 U.S. Department of Transportation Federal Highway Administration |
MEMORANDUM |
| Subject: | Montana/Canadian Contract Issues | Date: | February 8, 1999 |
| From: | Program Manager, Infrastructure | Refer To: | HNG-22 |
| To: | Ms. Janice W. Brown Division Administrator Helena, Montana |
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The purpose of this memorandum is to further clarify our February 5, 1999 memorandum to Senator Baucus concerning the recently introduced draft legislative proposal, which would restrict Canadian contractors from bidding on Federal aid highway projects in Montana.
Throughout the history of the Federal aid highway program, it has been the Federal Highway Administration's (FHWA) position that Federal aid highway funds cannot be made available for construction projects which incorporate local preferences. Any provision which restricts competition by either: 1) providing a preference for local (in state) contractors; or 2) by refusing to consider a bid from a non resident contractor is in conflict with FHWA regulations.
The FHWA's regulations are based on the competitive bidding provision in our statute. This statute originated in the 1954 Federal aid Highway Act. It has been modified and refined over the years, to develop a clear standard for competition. Specifically the regulations state:
23 CFR 635.110(b)
No procedure or requirement for bonding, insurance, prequalification, qualification, or licensing of contractors shall be approved which, in the judgment of the Division Administrator, may operate to restrict competition, to prevent submission of a bid by, or to prohibit the consideration of a bid submitted by, any responsible contractor, whether resident or nonresident of the State wherein the work is to be performed.
23 CFR 635.112(d)
Nondiscriminatory bidding procedures shall be afforded to all qualified bidders regardless of National, State or local boundaries and without regard to race, color, religion, sex, national origin, age, or handicap.
23 CFR 117
No procedures or requirement shall be imposed by any State which will operate to discriminate against the employment of labor from any other State, possession or territory of the United States, in the construction of a Federal aid project.
The selection of labor to be employed by the contractor on any Federal aid project shall be by the contractor without regard to race, color, religion, sex, national origin, age or handicap and in accordance with 23 CFR part 230, 41 CFR part 60 and Exec. Order No. 11246 (Sept. 24, 1965), 3 CFR 339 (1964 1965), as amended.
(* underlining added for emphasis)
In addition, a U.S. Department of Transportation (US DOT) wide regulation, 49 CFR 30, "Denial of Public Works Contracts to Suppliers of Goods and Service of Countries that Deny Procurement Market Access to U.S. Contractors" applies to all US DOT funded contracts, including FHWA. In essence, this regulation states that only the U.S. Trade Representative has the authority to designate foreign trade policies for the United States. Currently, there are no foreign countries which are listed for discriminating against U.S. firms.
Since 1954, FHWA has rarely deviated from the position that State, local or territorial preference provisions may not be applied in Federal aid projects. The only local preferences that FHWA has allowed have been based upon explicit statutory authority. These are Indian preferences and Appalachian resident preferences.
In fact, we have consistently reiterated our position on hiring preferences to various Federal aid recipients including: New York City, New York (1985 apartheid issues); the City of Oakland, California (1993); the District of Columbia (1994) and the Alameda Corridor Transportation Agency, California (1998).
Should the draft legislative proposal be enacted in its present form, and such language be included in future Federal-aid contract provisions, we would consider Montana to be in violation of the above referenced law and regulations, including those which prohibit discrimination based upon national origin or national boundary location. This would give the FHWA no option but to suspend Montana's authority to obligate Federal-aid funds, until such time as compliance with Title 23 has been reestablished. (see 23 CFR 1.36, as stated below)
23 CFR 1.36
If the Administrator determines that a State has violated or failed to comply with the Federal laws or the regulations in this part with respect to a project, he may withhold payment to the State of Federal funds on account of such project, withhold approval of further projects in the State, and take such other action that he deems appropriate under the circumstances, until compliance or remedial action has been accomplished by the State to the satisfaction of the Administrator.
/s/ Vincent F. Schimmoller