FTA Offers Tools To Improve Bus Transit Procurements

Purchasing and modernizing the nation’s bus fleet is no small task for U.S. transit providers. Realizing this, the Department of Transportation Federal Transit Administration (FTA) recently issued a Dear Colleague letter to transit providers addressing ways to meet financial challenges during bus procurement and manufacturing.

Among the actions, according to the letter, that transit providers can take to lower costs or otherwise improve bus procurements include the following:

• Contract modifications for price increases — Federally funded contracts can be modified for price adjustments (§200.318(k)). Allowable modifications depend on factors such as: (1) contract terms and conditions, such as change clauses and Producer Price Index or Consumer Price Index adjustment clauses; (2) applicable state, local or tribal procurement law; (3) the term and of a price adjustment; and (4) the scope of the contract modification. Certain federal regulatory requirements may apply, such as performance of a cost or price analysis in connection with a contract modification greater than the simplified acquisition threshold (currently $250,000), and where a cost analysis is performed, the FTA recipient must negotiate profit as a separate element of the price (§200.324(a) and (b)).
• Federal funds for price increases — FTA recipients can seek additional federal funds to cover contract price increases. FTA formula grant and other federal funds can be used to cover modifications for price increases.
• Advance payments — Advance payments are those made to the contractor prior to the contractor incurring costs and are allowable under certain circumstances. They can be made: (1) before the award of an FTA grant using local funds if the recipient has either FTA automatic pre-award authority, an FTA letter of no prejudice or other pre-award authority prior to making an advance payment; or (2) after FTA grant award using local or FTA funds inf the recipient provides a rationale, such as a reduction in the contract cost due to the payment, and FTA provides advance written concurrence. FTA recipients must obtain security from the contractor in the amount of the advance payment.
• Progress payments — Progress payments are those paid to a contractor prior to completion of all contract work. Use of FTA funds for progress payments is allowable and does not require agency pre-approval if the recipient: (1) obtains adequate security for those payments; and (2) maintains documentation to show completion of the discrete activities associated with the progress payment. However, for rolling stock procurements, recipients may not tie progress payments to the percentage of completion of the contract.

The letter notes that FTA soon will release the federal fiscal year 2024 Buses and Bus Facility and Low or No Emission program notice of funding opportunity (NOFO). New provisions in the NOFO will support transit agencies and strengthen bus manufacturing, according to the agency. FTA notes that it will give priority consideration to applicants proposing to use advance or progress payments, joint procurements or the procurement of base model buses.

The agency also will host a bus procurement webinar on Feb. 29 from 2:30 p.m. to 3:30 p.m. Eastern time on Feb. 29. The webinar will offer an overview of the current U.S. bus market, FTA’s guidance and resources, and flexibilities and actions available to transit agencies to help lower bus costs and simplify procurements. All interested stakeholders should tune in to this meeting.

Join us for our following Thompson Grants events:
Thompson Grants Workshop: Indirect Costs| March 14, 2024 | Virtual Event
Thompson Grants Workshop: Procurement | May 23, 2024 | Virtual Event