B-125052, OCT. 10, 1960

B-125052, OCT. 10, 1960

TO MR. GERALD W. COLLINS, MANAGER, TRANSPORTATION AND COMMUNICATION DEPARTMENT, CHAMBER OF COMMERCE OF THE UNITED STATES:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 22, 1960, CONCERNING REPORTS OF THE GENERAL ACCOUNTING OFFICE WHICH CONTAIN STATEMENTS REGARDING THE USE OF PRIVATE CONSULTING ENGINEERS IN THE FEDERAL-AID HIGHWAY PROGRAM. YOU APPARENTLY HAVE REFERENCE TO A REPORT DATED DECEMBER 14, 1959, BY OUR OFFICE TO THE CONGRESS ON OUR REVIEW OF THE FEDERAL-AID HIGHWAY PROGRAM AS ADMINISTERED BY THE BUREAU OF PUBLIC ROADS IN THE STATES OF MARYLAND, PENNSYLVANIA, AND WEST VIRGINIA. THE FOLLOWING INFORMATION SUMMARIZES THE CONTENT OF THIS SUBJECT AS DISCUSSED IN THAT REPORT.

THE USE OF CONSULTING ENGINEERS IN THE FEDERAL-AID HIGHWAY PROGRAM IS, APART FROM ANY OTHER CONSIDERATIONS, ESSENTIALLY A MATTER OF COMPLIANCE WITH HIGHWAY LEGISLATION AND PRESCRIBED FEDERAL REGULATIONS. SECTION 302 OF TITLE 23, U.S.C. STATES THAT:

"/A) ANY STATE DESIRING TO AVAIL ITSELF OF THE PROVISIONS OF THIS TITLE SHALL HAVE A STATE HIGHWAY DEPARTMENT WHICH SHALL HAVE ADEQUATE POWERS, AND BE SUITABLY EQUIPPED AND ORGANIZED TO DISCHARGE TO THE SATISFACTION OF THE SECRETARY DUTIES REQUIRED BY THIS TITLE. * * *"

THE REGULATIONS ISSUED BY THE SECRETARY OF COMMERCE PERTINENT TO THE ORGANIZATION OF STATE HIGHWAY DEPARTMENTS PROVIDE:

"SECTION 1.3 ORGANIZATION AND POWERS OF STATE HIGHWAY DEPARTMENT.

EACH STATE SHALL MAINTAIN AT ITS OWN EXPENSE A STATE HIGHWAY DEPARTMENT * * * HAVING ADEQUATE POWERS AND SUITABLY EQUIPPED AND ORGANIZED TO DISCHARGE TO THE SATISFACTION OF THE SECRETARY THE DUTIES REQUIRED BY THE ACT AND BY THE REGULATIONS IN THIS PART. * * *

"SECTION 1.8 SURVEYS, PLANS, SPECIFICATIONS, AND ESTIMATES.

"/3) THE SERVICES OF CONSULTING ENGINEERS AND PRIVATE ENGINEERING ORGANIZATIONS MAY BE UTILIZED ON A CONTRACT BASIS FOR DESIGN, PREPARATION OF PLANS, SPECIFICATIONS, AND ESTIMATES, AND IN SPECIAL CASES FOR CONSTRUCTION ENGINEERING OTHER THAN GENERAL SUPERVISION, ONLY UNDER ONE OR MORE OF THE FOLLOWING CIRCUMSTANCES: (I) THE WORK IS OF UNUSUAL CHARACTER REQUIRING HIGHLY SPECIALIZED KNOWLEDGE AND EXPERIENCE; (II) IT WOULD NOT BE POSSIBLE TO ENLARGE THE STAFF OR PERSONNEL AVAILABLE TO THE STATE SO AS TO PERFORM THE ENGINEERING SERVICES ON THE PROJECT WITHIN A REASONABLE TIME; OR (III) THE STATE HAS A PROGRAM SUBSTANTIALLY LARGER THAN NORMAL OR EXPECTED IN FUTURE YEARS AND IT DESIRES TO EMPLOY CONSULTING ENGINEERS RATHER THAN BUILD UP ITS ORGANIZATION FOR A COMPARATIVELY SHORT PERIOD.'

THE GENERAL ACCOUNTING OFFICE REVIEW OF THE FEDERAL-AID HIGHWAY PROGRAM IN REGION 2, HAGERSTOWN, MARYLAND, COVERING THE STATES OF MARYLAND, PENNSYLVANIA, AND WEST VIRGINIA, DISCLOSED THAT THESE STATES WERE CONTRACTING EXTENSIVELY WITH CONSULTING ENGINEERS FOR THE USUAL TYPES OF ENGINEERING THAT WERE CONTEMPLATED BY THE STATUTE AND REGULATIONS QUOTED ABOVE, TO BE DONE BY STATE HIGHWAY DEPARTMENT ENGINEERING FORCES. THE STATUTORY AUDIT RESPONSIBILITIES OF THIS OFFICE REQUIRED THAT THIS SITUATION BE BROUGHT TO THE ATTENTION OF THE CONGRESS WHICH WAS DONE IN THE REPORT DATED DECEMBER 14, 1959. IN ITS RESPONSE ON THIS MATTER, THE BUREAU OF PUBLIC ROADS STATED THAT IT HAS BEEN WORKING AND WILL CONTINUE TO WORK THROUGH ITS FIELD OFFICES TO ENCOURAGE THE STATE HIGHWAY DEPARTMENTS TO BUILD UP THEIR OWN FORCES FOR ACCOMPLISHING AS MUCH OF THEIR OWN DESIGN WORK AS IS PRACTICABLE WITH STATE FORCES, THEREBY EVIDENCING THE AGREEMENT OF THE BUREAU AS TO THE INTENT OF THE LAW AND REGULATIONS.

IN THE MATTER OF THE RELATIVE COSTS OF WORK DONE BY CONSULTING ENGINEERS AND BY STATE ENGINEERING FORCES, THE GENERAL ACCOUNTING OFFICE CONSIDERED SUCH COSTS ONLY AS THEY AFFECT THE FEDERAL GOVERNMENT. ON WORK DONE BY CONSULTING ENGINEERS, THE ENTIRE CHARGES THEREFOR TO THE STATES ARE ELIGIBLE FOR FEDERAL PARTICIPATION. THE ELEMENTS COMPRISING THOSE CHARGES ARE (1) PERSONAL SERVICE COSTS OF PERSONNEL ENGAGED DIRECTLY ON THE WORK, (2) OVERHEAD OF THE CONSULTING FIRM, AND (3) PROFIT. FOR ENGINEERING WORK BY STATE FORCES, ONLY THE PERSONAL SERVICE COSTS OF PERSONNEL DIRECTLY ENGAGED ON THE WORK ARE ELIGIBLE FOR FEDERAL PARTICIPATION. UNDER REGULATIONS ISSUED BY THE SECRETARY OF COMMERCE, OVERHEAD COSTS INCURRED BY STATE HIGHWAY DEPARTMENTS MAY NOT BE REIMBURSED.

"SECTION 1.8 SURVEYS, PLANS, SPECIFICATIONS, AND ESTIMATES.

"/B) (1) * * * INASMUCH AS THE ACT REQUIRES EACH STATE TO MAINTAIN AT ITS OWN EXPENSE A STATE HIGHWAY DEPARTMENT HAVING ADEQUATE POWERS AND SUITABLY EQUIPPED AND ORGANIZED TO DISCHARGE THE DUTIES REQUIRED, NO PART OF THE COST OF MAINTAINING THE CENTRAL OFFICE OF A STATE HIGHWAY DEPARTMENT OR THE CENTRAL OFFICE OF ANY PUBLICLY MAINTAINED ENGINEERING ORGANIZATION WHICH MAY BE UTILIZED BY THE STATE SHALL BE PAID WITH FEDERAL FUNDS.'

A FURTHER CONSIDERATION HAS TO DO WITH THE SALARIES OF ENGINEERING PERSONNEL. ACCORDING TO THE BUREAU OF PUBLIC ROADS, ONE OF THE PRINCIPAL REASONS FOR THE LACK OF SUFFICIENT ENGINEERING PERSONNEL IN SOME STATE HIGHWAY DEPARTMENTS IS THE INABILITY OF THE STATES TO COMPETE WITH CONSULTING ENGINEERING FIRMS. THIS CONDITION WOULD INDICATE THAT THE COST OF DIRECT ENGINEERING SERVICES ON STATE CONTRACTS WITH CONSULTING ENGINEERS WOULD ORDINARILY BE HIGHER THAN IF THE WORK WERE DONE BY STATE FORCES.

IT SEEMS CLEAR FROM THE ABOVE THAT REIMBURSEMENTS TO THE STATES BY THE FEDERAL GOVERNMENT FOR ITS PARTICIPATING SHARE IN THE COST OF ENGINEERING BY STATE FORCES ARE LESS THAN THEY WOULD BE FOR THE SAME ENGINEERING BY CONSULTING ENGINEERS, AT LEAST TO THE EXTENT OF OVERHEAD AND PROFIT.

REPORTING ON THE USE OF CONSULTING ENGINEERS HAS BEEN IN PURSUANCE OF THE STATUTORY RESPONSIBILITY OF THE GENERAL ACCOUNTING OFFICE TO EXAMINE AND REPORT TO THE CONGRESS ON COMPLIANCE WITH FEDERAL HIGHWAY LEGISLATION AND RELATED REGULATIONS AND THE EFFECT THEREOF ON COST TO THE FEDERAL GOVERNMENT. WHETHER THE CONDITIONS STIPULATED BY SUCH LEGISLATION AND REGULATIONS ARE PROPER AS THEY AFFECT THE PUBLIC INTEREST AND PARTICULARLY CONSULTING ENGINEERS, ARE MATTERS OF CONGRESSIONAL POLICY WHICH ARE NOT WITHIN THE PROVINCE OF THE GENERAL ACCOUNTING OFFICE TO EVALUATE.

IT SHOULD BE NOTED THAT OUR REPORT DIRECTED ATTENTION, NOT TO SPECIALIZED SERVICES SUCH AS BRIDGES AND OTHER COMPLEX STRUCTURES, BUT SPECIFICALLY TO THE REGULAR TYPES OF ENGINEERING FOR ORDINARY HIGHWAY CONSTRUCTION. EVEN AS TO THE LATTER, THE GENERAL ACCOUNTING OFFICE DOES NOT CONSTRUE THE LAW AND REGULATIONS AS NECESSARILY REQUIRING THAT ALL SUCH ENGINEERING BE DONE BY STATE FORCES. HOWEVER, WHEN SUCH A HIGH VOLUME OF THIS ENGINEERING IS DONE BY CONSULTING ENGINEERS, AS IN THE CASES OF MARYLAND, PENNSYLVANIA, AND WEST VIRGINIA, IT IS APPARENT THAT THE PURPOSES OF THE APPLICABLE HIGHWAY LEGISLATION AND REGULATIONS ARE NOT BEING REASONABLY CARRIED OUT.

WE TRUST THAT THE ABOVE INFORMATION WILL CLARIFY OUR POSITION WITH RESPECT TO THE USE OF CONSULTING ENGINEERS IN THE FEDERAL-AID HIGHWAY PROGRAM.