FHWA refuses to offer steel price relief

News ARTBA April 13, 2004
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The Federal Highway Administration sent guidance to its field offices and the state DOTs on steel price adjustments


The Federal Highway Administration sent guidance to its field offices and the state DOTs on steel price adjustments. The message said, in part: "We have concluded that we cannot participate in retroactive price adjustments in existing contracts. The Office of Chief Counsel researched the issue and found that we are legally prohibited from approving the use of Federal funds for retroactive price adjustments in existing contracts. The Secretary of Transportation concurs in our decision.


"We recognize that there may be cases where price adjustment clauses are needed. On that basis, we do not object to the use of price adjustment clauses on Federal-aid contracts with the following conditions. Should the State wish to add retroactive price adjustments solely with State funds and have the capability to do so within State laws, regulations, etc., they can do so on Federal-aid contracts on a non-participating basis. For projects with Finance Plans, any change should not adversely affect the approval conditions. If a state wishes to add a retroactive price adjustment clause, it should consider both the precedent setting nature of the action on firm, fixed price contracts and ways to limit the precedent."


An ARTBA member-staff task force has been meeting with top FHWA and AASHTO officials the past two months seeking relief for contractors, fabricators and suppliers adversely impacted by the dramatic increase in steel prices that have occurred since last December. The specific request was for federal participation in steel price adjustments offered by state DOT on contracts awarded before March 1, 2004, and steel purchased on those contracts after Jan. 1, 2004.


ARTBA has begun discussions with congressional offices and committees on the issue to determine if legislative relief is an option.


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