonable profit, the recipient needs to consider the complexity of the work to be performed, the risk undertaken by the contractor, the contractor's investment, the amount of subcontracting, the quality of the contractor's record of past performance, and industry profit rates in the surrounding geographical area for similar work. b. Price Analysis. If the recipient determines that competition was adequate, a price analysis, rather than a cost analysis, is required to determine the reasonableness of the proposed contract price. As discussed previously in subsection 3.a of this Chapter, the price analysis for micro- purchases may be limited. Similarly, the recipient may use an abbreviated price analysis for small purchases in most cases. One method to record this price analysis is through the use of a preprinted form on which a contracting officer (or other responsible person) can annotate a finding of fair and reasonable pricing and check off the most common reasons why this would be so, such as catalog or market prices offered in substantial quantities to the general public, regulated prices (for example, for many utilities purchases), or a comparison with recent prices for similar goods and services. c. Guidance on Cost and Price Analysis. FTA recognizes that some recipients may have difficulty obtaining the information necessary to conduct a proper cost or price analysis. Although neither FTA nor DOT may change the Common Grant Rules' requirements for cost or price analysis, FTA continues to seek a fair, practical solution to this problem consistent with the flexibility provided to Federal contracting officers under the FAR The recipient may use the following resources as guidance in preparing cost or price analyses: (1) FTA's "Best Practices Procurement Manual," Chapter 5, (2) The National Transit Institute Course, "Cost or Price Analysis and Risk Assessment," Page VI -22 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (3) Pricing Guide for FTA Grantees, FTA Web Site: http: / /www.fta. dot. gov / documents /Helpline_Price_Guide.doc., (4) FAR Part 31, Contract Cost Principles and Procedures, and (5) Defense Contract Audit Agency Audit Manual. See, the DCAA Web site: http://www.dcaa.mil. Note, however, that the requirements of FAR Part 31 and the Defense Contract Audit Agency Audit Manual may differ from restrictions applicable to an FTA recipient. Each FTA recipient must comply with those Federal laws and regulations directly applicable to it. 7. EVALUATIONS. The following standards apply: a. General. When evaluating bids or proposals submitted, FTA expects the recipient to consider all evaluation factors specified in its solicitation documents, and evaluate the bids or offers only on the evaluation factors included in those solicitation documents. The recipient may not modify its evaluation factors after bids or proposals have been submitted without re- opening the solicitation. b. Options. In awarding the contract that will include options, the following standards apply: (1) Evaluation Required. In general, FTA expects the recipient to evaluate bids or offers for any option quantities or periods contained in a solicitation if it intends to exercise those options after the contract is awarded. (2) Evaluation Not Required. The recipient need not evaluate bids or offers for any option quantities when the recipient determines that evaluation would not be in its best interests. An example of a circumstance that may support a recipient's determination not to evaluate bids or offers for option quantities is when the recipient is reasonably certain that funds will not be available to permit it to exercise the option. c. Evaluators. In addition to evaluators with experience in technical or public policy matters related to the procurement, other evaluators may also include auditors and financial experts to the extent that the recipient determines would be necessary or helpful. Although many FTA recipients assign evaluation duties to their own personnel, a recipient lacking qualified personnel within its organization may contract for the evaluation services it needs. If the recipient does contract for evaluation services, the procurement standards of this circular will apply to those contracts and to those contractors selected to perform procurement evaluation functions on behalf of the recipient. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI 23 8. CONTRACT AWARD. The following provisions apply to third party contract awards: a. Award to Other Than the Lowest Bidder or Offeror. Federal transit law at 49 U.S.C. Section 5325(c) authorizes the recipient to award a contract to other than the lowest bidder if the award furthers an objective consistent with the purposes of 49 U.S.C. Chapter 53, including improved long -term operating efficiency and lower long -term costs. The recipient may also award a contract to other than the offeror whose proposal is lowest, when stated in the evaluation factors of the solicitation. In both cases, the recipient should include a statement in its solicitation document reserving the right to award the contract to other than the low bidder or offeror. b. Award Only to a Responsible Bidder or Offeror. SAFETEA -LU amended 49 U.S.C. Section 5325 to require FTA assisted contract awards be made only to "responsible" contractors possessing the ability, willingness, and integrity to perform successfully under the terms and conditions of the contract. Responsibility is a procurement issue that is determined by the recipient after receiving bids or proposals and before making contract award. FTA expects the prospective contractor to demonstrate affirmatively to the recipient that it qualifies as "responsible" under the standards of 49 U.S.C. Section 5325, and that its proposed subcontractors also qualify as "responsible." To designate a prospective contractor "responsible" as required by 49 U.S.C. Section 5325, FTA expects the recipient, at a minimum, to determine and ensure that the prospective contractor satisfies the following criteria described herein. In addition to being otherwise qualified and eligible to receive the contract award under applicable laws and regulations, a responsible contractor must fulfill the following criteria: (1) Integrity and Ethics. Have a satisfactory record of integrity and business ethics, in compliance with 49 U.S.C. Section 5325(j)(2)(A), (2) Debarment and Suspension. Be neither debarred nor suspended from Federal programs under DOT regulations, "Nonprocurement Suspension and Debarment," 2 CFR Parts 180 and 1200, or under the FAR at 48 CFR Chapter 1, Part 9.4, (3) Affirmative Action and DBE. Be in compliance with the Common Grant Rules' affirmative action and FTA's Disadvantaged Business Enterprise requirements, (4) Public Policy. Be in compliance with the public policies of the Federal Government, as required by 49 U.S.C. Section 5325(j)(2)(B), (5) Administrative and Technical Capacity. Have the necessary organization, experience, accounting, and operational controls, and technical skills, or the ability to obtain them, in compliance with 49 U.S.C. Section 5325(j)(2)(D), Page VI -24 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (6) Licensing and Taxes. Be in compliance with applicable licensing and tax laws and regulations, (7) Financial Resources. Have, or can obtain, sufficient financial resources to perform the contract, as required by 49 U.S.C. Section 5325(j)(2)(D), (8) Production Capability. Have, or can obtain, the necessary production, construction, and technical equipment and facilities, (9) Timeliness. Be able to comply with the required delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments, and (10) Performance Record. Be able to provide: (a) Current Performance. A satisfactory current performance record, and (b) Past Performance. A satisfactory past performance record in view of its records of long -time performance or performance with a predecessor entity, including: 1 Sufficient Resources. Key personnel with adequate experience, a parent firm with adequate resources and experience, and key subcontractors with adequate experience and past performance, 2 Adequate Past Experience. Past experience in carrying out similar work with particular attention to management approach, staffing, timeliness, technical success, budgetary controls, and other specialized considerations as described in the recipient's solicitation, and 3 Past Deficiencies Not the Fault of the Bidder or Offeror. A prospective bidder or offeror that is or recently has been seriously deficient in contract performance is presumed to be nonresponsible, unless the recipient determines that the circumstances were properly beyond the bidder or offeror's control, or unless the bidder or offeror has taken appropriate corrective action. Past failure to apply sufficient tenacity, perseverance, and effort to perform acceptably is strong evidence of nonresponsibility. Failure to meet the quality requirements of a contract is a significant factor to consider in determining satisfactory performance. FTA expects the recipient to consider the number of the bidder or offeror's contracts involved and the extent of deficient performance in each contract when making this determination. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VI -25 Before entering into a full funding contract for a fixed guideway project, the recipient must now consider the prospective contractor's past performance in estimating costs and ridership as reported in the Contractor Performance Assessment Reports, as required by 49 U.S.C. Section 5325(j)(2)(C). c. Rejection of Bids and Proposals. Depending on the type of recipient, the following applies: (1) Governmental Recipients. The Common Grant Rule for governmental recipients asserts the recipient's right to reject all bids submitted in response to an invitation for bids or request for proposals. (2) Non - Governmental Recipients. The Common Grant Rule for non - governmental recipients authorizes the recipient to reject any and all bids and proposals when it is in the recipient's interest to do so. d. Extent and Limits of Contract Award. A selection of a contractor to participate in one aspect of a project does not, by itself, constitute a sole source selection of the contractor's wholly owned affiliates to perform other work in connection with the project. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 VII. CHAPTER VII PROTESTS, CHANGES AND MODIFICATIONS, DISPUTES, CLAIMS, LITIGATION, AND SETTLEMENTS Page VII -1 The Common Grant Rules assign responsibility to the recipient for resolving all contractual and administrative issues arising out of their third party procurements, including source evaluation and selection, including protests of awards, disputes, and claims using good administrative practices and sound business judgment. The Federal Transit Administration (FTA) also encourages the recipient to use appropriate alternative dispute resolution procedures. Neither FTA nor the Common Grant Rules relieve the recipient of any responsibility under its contracts to resolve disagreements that may arise in the course of contract formation or contract administration. FTA is not a party to its recipients' third party contracts, and does not have any obligation to any participant in its recipients' third party contracts. In general, FTA will not substitute its judgment for that of the recipient or subrecipient unless the matter is primarily a Federal concern. Examples of "Federal concerns" include, but are not limited to, situations "where a special Federal interest is declared because of program management concerns, possible mismanagement, impropriety, waste, or fraud." Nevertheless, FTA can become involved in the recipient's administrative decisions when a recipient's protest decision is appealed to FTA, or when the recipient seeks to use FTA assistance to support the costs of settlements or other resolutions of protests, disputes, claims, or litigation. 1. PROTESTS. a. The Recipient's Role and Responsibilities. The Common Grant Rules charge the recipient with the initial responsibility to resolve protests of third party contract awards. (1) Protest Procedures. Apart from other methods the recipient may have to resolve third party contract issues, such as mediation or arbitration, the Common Grant Rule for governmental recipients requires the recipient to have protest procedures. While the Common Grant Rule for non - governmental recipients does not impose a similar requirement on a non - governmental recipient, FTA expects each recipient to have appropriate written protest procedures, as part of its requirement to maintain or acquire adequate technical capacity to implement the project. (2) Responsibilities to FTA. The recipient's minimum responsibilities to FTA consist of the following: (a) Notify FTA Expeditiously. The Common Grant Rule for governmental recipients requires a governmental recipient to notify FTA when it receives a third party contract protest to which this circular applies, and to keep FTA Page VII -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 informed about the status of the protest. Anon- governmental recipient involved in a protest is similarly expected to notify FTA when it receives a third party contract protest to which the circular applies, and to similarly keep FTA informed about the status of the protest. The recipient is expected to provide the following information: 1 Subjects. A list of protests involving third party contracts and potential third party contracts that: a Have a value exceeding $100,000, or b Involve a controversial matter, irrespective of amount, or c Involve a highly publicized matter, irrespective of amount. 2 Details. The following information about each protest: a A brief description of the protest, b The basis of disagreement, and c If open, how far the protest has proceeded, or d If resolved, the agreement or decision reached, and Whether an appeal has been taken or is likely to be taken. 3 When and Where. The recipient should provide this information: a In its next quarterly Milestone Progress Report, and b At its next Project Management Oversight review, if any. Small recipients may report less frequently if no protests are outstanding. 4 FTA Officials to Notify. When a recipient denies a bid protest, and especially if an appeal to FTA is likely to occur, FTA expects the recipient to inform the FTA Regional Administrator for the region administering a regional project, or the FTA Associate Administrator for the program office administering a headquarters project directly. FTA also encourages the recipient to keep its FTA project manager informed about protests with which it is involved. In particular, the recipient should contact its project manager about any unusual activity. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VII -3 (b) Access to Information. FTA expects the recipient to disclose information about any third party procurement protest to FTA upon request. FTA reserves the right to require the recipient to provide copies of a particular protest or all protests, and any or all related supporting documents as FTA may determine necessary. b. FTA's Role and Responsibilities. FTA has developed an appeals process for reviewing protests of a recipient's procurement decisions. (1) Requirements for the Protester. The protester must: (a) Qualify as an "Interested Party." Only an "interested party" qualifies for FTA review of its appeal. An "interested party" is a party that is an actual or prospective bidder or offeror whose direct economic interest would be affected by the award or failure to award the third party contract at issue. 1 Subcontractors. A subcontractor does not qualify as an "interested party" because it does not have a direct economic interest in the results of the procurement. 2 Consortia/Joint Ventures/Partnerships /Teams. An established consortium, joint venture, partnership, or team that is an actual bidder or offeror and is acting in its entirety, would qualify as an "interested party" because it has a direct economic interest in the results of the procurement. An individual member of a consortium, joint venture, partnership, or team, acting solely in its individual capacity, does not qualify as an "interested party" because it does not have a direct economic interest in the results of the procurement. 3 Associations or Organizations. An association or organization that does not perform contracts does not qualify as an "interested party," because it does not have a direct economic interest in the results of the procurement. (b) Exhaust Administrative Remedies. The protester must exhaust its administrative remedies by pursuing the recipient's protest procedures to completion before appealing the recipient's decision to FTA. (c) Appeal Within Five Days. The protester must deliver its appeal to the FTA Regional Administrator for the region administering its project or the FTA Associate Administrator for the program office administering its project within five (5) working days of the date when the protester has received actual or constructive notice of the recipient's final decision. Likewise, the protester must provide its appeal to the FTA Regional Administrator for the region administering its project or the FTA Associate Administrator for the program Page VII-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 office administering its project within five (5) working days of the date when the protester has identified other grounds for appeal to FTA. For example, other grounds for appeal include the recipient's failure to have or failure to comply with its protest procedures or failure to review the protest. (2) Extent of FTA Review. As provided in the Common Grant Rule for governmental recipients, FTA will limit its review of third party contract protests as follows: (3) (a) The Recipient's Procedural Failures. FTA will consider a protest if the recipient: 1 Does not have protest procedures, or 2 Has not complied with its protest procedures, or 3 Has not reviewed the protest when presented an opportunity to do so. (b) Violations of Federal Law or Regulations. FTA will not consider every appeal filed by a protestor of an FTA recipient's protest decision merely because a Federal law or regulation may be involved. Instead, FTA will exercise discretionary jurisdiction over those appeals involving issues important to FTA's overall public transportation program. FTA will refer violations of Federal law for which it does not have primary jurisdiction to the Federal authority having proper jurisdiction. (c) Violations of State or Local Law or Regulations. FTA will refer violations of State or local law to the State or local authority having proper jurisdiction. FTA Determinations to Decline Protest Reviews. FTA's determination to decline jurisdiction over a protest does not mean that FTA approves of or agrees with the recipient's decision or that FTA has determined the contract is eligible for Federal participation. FTA's determination means only that FTA does not consider the issues presented to be sufficiently important to FTA's overall program that FTA considers a review to be required. 2. CHANGES AND MODIFICATIONS. a. The Recipient's Role and Responsibilities. The recipient is responsible for issuing, evaluating, and making necessary decisions involving any change to its third party contracts, and any change orders, or modifications it may issue. The recipient is also responsible for evaluating and making the necessary decisions involving any claim of a constructive change. In general, FTA expects each recipient to comply with the following procedures: FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VII -5 (1) Approval Requirements. FTA expects the recipient to have cost justifications supporting each change order it may issue. FTA also expects the recipient's authorized official to approve any proposed change order before it is issued. (2) Cost Restrictions. To be eligible for FTA assistance under the recipient's grant or cooperative agreement, the cost of the change, modification, change order, or constructive change must be allowable, allocable, within the scope of its grant or cooperative agreement, and reasonable for the completion of project scope. A more extensive discussion on Changes and Modifications can be found in FTA's Best Practices Procurement Manual (BPPM). b. FTA's Role and Responsibilities. FTA does not participate in the recipient's decisions involving change orders, constructive changes, or modifications, but reserves the right to review the recipient's supporting documentation as necessary to determine the extent of FTA assistance that may be used to support those costs. 3. DISPUTES. a. The Recipient's Role and Responsibilities. The Common Grant Rules charge the recipient with responsibility for evaluating and resolving third party contract disputes. If the recipient intends to request FTA's permission to use Federal assistance to support payments to a third party contractor to settle a dispute, or intends to request increased Federal assistance for that purpose, the recipient's responsibilities are as follows: (1) Notify FTA. FTA expects the recipient to provide the following information in connection with third party contract disputes in which it is involved: (a) Subiects. A list of disputes involving third party contracts and potential third party contracts that: 1 Have a value exceeding $100,000, 2 Involve a controversial matter, irrespective of amount, or 3 Involve a highly publicized matter, irrespective of amount. (b) Details. The following information about each dispute: 1 A brief description of the dispute, 2 The basis of disagreement, and 3 If open, how far the dispute has proceeded, or Page VII-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 4 If resolved, the agreement or decision reached, and 5 Whether an appeal has been taken or is likely to be taken. (c) When and Where. The recipient should provide this information: 1 In its next quarterly Milestone Progress Report, and 2 At its next Project Management Oversight review, if any. Small recipients may report less frequently if no disputes are outstanding. (d) FTA Officials to Notify. FTA also encourages the recipient to keep its FTA project manager informed about disputes with which it is involved. In particular, the recipient should contact its project manager about any unusual activity. (2) Adequate Documentation. FTA expects the recipient to include adequate documentation in its project files of the facts, events, negotiations, applicable laws, and a legal evaluation of the likelihood of success in any potential litigation involving the dispute as may be needed to justify FTA's concurrence in any compromise or settlement, should FTA concurrence become necessary. (3) Audit. An audit can help the recipient demonstrate that any settlement costs, if incurred, are necessary, reasonable, adequately documented, and appropriate for FTA support. The recipient should consider conducting or obtaining a formal audit to substantiate each part of a large contract dispute before entering into a settlement. The audit should be conducted in accordance with "Generally Accepted Auditing Standards" as defined by the American Institute of Certified Public Accountants. FTA also encourages the recipient to undertake an audit or similar analysis before settlement of a small dispute. b. FTA's Role and Responsibilities. FTA generally does not become involved in negotiating the resolution of a recipient's disputes. However, FTA does reserve the right to become involved as follows: (1) Determine Reasonableness. FTA may review the reasonableness of a negotiated settlement to determine the extent of its participation in the costs of the settlement. (2) Review Documents. When FTA considers necessary, FTA may review the recipient's files and history pertaining to the dispute or experience under a particular grant or cooperative agreement. If the recipient has already disbursed amounts determined to be ineligible through subsequent audit or FTA review, the recipient must return those amounts to FTA, unless FTA determines otherwise. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VII -7 FTA reserves the right to defer participation in settlement costs until it receives an adequate audit. 4. CLAIMS AND LITIGATION. a. The Recipient's Role and Responsibilities. The Common Grant Rules charge the recipient with responsibility for evaluating and resolving third party contract claims and litigation resulting from a contractor's violation, default, or breach of its third party contracts with recipients of Federal assistance. The recipient is also responsible for resolving any claims and litigation the contractor may present against it. Due to FTA's financial interest in the settlement of third party contract claims and litigation, and concerns about matters with significant policy consequences to the Federal Government, FTA expects the recipient to: (1) Notify FTA. FTA expects the recipient to provide the following information in connection with third party contract claims and litigation with which it is involved. (a) Subjects. A list of claims and litigation involving third party contracts and potential third party contracts that: 1 Have a value exceeding $100,000, 2 Involve a controversial matter, irrespective of amount, or 3 Involve a highly publicized matter, irrespective of amount. (b) Details. The following information about each claim or lawsuit: 1 A brief description of the claim or litigation, 2 The basis of disagreement, and 3 If open, how far the claim or litigation has proceeded, or 4 If resolved, the decision or agreement reached, and 5 Whether an appeal has been or is likely to be taken. (c) When and Where. The recipient should provide this information: 1 In its next quarterly Milestone Progress Report, and 2 At its next Project Management Oversight review, if any. Page VII -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Small recipients may report less frequently if no claims or litigation are outstanding. (d) FTA Officials to Notify. FTA also encourages the recipient to keep its FTA project manager informed about claims and litigation with which it is involved. In particular, the recipient should contact its project manager about any unusual activity. (2) Legal Rights and Remedies. In resolving third party contract claims, FTA expects the recipient to take reasonable measures to pursue its rights and remedies available under law, including settlement, particularly if failure to do so would jeopardize the Federal interest in the project or cause the recipient to seek additional Federal assistance. b. FTA's Role and Responsibilities. In support of its financial interest in the settlement of claims and litigation involving any federally assisted third party contracts, FTA has retained its discretion to assert the following rights: (1) Proceeds Recovered. FTA retains a right to a share of any net proceeds recovered through a third party contract claim or litigation, in proportion to the amount FTA has committed to the project, unless FTA permits other uses of the proceeds recovered. (2) Liquidated Damages. If the third party contract includes a liquidated damages provision, FTA expects the recipient to credit any liquidated damages recovered to the project, unless FTA permits other uses of the liquidated damages. For example, in negotiating the terms of a claim or litigation settlement, it may be reasonable for the recipient to exchange some or all liquidated damages that may be due the recipient for additional property or services. 5. FTA PARTICIPATION IN SETTLEMENTS, ARBITRATION AWARDS, AND COURT AWARDS. a. The Recipient's Responsibilities. (1) Settlement Arrangements Must Be Reasonable. FTA recognizes that a settlement may require the recipient to relinquish its rights to amounts it would otherwise be due, including amounts for liquidated damages and other matters, were it to prevail on all matters at issue. Still, FTA expects the recipient to enter into a settlement only if the recipient can justify its terms as reasonable. Reasonable settlement arrangements can take many forms. In certain situations, an agreement by the contractor to provide extra property or services in lieu of payments or reduced payments for damages, including liquidated damages, may be reasonable. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Page VII -9 (2) Maintain Sufficient Records. To justify FTA's participation in settlements, arbitration awards, or court awards, the recipient's records must be sufficient to demonstrate that the recipient has taken reasonable and prudent measures to prevent or offset the actions or circumstances resulting in the underlying protest, dispute, claim, or litigation. (3) Obtain FTA Concurrence. When the recipient incurs costs due to binding arbitration or court decision, FTA expects the recipient to secure FTA review and its written concurrence in a proposed or final settlement involving a dispute, claim, or litigation before using Federal assistance to support its costs if one of the following circumstances is present: (a) Exceeds $100,000. When the settlement exceeds $100,000. (b) Insufficient Funds. When the approved project lacks sufficient funds to cover the settlement costs. (c) Special Federal Interest or Federal Concern. When a special Federal interest or Federal concern is declared due to program management concerns, possible mismanagement, impropriety, waste, or fraud. b. FTA's Prerogatives. (1) Review Supporting Documentation. FTA reserves the right to review the recipient's supporting documentation. (2) Provide Federal Assistance. If FTA assistance is available, FTA may provide a prorated share of any eligible costs resulting from protests, disputes, claims, litigation, or settlements that were not caused by the recipient's mismanagement or are attributable to the contractor, and were otherwise properly incurred. (3) Deny Federal Assistance. Protests, disputes, claims, litigation, or settlements that result from the recipient's negligence or error are usually ineligible for FTA participation. FTA reserves the right to determine the extent to which FTA assistance may be used for any dispute, claim, litigation, or settlement caused in whole or part by the recipient's negligence or error. Examples of situations that might be caused by a recipient's negligence or error include, but are not limited to, the following: (a) Right -of -Way. Failure to ensure clear access to all needed right -of -way prior to award of the construction contract. (b) Utility Agreements. Failure to execute all required utility agreements in time to assure uninterrupted construction progress. Page VII -10 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 (c) Planning and Scheduling. Failure to undertake comprehensive project planning and scheduling to achieve proper coordination among contractors. (d) Subsurface Conditions. Failure to inform potential contractors of all available geo- technical information on subsurface conditions. (e) Materials Compatibility. Failure to ensure that all materials provided by the recipient are compatible with contractor project facilities or equipment or both and available when needed. (f) Pre - Construction Surveys and Engineering. Failure to complete all pre - construction surveys and engineering prior to issuing the contractor a Notice to Proceed. (g) Public Authority Approvals. Failure to complete the necessary approvals and agreements from all other public authorities affected by the project before contract award. (h) Drawing Approvals. Failure by the recipient to approve and provide all design and shop drawings to the contractor promptly as needed. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix A -1 A. APPENDIX A REFERENCES 1. Federal Transit Laws, Title 49, United States Code, Chapter 53; also public transportation provisions of Title 23, United States Code. 2. Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, (SAFETEA -LU), Public Law 109 -59, August 10, 2005, as amended by the SAFETEA -LU Technical Corrections Act, 2008, Public Law 110 -244, June 6, 2008. 3. Transportation Equity Act for the 21st Century 1998 (TEA -21), Public Law 105 -178 as amended by TEA -21 Restoration Act 1998, Public Law 105 -206. 4. 7 U.S.C. Sections 2131 et seq. Animal Welfare Act, as amended. 5. 15 U.S.C. Sections 205a et seq.— Omnibus Trade and Competitiveness Act (Amendments to the Metric Conversion Act), 15 U.S.C. §§ 205a et seq. 6. 15 U.S.C. Section 644 note — Section 7101(a) of the Federal Acquisition Streamlining Act of 1994 (Repeal of Labor Surplus Area Programs). 7. 18 U.S.C. Section 874 — Section 1 of the Copeland Anti- Kickback Act, as amended. 8. 18 U.S.C. Section 1001 —Criminal Fraud. 9. 20 U.S.C. Sections 1681 et seq. —Title IX of the Education Amendments of 1972, as amended (Nondiscrimination on the Basis of Sex). 10. 23 U.S.C. Section 101 note — Section 451 of the Hiring Incentives to Restore Employment Act (HIRE Act), Pub. L. 111 -147, Title IV, Section 451, March 18, 2010. 11. 23 U.S.C. Section 512 note — Section 5307(c) of SAFETEA -LU (Intelligent Transportation Systems). 12. 29 U.S.C. Sections 201 et seq. —Fair Labor Standards Act, as amended (Wage and Hour Restrictions). 13. 29 U.S.C. Sections 621 through 634 —Age Discrimination in Employment Act (Prohibitions). 14. 29 U.S.C. Section 794 — Section 504 of the Rehabilitation Act of 1973, as amended (Nondiscrimination under Federal Grants on the Basis of Disability). 15. 29 U.S.C. Section 794d— Section 508 of the Rehabilitation Act of 1973, as amended (Electronic and Information Technology acquired with Federal funding to be Accessible). Appendix A -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 16. 31 U.S.C. Section 1352— Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transactions (Byrd "Anti- Lobbying" Amendment). 17. 31 U.S.C. Sections 3801 et seq. — Program Fraud Civil Remedies Act of 1986, as amended. 18. 31 U.S.C. Section 5112(p)— Section 104 of the Presidential $1 Coin Act of 2005 (Use of Coins in Transit Facilities and Equipment). 19. 31 U.S.C. Sections 7501 et seq. — Single Audit Act of 1984, as amended (Audits of Federally Funded Programs). 20. 33 U.S.C. Sections 1251 through 1377 —Clean Water Act. 21. 35 U.S.C. Sections 200 et seq. —Bayh -Dole Act (Patent Rights). 22. 40 U.S.C. Section 502(a)(3)— Federal Property and Administrative Services Act of 1949, as amended (General Services Administration (GSA) Schedule Use by the District of Columbia). 23.40 U.S.C. Section 502(c)(1)(A)— Section 211 of the E- Government Act of 2002 (GSA Schedule Use for Information Technology). 24. 40 U.S.C. Section 502(c)(1)(B)— Section 2 of the Local Preparedness Acquisition Act (GSA Schedule Use for Safety or Security Emergency Preparedness) 40 U.S.C. Section 502(c)(1)(B)— Section 2 of the Local Preparedness Acquisition Act (GSA Schedule Use for Safety or Security Emergency Preparedness). 25. 40 U.S.C. Section 502(d)— Section 833 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (GSA Schedule Use for Major Disaster or Emergency Relief). 26. 40 U.S.C. Chapter 11— Architectural Engineering Procurement Requirements ( "Brooks Act "). 27. 40 U.S.C. Sections 3141 et seq.— Davis -Bacon Act (Prevailing Wages). 28. 40 U.S.C. Section 3145— Section 2 of the Copeland Anti- Kickback Act, as amended. 29.40 U.S.C. Section 3701(b)(3)(A)(iii)— Section 4104(c) of the Federal Acquisition Streamlining Act of 1994) (Increased Wage and Hour Thresholds for Contract Work Hours and Safety Standards Act). 30. 40 U.S.C. Section 3702 — Section 102 of the Contract Work Hours and Safety Standards Act (Wage and Hour Restrictions). 31. 40 U.S.C. Section 3704 — Section 107 of the Contract Work Hours and Safety Standards Act (Construction Safety). FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix A -3 32. 41 U.S.C. Section 253m —(Two -Step Selection Procedures Process [for Federal Procurements]). 33. 41 U.S.C. Section 403(11)— Federal Acquisition Streamlining Act of 1994 (Definition of the [Federal] Simplified Acquisition Threshold). 34. 42 U.S.C. Sections 289 et seq.-National Research Act, as amended (Protection of Humans). 35.42 U.S.C. Sections 2000d et seq. —Title VI of the Civil Rights Act of 1964, as amended (Nondiscrimination). 36.42 U.S.C. Section 2000e et seq. —Title VII of the Civil Rights Act of 1964, as amended (Equal Employment Opportunity). 37.42 U.S.C. Sections 4601 et seq. — Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended. 38. 42 U.S.C. Section 5150— Stafford Act (Major Disaster or Emergency Relief). 39. 42 U.S.C. Sections 6101 et seq. —Age Discrimination Act of 1975, as amended, (Nondiscrimination on the Basis of Age in Federal or Federal Assistance Programs). 40. 42 U.S.C. Sections 6321 et seq.— Subchapter III, Part B, Energy Policy and Conservation Act (State Energy Conservation Plans). 41. 42 U.S.C. Section 6962 — Section 4002 of the Resource Conservation and Recovery Act of 1976, as amended (Recycled Materials). 42. 42 U.S.C. Sections 7401 through 7671q —Clean Air Act. 43. 42 U.S.C. Sections 7701 et seq.— Earthquake Hazards Reduction Act of 1977, as amended, (Seismic Safety). 44. 42 U.S.C. Sections 12101 et seq. — Americans with Disabilities Act of 1990, as amended (Accessibility for Persons with Disabilities). 45.46 U.S.C. Section 55305 —Cargo Preference Act (codified). 46. 48 U.S.C. Section 1469e —Use of GSA Supply Schedules by Insular Areas. 47. 49 U.S.C. Section 114(r)— Department of Transportation, Transportation Security Administration (Protection of Sensitive Security Information). 48. 49 U.S.C. Sections 303(b) and 303(c)— Department of Transportation (DOT) (Statutory protections for Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites). Appendix A-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 49. 49 U.S.C. Section 40118 — Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974, as amended ( "Fly America" Act – Persons and Property). 50. 49 U.S.C. Section 40119(b)— (Protection of Sensitive Security Information). 51. DOT regulations, "Nonprocurement Suspension and Debarment," 2 CFR Part 1200. 52. DOT regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments," 49 CFR Part 18 (Common Grant Rule for Governmental Recipients). 53. DOT regulations, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations," 49 CFR Part 19 (Common Grant Rule for Non - governmental Recipients). 54. DOT regulations, "Protection of Human Subjects," 49 CFR Part 11. 55. DOT regulations, "Protection of Sensitive Security Information," 49 CFR Part 15. 56. DOT regulations, "New Restrictions on Lobbying," 49 CFR Part 20. 57. DOT regulations, "Nondiscrimination in Federally Assisted Programs of the Department of Transportation – Effectuation of Title VI of the Civil Rights Act," 49 CFR Part 21. 58. DOT regulations, "Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs," 49 CFR Part 24. 59. DOT regulations, "Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance," 49 CFR Part 25. 60. DOT regulations, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs," 49 CFR Part 26, as amended by the "Disadvantaged Business Enterprise: Program Improvements" amendments thereto, 76 FR 5083 et seq. January 28, 2011. 61. DOT regulations, "Program Fraud Civil Remedies," 49 C.F.R. Part 31. 62. DOT regulations, "Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or Benefiting from Federal Financial Assistance," 49 CFR Part 27. 63. DOT regulations, "Transportation Services for Individuals with Disabilities (ADA)," 49 CFR Part 37, including Appendix A, "DOT Modifications of ATBCB Standards for Accessible Transportation Facilities." 64. Joint Architectural and Transportation Barriers Compliance Board (ATBCB) /DOT regulations, "Americans with Disabilities (ADA) Accessibility Specifications for Transportation Vehicles," 36 CFR Part 1192 and 49 CFR Part 38. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix A -5 65. DOT regulations, "Seismic Safety," 49 CFR Part 41 at Sections 41.117 and 41.120. 66. Federal Transit Administration (FTA) regulations, "Charter Service," 49 CFR Part 604. 67. FTA regulations, "School Bus Operations," 49 CFR Part 605. 68. FTA regulations, "Capital Leases," 49 CFR Part 639. 69. FTA regulations, "Prevention of Alcohol Misuse and Prohibited Drug Use in Transit Operations," 49 CFR Part 655. 70. FTA regulations, "Buy America," 49 CFR Part 661. 71. FTA regulations, "Pre -Award and Post - Delivery Audits of Rolling Stock Purchases," 49 CFR Part 663. 72. FTA regulations, "Bus Testing," 49 CFR Part 665. 73. Joint Federal Highway Administration (FHWA)/FTA regulations, "Environmental Impact and Related Procedures," 23 C.F.R. Part 771 and 49 C.F.R. Part 622. 74. Joint FHWA/FTA regulations, "Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites," 23 CFR Parts 771 and 774, and 49 CFR Part 622. 75. Federal Acquisition Regulation (FAR), 48 CFR Chapter 1. 76. FAR Subpart 6.3, 48 CFR Chapter 1, Subpart 6.3 (Federal Procurement by Noncompetitive Proposals). 77. FAR Subparts 25.1 and 25.2, 48 CFR Chapter 1, Subparts 25.1 and 25.2 (Federal Buy American Regulations). 78. FAR Part 31, 48 CFR Chapter 1, Part 31 (Federal Cost Principles). 79. FAR Subpart 31.2, 48 CFR Chapter 1, Subpart 31.2 (Contracts with Commercial Organizations). 80. Department of Homeland Security regulations, "Protection of Sensitive Security Information," 49 CFR Part 1520. 81. Department of Labor (DOL) regulations, "Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in part by Loans or Grants from the United States," 29 CFR Part 3. 82. DOL regulations "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 CFR Part 5. Appendix A-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 83. DOL guidelines, "Section 5333(b), Federal Transit Law," 29 CFR Part 215. 84. DOL regulations "Safety and Health Regulations for Construction," 29 CFR Part 1926. 85. Equal Employment Opportunity Commission regulations, "Age Discrimination in Employment Act," 29 CFR Part 1625. 86. DOL regulations, "Office of Federal Contract Compliance, Equal Employment Opportunity, Department of Labor," 41 CFR Chapter 60. 87. Department of Agriculture regulations, "Animal Welfare," 9 CFR Subchapter A, Parts 1, 2, 3, and 4. 88. Department of the Treasury regulations, "Surety Companies Doing Business with the United States," 31 CFR Part 223. 89. ATBCB regulations, "Electronic and Information Technology Accessibility Standards," 36 CFR Part 1194. 90. Department of Commerce regulations, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms," 37 CFR Part 401. 91. Department of Commerce, "Export Administration Regulations," 15 CFR Parts 730 et seq. 92. Environmental Protection Agency (EPA) regulations, "Comprehensive Procurement Guideline for Products Containing Recovered Materials," 40 CFR Part 247. 93. EPA regulations, "Control of Air Pollution from Mobile Sources," 40 CFR Part 85. 94. EPA regulations, "Control of Air Pollution from New and In -Use Motor Vehicles and New and In -Use Motor Vehicle Engines," 40 CFR Part 86. 95. EPA regulations, "Fuel Economy of Motor Vehicles," 40 CFR Part 600. 96. Council on Environmental Quality regulations, "Other Requirements of NEPA," 40 CFR Part 1506. 97. Department of Health and Human Services regulations, "Nondiscrimination on the Basis of Age in Programs or Activities Receiving Federal Financial Assistance," 45 CFR Part 90. 98. General Services Administration (GSA), "Federal Property Management Regulations," 41 CFR Parts 101 -42 through 101 -46, and 101 -48, 101 -49. 99. GSA regulations, "Use of United States Flag Air Carriers," 41 CFR Sections 301 - 10.131 through 301 - 10.143. 100. Maritime Administration regulations, "Cargo Preference U.S. Flag Vessels," 46 CFR Part 381. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix A -7 101. Executive Order No. 11246, "Equal Employment Opportunity," September 24, 1965, as amended by Executive Order No. 11375, "Amending Executive Order No. 11246 Relating to Equal Employment Opportunity," October 13, 1967. 102. Executive Order No. 12770, "Metric Usage in Federal Government Programs," 15 U.S.C. Section 205a note. 103. Executive Order No. 12898, "Federal Actions to Address Environmental Justice in Minority Populations and Low- Income Populations," February 11, 1994, 42 U.S.C. Section 4321 note. 104. Executive Order No. 13043, "Increasing Seat Belt Use in the United States," August 16, 1997, 23 U.S.C. Section 402 note. 105. Executive Order No.13132, "Federalism," August 4, 1999, 5 U.S.C._ Section 601 note. 106. Executive Order No. 13166, "Improving Access to Services for Persons with Limited English Proficiency," August 11, 2000, 42 U.S.C. Section 2000d -1 note. 107. Executive Order No. 13502, "Use of Project Labor Agreements for Federal Construction Projects," February 6, 2009, which rescinds Executive Order No. 13202, "Preservation of Open Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction Projects," February 17, 2001, as amended by Executive Order No. 13208, April 6, 2001, 41 U.S.C. Section 251 note. 108. Executive Order No. 13513, "Federal Leadership on Reducing Text Messaging While Driving," October 1, 2009, 23 U.S.C. Section 402 note. 109. Office of Management and Budget (OMB) "Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement)," 2 CFR Part 180. 110. OMB Guidance for Grants and Agreements, "Cost Principles for Educational Institutions (OMB Circular A -21)," 2 CFR Part 220. 111. OMB Guidance for Grants and Agreements, "Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A -87)," 2 CFR Part 225. 112. OMB Guidance for Grants and Agreements "Cost Principles for Non - Profit Organizations (OMB Circular A- 122)," 2 CFR Part 230. 113. OMB Circular A -133, "Audits of States, Local Governments, and Non - Profit Organizations," as revised. 114. GSA Order ADM 4800.2E, "Eligibility to Use GSA Sources of Supply and Services." 115. DOT Order 5610.2, "Department of Transportation (DOT) Order To Address Environmental Justice in Minority Populations and Low- Income Populations," 62 FR 18377, April 15, 1997. Appendix A -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 116. DOT Order 3902.10, "Text Messaging While Driving," December 30, 2009. 117. DOT, "Policy Guidance Concerning Recipients' Responsibilities to Limited English Proficient (LEP) Persons," December 14, 2005. 118. FTA Circular 4702.1A, "Title VI and Title VI- Dependent Guidelines for FTA Recipients," 05- 13 -07. 119. FTA Circular 5010.1D, "Grant Management Requirements," 11- 01 -08. 120. FTA Circular 9030.1C, "Urbanized Area Formula Program Grant Application Instructions" 10- 01 -98. 121. FTA Circular 9300.1B, "Capital Investment Program Guidance and Application Instructions" 11- 01 -08. 122. FTA Circular 9400.1A, "Federal Transit Administration Design and Art in Transit Projects," 06- 09 -95. 123. FTA, "Notice of Final Agency Guidance on the Eligibility of Joint Development Improvements under Federal Transit Law," 72 FR 5788, February 7, 2007. 124. FTA Notice, "FTA National ITS Architecture Policy on Transit Projects" 66 FR 1455 et seq., January 8, 2001. 125. FTA, Master Agreement (PDF). 126. FTA, "Best Practices Procurement Manual" 127. FTA, "Pricing Guide for FTA Grantees." 128. Defense Contract Audit Agency Audit Manual FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 B. APPENDIX B Appendix B -1 FTA REGIONAL AND METROPOLITAN OFFICE CONTACT INFORMATION Office Area Served Contact Information Region I Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont Transportation Systems Center Kendall Square 55 Broadway, Suite 920 Cambridge, MA 02142 -1093 Phone: 617 - 494 -2055 Fax: 617 -494 -2865 Region II New York and New Jersey One Bowling Green, Room 429 New York, NY 10004 -1415 Phone: 212 - 668 -2170 Fax: 212 - 668 -2136 Region III Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, and West Virginia 1760 Market Street, Suite 500 Philadelphia, PA 19103 -4124 Phone: 215- 656 -7100 Fax: 215- 656 -7260 Region W Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, and U.S. Virgin Islands 230 Peachtree St., N.W., Suite 800 Atlanta, GA 30303 Phone: 404 - 865 -5600 Fax: 404 - 865 -5605 Region V Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin 200 West Adams Street, Suite 320 Chicago, IL 60606 Phone: 312- 353 -2789 Fax: 312 - 886 -0351 Region VI Arkansas, Louisiana, New Mexico, Oklahoma, and Texas 819 Taylor Street, Room 8A36 Forth Worth, TX 76102 Phone: 817- 978 -0550 Fax: 817 - 978 -0575 Region VII Iowa, Kansas, Missouri, and Nebraska 901 Locust, Suite 404 Kansas City, MO 64106 Phone: 816- 329 -3920 Fax: 816 - 329 -3921 Appendix B -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Office Area Served Contact Information Region VIII Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming 12300 W Dakota Avenue, Suite 310 Lakewood, CO 80228 -2583 Phone: 720 - 963 -3300 Fax: 720 - 963 -3333 Region IX Arizona, California, Hawaii, Nevada, Guam, American Samoa, and the Northern Mariana Islands 201 Mission Street, Room 1650 San Francisco, CA 94105 -1839 Phone: 415- 744 -3133 Fax: 415- 744 -2726 Region X Alaska, Idaho, Oregon, and Washington 915 Second Avenue, Suite 3142 Seattle, WA 98174 -1002 Phone: 206 - 220 -7954 Fax: 206 - 220 -7959 Lower Manhattan Recovery Office Lower Manhattan One Bowling Green, Room 436 New York, NY 10004 Phone: 212- 668 -1770 Fax: 212 - 668 -2505 New York Metropolitan Office New York Metropolitan Area One Bowling Green, Room 428 New York, NY 10004 -1415 Phone: 212 - 668 -2201 Fax: 212- 668 -2136 Philadelphia Metropolitan Office Philadelphia Metropolitan Area 1760 Market Street, Suite 510 Philadelphia PA 19103 -4124 Telephone: 215-656-7070 Fax: 215- 656 -7269 Washington, DC Metropolitan Office Washington, DC Metropolitan Area 1990 K Street NW, Suite 510 Washington, DC 20006 -1178 Telephone: 202 - 219- 3562/219 -3565 Fax: 202 - 219 -3545 Chicago Metropolitan Office Chicago Metropolitan Area 200 West Adams Street, Suite 2410 Chicago, IL 60606 Telephone: 312-886-1616 Fax: 312 - 886 -0351 Los Angeles Metropolitan Office Los Angeles Metropolitan Area 888 S. Figueroa, Suite 1850 Los Angeles, CA 90012 Telephone: 213-202-3950 Fax: 213 - 202 -3961 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 C. APPENDIX C THIRD PARTY CONTRACTING CHECKLISTS Appendix C -1 CHAPTER II, Sec. 2 APPLICABILITY OF THE CIRCULAR CHECK Sec. 2.a Participants in FTA Assisted Procurements Sec. 2.a(1) Recipients of FTA Grants or Cooperative Agreements Sec. 2.a(1)(a) States Sec. 2.a(1)(a)1 Governmental Subrecipients of the State Sec. 2.a(1)(a)2 Private Non -Profit Subrecipients of the State Sec. 2.a(1)(b) Recipients and Subrecipients that are not States Sec. 2.a(2) Subrecipients of FTA Assistance Sec. 2.a(3) Recipients of Both FTA Assistance and Funds Provided by Another Federal Agency Sec. 2.a(4) Recipients of "Other Agreement" Assistance Sec. 2.a(5) Third Party Contractors and Subcontractors Sec. 2.a(5)(a) Status Sec. 2.a(5)(b) Effect of Federal Requirements Sec. 2.b Project Types and Third Party Contracts Sec. 2.b(1) Capital Contracts Sec. 2.b(1)(a) Capital Contracts Financed Without Federal Funds Sec. 2.b(1)(b) Art Sec. 2.b(1)(c) Over -the -Road Bus Accessibility Program Sec. 2.b(1)(d) Real Property Sec. 2.b(2) Operations Contracts Sec. 2.b(2)(a) Operations Contracts Financed with FTA Assistance Sec. 2.b(2)(b) Operations Contracts Financed Entirely Without FTA Assistance Sec. 2.b(3) Preventive Maintenance Contracts Sec. 2.b(4) Revenue Contracts Sec. 2.b(4)(a) Limited Contract Opportunities Sec. 2.b(4)(b) Open Contract Opportunities Sec. 2.b(5) Joint Development Sec. 2.b(5)(a) Construction Contracts Sec. 2.b(5)(b) Revenue Contracts Sec. 2.b(5)(c) Other Contracts Sec. 2.b(6) Public- Private Partnerships Sec. 2.b(7) Transactions Involving Complex Financial Arrangements Sec. 2.b(7) Force Account Sec. 3 Federal Laws and Regulations Sec. 3.a Common Grant Rules Sec. 3.a(1) Governmental Recipients Sec. 3.a(2) Non- Governmental Recipients Sec. 3.b Federal Acquisition Regulation Sec. 3.c Other Federal Requirements Sec. 3.c(1) Compilation in the Master Agreement Sec. 3.c(2) Conflicting Federal Requirements Sec. 3.d Waivers Sec. 4 State and Local Laws and Regulations Sec. 4.a Inadequate State and Local Requirements Sec. 4.b Conflicts Between Federal Requirements and State or Local Requirements Appendix C -2 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER III THE RECIPIENT'S RESPONSIBILITIES CHECK Sec. 1. Written Standards of Conduct Sec. 1.a Personal Conflicts of Interest - Sec. l .b Gifts Sec. 1.c Violations Sec. 2 Self- Certification Sec. 3 Third Party Contracting Capacity Sec. 3.a Written Procurement Procedures Sec. 3.a(1) Solicitations Sec. 3.a(1)(a) Clear Descriptions Sec. 3.a( 1)(b) Nonrestrictive Specifications Sec. 3.a(1)(c) Quality Requirements Sec. 3.a(1)(d) Preference for Performance Specifications Sec. 3.a(1)(e) Brand Name or Equal Sec. 3.a(2) Necessity Sec. 3.a(3) Lease Versus Purchase Sec. 3.a(4) Metric Usage Sec. 3.a(5) Environmental and Energy Efficiency Preferences Sec. 3.a(6) Procurement Methods Sec. 3.a(7) Legal Restrictions Sec. 3.a(8) Third Party Contract Provisions Sec. 3.a(9) Sources Sec. 3.a(10) Resolution of Third Party Contracting Issues Sec. 3.b Adequate Third Party Contract Provisions Sec. 3.c Industry Contracts Sec. 3.d Record Keeping Sec. 3.d(1) Procurement History Sec. 3.d(1)(a) Procurement Method Sec. 3.d(1)(b) Contract Type Sec. 3.d(1)(c) Contractor Selection Sec. 3.d(1)(d) Cost or Price Sec. 3.d(1)(e) Reasonable Documentation Sec. 3.d(2) Access to Records Sec. 3.e Special Notification Requirements for States Sec. 3.f Use of Technology/Electronic Commerce Sec. 3.f(1) Sufficient System Capacity Sec. 3.f(2) Written Procedures Sec. 3.f(3) Uses Sec. 3.f(3)(a) Standard Bidding and Proposal Procedures Sec. 3.f(3)(b) Electronic Bidding and Reverse Auctions Sec. 3.f(3)(b)1 Value Sec. 31(3)(b)2 Procedures Sec. 3.f(3)(b)2_a Notification) Sec. 3.f(3)(b)2.b Bid or Quote Submission Sec. 3.f(3)(b)2_c Information Displayed During the Auction Sec. 3.f(3)(b)2_d Information Not Displayed During the Auction Sec. 3.f(3)(b)2_e Information Displayed at the End of the Auction Sec. 3.f(3)(b)2_f Information Provided at the End of the Auction Sec. 4 Audit Sec. 4.a The Recipient's Auditors Sec. 4.b Independent Auditors Sec. 4.c Federal Audit Agencies FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -3 CHAPTER IV, Sec. 1 DETERMINING THE RECIPIENT'S NEEDS CHECK Sec. 1.a Eligibility Sec. 1.b Necessity Sec. 1.b(1) Unnecessary Reserves Sec. 1.b(2) Acquisition for Assignment Prohibitions Sec. 1.b(1)(a) General Prohibition Sec. 1.b(1)(b) Changes in the Recipient's Needs Sec. 1.b(1)(c) Exceptions Sec. 1.b(1)(e)1 Joint Procurements Sec. 1.b(1)(c)1 State or Local Government Purchasing Schedules or Purchasing Contracts Sec. 1.c Procurement Size Sec. 1.c(1) Joint Procurements Sec. 1.c(2) Small Procurements Sec. 1.d Options Sec. 1.e Lease Versus Purchase Sec. 1.f Specifications CHAPTER IV, Sec. 2.a. CONTRACTOR QUALIFICATIONS CHECK Sec. 2.a(1) "Responsibility" Requirements Sec. 2.a(2) Debarment and Suspension Sec. 2.a(2)(a) DOT Debarment and Suspension Regulations Sec. 2.a(2)(b) GSA Excluded Parties List System Sec. 2.a(2)(c) State Debarment and Suspension Lists Sec. 2.a(3) Conflict of Interest Sec. 2.a(4) Lobbying Certification and Disclosure Sec. 2.a(5) Federal Civil Rights Laws and Regulations Sec. 2.a(5)(a) Federal Equal Employment Opportunity (EEO) Requirements Sec. 2.a(5)(a)1 Nondiscrimination in Federal Public Transportation Programs Sec. 2.a(5)(a)2 Prohibition Against Employment Discrimination Sec. 2.a(5)(b) Nondiscrimination on the Basis of Sex Sec. 2.a(5)(c) Nondiscrimination on the Basis of Age Sec. 2.a(5)(d) Federal Protections for Individuals with Disabilities Sec. 2.a(6) Socio- Economic Development Sec. 2.a(6)(a) Disadvantaged Business Enterprises (DBE) Sec. 2.a(6)(b) Small and Minority Firms and Women's Business Enterprises Sec. 2.a(6)(b)1 Notice Sec. 2.a(6)(b)2 Contract Size Sec. 2.a(6)(b)3 Delivery Schedule Sec. 2.a(6)(b)4 Small Business Administration and the Department of Commerce Minority Business Development Agency Sec. 2.a(6)(b)5 Subcontracting Opportunities Sec. 2.a(7) Sensitive Security Information Sec. 2.a(8) Seat Belt Use Appendix C -4 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER IV, Sec.2.b ADMINISTRATIVE RESTRICTIONS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.b(1) Legal Eligibility Sec. 2.b(2) Scope of the Project Sec. 2.b(3) Period of Performance - Limits Sec. 2.b(3)(a) General Standards Sec. 2.b(3)(b) Federal Restrictions Sec. 2.b(3)(c) Time Extensions Sec. 2.b(4) Federal Cost Principles Sec. 2.b(4)(a) Governmental Entities Sec. 2.b(4)(b) Educational Institutions Sec. 2.b(4)(c) Non - Profit Entities Sec. 2.b(4)(d) For -Profit Entities Sec. 2.b(5) Payment Provisions Sec. 2.b(5)(a) FTA Support for the Project Sec. 2.b(5)(a)1 Award Made Sec. 2.b(5)(a)2 Preaward Authority Sec. 2.b(5)(a)3 Letter of No Prejudice Sec. 2.b(5)(b) Advance Payments Sec. 2.1)(5)(b)1 Use of FTA Assistance Prohibited Sec. 2.b(5)(b)2 Exceptions for Sound Business Reasons Sec. 2.b(5)(b)2_a Adequate Security for Advance Payments (FTA Concurrence) Sec. 2.b(5)(b)2.b Customary Advance Payments (FTA Concurrence - $100,000 +) Sec. 2.b(5)(b)2.b Public Utility Connections and Services Sec. 2.b(5)(b)2_b Rent Sec. 2.b(5)(b)2.b Tuition Sec. 2.b(5)(b)2.b Insurance Premiums Sec. 2.b(5)(b)2.b Subscriptions to Publications Sec. 2.b(5)(b)2.b Software Licenses Sec. 2.b(5)(b)2.b Construction Mobilization Services Sec. 2.b(5)(b)2.b Transportation Sec. 2.b(5)(b)2.b Hotel Reservations Sec. 2.b(5)(b)2_b Conference and Convention Registration Sec. 2.b(5)(b)2.b Other Sec. 2.b(5)(c) Progress Payments Sec. 2.b(5)(c)1 Adequate Security for Progress Payments Sec. 2.b(5)(c)2 Adequate Documentation Sec. 2.b(5)(c)3 Percentage of Completion Sec. 2.b(6) Protections Against Performance Difficulties Sec.2.b(6)(a) Changes Sec. 2.b(6)(b) Remedies Sec. 2.b(6)(b)1 Liquidated Damages Sec. 2.b(6)(b)2 Violation or Breach Sec. 2.b(6)(b)3 Suspension of Work Sec. 2.b(6)(b)4 Termination FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -5 CHAPTER IV, Sec. 2.c SOCIO - ECONOMIC REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.c(1) Labor Sec. 2.c(1)(a) Wage and Hour Sec. 2.c(1)(b) Fair Labor Standards Sec. 2.c(2) Civil Rights Sec. 2.c(2)(a) Nondiscrimination in Federal Public Transportation Programs Sec. 2.c(2)(b) Title VI of the Civil Rights Act Sec. 2.c(2)(c) Environmental Justice Sec. 2.c(2)(d) Limited English Proficiency (LEP) Sec. 2.c(2)(e) Nondiscrimination on the Basis of Disability Sec. 2.c(2)(e)1 Section 504 of the Rehabilitation Act of 1973, as amended (Section 504) Sec. 2.c(3)(e)2 The Americans with Disabilities Act of 1990, as amended (ADA) Sec. 2.c(3)(e)3 DOT Public Transportation Regulations- Section 504 and the ADA Sec. 2.c(3)(e)3.a Design and Construction Sec. 2.c(3)(e)3.b Accessibility and Usability Sec. 2.c(3)(e)3.c Complementary Paratransit Service Sec. 2.c(3)(e)3.d Equal Opportunity Sec. 2.c(2)(f) Electronic Reports and Information Sec. 2.c(3) Environmental Protections Sec. 2.c(3)(a) Environmental Mitigation Sec. 2.c(3)(b) National Environmental Policy Act Sec. 2.c(3)(b)1 Property Sec. 2.c(3)(b)2 Services Sec. 2.c(3)(c) Parks, Recreation Areas, Wildlife and Waterfowl Refuges, and Historic Sites Sec. 2.c(3)(d) Clean Air Sec. 2.c(3)(e) Clean Water Sec. 2.c(3)(f) Recycled Products Sec. 2.c(3)(g) Other Federal Environmental Protection Requirements Sec. 2.c(3)(g) Wild and Scenic Rivers Sec. 2.c(3)(g) Coastal Zones Sec. 2.c(3)(g) Wetlands Sec. 2.c(3)(g) Endangered Species Sec. 2.c(3)(g) Fisheries Sec. 2.c(3)(g) Archeological Sites Sec. 2.c(3)(g) Indian Sacred Sites Sec. 2.c(4) Energy Conservation Sec. 2.c(5) Preference for U.S. Property-Buy America Sec. 2.c(6) Shipments of Property-U.S. Flag Requirements Sec. 2.c(6)(a) Shipments by Ocean Vessel Sec. 2.c(6)(b) Shipments by Air Carrier Sec. 2.c(7) Project Travel -Use of U.S. Flag Air Carriers Appendix C -6 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER IV, Sec. 2.d TECHNICAL RESTRICTIONS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.d(1) Intelligent Transportation Systems Sec. 2.d(2) Metric Measurements Sec. 2.d(3) Use of $1 Coins CHAPTER IV, Sec. 2.e ROLLING STOCK - SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.e(1) Accessibility Sec. 2.e(2) Transit Vehicle Manufacturer Compliance with DBE Requirements Sec. 2.e(3) Minimum Service Life Sec. 2.e(4) Spare Ratios Sec. 2.e(5) Air Pollution and Fuel Economy Sec. 2.e(6) Preaward Review and Post Delivery Review Sec. 2.e(7) Bus Testing Sec. 2.e(8) In -State Dealers Sec. 2.e(9) Basis for Contract Award Sec. 2.e(10) Five -Year Limitation CHAPTER IV, Sec. 2.f PUBLIC TRANSPORTATION SERVICES - SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.f(1) Protections for Public Transportation Employees Sec. 2.f(2) Drug Use and Testing and Alcohol Misuse and Testing Sec. 2.f(3) Accessibility Sec. 21(4) Protection of Animals Sec. 2.f(5) Charter Service Restrictions Sec. 21(6) School Bus Restrictions CHAPTER IV, Sec. 2.g ART - SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.g(1) Criteria for Art in Federally Assisted Transit Projects Sec. 2.g(1)(a) Quality Sec. 2.g(1)(b) Effect Sec. 2.g(1)(c) Relationship Sec. 2.g(1)(d) Suitability Sec. 2.g(1)(e) Resilience Sec. 2.g(1)(f) Indestructibility Sec. 2. g(1)(g) Preservation Sec. 2.g(2) Choosing Art Works and Services of Artists Sec. 2.g(2)(a) Process Sec. 2.g(2)(b) Nondiscrimination Sec. 2.g(2)(c) Community Participation Sec. 2.g(2)(d) Selection Sec. 2.g(3) Compensation of Artists Sec. 2.g(4) Prohibition FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -7 CHAPTER IV, Sec. 2.h ARCHITECTURAL ENGINEERING AND RELATED SERVICES - SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.h(1) Qualifications -Based Requirements Sec. 2.h(2) Relation to Construction Sec. 2.h(2)(a) Purpose of Services Sec. 2.h(2)(b) Requirements in the Context of a Construction Project Sec. 2.h2)(b)1 End Products Used in Construction Sec. 2.h(2)(b)2 Services Related to Design of Construction Projects Sec. 2.h(2)(b)3 Actual Construction Sec. 2.h(2)(c) Type of Contractor Not Determinative Sec. 2.h(3) Equivalent State Law Sec. 2.h(4) Special Requirements for Indirect Cost Rates CHAPTER IV, Sec. 2.i CONSTRUCTION - SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.i(1) Bonding Sec. 2.i(1)(a) Bid Guarantee Sec. 2.i(1)(b) Performance Bond Sec. 2.i(1)(c) Payment Bond Sec. 2.i(1)(c)1 Less Than $1 Million Sec. 2.i(1)(c)2 More Than $1 Million but Less Than $5 Million Sec. 2.i(1)(c)3 More Than $5 Million Sec. 2.i(1)(d) Acceptable Sureties Sec. 2.i(1)(e) Reduced Bonding Sec. 2.i(1)(t) Excessive Bonding Sec. 2.i(2) Seismic Safety Sec. 2.i(3) Value Engineering Sec. 2.i(4) Equal Employment Opportunity Sec. 2.i(5) Prevailing Wages Sec. 2.i(6) Anti- Kickback Sec. 2.i(7) Construction Safety Sec. 2.i(8) Labor Neutrality Sec. 2.i(9) Preference for U.S. Property-Buy America Sec. 2.i(10) Accessibility Appendix C -8 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER IV, Sec. 2.j RESEARCH, DEVELOPMENT, DEPLOYMENT, AND SPECIAL STUDIES SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2j(1) Patent Rights Sec. 2.j(2) Rights m Data Sec. 2.j(2)(a) Publication Restrictions Sec. 2.j(2)(b) Distribution of Data Sec. 2.j(3) Export Control Sec. 2j(4) Protection of Human Subjects Sec. 2.j(5) Protection of Animals CHAPTER IV, Sec. 2.k AUDIT SERVICES — SPECIAL REQUIREMENTS ACQUISITION OF PROPERTY AND SERVICES CHECK Sec. 2.k(1) Single Audit Act Sec. 2.k(I)(a) Organizational Conflicts of Interest Sec. 2.k(1)(b) Eligibility of Costs Sec. 2.k(2) Other Project Audits Sec. 2.k(2)(a) Organizational Conflicts of Interest Sec. 2.k(2)(b) Verification of Indirect Costs Sec. 2.k(2)(c) Duplication of Services Sec. 2.k(2)(d) Obtaining Indirect Cost Rates Sec. 2.k(2)(d)1 Governmental Entities Sec. 2.k(2)(d)2 Indian Tribes Sec. 2.k(2)(d)3 Educational Institutions Sec. 2.k(2)(d)4 Non -Profit Entities Sec. 2.k(2)(d)5 Private For -Profit Entities Sec. 2.k(2)(e) Eligibility of Costs FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -9 CHAPTER V SOURCES CHECK Sec. 1 Force Account Sec. 2 Shared Use Sec. 3 Joint Procurements Sec. 3.a Use Encouraged Sec. 3.b All FTA and Federal Requirements Apply Sec. 4 State or Local Government Purchasing Schedules or Purchasing Contracts Sec. 4.a Use Encouraged Sec. 4.b All FTA and Federal Requirements Apply Sec. 5 Federal Excess and Surplus Property Sec. 6 Federal Supply Schedules Sec. 6.a Full Use of Federal Supply Schedules Sec. 6.b Limited Use of Federal Supply Schedules Sec. 6.b(1) Information Technology Sec. 6.b(2) Major Disaster or Emergency Recovery Sec. 6.b(3) Local Preparedness Acquisition Sec. 6.c All FTA and Federal Requirements Apply Sec. 6.d Competition and Price Reasonableness Sec. 7 Existing Contracts Sec. 7.a Permissible Actions Sec. 7.a(1) Exercise of Options Sec. 7.a(1)(a) Consistency with the Underlying Contract Sec. 7.a(1)(b) Price Sec. 7.a(1)(c) Awards Treated as Sole Source Procurements Sec. 7.a(1)(c)1 Failure to Evaluate Options Before Awarding the Underlying Contract Sec. 7.a(1)(c)2 Negotiating a Lower Option Price Sec. 7.a(2) Assignment of Contract Rights Sec. 7.a(2)(a) Acquisition Through Assigned Contract Rights Sec. 7.a(2)(b) Alternatives to Assigned Contract Rights Sec. 7.a(2)(b)1 Joint Procurements Sec. 7.a(2)(b)2 Intergovernmental Procurements Sec. 7.b Impermissible Actions Sec. 7.b(1) Improper Contract Expansion Sec. 7.b(2) Cardinal Changes Sec. 7.6(2)(a) Identifying Cardinal Changes Sec. 7.b(2)(b) Changes in Quantity Sec. 7.b(2)(c) Tests Sec. 7.b(2)(d) Rolling Stock Sec. 7.b(2)(e) Federal Procurement Standards Sec. 8 The Open Market Appendix C -10 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER VI OPEN MARKET PROCUREMENTS - COMPETITION CHECK Sec. 1 Competition Required Sec. 1.a Solicitation by the Recipient Sec. 1.b Unsolicited Proposals Sec. 1.b(1) Receipt Sec. 1.b(2) Adequate Description Sec. 1.b(3) Interest in the Property or Services Sec. 1.b(3) Adequate Opportunity to Compete Sec. 1.b(4) Contract Award Based on Proposals Received Sec. 1.c Prequalification Sec. 1.c(1) Lists Sec. 1.c(2) Sources Sec. 1.c(3) Qualification Periods Sec. 2 Solicitation Requirements and Restrictions Sec. 2.a Description of the Property or Services Sec. 2.a(1) What to Include Sec. 2.a(2) Quantities Limited to the Recipient's Actual Needs Sec. 2.a(3) Brand Name or Equal Sec. 2.a(4) Prohibitions Sec. 2.a(4)(a) Excessive Qualifications Sec. 2.a(4)(b) Unnecessary Experience Sec. 2.a(4)(c) Improper Prequalification Sec. 2.a(4)(d) Retainer Contracts Sec. 2.a(4)(e) Excessive Bonding Sec. 2.a(4)(f) Brand Name Only Sec. 2.a(4)(g) In -State or Local Geographic Restrictions Sec. 2.a(4)(g)1 Architectural Engineering Services Sec. 2.a(4)(g)2 Licensing Sec. 2.a(4)(g)3 Major Disaster or Emergency Relief Sec. 2.a(4)(h) Organizational Conflicts of Interest Sec. 2.a(4)(h)1 Occurrence . Sec. 2.a(4)(h)1_a Lack of Impartiality or Impaired Objectivity Sec. 2.a (4)(h)l.b Unequal Access to Information Sec. 2.a(4)(h)1_c Biased Ground Rules Sec. 2.a(4)(h)2 Remedies Sec. 2.a(4)(i) Restraint of Trade Sec. 2.a(4)(j) Arbitrary Action Sec. 2.b Evaluation Factors Sec. 2.c Contract Type Specified Sec. 2.c(1) Typical Contract Types Sec. 2.c(1)(a) Firm Fixed Price Sec. 2.c(1)(b) Cost Reimbursement Sec. 2.c(2) Prohibited or Restricted Contract Types Sec. 2.c(2)(a) Cost Plus a Percentage of Cost - Prohibited Sec. 2.c(2)(b) Percentage of Construction Cost - Prohibited Sec. 2.c(2)(c) Time and Materials- Restricted Sec. 2.c(2)(c)1 When to Use Sec. 2.c(2)(c)2 Finn Ceiling Price Sec. 2.d Other Federal Requirements Affecting the Property or Services to be Acquired Sec. 2.e Other Federal Requirements Affecting the Bidder or Offeror and Contractor Sec. 2.f Award to Other Than the Low Bidder or Offeror Sec. 2.g Rejection of All Bids or Offers FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -11 CHAPTER VI, Sec. 3 OPEN MARKET PROCUREMENTS - METHODS OF COMPETITIVE PROCUREMENT CHECK Sec. 3.a Micro - Purchases Sec. 3.a( I) When Appropriate Sec. 3.a(2) Procedures Sec. 3.a(2)(a) Competition Sec. 3.a(2)(b) Prohibited Divisions Sec. 3.a(2)(c) Documentation Sec. 3.b Small Purchases Sec. 3.b(1) When Appropriate Sec. 3.b(2) Procedures Sec. 3.b(2)(a) Competition Sec. 3.b(2)(b) Prohibited Divisions Sec. 3.c Sealed Bids (Formal Advertising) Sec. 3.c(1) When Appropriate Sec. 3.c(1)(a) Precise Specifications Sec. 3.c(1)(b) Adequate Sources Sec. 3.c(1)(c) Fixed Price Contract Sec. 3.c(1)(d) Price Determinative Sec. 3.c(1)(e) Discussions Unnecessary Sec. 3.c(2) Procurement Procedures Sec. 3.c(2)(a) Publicity Sec. 3.c(2)(b) Adequate Sources Sec. 3.c(2)(c) Adequate Specifications Sec. 3.c(2)(d) Sufficient Time Sec. 3.c(2)(e) Public Opening Sec. 3.c(2)(f) Fixed Price Contract Sec. 3.c(2)(g) Rejection of Bids Sec. 3.d Competitive Proposals (Request for Proposals) Sec. 3.d(1) When Appropriate Sec. 3.d(1)(a) Type of Specifications Sec. 3.d(1)(b) Uncertain Number of Sources Sec. 3.d(1)(c) Price Alone Not Determinative Sec. 3.d(1)(d) Discussions Expected Sec. 3.d(2) Procurement Procedures Sec. 3.d(2)(a) Publicity Sec. 3.d(2)(b) Evaluation Factors Sec. 3.d(2)(c) Adequate Sources Sec. 3.d(2)(d) Evaluation Method Sec. 3.d(2)(e) Price and Other Factors Sec. 3.d(2)(t) Best Value Appendix C -12 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER VI OPEN MARKET PROCUREMENTS - METHODS OF COMPETITIVE PROCUREMENT CHECK Sec. 3.e Two -Step Procurement Procedures Sec. 3.e(1) Review of Technical Qualifications and Approach Sec. 3.e(2) Review of Bids and Proposals Submitted by Qualified Prospective Contractors Sec. 3.f Architectural Engineering Services (A &E) and Other Services Sec. 3.f(1) Qualification -Based Procurement Procedures Required Sec. 3.f(2) Qualifications -Based Procurement Procedures Prohibited Sec. 3.f(3) Qualifications -Based Procurement Procedures Sec. 3.f(3)(a) Qualifications Sec. 3.f(3)(b) Price Sec. 3.f(3)(c) Most Qualified Sec. 3.f(3)(d) Next Most Qualified Sec. 3.f(3)(e) Effect of State Laws Sec. 3.f(5) Audits and Indirect Costs Sec. 3.f(5)(a) Performance of Audits Sec. 3.f(5)(b) Indirect Cost Rates Sec. 3.0)(c) Application of Rates Sec. 31(5)(d) Prenotification: Confidentiality of Data Sec. 3.g Design- Bid -Build Sec. 3.g(1) Design Services Sec. 3.g(2) Construction Sec. 3.h Design -Build Sec. 3.h(1) Procurement Method Sec. 3.h(1)(a) Construction Predominant Sec. 3.h(1)(b) Design Services Predominant Sec. 3.h(2) Selection Processes Sec. 3.h(2)(a) One -Step Method Sec. 3.h(2)(b) Two -Step Method Sec. 3.h(2)(b)1 Review of Technical Qualifications and Approach Sec. 3.h(2)(b)2 Review of Complete Proposals FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 THIRD PARTY CONTRACTING CHECKLISTS Appendix C -13 CHAPTER VI, Sec. 3.h OPEN MARKET PROCUREMENTS - METHODS OF PROCUREMENT OTHER THAN FULL AND OPEN COMPETITION CHECK Sec. 3.i(1) When Appropriate Sec. 3.i(1)(a) Competition Adequacy Sec. 3.i(1)(b) Sole Source Sec. 3.i(1)(b)1 Unique Capability and Availability Sec. 3.i(1)(b)1_a Unique or Innovative Concept Sec. 3.i(1)(b)1_b Patents or Restricted Data Rights Sec. 3.i(1)(b)1_c Substantial Duplication Costs Sec. 3.i(1)(b)1_d Unacceptable Delay Sec. 3.i(1)(b)2 Single Bid or Single Proposal Sec. 3.i(1)(b)2_a Adequate Competition Sec. 3.i(1)(b)2_b Inadequate Competition Sec. 3.i(1)(c) Unusual and Compelling Urgency Sec. 3.i(1)(d) Associated Capital Maintenance Item Exception Repealed Sec. 3.i(1)(e) Authorized by FTA Sec. 3.i(1)(e)1 Consortium, Joint Venture, Team, Partnership Sec. 3.i(1)(e)2 FAR Standards Sec. 3.i(1)(e)2.a Statutory Authorization or Requirement Sec. 3.i (1)(e)2_b National Emergency Sec. 3.i(1)(e)2.c Research Sec. 3.i(1)(e)2.d Protests, Disputes, Claims, Litigation Sec. 3.i(1)(e)2.e International Agreements Sec. 3.i(1)(e)2.f National Security Sec. 3.i(1)(e)2g Public Interest Sec. 3.i(2) When Prohibited Sec. 3.i(2)(a) Failure to Plan Sec. 3.i(2)(b) Limited Availability of Federal Assistance Sec. 3.i(3) Procurement Procedures Sec. 3.i(3)(a) Potential Sources Sec. 3.i(3)(b) Sole Source Justification Sec. 3.i(3)(c) Cost Analysis Sec. 3.i(3)(d) Preaward Review Appendix C -14 THIRD PARTY CONTRACTING CHECKLISTS FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 CHAPTER VI OPEN MARKET PROCUREMENTS - EVALUATIONS CHECK Sec. 4 Eligible Costs Sec. 5 Incentive Costs and Payments Sec. 6 Cost or Price Analysis Sec. 6.a Cost Analysis Sec. 6.a(1) Federal Cost Principles Sec. 6.a(2) Establishing Indirect Cost Rates Sec. 6.a(2)(a) Contracts of $5 Million or Less Sec. 6.a(2)(b) Contracts Exceeding $5 Million Sec. 6.a(3) Profit Sec. 6.b Price Analysis Sec. 6.c Guidance on Cost and Price Analysis Sec. 7 Evaluations Sec. 7.a General Sec. 7.b Options Sec. 7.b(1) Evaluation Required Sec. 7.b(2) Evaluation Not Required Sec.7.c Evaluators FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix C -15 CHAPTER VI OPEN MARKET PROCUREMENTS CONTRACT AWARDS - REJECTIONS OF BIDS AND PROPOSALS CHECK Sec. 8 Contract Award Sec. 8.a Award to Other Than the Lowest Bidder or Offeror Sec. 8.b Award to Only a Responsible Bidder or Offeror Sec. 8.b(1) Integrity and Ethics Sec. 8.b(2) Debarment and Suspension Sec. 8.b(3) Affirmative Action and DBE Sec. 8.b(4) Public Policy Sec. 8.b(5) Administrative and Technical Capacity Sec. 8.b(6) Licensing and Taxes Sec. 8.b(7) Financial Resources Sec. 8.b(8) Production Capability Sec. 8.b(9) Timeliness Sec. 8.b(10) Performance Record Sec. 8.b(10)(a) Current Performance Sec. 8.b(10)(b) Past Performance Sec. 8.b(10)(b)1 Sufficient Resources Sec. 8.b(10)(b)2 Adequate Past Experience Sec. 8.b(10)(b)3 Any Past Deficiencies Not the Fault of the Bidder or Offeror Sec. 8.c Rejection of Bids and Proposals Sec. 8.c(1) Governmental Recipients Sec. 8.c(2) Non - Governmental Recipients Sec. 8.d Extent and Limits of Contract Award FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 D. APPENDIX D Appendix D -1 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER -- MATRICES A. THIRD PARTY CONTRACT PROVISIONS (excluding micro - purchases, except Davis -Bacon requirements apply to contracts exceeding $2,000) PROVISION j COMMENTS MASTER AGREEMENT REFERENCE (based on FA MA(17) 10-1-2010) All FTA Assisted Third Party Contracts and Subcontracts No Federal Government Obligations to Third Parties (Use of Disclaimer) § 2.f False or Fraudulent Statements or Claims — Civil and Criminal Fraud § 3.f Access to Third Party Contract Records § 15.t Changes to Federal Requirements § 2.c(1) Civil Rights (Title VI, ADA, EEO (except special DOL construction clause)) § 12 Disadvantaged Business Enterprises (DBEs) Contract awarded on the basis of a bid /proposal offering to use DBEs. § 12.d Incorporation of FTA Terms Per FTA C 4220.1F. § 15.a Awards Exceeding $10,000 Terminations If 49 CFR Part 18 applies. § 11 and § 15.a, which incorporate 49 CFR Part 18 Special EEO provision for construction contracts If 49 CFR Part 18 or Part 19 indicate that the DOL EEOC regulations at 41 C.F.R. Chapter 60 apply. § 15.a, which incorporates 49 CFR Part 18 and Part 19 Awards Exceeding $25,000 Debarment and Suspension § 3.b Awards Exceeding the Simplified Acquisition Threshold ($100,000) (As of February 2011, OMB has not to date adopted the FAR clause 2.101 $150,000 standard for grants.) Buy America When tangible property or construction will be acquired. § 14.a Resolution of Disputes, Breaches, or Other Litigation § 56 Awards Exceeding $100,000 by Statute Lobbying As of February 2011, the OMB Office of Federal Financial Management has not adopted the FAR clause 2.101 $150,000 simplified acquisition threshold standard. 3 d Clean Air § 25.b Clean Water ..........___ § 25.c Appendix D -2 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER — MATRICES A. THIRD PARTY CONTRACT PROVISIONS (Continued) (excluding micro- purchases, except Davis -Bacon requirements apply to contracts exceeding $2,000) PROVISION COMMENTS MASTER AGREEMENT REFERENCE (based on FA MA(17) 10 -1 -2010) Transport of Property or Persons Cargo Preference When acquiring property suitable for shipment by ocean vessel. 14.b Fly America When property or persons are transported by air between U.S. and foreign destinations, or between foreign locations, § 14.c Construction Activities Construction Employee Protections — Davis -Bacon Act For contracts exceeding $2,000. § 24.a 1 ( ) Construction Employee Protections — Contract Work Hours & Safety Standards Act For contracts exceeding $100,000. As of February 2011, the OMB Office of Federal Financial Management has not adopted the FAR clause 2.101 $150,000 simplified acquisition threshold standard. § 24.a(2) Construction Employee Protections — Sec. 1 Copeland Anti- Kickback Act — Sec. 2 Copeland Anti- Kickback Act All contracts All construction contracts exceeding $2,000. § 24.a(3) Bonding for Construction Activities Exceeding $100,000 5% bid guarantee bond. 100% performance bond. Payment bond equal to: — 50% for contracts < $1M. — 40% for contracts >$1 M — < $5M. — $2.5M for contracts > $5M. § 15.0(1) Seismic Safety Construction contracts for new buildings or for existing buildings. § 23.e Nonconstruction Activities Nonconstruction Employee Protection — Contract Work Hours & Safety Standards Act For all turnkey, rolling stock, and operational contracts (except transportation services contracts and open market contracts) exceeding $100,000. As of February 2011, the OMB Office of Federal Financial Management has not adopted the FAR clause 2.101 $150,000 simplified acquisition threshold standard. § 24.b Transit Operations Transit Employee Protective § 24.d Arrangements Charter Bus Operations § 28 School Bus Operations § 29 Drug Use and Testing Safety sensitive functions. § 32.b Alcohol Misuse and Testing Safety sensitive functions. § 32.b FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix D -3 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER — MATRICES A. THIRD PARTY CONTRACT PROVISIONS (Continued) (excluding micro- purchases, except Davis -Bacon requirements apply to contracts exceeding $2,000) PROVISION COMMENTS'! MASTER AGREEMENT REFERENCE (based on FA MA(17) 10-1-2010) Planning, Research, Development, and Demonstration Projects Patent Rights § 17 Rights in Data and Copyrights § 18 Special Notification Requirements for States Special Notification Requirement for States § 38 Miscellaneous Special Requirements Energy Conservation § 26 Recycled Products Contracts when procuring $10,000 or more per year of items designated by EPA. § 15.k Conformance with National ITS Architecture Contracts and solicitations for ITS projects. § 15.m ADA Access Contracts for rolling stock or facilities construction/renovation. § 12.g Assignability Clause Procurements through assignments. § 15.a, which incorporates 49 CFR Part18 and 49 CFR Part 19 Appendix D-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER-MATRICES B. APPLICABILITY OF THIRD PARTY CONTRACT PROVISIONS (excluding micro-purchases, except Davis-Bacon requirements apply to contracts exceeding $2,000) TYl'E OF PROCUREMENT PROVISION Professional Services/A&E Operations/ Management Rolling Stock Purchase Construction Materials & Supplies No Federal Government Obligations to 'Third Parties (by Use of a Disclaimer) All All All All All False Statements or Claims Civil and Criminal Fraud All Al! All All All Access to Third Party Contract Records All All All All All Changes to Federal Requirements All All All All All Termination >$10,000 if 49 CFR Part 18 applies. >$10,000 if 49 CFR Part 18 applies. >$10,000 if 49 CFR Part 18 applies. >$10,000 if 49 CFR Part 18 applies. >$10,000 if 49 CFR Part 18 applies. Civil Rights (Title VI, ADA, EEO except Special DOL EEO clause for construction projects) All All All>$10,000 All All Special DOL EEO clause for construction projects >$10,000 Disadvantaged Business Enterprises (DBEs) All All All All All Incorporation of FTA Terms All All All All All Debarment and Suspension >$25,000 >$25,000 >$25,000 >$25,000 >$25,000 Buy America >$100,000 As of Feb. 2011, FTA has not adopted the FAR 2.101 $150,000 standard, >$100,000 As of Feb. 2011, FTA has not adopted the FAR 2.101 $150,000 standard. >$100,000 As of Feb. 2011, FTA has not adopted the FAR 2.101 $150,000 standard. Resolution of Disputes, Breaches, or Other Litigation >$100,000 >$100,000 >$100,000 >$100,000 >$100,000 Lobbying >$100,000 >$100,000 >$100,000 >$100,000 >$100,000 Clean Air >$100,000 >$100,000 >$100,000 >$100,000 >$100,000 Clean Water >$100,000 >$100,000 >$100,000 >$100,000 >$100,000 Cargo Preference Transport by ocean vessel. Transport by ocean vessel, Transport by ocean vessel. Fly America Foreign air transp./travel. Foreign air transp./travel. Foreign air transp./travel. Foreign air transp./travel. Foreign air transp./travel. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix D -5 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER — MATRICES B. APPLICABILITY OF THIRD PARTY CONTRACT PROVISIONS (Continued) (excluding micro- purchases, except Davis -Bacon requirements apply to construction contracts exceeding $2,000) TYPE OF PROCUREMENT' PROVISION Professional Services /A &E Operations/ Management Rolling Stock Purchase Construction Materials & Supplies Davis -Bacon Act >$2,000 (also ferries). Contract Work Hours and Safety Standards Act >$100,000 (transportation services excepted). >$100,000 >$100,000 (also ferries). Copeland Anti- Kickback Act Section 1 Section 2 All > $2,000 (also ferries). Bonding $100,000 Seismic Safety A &E for new buildings & additions. New buildings & additions. Transit Employee Protective Arrangements Transit operations. Charter Service Operations All School Bus Operations All Drug Use and Testing Transit operations. Alcohol Misuse and Testing Transit operations. Patent Rights R & D Rights in Data and Copyrights R & D Energy Conservation All All All All All Recycled Products EPA- selected items $10,000 or more annually. EPA - selected items $10,000 or more annually. EPA - selected items $10,000 or more annually. Conformance with ITS National Architecture ITS projects. ITS projects. ITS projects. ITS projects. ITS projects. ADA Access A &E All All All All Notification of Federal Participation for States Limited to States. Limited to States. Limited to States. Limited to States. Limited to States. Appendix D-6 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER—MATRICES C. CERTIFICATIONS, REPORTS, AND FORMS CERTIFICATIONS, CERTIFICATIONS REPORTS, AND FORMS COMMENTS REGULATORY REFERENCE Bus Testing Certification All procurements of new model transit buses and vans and existing models being modified with a major changevor changes. 49 CFR Part 665 TVM Certifications All rolling stock procurements. 49 CFR Part 26 Buy America Certification Procurements of steel, iron or manufactured products exceeding $100,000. 49 CFR Part 661 Preaward Review FTA Annual Certification for any rolling stock procurement. 49 CFR Part 663 Preaward Buy America Certification Rolling stock procurements exceeding procurements exceeding $100,000. 49 CFR Part 663 Preaward Purchaser's Requirement All rolling stock procurements. 49 CFR Part 663 Post Delivery Review FTA Annual Certification for any rolling stock procurement. 49 CFR Part 663 Post Delivery Buy America Certification Rolling stock procurements exceeding procurements exceeding $100,000. 49 CFR Part 663 Post Delivery Purchaser's Requirement All rolling stock procurementsto the extent required by Federal law and regeulations. 49 CFR Part 663 On-Site Inspector's Report Rolling Stock except for procurements of: -10 or fewer vehicles; - 20 or fewer vehicles serving rural (other than urbanized) areas or urbanized areas or 200,000 people or fewer; - any amount of primary manufactured standard production and umnodified vans that after visual inspection and road testing meet the contract specifications. 49 CFR Part 663 Federal Motor Vehicle Safety Standards Preaward Review and Post Delivery Motor vehicle procurements (49 CFR 571). 49 CFR Part 663 Lobbying Procurements exceeding $100,000. 49 CFR Part 20 As of February 2011, OMB Office of Federal Financial Management has not adopted FAR 2.101 $150,000 simplified acquisition threshold standard. Standard Form LLL and Quarterly Updates (when required) Procurements exceeding $100,000 where contractor engages in lobbying activities. 49 CFR Part 20 As of February 2011, OMB Office of Federal Financial Management has not adopted FAR 2.101 $150,000 simplified acquisition threshold standard. FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Appendix D -7 PROVISIONS, CERTIFICATIONS, REPORTS, FORMS, AND OTHER — MATRICES D. OTHER MATTERS OTHER MATTERS COMMENTS STATUTORY OR REGULATORY REFERENCES Contract Administration System 49 CFR § 18.36(b)(2) 49 CFR § 19.47 Record of Procurement History 49 CFR § 18.36(b)(9) 49 CFR § 19.47 Protest Procedures 49 CFR § 18.36(b)(12) Selection Procedures 49 CFR § 18.36(c)(3) Cost/Price Analysis 49 CFR § 18.36(f) 49 CFR § 19.45 Justification for Noncompetitive Awards If Applicable. 49 CFR § 18.36(b)(9) by implication 49 CFR § 19.46(b) No Excessive Bonding Requirements 49 CFR § 18.36(h) 49 CFR § 19.48(c)(5) No Exclusionary Specifications 49 U.S.C. § 5325(h) No Geographic Preferences Except for A &E Services 49 CFR § 18.36(c)(2) FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 INDEX A &E, II -2, II -10, IV -24, IV -25, IV -26, IV- 33, VI -4, VI -12, VI -15, VI -21, VII -12, VII-4, VII -5, VII -7, See also, Architectural Engineering Access, I -9, I -14, 11 -7, 11I -5, IV -15, V -2, V -3, VI -5, VII -3, VII -9, A -7, VII -2, VII -10, VII -1, VII -3, VII -4, VII -5 Accessible, I -2, III -4, IV -16, VI -14, A -1, A-4 Activities, I -1, II -6, 1I -8, IV -5, IV -6, IV -14, IV -15, IV -22, IV -30, VI -5, VI -15, A -4, A-6, VII -2, VII -6, See also, Activity Activity, I -9, I1 -7, IV -14, VII -2, VII -6, VII - 8, See also, Activities ADA Access, VII -3, VII -5 Adequate, III -1, III -3, 111 -4, 11I-6, IV -1, IV- 11, IV -12, IV -16, IV -26, V -1, V -6, VI -1, VI -8, VI -9, VI -11, VI -16, VI -17, VI -21, VI -24, VII -1, VII-6, VII -7, VII -2, VII-4, VII -10, VII -11, VII -13, VII -15 Administrative, I -2, I-4, 1 -12, II -10, II1 -7, IV -2, IV -9, IV -13, IV -26, IV -32, IV -33, V -3, VI -14, VI -23, VII -1, VII -3, A -2, A-4, VII -4, VII -15 Administrative Remedies, VII -3 Administrator, 1 -2, I -1, II -11, IV -27, VII -2, VII -3 Advance Payment, IV -10, IV -11, VII-4 Affirmative Action, VI -23, VII -15 Age, IV -5, IV -6, IV -14, W-23, A -1, A -3, A-6, VII -3 Age Discrimination Act, IV -6, A -3 Age Discrimination in Employment Act, IV- 6, A -1, A-6 Air, IV -3, IV -17, IV -19, IV -20, A -3, A -4, A -6, VII -5, VII-6, VII -1, VII -2, VII-4 Air Carrier, IV -19, A -6, VII -5 Alcohol Misuse and Testing, IV -22, VII-6, VII -2, VII -5 Index -1 Alteration, IV -24, W -25, IV -28, IV -29, VI- 12, VI -13, VI -14 Amended, I -1, 1 -2, 11 -5, II-6, III -7, 11I -8, IV -5, IV -6, IV -14, IV -15, IV -16, IV -17, IV -18, IV -19, IV -25, IV -26, IV -28, IV- 29, IV -32, V -3, VI -23, A -1, A -2, A -3, A-4, A -7, VII -5, See also, Amendment Amendment, IV -5, VI -20, A -2, See also, Amended Americans with Disabilities Act, IV -6, IV- 15, IV -30, A -3, VII -5 Animal, IV -22, IV -32, A -1, A-6 Animal Welfare Act, IV -22, IV -32, A -1 Anti - Kickback, IV -28, IV -29, A -1, A -2, VII -7, VII -2, VII -5 Appeal, VII -2, VII -3, VII -4, VII -6, VII -7 Applicability, II -1, I1 -2, VII -1, VII-4, VII -5 Approval, 1 -3, IV -11, IV -27, VI -2, VI -18, VII -5 Arbitrary, VI -5, VII -10 Arbitration, VII -1, VII -8, VII -9 Arbitration Award, VII -8, VII -9 Architectural, 11 -2, IV -15, IV -24, VI-4, VI- 12, VI -13, VI -14, VI -15, A -2, A -4, VII - 7, VII -10, VII -12 Architectural Engineering, I1 -2, IV -24, VI -4, VI -12, VI -14, VI -15, A -2, VII -7, VII -10, VII -12, See also, A &E Architecture, IV -19, A -8, VII -3, VII -5 Arrangement, I -9, 11 -8, V -2 Arranger, I1 -9 Art, II -5, IV -23, A -8, VII -1, VII-6 Assignment, IV -1, IV -2, V -1, V -5, V-6, V- 7, VII -3, VII -9 Associated Capital Maintenance Item, VI -18, VII -13 Auction, 11I -6, 11I -7, VII -2 Audit, 1II -7, IV -4, IV -25, IV -32, IV -33, W -34, VI -22, VII -6, VII -7, A -2, A -8, VII -2, VII -8 Index -2 Auditor, IV -32, IV -33 Authorization, I -3, V -3, VI -19, A -2, VII -13 Authorizing, I -1, IV -1, IV -9, VI -20 Availability, II -5, 11I -3, IV -3, VI -4, VI -17, VI -19, VII -13 Award, I -12, I -13, 1II -1, 11I -4, IV -1, IV -2, IV -4, W-5, IV -10, IV -21, IV -28, V -5, V-6, V -7, V -8, VI -1, VI -2, VI -3, VI -4, VI -5, VI -7, VI -9, VI -10, VI -11, VI -13, VI -15, VI -16, VI -17, VI -19, VI -23, VI- 25, VII -3, VII -8, VII -9, VII -10, A -5, VII -4, VII-6, VII -10, VII -15 Background, 1 -2 Barriers, IV -15, IV -25, VI -13, A-4 Basis for Contract Award, IV -21, VII-6 Bayh -Dole Act, IV -30, A -2 Best Practices Procurement Manual, I -13, II- 4, I1 -5, IV -4, V -6, V -7, V -8, VI -3, VI- 21, VII -5, A -8, See also, BPPM Best Value, I -3, IV -3, VI -11, VII -11 Bias, III -2, See also, Biased Biased, VI -5, VII -10, See also, Bias Bid, I -5, I1I -6, IV -20, IV -26, VI-4, VI -5, VI -8, VI -9, VI -10, VI -12, VI -14, VI -17, VII -2, VII -7, VII -12, VII -13, VII -1, VII - 2 Bid Guarantee, IV -26, VII -7, VII -2 Bidder, II1-4, IV -26, VI-4, VI -7, VI -8, VI- 9, VI -10, VI -12, VI -23, VI -24, VII -3, VII -10, VII -15 Bidding, I -5, II1-6, VI -8, VI -10, VI -12, VI- 15, VII -2 Bond, IV -26, IV -27, VI -4, VII -7, VII -2 Bonding, IV -26, IV -27, VI -3, VI-4, VII -7, VII -10, VII -2, VII -5, VII -7 BPPM, 1 -13, I -14, 11 -4, VI -3, VII -5, See also, Best Practices Procurement Manual Brand Name, III -2, VI -3, VI -4, VII -2, VII - 10 Breach, IV -13, VII -7, VII-4 Brooks Act, IV -24, IV -26, VI -12, VI -13, VI -15, A -2 Building, 1 -5, IV -29, A -5 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Build - Operate- Transfer, I1 -9 Build- Own- Operate, I1 -9 Burden, III -7, IV -32, See also, Overhead Bus, 1 -8, II -5, I1 -7, 11 -8, IV -21, IV -23, VI- 4, A -5, VII -1, VII -6, VII -2, VII -5, VII-6 Bus Testing, IV -21, A -5, VII-6 Business Opportunity, IV -5, IV -14 Business Reason, IV -11, VI -10, VII-4 Buy America, IV -18, IV -29, IV -30, V -2, V- 4, V-6, VI -7, VI -8, A -5, VII -5, VII -7, VII -1, VII-4, VII -6 Byrd Anti - Lobbying Amendment, IV -5, A -2 Cancellation, I -1 Capability, III -1, III -7, VI -2, VI -4, VI -17, VI -19, VI -24, VII -13, VII -15 Capacity, I -11, III -1, I11-6, V -1, V -5, V -7, VI -4, VI -23, VII -1, VII -3, VII -2, VII -15 Capital Contract, II -5, VII -1 Cardinal Change, 1-3, IV -9, V -7, V -8, VII -9 Cargo Preference, IV -19, A -3, A -6, VII -2, VII-4 Cargo Preference Act, IV -19, A -3 Ceiling, IV -26, VI-6, VII -10 Certification, I -11, I -12, III- 1,11I -2, IV -5, IV -20, IV -22, V -2, V -4, VII -2, VII -3, VII-6 Change, I -3, 1 -4, IV -2, IV -9, V -7, V -8, V- 9, VI -17, VI -21, VII-4, VII -5, VII -9 Change Order, 1-4, VI -21, VII-4, VII -5 Charter, 1 -8, IV -22, A -5, VII -6, VII -2, VII - 5 Civil Rights, IV -5, IV -14, IV -15, A -3, A -4, VII -3, VII -5, VII -1, VII-4 Claim, 1I1 -8, VI -19, VII -4, VII -7, VII -8, VII -9 Clean Air Act, IV -17, A -3 Clean Water Act, W-17, A -2 Coastal Zone, IV -18, VII -5 Coin, 1V -20, A -2 Color, IV -5, IV-6, IV -14, IV -23 Common Grant Rule, 1 -4, I -6, 1 -7, I -10, I- 11, I -12, II -3, 11 -4, II -5, II-10, II -11, I1I- 1, II1 -2, 11I -3, III-4, 11I -5, IV -1, IV -3, FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 W-4, W-5, IV -7, IV -8, IV -9, W -12, IV- 13, IV -14, IV -17, IV -18, IV -19, IV -21, IV -26, IV -27, 1V -28, IV -29, IV -30, IV- 31, V -1, V -2, V -4, V -7, VI -1, VI -2, VI- 3, VI -4, VI -5, VI-6, VI -7, VI -8, VI -10, VI -16, VI -18, VI -19, VI -20, VI -21, VI- 23, VI -25, VII -1, VIII, VII -5, VII -7, A- 4, VII -1 Common Grant Rule for Governmental Recipients, II -3, III -2, IV -7, IV -8, IV -12, IV -28, V -1, V -2, VI -2, VI -6, VI -7, VI -8, VI -10, VI -16, VI -18, VI -19, VI -25, VII - 1, VII -4, A-4, See also, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments Common Grant Rule for Non - Governmental Recipients, II -3, III -2, III -3, IV -7, IV -8, IV -13, IV -27, VI-6, VI -25, VII -1, A -4, See also, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations Community, I -6, I -7, IV -23, VII-6 Compensation, IV -24, IV -29, VII-6 Competition, I-6, 11 2, II -7, II -8, II -9, III -2, 1I1 -4, III -6, IV -9, IV -21, W -27, IV 29, V -4, V -8, VI -1, VI -2, VI -3, VI -4, VI -8, VI -12, VI -16, VI -17, VI -18, VI -19, VI- 21, A -7, VII -9, VII -10, VII -11, VII -13 Competitive Proposal, VI -9, VI -10, VI -11, VI -16, VI -18, A -5, VII -11 Complex, II -9, IV -30, VII -1 Comptroller General, I -13, III -5, III-6, V -8 Concept, IV -28, V -9, VI -1, VI -17, VII -13 Concurrence, I -3, II -1, IV -11, VI -4, VII-6, VII -9, VII-4 Condition, III -2, IV -11, IV -28 Confidentiality, VI -14, VII -12 Conflict, II -9, II -11, III -1, IV -5, IV -21, VI- 3, VI-4, VI -5, VI -14, VII -3 Index -3 Conflict of Interest, II -9, III -1, IV -5, VI -5, VII -3 Consortium, I -5, I -8, 1I -2, VI -15, VI -18, VII -3, VII -13 Construction, I -5, II -6, II -8, II -9, IV -9, IV- 11, IV -12, IV -14, IV -15, IV -24, IV -25, IV -26, IV -27, IV -28, IV -29, IV -30, VI- 3, VI-6, VI -7, VI -9, VI -12, VI -13, VI- 14, VI -15, VI -24, VII -9, VII -10, A -2, A- 5, A -6, A -7, VII -1, VII -4, VII -5, VII -7, VII -10, VII -12, VII -1, VII -2, VII -3, VII - 4, VII -5 Construction Management, IV -24, VI -12, VI -14, VI -15 Construction Manager at Risk, II -9 Constructive Change, I-4, VII -4, VII -5 Contact, I -2, I -14, II -1, II -9, IV -4, IV -11, IV -32, VII 2, VII-6, VII -8, B -1 Contract, I-4 Contract Administration System, III -1, VII -7 Contract Award, IV -2, IV -4, IV -5, IV -21, IV -28, V -5, V-6, VI -1, VI -2, VI -5, VI- 10, VI -13, VI -15, VI -23, VI -25, VII -1, VII -10, VII-6, VII -10, VII -15, VII -1 Contract Expansion, V -7, VII -9 Contract Rights, V -1, V -4, V -5, V -6, V -7, VI -3, VII -9 Contract Type, III -4, VI -6, VI -8, VII -2, VII -10 Contract Work Hours and Safety Standards Act, IV -13, IV -14, IV -29, A -2, A -5, VII - 5 Cooperative Agreement, I -2, I -3, I-4, I -5, I- 7, I -8, I -13, II -1, II -2, II -3, II -10, IV -9, IV -10, V -1, VI -18, VI -20, VII -5, VII-6, A-4, VII -1 Cooperative Procurement, I -6, I -7, See also, Joint Procurement and Cooperative Purchasing Program Cooperative Purchasing Program, I -7, I -9, I- 10, V -2, V -3, See also, Cooperative Purchasing Program Index-4 Copeland Anti- Kickback Act, A -1, A -2, VII -2, VII -5 Copyright, IV -31, VII -5 Cost, I -3, I -8, I -10, II -10, III -4, III -5, IV -1, IV -3, IV -9, IV -10, IV -18, IV -26, IV -30, IV -32, IV -33, IV -34, V -1, VI -3, VI-6, VI -10, VI -11, VI -14, VI -15, VI -16, VI- 19, VI -20, VI -21, VI -22, VII -5, A -5, A- 7, VII -2, VII-4, VII -7, VII -8, VII -10, VII -12, VII -13, VII -14, VII -7 Cost Analysis, VI -16, VI -20, VI -21, VII -13, VII -14 Cost Plus a Percentage of Cost, VI -6, VII -10 Cost Reimbursement, III-4, VI-6, VII -10 Council on Environmental Quality, IV -17, A-6 Court Award, VII -8, VII -9 Creed, IV -5, IV -14, IV -23 Criminal Fraud, III -7, A -1, VII -1, VII-4 Criteria, I -5, N -23, VI -23, VII-6 Customary, II -8, IV -11, V -8, VII-4 Data, I-6, IV -31, VI -14, VI -17, VI -20, VII - 8, VII -12, VII -13, VII -3, VII -5 Davis -Bacon Act, IV -28, A -2, VII -2, VII -5 DBE, II -6, IV -3, IV-6, IV -7, IV -20, VI -23, VII -3, VII -6, VII -15, See also, Disadvantaged Business Enterprise Debarment, IV-4, IV -5, VI -23, A -4, A -7, VII -3, VII -15, VII -1, VII-4 Defense Contract Audit Agency, IV -34, VI- 22, A -8 Deficiencies, I -11, VI -24, VII -15 Definition, I -3, I -5, III -6, V -3, A -3 Delay, I -11, VI -17, VI -18, VII -13 Delivery, I -3, I -5, I -6, II -8, II -9, N -7, IV- 12, IV -21, V -1, V -5, V -6, V -8, VI -3, VI -11, VI -24, A -5, VII -3, VII-6 Demonstration, II -4, IV -30, IV -31, VII -3 Department of Agriculture, IV -22, IV -32, A- 6 Department of Commerce, IV -8, IV -30, N- 31, A -6, VII -3 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Department of Labor, IV -13, IV -28, A -5, A- 6, See also, DOL Department of the Treasury, W -27, A-6 Department of Transportation, I -1, II-6, IV- 4, IV -7, IV -14, VI -19, A -3, A-4, A -7, See also, DOT Description, I -14, II -9, III -2, IV -3, VI -1, VI -2, VI -3, VI -8, VI -9, VII -2, VII -5, VII -7, VII -10 Design, I -3, I -5, II -5, II -8, II -9, IV -15, IV- 23, IV -24, IV -25, IV -28, VI -11, VI -12, VI -13, VI -14, VI -15, VI -16, VII -10, A- 8, VII -5, VII -7, VII -12 Desk- Bid - Build, I -5, VI -14, VII -12 Design - Build, I -5, II -8, II -9, IV -28, VI -15, VI -16, VII -12 Design -Build With a Warranty, II -9 Design - Build- Finance- Operate, II -9 Design - Build- Operate- Maintain, II -9 Development, I -1, I -8, II-4, II -7, II -8, IV -6, IV -8, IV -24, IV -30, IV -31, VI -10, VI- 17, VI -19, A -8, VII -1, VII -3, VII -8, VII - 3, VII -5 Disabilities, IV-6, IV -15, IV -16, IV -20, IV- 22, IV -30, A -3, A -4, VII -3, VII -5, See also, Disability Disability, IV -15, A -1, VII -5, See also, Disabilities Disadvantaged Business Enterprise, II-6, IV- 2, IV -3, IV-6, IV -7, VI -4, VI -23, A-4, VII -3, VII -1, VII-4, See also, DBE Disclosure, IV -5, IV -17, VI -19, VII -3 Discriminatory, III -2, IV -3, VI -3 Discussion, IV -13, VII -5 Disputes, VI -19, VII -1, VII -5, VII-6, VII -9, VII -13, VII -1, VII-4 Documentation, III -5, IV -11, IV -12, VI -8, VII -5, VII -6, VII -9, VII -2, VII-4, VII -11 DOL, IV -13, IV -22, IV -28, IV -29, A -5, A- 6, See also, Department of Labor DOT, I -1, I -4, II -5, II -6, II -10, III -5, III -8, IV -4, IV -5, IV -7, IV -8, IV -14, IV -15, IV -17, IV -20, IV -22, IV -27, IV -30, IV- FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 32, VI -19, VI -21, VI -23, A -3, A -4, A -5, A -7, A -8, VII -3, VII -5, See also, Department of Transportation Driving, IV -8, W -9, A -7, A -8 Drug Use and Testing, IV -22, VII-6, VII -2, VII -5 Duplication, IV -32, VI -17, VII -8, VII -13 Earthquake Hazards Reduction Act, IV -28, A -3 E- Commerce, I -5, See also, Electronic Commerce Educational Institutions, IV -10, IV -33, A -7, VII -4, VII -8 EEO, IV -5, VII -3, VII -1, VII-4, See also, Equal Employment Opportunity Effect, I -3, I -4, I -13, II -1, II-4, III -5, IV- 23, IV -30, V -7, VI -5, VI -13, VII -1, VII - 6, VII -12 E- Government Act of 2002, V -3, A -2 Electronic, I -3, I -5, I-6, I -13, I1I -5, 1II -6, IV -16, A -1, A -6, VII -2, VII -5 Electronic Commerce, I -5, III -5, VII -2, See also, E- Commerce Eligibility, II -8, IV -1, IV -9, IV -32, IV -34, V -2, V -3, A -7, A -8, VII -3, VII -4, VII -8 Eligible, I -6, II -6, IV -1, IV -3, IV -9, IV -23, IV -34, V -3, VI-4, VI -20, VI -23, VII -4, VII -5, VII -9, VII -14 Emergency, V -3, V -4, VI-4, VI -5, VI -18, VI -19, A -2, A -3, VII -9, VII -10, VII -13 Employee, III -1, IV -22, VII -2, VII -5 Employment, I -8, IV -5, IV -6, IV -14, IV -28, A -1, A -3, A -6, A -7, VII -3, VII -7 End Products, IV -25, VI -13, VII -7 Energy, I1I -3, IV -17, IV -18, A -3, VII -2, VII -5, VII -3, VII -5 Energy Policy and Conservation Act, IV -18, A -3 Engineering, I -10, II -2, IV -24, IV -28, VI -4, VI -12, VI -13, VI -14, VI -15, VI -19, VII - 10, A -2, VII -7, VII -10, VII -12 Environment, III -3, IV -17, See also, Environmental Index -5 Environmental, III -3, IV -14, IV -15, IV -16, IV -17, IV -18, A -5, A-6, A -7, VII -2, VII -5, See also, Environment Environmental Justice, IV -14, W -15, A -7, VII -5 Environmental Protection Agency, IV -17, A- 6, See also, EPA EPA, W-17, IV 20, A-6, VII -3, VII -5, See also, Environmental Protection Agency EPLS, IV -5, See also, Excluded Parties List System Equal, 11 -7, III -2, III -3, IV -5, IV-6, IV -16, IV -28, VI -3, VI -4, VI -18, A -3, A -6, A- 7, VII -2, VII -3, VII -5, VII -7, VII -10, VII -2 Equal Employment Opportunity, IV -5, IV -6, IV -28, A -3, A-6, A -7, VII -3, VII -7, See also, EEO Equipment, 1 -6, I -8, II -5, IV -3, W -18, IV- 22, IV -23, W-30, IV -31, V -1, VI -17, VI -24, VII -10, A -2 Ethics, VI -23, VII -15 Evaluate, III -5, IV -25, V -5, VI -5, VI -22, VII -9, See also, Evaluation Evaluation, I -3, VI -5, VI -11, VI -13, VI -20, VI -22, VI -23, VII -1, VII-6, VII -10, VII - 11, VII -14, See also, Evaluate Exception, II -9, IV -11, VI -18, VII -13, See also, Waiver Existing Contract, V -4, V -5, V -7, VI -17, VII -9 Experience, I -11, VI -3, VI -6, VI -10, VI -22, VI -23, VI -24, VII -6, VII -10, VII -15 Export, W -31, A -6, VII -8 Fabrication, IV -21, IV -24, IV -25, VI -13 Facilitator, II -9 Factor, VI -13, VI -24 Failure, IV -27, V -5, VI -19, VI -24, VII -3, VII-4, VII -8, VII -9, VII -10, VII -9, VII - 13 Fair Labor Standards, IV -14, IV -22, A -1, VII -5 Fair Labor Standards Act, IV -14, IV -22, A -1 Index -6 False Statement, VII-4 FAR, II -10, IV -10, IV -18, IV -26, IV -30, IV -33, VI -7, VI -14, VI -18, VI -20, VI- 21, VI -22, VI -23, A -5, VII -13 Feasibility Studies, IV -24, VI -12, VI -14, VI -15 Federal Acquisition Regulation, II -10, VI -7, A -5, VII -1, See also, FAR Federal Acquisition Streamlining Act of 1994, IV -7, IV -14, IV -29, A -1, A -2, A -3 Federal Boards of Contract Appeals, V -8 Federal Concern, I -11, VII -1, VII -9 Federal Court Decisions, V -8 Federal Interest, IV -26, IV -27, VII -1, VII -8, VII -9 Federal Procurement Standard, V -8, VII -9 Federal Property and Administrative Services Act, V -3, A -2 Federal Register, I -1, I -2, IV -10 Federal Requirements, I -1, I -2, I -12, I -13, I- 14, II -1, II -4, II -10, II -11, III -1, III -4, III -6, IV -1, IV -3, IV -4, IV -9, IV -19, IV- 21, IV -30, V -1, V -2, V-4, V-6, VI-4, VI -7, VII -1, VII -9, VII -10, VII -1, VII-4 Federal Supply Schedule, V -2, V -3, VII -9 Federal Transit Administration, I -1, I -2, I-6, II -1, II -5, III -1, IV -1, VI -1; VII -1, A -5, A -8, See also, FTA Federal Transit Laws, I -1, II -10, A -1 Federalism, I -11, A -7 Financial, I -1, I -2, II -6, II -9, III -1, III -4, IV-4, IV-6, IV -7, IV -12, IV -14, IV -15, IV -17, IV -27, VI -22, VI -24, VII -7, VII - 8, A -2, A -4, A -6, VII -1, VII -15 Firm Fixed Price, VI-6, VI -8, VI -9, VI -10, VII -10 Five -Year Limitation, IV -21, VII-6 Fixed Price, III-4, VI-6, VI -8, VI -9, VI -10, VII -10, VII -11 Fly America, IV -19, A -4, VII -2, VII-4 Force Account, I -6, II -9, V -1, VII -1, VII -9 Foreign, I -8, IV -18, IV -31, VI -19, VII -2, VII-4 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Formal Advertising, VI -8, VI -11, VII -11 Forms, III-4, III -5, VII -8, VII -1, VII -2, VII -3, VII -4, VII -5, VII-6, VII -7 For - Profit, I -7, II -5, II-10, IV -10, IV -34, VII -4, VII -8 Fraud, III -7, III -8, VII -1, VII -9, A -1, A -2, A-4, VII -1, VII-4 Frequently Asked Questions, I -14, V -8 FTA, I -1, I -2, I -1, I -2, I -3, I -5, I -6, I -7, I- 8, I -9, I -10, I -11, I -12, I -13, I -14, II -1, II -2, II -3, II -4, II -5, II-6, II -7, II -8, II -9, II -10, II -11, III -1, 111 -2, 111-4, III -5, III - 6, III -7, IV -1, IV -2, IV -3, IV -4, IV -5, IV-6, IV -7, IV -8, IV -9, IV -10, IV -11, IV -12, IV -13, IV -14, IV -15, IV -16, IV- 17, IV -18, IV -19, IV -20, IV -21, IV -22, IV -23, IV -24, IV -25, IV -26, IV -27, IV- 28, IV -29, IV -30, IV -31, IV -32, IV -33, IV -34, V -1, V -2, V -3, V-4, V -5, V -6, V -7, V -8, V -9, VI -1, VI -2, VI -3, VI-4, VI -5, VI -7, VI -8, VI -10, VI -11, VI -12, VI -13, VI -14, VI -15, VI -16, VI -17, VI- 18, VI -20, VI -21, VI -22, VI -23, VI -24, VII -1, VII -2, VII -3, VII -4, VII -5, VII -6, VII -7, VII -8, VII -9, A -5, A -8, B -1, VII- I, VII -4, VII -9, VII -13, VII -1, VII -4, See also, Federal Transit Administration FTA Circular, I -1, I -13, II -5, II -6, IV -1, IV -14, IV -15, IV -20, A -8 FTA Official, IV-4, VII -2, VII-6, VII -8 Fuel Economy, IV -20, A-6, VII-6 Full and Open Competition, I-6, II -8, III-6, VI -1, VI -2, VI -12, VI -16, VI -19, VII -13 Full Delivery, II -9 G &A, III -7, IV -32, See also, General & Administrative General & Administrative, III -7, IV -32, See also, G &A General Services Administration, I -7, IV -5, V -2, A -2, A -6, See also, GSA Geographic, I -2, II -2, VI-4, VII -10, VII -7 Gift, III -1 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Governmental Recipient, I -4, I-6, I -7, II -3, II -10, III -2, III -3, III -4, IV-7, IV-8, IV- 12, IV-13, IV-17, IV-27, IV-28, V -1, V- 2, V -3, VI -2, VI -6, VI -7, VI -8, VI -10, VI -11, VI -16, VI -18, VI -19, VI -25, VII - 1, VII -2, VII-4, A -4, VII -1, VII -15 Governmental Subrecipient, 11 2, II -3, VII -1 Grant, I -3, I -4, I-6, I -7, I -8, I -10, I -11, I- 12, I -13, II -1, II -2, II -3, II -4, II -5, II-6, II -10, II -11, III -1, III -2, III -3, III-4, III - 5, IV-1, IV -3, IV-4, IV-5, IV-7, IV -8, IV -9, IV -10, IV-12, W-13, IV-14, N- 17, N -18, N -19, IV-20, N -21, IV -26, IV-27, N -28, IV -29, W-30, IV-31, V -1, V -2, V -4, V -7, VI -1, VI -2, VI -3, VI -4, VI -5, VI-6, VI -7, VI -8, VI -10, VI -16, VI -18, VI -19, VI -20, VI -21, VI -23, VI- 25, VII -1, VII -4, VII -5, VII-6, VII -7, A- 4, A -8, VII -1 Grant Management, II-6, N -1, IV-20, A -8 Grantee, I -8, II -2 GSA, I -7, I -9, I -10, IV-5, IV -19, V -2, V -3, V -4, A -2, A -3, A -6, A -7, VII -3, See also, General Services Administration Guidance, I -1, I -2, I -11, I -12, I -13, II -1, II- 2, II-6, II -8, II -9, II -10, II -11, IV-1, IV- 3, IV-4, N -10, IV-14, IV -15, IV-33, V- 1, V -7, V -8, VI -1, VI -6, VI -7, VI 21, A- 7, A -8, VII -14 Guidelines, IV-5, IV-14, IV-15, IV-17, IV- 22, IV-30, A -6, A -7, A -8 Handicap, IV-15, A-4 Helpline, I -14, VI -22 HIRE Act, IV-6, A -1 History, III -4, III -5, IV-23, VII-6, VII -2, VII -7 HUBZone, IV-7 IDIQ, V -5, V -7, See also, Indefinite- Delivery- Indefinite- Quantity Impartiality, IV-5, VI -5, VII -10 Inadequate, II -11, VI -18, VI -21, VII -1, VII - 13 Incentive, VI-6, VI -10, VI -20, VII -14 Index -7 Indefinite- Delivery - Indefmite- Quantity, V -5, See also, IDIQ Indian, I -1, I -4, I -6, I -7, I -9, II -10, IV-10, IV-18, IV-30, IV-33, V -3, A -7, VII -5, VII -8, See also, Indian Tribe, and Indian Tribal Government Indian Tribal Government, I -4, I-6, IV-10, IV-33, A -7, See also, Indian, and Indian Tribe, Indian Tribe, I-6, II -10, IV-30, N -33, VII - 8, See also, Indian, and Indian Tribal Government Indirect Cost, IV 26, IV-32, N -33, N -34, VI -14, VII -7, VII -8, VII -12, VII -14 Industry Contracts, III -4, VII -2 Information, I -2, I -12, II -1, II -4, II -11, III - 5, III -6, III -7, N -1, IV -4, IV-7, N -8, IV-16, N -17, IV-23, IV-32, V -3, V-4, V-6, VI -1, VI -2, VI -3, VI -5, VI -7, VI- 20, VI -21, VII -2, VII -3, VII -5, VII-6, VII -7, VII -10, A -1, A -2, A -3, A-4, A -5, A-6, B -1, VII -2, VII -3, VII -5, VII -9, VII -10 Information Technology, IV-16, V -3, A -1, A -2, A -6, VII -9 Innovative, I -10, II -9, VI -17, VII -13 In- State, IV -21, VI -4, VII-6, VII -10 Institution of Higher Education, I -7, N -10, IV-30, IV-31, V -3 Integrity, W-4, VI -23, VII -15 Intelligent Transportation System, N -19, A- 1, VII -6, See also, ITS International, I -8, IV-19, VI -19, A-4, VII - 13 International Air Transportation Fair Competitive Practices Act, IV-19, A-4, See also, Fly America Act ITS, IV -19, IV-25, A -8, VII -3, VII -5, See also, Intelligent Transportation System John Warner National Defense Authorization Act for Fiscal Year 2007, V -3, A -2 Joint Architectural and Transportation Barriers Compliance Board, N -15, A-4 Index -8 Joint Partnership, II-4 Joint Procurement, I -6, I -7, I -10, IV -1, IV- 2, V -1, V -7, VII -3, VII -9 Joint Venture, I -8, II -2, VI -15, VI -18, VII - 3, VII -13 Justification, 1II -4, III -5, IV -9, VI -20, VII - 13, VII -7 Labor, 1-6, 1 -8, IV -7, IV -13, IV -14, IV -22, IV -26, IV -28, IV -29, V -1, V -5, VI -20, A -1, A -5, A -6, A -7, VII -5, VII -7 Labor Neutrality, W -29, VII -7 Laborer, IV -13, IV -29 Land, I -8, II -5, II-6 Law, I -1, I -2, I -7, II -1, II -3, II -8, II -11, III - 1, III-6, IV -1, W-4, IV -9, IV -14, IV -21, IV -22, W -25, IV -26, V -2, V -3, VI -1, VI -4, VI -7, VI -8, VI -10, VI -1l, VI -12, VI -13, VI -14, VI -15, VI -21, VI -23, VII - 4, VII -8, A -1, A-6, A -8, VII -7 Lease, III -3, IV -3, IV-4, VII -2, VII -3 Legal Effect, II -1 Legislation, I -1, I -2, III -5, IV -17, VI -1, VI- 12, VI -15 LEP, IV -15, A -8, VII -5, See also, Limited English Proficiency Letter of Credit, IV -11 Letter of No Prejudice, IV -10, VII-4 License, W -21, IV -30, IV -31 Licensing, IV -21, VI-4, VI -24, VII -10, VII - 15 Lift, II -5 Limited, I -1, I -3, I -7, II -5, 1I -7, 1I -8, II -10, III -5, IV -5, IV -9, IV -11, IV -15, IV -16, IV -20, IV -23, IV -30, V -3, V -4, VI -3, VI -4, VI -5, VI-6, VI -9, VI -11, VI -14, VI -19, VI -21, VII -1, VII -9, A -7, A -8, VII -1, VII -5, VII -9, VII -10, VII -13, VII - 5 Limited Contract Opportunities, I1 -7, VII -1 Limited English Proficiency, IV -15, A -7, VII -5, See also, LEP Liquidated Damages, IV -12, IV -13, VII -8, VIII FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 List, I -14, IV-4, IV -5, IV -17, IV -27, V -7, VII -2, VII -5, VII -7, VII -3 Litigation, VI -19, VII -1, VII-6, VII -7, VII - 8, VII -9, VII -13, VII -1, VII-4 Lobbying, IV -5, A -2, A -4, VII -3, VII -1, VII-4, VII -6 Local Government, 1-4, I-6, I -7, I -9, II -10, 11I -7, IV -2, IV -30, IV -32, V -1, V -2, V- 3, V-4, V-6, V -7, A-4, A -7, VII -3, VII -9 Local Law, II -11, III -1, III -6, IV -23, VI -1, VI -4, VI -7, VI -8, VI -10, VI -11, VI -12, VI -14, VII-4, VII -1 Local Preparedness Acquisition Act, V-4, A- 2 Local Share, IV -10, IV -11 Major Disaster, V -3, V-4, VI-4, VI -5, A -2, A -3, VII -9 Mapping, IV -24, IV -25, VI -12, VI -14, VI- 15 Master Agreement, I -3, I -7, I -13, II -1, II -5, II -11, III -1, III -5, IV -3, IV -4, IV -18, IV- 31, VI -7, A -8, VII -1, VII -2, VII -3 Matrices, IV -4, VII -1, VII -2, VII -3, VII -4, VII -5, VII -6, VII -7 Mechanic, IV -13, IV -29 Method, I -3, I-6, II -1, III -4, IV -12, V -1, V- 7, VI -6, VI -7, VI -8, VI -10, VI -11, VI- 14, VI -15, VI -16, VI -17, VI -20, VI -21, VII -2, VII -11, VII -12 Metric, III -3, IV -19, IV -20, A -1, A -7, VII - 2, VII-6 Micro - Purchase, VI -7, VI -8, VI -21, VII -11, VII -1, VII -2, VII -3, VII -4, VII -5 Mitigation, W -16, VII -5 Modification, I -7, VI -21, VII -5 National Emergency, VI -19, VII -13 National Environmental Policy Act, IV -16 National Origin, IV -5, IV-6, IV -14, IV -23 National Research Act, IV -31, A -3 National Security, VI -19, VII -13 National Transit Institute, VI -21 Necessity, III -3, IV -1, VII -2, VII -3 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Needs, I -7, 11I -7, IV -1, IV -2, IV -3, IV -21, V -1, V -5, V -6, V -7, V -9, VI -3, VI -7, VI -17, VI -19, VI -21, VI -22, VII -3, VII - 10 Negotiate, VI -10, VI -21, See also, Negotiated, and Negotiation Negotiated, I -3, V -5, VI -10, VI -12, VI -20, VII -6, See also, Negotiate, and Negotiation Negotiation, IV -26, VI -14, VI -15, See also, Negotiate, and Negotiated Noncompetitive Proposal, VI -16, VI -18, A- 5 Nondiscrimination, IV -5, IV -6, IV -14, IV- 15, IV -23, A -1, A -3, A -4, A -6, VII -3, VII -5, VII -6 Non - Governmental Recipient, I -4, 1 -7, I1 -3, II -10, III -2, III -3, III -4, IV -7, IV -8, IV- 13, IV -27, V -1, V -2, VI -6, VI -7, VI -10, VI -11, VI -25, VII -1, VII -2, A -4, VII -1, VII -15 Nonprofit, I -7, W-30, A -6, See also, Non - Profit Non - Profit, I-4, I -7, 11 -3, II -10, I11 -7, IV- 10, IV -16, IV -30, IV -32, IV -33, IV -34, VI -19, A -4, A -7, VII -1, VII -4, VII -8, See also, Nonprofit Nonrestrictive, 11I -2, V1I -2 Notice, I -1, I -2, II -5, II -8, 1I -9, IV -7, IV- 10, IV -19, VII -3, VII -10, A -8, VII -3 Notification, 1 -2, II -11, 11I -5, III -6, VII -2, VII -3, VII -5, See also, Notify Notify, I1-4, II -11, I11-6, VI -14, VII -1, VII - 2, VII -5, VII-6, VII -7, VII -8, See also, Notification Objectivity, IV -5, VI -5, VII -10 Ocean Vessel, IV -19, VII -5, VII -2, VII-4 Offeror, I -10, 1II-4, VI -1, VI -2, VI -4, VI -7, VI -11, VI -12, VI -13, VI -17, VI -20, VI- 23, VI -24, VII -3, VII -10, VII -15 Office, I -1, I -2, I -14, 1II -6, IV -4, IV -11, W -12, IV -28, IV -33, VII -2, VII -3, VII - 4, A-6, A -7, B -1, B -2 Index -9 Office of Federal Procurement Policy, I11-6, IV -12 Off - the - Shelf, IV -25, VI -13 Omnibus Trade and Competitiveness Act, IV -19, A -1 On -Site Inspector's Report, VII-6 Open Contract Opportunities, I1 -7, VII -1 Open Market, V -9, VI -1, VII -9, VII -10, VII -11, VII -12, VII -13, VII -14, VII -15 Operation, I -1, 1I -8 Opportunity, II -7, IV -5, IV -6, IV -14, IV- 16, IV -28, VI -1, VI -12, VII -4, A -3, A -6, A -7, VII -3, VII -5, VII -7, VII -10 Option, I -5, I -9, IV -3, IV -21, V -2, V -5, VI -22, VII -9 Organizational Conflicts of Interest, 11I -2, IV -32, VI -5, VII -8, VII -10 Other Agreement, 1 -8, II -2, II -4, IV -30, IV- 33, VII -1 Other Than Full and Open Competition, VI- 16, VII -13 Overhead, 11I -7, IV -18, IV -30, IV -32, VI- 20, See also, Burden Oversight, I -11, I -12, 1 -13, V -9, VII -2, VII - 6, VII -7 Over - the -Road Bus, II -5, VII -1 Paratransit, IV -16, VII -5 Participant, 11 -2, VII -1 Participation, I1-6, IV -2, IV -7, IV -14, IV- 23, IV -32, VI -3, VI -4, VI -18, VI -20, VII -4, VII -6, VII -7, VII -8, VII -9, A -4, VII -6, VII -5 Partnership, 1 -8, II -2, 1I -4, II -8, II -9, VI -15, VI -18, VII -3, VII -13 Past Performance, 1 -3, IV-4, VI -10, VI -11, VI -21, VI -24, VI -25, VII -15 Patent, IV -30, VI -17, A -2, VII -8, VII -3, VII -5 Payment, II1-4, IV -10, IV -11, IV -12, IV -26, VI -4, VI -6, VI -10, VII-4, VII -7, VII -2 Payment Bond, IV -26, VI-4, VII -7, VII -2 Percentage, II -7, IV -12, V -8, VI -6, VI -11, VII -4, VII -10 Index -10 Percentage of Construction Cost, VI -6, VII - 10 Performance, I -3, I -5, I -10, I -12, III -1, III - 2, II1 -4, IV-4, W -9, IV -12, IV -13, IV- 17, IV -21, IV -22, IV -26, VI -1, VI -2, VI- 3, VI-4, VI -5, VI-6, VI -7, VI -10, VI -l1, VI -14, VI -21, VI -24, VI -25, VII -2, VII - 4, VII -7, VII -12, VII -15, VII -2 Performance Bond, IV -26, VI-4, VII -7, VII - 2 Period of Performance, IV -9, VII-4 Person, IV -14, IV -28, VI -3, VI -19, VI -21 Personal Conflicts of Interest, III -1, VII -2 Personnel, I -3, III -1, III -7, IV -8, VI -11, VI- 22, VI -24 Piggybacking, V-6 PLA, 1 -8, IV -29, See also, Project Labor Agreement Plan, I -3, VI -11, VI -19, VII -13 Planning, II-6, II -8, IV -23, IV -24, VI -19, VII -10, VII -3 Pollution, IV -20, A -6, VII-6 Pooling, V -7 PPP, II -8, II -9, See also, Public- Private Partnership Preaward Authority, IV -10, VII-4 Preference, III -2, II1 -3, IV -17, IV -18, IV- 19, N -29, VI -2, VI -5, VI -8, VI -18, A -3, A-6, VII -2, VII -5, VII -7, VII -2, VII-4 Preliminary Engineering, IV -24, VI -12, VI- 14, VI -15 Prenotification, VI -14, VII -12 Prequalification, VI -2, VI -3, VI -16, VII -10 Presidential $1 Coin Act, IV -20, A -2 Prevailing Wage, IV -28, VI -7, A -2, VII -7 Preventive Maintenance, II -6, 1I -7, VII -1 Price, I -3, III -4, III -5, IV -12, IV -26, IV -27, V -4, V -5, V -6, VI -6, VI -8, VI -9, VI -10, VI -11, VI -12, VI -13, VI -16, VI -20, VI- 21, VI -22, VII -2, VII -9, VII -10, VII -11, VII -12, VII -14, VII -7 Price Analysis, V-6, VI -16, VI -20, VI -21, VII -14, VII -7 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Pricing Guide for FTA Grantees, VI -22, A -8 Process, I -3, I -13, I1 -7, III -7, W-16, W-21, IV -23, V -6, VI -2, VI -5, VI -11, VI -16, VII -3, A -3, VII-6 Procurement Procedures, 1I -2, II -3, II -5, II- 11, 1II -2, 1II -3, III -6, IV -24, IV -25, V -7, VI -1, VI -7, VI -9, VI -11, VI -12, VI -13, VI -14, VI -15, VI -19, VII -2, VII -11, VII - 12, VII -13 Procurement System, I -11, I -12, III -1 Product, I -10, III -2, V -2, VI -2, VI-4, VI- 17, VI -21 Production, VI -17, VI -24, VII -15 Program Management, 11 -9, IV -24, VI -12, VI -14, VI -15, VII -1, VII -9 Program Manager, W-25 Progress Payment, IV -11, IV -12, VII-4 Prohibited, IV -9, W -11, IV -21, IV -22, IV- 29, V -8, VI -3, VI -5, VI -6, VI -8, VI -13, VI -14, VI -19, A -5, VII-4, VII -10, VII - 11, VII -12, VII -13 Prohibition, IV -2, W -5, IV -24, VII -3, VII - 6, See also, Prohibited Project Designer, IV -25 Project Labor Agreement, I -8, IV -29, A -7, See also, PLA Project Type, II -5, VII -1 Property, I -6, I -8, 1 -9, I -10, II -2, II -5, II -6, I1 -7, 1I -8, 11 -9, II1 -2, III -3, III -4, 1II-6, IV -1, IV -2, IV -3, IV -9, IV -13, IV -14, IV -16, IV -18, IV -19, IV -20, IV -24, IV- 25, IV -29, IV -30, V -1, V -2, V -3, V-4, V -5, V -6, V -7, V -9, VI -1, VI -2, VI -3, VI -7, VI -8, VI -9, VI -10, VI -12, VI -13, VI -14, VI -17, VI -18, VI -20, VII -8, A -2, A -3, A-4, A -6, VII -1, VII -4, VII -5, VII - 6, VII -7, VII -8, VII -9, VII -10, VII -1, VII -2 Proposal, 1 -3, I -10, I11 -3, I1I -6, IV -20, IV- 34, VI -1, VI -4, VI -9, VI -10, VI -11, VI- 12, VI -16, VI -17, VI -18, VI -23, A -5, VII -2, VII -11, VII -13, VII -1 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Protest, VI -19, VII -1, VII -2, VII -3, VII -4, VII -9, VII -7 Provision, I -1, 11-6, II -10, N -8, IV-9, V-6, VI -6, VI -l0, VII -8, VII -1, VII -2, VII -3, VII -4, VII -5 Public Interest, IV-31, VI -19, VII -13 Public Opening, VI -9, VII -11 Public Policy, IV -4, VI -22, VI -23, VII -15 Public Transportation, I -1, I -2, 1 -3, I -5, I -8, I -9, II -3, II -4, II -7, II -9, IV-1, IV-2, N- 3, IV-5, IV-14, IV -15, IV -16, IV-20, IV- 21, IV-22, IV-30, V-6, VI -11, VII -4, A- 1, VII -3, VII -5, VII -6 Publication, I -1, IV-7, IV -31, VI -1, VI -7, VII -8 Publicity, VI -9, VI -11, VII -11 Public- Private Partnership, II -8, II -9, VII -1, See also, PPP Purchase, I -5, I -10, II -2, III -1, III -3, III-4, 11I -5, I11 -7, N -1, IV-2, IV-3, W-13, N- 18, V -2, V -3, V -4, VI -6, VI -7, VI -8, VI- 9, VI -16, VI -21, VII -2, VII -3, VII -11, VII -1, VII -2, VII -3, VII-4, VII -5 Purchase Order, I -10, 11 -2, III -1, III -7, V -2, V -4, VI-6 Purchasing Contract, I -9, N -2, V -2, V -4, VII -3, VII -9 Purchasing Schedule, I-6, I -9, IV-2, V -1, V -2, V -4, V -6, VII -3, VII -9 Qualifications- Based, IV-24, IV-25, IV -26, VI -2, VI -12, VI -13, VI -14, VI -15, VII -7, VII -12 Qualified, III -1, III -7, IV-6, N -7, IV-15, VI -2, VI -4, VI -8, VI -11, VI -12, VI -13, VI -16, VI -22, VI -23, VII -12 Quality, I -3, I -8, I1I -2, IV -17, N -23, V -8, VI -11, VI -21, VI -24, A -6, VII -2, VII-6 Quantity, 1-6, N -2, N -20, V -1, V -5, V-6, V -8, VI -3, VII -9 Quote, II1 -6, VII -2 Race, IV-5, IV-6, IV-14, IV-23 Real Property, I -8, I1 -5, II-6, IV-24, IV-25, VI -12, VI -13, VI -14, A -3, A -4, VII -1 Index -11 Recipient, I -1, 1 -2, I -3, 1 -4, I -5, I-6, I -7, I- 8, I -9, 1 -10, I -11, I -12, 1 -13, 1 -14, 1I -1, II -2, II -3, II -4, I1 -5, II-6, 11 -7, 1I -8, 11 -9, II-10,II-11,III-1,II1-2,III-3,III-4,III- 5, II1 -6, III -7, IV-1, IV-2, IV-3, IV-4, IV-5, IV -6, IV-7, IV-8, N -9, IV-10, N- 11, N -12, IV -13, IV-15, N -16, IV-17, IV-18, IV-19, W-20, IV-21, IV-22, IV- 23, N -24, IV-25, N -26, IV-27, N -28, IV-29, N -30, IV-31, N -32, IV-33, V -1, V -2, V -3, V-4, V -5, V -6, V -7, V -8, V- 9, VI -1, VI -2, VI -3, VI-4, VI -5, VI-6, VI -7, VI -8, VI -10, VI -11, VI -12, VI -13, VI -14, VI -15, VI -16, VI -17, VI -18, VI- 19, VI -20, VI -21, VI -22, VI -23, VI -24, VI -25, VII -1, VII -2, VII -3, VII -4, VII -5, VII -6, VII -7, VII -8, VII -9, VII -10, A -4, VII -1, VII -2, VII -3, VII -10, VII -15 Record, I -12, III-4, 11I -5, W-4, N -13, N- 29, VI -21, VI -23, VI -24, VII -2, VII -15, VII -7 Recreation Area, N -17, A -3, A -5, VII -5 Recycled, IV-17, A -3, VII -5, VII -3, VII -5 Reference, I -7, I -10, I -12, I -13, N -30, VI- 7, VII -1, VII -2, VII -3, VII-6 Region, II -11, IV -27, VII -2, VII -3, B -1, B- 2 Regional Administrator, IV-27, VII 2, VII -3 Regulations, I -2, I-4, I -13, I -14, II -1, II -2, II -3, II -5, 11 -6, II -9, II -10, II -11, III -1, 1I1 -3, III -4, I1I -8, IV-1, IV-3, IV-4, IV-5, IV-6, IV-7, W-8, IV-9, IV-13, IV-14, IV-15, IV -16, IV-17, N -18, N -19, N- 20, IV-21, N -22, N -23, IV-24, IV-26, IV-27, IV-28, W-29, IV-30, IV-31, N- 32, V -2, V-4, VI -1, VI -4, VI -11, VI -14, VI -22, VI -23, VI -24, VII-4, A-4, A -5, A-6, VII -1, VII -3, VII -5 Rehabilitation, N -15, IV-16, A -1, VII -5 Rehabilitation Act, N -15, N -16, A -1, VII - 5 Rejection, III -4, III -5, VI -7, VI -8, VI -10, VI -25, VII -10, VII -11, VII -15 Index -12 Relocation, II -5, 1I-6, A -3, A-4 Remedies, 111 -8, IV-12, IV-13, VI -5, VII -3, VII -8, A -2, A-4, VII-4, VII -10 Repair, IV-24, IV-25, IV -28, IV -29, VI -12, VI -13, VI -14 Report, VII -2, VII -6, VII -7, VII -8, VII-6 Reporting, IV -26, VI -14 Request for Proposals, I -10, VI -10, VI -11, VI -25, VII -11 Requirement, I -14, II -1, IV-24, IV-26, IV- 29, VI -1, VI -8, VI -11, VI -13, VI -19, VII -1, VII -13, VII -3, VII-6 Research, I -7, I -8, II -4, IV-24, N -30, IV- 31, N -33, VI -18, VI -19, A -3, VII -8, VII -13, VII -3, VII -5 Reserve, VI -7, VII-6 Resource Conservation and Recovery Act, IV-17, A -3 Resources, II1 -3, IV-4, IV -17, N -23, V -7, VI -21, VI -24, VII -15 Responsibility, I -2, III -5, IV-2, IV -4, IV- 22, VI -9, VI -23, VII -1, VII -5, VII -7, VII -3 Responsible, I -1, I -2, I -6, I -9, 11 2, N -2, N -3, IV-4, V -4, V -6, VI -8, VI -9, VI -10, VI -11, VI -15, VI -16, VI -21, VI -23, VII - 4, VII -7, VII -15 Restraint of Trade, VI -5, VII -10 Restrictive, IV -3, IV-27, VI -3, VI-4, VI -16, VI -18 Retainer, VI -3, VII -10 Revenue Contract, I -9, II -7, II -8, VII -1 Revenue Vehicle, II -2 Reverse Auction, III-6, VII -2 Review, I -11, I -12, I -14, II -11, III -5, IV -3, IV-16, N -18, IV -21, IV-22, V -6, V -9, VI -2, VI -12, VI -16, VI -17, VI -20, VII -2, VII -3, VII -4, VII -5, VII -6, VII -7, VII -9, VII -6, VII -12, VII -13, VII-6 Role, I=1, I -5, 1-6, I -10, I -11, II -8, VI -10, VII -1, VII -3, VII -4, VII -5, VII -6, VII -7, VII -8 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Rolling Stock, I -12, IV -9, IV -13, IV -18, IV -20, IV -21, V -8, A -5, VII -6, VII -9, VII -2, VII -3, VII -4, VII -5, VII-6 Safe, Accountable, Flexible, Efficient Transportation Equity Act A Legacy for Users, I -1, IV-6, VI -18, See also, SAFETEA -LU SAFETEA -LU, I -1, I -2, II -5, IV-4, IV-6, N -19, N -25, IV-26, VI -18, VI -20, VI- 23, A -1, See also, Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Safety, I -10, IV -8, N -13, IV-14, IV -22, IV-24, IV-27, IV -28, IV-29, A -2, A -3, A -5, A -6, VII -7, VII -2, VII -5, VII-6 Schedule, 1 -6, I -9, IV -2, IV -7, V -1, V -2, V -3, V -4, V-6, VI -24, A -2, VII -3, VII -9 School, I -7, IV-23, V -3, A -5, VII -6, VII -2, VII -5 Scope, II -5, IV-1, N -9, IV -23, V -7, V -8, VI -7, VI -17, VII -5, VII-4 Sealed Bids, VI -8, VI -11, VI -15, VI -16, VII -11 Seat Belt, IV-8, A -7, VII -3 Security, I -10, N -8, N -11, IV-12, VI -19, A -3, A-4, A -5, VII -3, VII-4, VII -13 Seismic, N -27, IV-28, A -3, A -5, VII -7, VII -2, VII -5 Selection, 11 -9, III -1, III-4, IV-4, IV-21, IV-23, N -24, VI-4, VI -8, VI -9, VI -10, VI -13, VI -15, VI -16, VI -25, VII -1, A -3, VII -2, VII -6, VII -12, VII -7 Self - Certification, I -11, I -12, III -1, III -2, VII -2 Sensitive Security Information, IV-8, A -3, A -4, A -5, VII -3 Service, I -2, I -1, I -10, III -2, IV-1, IV -3, N -16, IV-20, IV -21, N -22, IV-30, A -5, VII -5, VII -6, VII -5, See also, Services Service Life, IV-3, N -20, VII-6 Services, I -2, I -5, I -6, I -7, I -9, I -10, II -2, 11 -5, 11 -8, II -9, II -10, 11I -2, II1 -3, III-4, II1 -6, II1 -7, IV -1, IV -2, IV -3, IV -5, IV- FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 6, IV -8, IV -9, IV -11, IV -13, IV -14, IV- 15, IV -16, IV -17, IV -18, IV -19, IV -20, IV -21, IV -22, IV -23, W -24, IV -25, IV- 26, IV -30, IV -31, IV -32, IV -33, V -1, V- 2, V -3, V -4, V -5, V-6, V -7, V -9, VI -1, VI -2, VI -3, VI -4, VI -7, VI -8, VI -9, VI- 10, VI -12, VI -13, VI -14, VI -15, VI -16, VI -17, VI -18, VI -19, VI -20, VI -21, VI- 22, VII -8, A -2, A -4, A-6, A -7, VII-4, VII -5, VII -6, VII -7, VII -8, VII -10, VII - 12, VII -2, VII-4, VII -5, VII -7, See also, Service Settlement, I-6, VII-6, VII -7, VII -8, VII -9 Sex, IV -5, IV -6, IV -14, IV -23, A -1, A -4, VII -3 Shared Use, V -1, VII -9 Single Audit Act, III -7, IV -32, A -2, VII -8 Single Bid, VI -10, VI -17, VII -13 Single Proposal, VI -17, VII -13 Size, III -5, IV -2, IV -7, VI -4, VI -8, VII -3 Small and Minority Firm, IV -2, W -7, VII -3 Small Procurement, IV -1, IV -2, VII -3 Small Purchase, III-4, IV -3, VI -8, VI -16, VI -21, VII -11 Socio - Economic, IV -6, IV -13, VII -3, VII -5 Sole Source, III -4, IV -9, V -5, VI -1, VI -2, VI -16, VI -17, VI -18, VI -20, VI -21, VI- 25, VII -9, VII -13 Solicitation, 1 -3, I -6, 1I -9, II1 -6, IV -7, IV- 12, IV -28, V -1, V -2, V -6, V -7, VI -1, VI -2, VI -3, VI -5, VI -7, VI -9, VI -11, VI- 17, VI -18, VI -22, VI -23, VI -24, VII -10 Source, I -14, III -4, IV -9, V -3, V -5, VI -1, VI -2, VI -10, VI -16, VI -17, VI -18, VI- 20, VI -21, VI -25, VII -1, VII -9, VII -13 Spare Ratio, IV -1, W -20, VII-6 Special Studies, IV -30, IV -31, VII -8 Specification, VI -3, VI -9, VI -10 Stafford Act, VI -4, A -3 Standard, 1 -7, I -13, II -4, 11I -6, IV -13, IV- 24, IV -26, V -8, VII -2, VII -9, VII-6 Standards of Conduct, III -1, VII -2 Index -13 State, I -1, I -4, I -6, 1 -7, I -9, I -10, I -11, II -2, II -3, II -10, II -11, III -1, I1I -3, III-4, 11I -5, II1 -6, IV -2, IV -3, W -5, W-10, IV -16, IV -18, W -21, IV -23, IV -25, IV -26, IV- 27, IV -30, IV -33, V -1, V -2, V -3, V -4, V-6, V -7, VI -1, VI -4, VI-6, VI -7, VI -8, VI -10, VI -11, VI -12, VI -13, VI -14, VI- 15, VII -4, A -3, A -4, A -7, VII -1, VII -3, VII -6, VII -7, VII -9, VII -10, VII -12 Structure, II -6, IV -10, VI -15 Subagreement, IV-4 Subcontract, II -4, W -8, W-9, VI -14 Subrecipient, I -8, I -9, II -1, 11 -2, 11 -3, 11-6, II -7, I1 -10, IV -7, W -15, IV -16, IV -30, IV -31, V -3, VII -1 Sureties, IV -27, VII -7 Surplus, IV -7, V -2, A -1, VII -9 Surveying, W -24, VI -12, VI -14, VI -15 Suspension, IV-4, IV -5, IV -13, VI -23, A -4, A -7, VII -3, VII -4, VII -15, VII -1, VII-4 Suspension of Work, IV -13, VII-4 System, I -5, I -11, I -12, 1 -13, 11 -7, III -1, III - 3, III -5, II1-6, IV -1, IV -5, IV -19, VII -2, VII -3, VII -7 Taxes, VI -24, VII -15 TEA -21, II -5, A -1, See also, Transportation Equity Act for the 21st Century Team, I -8, 11 -2, VI -15, VI -18, VII -3, VII - 13 Technical Assistance, I -11, I -12, I -13 Technical Capacity, I -11, III -1, V -1, VI -23, VII -1, VII -15 Technical Qualification, VI -2, VI -12, VI -16, VII -12 Technology, 1 -5, III -5, IV -16, V -3, A -1, A- 2, A -6, VII -2, VII -9 Term, 1 -3, I -7, I -8, I -10, 11 -2, IV -3, IV -9, V -1, V -2, V -3, VI -23 Terminate, II -11, See also, Termination Termination, IV -13, VII -4, See also, Terminate Texting, W -8 Index -14 Third Party Contract, I -1, I -2, I -9, I -10, I- 11, I -12, I -13, I -14, II -1, I1 -2, I1 -3, I1-4, II -5, 1I-6, II -8, II -9, III -1, III -3, III -4, III -5, III -7, IV -1, IV -2, IV -3, IV-4, IV- 5, IV-6, IV -7, IV -8, IV -9, IV -11, IV -13, IV -15, IV -16, IV -17, IV -18, IV -19, IV- 20, IV -21, IV -22, IV -23, IV -26, IV -27, IV -28, IV -29, IV -30, IV -31, IV -32, IV- 33, IV -34, V -1, V -5, V -7, V -8, VI -1, VI -3, VI -14, VI -23, VII -1, VII -2, VII -3, VII -4, VII -5, VII -7, VII -8, VII -1, VII -2, VII -3, VII -4, VII -5, VII -6, VII -7, VII -8, VII -9, VII -10, VII -11, VII -12, VII -13, VII -14, VII -1, VII -2, VII -3, VII-4, VII -5 Tier, I -13, II-4, III -5, IV -4, IV -5, IV -8, IV- 15, IV -17, IV -28 Time, I -5, 111 -6, III -7, IV -1, IV -2, IV -3, IV -9, IV -13, V -5, V -7, V -8, VI -3, VI-6, VI -9, VI -24, VII -9, VII -4, VII -10, VII - 11 Time and Materials, VI -6, VII -10 Time Extension, IV -9, VII-4 Timeliness, VI -24, VII -15 Title IX, IV-6, A -1, See also, Title IX of the Education Amendments of 1972 Title IX of the Education Amendments of 1972, A -1, See also, Title IX Title VI, IV -5, IV -14, IV -15, A -3, A -4, A- 8, VII -5, VII -1, VII-4, See also, Title VI of the Civil Rights Act Title VI of the Civil Rights Act, IV -14, IV- 15, A -3, A-4, VII -5, See also, Title VI Title VII, IV -5, A -3, See also, Title VII of the Civil Rights Act Title VII of the Civil Rights Act, IV -5, A -3, See also, Title VII Training, I -13, II -5 Transit Employee Protective Arrangements, VII -2, VII -5 Transit Vehicle Manufacturer, IV -20, VII-6, See also, TVM Transportation Equity Act for the 21st Century, II -5, A -1, See also, TEA -21 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Travel, IV -19, VII -5, VII-4 TVM, IV -20, VII -6, See also, Transit Vehicle Manufacturer Two -Step Procurement Procedure, VI -12, VI -13, VII -12 Type, II -3, II -5, II -7, III -4, IV -1, IV -23, IV -25, IV -30, VI -3, VI -6, VI -7, VI -8, VI -10, VI -13, VI -25, VII -1, VII -2, VII - 7, VII -10, VII -11, VII-4, VII -5 Unequal, VI -5, VII -10 Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non - Profit Organizations, I -4, II -10, A -4, See also, Common Grant Rule for Non - Governmental Recipients Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, I -4, II -10, A -4, See also, Common Grant Rule for Governmental Recipients Uniform Relocation Assistance and Real Property Acquisition Policies Act, 11-6, A- 3 Unique, I -10, VI -2, VI -17, VII -13 Unsolicited Proposal, I -10, VI -1, VII -10 Urgency, VI -18, VII -13 Usability, IV -16, VII -5 Value, I -3, I -10, III -1, III -6, IV -3, IV -28, IV -33, V -8, VI -11, VI -15, VII -2, VII -5, VII -7, VII -2, VII -7, VII -11 Value Engineering, I -10, IV -28, VII -7 Violation, III -1, IV -13, IV -14, IV -16, VII - 7, VII-4 Wage, IV -13, IV -14, IV -24, IV -28, VI -7, A -1, A -2, VII -5, VII -7 Wage and Hour, IV -13, IV -14, IV -28, A -1, A -2, VII -5 Waiver, I -1, I -3, IV -29, V -2, V-4, See also, Exception Water, IV -17, A -2, VII -5, VII -1, VII-4 Waterfowl, IV -17, A -3, A -5, VII -5 FTA C 4220.1F 11/01/2008 Rev. 1, 04/14/2009 Rev. 2, 07/01/2010 Rev. 3, 02/15/2011 Web site, I -2, 1 -12, 1 -14, I1 -5, I11 -6, III -7, IV -5, IV -17, W-34, V-4, V -8, VI -20, VI -22 Wheelchair, I1 -5 Wheelchair Lift, 11 -5 Wildlife, IV -17, A -3, A -5, VII -5 Index -15 EXHIBIT H FTA THIRD PARTY CONTRACT PROVISIONS STANDARD TERMS AND CONDITIONS FTA THIRD PARTY CONTRACT PROVISIONS — STANDARD TERMS AND CONDITIONS 1 -1 Disadvantaged Business Enterprise (DBE) Participation A. Nondiscrimination 49 CFR part 26. The Contractor shall not discriminate on the basis of race, color, national origin, or sex in the performance of this Contract. The Contractor shall carry out applicable requirements of 49 CFR part 26 in the award and administration of United States Department of Transportation assisted contracts. Failure by the Contractor to carry out these requirements is a material breach of this Contract, which may result in the termination of this Contract or such other remedy, as the City deems appropriate. Each subcontract the contractor signs with a subcontractor must include the assurance in this paragraph (see 49 CFR 26.13(b)). B. DBE Program. The DBE requirements of 49 CFR Part 26 apply to this Contract. City has determined that no DBE goal will be established for this Contract. However, the City requires that the Contractor report any actual DBE participation on this Contract to enable the City to accurately monitor DBE program compliance. C. Efforts to Increase DBE Participation. Even though this Contract has no DBE goal, the City still encourages Contractors to pursue opportunities for DBE participation. To that end, Contractors are encouraged to: 1. Advertise opportunities for subcontractors and suppliers ( "subcontractors ") in a manner reasonably designed to provide DBEs capable of performing the work with timely notice of such opportunities. All advertisements should include a provision encouraging participation by DBE firms and may be done through general advertisements (e.g., newspapers, joumals, etc.) or by soliciting proposals directly from DBEs. 2. Utilize the services of available minority community organizations, minority consultant groups, local minority assistance offices and organizations that provide assistance in the recruitment and placement of DBEs and other small businesses. 3. Establish delivery schedules, where requirements of the contract allow and encourage participation by DBEs and other small businesses. 4. Achieve DBE attainment through joint ventures. D. DBE Listing. A current list of DBE firms accepted as certified by the Washington State Office of Minority and Women's Business Enterprises ( OMWBE) is available from that office at (360) 753- 9693. For purposes of this Contract, a DBE firm must be certified by OMWBE as of the date of contract award. E. Procedure Applicable when DBEs Are Utilized. Concurrent with the use of any DBE subcontractor or supplier the Contractor shall provide notice of such use in writing to the King County Office of Business Development and Contract Compliance (BDCC). Upon receipt of said notice, BDCC shall provide the Contractor with the applicable procedures for counting DBE participation. Assistance with this Section is available from BDCC at (206) 684 -1330. Notice referenced herein should be delivered to the following address: King County Department of Finance Office of Business Relations and Economic Development 401 Fifth Avenue, Suite 350 MS CNK -ES -0350 Seattle, WA 98104 Phone: (206) 263 -9750 Fax: (206) 205 -0840 F. The Contractor is required to pay its subcontractors performing work related to this contract for satisfactory performance of that work no later than 30 days after the contractor's receipt of payment for that work from the City. In addition, the contractor may not hold retainage from its subcontractors, but may require the purchase of a retainage bond by the subcontractor. G. The contractor must promptly notify the City whenever a DBE subcontractor performing work related to this contract is terminated or fails to complete its work, and must make good faith efforts to engage another DBE subcontractor to perform at least the same amount of work. The contractor may not terminate any DBE subcontractor and perform that work through its own forces or those of an affiliate without prior written consent of the City. 1 -2 Federal Changes Contractor shall at all times comply with all applicable FTA regulations, policies, procedures and directives, including without limitation those listed directly or by reference in the Master Agreement between the City and FTA, as they may be amended or promulgated from time to time during the term of this contract. Contractor's failure to so comply shall constitute a material breach of this contract. 1 -3 No Federal Government Obligations to Third Parties The Contractor acknowledges and agrees that, notwithstanding any concurrence by the Federal Government in or approval of the solicitation or award of this Contract, absent the express written consent by the Federal Government, the Federal Government is not a party to this Contract and shall not be subject to any obligations or liabilities to the Contractor or any other party (whether or not a party to this Contract) pertaining to any matter resulting from this Contract. The Contractor agrees to include the above clause in each subcontract financed in whole or in part with Federal assistance provided by FTA. It is further agreed that the clause shall not be modified, except to identify the subcontractor who will be subject to its provisions. 1 -4 Civil Rights The following requirements apply to the underlying contract: (A) Nondiscrimination - In accordance with Title VI of the Civil Rights Act, as amended, 42 U.S.C. § 2000d, section 303 of the Age Discrimination Act of 1975, as amended, 42 U.S.C. § 6102, section 202 of the Americans with Disabilities Act of 1990, 42 U.S.C. § 12132, and Federal transit law at 49 U.S.C. § 5332, the Contractor agrees that it will not discriminate against any employee or applicant for employment because of race, color, creed, national origin, sex, age, or disability. In addition, the Contractor agrees to comply with applicable Federal implementing regulations and other implementing requirements FTA may issue. (B) Equal Employment Opportunity - The following equal employment opportunity requirements apply to the underlying contract: (1) Race, Color, Creed, National Origin, Sex - In accordance with Title VI of the Civil Rights Act, as amended, 42 U.S.C. § 2000e, and Federal transit laws at 49 U.S.C. § 5332, the Contractor agrees to comply with all applicable equal employment opportunity requirements of U.S. Department of Labor (U.S. DOL) regulations, "Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor," 41 C.F.R. Parts 60 et seq., (which implement Executive Order No. 11246, "Equal Employment Opportunity," as amended by Executive Order No. 11375, "Amending Executive Order 11246 Relating to Equal Employment Opportunity," 42 U.S.C. § 2000e note), and with any applicable Federal statutes, executive orders, regulations, and Federal policies that may in the future affect construction activities undertaken in the course of the Project. The Contractor agrees to take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, creed, national origin, sex, or age. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. In addition, the Contractor agrees to comply with any implementing requirements FTA may issue. (2) Age - In accordance with section 4 of the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§ 623 and Federal transit law at 49 U.S.C. § 5332, the Contractor agrees to refrain from discrimination against present and prospective employees for reason of age. In addition, the Contractor agrees to comply with any implementing requirements FTA may issue. (3) Disabilities - In accordance with section 102 of the Americans with Disabilities Act, as amended, 42 U.S.C. § 12112, the Contractor agrees that it will comply with the requirements of U.S. Equal Employment Opportunity Commission, "Regulations to Implement the Equal Employment Provisions of the Americans with Disabilities Act," 29 C.F.R. Part 1630, pertaining to employment of persons with disabilities. In addition, the Contractor agrees to comply with any implementing requirements FTA may issue.' (C) Information and Reports - The Contractor shall provide all information and reports required by the regulations or directives issued pursuant thereto and shall permit access to its books, records, accounts, other sources of information, and its facilities as may be determined by the City or the Federal Transit Administration (FTA) to be pertinent to ascertain compliance with such regulations, orders and instructions. The Contractor shall maintain all required records for at least three (3) years after the City makes final payment and all other pending matters are closed. Where any information is required and it is in the exclusive possession of another who fails or refuses to furnish this information, the Contractor shall so certify to the City or the Federal Transit Administration, as appropriate, and shall set forth efforts made to obtain the information. (D) Sanctions for Noncompliance - In the event of the Contractor's noncompliance with the nondiscrimination provisions of this Contract, the City shall impose such contract sanctions as it or the FTA may determine to be appropriate, including, but not limited to: 1. Withholding of payments to the Contractor under the Contract until the Contractor complies, and/or, 2. Cancellation, termination or suspension of the Contract, in whole or in part. (E) Incorporation of Provisions - The Contractor shall include the provisions of paragraphs A through E of this section in every subcontract, including procurements of materials and leases of equipment, unless exempt by the regulations or directives issued pursuant thereto. The Contractor shall take such action with respect to any subcontract or procurement as the City or the FTA may direct as a means of enforcing such provisions, including sanctions for noncompliance. Provided, however, that, in the event the Contractor becomes involved in or is threatened with litigation with a subcontractor or supplier as a result of such direction, the Contractor may request the City to enter into such litigation to protect the interests of the City, and in addition, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. 1 -5 Labor Provisions - Non - Construction Contracts The Contractor agrees to comply, and assures the compliance by each subcontractor or subconsultant at any tier with any applicable employee protection requirements for non - construction employees of Section 102 of the Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C. Sections 327 - 332, and U.S. DOL regulations, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act)," 29 C.F.R. Part 5. These include but are not limited to the following: A. Overtime Requirements No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any work week in which he or she is employed on such work to work in excess of forty (40) hours in such work week unless such laborer or mechanic receives compensation at a rate not less than one and one -half (1.5) times the basic rate of pay for all hours worked in excess of forty (40) hours in such work week. (29 CFR § 5.5(b)(1)). B. Violation: Liability for Unpaid Wages: Liquidated Damages In the event of any violation of the clause set forth in paragraph A of this section, the Contractor and any subcontractor responsible therefor shall be liable for the unpaid wages. In addition, such Contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such district or to such territory) for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of paragraph A of this section in the sum of ten ($10) dollars for each calendar day on which such individual was required or permitted to work in excess of the standard work week of forty (40) hours without payment of the overtime wages required by paragraph A of this section. (29 CFR § 5.5(b)(2)). C. Withholding for Unpaid Wages and Liquidated Damages The Department of Transportation or the City shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any monies payable on account of work performed by the Contractor or subcontractor under any such contract or any other federal contract with the same prime Contractor, or any other federally- assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or subcontractor for unpaid wages and liquidated damages as provided in paragraph B of this section. (29 CFR § 5.5(b)(3))) D. Payrolls and Basic Records The Contractor or subcontractor shall maintain payrolls and basic payroll records during the course of the work and shall preserve them for a period of three (3) years from the completion of the contract for all laborers and mechanics, including guards and watchmen, working on the contract. Such records shall contain the name and address of each such employee, social security number, correct classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made and actual wages paid. Further, the records to be maintained under this paragraph shall be made available by the Contractor or subcontractor for inspection, copying or transcription by authorized representatives of the Department of Transportation and the Department of Labor, and the Contractor or subcontractor will permit such representatives to interview employees during working hours on the job. (29 CFR § 5.5(c)). E. Subcontracts The Contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraphs A through E of this section and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime Contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs A through E of this section. (29 CFR § 5.5(b)(4)). 1 -6 Davis Bacon Act and Copeland Anti- Kickback Act Requirements A. Minimum Wages 1. All laborers and mechanics employed or working upon the site of the work (or under the U. S. Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project) will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act, 29 CFR Part 3), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor as set forth in Section 00130 of the Contract Documents and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits under Section 1(b)(2) of the Davis -Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers and mechanics, subject to subparagraph A(4) below of this provision 10.12, Davis -Bacon Act also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in 29 CFR 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein; provided, that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination and the Davis -Bacon poster (WH -1321) shall be posted at all times by the Contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers. 2. Whenever the minimum wage rate prescribed in the Contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the Contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. 3. If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program; provided, that the Secretary of Labor has found, upon the written request of the Contractor, that the applicable standards of the Davis -Bacon Act have been met. The Secretary of Labor may require the Contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. 4. Classifications and disputes determined as follows: a. The City shall require that any class of laborers or mechanics which is not listed in the wage determination and which is to be employed under the Contract shall be classified in conformance with the wage determination. The City shall approve an additional classification and wage rate and fringe benefits therefore only when the following criteria have been met: (i) The work to be performed by the classification requested is not performed by a classification in the wage determination; and (ii) The classification is utilized in the area by the construction industry; and (iii) Except with respect to helpers as defined as 29 CFR 5.2(n)(4), the work to be performed by the classification requested is not performed by a classification in the wage determination, and (iii) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. b. If the Contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the City on the classification and wage rate (including the amount designated for fringe benefits where appropriate), a report of the action taken shall be sent by the City to Administrator of the Wage and Hour Division, Employment Standards Administration, U. S. Department of Labor, Washington, D. C. 20210. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise the City or will notify the City within the 30 -day period that additional time is necessary. c. In the event the Contractor, the laborers or mechanics to be employed m the classification or their representatives, and the City do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the City shall refer the questions, including the views of all interested parties and the recommendation of King the City, to the Administrator for determination. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the City or will notify the City within the 30 day period that additional time is necessary. d. The wage rate, (including fringe benefits where appropriate) determined pursuant to subparagraphs A(4)(b) or A(4)(c) of this provision, shall be paid to all workers performing work in the classification under this Contract from the first day on which work is performed in the classification. B. Withholding The City shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld from the Contractor under this Contract or any other Federal contract with the same Contractor, or any other Federally- assisted contract subject to Davis -Bacon prevailing wage requirements, which is held by the same Contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the Contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper, employed or working on the site of the work (or under the U. S. Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the FTA assisted project), all or part of the wages required by the Contract, the City may, after written notice to the Contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. C. Payrolls and Basic Records 1. Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work (or under the U. S. Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project). Such records shall contain the name, address and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in Section 1(b)(2)(B) of the Davis -Bacon Act), daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in Section 1 (b)(2)(B) of the Davis -Bacon Act, the Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual costs incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. 2. The Contractor shall comply with the following requirements for submission of payrolls: a. The Contractor shall submit weekly, for each week in which any Contract Work is performed, a copy of all payrolls to the City for transmittal to the FTA. The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR Part 5. This information may be submitted in any form desired. Optional Form WH -347 is available for this purpose and may be purchased from the Superintendent of Documents (Federal Stock Number 029- 005- 00014 -1), U. S. Government Printing Office, Washington, D.C. 20402. The Contractor is responsible for the submission of copies of payrolls by all subcontractors. b. Each payroll submitted shall be accompanied by a "Statement of Compliance" signed by the Contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the Contract and shall certify the following: (i) that the payroll for the payroll period contains the information required to be maintained under 29 CFR Part 5, and that such information is correct and complete; (ii) that each laborer or mechanic (including each helper, apprentice, and trainee) employed on the Contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the wages earned, other than permissible deductions as set forth in 29 CFR Part 3; and (iii) that each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the Contract. c. The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH -347 shall satisfy the requirement for submission of the "Statement of Compliance" required by subparagraph C(2)(b) of this provision. d. The falsification of any of the above certifications may subject the Contractor or subcontractor to civil or criminal prosecution under Section 1001 of Title 18 and Section 231 of Title 31 of the United States Code. 3. The Contractor or subcontractor shall make the records required under subparagraph C(1) of this provision available for inspection, copying, or transcription by authorized representatives of the City, the FTA or the federal Department of Labor, and shall permit such representatives to interview employees during working hours on the job. If the Contractor or subcontractor fails to submit the required records or to make them available, the City or the FTA may, after written notice to the Contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12. D. Apprentices and Trainees 1. Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U. S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a state apprenticeship agency recognized by the Bureau, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Bureau of Apprenticeship and Training or a state apprenticeship agency (where appropriate) to be eligible for probationary employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the Contractor as to the entire work force under the registered program. Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a Contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman's hourly rate) specified in the Contractor's or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice's level of progress, expressed as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringe benefits shall be paid in accordance with that determination. In the event the Bureau of Apprenticeship and Training, or a state apprenticeship agency recognized by the Bureau, withdraws approval of an apprenticeship program, the Contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved. 2. Trainees Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U. S. Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate on the wage determination which provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate who is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. 3. Equal Employment Opportunity. The utilization of apprentices, trainees and journeymen shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended, and 29 CFR Part 30. E. Compliance with Copeland Act Requirements The Contractor shall comply with the requirements of 29 CFR Part 3, which are incorporated by reference in this Contract. F. Subcontracts The Contractor or subcontractor shall insert in any subcontracts the clauses set forth in subparagraphs A through E above and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in 29 CFR 5.5(a)(1) through (10) and such other clauses as the FTA may by appropriate instructions require, and also a clause requiring subcontractors to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR 5.5. G. Contract Termination - Debarment A breach of the contract clauses in 29 CFR 5.5 may be grounds for termination of the Contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR 5.12. H. Compliance with Davis -Bacon and Related Acts Requirements All rulings and interpretations of the Davis -Bacon and Related Acts contained in 29 CFR Parts 1, 3 and 5 are incorporated herein by reference in this Contract. I. Disputes Concerning Labor Standards Disputes arising out of the labor standards provisions of this Contract shall not be subject to the general disputes clause of this Contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 5, 6 and 7. Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontractors) and the City, the FTA, the U.S. Department of Labor, or the employees or their representatives. J. Certification of Eligibility 1. By entering into this Contract, the Contractor certifies that neither it (nor he or she) nor any person or firm which has an interest in the Contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis -Bacon Act or 29 CFR 5.12(a)(1). 2. No part of this Contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis -Bacon Act or 29 CFR 5.12(a)(1). 3. The penalty for making false statements is prescribed in the U. S. Criminal Code, 18 U.S.C. 1001. 1 -7 Bonding A. Bond Requirements (Construction) 1. Bid Security A Bid Bond must be issued by a fully qualified surety company acceptable to the and listed as a company currently authorized under 31 CFR, Part 223 as possessing a Certificate of Authority as described thereunder. 2. Rights Reserved In submitting this Bid, it is understood and agreed by bidder that the right is reserved by the City to reject any and all bids, or part of any bid, and it is agreed that the Bid may not be withdrawn for a period of ninety (90) days subsequent to the opening of bids, without the written consent of the City. It is also understood and agreed that if the undersigned bidder should withdraw any part or all of his bid within ninety (90) days after the bid opening without the written consent of the City, shall refuse or be unable to enter into this Contract, as provided above, or refuse or be unable to furnish adequate and acceptable Performance Bonds and Labor and Material Payments Bonds, as provided above, or refuse or be unable to furnish adequate and acceptable insurance, as provided above, he shall forfeit his bid security to the extent of the City damages occasioned by such withdrawal, or refusal, or inability to enter into an agreement, or provide adequate security therefore. It is further understood and agreed that to the extent the defaulting bidder's Bid Bond, Certified Check, Cashier's Check, Treasurer's Check, and/or Official Bank Check (excluding any income generated thereby which has been retained by the City as provided in (Item x "Bid Security" of the Instructions to Bidders) shall prove inadequate to fully recompense the City for the damages occasioned by default, then the undersigned bidder agrees to indemnify the City and pay over to the City the difference between the bid security and the City's total damages, so as to make the City whole. The undersigned understands that any material alteration of any of the above or any of the material contained on this form, other than that requested, will render the bid unresponsive. B. Performance and Payment Bonding Requirements (Construction) The Contractor shall be required to obtain performance and payment bonds as follows: 1. Performance bonds a. The penal amount of performance bonds shall be 100 percent of the original contract price, unless the City determines that a lesser amount would be adequate for the protection of the City. b. The City may require additional performance bond protection when a contract price is increased. The increase in protection shall generally equal 100 percent of the increase in contract price. The City may secure additional protection by directing the Contractor to increase the penal amount of the existing bond or to obtain an additional bond. 2. Payment bonds a. The penal amount of the payment bonds shall equal: (i) Fifty percent of the contract price if the contract price is not more than $1 million. (ii) Forty percent of the contract price if the contract price is more than $1 million but not more than $5 million; or (iii) Two and one half million if the contract price is more than $5 million. b. If the original contract price is $5 million or less, the City may require additional protection as required by subparagraph 1 if the contract price is increased. C. Performance and Payment Bonding Requirements (Non- Construction) The Contractor may be required to obtain performance and payment bonds when necessary to protect the City's interest. 1. The following situations may warrant a performance bond: a. The City's property or funds are to be provided to the contractor for use in performing the contract or as partial compensation (as in retention of salvaged material). b. A contractor sells assets to or merges with another concern, and the City, after recognizing the latter concern as the successor in interest, desires assurance that it is financially capable. c. Substantial progress payments are made before delivery of end items starts. d. Contracts are for dismantling, demolition, or removal of improvements. 2. When it is determined that a performance bond is required, the Contractor shall be required to obtain performance bonds as follows: a. The penal amount of performance bonds shall be 100 percent of the original contract price, unless the City determines that a lesser amount would be adequate for the protection of the City. b. The City may require additional performance bond protection when a contract price is increased. The increase in protection shall generally equal 100 percent of the increase in contract price. The City may secure additional protection by directing the Contractor to increase the penal amount of the existing bond or to obtain an additional bond. 3. A payment bond is required only when a performance bond is required, and if the use of payment bond is in the City's interest. 4. When it is determined that a payment bond is required, the Contractor shall be required to obtain payment bonds as follows: a. The penal amount of payment bonds shall equal: (i) Fifty percent of the contract price if the contract price is not more than $1 million; (ii) Forty percent of the contract price if the contract price is more than $1 million but not more than $5 million; or (iii) Two and one half million if the contract price is increased. D. Advance Payment Bonding Requirements The Contractor may be required to obtain an advance payment bond if the contract contains an advance payment provision and a performance bond is not furnished. The City shall determine the amount of the advance payment bond necessary to protect the City. E. Patent Infringement Bonding Requirements (Patent Indemnity) The Contractor may be required to obtain a patent indemnity bond if a performance bond is not furnished and the financial responsibility of the Contractor is unknown or doubtful. The City shall determine the amount of the patent indemnity to protect the City. F. Warranty of the Work and Maintenance Bonds 1. The Contractor warrants to the City, the Architect and/or Engineer that all materials and equipment furnished under this Contract will be of highest quality and new unless otherwise specified by the City, free from faults and defects and m conformance with the Contract Documents. All work not so conforming to these standards shall be considered defective. If required by the City, the Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment. 2. The Work furnished must be of first quality and the workmanship must be the best obtainable in the various trades. The Work must be of safe, substantial and durable construction in all respects. The Contractor hereby guarantees the Work against defective materials or faulty workmanship for a minimum period of one (1) year after Final Payment by the City and shall replace or repair any defective materials or equipment or faulty workmanship during the period of the guarantee at no cost to the City. As additional security for these guarantees, the Contractor shall, prior to the release of Final Payment, furnish separate Maintenance (or Guarantee) Bonds in form acceptable to the City written by the same corporate surety that provides the Performance Bond and Labor and Material Payment Bond for this Contract. These bonds shall secure the Contractor's obligation to replace or repair defective materials and faulty workmanship for a minimum period of one (1) year after Final Payment and shall be written in an amount equal to ONE HUNDRED PERCENT (100 %) of the CONTRACT SUM, as adjusted (if at all). 1 -8 Seismic Safety The Contractor agrees that any new building or addition to an existing building will be designed and constructed in accordance with the standards for Seismic Safety required in Department of Transportation Seismic Safety Regulations 49 CFR Part 41, now or as hereinafter amended, and will certify to compliance to the extent required by the regulation. The Contractor also agrees to ensure that all work performed under this Agreement including work performed by a subcontractor is in compliance with the standards required by the Seismic Safety Regulations and the certification of compliance issued on the Project. 1 -9 Conformance with ITS Architecture The Contractor agrees to conform, to the extent applicable, to the National Intelligent Transportation Systems (ITS) Architecture and Standards as required by section 5206(e) of TEA -21, 23 U.S.C. § 502 note, and comply with FTA Notice, "FTA National ITS Architecture Policy on Transit Projects" 66 Fed. Reg. 1455 et seq., January 8, 2001, and other Federal requirements that may be issued. The Contractor agrees to include the above language in any sub - contractors or sub - agreements entered into in the performance of this agreement. 1 -10 Cargo Preference - Use of U.S. Flag Vessels The contractor agrees: a. to use privately owned United States -Flag commercial vessels to ship at least 50 percent of the gross tonnage (computed separately for dry bulk carriers, dry cargo liners, and tankers) involved, whenever shipping any equipment, material, or commodities pursuant to the underlying contract to the extent such vessels are available at fair and reasonable rates for United States -Flag commercial vessels; b. to furnish within 20 working days following the date of loading for shipments originating within the United States or within 30 working days following the date of leading for shipments originating outside the United States, a legible copy of a rated, "on- board" commercial ocean bill - of - lading in English for each shipment of cargo described in the preceding paragraph to the Division of National Cargo, Office of Market Development, Maritime Administration, Washington, DC 20590 and to the FTA recipient (through the contractor in the case of a subcontractor's bill -of- lading.) c. to include these requirements in all subcontracts issued pursuant to this contract when the subcontract may involve the transport of equipment, material, or commodities by ocean vessel. 1 -11 Fly America Requirements The Contractor agrees to comply with 49 U.S.C. 40118 (the "Fly America" Act) in accordance with the General Services Administration's regulations at 41 CFR Part 301 -10, which provide that recipients and subrecipients of Federal funds and their contractors are required to use U.S. Flag air carriers for U.S Government - financed international air travel and transportation of their personal effects or property, to the extent such service is available, unless travel by foreign air carrier is a matter of necessity, as defined by the Fly America Act. The Contractor shall submit, if a foreign air carrier was used, an appropriate certification or memorandum adequately explaining why service by a U.S. flag air carrier was not available or why it was necessary to use a foreign air carrier and shall, in any event, provide a certificate of compliance with the Fly America requirements. The Contractor agrees to include the requirements of this section in all subcontracts that may involve intemational air transportation. 1 -12 Audit and Inspection of Records Access to Records - The following access to records requirements apply to this Contract: A. Where the Purchaser is not a State but a local government and is the FTA Recipient or a subgrantee of the FTA Recipient in accordance with 49 C.F.R. 18.36(i), the Contractor agrees to provide the Purchaser, the FTA Administrator, the Comptroller General of the United States or any of their authorized representatives access to any books, documents, papers and records of the Contractor which are directly pertinent to this contract for the purposes of making audits, examinations, excerpts and transcriptions. Contractor also agrees, pursuant to 49 C.F.R. 633.17 to provide the FTA Administrator or his authorized representatives including any PMO Contractor access to Contractor's records and construction sites pertaining to a major capital project, defined at 49 U.S.C. 5302(a)1, which is receiving federal financial assistance through the programs described at 49 U.S.C. 5307, 5309 or 5311. B. Where the Purchaser is a State and is the FTA Recipient or a subgrantee of the FTA Recipient in accordance with 49 C.F.R. 633.17, Contractor agrees to provide the Purchaser, the FTA Administrator or his authorized representatives, including any PMO Contractor, access to the Contractor's records and construction sites pertaining to a major capital project, defined at 49 U.S.C. 5302(a)1, which is receiving federal financial assistance through the programs described at 49 U.S.C. 5307, 5309 or 5311. By definition, a major capital project excludes contracts of less than the simplified acquisition threshold currently set at $100,000. C. Where the Purchaser enters into a negotiated contract for other than a small purchase or under the simplified acquisition threshold and is an institution of higher education, a hospital or other non - profit organization and is the FTA Recipient or a subgrantee of the FTA Recipient in accordance with 49 C.F.R. 19.48, Contractor agrees to provide the Purchaser, FTA Administrator, the Comptroller General of the United States or any of their duly authorized representatives with access to any books, documents, papers and record of the Contractor which are directly pertinent to this contract for the purposes of making audits, examinations, excerpts and transcriptions. D. Where any Purchaser which is the FTA Recipient or a subgrantee of the FTA Recipient in accordance with 49 U.S.C. 5325(a) enters into a contract for a capital project or improvement (defined at 49 U.S.C. 5302(a)1) through other than competitive bidding, the Contractor shall make available records related to the contract to the Purchaser, the Secretary of Transportation and the Comptroller General or any authorized officer or employee of any of them for the purposes of conducting an audit and inspection. E. The Contractor agrees to permit any of the foregoing parties to reproduce by any means whatsoever or to copy excerpts and transcriptions as reasonably needed. F. The Contractor agrees to maintain all books, records, accounts and reports required under this contract for a period of not less than three years after the date of termination or expiration of this contract, except in the event of litigation or settlement of claims arising from the performance of this contract, in which case Contractor agrees to maintain same until the Purchaser, the FTA Administrator, the Comptroller General, or any of their duly authorized representatives, have disposed of all such litigation, appeals, claims or exceptions related thereto. Reference 49 CFR 18.39(i)(11). G. FTA does not require the inclusion of these requirements in subcontracts. 1 -13 Buy America The contractor agrees to comply with 49 U.S.C. 5323(j) and 49 C.F.R. Part 661, which provide that Federal funds may not be obligated unless steel, iron, and manufactured products used in FTA- funded projects are produced in the United States, unless a waiver has been granted by FTA or the product is subject to a general waiver. General waivers are listed in 49 C.F.R. 661.7. A bidder must submit to the FTA recipient the appropriate Buy America certification in Attachment A with its bids on FTA - funded contracts, except those subject to a general waiver. Bids that are not accompanied by a completed Buy America certification must be rejected as nonresponsive. This requirement does not apply to lower tier subcontractors. However, the selected contractor shall be responsible for ensuring that the lower subcontractors are in compliance with the requirements for Buy America. 1 -14 FTA Protest Procedures Bidders are hereby notified that if this Contract is funded in whole or in part by the Federal Department of Transportation, the Federal Transit Administration (FTA) may entertain a protest that alleges that the City failed to have or follow written protest procedures. Bidders must file a protest with the FTA not later than 5 working days after the City renders a final decision or 5 working days after the Bidder knows or has reason to know that the City has failed to render a final decision. The protesting party must notify the City if it has filed a protest with the FTA. After 5 days, the City will confirm with FTA that FTA has not received a protest. Protests to the FTA must be filed in accordance with FTA Circular 4220.1F (as periodically updated). The City will not award a contract for 5 working days following its decision on a Bid protest or while a protest to the FTA is pending unless the City determines that: (1) the items to be procured are urgently required; (2) delivery of performance will be unduly delayed by failure to make the award promptly; or (3) failure to make prompt award will otherwise cause undue harm to the City or the Federal Government. 1 -15 Privacy Should the Contractor, or any of its subcontractors, or their employees administer any system of records on behalf of the Federal Government, the Privacy Act of 1974, 5 USC § 552a, imposes information restrictions on the party administering the system of records. For purposes of the Privacy Act, when the Agreement involves the operation of a system of records on individuals to accomplish a government function, the recipient and any contractors, third party contractors, subcontractors and their employees involved therein are considered to be government employees with respect to the government function. The requirements of the Act, including the civil and criminal penalties for violations of the Act, apply to those individuals involved. Failure to comply with the terms of the Act or this provision of this contract will make this contract subject to termination. The Contractor agrees to include this clause in all subcontracts awarded under this Contract, which involve the design, development, operation, or maintenance of any system of records on individuals subject to the Act. 1 -16 Certification Regarding Debarment, Suspension and Other Responsibility Matters Pursuant to Executive Order 12549 and 12689, "Debarment and Suspension," 31 USC § 6101 note and federal regulations in 49 CFR 29, entities and individuals who are debarred or suspended by the federal government are excluded from obtaining federal assistance funds under this contract. To assure that such entities and individuals are not involved as participants on this FTA - financed contract, if the contract exceeds $25,000, each Bidder shall complete and submit, as part of its Bid, the certification contained in Attachment B for itself, its principals and its subcontractor(s) for any subcontract in excess of $25,000. The inability of a Bidder to provide a certification in Attachment B will not necessarily result in denial of consideration for contract award. A Bidder that is unable to provide a certification must submit a complete explanation attached to the certification form. Failure to submit a certification or explanation shall disqualify the Bidder from participation under this Bid. The City, in conjunction with FTA, will consider the certification or explanation in determining contract award. No contract will be awarded to a potential third -party contractor submitting a conditioned debarment or suspension certification, unless approved by the FTA. The certification is a material representation of fact upon which reliance is placed in determination of award of contract. If at any time the Bidder or Contractor learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances, it shall immediately provide written notice to the City. If it is later determined that the Bidder knowingly rendered an erroneous certification, or failed to notify the City immediately of circumstances that made the original certification no longer valid, the City may disqualify the Bidder. If it is later determined that the Contractor knowingly rendered an erroneous certification, or failed to notify the City immediately of circumstances which made the original certification no longer valid, the City may terminate the contract, in addition to other remedies available including FTA suspension and/or debarment. 1 -17 Subcontractors' Certification Regarding Debarment, Suspension or Ineligibility By submitting a Bid for this Contract, the Bidder agrees that should it be awarded the Contract, it shall not knowingly enter into any subcontract exceeding $25,000 with an entity or person who is debarred, suspended, or who has been declared ineligible from obtaining federal assistance funds; and shall require each subcontractor to complete the certification provided in Attachment C. Each subcontract, regardless of tier, shall contain a provision that the subcontractor shall not knowingly enter into any lower tier subcontract with a person or entity who is debarred, suspended or declared ineligible from obtaining federal assistance funds, and a provision requiring each lower- tiered subcontractor to provide the certification set forth m Attachment C. The Contractor shall require each subcontractor, regardless of tier, to immediately provide written notice to the Contractor if at any time the subcontractor learns that its, or a lower -tier certification was erroneous when submitted or has become erroneous by reason of changed circumstances. The Contractor may rely upon the certifications of the subcontractors unless it knows that a certification is erroneous. The Contractor's knowledge and information regarding any subcontractor is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business. 1 -18 Disclosure of Lobbying Activities Bids in excess of $100,000 require Attachment D, "Certification Regarding Lobbying," and Attachment E, "Disclosure of Lobbying Activities" (if appropriate), be completed and submitted to the City with the proposal, as required by 49 CFR Part 20, "New Restrictions on Lobbying." The Contractor certifies that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by the Byrd Anti - Lobbying Amendment, 31 USC § 1352. The Contractor shall disclose the name of any registrant under the Lobbying Disclosure Act of 1995, codified at 2 USC § 1601 et seq., who has made lobbying contacts on its behalf with non - Federal funds with respect to that Federal contract, grant or award covered by 31 USC § 1352. Such disclosures are to be forwarded to the City. The Contractor will include the language of this certification in all subcontract awards at any tier and require that all recipients of subcontract awards in excess of $100,000 shall certify and disclose accordingly. 1 -19 Anti- Kickback The City and contractors are required to comply with the Anti- Kickback Act of 1986, 41 USC §§ 51 et seq. Under state and federal law, it is a violation for City employees, bidders, contractors or subcontractors to accept or offer any money or benefit as a reward for favorable treatment in connection with the award of a contract or the purchase of goods or services. "Kickback" as defined by Federal Acquisition Regulation (FAR) 52.203 -7, and 41 USC § 52(2), means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind that is provided directly or indirectly to any prime Contractor, prime Contractor employee, subcontractor or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract. 1 -20 False or Fraudulent Statements or Claims (A) The Contractor acknowledges that the provisions of the Program Fraud Civil Remedies Act of 1986, as amended, 31 U.S.C. § 3801 et seq. and U.S. DOT regulations, "Program Fraud Civil Remedies," 49 C.F.R. Part 31, apply to its actions pertaining to this Project. Upon execution of the underlying contract, the Contractor certifies or affirms the truthfulness and accuracy of any statement it has made, it makes, it may make, or causes to be made, pertaining to the underlying contract or the FTA assisted project for which this contract work is being performed. In addition to other penalties that may be applicable, the Contractor further acknowledges that if it makes, or causes to be made, a false, fictitious, or fraudulent claim, statement, submission, or certification, the Federal Government reserves the right to impose the penalties of the Program Fraud Civil Remedies Act of 1986 on the Contractor to the extent the Federal Government deems appropriate. (B) The Contractor also acknowledges that if it makes, or causes to be made, a false, fictitious, or fraudulent claim, statement, submission, or certification to the Federal Government under a contract connected with a project that is financed in whole or in part with Federal assistance originally awarded by FTA under the authority of 49 U.S.C. § 5307, the Government reserves the right to impose the penalties of 18 U.S.C. § 1001 and 49 U.S.C. § 5307(n)(1) on the Contractor, to the extent the Federal Government deems appropriate. (C) The Contractor agrees to include the above two clauses in each subcontract financed in whole or in part with Federal assistance provided by FTA. It is further agreed that the clauses shall not be modified, except to identify the subcontractor who will be subject to the provisions. 1 -21 Conservation The Contractor agrees to comply with mandatory standards and policies relating to energy efficiency that are contained in the State Energy Conservation plan issued in compliance with the Energy Policy and Conservation Act, 42 USC §§ 6321 et seq. The Contractor agrees to include this clause in all subcontracts awarded under this Contract. 1 -22 Environmental Requirements The Contractor agrees to comply with all applicable standards, orders or requirements as follows: A. Environmental Protection The Contractor agrees to comply with the applicable requirements of the National Environmental Policy Act of 1969, as amended, 42 USC §§ 4321, et seq., consistent with Executive Order No. 11514, as amended, "Protection and Enhancement of Environmental Quality," 42 USC § 4321 note. FTA statutory requirements on environmental matters at 49 USC § 5324(b); Council on Environmental Quality regulations on compliance with the National Environmental Policy Act of 1969, as amended, 42 USC § 4321 et seq. and 40 CFR Part 1500 et seq.; and joint FHWA/FTA regulations, "Environmental Impact and Related Procedures," 23 CFR Part 771 and 49 CFR Part 622. B. Air Quality The Contractor agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Clean Air Act, as amended, 42 USC §§ 7401, et seq. The Contractor agrees to report each violation to the City and understands and agrees that the City will, in turn, report each violation as required to assure notification to FTA and the appropriate U.S. Environmental Protection Agency (EPA) Regional Office. The Contractor agrees to include this clause in each subcontract exceeding $100,000 financed in whole or in part with Federal assistance provided by FTA. C. Clean Water The Contractor agrees to comply with all applicable standards, orders, or regulations issued pursuant to the Federal Water Pollution Control Act, as amended, 33 USC §§ 1251 et seq. The Contractor agrees to report each violation to the City and understands and agrees that the City will, in turn, report each violation as required to assure notification to FTA and the appropriate Environmental Protection Agency (EPA) Regional Office. The Contractor agrees to protect underground sources of drinking water consistent with the provisions of the Safe Drinking Water Act of 1974, as amended, 42 USC §§ 300h et seq. The Contractor agrees to include these requirements in each subcontract exceeding $100,000 fmanced in whole or in part with Federal assistance provided by FTA. D. Use of Public Lands The Contractor agrees that no publicly owned land from a park, recreation area, or wildlife or waterfowl refuge of national, state, or local significance as determined by the federal, state or local officials having jurisdiction thereof, or any land from a historic site of national, state, or local significance may be used for the Project unless the FTA makes the specific findings required by 49 USC § 303. E. Historic Preservation The Contractor agrees to assist the Federal Government in complying with section 106 of the National Historic Preservation Act, as amended, 16 USC § 470f, Executive Order No. 11593, "Protection and Enhancement of the Cultural Environment," 16 USC § 470 note, and the Archaeological and Historic Preservation Act of 1974, as amended, 16 USC §§ 469a -1 et seq. involving historic and archaeological preservation as follows: 1. The Contractor agrees to consult with the State Historic Preservation Officer about investigations to identify properties and resources listed in or eligible for inclusion in the National Register of Historic Places that may be affected by the Project, in accordance with Advisory Council on Historic Preservation regulations, "Protection of Historic and Cultural Properties," 36 CFR Part 800, and notifying FTA of those properties so affected. 2. The Contractor agrees to comply with all federal requirements to avoid or mitigate adverse effects on those historic properties. F. Mitigation of Adverse Environmental Effects The Contractor agrees that if the Project should cause adverse environmental effects, the Contractor will take all reasonable steps to minimize those effects in accordance with 49 USC § 5324(b), and all other applicable federal laws and regulations, specifically, the procedures of 23 CFR Part 771 and 49 CFR Part 622. 1 -23 Preference for Recycled Products Recovered Materials - The contractor agrees to comply with all the requirements of Section 6002 of the Resource Conservation and Recovery Act (RCRA), as amended (42 U.S.C. 6962), including but not limited to the regulatory provisions of 40 CFR Part 247, and Executive Order 12873, as they apply to the procurement of the items designated in Subpart B of 40 CFR Part 247. 1 -24 Termination Provisions Required All contracts and subcontracts in excess of $10,000 shall contain contractual provisions or conditions that allow for termination for cause and convenience by the City including the manner by which it will be effected and the basis for settlement. (Required by FTA Circular 4220.1F, Page IV -12). 1 -25 Breach Provisions Required All contracts in excess of $100,000 shall contain contractual provisions or conditions that will allow for administrative, contractual, or legal remedies in instances where the Contractor violates or breaches the terms of this Contract, including sanctions and penalties as may be appropriate. The Contractor agrees to include this provisional requirement in all subcontracts in excess of $100,000 awarded under this Contract. (Required by FTA Circular 4220.1F, Page IV -12). 1 -26 Incorporation of FTA Terms The preceding provisions include, in part, certain Standard Terms and Conditions required by the U.S. Department of Transportation, whether or not expressly set forth in the preceding contract provisions. All contractual provisions required by the U.S. Department of Transportation, as set forth in FTA Circular 4220.1F, dated November 1, 2008, are hereby incorporated by reference. Anything to the contrary herein notwithstanding, all FTA mandated terms shall be deemed to control in the event of a conflict with other provisions contained in this Contract. The Contractor agrees not to perform any act, fail to perform any act, or refuse to comply with any City requests that would cause the City to be in violation of the FTA terms and conditions. ATTACHMENT A BUY AMERICA CERTIFICATE CONTRACT NO. Certificate Of Compliance With Section 165(a) The vendor hereby certifies that it will comply with the requirements of Section 165(a) of the Surface Transportation Assistance Act of 1982, as amended, and the regulations in 49 CFR Part 661. Date: Company Name: Signature: Title: OR Certificate Of Noncompliance With Section 165(a) The vendor hereby certifies that it cannot comply with the requirements of Section 165(a) of the Surface Transportation Assistance Act of 1982, as amended, but it may qualify for an exception to the requirement pursuant to Section 165(b)(2) or (b)(4) of the Surface Transportation Assistance Act of 1982 and regulations in 49 CFR Part 661.7. Date: Company Name: Signature: Title: It is important to remember that this Bid is funded in part by the FEDERAL TRANSIT ADMINISTRATION (FTA). In accordance with FTA requirements, each vendor shall complete this Attachment A and submit it to the City with and as a part of their Bid. Par. 661.5 GENERAL REQUIREMENTS FOR STEEL AND MANUFACTURED PRODUCTS. [a] Except as provided in Part 661 no funds may be obligated by FTA for a grantee project unless all steel and manufactured products used in the project are produced in the United States. [b] All steel manufacturing processes must take place in United States, except metallurgical processes involving refine of steel additives. [c] The steel requirements apply to all steel items including, but not limited to, structural steel, running rail and contact rail. [d] For a manufactured product to be considered produced in the United States: [11 All of the manufacturing processes for the product must take place in the United States; and [2] All items or material used in the product must be of United States origin. f: \data \Procman \01 \Boilerplate \Team -BPO (10/01) 19 ATTACHMENT B CERTIFICATION REGARDING DEBARMENT, SUSPENSION AND OTHER RESPONSIBILITY MATTERS - PRIMARY COVERED TRANSACTIONS Federal Transit Administration (FTA) The prospective Primary Participant (potential contractor for a major third -party contract), certifies to the best of its knowledge and belief, that it and its principals: 1. Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by any federal department or agency; 2. Have not within a three (3) year period preceding this Bid been convicted of or had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public (federal, state or local) transaction or contract under a public transaction; violation of federal or state antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction or records, making false statements or receiving stolen property; 3. Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (federal, state or local) with commission of any of the offenses enumerated in Paragraph 2 of this certification; and 4. Have not within a three (3) year period preceding this Bid had one or more public transactions (federal, state or local) terminated for cause or default. [If the primary participant (applicant for an FTA grant, or cooperative agreement or potential third -party contractor) is unable to certify to any of the statements m this certification, the participant shall attach an explanation to this certification.] THE PRIMARY PARTICIPANT (POTENTIAL CONTRACTOR FOR A MAJOR THIRD -PARTY CONTRACT) CERTIFIES OR AFFIRMS THE TRUTHFULNESS AND ACCURACY OF THE CONTENTS OF THE STATEMENTS SUBMITTED ON OR WITH THIS CERTIFICATION AND UNDERSTANDS THAT THE PROVISIONS OF 31 USC SECTIONS 3801, ETSEQ., ARE APPLICABLE THERETO. Name of Firm: Authorized Signature: Printed Name: Title: Date: f: \data \Procman \01 \Boilerplate \Team —BPO (10 /01) 20 ATTACHMENT C CONTRACT NO: CERTIFICATION REGARDING DEBARMENT, SUSPENSION, AND OTHER INELIGIBILITY AND VOLUNTARY EXCLUSION — LOWER-TIER COVERED TRANSACTIONS (This Attachment may be completed and submitted to the City after award of Contract) The Lower -Tier Participant (potential sub - grantee or sub - recipient under a Federal Transit Administration (FTA) project, potential third -party contractor, or potential subcontractor under a major third -party contract), certifies, by submission of this Bid, that neither it nor its principals are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any federal department or agency. The Lower -Tier Participant will not knowingly enter into any lower -tier covered transaction with a person who is proposed for debarment under 48 CFR part 9, subpart 9.4, debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, unless authorized by the department or agency with which this transaction originated. The prospective Lower -Tier Participant agrees by submitting this proposal that it will include this requirement in all lower -tier covered transactions and in all solicitations for lower -tier covered transactions. If the Lower -Tier Participant (potential sub - grantee or sub - recipient under an FTA project, potential third -party contractor, or potential subcontractor under a major third party contract) is unable to certify to any of the statements in this certification, such participant shall attach an explanation to this Bid. THE LOWER -TIER PARTICIPANT (POTENTIAL SUB - GRANTEE OR SUB - AGREEMENT UNDER AN FTA PROJECT, POTENTIAL THIRD -PARTY CONTRACTOR, OR POTENTIAL SUBCONTRACTOR UNDER A MAJOR THIRD -PARTY CONTRACT) CERTIFIES OR AFFIRMS THE TRUTHFULNESS AND ACCURACY OF THE CONTENTS OF THE STATEMENTS SUBMITTED ON OR WITH THIS CERTIFICATION AND UNDERSTAND THAT THE PROVISIONS OF 31 USC §§ 3801, ETSEQ., ARE APPLICABLE THERETO. Name of Firm: Authorized Signature: Printed Name: Title: Date: f: \data \Procman \01 \Boilerplate \Team -BPO (10 /01) 21 ATTACHMENT D CERTIFICATE OF LOBBYING ACTIVITIES CONTRACT NO. The undersigned certifies, to the best of his or her knowledge and belief, that: (1) No federally appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, or officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment or modification of any federal contract, grant, loan or cooperative agreement. (2) If any funds other than federally appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress or an employee or a Member of Congress in connection with this federal contract, grant, loan or cooperative agreement, the undersigned shall complete and submit Standard Form -LLL, "Disclosure Form to Report Lobbying," to the contract administrator. (3) The undersigned shall require that the language of this certification be included in the award documents for all sub - awards at all tiers (including sub - contracts, sub - grants and contracts under grants, loans and cooperative agreements) and that all recipients of subcontract awards in excess of $100,000 shall certify and disclose accordingly. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by § 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Name of Firm: Authorized Signature: Printed Name: Title: Date: f: \data \Procman \O1 \Boilerplate \Team -BPO (10 /01) 22 ATTACHMENT E DISCLOSURE FORM TO REPORT LOBBYING DISCLOSURE OF LOBBYING ACTIVITIES Complete this form to disclose lobbying activities pursuant to 31 U.S. C. 1352 See reverse for public burden disclosure. 1. Type of Federal Action: ❑ a. contract ❑ b. grant ❑ c. cooperative agreement ❑ d. loan ❑ e. loan guarantee ❑ f. loan insurance 2. Status of Federal Action: ❑ a. bid/offer /application ❑ b. initial award ❑ c. post -award 3. Report Type: ❑ a. initial filing ❑ b. material change For material change only: year quarter Date of last report: 4. Name and Address of Reporting Entity: ❑ Prime ❑ Subawardee Tier , if known: 5. If Reporting Entity in No. 4 is Subawardee, Enter Name and Address of Prime: Congressional District, if known: Congressional District, if known: 6. Federal Department/Agency: 7. Federal Program Name/Description: CFDA Number, if applicable: 8. Federal Action Number, if known: 9. Award Amount, if known: $ 10. a. Name and Address of Lobbying Entity (If individual, last name, first name, MI): b. Individuals Performing Services (including address if different from No. l0a) (Last name, First name, MI): 11. Amount of Payment (check all that apply): 13. Type of Payment (check all that apply): ❑ a. retainer ❑ b. one -time fee ❑ c. commission ❑ d. contingent fee ❑ e. deferred ❑ f. other; specify: 12. Form of Payment (check all that apply): ❑ a. cash ❑ b. in kind; specify: nature value 14. Brief Description of Services Performed or to be Performed and date(s) of service, including officer(s), employee(s), or member(s) contacted, for payment indicated in Item 11: (Attach Continuation Sheet(s) SF- LLL -A, if necessary) 15. Continuation Sheet(s) SF -LLL -A attached): ❑ Yes ❑ No 16. Information requested through this form is authorized by title 31 USC § 1352. This disclosure of lobbying activities is a material representation of fact upon which reliance was placed by the tier above when this transaction was made or entered into. This disclosure is required pursuant to 31 USC § 1352. This information will be reported to the Congress semi - annually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. Signature: Print Name: Title: Telephone No: Date: f: \data \Procman \01 \Boilerplate \Team -BPO (10 /01) 23 EXHIBIT I OMB CIRCULAR NO. A -133 - AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON - PROFIT ORGANIZATIONS Circular No. A -133 Revised to show changes published in the Federal Register June 27, 2003 and June 26, 2007 Audits of States, Local Governments, and Non -Profit Organizations Accompanying Federal Register Materials: -- Audits of States, Local Governments, and Non - Profit Organizations June 30, 1997 - - Revision published June 27, 2003 This revision: (1) increased the dollar threshold for the audit requirement; and (2) made changes regarding determination of cognizant and oversight agencies for audit. - - Revision published June 26, 2007 This revision: (1) replaced the term "reportable conditions" with "significant deficiencies" to conform with current auditing standards; and (2) updated report submission requirements. Definition of "significant deficiencies" and "material weaknesses" are as defined in generally accepted auditing standards issued by the American Institute of Certified Public Accountants (AICPA) and Government Auditing Standards issued by the Government Accountability Office. [Note: The June 27, 2003 revisions: (1) increased the dollar threshold for the audit requirement, and (2) made changes regarding determination of cognizant and oversight agencies for audit. The June 26, 2007 revisions make changes to (1) to replace the terms "reportable conditions" with "significant deficiencies" to conform with changes in auditing standards; and (2) reporting submission requirements. In several places, the Circular includes guidelines for the reporting of "significant deficiencies" and "material weaknesses." These terms are to be used as defined in generally accepted auditing standards issued by the American Institute of Certified Public Accountants (AICPA), and Government Auditing Standards issued by the Government Accountability Office.] Circular No. A -133 Revised to show changes published in the Federal Registers of June 27, 2003 and June 26, 2007 Audits of States, Local Governments, and Non - Profit Organizations TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS SUBJECT: Audits of States, Local Governments, and Non - Profit Organizations 1. Purpose. This Circular is issued pursuant to the Single Audit Act of 1984, P.L. 98 -502, and the Single Audit Act Amendments of 1996, P.L. 104 -156. It sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, and non - profit organizations expending Federal awards. 2. Authority. Circular A -133 is issued under the authority of sections 503, 1111, and 7501 et seq. of title 31, United States Code, and Executive Orders 8248 and 11541. 3. Rescission and Supersession. This Circular rescinds Circular A -128, "Audits of State and Local Governments," issued April 12, 1985, and supersedes the prior Circular A -133, "Audits of Institutions of Higher Education and Other Non - Profit Institutions," issued April 22, 1996. For effective dates, see paragraph 10. 4. Policy. Except as provided herein, the standards set forth in this Circular shall be applied by all Federal agencies. If any statute specifically prescribes policies or specific requirements that differ from the standards provided herein, the provisions of the subsequent statute shall govern. Federal agencies shall apply the provisions of the sections of this Circular to non - Federal entities, whether they are recipients expending Federal awards received directly from Federal awarding agencies, or are subrecipients expending Federal awards received from a pass- through entity (a recipient or another subrecipient). This Circular does not apply to non -U.S. based entities expending Federal awards received either directly as a recipient or indirectly as a subrecipient. 5. Definitions. The definitions of key terms used in this Circular are contained in § .105 in the Attachment to this Circular. 6. Required Action. The specific requirements and responsibilities of Federal agencies and non - Federal entities are set forth in the Attachment to this Circular. Federal agencies making awards to non - Federal entities, either directly or indirectly, shall adopt the language in the Circular in codified regulations as provided in Section 10 (below), unless different provisions are required by Federal statute or are approved by the Office of Management and Budget (OMB). 7. OMB Responsibilities. OMB will review Federal agency regulations and implementation of this Circular, and will provide interpretations of policy requirements and assistance to ensure uniform, effective and efficient implementation. 8. Information Contact. Further information concerning Circular A -133 may be obtained by contacting the Financial Standards and Reporting Branch, Office of Federal Financial Management, Office of Management and Budget, Washington, DC 20503, telephone (202) 395 -3993. 1 9. Review Date. This Circular will have a policy review three years from the date of issuance. 10. Effective Dates. The standards set forth in § .400 of the Attachment to this Circular, which apply directly to Federal agencies, shall be effective July 1, 1996, and shall apply to audits of fiscal years beginning after June 30, 1996, except as otherwise specified in §.400(a). The standards set forth in this Circular that Federal agencies shall apply to non - Federal entities shall be adopted by Federal agencies in codified regulations not later than 60 days after publication of this final revision in the Federal Register, so that they will apply to audits of fiscal years beginning after June 30, 1996, with the exception that § .305(b) of the Attachment applies to audits of fiscal years beginning after June 30, 1998. The requirements of Circular A -128, although the Circular is rescinded, and the 1990 version of Circular A -133 remain in effect for audits of fiscal years beginning on or before June 30, 1996. The revisions published in the Federal Register June 27, 2003, are effective for fiscal years ending after December 31, 2003, and early implementation is not permitted with the exception of the definition of oversight agency for audit which is effective July 28, 2003. Augustine T. Smythe Acting Director The revisions published in the Federal Register June 26, 2007, are effective for fiscal years ending on or after December 15, 2006. Attachment 2 Rob Portman Director PART -- AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON - PROFIT ORGANIZATIONS Subpart A-- General Sec. .100 Purpose. .105 Definitions. Subpart B -- Audits .200 Audit requirements. .205 Basis for determining Federal awards expended. .210 Subrecipient and vendor determinations. .215 Relation to other audit requirements. .220 Frequency of audits. _.225 Sanctions. .230 Audit costs. _.235 Program- specific audits. Subpart C-- Auditees .300 Auditee responsibilities. .305 Auditor selection. .310 Financial statements. .315 Audit findings follow -up. .320 Report submission. Subpart D-- Federal Agencies and Pass - Through Entities .400 Responsibilities. .405 Management decision. Subpart E -- Auditors _.500 Scope of audit. .505 Audit reporting. .510 Audit findings. _.515 Audit working papers. .520 Major program determination. _.525 Criteria for Federal program risk. .530 Criteria for a low -risk auditee. Appendix A to Part - Data Collection Form (Form SF -SAC). Appendix B to Part _ - Circular A -133 Compliance Supplement. Subpart A-- General § .100 Purpose. This part sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of non - Federal entities expending Federal awards. § .105 Definitions. Auditee means any non - Federal entity that expends Federal awards which must be audited under this part. Auditor means an auditor, that is a public accountant or a Federal, State or local government audit organization, which meets the general standards specified in generally accepted government auditing standards (GAGAS). The term auditor does not include internal auditors of non - profit organizations. Audit finding means deficiencies which the auditor is required by § .510(a) to report in the schedule of findings and questioned costs. CFDA number means the number assigned to a Federal program in the Catalog of Federal Domestic Assistance (CFDA). Cluster of programs means a grouping of closely related programs that share common compliance requirements. The types of clusters of programs are research and development (R &D), student financial aid (SFA), and other clusters. "Other clusters" are as defined by the Office of Management and Budget (OMB) in the compliance supplement or as designated by a State for Federal awards the State provides to its subrecipients that meet the definition of a cluster of programs. When designating an "other cluster," a State shall identify the Federal awards included in the cluster and advise the subrecipients of compliance requirements applicable to the cluster, consistent with § .400(d)(1) and § .400(d)(2), respectively. A cluster of programs shall be considered as one program for determining major programs, as described in §.520, and, with the exception of R &D as described in § .200(c), whether a program- specific audit may be elected. Cognizant agency for audit means the Federal agency designated to carry out the responsibilities described in § .400(a). Compliance supplement refers to the Circular A -133 Compliance Supplement, included as Appendix B to Circular A -133, or such documents as OMB or its designee may issue to replace it. This document is available from the Government Printing Office, Superintendent of Documents, Washington, DC 20402 -9325. Corrective action means action taken by the auditee that: (1) Corrects identified deficiencies; (2) Produces recommended improvements; or (3) Demonstrates that audit findings are either invalid or do not warrant auditee action. Federal agency has the same meaning as the term agency in Section 551(1) of title 5, United States Code. Federal award means Federal financial assistance and Federal cost - reimbursement contracts that non - Federal entities receive directly from Federal awarding agencies or indirectly from pass- through entities. It does 4 not include procurement contracts, under grants or contracts, used to buy goods or services from vendors. Any audits of such vendors shall be covered by the terms and conditions of the contract. Contracts to operate Federal Government owned, contractor operated facilities (GOCOs) are excluded from the requirements of this part. Federal awarding agency means the Federal agency that provides an award directly to the recipient. Federal financial assistance means assistance that non - Federal entities receive or administer in the form of grants, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance, but does not include amounts received as reimbursement for services rendered to individuals as described in § .205(h) and § .205(i). Federal program means: (1) All Federal awards to a non - Federal entity assigned a single number in the CFDA. (2) When no CFDA number is assigned, all Federal awards from the same agency made for the same purpose should be combined and considered one program. (3) Notwithstanding paragraphs (1) and (2) of this definition, a cluster of programs. The types of clusters of programs are: (i) Research and development (R &D); (ii) Student financial aid (SFA); and (iii) "Other clusters," as described in the definition of cluster of programs in this section. GAGAS means generally accepted government auditing standards issued by the Comptroller General of the United States, which are applicable to financial audits. Generally accepted accounting principles has the meaning specified in generally accepted auditing standards issued by the American Institute of Certified Public Accountants (AICPA). Indian tribe means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation (as defined in, or established under, the Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. Internal control means a process, effected by an entity's management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (1) Effectiveness and efficiency of operations; (2) Reliability of financial reporting; and (3) Compliance with applicable laws and regulations. Internal control pertaining to the compliance requirements for Federal programs (Internal control over Federal programs) means a process -- effected by 5 an entity's management and other personnel -- designed to provide reasonable assurance regarding the achievement of the following objectives for Federal programs: (1) Transactions are properly recorded and accounted for to: (i) Permit the preparation of reliable financial statements and Federal reports; (ii) Maintain accountability over assets; and (iii) Demonstrate compliance with laws, regulations, and other compliance requirements; (2) Transactions are executed in compliance with: (i) Laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on a Federal program; and (ii) Any other laws and regulations that are identified in the compliance supplement; and (3) Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition. Loan means a Federal loan or loan guarantee received or administered by a non - Federal entity. Local government means any unit of local government within a State, including a county, borough, municipality, city, town, township, parish, local public authority, special district, school district, intrastate district, council of governments, and any other instrumentality of local government. Major program means a Federal program determined by the auditor to be a major program in accordance with §.520 or a program identified as a major program by a Federal agency or pass- through entity in accordance with § .215 (c) . Management decision means the evaluation by the Federal awarding agency or pass- through entity of the audit findings and corrective action plan and the issuance of a written decision as to what corrective action is necessary. Non - Federal entity means a State, local government, or non - profit organization. Non - profit organization means: (1) any corporation, trust, association, cooperative, or other organization that: (i) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest; (ii) Is not organized primarily for profit; and (iii) Uses its net proceeds to maintain, improve, or expand its operations; and (2) The term non - profit organization includes non - profit institutions of higher education and hospitals. 6 OMB means the Executive Office of the President, Office of Management and Budget. Oversight agency for audit means the Federal awarding agency that provides the predominant amount of direct funding to a recipient not assigned a cognizant agency for audit. When there is no direct funding, the Federal agency with the predominant indirect funding shall assume the oversight responsibilities. The duties of the oversight agency for audit are described in § .400(b). Effective July 28, 2003, the following is added to this definition: A Federal agency with oversight for an auditee may reassign oversight to another Federal agency which provides substantial funding and agrees to be the oversight agency for audit. Within 30 days after any reassignment, both the old and the new oversight agency for audit shall notify the auditee, and, if known, the auditor of the reassignment." Pass - through entity means a non - Federal entity that provides a Federal award to a subrecipient to carry out a Federal program. Program- specific audit means an audit of one Federal program as provided for in § .200(c) and § .235. Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a provision of a law, regulation, contract, grant, cooperative agreement, or other agreement or document governing the use of Federal funds, including funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Recipient means a non - Federal entity that expends Federal awards received directly from a Federal awarding agency to carry out a Federal program. Research and development (R &D) means all research activities, both basic and applied, and all development activities that are performed by a non - Federal entity. Research is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function. Development is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. Single audit means an audit which includes both the entity's financial statements and the Federal awards as described in § .500. State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the 7 Pacific Islands, any instrumentality thereof, any multi - State, regional, or interstate entity which has governmental functions, and any Indian tribe as defined in this section. Student Financial Aid (SFA) includes those programs of general student assistance, such as those authorized by Title IV of the Higher Education Act of 1965, as amended, (20 U.S.C. 1070 et seq.) which is administered by the U.S. Department of Education, and similar programs provided by other Federal agencies. It does not include programs which provide fellowships or similar Federal awards to students on a competitive basis, or for specified studies or research. Subrecipient means a non - Federal entity that expends Federal awards received from a pass- through entity to carry out a Federal program, but does not include an individual that is a beneficiary of such a program. A subrecipient may also be a recipient of other Federal awards directly from a Federal awarding agency. Guidance on distinguishing between a subrecipient and a vendor is provided in §.210. Types of compliance requirements refers to the types of compliance requirements listed in the compliance supplement. Examples include: activities allowed or unallowed; allowable costs /cost principles; cash management; eligibility; matching, level of effort, earmarking; and, reporting. Vendor means a dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a Federal program. These goods or services may be for an organization's own use or for the use of beneficiaries of the Federal program. Additional guidance on distinguishing between a subrecipient and a vendor is provided in §.210. Subpart B -- Audits § .200 Audit requirements. (a) Audit required. Non - Federal entities that expend $300,000 ($500,000 for fiscal years ending after December 31, 2003) or more in a year in Federal awards shall have a single or program- specific audit conducted for that year in accordance with the provisions of this part. Guidance on determining Federal awards expended is provided in §.205. (b) Single audit. Non - Federal entities that expend $300,000 ($500,000 for fiscal years ending after December 31, 2003) or more in a year in Federal awards shall have a single audit conducted in accordance with §.500 except when they elect to have a program- specific audit conducted in accordance with paragraph (c) of this section. (c) Program - specific audit election. When an auditee expends Federal awards under only one Federal program (excluding R &D) and the Federal program's laws, regulations, or grant agreements do not require a financial statement audit of the auditee, the auditee may elect to have a program - specific audit conducted in accordance with §.235. A program- specific audit may not be elected for R &D unless all of the Federal awards expended were received from the same Federal agency, or the same Federal agency and the same pass- through entity, and that Federal agency, or pass- through entity in the case of a subrecipient, approves in advance a program- specific audit. (d) Exemption when Federal awards expended are less than $300,000 ($500,000 for fiscal years ending after December 31, 2003). Non - Federal 8 entities that expend less than $300,000 ($500,000 for fiscal years ending after December 31, 2003) a year in Federal awards are exempt from Federal audit requirements for that year, except as noted in § .215(a), but records must be available for review or audit by appropriate officials of the Federal agency, pass- through entity, and General Accounting Office (GAO). (e) Federally Funded Research and Development Centers ( FFRDC). Management of an auditee that owns or operates a FFRDC may elect to treat the FFRDC as a separate entity for purposes of this part. §_.205 Basis for determining Federal awards expended. (a) Determining Federal awards expended. The determination of when an award is expended should be based on when the activity related to the award occurs. Generally, the activity pertains to events that require the non - Federal entity to comply with laws, regulations, and the provisions of contracts or grant agreements, such as: expenditure /expense transactions associated with grants, cost - reimbursement contracts, cooperative agreements, and direct appropriations; the disbursement of funds passed through to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or consumption of food commodities; the disbursement of amounts entitling the non - Federal entity to an interest subsidy; and, the period when insurance is in force. (b) Loan and loan guarantees (loans). Since the Federal Government is at risk for loans until the debt is repaid, the following guidelines shall be used to calculate the value of Federal awards expended under loan programs, except as noted in paragraphs (c) and (d) of this section: (1) Value of new loans made or received during the fiscal year; plus (2) Balance of loans from previous years for which the Federal Government imposes continuing compliance requirements; plus (3) Any interest subsidy, cash, or administrative cost allowance received. (c) Loan and loan guarantees (loans) at institutions of higher education. When loans are made to students of an institution of higher education but the institution does not make the loans, then only the value of loans made during the year shall be considered Federal awards expended in that year. The balance of loans for previous years is not included as Federal awards expended because the lender accounts for the prior balances. (d) Prior loan and loan guarantees (loans). Loans, the proceeds of which were received and expended in prior - years, are not considered Federal awards expended under this part when the laws, regulations, and the provisions of contracts or grant agreements pertaining to such loans impose no continuing compliance requirements other than to repay the loans. (e) Endowment funds. The cumulative balance of Federal awards for endowment funds which are federally restricted are considered awards expended in each year in which the funds are still restricted. (f) Free rent. Free rent received by itself is not considered a Federal award expended under this part. However, free rent received as part 9 of an award to carry out a Federal program shall be included in determining Federal awards expended and subject to audit under this part. (g) Valuing non -cash assistance. Federal non -cash assistance, such as free rent, food stamps, food commodities, donated property, or donated surplus property, shall be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency. (h) Medicare. Medicare payments to a non - Federal entity for providing patient care services to Medicare eligible individuals are not considered Federal awards expended under this part. (i) Medicaid. Medicaid payments to a subrecipient for providing patient care services to Medicaid eligible individuals are not considered Federal awards expended under this part unless a State requires the funds to be treated as Federal awards expended because reimbursement is on a cost - reimbursement basis. (j) Certain loans provided by the National Credit Union Administration. For purposes of this part, loans made from the National Credit Union Share Insurance Fund and the Central Liquidity Facility that are funded by contributions from insured institutions are not considered Federal awards expended. § .210 Subrecipient and vendor determinations. (a) General. An auditee may be a recipient, a subrecipient, and a vendor. Federal awards expended as a recipient or a subrecipient would be subject to audit under this part. The payments received for goods or services provided as a vendor would not be considered Federal awards. The guidance in paragraphs (b) and (c) of this section should be considered in determining whether payments constitute a Federal award or a payment for goods and services. (b) Federal award. Characteristics indicative of a Federal award received by a subrecipient are when the organization: (1) Determines who is eligible to receive what Federal financial assistance; (2) Has its performance measured against whether the objectives of the Federal program are met; (3) Has responsibility for programmatic decision making; (4) Has responsibility for adherence to applicable Federal program compliance requirements; and (5) Uses the Federal funds to carry out a program of the organization as compared to providing goods or services for a program of the pass- through entity. (c) Payment for goods and services. Characteristics indicative of a payment for goods and services received by a vendor are when the organization: operations; (1) Provides the goods and services within normal business 10 purchasers; (2) Provides similar goods or services to many different (3) Operates in a competitive environment; (4) Provides goods or services that are ancillary to the operation of the Federal program; and (5) Is not subject to compliance requirements of the Federal program. (d) Use of judgment in making determination. There may be unusual circumstances or exceptions to the listed characteristics. In making the determination of whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all of the characteristics will be present and judgment should be used in determining whether an entity is a subrecipient or vendor. (e) For - profit subrecipient. Since this part does not apply to for - profit subrecipients, the pass- through entity is responsible for establishing requirements, as necessary, to ensure compliance by for - profit subrecipients. The contract with the for - profit subrecipient should describe applicable compliance requirements and the for - profit subrecipient's compliance responsibility. Methods to ensure compliance for Federal awards made to for - profit subrecipients may include pre -award audits, monitoring during the contract, and post -award audits. (f) Compliance responsibility for vendors. In most cases, the auditee's compliance responsibility for vendors is only to ensure that the procurement, receipt, and payment for goods and services comply with laws, regulations, and the provisions of contracts or grant agreements. Program compliance requirements normally do not pass through to vendors. However, the auditee is responsible for ensuring compliance for vendor transactions which are structured such that the vendor is responsible for program compliance or the vendor's records must be reviewed to determine program compliance. Also, when these vendor transactions relate to a major program, the scope of the audit shall include determining whether these transactions are in compliance with laws, regulations, and the provisions of contracts or grant agreements. §_.215 Relation to other audit requirements. (a) Audit under this part in lieu of other audits. An audit made in accordance with this part shall be in lieu of any financial audit required under individual Federal awards. To the extent this audit meets a Federal agency's needs, it shall rely upon and use such audits. The provisions of this part neither limit the authority of Federal agencies, including their Inspectors General, or GAO to conduct or arrange for additional audits (e.g., financial audits, performance audits, evaluations, inspections, or reviews) nor authorize any auditee to constrain Federal agencies from carrying out additional audits. Any additional audits shall be planned and performed in such a way as to build upon work performed by other auditors. (b) Federal agency to pay for additional audits. A Federal agency that conducts or contracts for additional audits shall, consistent with other applicable laws and regulations, arrange for funding the full cost of such additional audits. 11 (c) Request for a program to be audited as a major program. A Federal agency may request an auditee to have a particular Federal program audited as a major program in lieu of the Federal agency conducting or arranging for the additional audits. To allow for planning, such requests should be made at least 180 days prior to the end of the fiscal year to be audited. The auditee, after consultation with its auditor, should promptly respond to such request by informing the Federal agency whether the program would otherwise be audited as a major program using the risk -based audit approach described in § .520 and, if not, the estimated incremental cost. The Federal agency shall then promptly confirm to the auditee whether it wants the program audited as a major program. If the program is to be audited as a major program based upon this Federal agency request, and the Federal agency agrees to pay the full incremental costs, then the auditee shall have the program audited as a major program. A pass- through entity may use the provisions of this paragraph for a subrecipient. § .220 Frequency of audits. Except for the provisions for biennial audits provided in paragraphs (a) and (b) of this section, audits required by this part shall be performed annually. Any biennial audit shall cover both years within the biennial period. (a) A State or local government that is required by constitution or statute, in effect on January 1, 1987, to undergo its audits less frequently than annually, is permitted to undergo its audits pursuant to this part biennially. This requirement must still be in effect for the biennial period under audit. (b) Any non - profit organization that had biennial audits for all biennial periods ending between July 1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this part biennially. § .225 Sanctions. No audit costs may be charged to Federal awards when audits required by this part have not been made or have been made but not in accordance with this part. In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass- through entities shall take appropriate action using sanctions such as: (a) Withholding a percentage of Federal awards until the audit is completed satisfactorily; (b) Withholding or disallowing overhead costs; (c) Suspending Federal awards until the audit is conducted; or (d) Terminating the Federal award. § .230 Audit costs. (a) Allowable costs. Unless prohibited by law, the cost of audits made in accordance with the provisions of this part are allowable charges to Federal awards. The charges may be considered a direct cost or an allocated indirect cost, as determined in accordance with the provisions of applicable OMB cost principles circulars, the Federal Acquisition Regulation (FAR) (48 CFR parts 30 and 31), or other applicable cost principles or regulations. 12 (b) Unallowable costs. A non - Federal entity shall not charge the following to a Federal award: (1) The cost of any audit under the Single Audit Act Amendments of 1996 (31 U.S.C. 7501 et sea.) not conducted in accordance with this part. (2) The cost of auditing a non - Federal entity which has Federal awards expended of less than $300,000 ($500,000 for fiscal years ending after December 31, 2003) per year and is thereby exempted under § .200(d) from having an audit conducted under this part. However, this does not prohibit a pass- through entity from charging Federal awards for the cost of limited scope audits to monitor its subrecipients in accordance with § .400(d)(3), provided the subrecipient does not have a single audit. For purposes of this part, limited scope audits only include agreed -upon procedures engagements conducted in accordance with either the AICPA's generally accepted auditing standards or attestation standards, that are paid for and arranged by a pass - through entity and address only one or more of the following types of compliance requirements: activities allowed or unallowed; allowable costs /cost principles; eligibility; matching, level of effort, earmarking; and, reporting. §_.235 Program- specific audits. (a) Program- specific audit guide available. In many cases, a program - specific audit guide will be available to provide specific guidance to the auditor with respect to internal control, compliance requirements, suggested audit procedures, and audit reporting requirements. The auditor should contact the Office of Inspector General of the Federal agency to determine whether such a guide is available. When a current program- specific audit guide is available, the auditor shall follow GAGAS and the guide when performing a program- specific audit. (b) Program- specific audit guide not available. (1) When a program - specific audit guide is not available, the auditee and auditor shall have basically the same responsibilities for the Federal program as they would have for an audit of a major program in a single audit. (2) The auditee shall prepare the financial statement(s) for the Federal program that includes, at a minimum, a schedule of expenditures of Federal awards for the program and notes that describe the significant accounting policies used in preparing the schedule, a summary schedule of prior audit findings consistent with the requirements of § .315(b), and a corrective action plan consistent with the requirements of § .315(c). (3) The auditor shall: (i) Perform an audit of the financial statement(s) for the Federal program in accordance with GAGAS; (ii) Obtain an understanding of internal control and perform tests of internal control over the Federal program consistent with the requirements of § .500(c) for a major program; (iii) Perform procedures to determine whether the auditee has complied with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on the Federal program consistent with the requirements of § .500(d) for a major program; and 13 (iv) Follow up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee, and report, as a current year audit finding, when the auditor concludes that the summary schedule of prior audit findings materially misrepresents the status of any prior audit finding in accordance with the requirements of §.500(e). (4) The auditor's report(s) may be in the form of either combined or separate reports and may be organized differently from the manner presented in this section. The auditor's report(s) shall state that the audit was conducted in accordance with this part and include the following: (i) An opinion (or disclaimer of opinion) as to whether the financial statement(s) of the Federal program is presented fairly in all material respects in conformity with the stated accounting policies; (ii) A report on internal control related to the Federal program, which shall describe the scope of testing of internal control and the results of the tests; (iii) A report on compliance which includes an opinion (or disclaimer of opinion) as to whether the auditee complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on the Federal program; and (iv) A schedule of findings and questioned costs for the Federal program that includes a summary of the auditor's results relative to the Federal program in a format consistent with §.505(d)(1) and findings and questioned costs consistent with the requirements of §.505(d)(3). (c) Report submission for program- specific audits. (1) The audit shall be completed and the reporting required by paragraph (c)(2) or (c)(3) of this section submitted within the earlier of 30 days after receipt of the auditor's report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the Federal agency that provided the funding or a different period is specified in a program - specific audit guide. (However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the required reporting shall be submitted within the earlier of 30 days after receipt of the auditor's report(s), or 13 months after the end of the audit period, unless a different period is specified in a program- specific audit guide.) Unless restricted by law or regulation, the auditee shall make report copies available for public inspection. (2) When a program- specific audit guide is available, the auditee shall submit to the Federal clearinghouse designated by OMB the data collection form prepared in accordance with § .320(b), as applicable to a program- specific audit, and the reporting required by the program- specific audit guide to be retained as an archival copy. Also, the auditee shall submit to the Federal awarding agency or pass- through entity the reporting required by the program- specific audit guide. (3) When a program- specific audit guide is not available, the reporting package for a program- specific audit shall consist of the financial statement(s) of the Federal program, a summary schedule of prior audit findings, and a corrective action plan as described in paragraph (b)(2) of this section, and the auditor's report(s) described in paragraph (b)(4) of this section. The data collection form prepared in accordance with 14 §_.320(b), as applicable to a program- specific audit, and one copy of this reporting package shall be submitted to the Federal clearinghouse designated by OMB to be retained as an archival copy. Also, when the schedule of findings and questioned costs disclosed audit findings or the summary schedule of prior audit findings reported the status of any audit findings, the auditee shall submit one copy of the reporting package to the Federal clearinghouse on behalf of the Federal awarding agency, or directly to the pass- through entity in the case of a subrecipient. Instead of submitting the reporting package to the pass- through entity, when a subrecipient is not required to submit a reporting package to the pass- through entity, the subrecipient shall provide written notification to the pass- through entity, consistent with the requirements of § .320(e)(2). A subrecipient may submit a copy of the reporting package to the pass- through entity to comply with this notification requirement. (d) Other sections of this part may apply. Program- specific audits are subject to §.100 through § .215(b), §.220 through §.230, §_.300 through §_.305, §.315, § .320(f) through §.320(j), §.400 through §.405, §.510 through §.515, and other referenced provisions of this part unless contrary to the provisions of this section, a program - specific audit guide, or program laws and regulations. Subpart C-- Auditees §.300 Auditee responsibilities. The auditee shall: (a) Identify, in its accounts, all Federal awards received and expended and the Federal programs under which they were received. Federal program and award identification shall include, as applicable, the CFDA title and number, award number and year, name of the Federal agency, and name of the pass- through entity. (b) Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs. (c) Comply with laws, regulations, and the provisions of contracts or grant agreements related to each of its Federal programs. (d) Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with § .310. (e) Ensure that the audits required by this part are properly performed and submitted when due. When extensions to the report submission due date required by §.320(a) are granted by the cognizant or oversight agency for audit, promptly notify the Federal clearinghouse designated by OMB and each pass- through entity providing Federal awards of the extension. (f) Follow up and take corrective action on audit findings, including preparation of a summary schedule of prior audit findings and a corrective action plan in accordance with § .315(b) and § .315(c), respectively. § .305 Auditor selection. 15 (a) Auditor procurement. In procuring audit services, auditees shall follow the procurement standards prescribed by the Grants Management Common Rule (hereinafter referred to as the "A -102 Common Rule ") published March 11, 1988 and amended April 19, 1995 [insert appropriate CFR citation], Circular A -110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non - Profit Organizations," or the FAR (48 CFR part 42), as applicable (OMB Circulars are available from the Office of Administration, Publications Office, room 2200, New Executive Office Building, Washington, DC 20503). Whenever possible, auditees shall make positive efforts to utilize small businesses, minority - owned firms, and women's business enterprises, in procuring audit services as stated in the A -102 Common Rule, OMB Circular A -110, or the FAR (48 CFR part 42), as applicable. In requesting proposals for audit services, the objectives and scope of the audit should be made clear. Factors to be considered in evaluating each proposal for audit services include the responsiveness to the request for proposal, relevant experience, availability of staff with professional qualifications and technical abilities, the results of external quality control reviews, and price. (b) Restriction on auditor preparing indirect cost proposals. An auditor who prepares the indirect cost proposal or cost allocation plan may not also be selected to perform the audit required by this part when the indirect costs recovered by the auditee during the prior year exceeded $1 million. This restriction applies to the base year used in the preparation of the indirect cost proposal or cost allocation plan and any subsequent years in which the resulting indirect cost agreement or cost allocation plan is used to recover costs. To minimize any disruption in existing contracts for audit services, this paragraph applies to audits of fiscal years beginning after June 30, 1998. (c) Use of Federal auditors. Federal auditors may perform all or part of the work required under this part if they comply fully with the requirements of this part. § .310 Financial statements. (a) Financial statements. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The financial statements shall be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, organization -wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §.500(a) and prepare separate financial statements. (b) Schedule of expenditures of Federal awards. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass - through entities to make the schedule easier to use. For example, when a Federal program has multiple award years, the auditee may list the amount of Federal awards expended for each award year separately. At a minimum, the schedule shall: (1) List individual Federal programs by Federal agency. For Federal programs included in a cluster of programs, list individual Federal programs within a cluster of programs. For R &D, total Federal awards expended shall be shown either by individual award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services. 16 (2) For Federal awards received as a subrecipient, the name of the pass- through entity and identifying number assigned by the pass- through entity shall be included. (3) Provide total Federal awards expended for each individual Federal program and the CFDA number or other identifying number when the CFDA information is not available. (4) Include notes that describe the significant accounting policies used in preparing the schedule. (5) To the extent practical, pass- through entities should identify in the schedule the total amount provided to subrecipients from each Federal program. (6) Include, in either the schedule or a note to the schedule, the value of the Federal awards expended in the form of non -cash assistance, the amount of insurance in effect during the year, and loans or loan guarantees outstanding at year end. While not required, it is preferable to present this information in the schedule. § .315 Audit findings follow -up. (a) General. The auditee is responsible for follow -up and corrective action on all audit findings. As part of this responsibility, the auditee shall prepare a summary schedule of prior audit findings. The auditee shall also prepare a corrective action plan for current year audit findings. The summary schedule of prior audit findings and the corrective action plan shall include the reference numbers the auditor assigns to audit findings under § .510(c). Since the summary schedule may include audit findings from multiple years, it shall include the fiscal year in which the finding initially occurred. (b) Summary schedule of prior audit findings. The summary schedule of prior audit findings shall report the status of all audit findings included in the prior audit's schedule of findings and questioned costs relative to Federal awards. The summary schedule shall also include audit findings reported in the prior audit's summary schedule of prior audit findings except audit findings listed as corrected in accordance with paragraph (b)(1) of this section, or no longer valid or not warranting further action in accordance with paragraph (b)(4) of this section. (1) When audit findings were fully corrected, the summary schedule need only list the audit findings and state that corrective action was taken. (2) When audit findings were not corrected or were only partially corrected, the summary schedule shall describe the planned corrective action as well as any partial corrective action taken. (3) When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency's or pass- through entity's management decision, the summary schedule shall provide an explanation. (4) When the auditee believes valid or do not warrant further action, the described in the summary schedule. A valid finding as not warranting further action is occurred: the audit findings are no reasons for this position reason for considering an that all of the following longer shall be audit have (i) Two years have passed since the audit report in which 17 the finding occurred was submitted to the Federal clearinghouse; (ii) The Federal agency or pass- through entity is not currently following up with the auditee on the audit finding; and (iii) A management decision was not issued. (c) Corrective action plan. At the completion of the audit, the auditee shall prepare a corrective action plan to address each audit finding included in the current year auditor's reports. The corrective action plan shall provide the name(s) of the contact person(s) responsible for corrective action, the corrective action planned, and the anticipated completion date. If the auditee does not agree with the audit findings or believes corrective action is not required, then the corrective action plan shall include an explanation and specific reasons. § .320 Report submission. (a) General. The audit shall be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section shall be submitted within the earlier of 30 days after receipt of the auditor's report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. (However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the data collection form and reporting package shall be submitted within the earlier of 30 days after receipt of the auditor's report(s), or 13 months after the end of the audit period.) Unless restricted by law or regulation, the auditee shall make copies available for public inspection. (b) Data Collection. (1) The auditee shall submit a data collection form which states whether the audit was completed in accordance with this part and provides information about the auditee, its Federal programs, and the results of the audit. The form shall be approved by OMB, available from the Federal clearinghouse designated by OMB, and include data elements similar to those presented in this paragraph. A senior level representative of the auditee (e.g., State controller, director of finance, chief executive officer, or chief financial officer) shall sign a statement to be included as part of the form certifying that: the auditee complied with the requirements of this part, the form was prepared in accordance with this part (and the instructions accompanying the form), and the information included in the form, in its entirety, are accurate and complete. (2) The data collection form shall include the following data elements: (i) The type of report the auditor issued on the financial statements of the auditee (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion). (ii) Where applicable, a statement that significant deficiencies in internal control were disclosed by the audit of the financial statements and whether any such conditions were material weaknesses. (iii) A statement as to whether the audit disclosed any noncompliance which is material to the financial statements of the auditee. (iv) Where applicable, a statement that significant deficiencies in internal control over major programs were disclosed by the audit and whether any such conditions were material weaknesses. (v) The type of report the auditor issued on compliance for major 18 programs (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion). (vi) A list of the Federal awarding agencies which will receive a copy of the reporting package pursuant to § .320(d)(2) of OMB Circular A -133. (vii) A yes or no statement as to whether the auditee qualified as a low - risk auditee under § .530 of OMB Circular A -133. (viii) The dollar threshold used to distinguish between Type A and Type B programs as defined in § .520(b) of OMB Circular A -133. (ix) The Catalog of Federal Domestic Assistance (CFDA) number for each Federal program, as applicable. (x) The name of each Federal program and identification of each major program. Individual programs within a cluster of programs should be listed in the same level of detail as they are listed in the schedule of expenditures of Federal awards. (xi) The amount of expenditures in the schedule of expenditures of Federal awards associated with each Federal program. (xii) For each Federal program, a yes or no statement as to whether there are audit findings in each of the following types of compliance requirements and the total amount of any questioned costs: (A) Activities allowed or unallowed. (B) Allowable costs /cost principles. (C) Cash management. (D) Davis -Bacon Act. (E) Eligibility. (F) Equipment and real property management. (G) Matching, level of effort, earmarking. (H) Period of availability of Federal funds. (I) Procurement and suspension and debarment. (J) Program income. (K) Real property acquisition and relocation assistance. (L) Reporting. (M) Subrecipient monitoring. (N) Special tests and provisions. (xiii) Auditee Name, Employer Identification Number(s), Name and Title of Certifying Official, Telephone Number, Signature, and Date. (xiv) Auditor Name, Name and Title of Contact Person, Auditor Address, Auditor Telephone Number, Signature, and Date. (xv) Whether the auditee has either a cognizant or oversight agency for audit. (xvi) The name of the cognizant or oversight agency for audit determined in accordance with §.400(a) and § .400(b), respectively. (3) Using the information included in the reporting package described in paragraph (c) of this section, the auditor shall complete the applicable sections of the form. The auditor shall sign a statement to be included as part of the data collection form that indicates, at a minimum, the source of the information included in the form, the auditor's responsibility for the information, that the form is not a substitute for the reporting package described in paragraph (c) of this section, and that the content of 19 the form is limited to the data elements prescribed by OMB. (c) Reporting package. The reporting package shall include the: (1) Financial statements and schedule of expenditures of Federal awards discussed in § .310(a) and § .310(b), respectively; (2) Summary schedule of prior audit findings discussed in § .315(b) ; (3) Auditor's report(s) discussed in §.505; and (4) Corrective action plan discussed in §.315(c). (d) Submission to clearinghouse. All auditees shall submit to the Federal clearinghouse designated by OMB a single copy of the data collection form described in paragraph (b) of this section and the reporting package described in paragraph (c) of this section. (e) Additional submission by subrecipients. (1) In addition to the requirements discussed in paragraph (d) of this section, auditees that are also subrecipients shall submit to each pass- through entity one copy of the reporting package described in paragraph (c) of this section for each pass - through entity when the schedule of findings and questioned costs disclosed audit findings relating to Federal awards that the pass- through entity provided or the summary schedule of prior audit findings reported the status of any audit findings relating to Federal awards that the pass- through entity provided. (2) Instead of submitting the reporting package to a pass - through entity, when a subrecipient is not required to submit a reporting package to a pass- through entity pursuant to paragraph (e)(1) of this section, the subrecipient shall provide written notification to the pass- through entity that: an audit of the subrecipient was conducted in accordance with this part (including the period covered by the audit and the name, amount, and CFDA number of the Federal award(s) provided by the pass- through entity); the schedule of findings and questioned costs disclosed no audit findings relating to the Federal award(s) that the pass- through entity provided; and, the summary schedule of prior audit findings did not report on the status of any audit findings relating to the Federal award(s) that the pass- through entity provided. A subrecipient may submit a copy of the reporting package described in paragraph (c) of this section to a pass- through entity to comply with this notification requirement. (f) Requests for report copies. In response to requests by a Federal agency or pass- through entity, auditees shall submit the appropriate copies of the reporting package described in paragraph (c) of this section and, if requested, a copy of any management letters issued by the auditor. (g) Report retention requirements. Auditees shall keep one copy of the data collection form described in paragraph (b) of this section and one copy of the reporting package described in paragraph (c) of this section on file for three years from the date of submission to the Federal clearinghouse 20 designated by OMB. Pass - through entities shall keep subrecipients' submissions on file for three years from date of receipt. (h) Clearinghouse responsibilities. The Federal clearinghouse designated by OMB shall distribute the reporting packages received in accordance with paragraph (d)(2) of this section and § .235(c)(3) to applicable Federal awarding agencies, maintain a data base of completed audits, provide appropriate information to Federal agencies, and follow up with known auditees which have not submitted the required data collection forms and reporting packages. (i) Clearinghouse address. The address of the Federal clearinghouse currently designated by OMB is Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th Street, Jeffersonville, IN 47132. (j) Electronic filing. Nothing in this part shall preclude electronic submissions to the Federal clearinghouse in such manner as may be approved by OMB. With OMB approval, the Federal clearinghouse may pilot test methods of electronic submissions. Subpart D-- Federal Agencies and Pass - Through Entities §.400 Responsibilities. (a) Cognizant agency for audit responsibilities. Recipients expending more than $25 million ($50 million for fiscal years ending after December 31, 2003) a year in Federal awards shall have a cognizant agency for audit. The designated cognizant agency for audit shall be the Federal awarding agency that provides the predominant amount of direct funding to a recipient unless OMB makes a specific cognizant agency for audit assignment. Following is effective for fiscal years ending on or before December 31, 2003: To provide for continuity of cognizance, the determination of the predominant amount of direct funding shall be based upon direct Federal awards expended in the recipient's fiscal years ending in 1995, 2000, 2005, and every fifth year thereafter. For example, audit cognizance for periods ending in 1997 through 2000 will be determined based on Federal awards expended in 1995. (However, for States and local governments that expend more than $25 million a year in Federal awards and have previously assigned cognizant agencies for audit, the requirements of this paragraph are not effective until fiscal years beginning after June 30, 2000.) Following is effective for fiscal years ending after December 31, 2003: The determination of the predominant amount of direct funding shall be based upon direct Federal awards expended in the recipient's fiscal years ending in 2004, 2009, 2014, and every fifth year thereafter. For example, audit cognizance for periods ending in 2006 through 2010 will be determined based on Federal awards expended in 2004. (However, for 2001 through 2005,the cognizant agency for audit is determined based on the predominant amount of direct Federal awards expended in the recipient's fiscal year ending in 2000). Notwithstanding the manner in which audit cognizance is determined, a Federal awarding agency with cognizance for an auditee may reassign cognizance to another Federal awarding agency which provides substantial direct funding and agrees to be the cognizant agency for audit. Within 30 days after any reassignment, both the old and the new cognizant agency for audit shall notify the auditee, and, if known, the auditor of the reassignment. The cognizant agency for audit shall: auditors. (1) Provide technical audit advice and liaison to auditees and (2) Consider auditee requests for extensions to the report 21 submission due date required by § .320(a). The cognizant agency for audit may grant extensions for good cause. (3) Obtain or conduct quality control reviews of selected audits made by non - Federal auditors, and provide the results, when appropriate, to other interested organizations. (4) Promptly inform other affected Federal agencies and appropriate Federal law enforcement officials of any direct reporting by the auditee or its auditor of irregularities or illegal acts, as required by GAGAS or laws and regulations. (5) Advise the auditor and, where appropriate, the auditee of any deficiencies found in the audits when the deficiencies require corrective action by the auditor. When advised of deficiencies, the auditee shall work with the auditor to take corrective action. If corrective action is not taken, the cognizant agency for audit shall notify the auditor, the auditee, and applicable Federal awarding agencies and pass- through entities of the facts and make recommendations for follow -up action. Major inadequacies or repetitive substandard performance by auditors shall be referred to appropriate State licensing agencies and professional bodies for disciplinary action. (6) Coordinate, to the extent practical, audits or reviews made by or for Federal agencies that are in addition to the audits made pursuant to this part, so that the additional audits or reviews build upon audits performed in accordance with this part. (7) Coordinate a management decision for audit findings that affect the Federal programs of more than one agency. (8) Coordinate the audit work and reporting responsibilities among auditors to achieve the most cost - effective audit. (9) For biennial audits permitted under § .220, consider auditee requests to qualify as a low -risk auditee under §.530(a). (b) Oversight agency for audit responsibilities. An auditee which does not have a designated cognizant agency for audit will be under the general oversight of the Federal agency determined in accordance with § .105. The oversight agency for audit: (1) Shall provide technical advice to auditees and auditors as requested. (2) May assume all or some of the responsibilities normally performed by a cognizant agency for audit. (c) Federal awarding agency responsibilities. The Federal awarding agency shall perform the following for the Federal awards it makes: (1) Identify Federal awards made by informing each recipient of the CFDA title and number, award name and number, award year, and if the award is for R &D. When some of this information is not available, the Federal agency shall provide information necessary to clearly describe the Federal award. (2) Advise recipients of requirements imposed on them by Federal laws, regulations, and the provisions of contracts or grant agreements. (3) Ensure that audits are completed and reports are received 22 in a timely manner and in accordance with the requirements of this part. (4) Provide technical advice and counsel to auditees and auditors as requested. (5) Issue a management decision on audit findings within six months after receipt of the audit report and ensure that the recipient takes appropriate and timely corrective action. (6) Assign a person responsible for providing annual updates of the compliance supplement to OMB. (d) Pass - through entity responsibilities. A pass- through entity shall perform the following for the Federal awards it makes: (1) Identify Federal awards made by informing each subrecipient of CFDA title and number, award name and number, award year, if the award is R &D, and name of Federal agency. When some of this information is not available, the pass- through entity shall provide the best information available to describe the Federal award. (2) Advise subrecipients of requirements imposed on them by Federal laws, regulations, and the provisions of contracts or grant agreements as well as any supplemental requirements imposed by the pass- through entity. (3) Monitor the activities of subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. (4) Ensure that subrecipients expending $300,000 ($500,000 for fiscal years ending after December 31, 2003) or more in Federal awards during the subrecipient's fiscal year have met the audit requirements of this part for that fiscal year. (5) Issue a management decision on audit findings within six months after receipt of the subrecipient's audit report and ensure that the subrecipient takes appropriate and timely corrective action. (6) Consider whether subrecipient audits necessitate adjustment of the pass- through entity's own records. (7) Require each subrecipient to permit the pass- through entity and auditors to have access to the records and financial statements as necessary for the pass- through entity to comply with this part. § .405 Management decision. (a) General. The management decision shall clearly state whether or not the audit finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. If the auditee has not completed corrective action, a timetable for follow -up should be given. Prior to issuing the management decision, the Federal agency or pass- through entity may request additional information or documentation from the auditee, including a request for auditor assurance related to the documentation, as a way of mitigating disallowed costs. The management decision should describe any appeal process available to the auditee. (b) Federal agency. As provided in § .400(a)(7), the cognizant agency for audit shall be responsible for coordinating a management decision for audit findings that affect the programs of more than one Federal agency. 23 As provided in § .400(c)(5), a Federal awarding agency is responsible for issuing a management decision for findings that relate to Federal awards it makes to recipients. Alternate arrangements may be made on a case -by -case basis by agreement among the Federal agencies concerned. (c) Pass - through entity. As provided in § .400(d)(5), the pass - through entity shall be responsible for making the management decision for audit findings that relate to Federal awards it makes to subrecipients. (d) Time requirements. The entity responsible for making the management decision shall do so within six months of receipt of the audit report. Corrective action should be initiated within six months after receipt of the audit report and proceed as rapidly as possible. (e) Reference numbers. Management decisions shall include the reference numbers the auditor assigned to each audit finding in accordance with § .510 (c) . Subpart E -- Auditors § .500 Scope of audit. (a) General. The audit shall be conducted in accordance with GAGAS. The audit shall cover the entire operations of the auditee; or, at the option of the auditee, such audit shall include a series of audits that cover departments, agencies, and other organizational units which expended or otherwise administered Federal awards during such fiscal year, provided that each such audit shall encompass the financial statements and schedule of expenditures of Federal awards for each such department, agency, and other organizational unit, which shall be considered to be a non - Federal entity. The financial statements and schedule of expenditures of Federal awards shall be for the same fiscal year. (b) Financial statements. The auditor shall determine whether the financial statements of the auditee are presented fairly in all material respects in conformity with generally accepted accounting principles. The auditor shall also determine whether the schedule of expenditures of Federal awards is presented fairly in all material respects in relation to the auditee's financial statements taken as a whole. (c) Internal control. (1) In addition to the requirements of GAGAS, the auditor shall perform procedures to obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk for major programs. (2) Except as provided in paragraph (c)(3) of this section, the auditor shall: (i) Plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program; and (ii) Perform testing of internal control as planned in paragraph (c)(2)(i) of this section. (3) When internal control over some or all of the compliance requirements for a major program are likely to be ineffective in preventing or detecting noncompliance, the planning and performing of testing described in paragraph (c)(2) of this section are not required for those compliance requirements. However, the auditor shall report a significant deficiency (including whether any such condition is a material weakness) in accordance with § .510, assess the related control risk at the maximum, and consider whether additional compliance tests are required because of ineffective 24 internal control. (d) Compliance. (1) In addition to the requirements of GAGAS, the auditor shall determine whether the auditee has complied with laws, regulations, and the provisions of contracts or grant agreements that may have a direct and material effect on each of its major programs. (2) The principal compliance requirements applicable to most Federal programs and the compliance requirements of the largest Federal programs are included in the compliance supplement. (3) For the compliance requirements related to Federal programs contained in the compliance supplement, an audit of these compliance requirements will meet the requirements of this part. Where there have been changes to the compliance requirements and the changes are not reflected in the compliance supplement, the auditor shall determine the current compliance requirements and modify the audit procedures accordingly. For those Federal programs not covered in the compliance supplement, the auditor should use the types of compliance requirements contained in the compliance supplement as guidance for identifying the types of compliance requirements to test, and determine the requirements governing the Federal program by reviewing the provisions of contracts and grant agreements and the laws and regulations referred to in such contracts and grant agreements. (4) The compliance testing shall include tests of transactions and such other auditing procedures necessary to provide the auditor sufficient evidence to support an opinion on compliance. (e) Audit follow -up. The auditor shall follow -up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee in accordance with § .315(b), and report, as a current year audit finding, when the auditor concludes that the summary schedule of prior audit findings materially misrepresents the status of any prior audit finding. The auditor shall perform audit follow -up procedures regardless of whether a prior audit finding relates to a major program in the current year. (f) Data Collection Form. As required in § .320(b)(3), the auditor shall complete and sign specified sections of the data collection form. §.505 Audit reporting. The auditor's report(s) may be in the form of either combined or separate reports and may be organized differently from the manner presented in this section. The auditor's report(s) shall state that the audit was conducted in accordance with this part and include the following: (a) An opinion (or disclaimer of opinion) as to whether the financial statements are presented fairly in all material respects in conformity with generally accepted accounting principles and an opinion (or disclaimer of opinion) as to whether the schedule of expenditures of Federal awards is presented fairly in all material respects in relation to the financial statements taken as a whole. (b) A report on internal control related to the financial statements and major programs. This report shall describe the scope of testing of internal control and the results of the tests, and, where applicable, refer to the separate schedule of findings and questioned costs described in paragraph (d) of this section. (c) A report on compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a 25 material effect on the financial statements. This report shall also include an opinion (or disclaimer of opinion) as to whether the auditee complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on each major program, and, where applicable, refer to the separate schedule of findings and questioned costs described in paragraph (d) of this section. (d) A schedule of findings and questioned costs which shall include the following three components: (1) A summary of the auditor's results which shall include: (i) The type of report the auditor issued on the financial statements of the auditee (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion); (ii) Where applicable, a statement that significant deficiencies in internal control were disclosed by the audit of the financial statements and whether any such conditions were material weaknesses; (iii) A statement as to whether the audit disclosed any noncompliance which is material to the financial statements of the auditee; (iv) Where applicable, a statement that significant deficiencies in internal control over major programs were disclosed by the audit and whether any such conditions were material weaknesses; (v) The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion); (vi) A statement as to whether the audit disclosed any audit findings which the auditor is required to report under §.510(a); (vii) An identification of major programs; (viii)The dollar threshold used to distinguish between Type A and Type B programs, as described in § .520(b); and (ix) A statement as to whether the auditee qualified as a low -risk auditee under § .530. (2) Findings relating to the financial statements which are required to be reported in accordance with GAGAS. (3) Findings and questioned costs for Federal awards which shall include audit findings as defined in § .510(a). (i) Audit findings (e.g., internal control findings, compliance findings, questioned costs, or fraud) which relate to the same issue should be presented as a single audit finding. Where practical, audit findings should be organized by Federal agency or pass- through entity. (ii) Audit findings which relate to both the financial statements and Federal awards, as reported under paragraphs (d)(2) and (d)(3) of this section, respectively, should be reported in both sections of the schedule. However, the reporting in one section of the schedule may be in summary form with a reference to a detailed reporting in the other section of the schedule. § .510 Audit findings. 26 (a) Audit findings reported. The auditor shall report the following as audit findings in a schedule of findings and questioned costs: (1) Significant deficiencies in internal control over major programs. The auditor's determination of whether a deficiency in internal control is a significant deficieicny for the purpose of reporting an audit finding is in relation to a type of compliance requirement for a major program or an audit objective identified in the compliance supplement. The auditor shall identify significant deficiencies which are individually or cumulatively material weaknesses. (2) Material noncompliance with the provisions of laws, regulations, contracts, or grant agreements related to a major program. The auditor's determination of whether a noncompliance with the provisions of laws, regulations, contracts, or grant agreements is material for the purpose of reporting an audit finding is in relation to a type of compliance requirement for a major program or an audit objective identified in the compliance supplement. (3) Known questioned costs which are greater than $10,000 for a type of compliance requirement for a major program. Known questioned costs are those specifically identified by the auditor. In evaluating the effect of questioned costs on the opinion on compliance, the auditor considers the best estimate of total costs questioned (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor shall also report known questioned costs when likely questioned costs are greater than $10,000 for a type of compliance requirement for a major program. In reporting questioned costs, the auditor shall include information to provide proper perspective for judging the prevalence and consequences of the questioned costs. (4) Known questioned costs which are greater than $10,000 for a Federal program which is not audited as a major program. Except for audit follow -up, the auditor is not required under this part to perform audit procedures for such a Federal program; therefore, the auditor will normally not find questioned costs for a program which is not audited as a major program. However, if the auditor does become aware of questioned costs for a Federal program which is not audited as a major program (e.g., as part of audit follow -up or other audit procedures) and the known questioned costs are greater than $10,000, then the auditor shall report this as an audit finding. (5) The circumstances concerning why the auditor's report on compliance for major programs is other than an unqualified opinion, unless such circumstances are otherwise reported as audit findings in the schedule of findings and questioned costs for Federal awards. (6) Known fraud affecting a Federal award, unless such fraud is otherwise reported as an audit finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not require the auditor to make an additional reporting when the auditor confirms that the fraud was reported outside of the auditor's reports under the direct reporting requirements of GAGAS. (7) Instances where the results of audit follow -up procedures disclosed that the summary schedule of prior audit findings prepared by the auditee in accordance with §.315(b) materially misrepresents the status of any prior audit finding. (b) Audit finding detail. Audit findings shall be presented in sufficient detail for the auditee to prepare a corrective action plan and take corrective action and for Federal agencies and pass- through entities to arrive at a management decision. The following specific information shall be 27 included, as applicable, in audit findings: (1) Federal program and specific Federal award identification including the CFDA title and number, Federal award number and year, name of Federal agency, and name of the applicable pass- through entity. When information, such as the CFDA title and number or Federal award number, is not available, the auditor shall provide the best information available to describe the Federal award. (2) The criteria or specific requirement upon which the audit finding is based, including statutory, regulatory, or other citation. (3) The condition found, including facts that support the deficiency identified in the audit finding. (4) Identification of questioned costs and how they were computed. (5) Information to provide proper perspective for judging the prevalence and consequences of the audit findings, such as whether the audit findings represent an isolated instance or a systemic problem. Where appropriate, instances identified shall be related to the universe and the number of cases examined and be quantified in terms of dollar value. (6) The possible asserted effect to provide sufficient information to the auditee and Federal agency, or pass- through entity in the case of a subrecipient, to permit them to determine the cause and effect to facilitate prompt and proper corrective action. (7) Recommendations to prevent future occurrences of the deficiency identified in the audit finding. (8) Views of responsible officials of the auditee when there is disagreement with the audit findings, to the extent practical. (c) Reference numbers. Each audit finding in the schedule of findings and questioned costs shall include a reference number to allow for easy referencing of the audit findings during follow -up. § .515 Audit working papers. (a) Retention of working papers. The auditor shall retain working papers and reports for a minimum of three years after the date of issuance of the auditor's report(s) to the auditee, unless the auditor is notified in writing by the cognizant agency for audit, oversight agency for audit, or pass- through entity to extend the retention period. When the auditor is aware that the Federal awarding agency, pass- through entity, or auditee is contesting an audit finding, the auditor shall contact the parties contesting the audit finding for guidance prior to destruction of the working papers and reports. (b) Access to working papers. Audit working papers shall be made available upon request to the cognizant or oversight agency for audit or its designee, a Federal agency providing direct or indirect funding, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this part. Access to working papers includes the right of Federal agencies to obtain copies of working papers, as is reasonable and necessary. 28 § .520 Major program determination. (a) General. The auditor shall use a risk -based approach to determine which Federal programs are major programs. This risk -based approach shall include consideration of: Current and prior audit experience, oversight by Federal agencies and pass- through entities, and the inherent risk of the Federal program. The process in paragraphs (b) through (i) of this section shall be followed. (b) Step 1. (1) The auditor shall identify the larger Federal programs, which shall be labeled Type A programs. Type A programs are defined as Federal programs with Federal awards expended during the audit period exceeding the larger of: (i) $300,000 or three percent (.03) of total Federal awards expended in the case of an auditee for which total Federal awards expended equal or exceed $300,000 but are less than or equal to $100 million. (ii) $3 million or three - tenths of one percent (.003) of total Federal awards expended in the case of an auditee for which total Federal awards expended exceed $100 million but are less than or equal to $10 billion. (iii) $30 million or 15 hundredths of one percent (.0015) of total Federal awards expended in the case of an auditee for which total Federal awards expended exceed $10 billion. (2) Federal programs not labeled Type A under paragraph (b)(1) of this section shall be labeled Type B programs. (3) The inclusion of large loan and loan guarantees (loans) should not result in the exclusion of other programs as Type A programs. When a Federal program providing loans significantly affects the number or size of Type A programs, the auditor shall consider this Federal program as a Type A program and exclude its values in determining other Type A programs. (4) For biennial audits permitted under § .220, the determination of Type A and Type B programs shall be based upon the Federal awards expended during the two -year period. (c) Step 2. (1) The auditor shall identify Type A programs which are low -risk. For a Type A program to be considered low -risk, it shall have been audited as a major program in at least one of the two most recent audit periods (in the most recent audit period in the case of a biennial audit), and, in the most recent audit period, it shall have had no audit findings under § .510(a). However, the auditor may use judgment and consider that audit findings from questioned costs under § .510(a)(3) and § .510(a)(4), fraud under § .510(a)(6), and audit follow -up for the summary schedule of prior audit findings under § .510(a)(7) do not preclude the Type A program from being low -risk. The auditor shall consider: the criteria in § .525(c), § .525(d)(1), § .525(d)(2), and § .525(d)(3); the results of audit follow -up; whether any changes in personnel or systems affecting a Type A program have significantly increased risk; and apply professional judgment in determining whether a Type A program is low -risk. (2) Notwithstanding paragraph (c)(1) of this section, OMB may approve a Federal awarding agency's request that a Type A program at certain recipients may not be considered low -risk. For example, it may be necessary for a large Type A program to be audited as major each year at particular recipients to allow the Federal agency to comply with the Government Management Reform Act of 1994 (31 U.S.C. 3515). The Federal agency shall notify the recipient and, if known, the auditor at least 180 days prior to the 29 end of the fiscal year to be audited of OMB's approval. (d) Step 3. (1) The auditor shall identify Type B programs which are high -risk using professional judgment and the criteria in § .525. However, should the auditor select Option 2 under Step 4 (paragraph (e)(2)(i)(B) of this section), the auditor is not required to identify more high -risk Type B programs than the number of low -risk Type A programs. Except for known significant deficiencies in internal control or compliance problems as discussed in § .525(b)(1), § .525(b)(2), and § .525(c)(1), a single criteria in § .525 would seldom cause a Type B program to be considered high -risk. (2) The auditor is not expected to perform risk assessments on relatively small Federal programs. Therefore, the auditor is only required to perform risk assessments on Type B programs that exceed the larger of: (i) $100,000 or three - tenths of one percent (.003) of total Federal awards expended when the auditee has less than or equal to $100 million in total Federal awards expended. (ii) $300,000 or three - hundredths of one percent (.0003) of total Federal awards expended when the auditee has more than $100 million in total Federal awards expended. (e) Step 4. At a minimum, the auditor shall audit all of the following as major programs: (1) All Type A programs, except the auditor may exclude any Type A programs identified as low -risk under Step 2 (paragraph (c)(1) of this section) . (2) (i) High -risk Type B programs as identified under either of the following two options: (A) Option 1. At least one half of the Type B programs identified as high -risk under Step 3 (paragraph (d) of this section), except this paragraph (e)(2)(i)(A) does not require the auditor to audit more high -risk Type B programs than the number of low -risk Type A programs identified as low -risk under Step 2. (B) Option 2. One high -risk Type B program for each Type A program identified as low -risk under Step 2. (ii) When identifying which high -risk Type B programs to audit as major under either Option 1 or 2 in paragraph (e)(2)(i)(A) or (B), the auditor is encouraged to use an approach which provides an opportunity for different high -risk Type B programs to be audited as major over a period of time. (3) Such additional programs as may be necessary to comply with the percentage of coverage rule discussed in paragraph (f) of this section. This paragraph (e)(3) may require the auditor to audit more programs as major than the number of Type A programs. (f) Percentage of coverage rule. The auditor shall audit as major programs Federal programs with Federal awards expended that, in the aggregate, encompass at least 50 percent of total Federal awards expended. If the auditee meets the criteria in § .530 for a low -risk auditee, the auditor need only audit as major programs Federal programs with Federal awards expended that, in the aggregate, encompass at least 25 percent of total Federal awards expended. (g) Documentation of risk. The auditor shall document in the working 30 papers the risk analysis process used in determining major programs. (h) Auditor's judgment. When the major program determination was performed and documented in accordance with this part, the auditor's judgment in applying the risk -based approach to determine major programs shall be presumed correct. Challenges by Federal agencies and pass- through entities shall only be for clearly improper use of the guidance in this part. However, Federal agencies and pass- through entities may provide auditors guidance about the risk of a particular Federal program and the auditor shall consider this guidance in determining major programs in audits not yet completed. (i) Deviation from use of risk criteria. For first -year audits, the auditor may elect to determine major programs as all Type A programs plus any Type B programs as necessary to meet the percentage of coverage rule discussed in paragraph (f) of this section. Under this option, the auditor would not be required to perform the procedures discussed in paragraphs (c), (d), and (e) of this section. (1) A first -year audit is the first year the entity is audited under this part or the first year of a change of auditors. (2) To ensure that a frequent change of auditors would not preclude audit of high -risk Type B programs, this election for first -year audits may not be used by an auditee more than once in every three years. §_.525 Criteria for Federal program risk. (a) General. The auditor's determination should be based on an overall evaluation of the risk of noncompliance occurring which could be material to the Federal program. The auditor shall use auditor judgment and consider criteria, such as described in paragraphs (b), (c), and (d) of this section, to identify risk in Federal programs. Also, as part of the risk analysis, the auditor may wish to discuss a particular Federal program with auditee management and the Federal agency or pass- through entity. (b) Current and prior audit experience. (1) Weaknesses in internal control over Federal programs would indicate higher risk. Consideration should be given to the control environment over Federal programs and such factors as the expectation of management's adherence to applicable laws and regulations and the provisions of contracts and grant agreements and the competence and experience of personnel who administer the Federal programs. (i) A Federal program administered under multiple internal control structures may have higher risk. When assessing risk in a large single audit, the auditor shall consider whether weaknesses are isolated in a single operating unit (e.g., one college campus) or pervasive throughout the entity. (ii) When significant parts of a Federal program are passed through to subrecipients, a weak system for monitoring subrecipients would indicate higher risk. (iii) The extent to which computer processing is used to administer Federal programs, as well as the complexity of that processing, should be considered by the auditor in assessing risk. New and recently modified computer systems may also indicate risk. (2) Prior audit findings would indicate higher risk, particularly when the situations identified in the audit findings could have a significant impact on a Federal program or have not been corrected. (3) Federal programs not recently audited as major programs 31 may be of higher risk than Federal programs recently audited as major programs without audit findings. (c) Oversight exercised by Federal agencies and pass - through entities. (1) Oversight exercised by Federal agencies or pass- through entities could indicate risk. For example, recent monitoring or other reviews performed by an oversight entity which disclosed no significant problems would indicate lower risk. However, monitoring which disclosed significant problems would indicate higher risk. (2) Federal agencies, with the concurrence of OMB, may identify Federal programs which are higher risk. OMB plans to provide this identification in the compliance supplement. (d) Inherent risk of the Federal program. (1) The nature of a Federal program may indicate risk. Consideration should be given to the complexity of the program and the extent to which the Federal program contracts for goods and services. For example, Federal programs that disburse funds through third party contracts or have eligibility criteria may be of higher risk. Federal programs primarily involving staff payroll costs may have a high -risk for time and effort reporting, but otherwise be at low -risk. (2) The phase of a Federal program in its life cycle at the Federal agency may indicate risk. For example, a new Federal program with new or interim regulations may have higher risk than an established program with time - tested regulations. Also, significant changes in Federal programs, laws, regulations, or the provisions of contracts or grant agreements may increase risk. (3) The phase of a Federal program in its life cycle at the auditee may indicate risk. For example, during the first and last years that an auditee participates in a Federal program, the risk may be higher due to start -up or closeout of program activities and staff. (4) Type B programs with larger Federal awards expended would be of higher risk than programs with substantially smaller Federal awards expended. § .530 Criteria for a low -risk auditee. An auditee which meets all of the following conditions for each of the preceding two years (or, in the case of biennial audits, preceding two audit periods) shall qualify as a low -risk auditee and be eligible for reduced audit coverage in accordance with § .520: (a) Single audits were performed on an annual basis in accordance with the provisions of this part. A non - Federal entity that has biennial audits does not qualify as a low -risk auditee, unless agreed to in advance by the cognizant or oversight agency for audit. (b) The auditor's opinions on the financial statements and the schedule of expenditures of Federal awards were unqualified. However, the cognizant or oversight agency for audit may judge that an opinion qualification does not affect the management of Federal awards and provide a waiver. (c) There were no deficiencies in internal control which were identified as material weaknesses under the requirements of GAGAS. However, the cognizant or oversight agency for audit may judge that any identified material weaknesses do not affect the management of Federal awards and provide a waiver. 32 (d) None of the Federal programs had audit findings from any of the following in either of the preceding two years (or, in the case of biennial audits, preceding two audit periods) in which they were classified as Type A programs: (1) Internal control deficiencies which were identified as material weaknesses; (2) Noncompliance with the provisions of laws, regulations, contracts, or grant agreements which have a material effect on the Type A program; or (3) Known or likely questioned costs that exceed five percent of the total Federal awards expended for a Type A program during the year. Appendix A to Part _ - Data Collection Form (Form SF -SAC) [insert SF -SAC after finalized] Appendix B to Part - Circular A -133 Compliance Supplement Note: Provisional OMB Circular A -133 Compliance Supplement is available from the Office of Administration, Publications Office, room 2200, New Executive Office Building, Washington, DC 20503. 33