AASHTO Audit Guide Delayed

Despite the effort to have the revised AASHTO Audit Guide ready for a final approval by the AASHTO Audit Group at their annual convention in July, certain portions of the draft are still being revised.

The new plan is to have a final draft ready by mid August and to have the states ratify it by written or electronic ballot.

The goal is to have the full AASHTO approval occur at AASHTO’s annual meeting in October, and then to have FHWA begin any necessary rulemaking early in 2010.

For a copy of the most recent draft of the guide go to http://audit.transportation.org/?siteid=43 and select the current draft (with or without comment versions are available)

This updated guide will (if adopted as expected) significantly change allowable cost practices in the states that have established individual state policies on costs, as the primary purpose of this update to the guide is to standardize the states to FAR standard practices.

Delay on Transportation Act Seems Likely

The House Ways & Means Committee has announced they will not take up a renewal of the soon to expire Surface Transportation authorization until after they have finished with Health Care Reform.

With Health Care now looking like it will extend into at least September (with the August Recess) it appears unlikely that Transportation will be not be finalized in time to prevent a lapse in September.

Look for an extension of current programs at current funding levels.

However, the Administration has proposed an 18 month extension.

Also complicating matters is the shortage in the Highway Trust fund that will begin to reduce spending next month if this is not fixed.

Transportation uncertainty is likely to delay transportation construction in states as they are unlikely to be able to make long-term project plans with uncertain funding.

Firms are likely to see lower new starts until this issue is respolved on a long term basis.

September 8 Appears to be E-verify deadline

After several delays, Congressional pressure to implement the requirment for E-verify use by all federal contractors is no o track to actually go into effect on September 8.

As part of the final rules, the requirment to terminate employees within 30 days following a "no-match" result has been modified.

New Jersey DOT Seeking Salary Freeze in Consultant Contracts

In a June 26, 2009 letter to all NJ DOT consultants, the state is advising that all new contracts will no longer contain cost escalation clauses. DOT will also be seeking to change existing contracts to eliminate current clauses permitting cost escalation.

This is primarily aimed at labor escalation, meaning the DOT is seeking a labor rate freeze for all existing and future contracts.

E-Verify Postponed Again

The requirement for government contractors to use the E-Verify system to verify prospective employees eligibility for employment has been postponed again.

The date is now September 8, 2009. No reason was cited for this latest delay.

Maximum Individual Compensation for 2009

The Exectuive compensation becnhmark limit for 2009 has been established as $684,181.

This is the limit on indiviudal compesation for the calander year

Expanded Definition for Federally Funded Work from FHWA

In the past FHWA, and most state DOTS have interpreted the requirements for a federal assistance engineering project as one in which all, or part of the engineering fees were funded by federal aid funds.

In a revised definition from FHWA, federally assistance includes projects where the engineering fees are used as all, or part of the local matching funds for a federally assisted highway construction projects.

The difference for A/E firms is that projects that qualify as federal projects must use FAR contracting rules and cost allowability rather than typically more restrictive cost reimbursement under state policies.

Several states have claimed that they pay engineering fees from state funds, thus the rules of Section 307 and 174 requiring FAR overhead rates do not apply. Firms are thus restricted to lower maximum salaries and higher unallowable costs under state policies that do not conform to FAR rules.

This change means more A/E contracts should be considered to be federally funded for the purposes of applying FAR cost rules to contract costs.

Firms should ask their DOT not only if a proposed contract is federally assisted, but if the contract is being used for the local matching requirements on a federally assisted construction project.