Notice2025-00992
Third Party Contracting Guidance
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 16, 2025
Issuing agencies
Transportation DepartmentFederal Transit Administration
Abstract
The Federal Transit Administration (FTA) has made available on its website the final updated Third-Party Contracting Guidance Circular (C 4220.1G). The updated circular reflects statutory and regulatory changes that have occurred since the last update, provides additional non-binding guidance, and supersedes the previous Third-Party Contracting Guidance Circular C 4220.1F. This notice responds to the comments FTA received on the proposed circular, which was published in the Federal Register on November 27, 2024.
Full Text
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[Federal Register Volume 90, Number 10 (Thursday, January 16, 2025)]
[Notices]
[Pages 4838-4846]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00992]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No. FTA-2024-0015]
Third Party Contracting Guidance
AGENCY: Federal Transit Administration (FTA), Department of
Transportation (DOT).
ACTION: Notice of availability of final circular and response to
comments.
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SUMMARY: The Federal Transit Administration (FTA) has made available on
its website the final updated Third-Party Contracting Guidance Circular
(C 4220.1G). The updated circular reflects statutory and regulatory
changes that have occurred since the last update, provides additional
non-binding guidance, and supersedes the previous Third-Party
Contracting Guidance Circular C 4220.1F. This notice responds to the
comments FTA received on the proposed circular, which was published in
the Federal Register on November 27, 2024.
DATES: The applicable date of this circular is February 18, 2025.
ADDRESSES: One may view the comments at docket number FTA-2024-0015.
For access to the docket, please visit <a href="https://www.regulations.gov">https://www.regulations.gov</a> or
the Docket Operations office located in the West Building of the United
States Department of Transportation, Room W12-140, 1200 New Jersey
Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m. Monday
through Friday.
FOR FURTHER INFORMATION CONTACT: For third party contracting questions,
contact Tara Murphy, Division Chief, Office of Administration, Federal
Transit Administration, 1200 New Jersey Ave. SE, Room E41-311,
Washington, DC 20590, phone: (202) 366-5647 or email
<a href="/cdn-cgi/l/email-protection#34405546551a594146445c4d74505b401a535b42"><span class="__cf_email__" data-cfemail="05716477642b687077756d7c45616a712b626a73">[email protected]</span></a>. For legal questions, Christopher Hall, Office of
Chief Counsel, same address, Room E56-316, phone (202) 941-9595 or
email <a href="/cdn-cgi/l/email-protection#14777c667d67607b647c71663a7c75787854707b603a737b62"><span class="__cf_email__" data-cfemail="80e3e8f2e9f3f4eff0e8e5f2aee8e1ececc0e4eff4aee7eff6">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Overview
II. Responses to Public Comments
A. Chapter I
B. Chapter II
C. Chapter III
D. Chapter IV
E. Chapter V
F. Chapter VI
G. Chapter VII
I. Overview
This notice announces the availability of FTA Circular C 4220.1G,
Third Party Contracting Guidance. C 4220.1G replaces C 4220.1F. The
purpose of Circular 4220.1 is to provide updated Third-Party
Contracting Guidance for Federal Transit Administration (FTA)
assistance programs. This circular incorporates provisions of Federal
law enacted since the publication of C 4220.1F, including the
Infrastructure Investment and Jobs Act (Pub. L. 117-58, Nov. 15, 2021);
the Office of Management and Budget's (OMB) and United States
Department of Transportation's (USDOT) updated Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards at 2 CFR part 200 (78 FR 78608, Dec. 26, 2013; 89 FR 30046, Apr.
22, 2024) and 2 CFR part 1201 (79 FR 76049, Dec. 19, 2014),
respectively; USDOT's regulation implementing the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970 (Uniform
Act) (49 CFR part 24, 89 FR 36944, May 3, 2024); and USDOT's
Disadvantaged Business Enterprise (DBE) regulation (49 CFR part 26, 89
FR 24963, Apr. 9, 2024).
A copy of the final circular is in the docket and is posted on
FTA's Circulars page (<a href="https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/circulars">https://www.transit.dot.gov/regulations-and-guidance/fta-circulars/circulars</a>).
II. Response to Comments
FTA issued a notice of availability and request for comments for
the proposed circular, C 4220.1G ``Third Party Contracting Guidance''
on November 27, 2024 (89 FR 93824). The public comment period closed on
December 27, 2024.
FTA received comments from 27 unique commenters including transit
authorities, businesses and industry organizations, private
individuals, and State and local departments of transportation.
FTA received seven requests to extend the comment period for the
proposed circular. FTA declined to extend the comment period because
FTA believes that the comment period was sufficient for interested
parties to provide comment, evidenced by the number of comments FTA
received on the proposed circular. In addition, the circular does not
contain any binding requirements that are not already effective through
statutory changes or regulatory changes established through a notice
and comment process during which interested parties could have provided
input.
FTA reviewed all relevant comments and took them into consideration
when developing this final circular. FTA addresses these comments in
the corresponding sections below. Some comments were outside the scope
of the circular, and FTA does not respond to those comments in this
notice. Several comments suggested typographical updates or changes.
These changes, where appropriate, were incorporated.
In response to comments, FTA made changes to the final guidance
which are discussed in detail in the corresponding sections below.
A. Chapter I
Comment: A consulting firm asserted that the concept of ``premium''
in the definition of the term ``best value'' is confusing and lacks a
clear definition.
FTA Response: FTA declines to define the term ``premium'' further,
as its meaning is context-specific and generally understood within the
framework of best value procurements. In this context, premium refers
to the additional cost a recipient may choose to pay for a proposal
offering superior technical quality, performance, or other non-cost
factors. Recipients are encouraged to clearly articulate evaluation
criteria and the basis for
[[Page 4839]]
determining best value in their procurement documentation to ensure
transparency and understanding.
Comment: A consulting firm suggested removing the term ``Common
Grants Rule'' from Chapter I, noting that it is not appropriate in the
context of the Americans with Disabilities Act (ADA) and 2 CFR part
200.
FTA Response: FTA has struck the definition, because the term is
not actually used in the Circular.
Comment: A consulting firm suggested changing the defined term
``grant'' to ``award'' in the definitions to ensure consistency with
terminology used in other FTA circulars and reviews.
FTA Response: FTA declines to replace the term ``grant'' with
``award'' in this definition, as the purpose of the definition is to
define grants specifically, as distinct from other forms of financial
assistance awards. (Compare with the nearby definition of ``cooperative
agreement'' in the circular.) However, FTA has changed the definite
article ``the'' to the indefinite article ``an'' (``Grant means an
instrument . . .'') to reflect the existence of other forms of
assistance awards.
Comment: A consulting firm noted that there are no mechanisms or
tests to verify the accuracy of self-certifications and suggested
instead asking recipients to affirm their agreement to comply with
procurement regulations.
FTA Response: FTA declines to revise the approach to self-
certifications, as the current process is well established and aligns
with Federal requirements and standard oversight practices. Self-
certifications serve as a formal acknowledgment of a recipient's
commitment to comply with procurement regulations, and recipients
remain responsible for ensuring their accuracy and validity.
Additionally, FTA conducts periodic reviews and audits to verify
compliance, providing further assurance beyond self-certification.
Comment: A consulting firm suggested deleting references to the
Best Practices Procurement Manual (BPPM), arguing that it lacks
authority, does not cover all areas, contains incorrect examples, and
is often copied by recipients without proper analysis, making it
unhelpful for ensuring compliance. Similarly, a state department of
transportation noted that the proposed circular, C 4220.1G, referenced
the Best Practices Procurement Manual, last updated in 2016, and
suggested either removing these references or updating the manual to
include new requirements from the Infrastructure Investment and Jobs
Act and 2 CFR part 200, which was last updated in October 2024.
FTA Response: FTA declines to remove references to the Best
Practices Procurement Manual (BPPM), as it serves as a valuable
resource offering practical examples and guidance to assist recipients
in navigating complex procurement requirements. The BPPM does not carry
regulatory authority. It complements regulations and FTA's other
guidance by providing illustrative scenarios and best practices.
Recipients can use the BPPM as another guidance tool, applying their
own judgment and analysis to ensure compliance with Federal procurement
standards.
Comment: An individual commenter suggested that in construction
manager/general contractor (CM/GC) contracts, the Guaranteed Maximum
Price (GMP) should be negotiated before contract award, with a fixed
price finalized at 60-90% design completion, and an ``off-ramp''
available for the owner to seek competitive bids if needed. For
Progressive Design-Build contracts (PDB), the commenter highlighted a
concern that because the GMP or Target Maximum Price (TMP) is
determined late in the design process, it prevents a fair and
reasonable price determination at the time of award and may lead to
uncontrolled cost escalation without a firmly established in upfront
budget.
FTA Response: FTA acknowledges the commenters' concerns regarding
CM/GC and PDB contract structures and has made clarifications in the
Circular to address them. With respect to CM/GC contracts, FTA
recognizes the value of early contractor involvement in the design
process to optimize lifecycle costs, value engineering, and scheduling
outcomes. While the reference to CM/GC contributing to design up to the
60-90% design stage reflects common industry practice, it is not
intended to preclude earlier involvement where it aligns with project
goals. The definition aims to provide general guidance rather than
prescriptive instructions on implementing alternative contracting
methods.
Regarding the timing of GMP negotiations, FTA acknowledges that
practices may vary based on project-specific factors and local
preferences. The Circular now clarifies that GMP or equivalent price
negotiations may occur either before or after the 60-90% design stage,
depending on the recipient's risk tolerance and procurement strategy.
FTA also notes that recipients have the flexibility to structure GMP
negotiations to include ``off-ramps'' for competitive bidding if the
GMP does not align with budgetary or value expectations.
For PDB contracts, FTA recognizes the potential risk of cost
escalation if the GMP or TMP is established late in the design process.
However, PDB remains an allowable contracting method under FTA
regulations. FTA emphasizes the importance of strong project management
capacity when using alternative contracting approaches to mitigate
risks and ensure effective outcomes. Lastly, while the term
``Guaranteed Maximum Price'' is widely understood in the industry, FTA
acknowledges that some recipients may prefer terms like ``final
construction price'' to better reflect their procurement and project
management processes.
Comment: A city agency commented that the new definition in Chapter
I, Section 5b for Approval, Authorization, Concurrence, Waiver is
overly general and suggested retaining the more specific language from
the previous version (4220.1F).
FTA Response: FTA declines to revise Chapter I, Section 5b to
reintroduce the prior definition from C 4220.1F. The updated definition
aligns with Federal procurement standards, and further specificity is
unnecessary to meet compliance objectives.
Comment: A city agency commented that Chapter I, Section 5dd should
clarify that the term ``recipient'' refers to the entire legal entity,
not just a specific component, as was explicitly stated in the prior
version (C 4220.1F).
FTA Response: FTA declines to revise this section to restate that
the term ``recipient'' applies to the entire legal entity. The
recipient is the entity with authority to enter into an assistance
agreement with FTA and to execute certifications, which may at times be
a unit of local government. The updated language provides sufficient
clarity and aligns with Federal regulatory standards.
Comment: A city agency commented that Chapter I, Section 6 should
reinstate references to the Master Agreement, as its removal has
created a gap in clarity.
FTA Response: FTA declines to reinstate the description of the
Master Agreement in this section. The purpose of Chapter I Section 6 is
to describe FTA's role and oversight activities. The Master Agreement
is not an oversight activity by FTA, but is the document incorporated
into every financial assistance award describing the recipient's
obligations.
B. Chapter II
Comment: A consulting firm suggested removing references to
[[Page 4840]]
revenue contracts, stating that they are not evaluated for compliance.
FTA Response: The FTA declines to remove references to revenue
contracts, as they remain an important aspect of third-party
contracting activities.
Comment: A consulting firm suggested removing references to the
Federal Acquisition Regulation (FAR), expressing concern that
recipients might rely on it as a primary procurement guide rather than
using it solely as a reference.
FTA Response: The FTA declines to remove references to the FAR,
because it is important to plainly distinguish between the FAR and the
procurement standards of 2 CFR part 200 so recipients are not confused.
Additionally, recipients may at times use the FAR as an additional
source of guidance.
Comment: A city agency commented that Chapter II, Section 2.a(1)
distinguishes Cooperative Agreements but does not reference Joint
Partnership Agreements, creating inconsistency with earlier chapters.
FTA Response: FTA has revised this section to provide a more
concise statement regarding its applicability to grants and cooperative
agreements. Grants and cooperative agreements are forms of financial
assistance awarded by FTA. FTA declines to revise this section to
include a reference to Joint Partnership Agreements, which are not a
form of financial assistance awarded by FTA. The current language
aligns with applicable regulatory requirements.
Comment: A city agency commented that Chapter II, Section 2.b(8)
should expand the definition of Force Account to include activities
performed by contractors, as the current definition limits it to a
recipient's own forces.
FTA Response: FTA declines to expand the definition of Force
Account to include contractor activities. The current definition
reflects the Federal intent for force account work to refer
specifically to the recipient's own non-contracted workforce.
C. Chapter III
Comment: A consulting firm noted that all ability to accept gifts
of ``nominal value'' should be removed, advocating for a zero-tolerance
policy as the best practice.
FTA Response: FTA declines to remove all ability to accept gifts of
``nominal value'' because 2 CFR 200.318 authorizes a recipient or
subrecipient to ``set standards for situations where the financial
interest is not substantial or a gift is an unsolicited item of nominal
value.''
Comment: A consulting firm noted that the phrase ``sound and
complete agreement'' is too ambiguous unless specific elements can be
stated or evaluated.
FTA Response: FTA disagrees that the term is ambiguous and declines
to make a change. The phrase recognizes the broad discretion recipients
have to design and form contracts. Furthermore, the statement that
recipients should take care to include contract terms that form a sound
and complete agreement is advisory. It is not intended to create
criteria by which FTA will inspect recipients' contracts for Federal
compliance.
Comment: A consulting firm noted that the term ``Industry
Contract'' is unclear and should either be redefined or removed
altogether.
FTA Response: FTA disagrees that the term is unclear and declines
to redefine or remove the term ``Industry Contract.'' FTA believes the
term is contextually clear within the procurement framework and allows
for broad application across diverse procurement scenarios.
Comment: A consulting firm noted that the term ``reasonable
documentation'' lacks clarity and is overly subjective, which could
lead to inconsistent compliance assessments.
FTA Response: FTA declines to revise the term ``reasonable
documentation.'' The term allows for recipients to exercise their
discretion across diverse procurement scenarios and aligns with
standard Federal practices for documentation. It would be impractical
to attempt to specify recordkeeping requirements to apply to everything
a recipient might procure, from micro-purchases to mega-projects.
FTA encourages recipients to maintain records sufficient to
demonstrate compliance with applicable procurement regulations.
Comment: A consulting firm noted that ``access to records'' should
be a mandatory clause in all third-party contracts.
FTA Response: The commenter was not specific about whose records he
means to be accessed by whom. Nonetheless, FTA declines to add such a
requirement for another mandatory clause in recipients' contracts. A
recipient's obligation to maintain records related to its award and
provide access to the Federal Government already is well established. A
recipient must take whatever measures are required to assure
compliance, which may, in some cases, include making provisions to
obtain records from contractors. Specifying a new required clause is
not necessary.
Comment: A consulting firm noted that the criteria for using
reverse auctions are insufficient and should not be limited to the
Simplified Acquisition Threshold (SAT) and commented that clear reasons
for their use, similar to Requests for Proposals (RFPs) and Invitations
for Bids (IFBs), should be provided.
FTA Response: FTA declines to expand the use of reverse auctions
for procurements above the SAT. This is because 2 CFR 200.320 specifies
procurement methods to be used for procurements above the SAT and does
not include reverse auctions. Reverse auctions are primarily suited for
procurements involving standardized goods or services where price is
the primary evaluation factor and technical complexity is minimal.
Sealed bidding is the procurement method required by regulation for
such procurements when they exceed the SAT. 2 CFR 200.320(b)(1).
Comment: A consulting firm noted that audits are not clearly stated
as a requirement and may cause confusion for recipients, suggesting
their removal.
FTA Response: FTA declines to remove references to audits as they
are a requirement pursuant to 2 CFR part 200, subpart F, but has
clarified the requirements to describe the procedure more accurately.
Comment: A state department of transportation noted that one of the
proposed changes required annual self-certification of the procurement
policy. It was recommended to add criteria outlining the attributes
that this self-certification should include.
FTA Response: Self-certification is not a change. For many years,
FTA has relied on recipients self-certifying their procurement systems
annually. The certification is made as part of a recipient's annual
Certifications and Assurances, which can be found on FTA's website here
(along with previous years' versions): <a href="https://www.transit.dot.gov/funding/grantee-resources/certifications-and-assurances/certifications-assurances">https://www.transit.dot.gov/funding/grantee-resources/certifications-and-assurances/certifications-assurances</a>. The Certifications and Assurances are standardized for all
recipients and provide the exact text of the certification. Therefore,
it is not necessary for the Circular to describe the contents that must
be included in such a certification.
Comment: A state department of transportation noted that the
Circular recommends reviewing Federal requirements when deploying an e-
commerce system but does not specify which requirements to follow. The
commenter recommended FTA include these specific Federal requirements.
[[Page 4841]]
FTA Response: FTA refers the commenter to Chapter III, Section 3,
paragraph e, subparagraphs i-iii for these requirements.
Comment: A transit bus manufacturer suggested using stronger
language to encourage electronic procurement methods rather than
printed documents in Chapter III, Section 3(e).
FTA Response: FTA declines to revise this section to include
stronger language encouraging the use of electronic methods over
printed documents. The existing guidance already supports and promotes
the use of electronic documentation as a best practice while allowing
recipients the flexibility to determine the most appropriate format for
their specific circumstances. Mandating stronger language may not
account for varying technological capabilities or regulatory
requirements across different recipients and procurement environments.
Recipients are encouraged to adopt electronic methods where feasible
and practical to improve efficiency and reduce administrative burdens.
D. Chapter IV
Comment: An individual commenter urged FTA to explicitly clarify
whether third-party contractors must be registered in <a href="http://SAM.gov">SAM.gov</a> at the
time of offer or quotation to be eligible for an award. The commenter
described inconsistencies between the Circular's description of the
requirement that a recipient verify a contractor's exclusion status
(i.e., suspension or debarment) and the expectations of triennial
reviewers, noting that SAM checks often seemed mandatory in practice
despite the Circular's statement that checking SAM is strongly
recommended.
FTA Response: In response to the comment, FTA has added a statement
to clarify that contractors are not required to be registered in SAM to
do business with FTA recipients. FTA also has reworded the paragraph
about verifying prospective contractors' exclusion status, to clarify
that SAM is one of several methods available to a recipient to confirm
a prospective contractor's non-exclusion.
Comment: A county requested clarification on the percentage
requirements for Disadvantaged Business Enterprises (DBEs) and which
clauses must be flowed down to subcontractors in the proposed FTA
Circular 4220.1G.
FTA Response: FTA declines to revise Circular 4220.1G to provide
the requested clarification because the Circular is focused on
procurement standards and not the U.S. Department of Transportation's
DBE program. The Circular directs readers to 49 CFR 26.49 and 2 CFR
200.321(b)(3) for detailed requirements regarding DBE participation.
The U.S. DOT's website is another useful source of guidance for
administering a DBE program or competing for work as a DBE: <a href="https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise">https://www.transportation.gov/civil-rights/disadvantaged-business-enterprise</a>.
When a recipient is required to set a percentage goal for DBE
contracting, the recipient creates its own goal, based on the
availability of DBEs in its area. In other words, there is no one DBE
goal for FTA recipients. Regarding flow-down clauses, FTA separately
will update its guidance on flow-down clauses on the FTA website soon.
Comment: A consulting firm noted that the phrase ``sound business
judgment'' should be removed as it cannot be objectively evaluated.
FTA Response: FTA declines to remove the term ``sound business
judgment.'' The term is intentionally broad to allow recipients
flexibility in decision-making while maintaining accountability.
Comment: A consulting firm noted that if seat belt use is only
encouraged and not mandated, it should be removed from the guidance.
FTA Response: FTA declines to remove references to seat belt use.
Executive Order 13043 (note at 23 U.S.C. 402) requires Federal agencies
to encourage seat belt use in Federal grants. Furthermore, encouraging
seat belt use remains an important safety consideration, even when it
is not a requirement.
Comment: A consulting firm noted that if texting policies are only
encouraged and not mandated, they should be removed from the guidance.
FTA Response: FTA declines to remove references to texting
policies. Executive Order 13513 (note at 23 U.S.C. 402) requires
Federal agencies to encourage recipients to adopt policies to ban text
messaging while driving in carrying out a Federal award. While not
mandatory, encouraging safe texting practices supports broader safety
objectives within transit operations.
Comment: A consulting firm noted that the civil rights clauses
should be reviewed to determine if they should flow down to contractors
and subcontractors, with revisions made as necessary.
FTA Response: FTA intends separately to update its guidance on
mandatory clauses and flow-down clauses on FTA's website. The existing
guidance in the Circular aligns with the applicable Federal statutes.
Comment: A consulting firm noted that the word ``considered'' in
Chapter IV, Section 3.b in references to Small and Disadvantaged
Business Enterprises should be removed because it cannot be
quantitatively measured or evaluated.
FTA Response: FTA declines to remove the term ``considered'' in
relation to Small and Disadvantaged Business Enterprises. Examples of
what consideration means are provided in the paragraph at Section 3.b.
The text of the Circular closely follows the text of 2 CFR 200.321,
which requires, when possible, that the recipient ensure disadvantaged
businesses are ``considered''.
Comment: A consulting firm noted that spare ratios are an agency
planning function and not related to procurement. The commenter noted
spare ratios already are discussed in FTA's Circular 5010.1F and should
not be addressed in Circular 4220.1G. The commenter suggested spare
ratios should be tracked through the Triennial Review.
FTA Response: FTA declines to remove references to spare ratios
from procurement guidance. Although spare ratios are addressed
primarily in Circular 5010.1F, referring to spare ratios in the
procurement circular helps ensure a recipient is aware of the spare
ratio policy when undertaking a vehicle procurement. The Triennial
Review serves as a broad assessment of a recipient's compliance across
multiple areas, including procurement, maintenance, and financial
management, and does review a recipient's spare ratio.
Comment: An individual commenter noted difficulty finding
confirmation of the Micro-purchase threshold increase to $50,000 in the
proposed FTA Circular 4220.1G and mentioned their understanding that
the threshold increase became effective on October 2, 2024.
FTA Response: The Federal micro-purchase threshold has not changed;
it is still $10,000. However, as of October 1, 2024, 2 CFR
200.320(a)(1) permits a recipient to certify for itself a higher micro-
purchase threshold, up to $50,000 in certain instances. This higher
threshold is not automatic and requires the recipient's self-
certification and supporting documentation. The circular discusses this
change in Chapter VI, Section 4.
Comment: An individual commenter sought clarification on two points
in the proposed Circular 4220.1G: whether the removal of the
prohibition on geographic preferences formally stated at 2 CFR 200.319
affected the guidance provided in Chapter VI of the Circular regarding
geographic preferences; and clarification of the statement regarding
[[Page 4842]]
Patent and Restricted Data Rights as a possible reason for a non-
competitive procurement, specifically the statement, ``However, the
mere existence of such rights does not by itself justify a
noncompetitive award,'' and whether such scenarios should be treated as
unsolicited proposals.
FTA Response: Circular 4220.1G does reflect the removal of the
prohibition against geographic preference from 2 CFR 200.319. However,
2 CFR 200.319 was not the only rule affecting geographic preferences in
FTA procurements. The Circular presents FTA's explanation of the
current status of geographic preferences across various procurement
types, reading relevant statutes and regulations together.
Additionally, the statement that ``the mere existence of [patent
and restricted data] rights does not by itself justify a noncompetitive
award,'' does not imply that these scenarios should be treated as
unsolicited proposals. It means that just because a single company may
own rights necessary to the delivery of the product or service being
acquired, does not mean that company is the only possible source for
the product or service. Recipients should conduct market research,
including consideration of Brand Name or Equal products or services,
and document their findings in the procurement file before pursuing a
sole source award.
Comment: A State department of transportation noted that in Chapter
IV, the section on Small Procurements references DBEs but does not
include small businesses or veteran-owned businesses.
FTA Response: The Small Procurement section in Chapter IV does
reference women owned businesses. FTA has added reference to veteran
owned businesses to correctly reflect the requirements of 2 CFR
200.321. Additionally, FTA refers the commenter to Chapter IV, section
2, ``Small and Disadvantaged Business Enterprises,'' for information on
small and veteran owned businesses.
Comment: A state department of transportation noted that the
section of Chapter IV related to small procurements allowed splitting a
procurement to increase DBE participation, and that this appeared to be
in conflict with other statements in Chapter IV that prohibit dividing
procurements to meet the micro-purchase limit. The commenter requested
clarification on whether splitting the procurement when using a DBE is
permissible if the end result were procurements that met the micro-
purchase threshold.
FTA Response: As noted in Chapter IV, Section 1(c)(2), a known
requirement must not intentionally be divided into multiple smaller
procurements to fall below the simplified acquisition threshold or
micro-purchase threshold, regardless of the use of DBEs. The Uniform
Requirements and U.S. DOT's DBE rule suggest ways to increase DBE
participation by ``dividing procurement transactions into separate
procurements'' (2 CFR 200.321) or ``breaking out contract work items
into economically feasible units (for example, smaller tasks or
quantities)'' (App. A to 49 CFR part 26). These suggestions must be
interpreted consistently with the requirement not to undermine full and
open competition. For example, it may be possible to unbundle a
solicitation for multiple services or supplies that do not necessarily
have to be combined under the same contract.
Comment: A law firm on behalf of an industry coalition suggested
FTA state that liquidated damages should not exceed incentives but
rather should be balanced with incentives.
FTA Response: FTA declines to specify that liquidated damages
should not exceed incentives but rather should be balanced with them.
Liquidated damages and incentive provisions serve distinct purposes in
a contract, with liquidated damages addressing the costs associated
with non-performance or delays, and incentives encouraging superior
performance or early completion. Balancing these two elements in every
contract may not always align with the specific goals or circumstances
of the procurement. FTA's existing guidance allows recipients the
flexibility to structure contracts, including liquidated damages and
incentives, in a manner that reflects their unique project needs and
risk assessments. Recipients are encouraged to ensure that both
liquidated damages and incentives are reasonable, justifiable, and
aligned with the overall objectives of the procurement.
Comment: A city agency commented that Chapter IV, Section 2.b.5(b)
omits the Percentage of Completion Method for progress payments, which
was previously included in C 4220.1F. The commenter suggested including
language on this method.
FTA Response: FTA declines to add language about the Percentage of
Completion Method. Until 2014, the now-superseded Common Rule at 49 CFR
18.21(d) (2014) specified that recipients may use the percentage of
completion method to pay their construction contractors. The current
procurement standards at 2 CFR part 200 do not mention percentage of
completion. Recipients retain flexibility in structuring construction
progress payments under Federal requirements.
Comment: A city agency commented that the last sentence at Chapter
IV, Section 2.b(9)(d) contains unclear language regarding returning
liquidated damages to the award budget, and recommended clarification.
FTA Response: FTA has revised the last sentence of this section for
clarity.
Comment: A city agency commented that Chapter IV, Section 2.c(3)(b)
should clarify whether DBEs have priority over other small, minority,
or disadvantaged business enterprises as defined by the USDOT.
FTA Response: There is no prioritization. Under U.S. DOT's
disadvantaged business enterprise (DBE) rule, a DBE means a for-profit
small business that is at least 51% owned by one or more individuals
who are both socially and economically disadvantaged. 49 CFR 26.5. The
rule rebuttably presumes that women and persons of certain racial
descent are socially disadvantaged. 49 CFR 26.67(a). Firm owners whom
the rule does not presume to be socially disadvantaged can register
their firms as DBEs by demonstrating their disadvantage through a
narrative description. 49 CFR 26.67(d).
Comment: A city agency commented that Chapter IV, Section 2.a(1)
introduces a requirement for recipients to verify contractor employee
classification. They requested additional guidance, including whether
FTA will provide a standard contract clause or certification.
FTA Response: The U.S. Office of Management and Budget added this
to the Uniform Requirements in 2024. 89 FR 30136. As part of assessing
a potential contractor's responsibility, the rule now requires the
recipient or subrecipient to consider the contractor's proper
classification of its employees under the Fair Labor Standards Act. 2
CFR 200.318(h). The rule does not specify that the recipient must make
a special investigation or acquire relevant information in any other
particular manner. The commenter's suggestion that a certification or
contract clause could be employed may be acceptable. FTA does not have
further guidance to provide at this time.
Comment: A city agency asked whether the Circular's new guidance
regarding protection and types of data rights created a change to the
required clauses recipients must include in their contracts. The
commenter also asked where to find a list of required clauses
[[Page 4843]]
now that Appendix D no longer is part of the Circular.
FTA Response: The Circular's guidance regarding data rights has not
created a new required clause. FTA intends to update and maintain a
table of required clauses separate from Circular 4220.1G on FTA's
website.
Comment: Regarding organizational conflicts of interest during
contracting, a city agency asked whether a consultant who assisted in
drafting reports or partial designs can still bid on future project
phases if the recipient discloses the consultant's work to other
potential bidders.
FTA Response: The comment presents a fact-specific hypothetical
that is beyond the scope of this comment process. FTA encourages the
commenter to contact its FTA regional office if it has discovered or is
trying to cure an organizational conflict of interest.
Comment: A city agency commented that Chapter IV, Section 2.b(4)
creates a barrier for non-profits and SBEs/DBEs by requiring an
indirect cost rate for non-A&E services. They suggested flexibility to
allow fixed or fully burdened rates, especially for community
engagement work.
FTA Response: The cost principles and requirements related to
indirect cost rates found in 2 CFR part 200 specify how recipients may
charge indirect costs to their FTA awards. FTA does not have rules
about how the recipient's contractors charge indirect costs to the
recipient. (An exception to this exists for A&E firms. The law requires
a recipient to accept and use an A&E firm's indirect rate established
in accordance with the Federal Acquisition Regulation. 49 U.S.C.
5325(b).) That being said, the commenter's local rules may impose such
requirements, but FTA cannot comment on local requirements.
Comment: A transit bus manufacturer requested that FTA change its
guidance that recipients ``may use'' progress payments and advance
payments to say recipients ``should use'' such payments. The commenter
also requested that FTA rephrase other parts of the section on advance
and progress payments and include more examples to promote the use of
advance and progress payments by recipients.
FTA Response: FTA declines to replace the permissive ``may use''
with the more prescriptive ``should use''. The current language
provides recipients with the flexibility to determine the most
appropriate procurement approach based on their specific project needs
and circumstances, while still adhering to Federal requirements.
Additionally, FTA declines to provide exhaustive descriptions of
circumstances where phrases like ``in some circumstances'' apply. The
variability in procurement scenarios across agencies and projects makes
it impractical to prescribe a one-size-fits-all definition. Recipients
are encouraged to consult with their FTA Regional Offices for guidance
when specific scenarios arise that require further clarification.
Comment: In Chapter IV, Section 2(b)(9)(d), Liquidated Damages, a
transit bus manufacturer suggested that FTA include statements
balancing risk and related penalties, add descriptions of excusable
delay on the part of contractors, and add a statement recommending that
recipients allow contractors to be reimbursed for costs and damages
associated with delivery delays requested or caused solely by the
recipient. The commenter noted this is particularly relevant with
respect to zero-emission bus delivery delays caused by charging or
fueling infrastructure.
FTA Response: FTA declines to revise this section to include
specific descriptions of risk-balancing and excusable delay or to
recommend contractor reimbursement for costs and damages associated
with delivery delays caused solely by the recipient. The existing
guidance provides sufficient flexibility for recipients to negotiate
contract terms with their vendors, including provisions for liquidated
damages, excusable delays, and risk-sharing, tailored to the specific
circumstances of their procurements.
Comment: A transit bus manufacturer suggested that in Chapter IV,
Section 2(e), where the Circular discusses special considerations for
rolling stock procurements, FTA include a paragraph on Excessive
Bonding that discourages excessive bonding and includes descriptions of
situations deemed excessive. The commenter suggested examples deemed
excessive include bonding required when no payments are made until
acceptance of vehicles, bonding that exceeds the amount of contracted
work remaining or the amount of advance payments or progress payments,
and bonding that exceeds the term of the period of performance. The
commenter also suggested such a detailed list be included in the
section on Excessive Bonding in Chapter VI. This commenter also
suggested that Chapter IV, Section 2(e) clarify that Federal law only
requires security for rolling stock procurements using advance or
progress payments.
FTA Response: FTA declines to revise this section to include a
paragraph on Excessive Bonding with a detailed list of specific
situations deemed excessive. Prescribing an exhaustive list of
scenarios could unintentionally limit recipients' ability to make risk-
based determinations suited to their unique procurement needs. The
situations described by the commenter may or may not be excessive based
on the specific facts and circumstances of any particular procurement.
Therefore, it is better for FTA not to be so prescriptive, and to leave
that to the discretion of the parties to the contract. The current
guidance already aligns with Federal procurement standards and provides
recipients with flexibility to assess bonding requirements based on
their project-specific risks and financial considerations.
Regarding the clarification on security for advance or progress
payments in rolling stock procurements, FTA affirms that it requires
security only for rolling stock procurements involving advance or
progress payments. However, this requirement is already addressed in
the guidance in the section describing advance and progress payments,
which have application beyond just rolling stock procurements, and
further clarification is unnecessary. FTA notes that recipients may
require security in excess of the minimums required by FTA.
Comment: A transit bus manufacturer requested that FTA include in
Chapter IV, Section 2(e)(3) (paragraph referring to FTA's minimum
useful life policy for rolling stock), a statement that infrastructure
and other property included in rolling stock purchases are also subject
to the minimum useful life requirements in Circular 5010.1F. The
commenter also requested FTA repeat the list of acceptable methods to
determine minimum useful life from Circular 5010.1F, rather than
referring to Circulars 5010.1F and 9050.1A.
FTA Response: FTA declines to revise this section to include a
statement about the useful life of infrastructure and other property
related to rolling stock, or a list of acceptable methods for
determining minimum useful life, rather than referencing Circulars
5010.1F and 9050.1A. These circulars already provide detailed guidance
on determining minimum useful life and duplicating their content within
Circular 4220.1G would create unnecessary redundancy and potential
inconsistencies across guidance documents. Recipients are encouraged to
consult Circulars 5010.1F and 9050.1A for specific requirements
regarding minimum useful life determinations for rolling stock and
related infrastructure.
[[Page 4844]]
Comment: A transit authority commented that in regions with a
limited number of DBEs, meeting the specialized needs of Federally
funded procurements is challenging. The commenter stated that the
proposed tiered compliance standards and enhanced documentation
requirements place significant administrative burdens on agencies
without delivering corresponding benefits due to the scarcity of
qualified DBEs in the region.
FTA Response: FTA declines to revise the description of the DBE
rule. The U.S. DOT DBE rule is a Department-wide rule administered by
the Office of the Secretary of Transportation, and changes to it are
beyond the scope of this circular update. FTA notes, however, that the
DBE rule directs recipients to take into account the availability of
DBEs when setting their DBE goals. 49 CFR 26.45.
Comment: A transit authority commented that proactive measures to
increase DBE participation, such as breaking contracts into smaller
components or altering delivery schedules, are often impractical and
may compromise cost efficiency and operational effectiveness. The
transit authority commented that mandating these measures risks causing
delays and increased costs for critical procurements.
FTA Response: FTA declines to make changes in response to the
comment. FTA declines to revise the description of the DBE rule. The
U.S. DOT DBE rule is a Department-wide rule administered by the Office
of the Secretary of Transportation, and changes to it are beyond the
scope of this circular update. The DBE rule does not mandate the
actions the commenter described; the DBE rule suggests them as actions
a recipient can ``consider'' as part of good faith efforts to increase
DBE participation. 49 CFR part 26, app. A para. IV.
Comment: A transit authority commented that greater flexibility
should be provided in compliance expectations for regions with limited
DBE availability. The commenter specifically commented that FTA should
allow recipients to demonstrate ``good faith efforts'' without punitive
measures if participation goals cannot be met due to local constraints
and offer exemptions or modified compliance standards for regions where
DBE participation opportunities are demonstrably limited.
FTA Response: FTA declines to make changes in response to the
comment. The U.S. DOT DBE rule is a Department-wide rule administered
by the Office of the Secretary of Transportation, and changes to it are
beyond the scope of this circular update. The commenter should review
the DBE rule, 49 CFR part 26, which does make provision for ``good
faith efforts'' on the part of a recipient.
Comment: A transit authority commented that rather than imposing
rigid participation requirements, FTA should prioritize capacity-
building initiatives for DBEs in underserved regions. The commenter
suggested that this approach would expand the pool of qualified DBEs
over time and better align with long-term equity goals.
FTA Response: FTA declines to make changes in response to the
comment. The U.S. DOT DBE rule is a Department-wide rule administered
by the Office of the Secretary of Transportation, and changes to it are
beyond the scope of this circular update.
Comment: A transit authority requested that FTA expand the
Circular's guidance related to software-as-a-service (SaaS) agreements.
The commenter requested that FTA add more detail addressing shared data
ownership in SaaS agreements, the eligibility of SaaS licensing for
Federal funds, and detailed clarification about the respective
cybersecurity responsibilities of the customer and the SaaS vendor. The
commenter also requested that FTA create a requirement about data
portability at the end of a SaaS contract and develop model clauses and
forms for recipients to use when procuring SaaS.
FTA Response: FTA declines to make these revisions. The purpose of
the Circular is to describe the Federal procurement standards and how
they apply to recipients' transit related procurements. The commenter's
suggestions are far more detailed and specific than the Federal
standards and are beyond the scope of this Circular. The guidance in
the Circular section acknowledges these data issues at a high level,
while not being unnecessarily prescriptive, and allows recipients and
their vendors to make these determinations for themselves.
Comment: A transit authority commented that FTA should include a
dedicated appendix featuring case studies of successful P3
implementations, highlighting best practices and lessons learned,
noting that examples would offer practical insights into how P3s have
been structured, financed, and managed effectively in real-world
scenarios.
FTA Response: FTA declines to create a dedicated appendix featuring
case studies of successful P3 implementations. While case studies can
offer valuable insights, the purpose of FTA Circular 4220.1G is to
provide regulatory guidance and requirements for federally funded
procurements. The Transit Cooperative Research Program (TCRP) conducts
research on P3s and some of their reports may include case studies.
Interested stakeholders may review these studies on TCRP's website:
<a href="https://nap.nationalacademies.org/search/?term=public+private+partnerships">https://nap.nationalacademies.org/search/?term=public+private+partnerships</a>.
Comment: A transit authority commented that FTA should simplify
compliance requirements for procuring products with recycled content,
prioritize high-impact product categories, and allow greater
flexibility for product categories with lower environmental impact.
They suggested allowing agencies to document ``good faith efforts''
when such products are either unavailable in the market or cost-
prohibitive. Additionally, they recommended a self-certification
process to reduce the administrative burden associated with compliance
and requested a balance between benefits and practicality.
FTA Response: FTA declines to revise the guidance. The requirements
related to procurement of recovered or recycled materials are a
governmentwide regulation, 2 CFR 200.323, and FTA cannot amend them.
The text in the Circular closely follows the text of the regulation,
which already allows for practicality.
Comment: A transit authority commented that FTA should offer
technical assistance and training to help agencies effectively
incorporate recycled content requirements into their procurement
processes. They suggested providing webinars, guides, or resources
outlining best practices and market opportunities. They also suggested
that FTA should promote collaboration through joint procurements or
cooperative purchasing agreements for recycled-content products, which
would enable smaller agencies to access competitive pricing and a
broader range of product options.
FTA Response: FTA acknowledges the request for additional support
to procure recycled-content products, but such efforts are beyond the
scope of the Circular update.
Comment: A transit authority commented that FTA should incorporate
the following verbiage to Chapter IV, Section 1.a: FTA prohibits, with
limited exceptions, the use of capital assistance for the recipient's
operating expenses.
FTA Response: FTA declines to add the suggested language because
the existing language in this section already reflects FTA's policy
regarding the use
[[Page 4845]]
of capital assistance, and adding specific examples may create
unnecessary redundancy or confusion. Recipients are expected to
understand and adhere to statutory and regulatory limitations on the
use of capital funds, as outlined in the applicable FTA circulars and
other guidance documents.
E. Chapter V
Comment: A consulting firm noted that interstate cooperative
procurement contracts should also be allowed for non-rolling stock
purchases as long as they comply with 2 CFR part 200.
FTA Response: FTA declines to extend the use of interstate
cooperative procurement contracts to non-rolling stock purchases.
Current guidance aligns with section 3019(b) of the FAST Act, which
authorizes such interstate purchasing from cooperative procurement
contracts only for rolling stock and related equipment.
Comment: A consulting firm noted that the term ``open market''
needs to be clearly defined to avoid ambiguity.
FTA Response: FTA declines to define the term ``open market''
further because the term is contextually understood within procurement
practices, and additional definition is unnecessary.
Comment: A state department of transportation commented that the
proposed Third-Party Contracting Guidance (FTA C 4220.1G) should
explicitly allow state and local agency technology procurement through
interstate cooperative purchasing agreements and purchasing schedules,
provided the participating states' procurement policies allow it,
regardless of the state in which the agencies are located. The
commenter suggested that restricting interstate purchasing schedules
would disproportionately harm smaller and rural transit agencies, which
often lack the resources to conduct independent procurements or
establish state-specific schedules for modern transit technologies.
FTA Response: Section 3019(b) of the FAST Act authorizes such
interstate purchasing from cooperative procurements only for rolling
stock and related equipment. FTA cannot amend it to include other
products.
Comment: A transit technology company commented in support of FTA's
clarifications in Chapter V regarding joint procurement, state or local
government purchasing schedules, and intergovernmental agreements. They
noted that public sector entities often misunderstand FTA's stance on
these arrangements and believe this clarification will encourage their
use, ultimately improving efficiency and cost-effectiveness in the
procurement process.
FTA Response: FTA appreciates the comments of support for the
proposed clarifications which are intended to provide transit agencies
and stakeholders with guidance that ensures compliance with applicable
laws and regulations while promoting efficiency and cost-effectiveness
in procurement practices.
Comment: A city agency commented that Chapter V, Section 4.d lacks
clarity on why Interstate Purchasing Schedules are restricted, despite
aligning with intergovernmental agreement principles. The commenter
requested further explanation.
FTA Response: FTA has added clarification to the Circular.
Interstate purchasing schedules generally are ineligible for FTA
funding because they curtail opportunities for competitive
procurements. Section 3019(b) of the FAST Act makes an exception for
interstate purchases of rolling stock and related equipment, but only
for rolling stock and related equipment.
F. Chapter VI
Comment: A consulting firm noted that evaluation criteria,
including how proposals will be scored or rated, should be explicitly
stated.
FTA Response: Existing regulation, 2 CFR 200.320(b), requires that
solicitations identify all evaluation factors and their relative
importance. The Circular already states this requirement.
Comment: A consulting firm noted that the $50,000 threshold for
contracts under the micro-purchase threshold should be tied to the
total contract value rather than an annual limit.
FTA Response: FTA has revised the Circular to clarify that the
self-certification to use a higher threshold must occur annually. The
threshold is not an annual ``budget'' for micro-purchases.
Comment: A consulting firm noted that task order contracts should
be evaluated as competitive procurements among the pool of selected
contractors.
FTA Response: FTA declines to make this change, as the suggestion
exceeds the requirements in the Federal procurement standards of 2 CFR
part 200. The procurement standards do not prescribe how task orders
are to be assigned under multiple award contracts. Recipients have
discretion to manage their contracts and assign task orders
effectively.
Comment: A consulting firm noted that the requirement to ``consider
workforce impacts'' under cost and price analysis is unclear and should
be clarified in terms of method and analysis depth.
FTA Response: In 2024, the U.S. Office of Management and Budget
amended 2 CFR 200.324(a) to add that a ``recipient or subrecipient
should consider potential workforce impacts in their analysis if the
procurement transaction will displace public sector employees,'' as
part of analyzing the cost or price of a procurement. (89 FR 30046).
FTA will leave this term broad, to provide maximum discretion to
recipients and to accommodate varied workforce considerations across
projects.
Comment: A consulting firm noted that cost analysis requirements
should explicitly apply to single-bid or single-proposal conditions.
FTA Response: FTA declines to revise the language to explicitly
mandate a cost analysis for single-bid or single-proposal conditions.
The provision as written notes that a recipient should perform a cost
analysis when price competition is inadequate.
Comment: A state department of transportation noted that the
requirement to negotiate profit separately was removed from 2 CFR
200.324 in the October 2024 update. However, the circular's language
still included this requirement, creating a perceived conflict between
the two regulations.
FTA Response: FTA acknowledges this change to 2 CFR 200.324. It is
considered a best practice to perform these tasks, and the Circular had
preserved it as a recommendation, not a requirement. FTA has removed
this from the final version of the Circular.
Comment: A law firm on behalf of an industry coalition requested
that FTA clarify that recipients planning to procure operations
services through a multiyear contract should define the scope of work
and performance metrics in their Request for Proposals. The commenter
also noted that the contract should provide pricing flexibility. The
commenter suggested that FTA should encourage recipients to seek input
before putting out an RFP and include information that will aid bidders
in developing proposals in the RFP. The commenter also suggested that
RFPs should provide flexibility regarding substitutions of key staff.
FTA Response: FTA declines to revise the Circular. The existing
guidance in Chapter VI already emphasizes the importance of clearly
defining requirements, evaluation criteria, and contract expectations
in RFPs to ensure fair and effective competition, consistent with
regulation, 2 CFR
[[Page 4846]]
200.320. Recipients have flexibility in structuring their RFPs and
contracts to address the unique needs of their operations services
procurements, including considerations for pricing structures and
staffing substitutions. Furthermore, while seeking industry input
before issuing an RFP may be useful, it is not universally required.
The current guidance provides sufficient flexibility for recipients to
develop RFPs that align with their procurement objectives while
complying with Federal requirements.
Comment: A law firm on behalf of an industry coalition suggested
that FTA include a series of recommendations to recipients on what to
include in contracts, such as provisions requiring the provision of
detailed information from contract bidders, specifying a contract base
period, bilateral rather than unilateral options for contract
extension, inflation adjustment and force majeure clauses. This
commenter also suggested FTA specify that fixed monthly fee and
variable rate; variable rate; and cost plus rate structures are all
appropriate for operations contracts.
FTA Response: FTA declines to include these specific
recommendations. FTA's existing guidance already provides recipients
with the flexibility to structure contracts in a manner that best meets
their operational and financial needs, provided they remain compliant
with Federal procurement requirements. Similarly, FTA declines to
prescribe specific pricing structures--such as fixed monthly fees,
variable rates, or cost-plus rates--as universally appropriate for
recipients. Recipients have discretion to select contract terms and
pricing structures based on their procurement objectives, market
conditions, and the specific requirements of each procurement.
Comment: A city agency commented that Chapter VI, Section 2.g(1)
should clarify whether contracts using negotiated hourly rates fall
under the Cost Reimbursement category.
FTA Response: FTA declines to amend the Circular to describe
different types of cost reimbursement contracts, because these terms
are generally understood in the contracting community, and recipients
have broad discretion to craft contracts within the limits of the
Federal procurement standards (e.g., cost-plus-percentage-of-cost
contracts are ineligible). If the commenter has a question about a
specific procurement, the commenter should contact its FTA regional
office.
Comment: A city agency commented that Chapter VI, Section h.2(c)
should clarify the prohibition on using qualifications based selection
(QBS) procedures to procure actual construction. They suggested adding
a cross-reference for exceptions under alternative contracting methods.
FTA Response: FTA has added a cross-reference to the section of the
Circular discussing alternative contracting methods.
Comment: A transit bus manufacturer suggested that in Chapter VI,
Section 2(g), ``Contract Type Specified,'' FTA include language on
price adjustment clauses and contract modifications on price increases.
FTA Response: FTA declines to revise this section. The current
guidance already provides recipients with flexibility to structure
contracts, including incorporating price adjustment provisions where
appropriate, as long as they remain consistent with Federal procurement
requirements and principles of fair and reasonable pricing.
G. Chapter VII
FTA is adopting as proposed the proposal to eliminate Chapter VII
and replace it with a new paragraph in proposed Chapter III on
Recipient Responsibilities and FTA's Role in Procurement Disputes.
Veronica Vanterpool,
Deputy Administrator.
[FR Doc. 2025-00992 Filed 1-15-25; 8:45 am]
BILLING CODE 4910-57-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.