1. Ransford S. McCourt, PE, PTOE Principal, West Coast Region Manager

2. FAR & Your Business  Why are we required to follow Federal rules?  What aspects of Federal Rules are important to my business?  How does this relate to the conduct of project work with ODOT?  Which rules are most relevant to my business?

3. 23 CFR 172 Administration of A&E Contracts  Establishes the basis for A&E contracts to follow federal procurement for Federal Aid projects  Keys:  Methods of Procurement  Compensation Methods  Audit requirements  Qualification Based Selection (Brooks Act)  Small Purchase Procedure s100K  Cognizant Audits  Ability to be flexible in audit approach (small business)

4. Best Web Site References  http://www.fhwa.dot.gov/programadmin/17 2qa.cfm#r17 http://www.fhwa.dot.gov/programadmin/17 2qa.cfm#r17 http://www.fhwa.dot.gov/programadmin/17 2qa.cfm#r17  http://www.fhwa.dot.gov/programadmin/m ega/ http://www.fhwa.dot.gov/programadmin/m ega/ http://www.fhwa.dot.gov/programadmin/m ega/

5. USC Title 48 Part 36 Contracting Procedures  FHWA uses this to guide the procedures in contracting for services  Keys:  Contracting Procedures  Selection Process  Evaluation Process  Selection Authority  Negotiation Process  Debriefing Process  Performance Evaluation Process

6. Other USC Sections  Basis for Audits  23 USC Sec.112 b)(2)(C) – The code under which DOT operates calls for audits and relates them to FAR = 48 CFR Part 31  For firms conducting Federal Aid projects

7. Best Web Site Reference  http://www.fhwa.dot.gov/programadmin/12 1205_48cfr.cfm http://www.fhwa.dot.gov/programadmin/12 1205_48cfr.cfm http://www.fhwa.dot.gov/programadmin/12 1205_48cfr.cfm

8. 48 CFR The FAR  Contract Cost Principles and Procedures  Overhead Principles  Reasonable Compensation Guides 48CFR31.205-6 (5) (b)  Unallowable Costs  Marketing Cost  Contributions  Bad Debt  Travel Cost in excess of GSA per diem (31.206-46)

9. Reasonable Compensation  OFPP Act Section 39 – 2008 maximum benchmark compensation $612,196  Reasonable Basis:  Compare to other firms of same size  Compensation practice of industry  Compensation in geographic areas  Governmental work vs non-governmental work  Outside sources of information  Balance between well managed firms and those that are not in determining reasonableness –  Salary vs performance incentive for compensation style of management

10. FAR contract clauses Title 48 Section 36.609  Responsibility of Designer  Design within funding limit  Keys:  The value of construction must be stated up front in procurement process  Part of negotiation process  Not used where performance is overriding consideration, where little design work is needed  Not responsible for changes outside control  Should define limits in contract – indexes, range

11. FAR contract clauses Title 48 Section 36.609  Design errors and deficiencies  Responsible for necessary corrections at no cost to agency  Negotiable  Agency does not have to require redesign  Avoid vague terms – “inadequacies”

12. Most Relevant Business Concerns Working for ODOT  Selection Process  Cost Accounting  Auditing  Compensation  Performance Review  Responsibility of Designer

13. Oregon Department of Transportation External Audits External Audits Margaret Cole, External Audit Manager Margaret Cole, External Audit Manager

14. External Audits b Who we are, What we do, Why we do it b Schedule of Indirect Cost Rate/Overhead Rate b The Process, What we look for b Cognizance

15. Introduction b Oregon Department of Transportation’s External Audit section is comprised of Margaret Cole, Audit Manager, Ruth Wu, CPA and Inna Cutting, Senior Auditors. Our work is performed in accordance with Generally Accepted Government Auditing Standards (GAGAS) as issued by the U.S. Government Accountability Office (GAO). b Federal law 23 USC Sec.112 (b) (2) (C) requires audits to be in compliance with the cost principles in Federal Acquisition Regulations (FARs) part 31.

16. Overhead Rates b A Schedule of Indirect Costs is often referred to as an Overhead Rate.

17. The Process b Audit Services: Desk ReviewDesk Review Independent CPA Working Paper ReviewIndependent CPA Working Paper Review b What do we look for? We look at whether or not costs are allocable, allowable, and reasonable by using the Federal Acquisition Regulations System 48 Chapter 1 Part 31 (FARS), Cost Accounting Standards (CAS), AASHTO Audit and Accounting Guide, DCAA Contract Audit Manual, Independent Survey data etc.We look at whether or not costs are allocable, allowable, and reasonable by using the Federal Acquisition Regulations System 48 Chapter 1 Part 31 (FARS), Cost Accounting Standards (CAS), AASHTO Audit and Accounting Guide, DCAA Contract Audit Manual, Independent Survey data etc.

18. Cognizance b Cognizance is a term created by the National Highway System (NHS) Act – Section 307. b The purpose of the act was to remove caps on overhead rates and to avoid duplication of audit work. b A cognizant audit is an audit by a federal or state agency of the indirect cost rate conducted in accordance with FAR part 31. The cognizant agency will issue either an audit report or a letter of concurrence.

19. Websites b ODOT’s Billing Rate Policy: http://www.oregon.gov/ODOT/CS/OPO/docs/aepage/AGR0601.pdf#b rpolicy http://www.oregon.gov/ODOT/CS/OPO/docs/aepage/AGR0601.pdf#b rpolicy http://www.oregon.gov/ODOT/CS/OPO/docs/aepage/AGR0601.pdf#b rpolicy b AASHTO Audit and Accounting Guide: http://www.transportation.org/?siteid=43 b FAR part 31: http://www.access.gpo.gov/nara/cfr/waisidx_04/48cfr31_04.html http://www.access.gpo.gov/nara/cfr/waisidx_04/48cfr31_04.html b DCAA Contract Audit Manual: http://www.dcaa.mil/ http://www.dcaa.mil/http://www.dcaa.mil/ b 23 CFR 172--Administration of Engineering and Design Related Service Contracts Q & A: http://www.fhwa.dot.gov/programadmin/172qa.cfm

20. Where to go for Questions Give Us a Call or Check our Website: http://www.oregon.gov/ODOT/CS/EXTERNALAUDITS/ Margaret Cole Margaret Cole External Audit Manager External Audit Manager (503) 986-3213 (503) 986-3213 Marlene Hartinger Marlene Hartinger Chief of Audit Services Chief of Audit Services (503) 986-4177 (503) 986-4177

22. Oregon Department of Transportation ODOT Procurement Office ODOT Procurement Office Donnell Fowler, CPPB – Procurement Operations Liaison Donnell Fowler, CPPB – Procurement Operations Liaison Michelle Remmy – Chief Procurement Officer Michelle Remmy – Chief Procurement Officer

23. Billing Rate Update b What is the issue with Billing Rates? b 4.5% Escalation Fee – What does this mean? b What do I need to submit for rate increase/decrease?

24. Profit Fee Worksheet b Profit Worksheet is a TOOL b Independently fill out the form b Both parties bring to the table for discussion b Analysis and Instructions