This section of the TEA-21 Act was canceled on July 27, 2004
TEA-21 - Transportation Equity Act for the 21st Century
Moving Americans into the 21st Century
|U.S. Department of Transportation|
Federal Highway Administration
ACTION: FLH Policy on Point of Obligation under the TEA-21
|November 20, 1998|
Acting Federal Lands Highway Program Administrator
Federal Lands Highway Office
Federal Lands Highway Division Engineers
The Transportation Equity Act for the 21st Century (TEA-21) changed the definition for point of obligation for Federal Lands Highway Program (FLHP) projects (TEA-21, Title 1, Subtitle A, Section 1115 amended 23 U.S.C. 203) by adding, Notwithstanding any other provision of law, the authorization by the Secretary of engineering and related work for a Federal lands highways program project, or the approval by the Secretary of plans, specifications, and estimates for construction of a Federal lands highways program project, shall be deemed to constitute a contractual obligation of the Federal Government to pay the Federal share of the cost of the project. This new requirement requires a change in the way we document obligation of funds and also requires a change in when funds must be available for FLHP projects. It partially provides a change FLH has been seeking for several years; however, this change is narrow and offers limited flexibility and even some complications to the way we must manage our obligations. This document is to outline policy guidance on how this section will be administered in the FLHP.
The FLH and its partner agencies, being Federal agencies, have traditionally used the award of contract, signing of agreements, and expenditure of funds for salaries and benefits as the point of obligation in accordance with standard accounting practices. In contrast, the Federal-aid program procedures have allowed the Government to obligate funds on the basis of an authorization of the State departments of transportation to proceed with project activities. This same authority would give FLH more flexibility in managing the FLHP. The TEA-21 has accommodated this to a limited degree.
Points of Interpretation:
The following four points are the issues that outline the flexibility gained and the complications caused by the limited requirement to obligate funds in advance of award:
To provide consistency in our obligation process, yet provide the maximum flexibility to work with the numerous types of projects and funds that we have, the following is FLHs policy on point of obligation as amended by Section 1115 of the TEA-21.
Funds for engineering services and related agreements shall be obligated upon the approval by the Division Engineer of the Statement of Work to proceed to procurement. Funds obligated for these activities shall equal the Governments estimate of cost and may include a contingency not to exceed 5 percent, but in no way shall the obligation authorized exceed the funds programed for the activity.
Funds for construction projects shall be obligated at the time of PS&E approval for advancement to construction. It shall be FLHs policy not to approve a PS&E until such time as all legal requirements (the National Environmental Policy Act, right-of-way utilities, permits, etc.) to construct the project are in place. Exceptions to this policy may be granted by the Division Engineer only if the incomplete requirements are: 1) not specifically required until contract award, or 2) not specifically required until construction commences in which case the Division Engineer shall have reasonable assurance that the incomplete requirement will be completed in time to avoid impact to the contract execution. In addition, for multi-funded projects, the Division Engineer shall be assured that in addition to the necessary FLHP funds, all non-FLHP funds are in place before authorization or approval to proceed. Upon approval of the PS&E, funds shall be obligated up to an amount equal to the engineers estimate plus any contract incentives; plus the obligation may include a contingency, not to exceed 5 percent, but in no case shall the obligation authorized exceed the funds programed for the project being authorized.
For projects with high uncertainty of bid results, the Division Engineer may approve a contingency in excess of the 5 percent limit noted above. If this is granted, the files shall document the reason for the additional contingency.
The attached FLH form entitled, Letter of Authorization and/or Approval, or similar document, executed by the Division Engineer shall constitute the obligating document for FLHP projects. This form shall clearly state the dollar amount and source of funds to be obligated, the type of work approved for procurement, anticipated award date of the contract, agreement or task order and any exceptions that must be completed before advertisement or award, or any limiting conditions that must be included in the contract.
Continued obligation of funds in excess of the contract/agreement amount shall not be permitted. At the time of award decision, obligations shall be adjusted, using the form Letter of Approval or Authorization to match the award. If funds authorized are less than the award amount, additional funds must be obligated prior to award. If the authorized amount exceeds the award amount, obligations shall be reduced to match the award amount. In no case shall excess obligations be allowed to remain more than 7 workdays from the date of award. When this adjustment is made, the Summary of Authorization should also be updated to reflect conditions approved to proceed to construction.
For non-FLHP projects administered by the FLH Divisions, funds shall be obligated at the point of final signature on agreements or the contracting officers award of Task Orders and contracts. This shall apply to all work that is not predominantly funded through the FLHP such as ERFO, DAR, other agency projects, etc. For these projects, the procurement document shall constitute the obligating document and the ?Letter of Authorization and/or Approval will not be required.
Funds for in-house services such as salary and benefits shall be obligated at the point of expenditure following established obligating procedures.
The authority to carryout this policy is delegated to the FLH Division Engineers and may be redelegated.
This policy shall become effective on the date of signature.
original signed by
Allen W. Burden
Attachment - pointobl.pdf (16KB)