23 U.S.C. § 112 — Letting of contracts

(a) When a state transportation department builds or oversees construction, it must generally seek bids by advertisement, unless the Secretary approves another method. The Secretary must require plans, specs, and bidding methods that actually create real competition. (b) Bidding Requirements: (1) in general, unless the state shows the Secretary that another method is more cost-effective or there's an emergency, construction contracts must be competitively bid and awarded to the lowest responsive bidder who meets responsibility standards. No extra requirement can be imposed as a condition of awarding the contract unless it's lawful and specifically written into the advertised bid specs. (2) Contracting for engineering and design services: (A) these contracts — for things like program management, feasibility studies, engineering, or architecture — must be awarded the same way architectural and engineering contracts are negotiated under chapter 11 of title 40; (B) such contracts must be performed and audited under federal cost rules in 48 C.F.R. part 31; (C) instead of doing its own audits, a fund recipient can accept indirect cost rates that a federal or state agency has already established for a one-year period, if those rates aren't disputed; (D) once a firm's indirect cost rates are accepted this way, the recipient must use them for estimating, negotiating, administering, reporting, and paying the contract, without being limited by any separate cost ceiling; (E) before requesting or using this cost data, the recipient must notify the affected firm — the data stays confidential and can't be shared with another firm or agency outside the group sharing it without written permission, or at all if the law forbids disclosure; (F) rules (B) through (E) don't apply in West Virginia or Minnesota. (3) Design-build contracting: (A) a state or local transportation agency can award a design-build contract for a "qualified project" using any procurement process its state or local law allows; (B) final design under that contract can't start until the project complies with the environmental review in section 102 of the National Environmental Policy Act (NEPA); (C) a "qualified project" is one the Secretary has approved for design-build contracting under the Secretary's regulations; (D) within 90 days of SAFETEA-LU's enactment, the Secretary had to update regulations that still let agencies issue proposals, award design-build contracts, or authorize preliminary design work before finishing NEPA review, but require the agency to get the Secretary's sign-off first, and still block the contractor from finishing final design or building any permanent structure until NEPA review is done; (E) "design-build contract" means any agreement — whatever it's called — for one contractor to both design and build a project, approved by the Secretary. (4) Method of contracting — construction manager/general contractor: (A)(i) an agency can award a two-phase contract, covering preconstruction and construction services; (ii) during preconstruction, the contractor advises on scheduling, sequencing, cost, buildability, cost estimates, and risk; (iii) before construction starts, the agency and contractor may agree on a price and other terms; (iv) if they reach that agreement, the contractor builds the project at the agreed price and terms; (B) the contractor is chosen through a competitive process based on qualifications, experience, best value, or other factors the agency thinks appropriate; (C) timing — before NEPA review is finished, the agency may issue proposals, award the preconstruction-services contract, and authorize preliminary design work, as long as none of that limits the range of options still being considered; the agency cannot award the construction-services phase, or let anyone proceed with final design or construction, until NEPA review is complete; before authorizing construction, the Secretary must approve the agency's price estimate for the whole project and any price agreement with the contractor; the agency may do design work at its own expense before NEPA review is done, without it affecting later required approvals, and that design work can still be reimbursed as a project expense under section 109(r); the Secretary must require a contract clause allowing termination if a "no-build" option is chosen instead. (c) Before approving a competitively bid contract under (b), the Secretary must require a sworn statement from the winning bidder certifying that they didn't secretly agree with anyone else, collude, or otherwise restrain free competitive bidding on that contract. (d) A state or local government can't sign a competitively bid contract under (b) without following this section and getting the Secretary's advance agreement to the award. (e) Standardized Contract Clause on Site Conditions: (1) the Secretary must require, in contracts for projects approved under section 106, a fair contract clause covering site conditions, state-ordered work suspensions (other than ones caused by the contractor's fault or weather), and major changes to the scope of work — this clause can't require arbitration; (2) this requirement doesn't apply in a state that already has its own formal law for creating this kind of clause, or a state law that doesn't allow such a clause, and it doesn't apply to design-build contracts approved under (b)(3). (f) A state can hire one consultant, under a single contract, to do both the environmental review — impact statements or analyses — and the later engineering and design work, but only if the state separately reviews the environmental work for objectivity before sending it to the Secretary. (g) Temporary Traffic Control Devices: (1) the Secretary, after consulting federal and state officials, must issue rules on when and how to fund uniformed police, physical barriers between workers and traffic, and temporary traffic control devices during construction, utility, and maintenance work; (2) based on those rules, states must create separate pay items for those safety measures and include them in every relevant highway contract, to comply with section 109(e)(2); (3) states can still adopt stricter safety standards than the federal rules require; (4) "positive protective measures" means things like temporary traffic barriers, crash cushions, and other strategies — including full road closures — to prevent accidents in work zones.