Indefinite Delivery and Indefinite Quantity Contracts for Federal-Aid Construction

Brandye L. Hendrickson
Federal Highway Administration
26 June 2018

[Federal Register Volume 83, Number 123 (Tuesday, June 26, 2018)]
[Proposed Rules]
[Pages 29713-29716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13645]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / 
Proposed Rules

[[Page 29713]]



DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 635

[FHWA Docket No. FHWA-2018-0017]
RIN 2125-AF83


Indefinite Delivery and Indefinite Quantity Contracts for 
Federal-Aid Construction

AGENCY: Federal Highway Administration (FHWA), U.S. Department of 
Transportation (DOT).

ACTION: Advance notice of proposed rulemaking (ANPRM).

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SUMMARY: The FHWA has announced that the Indefinite Delivery and 
Indefinite Quantity (ID/IQ) method of contracting, including job order 
contracts, for low-cost construction contracts will be allowed, without 
FHWA approval, under certain circumstances. This advance notice of 
proposed rulemaking seeks comment on how FHWA may further expand this 
contracting method on a permanent basis.

DATES: Comments must be received on or before August 27, 2018. Late 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments, identified by the document number 
at the top of this document, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE, West Building Ground Floor, 
Room W12-140, Washington, DC 20590.
     Hand Delivery/Courier: West Building Ground Floor, Room 
W12-140, 1200 New Jersey Ave. SE, between 9:00 a.m. and 5:00 p.m., 
Monday through Friday, except Federal holidays. The telephone number is 
(202) 366-9329.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to www.regulations.gov, including any personal 
information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For questions about this ANPRM, please 
contact Mr. John Huyer, FHWA Office of Program Administration, (651) 
291-6111, or via email at John.Huyer@dot.gov. For legal questions, 
please contact Mr. Jomar Maldonado, FHWA Office of the Chief Counsel, 
202-366-1373, or via email at Jomar.Maldonado@dot.gov. Office hours for 
the FHWA are from 8:00 a.m. to 4:30 p.m., ET, Monday through Friday, 
except Federal holidays.

SUPPLEMENTARY INFORMATION: On May 2, 2018,\1\ FHWA announced that 
contracting agencies no longer need to submit individual requests and 
work plans pursuant to Special Experimental Project No. 14 (SEP-14) for 
low-cost ID/IQ contracts that are awarded to the lowest responsive 
bidder based on an invitation for bids. The FHWA considers ``low-cost 
contracts'' to be 1- or 2-year contracts awarded to the lowest 
responsive bidder for construction of projects that qualify for FHWA 
categorical exclusions under the National Environmental Policy Act of 
1969 (23 CFR 771.117) and where the total value of task or work orders 
does not exceed $2,000,000 per year. However, the ID/IQ contracting 
technique continues to be authorized on an experimental basis while 
FHWA explores rulemaking to revise FHWA's regulations to accommodate 
this contracting technique. This ANPRM seeks comment on how FHWA may 
operationalize this contracting technique on a permanent basis.
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    \1\ 83 FR 19393, May 2, 2018.
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Background

    The ID/IQ contracts are a method of contracting that allows an 
indefinite quantity of services for a fixed time. They are used in the 
Federal Government when agencies cannot determine, above a specified 
minimum, the precise quantities of supplies or services that the 
Government will require during the contract period. For construction 
ID/IQ contracts, contractors bid unit prices for estimated quantities 
of standard work items, and task orders are used to define the location 
and quantities for specific work. The ID/IQ contracts may be awarded to 
the lowest responsive bidder based on an invitation for bids or the 
best-value proposer based on responses to Requests for Proposals. 
Contracting agencies use other names for these types of contracts, 
including on-call contracts, area-wide contracts, continuing contracts, 
push-button contracts, and task order contracts. Job Order Contracts 
(JOCs) are a form of ID/IQ contracts that utilize a construction task 
catalogue with pre-priced work item descriptions and where contractors 
bid ``mark-up rates.'' The contract is awarded to the lowest responsive 
bidder determined by their rates.
    Although ID/IQ contracts have been specifically authorized in the 
Federal procurement process (48 CFR 16.5) and for the contracting of 
architecture and engineering (A/E) services in the Federal-aid highway 
program (FAHP) (23 CFR part 172), the FAHP authorization and 
procurement laws for construction do not address the possible use of 
ID/IQ contracts. The FAHP construction procurement statute, 23 U.S.C. 
112(b)(1), requires contracts to be awarded by a competitive bidding 
process to the lowest responsive bidder (traditional design-bid-build 
project delivery method based upon the premise of a 100 percent-
complete design and a well-defined scope of work). The ID/IQ contracts 
are awarded based upon a general, but not completely defined, scope of 
work for a geographic area and limited time period (but not specific 
locations, designs, or quantities) and are often awarded based upon 
specific evaluation criteria.

A. Experience Under Special Experimental Project Number 14 (SEP-14)

    The FHWA has used its authority in 23 U.S.C. 502(b)(1) to test the 
use of ID/IQ contracts for the construction of FAHP projects through 
the SEP-14 Program for innovative contracting techniques. Under the 
SEP-14 Program, contracting agencies interested in testing an 
innovative contracting technique submit project-specific (or 
programmatic) work plans to FHWA for

[[Page 29714]]

their implementation. The FHWA Division Office evaluates the work plan, 
coordinates with FHWA Headquarters, and, if it finds the work plan to 
be acceptable, FHWA approves the use of the technique on a temporary 
basis for a project or group of pilot projects. Over time, FHWA 
Headquarters staff assess the initiative to determine if it is a 
technique that should be operationalized for the FAHP on a permanent 
basis without the need for individual requests, work plans, and 
evaluation reports. Operationalizing SEP-14 experiments has taken 
different paths in the past based on the source of the policy 
warranting innovation and FHWA's risk assessment, such as FHWA-
initiated memoranda (for example, cost plus time bidding and lane 
rental), FHWA-initiated rulemaking (for example, warranty clauses at 23 
CFR 635.413), and congressionally initiated statutory amendments (for 
example, design-build and contractor manager/general contractor under 
23 U.S.C. 112(b)(3)-(4)). More information on SEP-14 can be found at 
https://www.fhwa.dot.gov/construction/cqit/sep14.cfm.
    From 2007 to the present, FHWA, State departments of transportation 
(State DOTs), and Local Public Agencies (LPAs) through the State DOTs 
have experimented with the use of ID/IQ contracts and JOCs for 
construction. The FHWA has approved the use of this contracting method 
under SEP-14 for 16 different State DOTs and 6 LPAs. Evaluation reports 
indicate that JOCs and ID/IQ contracts allow for cost-effective 
contracting for small value contracts and preventive maintenance 
programs. Specifically, the reports indicate that these contracts 
eliminate the need for contracting agencies to advertise and award 
numerous small contracts and provide contracting agencies with wide 
flexibility in programming and addressing preventive maintenance needs.
    Having evaluated the use of JOCs and ID/IQ contracts for 
construction in the FAHP for over a decade, FHWA has now determined 
that they are suitable for operationalization. This is consistent with 
Senate report language accompanying fiscal years 2017 and 2018 
appropriations to operationalize JOCs. S. Rept. No. 114-243, 43 (April 
21, 2016); S. Rept. No. 115-138, 52 (July 27, 2017). The approach is 
also consistent with the Department of Justice's Office of Legal 
Counsel (OLC) opinion regarding competition and contracting 
requirements. See Competitive Bidding Requirements Under the Federal-
Aid Highway Program, 23 U.S.C. 112 (Aug. 23, 2013).

B. Steps for Operationalizing ID/IQs and JOCs for Construction in the 
FAHP

    The FHWA is proceeding with two phases to operationalize ID/IQ 
contracts and JOCs for construction in the FAHP. The first phase is the 
issuance of an FHWA Notice on how FHWA will allow ID/IQ contracts and 
JOCs for construction without the need for project-specific work plans 
from contracting agencies. The FHWA published a Federal Register Notice 
requesting public comment on allowing contracting agencies to establish 
ID/IQ and JOCs for low-cost construction contracts at 83 FR 19393 (May 
2, 2018). Please refer to that notice for details on the proposed 
implementation of phase one. The second phase is the initiation of this 
rulemaking.
    Amendments to the construction and approval regulations are 
necessary in order to allow the contracting technique on a permanent 
basis. To assist the Agency in this effort, FHWA seeks public comments 
on the following questions:
    1. Would it be appropriate to allow notice and award of the base 
ID/IQ contract or JOC prior to approval of plans, specifications and 
estimates, environmental review, and right-of-way clearances, but 
require these prior to the issuance of individual tasks?
    2. Would the allowance of time extensions be appropriate? What 
should be the minimum time extension length? What should be the maximum 
time extension length?
    3. Is the $2,000,000 per year limitation appropriate? Should this 
figure be indexed? If so, how?
    4. Should FHWA consider allowing ID/IQ contracts using best value 
considerations? What criteria (for example, past performance, quality, 
timeliness) should be considered for best value determinations?
    5. Should multiple award ID/IQ contracts be allowed? If so, what 
conditions or criteria should be used for awarding work orders?
    6. What contract term/extension limits should be allowed? Should 
``on-ramp'' procedures be used to allow new contractors to be 
considered for the award pool after the initial award and ``off-ramp'' 
procedures be used to discontinue the use of contractors who are not 
performing satisfactorily?
    7. What procedures should be in place to ensure fairness and 
transparency in the selection and implementation of multiple-award ID/
IQ contracts?
    8. What change conditions clause would be appropriate for ID/IQ 
contracts and JOCs? What would be an appropriate clause for significant 
changes in the character of work?
    9. How should the contracting agencies address the estimates 
required under 23 CFR 635.115? Would the estimate quantities be the 
minimum value provided under the contract, the estimate for the base 
contract, or the estimated maximum value under the contract including 
contract extensions?
    10. How would the 30 percent self-performance requirement in 23 CFR 
635.116(a) apply to ID/IQ contracts and JOCs? How would it be enforced 
given the nature of the task orders?
    11. How should authorizations to proceed with work be given for 
individual task orders?
    12. What costs, benefits, and cost-savings would result from 
allowing this contracting technique on a permanent basis? Please submit 
data that would help FHWA quantify cost-effectiveness, as well as 
quantifiable cost-savings associated with advertising and awarding 
small contracts and increasing flexibility in programming, and any 
other efficiencies that may result from the operationalization of this 
contracting method.
    13. Are there any other aspects related to the use of ID/IQ 
contracts or JOC for construction in the FAHP that FHWA should 
consider?
    The FHWA will consider all responses and comments and take them 
into account in the development of a notice of proposed rulemaking 
(NPRM) on this subject.

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, 
FHWA also will continue to file relevant information in the docket as 
it becomes available after the comment period closing date, and 
interested persons should continue to examine the docket for new 
material. An NPRM may be published at any time after close of the 
comment period.

Executive Order 13771 (Reducing Regulations and Controlling Regulatory 
Costs), Executive Order 12866 (Regulatory Planning and Review), 
Executive Order 13563 (Improving Regulation and Regulatory Review), and 
DOT Regulatory Policies and Procedures

    The FHWA has preliminarily determined that this action would not be 
a significant regulatory action within the meaning of Executive Order 
(E.O.)

[[Page 29715]]

12866 and within the meaning of the DOT regulatory policies and 
procedures. This action complies with E.O.s 12866, 13563, and 13771 to 
improve regulation. The FHWA anticipates that this rulemaking would be 
a deregulatory action and result in cost-savings because it proposes to 
remove the traditional procurement requirements for Federal-aid highway 
construction work for small construction work that would result in 
expeditious project delivery of low-cost and/or repetitive work. The 
FHWA seeks data on the costs, benefits, and cost-savings associated 
with this action.
    Based upon the information received in response to this ANPRM, FHWA 
intends to carefully consider the costs and benefits associated with 
this rulemaking. Accordingly, comments, information, and data are 
solicited on the economic impact of any proposed recommendation.
    This ANPRM is not a regulatory action under Executive Order 13771.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612), and based upon the information received in response 
to this ANPRM, FHWA will evaluate the effects of any action proposed on 
small entities. This action merely seeks information regarding the use 
of the ID/IQ method of contracting, including JOCs, for low-cost 
construction contracts. Therefore, FHWA is unable to certify at this 
time whether or not it will have a significant impact on a substantial 
number of small entities.

Unfunded Mandates Reform Act of 1995

    Because of the preliminary nature of this document and lack of 
necessary information on costs, FHWA is unable to evaluate the effects 
of the potential regulatory changes in regard to imposing a Federal 
mandate involving expenditure by State, local, and Indian Tribal 
governments, in the aggregate, or by the private sector, of $151.1 
million or more in any one year (2 U.S.C. 1532). Nevertheless, FHWA 
will evaluate any regulatory action that might be proposed in 
subsequent stages of this rulemaking to assess the effects on State, 
local, and Indian Tribal governments and the private sector.

Executive Order 12988 (Civil Justice Reform)

    The FHWA will evaluate any rule that may be proposed in response to 
comments received to ensure that such action meets applicable standards 
in section 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to 
minimize litigation, eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    The FHWA will evaluate any rule that may be proposed in response to 
comments received to ensure that such action meets the requirements of 
E.O. 13045, Protection of Children from Environmental Health Risks and 
Safety Risks. The Agency does not, however, anticipate that any such 
rule would be economically significant or would present an 
environmental risk to health or safety that may disproportionately 
affect children.

Executive Order 12630 (Taking of Private Property)

    The FHWA will evaluate any rule that may be proposed in response to 
comments received to ensure that any such rule will not affect a taking 
of private property or otherwise have taking implications under E.O. 
12630, Governmental Actions and Interference with Constitutionally 
Protected Property Rights.

Executive Order 13132 (Federalism)

    The FHWA will analyze any action that might be proposed in 
accordance with the principles and criteria contained in E.O. 13132, 
and FHWA anticipates that any action contemplated will not have 
sufficient federalism implications to warrant the preparation of a 
federalism assessment. The FHWA also anticipates that any action taken 
will not preempt any State law or State regulation or affect the 
States' ability to discharge traditional State governmental functions. 
We encourage commenters to consider these issues.

Executive Order 13175 (Tribal Consultation)

    The FHWA will analyze any proposal under E.O. 13175, dated November 
6, 2000. The FHWA preliminarily believes that any proposal will not 
have substantial direct effects on one or more Indian Tribes, will not 
impose substantial direct compliance costs on Indian Tribal 
governments, and will not preempt Tribal law. Therefore, a Tribal 
summary impact statement may not be required.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing E.O. 
12372 regarding intergovernmental consultation on Federal programs and 
activities apply to this program.

Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501), 
Federal agencies must obtain approval from the Office of Management and 
Budget (OMB) for each collection of information they conduct, sponsor, 
or require through regulations. Any action that might be contemplated 
in subsequent phases of this proceeding will be analyzed for the 
purpose of the PRA for its impact upon information collection. The FHWA 
would be required to submit any proposed collections of information to 
OMB for review and approval at the time the NPRM is issued, and, 
accordingly, seeks public comments. Interested parties are invited to 
send comments regarding any aspect of any proposed information 
collection requirements, including, but not limited to: (1) Whether the 
collection of information would be necessary for the performance of the 
functions of FHWA, including whether the information would have 
practical utility; (2) the accuracy of the estimated burden; (3) ways 
to enhance the quality, utility, and clarity of the collection of 
information; and (4) ways to minimize the collection burden without 
reducing the quality of the information collected.

National Environmental Policy Act

    The FHWA will analyze any action that might be proposed for the 
purposes of the National Environmental Policy Act of 1969, as amended 
(42 U.S.C. 4321-4347) to assess whether there would be any effect on 
the quality of the environment.

Executive Order 13211 (Energy Effects)

    The FHWA will analyze any proposed action under E.O. 13211, Actions 
Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use, to assess whether there would be any adverse 
effect on the supply, distribution, or use of energy.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross-reference this section with the 
Unified Agenda.

List of Subjects in 23 CFR Part 635

    Grant programs--transportation, Highways and roads, Reporting and 
recordkeeping requirements.

    Authority: 23 U.S.C. 112 and 502; 23 CFR 635.


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    Issued on June 20, 2018 under authority delegated in 49 CFR 
1.85.
Brandye L. Hendrickson,
Acting Administrator, Federal Highway Administration.
[FR Doc. 2018-13645 Filed 6-25-18; 8:45 am]
BILLING CODE 4910-22-P