[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: 23CFR635.407]

[Page 188-189]
 
                           TITLE 23--HIGHWAYS
 
 CHAPTER I--FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 635--CONSTRUCTION AND MAINTENANCE--Table of Contents
 
                Subpart D--General Material Requirements
 
Sec. 635.407  Use of materials made available by a public agency.

    (a) Contracts for highway projects shall require the contractor to 
furnish all materials to be incorporated in the work and shall permit 
the contractor to select the sources from which the materials are to be 
obtained. Exception to this requirement may be made when there is a 
definite finding by the State highway agency and concurred in by the 
FHWA Division Administrator, that it is in the public interest to 
require the contractor to use material furnished by the State highway 
agency or from sources designated by the State highway agency. In cases 
such as this, the FHWA does not expect mutual sharing of costs unless 
the State highway agency receives a related credit from another agency 
or political subdivision of the State. Where such a credit does accrue 
to the State highway agency, it shall be applied to the Federal-aid 
project involved. The designation of a mandatory material source may be 
permitted based on environmental considerations, provided the 
environment would be substantially enhanced without excessive cost. 
Otherwise, if a State highway agency proposal to designate a material 
source for mandatory use would result in higher project costs, Federal-
aid funds shall not participate in the increase even if the designation 
would conserve other public funds.
    (b) The provisions of paragraph (a) of this section will not 
preclude the designation in the plans and specifications of sources of 
local natural materials, such as borrow aggregates, that have been 
investigated by the State highway agency and found to contain materials 
meeting specification requirements. The use of materials from such 
designated sources shall not be mandatory unless there is a finding of 
public interest as stated in paragraph (a) of this section.
    (c) Federal funds may participate in the cost of specifications 
materials made available by a public agency when they have been actually 
incorporated in accepted items of work, or in the cost of such materials 
meeting

[[Page 189]]

the criteria and stockpiled at the locations specified in Sec. 635.114 
of this chapter.
    (d) To be eligible for Federal participation in its cost, any 
material, other than local natural materials, to be purchased by the 
State highway agency and furnished to the contractor for mandatory use 
in the project, must have been acquired on the basis of competitive 
bidding, except when there is a finding of public interest justifying 
the use of another method of acquisition. The location and unit price at 
which such material will be available to the contractor must be stated 
in the special provisions for the benefit of all prospective bidders. 
The unit cost eligible for Federation participation will be limited to 
the unit cost of such material to the State highway agency.
    (e) When the State highway agency or another public agency owns or 
has control over the source of a local natural material the unit price 
at which such material will be made available to the contractor must be 
stated in the plans or special provisions. Federal participation will be 
limited to (1) the cost of the material to the State highway agency or 
other public agency; or (2) the fair and reasonable value of the 
material, whichever is less. Special cases may arise that will justify 
Federal participation on a basis other than that set forth above. Such 
cases should be fully documented and receive advance approval by the 
FHWA Division Administrator.
    (f) Costs incurred by the State highway agency or other public 
agency for acquiring a designated source or the right to take materials 
from it will not be eligible for Federal participation if the source is 
not used by the contractor.
    (g) The contract provisions for one or a combination of Federal-aid 
projects shall not specify a mandatory site for the disposal of surplus 
excavated materials unless there is a finding by the State highway 
agency with the concurrence of the FHWA Division Administrator that such 
placement is the most economical except that the designation of a 
mandatory site may be permitted based on environmental considerations, 
provided the environment would be substantially enhanced without 
excessive cost.