FTA adds exemptions to 5-year rule

The Federal Transit Administration (FTA) issued a Dear Colleague letter that exempts certain classes of contracts from requiring prior FTA approval for periods of performance in excess of five years. The FTA's June 15 letter exempts contracts involving non-construction-related services such as software maintenance consulting and other professional services awarded for a discrete, identifiable item. The waiver does not exempt general engineering consultant services, however. In addition, prior FTA approval is no longer required for non-exclusive revenue contracts that, due to their nature and the capacity of the transit system, are not limited by physical constraints or to any specific number of entrants. Some exclusive revenue contracts are exempted under certain conditions: when contracts are awarded through a competitive process and when economic analysis shows that a contract term longer than five years is necessary to allow the contractor to recover any required capital investment and a reasonable return on investment.