FHWA Policy Memorandums - Office of Engineering

ACTION: ISTEA of 1991 - Construction and Maintenance Requirements

Date: Feb 13, 1992
Associate Administrator for Program Development HNG-22
Regional Federal Highway Administrators
Federal Lands Highway Program Administrator

The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) amended a number of contract administration and construction and maintenance requirements contained in Title 23 and 23 CFR Part 635--Construction and Maintenance. This memorandum will discuss each of these changes and provide interim operating guidance pending the issuance of regulatory revisions.


Section 1006(g)(2) of the ISTEA amended 23 U.S.C. 113(a) to make Davis-Bacon wage rates applicable to, "work performed on highway projects on the Federal-aid highways." The term "Federal-aid highways" is defined (revised 23 U.S.C. 101(a)) as meaning highways eligible for assistance under this chapter (Title 23, Chapter 1) other than highways classified as local roads or rural minor collectors. Davis-Bacon prevailing rates of wage are, therefore, now applicable to all Federal-aid highway construction projects (NHS and non-NHS) except those located on highways classified as local roads or rural minor collectors.


Section 1018 of the ISTEA amended 23 U.S.C. 106(c). It now provides that items included in all estimates for construction engineering (CE) for a State for a fiscal year shall not exceed, in the aggregate, 15 percent of the total estimated costs of all projects financed within the boundaries of the State with Federal-aid highway funds in such fiscal year, after excluding from the total estimated costs, the estimated costs of right-of-way, preliminary engineering, and CE.

Also amended was 23 U.S.C. 121(d) to reference the requirements of Section 106(c) as applicable limitations with respect to payment for CE. This reference means that reimbursement for CE costs will be limited to the amount of CE approved on the project under Section 106(c).

The new provision applies to all Federal-aid highway construction (NHS and non-NHS) projects and project modifications approved on or after December 18, 1991. Projects for which a final voucher has already been approved should not be reopened to claim additional CE costs. The fiscal year limitation may be applied on a State or Federal fiscal year.


Section 1019 of the ISTEA amended 23 U.S.C. 114(b)(2) by inserting "after July 1, 1991," after "materials produced." This action clarifies congressional intent that language in the Department of Justice Appropriation Acts relative to the incorporation of convict produced materials on Federal-aid highway projects does not override the requirements placed on such use by the Surface Transportation and Uniform Relocation Assistance Act of 1987. Guidance on this subject previously issued by William A. Weseman's memorandums dated September 21, 1989, and February 13, 1990, are superseded by Section 1019.

The requirements now applicable relative to incorporation of convict produced material on Federal-aid projects are contained both in 23 U.S.C. 114(b) and 23 CFR 635.417. These requirements mandate that materials produced after July 1, 1991, by convict labor are prohibited from being incorporated in a Federal-aid highway construction project (NHS or non-NHS) unless (1) produced by convicts who are on parole, supervised release, or probation or (2) if produced by convicts in a qualified prison facility; the quantity is limited to the amount produced during the 12-month period ending July 1, 1987.


Sections 1041(a) and 1048(a) of the ISTEA amended and clarified the Buy America provisions of Section 165(a) of the Surface Transportation Assistance Act of 1982 (STAA) and 23 CFR 635.410. Iron has been added to the materials now subject to the Buy America requirements, and the action of applying a coating to a covered material (i.e., steel and iron) is now deemed a manufacturing process subject to Buy America. Coating includes epoxy coating, galvanizing, painting, and any other coating that protects or enhances the value of a material subject to requirements of Buy America. Buy America requirements of 23 CFR 635.410 are applicable to all Federal-aid highway construction projects (NHS and non-NHS).

Section 1048(b) of the ISTEA amended Section 165(a) of the STAA to require that all waivers granted in fiscal years 1992 and 1993 are to be reported to Congress. Therefore, all Buy America waivers granted by Regional Administrators during the period covered need to be reported to the Washington Headquarters, HNG-22, at the time the waiver is granted. Basic information to be provided on each waiver should include the justification and the dollar amount of the items for which the waiver is granted.


Section 1016(f)(2)(C) of the ISTEA revised 23 U.S.C. 117(b) to provide that "The Secretary may accept projects based on inspections of a type and frequency necessary to ensure the projects are completed in accordance with appropriate standards." This revision eliminated the requirement that a final inspection of each CA project be conducted upon its completion. Effective immediately, the provisions of paragraphs 5(d)(1)(a) and 5(d)(1)(c) of FAPG G6042.08 (former FHPM 6-4-2-8) are revised to delete references to exemptions of CA and SRP projects from the approved procedures for determining the type of inspections which may be used for construction projects. A draft revision to page 4 of the FAPG is attached.

Original signed by:
Anthony R. Kane



  1. Final Inspection

      (1) A review to determine the extent to which the SHA has exercised its control to assure that the project has been completed in reasonably close conformance with the plans, specifications, and authorized changes.

        (a) For all Federal-aid construction projects which require project review and oversight, a final inspection may be accomplished by any of the following methods:

        1. an on-site review conducted at or near the completion of work,

        2. a review of project records which are provided by the State at the completion of work, or

        3. if previous PR/PE or inspection-in-depth reviews of the SHA's internal control programs for inspection of completed projects have indicated the SHA has satisfactory procedures, the final inspection may be based on the finding that the SHA is properly exercising its internal controls and no additional review will be required.

        (b) When similar types of work are included in an areawide project, an inspection of a sample of contract work locations may fulfill the requirement for a final inspection.

      (2) The Division Administrator should develop and include as a part of the annual CMP a process to determine the final inspection requirements for construction projects. This determination should consider the type, size and complexity of the project, the degree to which the project has been previously inspected by FHWA personnel, the adequacy of the SHA's internal controls, and the degree of independent inspections and evaluations.

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