New FHWA Guidance on Engineering and Design Contracting From ACEC

As you will see in this week’s  Last Word, the Federal Highway Administration has finalized its rewrite of the policy guidance it provides on consultant services, in the form of a FAQ page.

Here is the link to the revised and expanded Q&As:  http://www.fhwa.dot.gov/programadmin/172qa.cfm.

This document will be a primary source of information for State DOTs and local transportation agencies on engineering contracting issues.  The new Q&As are much more detailed than previous iterations, going into great detail on issues such as QBS procedures, contract negotiation practices, indirect cost rates and audits, and conflicts of interest policies. 

FHWA was very open with ACEC throughout the process of rewriting this guidance.  ACEC had multiple opportunities to review and comment on proposed questions and answers and to suggest revisions. 

Generally, we are very pleased with many of the changes that FHWA made that reflect input that we provided.  In particular, ACEC achieved many improvements, including:

• An explicit statement that if a state uses only state funds for design or other pre-construction work, in order to avoid federal requirements, the funds spent on that contract cannot be used as part of the non-federal match for the construction if they fail to comply with federal laws and regulations (e.g. QBS).
• A new section on contract negotiation clarifies the requirements for agencies regarding  “fair and reasonable prices,”  including restrictions on the use of average indirect cost rates, caps on direct salaries, and unilateral reductions in fees.
• The expanded section on audits includes extensive guidance on indirect cost rates, performance and acceptance of cognizant audits, and many other items that will promote adherence to the AASHTO Audit Guide.
• We do have some on-going concerns with the new conflicts of interest policy, which we believe greatly discourages agencies from hiring the same firm to do both design and construction-phase services on the same project.  It is not an outright prohibition, but the language is still troublesome and we will continue to work with FHWA for a better resolution on that issue.

ACEC will be holding some educational webinars to provide more extensive review of this policy guidance, so much more analysis will be forthcoming.

As ACEC Members review the new Q&As, please let us know if you have questions, concerns or comments.  FHWA intends this to be updated on a regular basis, so we expect this will continue to be a collaborative and open process.