Construction

U.S. Department of Transportation Federal Highway Administration

MEMORANDUM

When Section 148 of the Surface Transportation Assistance Act of 1982 was repealed by Congress in 1983, we reinstated our previous policy that allowed the use of convict-produced materials on Federal-aid projects. Since then we have learned that there has been some wide interpretation of the regulation especially concerning the procurement of signing materials.

Signing materials obtained from prison industries will be subject to the same requirements concerning approval for Federal-aid participation as are imposed upon materials derived from other sources. Signing materials manufactured or produced by convict labor in penal institutions: (1) which are purchased by highway construction contractors; (2) which are furnished by the State highway departments to highway construction contractors; and (3) which are used by the State highway departments in force account construction, will be given no preferential treatment.

The following requirements are the principal Federal laws and regulations applicable to the procurement of signing material for use in Federal-aid highway construction projects regardless of whether the materials are manufactured or produced in penal institutions or by private industry.

1. Compliance with State and applicable Federal laws, (see Section 114(a) of 23 U.S.C.);
2. Regulations for competitive bidding, (see Section 112 of 23 U.S.C., 23 CFR 635.107(g));
3. Requirements for contractors to furnish material, (see 23 CFR 635.407; and
4. Prohibition against use of State restrictions upon out-of-State material (see 23 CFR 635.409).

Under our present policy, signing material may be obtained basically by two methods. The preferred method is through normal contracting procedures which requires the contractor to furnish all materials to be incorporated in the work and permits the contractor to select the source (private or public) from which the materials are to be obtained. Prison sign shops are prohibited from bidding on projects directly but may act as a material supplier to contractors bidding on the project in which case the prison sign shop is not considered a subcontractor.

The second method provides for the Division Administrator to approve an exception allowing for State-furnished material (or materials from a source designated by the State) if he determines it is in the public interest based on documentation provided by the State. When an exception is approved, the State-furnished materials are to be acquired through competitive bidding unless some other method of acquisition is approved by the Division Administrator. Other methods can include production in a prison or State highway agency sign shop.

The Division Administrators should review their procedures to ensure that a public interest determination is being made each time the State proposes to use State-furnished materials. If the State is under CA, the State's procedures should be reviewed to ensure that the public interest finding is documented for each project.

/s/ original signed by
Rex C. Leathers