This directive was canceled August 7, 2006

U.S. Department of Transportation Federal Highway Administration	Order Subject
	PROCESSING RESEARCH PROJECTS UNDER TEA 21 SECTION 5001
	Classification Code	Date	Office of Primary Interest
	4410.3	September 19, 2001	HAAM-1

1. What is the purpose of this directive? This Order provides guidance on the procedures to be used in obligating funds for research projects undertaken by the Federal Highway Administration (FHWA) that are authorized under Section 5001 of the Transportation Equity Act for the 21st Century (TEA-21) (Public Law 105-178). It also establishes a collaborative process for determining the most streamlined method for funding each research project while maintaining the integrity of the acquisition process. The Order also provides guidance on competition and matching requirements related to assistance agreements for these projects.



2. Does this Order supplement an existing FHWA directive? Yes. This Order supplements FHWA Order 4410.1, Grant and Cooperative Agreement Policies and Procedures, dated February 28, 1994.



3. What definitions are needed to understand this directive?



1. Procurement Contract - the legal instrument used to reflect a relationship between the Federal Government and a party when the principal purpose of the transaction is the acquisition by purchase, lease, or barter of property or services for the direct benefit or use of the Federal Government, including situations in which the property or services are in turn provided to a third party. A procurement generally takes the form of a contract, though purchase orders are used for buys of $100,000 or less.



2. Assistance Agreement - the legal instrument used to reflect a relationship between the Federal Government and a State, local government, or other recipient when the principal purpose is to transfer money, property or anything of value to the other party to the agreement in order to assist in accomplishing a public purpose of support or stimulation authorized by a Federal law. These instruments include:



1. Grants - assistance agreements in which substantial involvement between FHWA and the recipient is not anticipated.



2. Cooperative Agreements - assistance agreements in which substantial involvement between FHWA and the recipient is anticipated. At FHWA, cooperative agreements for discretionary research projects (including earmarks) are processed either by a division office using Federal-aid procedures (project agreement, FMIS, etc.) or through the Headquarters Office of Acquisition Management. This Order provides guidance for determining which of these two routes is appropriate for a given research project.



4. What is the background concerning this directive? Section 5001 of TEA-21 authorizes funding for the Research and Technology (R T) program of the FHWA. Some of the funding authorized under Section 5001 is available for use at the discretion of FHWA program managers, while the use of other funds has been specifically directed by Congress, either in TEA-21 itself or in subsequent appropriations acts. In determining the appropriate method for accomplishing specific R T projects, including those specified by Congress, the FHWA must make a series of collaborative decisions based on the circumstances of each project. Included among these decisions is whether the project represents an FHWA acquisition of services or products, or whether it is financial assistance. Other factors, such as competition requirements, matching funds, and the intended recipient are also considerations.



5. How is it determined whether to use a procurement contract or an assistance agreement?



1. A procurement contract is appropriate when the principal purpose of the transaction is the acquisition of goods or services for the direct benefit or use of the Federal Government. A procurement contract is a mutually binding legal relationship obligating the seller to furnish supplies or services and the buyer (the FHWA) to pay for them. An assistance agreement can be either a cooperative agreement or a grant. The use of an assistance agreement is appropriate when the principal purpose is to assist in accomplishing a public purpose of supporting or stimulating the acquisition of knowledge or understanding of the subject under study, to accomplish technology transfer, or to advance the state-of-the-art. FHWA Order 4410.1 provides further details and examples that describe the differences between a procurement contract and an assistance agreement.



2. As a general rule, the Headquarters Office of Acquisition Management handles all contracts/procurements for Headquarters. Assistance projects, whether discretionary or directed by Congress, may also be handled by the Office of Acquisition Management if the award is competitive, or if the recipient is other than a State. If the recipient of a grant or cooperative agreement is a State, for which competition is not required, then the Federal-aid process may be used as a streamlined vehicle for getting the funds to the State.



3. After coordination with the appropriate offices, the Director, Office of Acquisition Management, is responsible for determining whether the FHWA should award using a procurement contract or an assistance agreement for a given requirement. (See FHWA Order 4410.1, Section 10(d).)



6. If it is a procurement contract, what happens? If after appropriate coordination, it is determined that a procurement contract is the appropriate legal instrument, the Office of Acquisition Management will process the award in accordance with the requirements of the Federal Acquisition Regulations and the associated Departmental guidance and regulations.



7. If it is an assistance agreement, what issues must be addressed? If after appropriate coordination, it is determined that an assistance agreement is the appropriate legal instrument, the issues of competition and matching requirements must be addressed.



1. Competition - The Federal Grant and Cooperative Agreement Act of 1977 requires agencies to obtain the maximum competition practicable in awarding grants and cooperative agreements, whenever discretion is permitted in selecting recipients. Pursuant to DOT Order 4600.17A, Financial Assistance Management Requirements, competition is not required for assistance awards to units of State or local governments, and no sole source justification is required. However, the rationale for selecting a particular State or consortium of State recipients should be documented by the FHWA.



2. Matching Requirements - Funds provided under assistance agreements for research under Section 5001 of TEA-21 are subject to a requirement that the Federal share of the cost of the project shall not exceed a maximum of 80 percent, unless the Secretary specifically waives the requirement with respect to a particular project or activity. Recipients of assistance agreements are expected to cost-share either through providing matching funds, and/or by providing other "hard" or "soft" ("in-kind") cost sharing. Guidance on and a definition of "in-kind" cost sharing for State and local governments are described in 49 CFR Part 18, Section 18.24. Guidance on "in-kind" cost sharing for educational institutions and other non-profit organizations is available in 49 CFR Part 19, Subpart C, Section 19.23. The Secretary has not delegated to FHWA the authority to waive, on a case-by-case basis, the matching requirements for assistance agreements.



NOTE: The FHWA Chief Counsel has issued a determination that matching requirements do not apply to procurement contracts.



8. How is it determined who should handle the obligation of funds for research projects? In order to ensure that the appropriate acquisition and Federal assistance processes are followed and the FHWA is in compliance with all applicable acquisition and Federal assistance laws and regulations, all FHWA Headquarters requests for research projects authorized under Section 5001 of TEA-21 must be coordinated with the appropriate FHWA Headquarters program office and the Office of Acquisition Management. This will be accomplished by one of the following methods.



1. If an FHWA Headquarters office identifies a research project funded under Section 5001 of TEA-21 that is not designated for a specific geographic location, and there is no justification to award the project to a specific State department of transportation (DOT), it shall be forwarded to the Office of Acquisition Management for review and appropriate processing. The Office of Acquisition Management will issue either a procurement contract or an assistance agreement and ensure adequate competition as required by the laws and regulations governing contracts and assistance agreements.



2. If a congressionally specified project using Section 5001 funds expressly designates a State, city, educational institution, or geographic location, a copy of the page(s) including the legislative language that contains the congressional specification and a copy of the cover sheet of the Public Law, Appropriations Bill, or Conference Report, must be forwarded to the Office of Acquisition Management. These types of projects are usually handled through FHWA's division offices (on a non-competitive basis) if it is determined that a State DOT is the most appropriate entity to accomplish a particular research project. The Office of Acquisition Management will generally obtain the advice of the Chief Counsel in interpreting the language. Within 10 business days after receiving the above documentation, the Office of Acquisition Management must review and provide its comments/concurrence on the proposed project. After receiving concurrence from the Office of Acquisition Management, the requesting office may proceed with an allocation of funds through the Federal-aid project process.



3. If an FHWA office determines that a discretionary research project would best be performed by a State DOT or other entity even though no specific State has been designated by legislation, the rationale for selecting a specific State to conduct the research project must be documented (in two pages or less) and forwarded to the Office of Acquisition Management. These types of projects are usually handled through FHWA's division offices (on a non-competitive basis) if it is determined that a State DOT is the most appropriate entity to accomplish a particular research project. Within 5 business days after receiving the above written rationale, the Office of Acquisition Management must review and either concur or non-concur on the proposed project. If concurrence from the Office of Acquisition Management is received, the requesting office may proceed with an allocation of funds through the Federal-aid project process. If the Office of Acquisition Management does not concur, the project will be processed and awarded as described in paragraph 8(a).



4. If an FHWA office identifies a request for a research project funded under Section 5001, TEA-21, and the situation warrants additional guidance or discussion in terms of how the project should be handled, the office shall submit a brief (no more than two pages) summary to the Director, Office of Acquisition Management. He/she will consult with appropriate FHWA personnel to recommend the most efficient and appropriate approach to accomplish the research project (whether congressionally specified or discretionary). Consultations would generally take place among representatives from the Office of Acquisition Management, the Office of Budget and Finance, the Chief Counsel, the applicable program office, and, as appropriate, the cognizant field office that would be used for a particular project/activity. Within 10 days after receiving a request for guidance, the Director, Office of Acquisition Management, will complete all necessary consultations and render a decision regarding the appropriate organizational entity to handle the project.



5. Requesting offices may appeal the decision of the Office of Acquisition Management under paragraphs 8(c) and (d) to the Executive Director.



9. Where can I get additional information? For additional information, contact the Program Office Liaison Division, Office of Acquisition Management, (202) 366-6991.