23 CFR Part 635 Construction and Maintenance; Contract Procedures

48 FR 22911 May 23, 1983

ACTION: Final rule.

SUMMARY: The Federal Highway Administration (FHWA) is amending its regulations which prescribe requirements for the letting of contracts in order to implement provisions mandated by section 112 of the Surface Transportation Assistance Act of 1982 (STAA of 1982). Section 112 of the STAA of 1982 amends 23 U.S.C. 112 to require the construction of each project by contract awarded by competitive bidding unless the State highway agency (SHA) demonstrates that some other method is shown to be more cost effective. Section 112 also limits the applicability of the waiver provisions contained in 23 U.S.C. 112(e) by excluding projects where employees of a political subdivision of a State are working on the project outside of such political subdivision. The regulations contained in 23 CFR Part 635 which implement 23 U.S.C. 112 are revised to reflect the statutory amendments.

EFFECTIVE DATE: This final rule is effective January 6, 1983.

FOR FURTHER INFORMATION CONTACT:

Mr. P. E. Cunningham, Chief, Construction and Maintenance Division, (202) 426-0392, or Mr. Michael J. Laska, Office of the Chief Counsel, (202) 426-0761, Federal Highway Administration, 400 Seventh Street, SW., Washington, D.C. 20590. Office hours are from 7:45 a.m. to 4:15 p.m., ET, Monday through Friday.

TEXT: SUPPLEMENTARY INFORMATION: On January 6, 1983, the President signed into law the Surface Transportation Assistance Act of 1982 (Pub. L. 97-424, 96 Stat. 2097). Section 112 of the STAA of 1982 amended 23 U.S.C. 112 which prescribes requirements for the letting of Federal-aid highway contracts. Prior to enactment of the STAA of 1982, 23 U.S.C. 112 required a contract be awarded by competitive bidding unless the Secretary of Transportation found that some other method would be in the public interest. Section 112 of the STAA of 1982 now requires that a contract be awarded by competitive bidding unless the SHA demonstrates, to the satisfaction of the Secretary, that some other method is cost effective.

Also prior to enactment of the STAA of 1982, contracts for projects on the Federal-aid secondary system in those States where the Secretary has discharged his responsibility pursuant to 23 U.S.C. 117 were excluded from the contract requirements of 23 U.S.C. 112. Section 112 of the STAA of 1982 limits this exception as provided in 23 U.S.C. 112(e). For those Federal-aid secondary system projects where employees of a political subdivision of a State are working on a project outside of such political subdivision, the contract requirements will now apply.

The Contract procedures for Federal-aid contracts as required by 23 U.S.C. 112 are implemented by 23 CFR Part 635. Those regulations which must be revised due to the enactment of section 112 of the STAA of 1982 are contained in @@ 635.104, 635.105, 635.202 through 205, and 635.309(e). A summary of the revisions to the existing provisions are as follows:

Discussion of Amendments

Subpart A -- Contract Procedures

Section 635.104, Method of construction.
This section is revised to reflect the statutory requirements for a finding of cost effectiveness as it relates to determining the method of construction.
Section 635.105(b)(2), Supervising agency.
This section requires that the SHA certify that the work of project supervision and construction that is performed by a local public agency is cost effective as required by section 112 of the STAA of 1982.

Subpart B -- Force Account Construction

Section 635.202, Application.
This section incorporates the exception to the applicability of the waiver provisions provided in 23 U.S.C. 112(e) as mandated by section 112 of the STAA of 1982. This subpart will not apply to projects constructed under a Certification Acceptance Plan in those States where the Secretary has discharged his responsibility pursuant to 23 U.S.C. 117 except where employees of a political subdivision of a State are working on a project outside such political subdivision.
Section 635.203, Definitions.
This section adds the definition of the term "cost effective."
Section 635.204, Determination of more cost effective method.
This section replaces the provisions for determining the public interest with provisions for determining cost effectiveness as they relate to justification for the selection of a method of construction other than by competitive bidding.
Section 635.205, Finding of cost effectiveness.
This section is revised to reflect the statutory requirements for a finding of cost effectiveness as it relates to the performance by force account (method other than competitive bidding) of the adjustment of railroad or utility facilities and similar type facilities owned or operated by a public agency, railroad, or a utility company. This section also simplifies the definitions of the adjustments of railroad facilities and utilities. The title "division engineer" is replaced by the title "Division Administrator" whenever it appears in this section so as to reflect a previous change in title. The process for requesting construction by force account is revised to reflect the justification of cost effectiveness.

Subpart C -- Physical Construction Authorization

Section 635.309, Authorization.

This section is revised to require that an affirmative finding of cost effectiveness be made when construction by some method other than contract based on competitive bidding is contemplated.

The FHWA has determined that this document does not contain a major rule under Executive Order 12291 or significant regulation under the regulatory policies and procedures of the Department of Transportation. Since the amendments in this document are being issued for the purpose of literally complying with Section 112 of the STAA of 1982 and do not reflect interpretation of statutory language, public comment is impracticable and unnecessary. Therefore, the FHWA finds good cause to make the amendments final without notice and opportunity for comment and without a 30-day delay in effective date under the Administrative Procedure Act. Notice and opportunity for comment are not required under the regulatory policies and procedures of the Department of Transportation because it is not anticipated that such action would result in the receipt of useful information. The statutory language incorporated in the regulation requires no interpretation and provides for no administrative discretion. In addition, the economic impact, if any, of this rulemaking action will be minimal. However, any impact would be positive as reflected by the requirement of cost effectiveness. Accordingly, a full regulatory evaluation is not required.

In consideration of the foregoing, and under the authority of 23 U.S.C. 315; Section 112, Surface Transportation Assistance Act of 1982, Pub. L. 97-424, 96 Stat. 2106; and 49 CFR 1.48(b), the FHWA is amending Part 635, Subparts A, B, and C of Title 23, Code of Federal Regulations, as set forth below.

(Catalog of Federal Domestic Assistance Program Number 20.205, Highway Research, Planning and Construction. The provisions of OMB Circular A-95 regarding State and local clearinghouse review of Federal and federally assisted programs apply to this program)

List of Subjects in 23 CFR Part 635

Government contracts, Grant programs -- transportation, Highways and roads.

Issued on: May 17, 1983.

L. P. Lamm,

Deputy Federal Highway Administrator, Federal Highway Administration. Lewis alpha -5-19-83-F. a23my0.193 (Fol.) 1185/6 %107.4

The Federal Highway Administration hereby amends Title 23, Code of Federal Regulations, Chapter I, Part 635, as set forth below.

PART 635 -- CONSTRUCTION AND MAINTENANCE

In @ 635.104, paragraphs (a) and (b) are amended by changing the title "division engineer" to read as "Division Administrator" each time it appears in the text, and by revising the first sentence of each paragraph to read as follows:
@ 635.104 Method of construction.
1. Except as provided in paragraph (b) of this section, or unless the State highway agency demonstrates to the satisfaction of the Division Administrator that some other method is more cost effective, actual construction work shall be performed by contract awarded to the lowest responsible bidder.* * *
2. When the Division Administrator finds that it is cost effective, construction work may be performed by some method other than by contract awarded by competitive bidding pursuant to requirements and procedures prescribed by him or her.* * *
In @ 635.105, paragraph (b)(2) is revised to read as follows:
@ 635.105 Supervising agency.

* * * * *

(b) * * *

(2) The State highway agency certifies that the work performed by the local public agency is cost effective.

* * * * *
Section 635.201 is revised to read as follows:
@ 635.201 Purpose.

The purpose of this subpart is to prescribe procedures in accordance with 23 U.S.C. 112(b) for a State highway agency to request approval that highway construction work be performed by some method other than contract awarded by competitive bidding.
Section 635.202 is revised to read as follows:
@ 635.202 Application.

This subpart applies to all Federal-aid and other highway construction projects financed in whole or in part with Federal funds and to be constructed by a State highway agency or a subdivision thereof in pursuant of agreements between any other State highway agency and the Federal Highway Administration ( FHWA). This subpart does not apply to projects constructed under a Certification Acceptance Plan in those States where the Secretary has discharged his/her responsibility pursuant to 23 U.S.C. @ 117, except where employees of a political subdivision of a State are working on a project outside such political subdivision.
Section 635.203 is amended by adding a new paragraph (e) to read as follows:
@ 635.203 Definitions.

* * * * *

(e) The term "cost effective" shall mean the efficient use of labor, equipment, materials and supplies to assure the lowest overall cost.
Section 635.204 is amended by changing the heading to read "Determination of more cost effective method" and by revising paragraphs (a) and (b) to read as follows:
@ 635.204 Determination of more cost effective method.
1. Congress has expressly provided in the cited legislation that the contract method based on competitive bidding shall be used by a State highway agency or county for performance of highway work financed with the aid of Federal funds unless the State highway agency demonstrates, to the satisfaction of the Secretary, that some other method is more cost effective.
2. It may be found cost effective for a State highway agency or county to undertake a federally financed highway construction project by force account when a situation exists in which the rights of responsibilities of the community at large are so affected as to require some special course of action, including situations where there is a lack of bids or the bids received are unreasonable.
Section 635.205 is amended by changing the heading to read "Finding of cost effectiveness" and by revising paragraph (a)(1) to read as follows:
@ 635.205 Finding of cost effectiveness.

(a) * * *

(1) By reason of inherent nature of the operations involved, it is cost effective to perform by force account the adjustment of railroad or utility facilities and similar type facilities owned or operated by a public agency, a railroad or a utility company, provided that the organization is qualified to perform the work in a satisfactory manner. The installation of new facilities shall be undertaken by competitive bidding except as provided in @ 635.205 (b) and (c). Adjustment of railroad facilities shall include minor work on the railroad's operating facilities routinely performed by the railroad with its own forces such as the installation of grade crossing warning devices, crossing surfaces, and minor track and signal work. Adjustment of utility facilities shall include minor work on the utility's existing facilities routinely performed by the utility with its own forces and includes minor installations of new facilities to provide power, minor lighting, telephone, water and similar utility services to a rest area, weigh-station, movable bridge, or other highway appurtenance, provided such installation cannot feasibly be done as incidental to major installation project such as an extensive highway lighting system.
section 635.205(a)(2) is amended by changing the title "division engineer" to read as "division administrator."
Section 635.205 is amended by revising paragraphs (b) and (c) to read as follows:
@ 635.205 Finding of cost effectiveness.

* * * * *
1. When a State highway agency desires that highway construction work financed with the aid of Federal funds, other than the kinds of work designated under @ 635.205(a) or projects constructed under an approved Certification Acceptance Plan, be undertaken by force account, it shall submit a request to the Division Administrator identifying and describing the project and the kinds of work to be performed, the estimated costs therefor, the estimated Federal funds to be provided, and setting forth the reason or reasons that force account for such project is considered to be cost effective.
2. The Division Administrator shall notify the State highway agency in writing of his/her determination that under the circumstances relating to the project, force account is or is not found to be cost effective.
Section 635.309 is amended by revising paragraph (e) to read as follows:
@ 635.309 Authorization.

* * * * *

(e) An affirmative finding of cost effectiveness has been made as required by 23 U.S.C. @ 112, in case construction by some method other than contract based on competitive bidding is contemplated.

* * * * *

(Sec. 112, Pub. L. 97-424, 96 Stat. 2097; 23 U.S.C. 112, 315; 49 CFR 1.48(b)). [FR Doc. 83-13807 Filed 5-20-83; 8:45 am]

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