[Federal Register Volume 59, Number 166 (Monday, August 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21243]
[[Page Unknown]]
[Federal Register: August 29, 1994]
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Part VI
Department of Transportation
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Federal Highway Administration
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Intelligent Vehicle-Highway Systems (IVHS): Procurement
Recommendations; Agency Response; Notice
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. 94-2]
Department of Transportation's Response to IVHS AMERICA's
Procurement Recommendations
agency: Federal Highway Administration (FHWA), DOT.
action: Notice.
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summary: The Department of Transportation (the Department) requested
that IVHS AMERICA, as part of its function as a utilized Federal
Advisory Committee, provide recommendations on procurement issues
pertaining to the national Intelligent Vehicle Highway Systems (IVHS)
program. IVHS AMERICA replied by submitting an October 1993 paper,
``Procurement Issues in IVHS Development and Deployment.'' This notice
sets forth the Department of Transportation's response to IVHS
AMERICA's procurement recommendations.
for further information contact: Beverly Russell, Joint Intelligent
Vehicle-Highway Systems Program Office, HVH-10, (202) 366-2202, Fax:
(202) 366-8712, or Julie Dingle, Office of the Chief Counsel, HCC-32,
Federal Highway Administration, 400 Seventh Street, SW., Washington, DC
20590, (202) 366-1394. To obtain a copy of IVHS AMERICA's paper,
``Procurement Issues in IVHS Development and Deployment,'' contact IVHS
AMERICA, 400 Virginia Avenue, SW., suite 800, Washington, DC 20024-
2730, (202) 484-4847, Fax: (202) 484-3483.
supplementary information: The objective of the national IVHS program
is to apply advanced technology in the areas of information processing,
communications, traffic control, and electronics to improve safety,
reduce congestion, increase mobility, reduce the energy and
environmental harm caused by transportation, and increase economic
productivity. The IVHS also incorporates the use of strategic planning
and innovative management practices at all levels of government to
implement those initiatives which enhance our national surface
transportation system, strengthen our economy, and benefit a broad
range of users.
The Department requested that IVHS AMERICA provide recommendations
on procurement in response to both public and private sector concerns
that existing Federal and State procurement laws could serve as a
constraint to IVHS deployment. The Department published a Report to
Congress on Nontechnical Constraints and Barriers to Implementation of
Intelligent Vehicle-Highway System (June 1994) which discussed several
of the procurement issues raised by IVHS AMERICA relating to IVHS
development and deployment.
In addition, the Department drafted a formal response to IVHS
AMERICA's recommendations. The text of the letter to Mr. James
Costantino, Executive Director, IVHS AMERICA, from the FHWA dated June
3, 1994, presenting the Department's response is set forth below:
Dear Mr. Costantino:
In further response to my November 22 letter, I am forwarding a
detailed response to IVHS AMERICA's recommendations on IVHS procurement
issues. We also plan to publish the response in the Federal Register.
Once again, I would like to thank IVHS AMERICA's Board of Directors,
the Coordinating Council, and the Procurement Task Force for their
efforts.
Sincerely yours,
E. Dean Carlson,
Executive Director.
Enclosure
Department of Transportation's Response to IVHS AMERICA's Procurement
Recommendations
Note: The problem statements and recommendations are taken
directly from the October 1993 paper, ``Procurement Issues in IVHS
Development and Deployment,'' forwarded by IVHS AMERICA in its role
as an advisory committee to the Department of Transportation. The
Department's responses are in italics.
1. Problem Statement: Contractors feel that the government insists
upon receiving more intellectual property rights than are necessary for
government purposes and does not pay the full value of such rights,
reducing the contractor's ability to offset its development costs
through sales to other government and private sector buyers.
First Recommendation--Government should only seek those
intellectual property rights necessary for their portion of an IVHS
system.
Department's Response: The Intermodal Surface Transportation
Efficiency Act (ISTEA) of 1991 states that one of the goals of the
national IVHS Program is to support the development and promotion of an
IVHS industry. Balancing competing interests in intellectual property
rights in a manner that will promote, rather than constrain, the
development and availability of IVHS technologies presents a challenge.
The Department of Transportation (the Department) is addressing this
challenge through its research and development and operational testing
activities. Partnership agreements, which serve as the contractual
mechanism for IVHS operational tests, clearly state the Department's
objective on intellectual property. Consistent with the federal patent
policy, non-federal participants in operational tests retain title to
the subject inventions as an incentive to develop technological
innovations. The Department retains the minimum license necessary to
meet the Federal government's needs, leaving contractors and partners
with the necessary rights to encourage private sector investment in the
development of commercial products.
Second Recommendation--Government should create a uniform specific
policy about what property rights will be sought, and also develop
specific publicized methods for seeking waivers of the usual public-
private allocation and be willing to negotiate these issues before a
contract is awarded.
Department's Response: As noted above, the Department's current
policy is to provide its partners and contractors with title to subject
inventions developed as part of the IVHS program. The Department
maintains only an irrevocable license. This is a minimum right which
cannot be ``negotiated away.'' However, the Department strongly
supports U.S. IVHS product development and would not take action which
would infringe on its commercial viability. The Department is therefore
committed to not only outlining this policy in its contracts and
partnership agreements, but to also, developing a set of principles and
guidelines which will be published within calendar year 1994.
Third Recommendation--Government should utilize the experience from
other IVHS procurements and other federal agencies to address this
issue.
Department's Response: We agree that the Department can learn from
other agencies which have developed innovative procurement mechanisms.
The Department reviewed other Federal agencies' policies before
developing the standard partnership agreement which is used for IVHS
operational tests. The agreement has been slightly refined and modified
based on experiences gained throughout the life of the Program. The
Department has also begun using other procurement mechanisms to solicit
IVHS projects (e.g., the broad agency announcement for the automated
highway system) and will continue to seek guidance on innovative means
to facilitate procurement.
2. Problem Statement: The development and deployment of IVHS
systems will frequently entail coordination of overlapping governmental
requirements, either of different levels (federal, state, etc.) or of
regional groups (e.g., EZ PASS), and nationwide deployment efforts will
involve applications of similar systems in varying state and local
jurisdictions. Coordination of these overlapping and sometimes
conflicting requirements will require time and resources as well as
present potential obstacles.
Recommendation--The federal government should spearhead efforts to
coordinate requirements, through demonstration/model rules for IVHS
procurements, seeking revisions to ISTEA authority to allow interstate
compacts so that regional requirements can be conformed, and through
providing information to the IVHS community about the scope and
existence of conflicting rules.
Department's Response: The Department recognizes the complexity and
cost involved in complying with procurement regulations that will vary
among jurisdictions and levels of government. Several efforts are
planned or underway to respond to the concerns of the IVHS community.
Adherence to multiple requirements, of course, will take time, but
the Department will seek to reduce unnecessary delays caused by
conflicts which may arise late in the course of IVHS projects. The
Department will encourage jurisdictions to involve their procurement
representatives early in the process of project formation so that they
are aware of project goals and can immediately set out to identify and
resolve potential conflicts. By involving procurement specialists early
in the project, jurisdictions may find that some procedures can be
established that will be satisfactory to all parties, eliminating
duplication of procedures.
Several efforts are underway at the Department to gather
information on multiple, conflicting requirements that inhibit the
progress of IVHS projects. The Department completed a study in
September 1993, investigating multi-jurisdictional issues encountered
by six metropolitan areas implementing varying scales of traffic
management projects. The Department has also completed case studies of
several IVHS operational tests involving multiple jurisdictions,
including Advance, HELP, Transcom/Transmit, and Advantage I-75, and
preparations are underway to monitor additional tests. Program-wide
evaluations of operational tests will yield more information on
specific problems encountered in multi-jurisdictional IVHS
procurements, and the Department will share evaluation results with the
public and the IVHS community.
Regional operational authorities may be an appropriate, efficient
mechanism for coordinating IVHS systems across jurisdictional
boundaries and reducing multiple requirements. The merits of
recommending legislative changes to permit the formation of interstate
compacts for deployment of IVHS are under consideration by the
Department. It should be recognized, however, that many communities,
municipalities, and states believe it is in the best interest of their
constituencies to retain operational and oversight authority over their
traffic management systems. The Department will, in any event, pursue
policies that will promote the successful coordination of IVHS across
jurisdictional lines.
3. Problem Statement: Many of the private and public sector
entities that will be involved in the procurement of IVHS systems are
inexperienced in high technology procurements, leading to delays,
missteps, and less effective competition.
Recommendation--Provide, support, expand, or publicize training
sessions on high technology procurement issues for state and local
procurement personnel and for businesses.
Department's Response: The Department strongly endorses developing
and promoting training on high technology procurement. The Department
is in the midst of its effort to provide support to State and local
governments and the private sector on high technology procurement
issues. The effort began in January 1993 with a conference on Public/
Private Partnerships: Managing the Legal Issues. The conference
included sessions on forming partnerships, defining project objectives,
intellectual property, and cost accounting. In January 1994, the
Department and IVHS AMERICA jointly sponsored a conference on
intellectual property rights under public/partnership agreements. As
part of its Fiscal Year 1994 activities, the Department is developing
two projects on procurement--an IVHS contracting course and a
procurement research project. The objective of the former is to cover
various aspects of contracting, including drafting specifications,
allocation of intellectual property rights, ways to minimize or avoid
protests and claims, and alternative funding mechanisms. The objectives
of the latter is to provide recommendations for improving the
efficiency of the procurement process and developing alternative models
for procurement of IVHS technology. The focus of the procurement
research project will be on developing methods to work within existing
organizational structures. The Department will continue to work closely
with IVHS AMERICA and other interested organizations in developing and
implementing procurement research, training, and informational efforts
which address all governmental levels (Federal, state, and local) and
the private sector.
4. Problem Statement: Cost accounting, auditing, and cost and price
certification requirements create an expensive burden on potential IVHS
contractors, increase the costs to the taxpayers of IVHS deployment,
and reduce the pool of effective competitors.
Recommendation--Minimize the procurements in which these
requirements are applied to those where the goals of the rules are
applicable.
Department's Response: In addressing cost accounting, cost
certification, and auditing requirements, it is important to
distinguish between direct Federal procurements and contracts under
Federal grants and cooperative agreements. Most government IVHS
procurement will be conducted by State and local [agencies] rather than
Federal government agencies. For these procurements, the Federal
requirements for cost accounting, cost certification and auditing of
commercial contractors are limited. IVHS procurements funded by Federal
grants and cooperative agreements to State transportation agencies
(which is the typical scenario) are subject to the Uniform
Administrative Requirements for Grants and Cooperative Agreements with
State and Local Governments (OMB Circular A-102, known as the ``common
rule''), codified by the Department of Transportation at 49 CFR Part 18
and the requirements of Title 23, U.S. Code. The common rule reflects
the doctrine of federalism, under which States are given the maximum
administrative discretion possible with respect to the national
programs they administer. When procuring property and services under a
grant or cooperative agreement, a State follows the same policies and
procedures it uses for procurements from its non-Federal funds.
Although such procurements are State administered, the Department has a
role in the IVHS program in providing technical assistance in the
development of State and local procurement laws and procedures. As
noted above, the Department is developing two projects on procurement.
The Department is also studying procurement issues as they arise in
IVHS operational test projects and will develop projects to address
those issues as appropriate.
Direct Departmental IVHS contracting efforts are focused primarily
at research and development and program support and are governed by the
Federal Acquisition Regulation (FAR). The FAR contains provisions for
exemptions from or waiver of submission of certified cost or pricing
data for negotiated contracts. FAR 15.804-3. A proposed rule was
published on March 28, 1994, to ``address unnecessarily requiring the
submission of cost or pricing data'' and to clarify when adequate price
competition exists. 59 FR 14458. The proposed rule states that when
there is a reasonable expectation that adequate price competition will
result on a particular procurement, ``the contracting officer should
rarely have a need to require the submission or certification of cost
or pricing data, regardless of the contract type.''
Current regulations provide that the contracting officer shall not
require submission or certification of cost or pricing data when prices
are (1) based on adequate price competition, (2) based on established
catalog or market prices of commercial items sold in substantial
quantities to the general public, or (3) set by law or regulation.
Price competition exists if (1) offers are solicited, (2) two or more
responsible offerors that can satisfy the Government's requirements
submit priced offers responsive to the solicitation's expressed
requirements, and (3) these offers compete independently for a contract
to be awarded to the responsible offeror submitting the lowest
evaluated price.
At the recommendation of industry, the proposed rule clarifies the
third condition for price competition by revising it to read: ``Award
will be made to a responsible offeror whose proposal is either (A) the
lowest price: or (B) Offers the greatest value (see 15.605(c)) to the
Government and price is a stated substantial factor in source
selection.'' Thus, agencies have flexibility to waive cost and pricing
data in a best value, negotiated procurement of the type generally used
for Federal IVHS procurements. The Department will give closer
consideration to the application of the cost and pricing requirements
in its IVHS procurements.
5. Problem Statement: With respect to procurement issues, the
potential for large products liability expenses may deter potential
IVHS vendors from participating in government procurements and, thus,
reduce competition and increase prices.
Recommendation--The government can seek statutory authority to
indemnify contractors, can take actions necessary to enable contractors
to invoke the government contract immunity doctrine, and can assist in
ensuring that reasonably-priced insurance is available to reduce the
uncertainties of potential product liability exposure.
Department's Response: The Department of Transportation, as well as
the Department of Justice, does not believe there has been a
demonstrated need for protectionist legislation to minimize potential
products liability expenses on the part of IVHS designers, developers,
or manufacturers. There has been no showing that liability concerns
have indeed inhibited investment in or development of IVHS
technologies. It is too early, accordingly, to consider the merits of
legislation or other actions to protect developers or operators from
liability risks. Additionally, no sufficient basis has been advanced
for the Department to pursue legislation regarding Federal
indemnification at this time. Such legislative proposals have budgetary
implications and need very strong demonstrated justification in order
to be considered by both the Departments of Transportation and Justice.
More specifically, with regard to the driver and traffic management
information systems, for example, the liability exposure of
participants in the automated traffic management systems (ATMS) and
automated traffic information systems (ATIS) does not appear to be
unique. It could be avoided, in any event, by the application of sound
engineering principles. The advanced vehicle control systems (AVCS)
carry the potential for enormous safety benefits. Their attendant risks
of liability correlate to the degree of safe engineering practices; the
National Highway Traffic Safety Administration and other organizations
are engaged in extensive testing and analyses of these systems. The
automated highway system (AHS), which poses the potentially greatest
safety benefits, also carries risks of system malfunctions. This
program, through, is still in its early stages of design and
development. Extensive testing and assessment will be accomplished
through the planned AHS consortium, and liability constraints will be
carefully analyzed within that context. Additionally, the high level of
industry interest in the AHS program suggests that the IVHS community
is not being unduly chilled by liability concerns at this time. It is,
accordingly, premature to conclude that liability issues pose
significant constraints to the deployment of this system.
It is the best government policy to encourage the safest, most
effective transportation advancements by maintaining a stimulus for the
IVHS developers to produce safe products and establish safe services.
Limiting liability would lessen the incentive for those capable of
controlling the design and manufacture of the products. Transferring
liability to the Federal government by, for example, indemnification of
IVHS manufacturers for a proportion of their liability costs or for
judgements that exceed available insurance coverage, would result in
similar safety disincentives. Such measures undermine the function of
tort liability as a means of causing a manufacturer or designer to act
with due care.
The Department is willing to work with IVHS AMERICA in exploring
the availability of insurance for IVHS development projects. To date,
to the Department's knowledge, participants in federally funded
operational tests have not encountered problems with insurance
coverage. Accordingly, legislation or other actions to ensure coverage
appear to be premature. Nevertheless, the Department agrees that it is
useful to include the insurance industry in relevant workshops and
outreach programs.
For these reasons, the Department is not disposed to suggest that
protective legislation is necessary to promote the implementation of
IVHS technologies at this time. The Department will, however, consider
the need for legislation, if any, during the course of our evaluations
of legal issues during the operational tests and the AHS development
program. The Department will also work with IVHS AMERICA and other
interested participants to encourage the involvement of the insurance
industry in public discussion concerning IVHS development.
6. Problem Statement: The cost of complying with varying
governmental recordkeeping and administrative requirements will add to
the cost of deploying IVHS systems at a time when government needs to
be most efficient.
Recommendation--Evaluate every administrative requirement that
differs from traditional commercial practices to determine whether it
is worth the added cost to the taxpayers and society, and take
aggressive action to reduce administrative cost of compliance with such
requirements.
Department's Response: A number of general procurement reform
activities are underway within the Government and the private sector,
and the Department will monitor those activities as they potentially
impact IVHS procurements. Many of the specific reasons for the higher
cost of doing business with the government identified in the IVHS
AMERICA procurement paper do not apply to IVHS procurements because of
the low dollar amount of these procurements or because of the nature of
the acquisitions, i.e., research studies rather than products. It
cannot be assumed, nor has it been demonstrated, that problems
encountered in large DOD, NASA or other agency systems acquisitions
apply to Departmental IVHS research and development activities. To the
extent that specific problems can be identified with State or local
IVHS procurements, the Department will sponsor research and work with
the interested parties to recommend solutions.
7. Problem Statement: Larger IVHS vendors believe they will be
unfairly excluded from providing the full range of IVHS design and
implementation services due to organization conflict of interest (OCI)
limitations at all levels of government.
Recommendation--Clarify the applicability of OCI rules and preempt
application of unreasonable OCI rules by State and local governments.
Department's Response: Again, it is important to distinguish
between direct Federal procurements and State and local procurements.
The Federal Acquisition Regulation (FAR) organizational conflict of
interest provisions do not apply to State and local procurements.
Accordingly, a contractor would not be restricted from eligibility for
State and local procurements as a result of the FAR conflict of
interest rules. States and local governments use their own procurement
procedures, including conflict of interest rules.
OCI rules in some form are necessary to provide governments with
impartial advice and to preserve fair and open competition. The
Department agrees, however, that the application of those rules to the
IVHS program should be studied. The Department will consider State and
local organizational conflict of interest rules as part of its research
on innovative procurement methods. The Department will make appropriate
recommendations and provide technical assistance in this area to State
and local governments in developing necessary laws and regulations for
acquisition of IVHS systems.
8. Problem Statement: Uncertainties resulting from public
procurement policies, political involvement with procurements, and
delays increase the cost of IVHS development and deployment and
discourage vendors from participating in this arena.
Recommendation--Engage in aggressive information exchange to reduce
delays due to unrealistic scheduling and lack of advance planning,
including seeking information from and distributing information to
State and local entities and the private sector.
Department's Response: The IVHS AMERICA paper addresses a number of
concerns on project uncertainties including procurement policies and
potential Congressional involvement in the management of the IVHS
program. The Department has some control over its own procurement
policies to improve multi-jurisdictional, multi-partner contracts.
However, the Department has little or no control over Congressional
earmarking, except to explain the negative impacts on the Program.
Congress has not interfered with the Department's implementation and
management of IVHS projects. Therefore, this should not be a great
concern for those interested in forming IVHS partnerships.
The primary problem with uncertainties in the government's
contracting process is largely due to lack of communication,
particularly in the early stages of a project. The Department
recognizes this problem and is beginning to aggressively examine means
to address this issue. As part of its Fiscal Year 1994 program, the
Department will test and examine the benefits of a voluntary pre-
agreement conference for early deployment and operational test
participants. The objective of the project is to examine the benefits
of a pre-negotiation process. The project's aim is to provide early and
greater involvement by subgrantees and contractors in the development
of the project and the negotiation of the partnership agreement. The
results of this project will be used to develop mechanisms to
facilitate multi-jurisdictional, multi-partner cooperation.
The Department will also include [a] representative of its
contracting offices in the early stages of a project so that advance
procurement planning can [be] facilitated.
As noted in the response under #2, the Department is also
continuing its effort to track and examine institutional issues in U.S.
operational tests. The objectives of the operational test case studies
is to examine institutional and legal impediments encountered, and how
they were addressed. The ``lessons learned'' emphasis of the studies
will be beneficial for future multi-jurisdictional, multi-partner
efforts.
The Department will continue to work with its partners, including
IVHS AMERICA, in its efforts to make IVHS procurement policies and
contractual agreements consistent and comprehendible.
9. Problem Statement: The lack of broad agreement on the definition
of public-private partnerships for IVHS and the methods by which they
should be implemented create uncertainty over applicable procurement
rules.
Recommendation--The Department should consult with the IVHS-
community and promulgate specific regulations or guidelines addressing
the use of public-private partnerships in IVHS development and
deployment in order to provide a definite framework for their
implementation and to ensure that full and open competition
requirements are not undermined inappropriately.
Department's Response: The Department disagrees that specific
regulations or guidelines are needed to address the use of public-
private partnerships in IVHS development and deployment. An IVHS
``partnership'' escapes a clear definition because it may mean
something very different depending on the objectives of a particular
endeavor or the area of emphasis--research, development, operational
testing, deployment, or commercial product development. Consequently,
the opportunities for innovation and flexibility associated with
public-private partnerships should not be constrained within Federal
guidelines or regulations.
The role of the Federal Government in IVHS public-private
partnership is as a provider of information on the different means of
structuring public-private partnership. A good start was the January
1994 conference, IVHS Public-Private Partnerships: Managing the Legal
Issues. The Federal Government also serves as a trend setter by using
its research and testing program to experiment with new contractual
mechanisms. IVHS AMERICA also plays a critical role in broadening the
use of public-private partnerships through its role as clearinghouse of
ideas on new contractual mechanisms for all levels of government and
the private sector. As the Federal IVHS institutional issues program is
further developed, the Federal Government will look more aggressively
towards providing outreach to State and local governments and the
private sector on IVHS public-private partnerships. In turn, the
Federal Government will continue its learning process by researching
and, where appropriate, applying innovative partnership arrangements
developed by other Federal agencies, States, local governments, and the
private sector.
Authority: 23 U.S.C. 315; 49 CFR 1.48; Pub. L. 102-240, Secs.
6051-6059, 105 Stat. 1914, 2189-2195.
Issued on: August 22, 1994.
Rodney E. Slater,
Federal Highway Administrator.
[FR Doc. 94-21243 Filed 8-26-94; 8:45 am]
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