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Federal Reimbursement

Federal-aid highway funds may be used to reimburse State transportation departments for the use of Subsurface Utility Engineering (SUE). There are no special or earmarked funds for SUE, but regular funds may be used (i.e., funds available for National Highway System, Surface Transportation Program, Interstate Maintenance, and possibly other Federal-aid highway programs).

In accordance with normal Federal-aid procedures, States first incur costs for SUE, then request Federal reimbursement at the normal pro rata share for the project or projects for which it was used. The Federal pro rata share is currently 80% for non-Interstate or 90% for Interstate projects.

The Brooks Act (40 U.S.C. 1101-1104, Public Law 92-582) establishes the policy of the Federal Government that the procurement of architects and engineers be based upon demonstrated competence and qualification. The regulations found in 23 CFR 172 serve as FHWA's implementation of the Brooks Act and provide guidance in the procurement, management, and administration of Federally funded engineering and design-related contracts that lead to a construction project. State contracts with SUE providers are subject to 23 CFR 172 procedures if Federal-aid highway funds are used. Hence, SUE providers must be selected by evaluating and ranking interested firms based on their qualifications to perform the requested work. A fair and reasonable price is then negotiated with the highest ranked firm. This is applicable to SUE because:

  • Title 23 U.S.C., Section 112(b)(2)(A) requires 23 CFR 172 procedures to be used for each contract for program management, construction management, feasibility studies, preliminary engineering, design, engineering, surveying, mapping, or architectural related services with respect to a Federally funded construction project performed by or supervised by a State transportation department, and
  • The FHWA considers SUE to be an engineering process for obtaining accurate and comprehensive information about underground utilities and for using that information in the development (i.e., planning, preliminary engineering, design, etc.) of highway projects.

There are exceptions to this determination. For example, 23 CFR 172 does not apply if:

  • The State pays for SUE with its own funds (i.e., 100% State funds). This is true even if done on a project where Federal-aid highway funds are used for other purposes. However, the costs of consultant service contracts that utilize only State or local funding which were not procured, negotiated, or administered in accordance with applicable Federal laws and regulations would not be eligible to be applied toward the non-Federal share of costs for subsequent phases (e.g., construction) of a FAHP funded project.
  • The SUE contract is with:
    1. an engineering firm working directly for the State, assuming the engineering firm working directly for the State was procured via a QBS selection process and the SUE element was part of the selection criteria or the SUE firm is a different firm under a subcontract to the prime consultant
    2. a design-builder, assuming the selection procedures and award criteria in the procurement of the design-builder was in accordance with 23 U.S.C. 112(b)(3) and 23 CFR 636 Subpart B, or
    3. a construction contractor, assuming the construction contractor is contracting directly with a SUE firm.
  • The State employs the services of a SUE provider by the low-bid method solely for the purpose of marking the approximate locations of underground utilities on the ground and/or exposing underground utilities (i.e., this activity is not considered to be an engineering service). However, if in addition to marking and/or exposing underground utilities, the SUE provider also surveys the locations and provides information to the State for highway planning or design purposes, then the provisions in 23 CFR 172 apply as stated above.
Updated: 02/26/2020
Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000