No. 43490 (Repeal and Reenact): Rule R907-66. Incorporation and Use of Federal Acquisition Regulations on Federal-Aid and State-Financed Transportation Projects

(Repeal and Reenact)

DAR File No.: 43490
Filed: 01/25/2019 03:37:32 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the change to this rule is to alleviate concerns raised by the Department of Transportation's (Department) internal audit for contracting professional services. This rule requires amendments for federal planning and research funding to be in compliance with contracting professional services according to State Procurement code and administrative rules, while also allowing the use of qualifications based selection for planning and research consultant contracts. The Department's Consultant Services Division needs changes in this rule due to federal code references being out of date and needing clarification and interpretations of the Utah Code to align purchasing requirements with the Department procurement practices.

Summary of the rule or change:

This rule is being repealed and reenacted. Several subsections are reordered and renumbered. The catchline of this rule changes from "Incorporation and Use of Federal Acquisition Regulations on Federal-Aid and State-Financed Transportation Projects" to "Procurement of Consultant Services, Procedures and Contract Administration". The substance of the reenacted rule replaces similar provisions of administrative rules under Title R33 and applies only to the Department to authorize procuring design professional, engineering, and engineering-related services. The reenacted rule accommodates how the Department functions better than similar provisions of Title R33 does. This proposed change to Rule R907-66 includes references to the Department's Consultant Services Manual of Instruction, project-specific solicitations, and other guidance from the Consultant Services Division. Title R33 (Division of Purchasing and General Services) is generic and intended to apply to all state agencies and political subdivisions and does not work well with many of the Department's specialized procurement functions and processes. Title R33 also does not incorporate the federal regulations the Department must follow on projects for which federal aid funding requirements apply. This rule reenactment changes the purpose of this rule from adopting federal cost principles to qualifications-based consultant selection for design, engineering and engineering-related services and moves the cost principle adoption to subsequent sections and updates federal cost principle references to 2 CFR 200 Subpart E Grants and Agreements, Cost Principles; and adds several definitions, including a definition that incorporates the federal definition of engineering and design related services, which requires the services to result in a construction project and the state definition of design professional services, which do not require the services result in a construction project. The Department will perform qualifications-based selection for services that fall under either definition following both state and federal qualifications-based selection processes. A section is added to define what services fall within the state's definition of other professional services as may be necessary to the planning, progress, and completion of any engineering services. This definition adds grant writing, asset management, transportation research, prototype development, technology transfer, project-related public involvement, right of way acquisition services, or other services as deemed necessary by the Department to coverage of this rule. Revises the Small Purchase Cap Section: This section aligns the Department's small purchase cap with the federal simplified acquisition threshold, which is set at $250,000 by federal regulation. Sections are added to the Small Purchase Cap regarding the Department establishment of pools of qualified consultants. A deadline is added to the requirement for consultants to submit updated Financial Screening Applications.

Statutory or constitutional authorization for this rule:

• Subsection 63G-6a-106(3)(a)
• Subsection 72-1-201(1)(h)

This rule or change incorporates by reference the following material:

• Adds 23 CFR 1.33 Conflicts of Interest, published by Office of the Federal Register National Archives and Records Administration, 04/01/2011
• Adds 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, published by Office of the Federal Register National Archives and Records Administration, 12/26/2013
• Adds 23 CFR 172 Administration of Engineering and Design Related Service Contracts, published by Office of the Federal Register National Archives and Records Administration, 04/01/2010
• Adds 23 CFR 1 11 Engineering Services, published by Office of the Federal Register National Archives and Records Administration, 11/23/2001

Anticipated cost or savings to:

the state budget:

The Department does not anticipate this proposed repeal and reenactment will have any tangible, estimable, or material fiscal impact on the state's budget because it only changes the Department's procedure for procuring professional design, engineering, and related services.

local governments:

The Department does not anticipate any local government in Utah will experience a material fiscal impact resulting from this proposed repeal and reenactment because this rule only applies to the Department and firms from which it procures services.

small businesses:

This proposed repeal and reenactment does not require anything of third party contractors, small or non-small, that might negatively impact their budgets or relieve them of any responsibilities that might lead to savings to their budgets because it only changes the Department's procedure for procuring professional design, engineering, and related services.

persons other than small businesses, businesses, or local governmental entities:

The Department does not anticipate this proposed repeal and reenactment will lead to any fiscal impact to persons other than businesses and local governments because it does not require anything additional from the public or business in general or relieve them of any responsibilities.

Compliance costs for affected persons:

The Department does not anticipate there will be any compliance costs for persons affected by this repeal and reenactment of Rule R907-66 because it only changes the Department's procedure for procuring professional design, engineering, and related services.

Comments by the department head on the fiscal impact the rule may have on businesses:

This repeal and reenactment of Rule R907-66 will not cause any fiscal impact to businesses.

Carlos Braceras, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Transportation
Administration
CALVIN L RAMPTON COMPLEX
4501 S 2700 W
SALT LAKE CITY, UT 84119-5998

Direct questions regarding this rule to:

• Christine Newman at the above address, by phone at 801-965-4026, by FAX at 801-965-4338, or by Internet E-mail at [e-mail]
• James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at [e-mail]
• Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at [e-mail]
• Josh Dangel at the above address, by phone at , by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/18/2019

This rule may become effective on:

03/25/2019

Authorized by:

Carlos Braceras, Executive Director

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$0

$0

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$0

$0

Net Fiscal Benefits:

$0

$0

$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non-Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Small and Non-Small Businesses

1) The Utah Department of Transportation (UDOT) does not anticipate any industries or businesses in Utah will experience a material fiscal impact resulting from this proposed repeal and reenactment. The reenacted rule establishes UDOT's procedures for procuring services that fall within the state's definition of "other professional services as may be necessary to the planning, progress, and completion of any engineering services" to include but not be limited to grant writing, asset management, transportation research, prototype development, technology transfer, project-related public involvement, right of way acquisition services, or other services as deemed necessary by UDOT.

2) UDOT does not anticipate any local government in Utah will experience a material fiscal impact resulting from this proposed repeal and reenactment.

3) Rule R907-66, regulates UDOT's procedure for procuring professional design, engineering and related services.

4) This proposed repeal and reenactment does not require anything of third party contractors that might negatively impact their budgets or relieve third-party contractors of any responsibilities that might lead to savings to their budgets.

5) UDOT does not anticipate this proposed repeal and reenactment will lead to any fiscal impact to persons other than businesses and local governments because it does not require anything additional from the public or business in general or relieve them of any responsibilities.

6) UDOT does not anticipate this proposed repeal and reenactment will have any tangible, estimable, or material fiscal impact on the state's budget because the changes to UDOT's procedure for procuring professional design, engineering, and related services.

7) Carlos Braceras, executive director of the Department, has reviewed and approved this fiscal analysis.

 

 

R907. Transportation, Administration.

[R907-66. Incorporation and Use of Federal Acquisition Regulations on Federal-Aid and State-Financed Transportation Projects.

R907-66-1. Reason for Incorporation - Federal-Aid Projects and State Projects.

(1) 23 U.S.C. 112 requires States to use the relevant parts of the Federal Acquisition Regulations (FAR), contained in 48 CFR Chapter 1 to calculate appropriate contract costs in all Federal-Aid transportation projects. Previously, federal law allowed States to develop their own cost principles and procedures in Federal-Aid projects.

(2) Consequently, the Department adopts and incorporates 48 CFR Chapter 1 Parts 1, 2, 30, 31, 32, 36 and 42 for use in Federal-Aid transportation projects.

(3) Because many transportation projects that the Department administers receive federal aid, the Department believes it is generally most efficient to also use FAR when calculating contract cost principles and procedures in transportation projects financed solely with state funds. Therefore, the Department also adopts and incorporates 48 CFR Chapter 1 Parts 1, 2, 30, 31, 32, 36 and 42 for use in most state-financed transportation projects.

 

R907-66-2. Financial Screening.

(1) To verify that the calculated overhead and hourly billing rates comply with FAR, UDOT conducts an initial financial screening and approval of consultants desiring to submit a Statement of Qualification (SOQ) for architecture and engineering service contracts.

(2) Consultants shall update their financial screening information by submitting a new completed financial screening application and related information to the Consultant Services Division. The consultant shall file the updated applications annually, on the anniversary date of the initial filing.

 

R907-66-3. Contract Negotiations.

(1) UDOT negotiates consultant contracts with the firm it considers most qualified to provide such services, using guidelines developed by the Consultant Services Division. UDOT prepares independent estimates of the value of such services for use in negotiations.

(2) Negotiations follow state and federal procurement procedures and are based on compensation that UDOT considers fair and reasonable. Negotiations will end when UDOT decides that it cannot agree on terms with the first most qualified firm. UDOT will then begin negotiations with the next most qualified firm. This process continues until either mutually agreeable terms are negotiated or UDOT chooses to begin the selection process again to identify other firms qualified to provide such services.

(3) The guidelines for both selection and negotiations are public information and can be obtained by contacting the Consultant Services Division.

 

R907-66-4. Award of Contracts.

UDOT awards the contract to the best qualified consultant with which it can negotiate a fair and reasonable cost as required by state rules and FAR and in accordance with UDOT selection procedures and guidelines.

 

R907-66-5. Small Purchase Cap.

To be consistent between federal-aid projects and state-financed projects, UDOT adopts the federal small purchase cap or simplified acquisition threshold established in 48 CFR 2.101, which is currently $150,000.

 

R907-66-6. Execution of Contracts.

UDOT considers no contract effective until funding has been approved and all signature lines have been filled in with the appropriate officer's signature.]

R907-66. Procurement of Consultant Services - Procedures and Contract Administration.

R907-66-1. Authority and Purpose.

(1) Authority. The Department of Transportation (the "Department") makes this rule pursuant to authority granted by Utah Code Sections 63G-6a-106(3)(a) and 72-1-201(1)(h).

(2) Purpose. The Department solicits for and contracts with consultants to perform design professional, engineering, and engineering-related services.

(a) This Rule, R907-66, establishes procedures for procuring services of design, engineering and engineering-related professionals, identified herein as consultants, and administering the attendant contracts utilizing Federal-aid highway program funding or Utah state funding.

(b) For detailed guidance beyond federal and state codes, federal regulations, and this rule, the Department's Consultant Services Division maintains the Consultant Services Manual of Instruction, which includes procedures and guidelines for preparing and publishing solicitations such as requests for qualifications that have project-specific requirements.

 

R907-66-2. Definitions.

For purposes of this rule, R907-66, the following definitions apply:

(1) "Brooks Act" means a commonly used term for the Federal Property and Administrative Services Act of 1949 (Public Law 92--582, 86 Stat. 1278 (1972) and 40 U.S.C. Chapter 11, Section 1101-1104.

(2) "Competitive negotiation" means any form of negotiation that utilizes qualifications-based procedures complying with the Brooks Act.

(3) "Consultant" means an expert the Department contracts with to perform professional services as may be necessary to the planning, progress, and completion of any design, engineering, and engineering-related service.

(4) "Desk review" means a process that includes a limited-scope examination of a Consultant's original source documentation and communication to provide reasonable assurance that costs presented are not materially misstated and comply with FAR and 2 CFR Part 200.

(5) "The division" means the Consultant Services Division of the Department of Transportation.

(6) "Engineering," "the practice of engineering," and "professional engineering" mean the same as the terms are defined in Utah Code Section 58-22-102(9)(a).

(7) "FAR" means Federal Acquisition Regulations, Title 48, Code of Federal Regulations.

(8) "Federal-aid highway funds" means funds authorized by Congress to assist the Department in providing for construction, reconstruction, and improvement of highways and bridges on eligible Federal-Aid highway routes and for other special purpose programs and projects.

(9) "Other Professional Services" means grant writing, asset management, transportation research, prototype development, technology transfer, project-related public involvement, right of way acquisition services, or other services as deemed necessary by the executive director or designee.

(10) "Qualifications-based selection" or "QBS" means that procurement process 40 U.S.C. Sections 1101 -- 1104 (Brooks Act), as a process for public agencies to use for architectural, engineering, and related professional services for public construction projects and Utah Code 63G-6a Part 15 for procurement of design professional services.

(11) "Risk Assessment" means a process that includes identifying and analyzing potential internal control deficiencies and evaluation of initial evidence for indications of noncompliance with FAR and 2 CFR Part 200 and making judgments on the tolerability of the risk of accepting the Consultant's indirect cost rate(s) as presented without further action.

 

R907-66-3. Qualifications-based Selection of Consultants for Design, Engineering and Engineering-related Services.

(1) The Department will perform qualifications-based selection procedures, including competitive negotiations to procure, manage, and administer contracts with consultants and other professional services.

 

R907-66-4. Incorporation by Reference of Applicable Federal Law.

To receive grants of federal-aid highway funds the Department must conform to applicable federal law. Therefore, the Department incorporates by reference the following federal regulations:

(1) 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards for both federal and state funded projects. 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

(2) 23 CFR 1.11, Engineering Services. 23 CFR 1.11 Engineering Services

(3) 23 CFR 1.33, Conflicts of Interest. 23 CFR 1.33 Conflicts of Interest

(4) 23 CFR 172, Procurement, Management, and Administration of Engineering and Design Related Service Contracts. Procurement, Management, and Administration of Engineering and Design Related Services

 

R907-66-5. Small Purchase Cap .

(1) Utah Code Section 63G-6a-506(2) grants the Department authority to make rules governing small purchases of any procurement item.

(2) When procuring services of consultants, the Division will follow the simplified acquisition threshold established by 48 CFR 2.101 as the small purchase maximum or small purchase cap for individual procurement of consultant services.

(3) The Division will establish pools of prequalified consultants or other professional service providers for various work disciplines for consultant selection to perform services with an estimated value less than the Small Purchase Cap following the Utah Procurement Code Section 63G-6a-507 Approved Vendor List Procurement Process.

(4) The Department will publish detailed procedures the Consultant Services Division will follow to establish pre-qualified consultant pools in the Consultant Services Manual of Instruction, Pool Solicitation or other Solicitations such as Requests for Qualifications.

 

R907-66-6. Selection of Consultants for Services with Estimated Values in Excess of the Small Purchase Cap.

The Department will select consultants for contracts with a value in excess of the small purchase cap set forth in R907-66-5 in accordance with 23 CFR Part 172, Utah Procurement Code 63G-6a Part 15 Design Professional Services, the Consultant Services Manual of Instruction, and the specific Solicitation such as the Request for Qualifications.

 

R907-66-7. Consultant Financial Screening and Auditing.

(1) To provide reasonable assurance that the Consultant's presented Indirect Cost Rate(s), hourly billing rates, and direct costs comply with the FAR and 2 CFR Part 200, Subpart E, Cost Principles, the Department will conduct risk assessments, desk reviews, and audits as necessary for consultants seeking to perform design professional, engineering, or engineering-related services for the Department.

(2) Consultants submit their firm's Financial Screening Application (including all required supporting documents) within 90 days of their most recent fiscal year-end or 60 days prior to the anniversary date of their previous financial screening application approval, whichever occurs first.

(3) The Department Office of Internal Audit may conduct an audit to determine costs are allowable and in compliance with the requirements of 2 CFR Part 200.

 

R907-66-8. Competitive Contract Negotiations.

(1) The Department will conduct competitive negotiations for contracts with the consultant firm it considers most qualified to provide services necessary to complete a project using guidelines developed by the Division. The Department will prepare independent estimates of the value of such services for use in negotiations.

(2) Negotiations follow state and federal procurement procedures and are based on compensation that the Department considers fair and reasonable. Negotiations will end if the Department decides that it cannot agree on terms with the firm it considers most qualified. The Division will then begin negotiations with the firm it determines to be next most qualified firm. This process continues until either mutually agreeable terms are agreed to or the Division chooses to begin the selection process again to identify other firms qualified to provide such services.

(3) The guidelines for both consultant selection and negotiations are public information and may be found within the Consultant Services Manual of Instruction, the project-specific solicitation or request for qualifications, and other guidelines established by the Division and published on the Department's Internet web site.

 

R907-66-9. Award of Contracts.

The Division will award a contract to the best qualified, responsive and responsible consultant with which it can negotiate a fair and reasonable cost as required by the Utah Procurement Code and 23 CFR Part 172, and in accordance with the Department's Consultant Services Manual of Instruction and other guidelines established by the Consultant Services Division.

 

R907-66-10. Execution of Contracts.

The Department will not consider a contract effective until funding has been approved and all signature lines have been filled in with the appropriate officer's signature.

 

R907-66-11. Notice to Proceed.

(1) Consultants may not begin performing work under a contract before the Division has issued to the consultant a notice to proceed for the contract.

(2) The Department will not pay for any work a consultant performs before the Department has issued to the consultant a notice to proceed for the contract.

 

KEY: [transportation, contracts]procurement, small purchases, design and engineering services

Date of Enactment or Last Substantive Amendment: [December 8, 2011]2019

Notice of Continuation: October 7, 2016

Authorizing, and Implemented or Interpreted Law: 63G-6-105; 72-1-201

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