[Code of Federal Regulations]
[Title 23, Volume 1]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 23CFR172.5]

[Page 21-22]
 
                           TITLE 23--HIGHWAYS
 
 CHAPTER I--FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 172--ADMINISTRATION OF ENGINEERING AND DESIGN RELATED SERVICE CONTRACTS--Table of Contents
 
                    Subpart A--Procurement Procedures
 
Sec. 172.5  General principles.

    (a) Need for consultant services in management roles. When Federal-
aid highway funds participate in the contract, the contracting agency 
shall receive approval from the FHWA before hiring a consultant to act 
in a ``management'' role for the contracting agency. This concept should 
be limited to situations where unique or unusual circumstances exist and 
where the contracting agency has provided adequate justification to 
explain its reason for using a consultant in this role and the reason it 
cannot perform the work.
    (b) Written procedures. The contracting agency shall prepare written 
procedures for each method of procurement it proposes to utilize. These 
procedures and all revisions shall be approved by the FHWA and describe, 
as appropriate to the particular method of procurement, each step used:
    (1) In preparing a scope of work, evaluation factors and cost 
estimate for selecting a consultant,
    (2) In soliciting proposals from prospective consultants,
    (3) In the evaluation of proposals and the ranking/selection of a 
consultant,
    (4) In negotiation of the reimbursement to be paid to the selected 
consultant,
    (5) In monitoring the consultant's work and in preparing a 
consultant's performance evaluation when completed, and
    (6) In determining the extent to which the consultant, who is 
responsible for the professional quality, technical accuracy, and 
coordination of services, may be reasonably liable for costs resulting 
from errors or deficiencies in design furnished under its contract.
    (c) Prenegotiation audits. The contracting agencies shall prepare 
prenegotiation audits to provide the necessary data to assure that the 
consultant has an acceptable accounting

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system, adequate and proper justification of the various rates charged 
to perform work and is aware of the FHWA's cost eligibility and 
documentation requirements.
    (1) Prenegotiation audits and the resultant audit opinions are 
required for all contracts expected to exceed $250,000 and for contracts 
of less than $250,000 where:
    (i) There is insufficient knowledge of the consultant's accounting 
system,
    (ii) There is previous unfavorable experience regarding the 
reliability of the consultant's accounting system, or
    (iii) The contract involves procurement of new equipment or supplies 
for which cost experience is lacking.
    (2) The use of an independent audit, an audit performed by another 
State/Federal agency or an audit performed by another local governmental 
agency is acceptable if the information is current and of sufficient 
detail.
    (3) Prenegotiation audits may be waived when sufficient audited 
consultant data is available to permit reasonable comparisons with the 
cost proposal.
    (d) State responsibility in local agency contracts. The State 
highway agency shall ensure that procurement actions by or through other 
State agencies or local agencies comply with this regulation. When 
Federal-aid highway funds participate in the contract, a local agency 
shall use the same procedures as used by the State to administer 
contracts not under CA, the SRP or the CRP. These contracts shall be 
subject to the prior approval of the State highway agency and the FHWA. 
Nothing herein shall be taken as relieving the State of its 
responsibility under Federal-aid highway laws and regulations for the 
work to be performed under any agreements entered into by a local 
agency.
    (e) Disadvantaged Business Enterprise (DBE) program. The contracting 
agency shall give consideration to DBE firms in the procurement of 
engineering and design related service contracts subject to 23 U.S.C. 
112(b)(2).
    (f) Contractual responsibilities. The contracting agency or State 
highway agency shall be responsible for the settlement of all 
contractual/administrative issues. All settlements shall be reviewed and 
approved by the FHWA before Federal-aid highway funds can participate in 
any additional costs.