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The Federal Transit Administration (FTA) sets specific requirements and provides guidance on how transit agencies spend Federal funds. FTA grants and accounting is handled differently at every agency; this article will not review best practices for accounting. It is intended to provide a review of grant programs and resources for procurement best practices.
Any agency staff member involved in, or expecting to be involved in procurement should attend the National Transit Institute (NTI) Procurement Series of trainings. The series is divided into a progression of four multi-day courses. NTI offers the courses on an occasional basis in different regions around the country. The initial course is the most crucial for newcomers to Federal Transit procurement, covering topics such as procurement methods, how procurement processes are organized in an agency, and how to appropriately manage a third-party procurement.
NTI now offers a course on Procurement for Small and Medium Transit Systems. The course is limited to agency representatives who receive 5307 funds and operate less than 50 vehicles or agencies receiving 5310 or 5311 funds.
The Best Practices Procurement Manual (BPPM) is provided by FTA and covers the spectrum of procurement requirements set out in FTA Circular 4220.1. As of this writing, the FTA circular version is 4220.1F, last revised in 2008. The circular provides guidance on contracting with third parties (in other words, procurement) using FTA grant funds. Unfortunately, the circular has not been updated for the most recent version of Federal transportation legislation (MAP-21). The BPPM was last updated in 2005.
Larger agencies with major projects programmed may find that multi-year procurement planning is essential to manage multi-year contracts. The procurement officer (or the staff member responsible for procurement as part of their duties) should handle planning of procurements based on identified needs of all departments. In other words, the various departments (operations, maintenance, training) should regularly track and identify purchasing needs - the procurement staff should not be identifying purchasing needs for mechanics. However, the procurement officer should work with departments to regularly collect and assess purchasing needs and may find that some needs in multiple departments can be served by a single procurement, for example. Without careful planning, agencies can miss opportunities for cost-effective purchasing.
One of the most important aspects of handling public funds is a system of checks and balances to prevent any one staff member from controlling spending without oversight. For example, if any one staff member at an agency has the ability to draft specifications, solicit for bids, and award contracts, they are able to spend Federal funds as they see fit. This could easily lead to abuse of power in unnecessary purchases or favoritism for certain bidders. A program manager should work along with the procurement officer to prepare specifications for bid and oversee contracts. The procurement officer should ensure that specifications developed by departments are not restrictive and meet FTA regulations. The disbursement of funds should be overseen by the agency finance staff, who ensure that the all parts of the procurement are in agreement (in other words, the executed contract and invoice are for the same product and agreed to price). Entrusting various aspects of the procurement process to different staff and departments reduces the risk of inappropriate practices.
Types of Contracts
- Supplies, services, equipment, construction
- Legal and associated services
- Real Estate
- Intergovernmental Agreements, Joint Procurements and Piggybacking
- Equipment Leases
- Transit Oriented Joint Development
- Disposition of Surplus
- Operating Assistance, Preventative Maintenance, CMAQ, JARQ
Solicitation and Selection
Newcomers to FTA procurement may be unsure of how to determine the best type of contract solicitation for a given purchase. It is not necessarily as simple as "always use a sealed bid for __ type of purchase," but understanding the characteristics of solicitation can help staff choose the right method to achieve the best value for the agency. A solicitation is not an obligation for the agency to spend money - agencies can conduct a solicitation and ultimately choose not to award any contract. However, conducting a solicitation properly is a time-consuming process, so having a well-planned procurement before entering the solicitation phase is best to ensure time and money is not wasted.
All purchases at any level require the grantee to determine if the price for the good or service is fair and reasonable.
Micro and Small Purchases
There are two different requirements for relatively small purchases to lessen the burden of procurement, but even micro-purchases must adhere to Federal regulation and require some documentation. A micro-purchase is any contract amounting to less than $2,500. Any contract between $2,500 and $100,000 must adhere at least to small purchase procedures; however, agency discretion or policy may lead to other solicitation methods for some or all contracts under $100,000. Purchases under $100,000 are not required to meet "Buy America" regulations.
Micro-purchases can be made without obtaining competitive quotes as long as the price is determined to be fair and reasonable, meaning the agency does not have to solicit and document multiple price quotes. Fair and reasonable determination can be done by comparing phone quotes for the product against previous purchases, or doing a brief phone or email solicitation of prices from local vendors. The purchasing officer can use a basic form documenting these comparisons. Except for the requirements of the "Davis-Bacon" act for construction contracts over $2,000, no Federal clauses are required for micro-purchases. Thus, micro-purchases require very minimal documentation. Micro-purchases also should be equitably split amongst suppliers across the region, possibly on a regular rotation. FTA recommends that the purchasing rotation and pricing be documented to monitor distribution and fair pricing.
FTA warns agencies not to divide up related contracts (in quantity, or across time periods) in order to keep award amounts under $100,000. FTA staff review procurements as part of Triennial Reviews and look for evidence of agencies inappropriately dividing contracts to take advantage of small purchase requirements instead of meeting regular procurement requirements. The procurement officer should review purchasing plans from all departments to determine if several micro-purchases, or repetitive requisitions could be combined into a larger procurement for more competitive pricing and more efficient purchasing. In the short run, buying small orders of supplies as they are needed may appear to be the most efficient method. However, tracking the history of repetitive purchases can demonstrate the potential for time and money savings by creating a formal procurement for a supplier contract. While a larger purchase is more work up-front, it has the potential to save more time that is harder to track spread out among frequent, repetitive purchases. A larger contract also has the potential for obtaining a better purchase price, saving the agency money as well as time. Using real history on purchasing can give the agency confidence on its future purchasing needs.
Sealed Bids and Competitive Proposals (RFPs, IFBs)
Common Procurement Concerns
Length of contract Termination