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.

E-Verify Postponed (Again)

The requirement for many government contractors to use the E-Verify system to verify employee eligability to work in the U. S. has been postponed again.

The new deadline for implementation is now June 30, 2009

Stimulus Funds Include All Federal Contracting Rules

As the stimulus rules are issued by the various agencies dispensing funds and grants, it is very clear that all federal contracting rules apply to all stimulus funds, no matter who actually does the contracting.

For A/E contracts this includes:

Project selection must be by Brooks Act (QBS) procedures

Contracts must be an acceptable federal contract type, and lump sum contracts are the preferred form of agreement

Costs must be estimated and costs accumulated in accordance with Federal Acquisition Regulations (FAR) cost principals

Proposals and contracts are subject to audit

For some local government or agencies, these requirements may not be in synch with their normal A/E contracting policies. Not acceptable contracting includes bidding for A/E contracts and percentage of construction cost contracts.

Agencies the do not adhere to the applicable federal rules risk the revocation of grant funds, which could place agencies at risk for reimbursing stimulus funds.

One message is becoming exceedingly clear as the rules are issued. Not only are all rules applicable to stimulus funds, even past exemptions are prohibited for these funds. Added rules have been enacted on reporting spending progress as well so the contracts must clearly adhere to the stimulus rules.

FAA Issues Stimulus Grant Guidelines

On March 3rd the FAA issued guidance to recipients of grants from the Stimulus bill.

This guidance instructs airports to use all existing contracting regulations for any funds received from the Stimulus bill.

For A/E services, this means projects selections must be by QBS (Brooks Act) procedures.

Contracts are subject to the Federal Acquisition Regulations (FAR) so costs and fees must meet these regulations.

Of particular interest is that airports must not “mix” stimulus funds with other grant funds. This means that stimulus funds may not be used to modify existing contracts funded from other grant sources. Since the local matching funds are 0% for, this should mean all stimulus funs are stand-alone projects, not extensions of other current projects.