U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
202-366-4000


Skip to content U.S. Department of Transportation/Federal Highway AdministrationU.S. Department of Transportation/Federal Highway Administration

Home / Resources / Legislation, Regulations and Guidance / Directives and Memorandum / Orders

FHWA Order 4420.3B

Order
Subject
Advance Acquisition Planning and Small Business Contracting Program
Classification Code Date Office of Primary Interest
4420.3B October 6, 2005 HAAM-1

Par.

  1. What is the purpose of this directive?
  2. Does this directive cancel an existing directive?
  3. What references were used when writing this directive?
  4. What is the background concerning this directive?
  5. What types of actions are covered by this directive?
  6. What are the definitions of terms used in this directive?
  7. Who is responsible for the procurement forecast?
  8. When is acquisition planning required?
  9. What should an Acquisition Plan include?
  10. How is the requirement for an acquisition plan fulfilled?
  11. What approvals and concurrences are required when bundling is not involved?
  12. What approvals and concurrences are required when bundling is involved and can be justified?
  13. What approvals and concurrences are required when bundling is involved but cannot be justified?
  14. Who is responsible for conducting market research?
  15. What are the small business contracting program requirements and options?
  16. What are the Major Procurement Preference Program Goals (MPPPG)?
  17. What is the FHWA responsibility regarding subcontracting plans?
  18. Where can I get additional information?

 

  1. What is the purpose of this directive? This directive issues guidance on the responsibilities and procedures for:

    1. advance planning, review, and approval of proposed acquisitions for goods and services, including construction;

    2. preparation and approval of acquisition plans; and

    3. application of legislated socio-economic programs related to the award of prime- and sub-contracts.

  2. Does this directive cancel an existing directive? Yes. This directive cancels Federal Highway Administration (FHWA) Order 4420.3A, Advance Acquisition Planning and Annual Procurement Plan (APP), dated June 7, 1996.

  3. What references were used when writing this directive?

    1. Federal Acquisition Regulation (FAR), Parts 7, 10, 13, 15, 19, and 52;

    2. Transportation Acquisition Manual (TAM), Chapters 1207 and 1219;

    3. Title 13, Code of Federal Regulations (CFR), Section 124.506(b);

    4. Title 15, U.S. Code (U.S.C.), Section 644(g)(1);

    5. Office of Management and Budget (OMB) Circular A-11, Preparation, Submission and Execution of the Budget, revised July 16, 2004; and

    6. Department of Transportation (DOT) Order 1350.2, Departmental Information Resources Management Manual (DIRMM), revised July 8, 2004.

  4. What is the background concerning this directive?

    1. Prior legislation such as the Federal Acquisition Streamlining Act of 1994 encouraged innovative contracting methods to reduce the administrative burden of acquiring supplies and services. This has led to a practice of consolidating requirements and the wide use of contracting methods such as Indefinite-Delivery, Indefinite-Quantity (IDIQ) type contracts to acquire supplies and services previously obtained through individual contracts. Subsequently, small business owners voiced their concerns to the White House and the Congress, which were corroborated by data from the Department of Commerce and the Small Business Administration (SBA) about lost opportunities due to this practice of consolidating "bundling" projects into requirements that have increasingly grown in size and complexity, and thus beyond the capacity of many small business concerns.

    2. On May 6, 2002, the White House directed the OMB to identify steps for ensuring that Federal agency competition practices facilitate access by small business concerns to the full range of marketplace requirements. The OMB's Office of Federal Procurement Policy subsequently conducted public meetings that served to guide the Congress in legislating changes to the FAR and to the SBA regulation that are designed to provide greater access to Federal acquisitions by small business concerns.

  5. What types of actions are covered by this directive?

    1. This directive applies to all proposed FHWA acquisitions having an estimated cost at or above $100,000 to be acquired through direct contracting by the Office of Acquisition Management (HAAM) and the three Federal Lands Highway Division contracting offices (HFL).

    2. Acquisitions include contracts, delivery orders under General Services Administration Federal Supply Schedule (GSA/FSS) contracts, Government Wide Acquisition Contracts (GWACs), Multiple Award Task Order Contracts (MATOCs), FHWA IDIQ contracts including individual Task Orders thereunder having an estimated cost at or above $100,000, and modifications that add new requirements having an estimated cost at or above $100,000 to existing contracts (except for administrative modifications such as funding or time changes).

    3. For purposes of this directive, acquisitions do not include:

      1. (1) actions executed using the simplified acquisition procedures of the FAR Part 13 ;

      2. (2) grants and cooperative agreements;

      3. (3) intra‑agency agreements with another DOT operating administration in which all work is performed by DOT personnel;

      4. (4) inter-agency agreements with other Federal agencies, except when an inter-agency agreement is used to acquire goods or services (see TAM 1207.103(d)(3));

      5. (5) emergency acquisitions (i.e., when the need for the supplies or services is of such an unusual and compelling urgency that the Federal government would be seriously injured if the goods or services are not immediately acquired); or

      6. (6) Small Business Innovative Research (SBIR) awards(see TAM 1207.103(d)(3)).

  6. What are the definitions of terms used in this directive?

    1. Acquisition Plan (AP) – a detailed strategy outlining the recommended method of procurement, including documentation of the decisions made related to such matters as recommended period of performance, socio-economic program set-asides, market research finding, and whether the requirement constitutes bundling.

    2. Bundling - consolidating two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract that is likely to be unsuitable for award to a small business concern due to:

      1. (1) the diversity, size, or specialized nature of the elements of the performance specified;

      2. (2) the aggregate dollar value of the anticipated award;

      3. (3) the geographical dispersion of the contract performance sites; or

      4. (4) any combination of the factors described in paragraphs 6b(1), 6b(2), and 6b(3) of this definition.

    3. COCO – Chief of contracting office.

    4. FDL – The Procurement Functional Discipline Leader for Federal Lands Highway.

    5. FLH – FHWA Federal Lands Highway.

    6. HAAM – FHWA Office of Acquisition Management.

    7. HCA – Head of the contracting activity (for both HAAM and FLH, this person is the FHWA Executive Director).

    8. Market research – collecting and analyzing information about capabilities within the market to determine the breadth and scope of concerns available to satisfy Federal agency needs.

    9. OSDBU – OST Office of Small and Disadvantaged Business Utilization (S-40).

    10. Procurement forecast – an annual public announcement of planned acquisitions for the forthcoming and future fiscal years, providing an opportunity for small business concerns, including those owned and controlled by socially and economically disadvantaged individuals, to market themselves as prime- or sub-contractors. For further information, see the FHWA procurement forecast.

    11. Program Office – The FHWA organizational element responsible for defining acquisition requirements and providing funding allocations for the acquisitions.

    12. SPE – The DOT Senior Procurement Executive (M-60).

    13. Small Business Administration Procurement Center Representative (SBA/PCR) – an SBA liaison employee stationed at DOT.

    14. Small Business Specialist (SBS) – an FHWA employee in the HAAM and in each of the three FLH acquisition offices that serve as FHWA liaisons with the DOT/OSDBU and the SBA.

  7. Who is responsible for the procurement forecast?

    1. Program offices shall submit to HAAM's Program Office Liaison Division (HAAM-10) by September 1 of each year information on planned competitive acquisitions having an estimated cost at or above $100,000 for the upcoming and future fiscal years. The procurement forecast may be submitted either in hard copy or electronically in the format defined on DOT Form F 4220.12 (DOT Procurement Forecast Form).

    2. Each program office is responsible for updating its procurement forecast as changes occur to reflect subsequently awarded and newly planned acquisitions or deletions.

    3. HAAM is responsible for forwarding the FHWA procurement forecast to the OSDBU for consolidation with the DOT procurement forecast.

  8. When is acquisition planning required?

    1. Acquisition planning is required for all competitive and sole-source acquisitions, including construction, supplies, and services having an estimated cost at or above $100,000 (see TAM 1207.103(d)(1)(i)).

    2. Acquisition planning and timely managerial involvement are key elements in successfully accomplishing FHWA acquisitions and supporting socio-economic programs while meeting its needs in the most effective, economical, and timely manner (see FAR 7.102(b)). Acquisition planning should begin as soon as the need is identified (see FAR 7.104(a)).

    3. No synopsis for a proposed contract action having an estimated cost at or above $100,000 may be released, no solicitations may be issued, nor may any funds be transferred within or outside the DOT until an AP has been completed and approved (see TAM 1207.102(b)).

  9. What should an Acquisition Plan include?

    1. Acquisition Plan should include, as a minimum:

    2. A written summary of the acquisition panel findings and recommendations pertaining to the:

      1. (1) acquisition background (e.g., new requirement or re-procurement of an existing requirement)

      2. (2) recommended method of procurement, (i.e., set-aside for one of the socio-economic programs or full-and-open competition)

      3. (3) recommended type of action, (i.e., contract, grant, or cooperative agreement)

    3. Copies of all supporting documents used in reaching the recommendations (where applicable.

    4. Identification of the acquisition panel members

    5. An executed DOT Form 4250.1 (Small Business Program Review Form)

    6. An executed FHWA Form 1514 or 1514A (Clearance of Requests for Procurement of Services and Equipment) [see FHWA Order 4460.1B] [NOTE: this may not apply to construction]

  10. How is the requirement for an acquisition plan fulfilled? The requirement for acquisition planning may be satisfied in one of four ways:

    1. The DOT procurement forecast may be used for requirements having an estimated cost from $100,000 up to $2,000,000 (see TAM 1207.103(d)(1)(i)).

    2. For requirements from $2,000,000 up to $20,000,000 (and optionally below $2,000,000) an acquisition strategy meeting may be convened in accordance with FAR 7.104 and TAM 1207.103-70. Applicable elements of AP topics specified at FAR 7.105 may be addressed in briefing format, charts, handouts, etc., and a written memorandum should be prepared to summarize the decisions, actions, and conclusions reached. Any documentation used to assist in the acquisition decision-making process shall be made a part of an Acquisition Strategy Meeting Record (ASMR). According to FAR 7.104(a) and TAM 1207.170(b)(1), recommended participation in the meeting should include the following staff:

      1. (1) Technical representative,

      2. (2) Cost/budget representative,

      3. (3) Legal representative,

      4. (4) Competition advocate.

      5. (5) Contracting Officer (CO), and

      6. (6) FHWA Small Business Specialist (SBS).

    3. For all acquisitions having an estimated cost at or above $20,000,000 an AP must be prepared in accordance with FAR 7.105 and coordinated with the SBS and the SBA/PCR when not set-aside for SB.

    4. For capital asset acquisitions at any dollar level, an OMB Exhibit 300 supported by a Capital Asset Plan/Business Case shall be prepared in accordance with OMB Circular A-11;for Information Technology (IT) acquisitions, the DIRMM shall be followed (see FAR 7.103(t) and TAM 1207.103(d)(iii)).

  11. What approvals and concurrences are required when bundling is not involved?

    1. The procurement forecast, ASMR, AP, or Exhibit 300, may be used to support acquisitions as follows when bundling is not involved (see TAM 1207.170(b)(4)).

      1. (1) $100,000 up to $2,000,000 – must have been published in the FHWA procurement forecast, concurred in by the SBS, and approved by the CO.

      2. (2) $2,000,000 up to $20,000,000 – concurred in by all of the above and approved by the COCO.

      3. (3) $20,000,000 and above – concurred in by all above and approved by the HCA.

      4. (4) Exhibit 300 – concurred in by all of the above and approved by the HCA.

    2. A copy of the procurement forecast excerpt, ASMR, AP, or Exhibit 300, shall be placed in each contract file where the documents were used to support an acquisition decision (see TAM 1207.103-70).

    3. A procurement forecast, ASMR, AP, or Exhibit 300, may cover a period of time extending over several years, but should be reviewed annually to assure currency (see TAM 1207.170(a)(2)).

    4. In addition to the above, SBS and SBA/PCR concurrence is required when a requirement, currently being performed by a SB concern, will not be set-aside for a SB (see FAR 19.202-1(e)).

  12. What approvals and concurrences are required when bundling is involved and can be justified? If bundling is involved, the requirement is not set aside for SB, and it can be justified in accordance with FAR 7.107, the decision must be supported by market research and an ASMR, AP, or Exhibit 300 (see paragraph 8 above), and coordinated and approved as follows (according to TAM 1207.104-70):

    1. $100,000 up to $2,000,000 – must have been published in the FHWA procurement forecast and concurred in by the SBS and the SBA/PCR, and approved by the CO. A record of the approvals and concurrences, via DOT Form F 4250.1 (DOT Small Business Program Review Form), shall be forwarded to the OSDBU with a copy to the DOT SPE.

    2. $2,000,000 up to $20,000,000 – concurrence by all of the above, and approved by the COCO. A record of the approvals and concurrences, via DOT Form F 4250.1, shall be forwarded to the OSDBU with a copy to the DOT SPE.

    3. $20,000,000 and above – concurrence by all of the above, and approved by the HCA. A record of the approvals and concurrences, via DOT Form F 4250.1, shall be forwarded to the OSDBU with a copy to the DOT SPE.

  13. What approvals and concurrences are required when bundling is involved but cannot be justified? If bundling is involved, not set aside for SB, and cannot be justified in accordance with FAR 7.107, the decision must be supported by market research and an ASMR or AP prepared in accordance with FAR 7.105, and FAR 7.107, or Exhibit 300 (see paragraph 8 above) and coordinated and approved as follows (according to TAM 1207.104-70):

    1. All requirements having an estimated cost of $100,000 and above must have been published in the FHWA procurement forecast, and concurred-in by the CO, SBS, SBA/PCR, Director, OSDBU, and Deputy Secretary, and approved by the HCA.

    2. Deputy Secretary concurrence applies only to the bundling issue, not the ASMR, AP, or Exhibit 300. A copy of the request for Deputy Secretary approval must be provided to the SPE at the same time it is coordinated with the OSDBU. Deputy Secretary approval of the bundling issue must be obtained prior to HCA approval of the AP.

  14. Who is responsible for conducting market research?

    1. Program offices having the most in-depth knowledge of their requirement are in the best position to determine the breadth and scope of industry and academia credentials for undertaking a requirement, and thus they bear the responsibility for conducting market research.

    2. The information obtained through market research should form the basis for recommending the method of procurement. Available options include set-asides for SB concerns certified under the 8(a) program and the HUBzone program; competition restricted to SB and Service-Disabled, Veteran-Owned Small Business concerns (SDVOSB); and unrestricted competition, or acquisition of commercial off-the-shelf products. Recommendations shall be based on identification of available concerns having the perceived requisite skills and experience, with consideration given to support decisions related to bundling (see FAR 10.001(a)(3)).

    3. Market research can take the following forms:

      1. (1) Contractor's self-marketing effort.

      2. (2) Sources sought announcements.

      3. (3) Pre-proposal Conferences

      4. (4) Professional Associations.

      5. (5) One-on-one meetings with contractors.

      6. (6) Additional suggestions listed in FAR 10.002(b)(2).

    4. Program offices may conduct reasonably open technical discussions (i.e., market research) with potential contractors to determine the extent to which qualified concerns are available and their level of interest in competing for the requirement. However, all must be cognizant of the potential for disclosure of source selection information, and all must adhere to a single agency voice (that of the Contracting Officer) once submission of a procurement request or public announcement of the requirement is made, which is the beginning of the acquisition process (see FAR 15.201(c)).

  15. What are the small business contracting program requirements and options? When preparing a procurement request (PR) for goods or services, program offices shall prepare a DOT Form F 4250.1 to accompany the PR. This form shall be used to record required approvals and concurrences and to recommend a method for procurement to the CO. The procurement options available for recommendation are:

    1. 8(a) program set-aside

      1. (1) $2,500 up to $3,000,000 – sole source (see TAM 1219.803-70 and TAM 1219.811).

      2. (2) Over $3,000,000 – competitive (see FAR 19.805-1(a)(2)).

      3. (3) Alaska Native Corporations and Indian Tribal Concerns are exempt from the $3,000,000 ceiling on sole-source 8(a) awards (see 13 CFR 124.506(b)).

    2. HUBzone set-aside

      1. (1) Rule of two. All requirements having an estimated cost at or above $100,000 must be set-aside for HUBzone when there is reasonable expectation that competitive offers will be obtained from two or more responsible concerns at fair market prices, based on market research findings (see FAR 19.1305(b)).

      2. (2) The concern must be SBA certified (see FAR 19.1303(b)).

      3. (3) When evaluating proposals submitted by HUBzone concerns under full-and-open competition, a 10% price evaluation preference is applicable unless waived by the HUBzone concern. A price evaluation adjustment rule at FAR 19.1307 provides for a price adjustment to be added to competing proposals from other than small business HUBzone concerns for evaluation purposes only where price is not a selection factor, (see FAR 19.1307(a)).

      4. (4) Requirements may be sole-sourced if only one HUBzone is available as determined through market research: limited to $3 Million for the services series or $5 Million for the manufacturing series of the North American Industry Classification System (NAICS) codes (see FAR 19.1306).

    3. SDVOSB set-aside

      1. (1) Set-aside is elective. However, the CO should assure that competitive proposals will be received from two or more responsible concerns at fair market prices (see FAR 19.1405).

      2. (2) May be sole-sourced if only one SDVOSB is available as determined through market research: limited to $3 Million for services or $5 Million for manufacturing NAICS codes (see FAR 19.1406).

      3. (3) SDVOSB concerns may self-certify their status (see FAR 52.219-1).

    4. Small business set-asides

      1. (1) All requirements at $100,000 or less are automatically set-aside for competition among SB concerns (see FAR 13.003(b)).

      2. (2) Rule of Two. All requirements having an estimated cost at or above $100,000 must be set-aside for SB when there is reasonable expectation that competitive offers will be obtained from two or more responsible concerns at fair market prices based on market research findings (see FAR 19.502-2(b)).

      3. (3) Exception: Public Law 100-656 prohibits SB set-aside for construction (NAICS codes 236xxx, 237xxx, and 238xxx) unless SB concerns do not capture a minimum of 40 percent of the available business under full and open competition; the 40 percent achievement for DOT is monitored by M-60 (see FAR 19.10).

    5. Small Disadvantaged Business Concerns. No procurement set-aside authority.

    6. Small Women-owned Business Concerns. No procurement set-aside authority.

  16. What are the Major Procurement Preference Program Goals (MPPPG)? The HAAM is responsible for establishing, in concert with the DOT OSDBU, annual procurement goals for awards to SB, Small Disadvantaged Business (SDB), Women-Owned Small Business (WOSB), HUBzone, and SDVOSB small business concerns; serving as FHWA advocacy for the MPPPG; and providing the annual MPPPG and associated reporting to the DOT OSDBU.

  17. What is the FHWA responsibility regarding subcontracting plans?

    1. Prime- and sub-contractor proposals must include subcontracting plans from "other than small business concerns" whenever the proposed price exceeds $500,000 for services/supplies or $1,000,000 for construction, and subcontracting is proposed (see FAR 19.702).

    2. The CO, COTR, and SBS are responsible for evaluating the plan and rendering a decision as to its reasonableness (see FAR 19.705 and TAM 1219.201(e)(6)).

    3. Subcontracting plans (when required) must include reasonable goals for SB, SDB, WOSB, and SDVOSB. All goals shall reflect a maximum opportunity for participation by small business concerns in each goal category, given the nature and location of the work. Legislated subcontracting goals of 5 percent SDB, 5 percent SWBE, and 3 percent SDVOSB should be used as guidance in establishing reasonable goals. (see 15 U.S.C. 644(g)(1))

    4. A copy of each subcontracting plan (or contractor statement that no subcontracts are to be awarded) must be furnished to the SBS for forwarding to the SBA/PCR and OSDBU for review prior to completion of negotiations or issuance of a notice to proceed on sealed bid awards. Contractor statements that no subcontracts are to be awarded must be approved at a level above the CO.

    5. contracting plans from the three Federal Lands Highway Division contracting offices shall be routed to the FDL in the Headquarters FLH office and subsequently forwarded to the HAAM for delivery to the SBA/PCR and OSDBU.

    6. SBA/PCR and OSDBU shall have 5 days within which to respond to the CO. Failure to respond within the 5 days shall not cause delay the contract award (see TAM 1219.705-5 and -6).

    7. A copy of each approved subcontracting plan shall be attached to and made a part of the applicable contract document.

  18. Where can I get additional information? For additional information, contact HAAM-10 at 202-366-4205.

 

Signature of Frederick G. Wright, Jr.
Frederick G. Wright, Jr.
Executive Director

Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000