Sec.13a-175u-4. Project costs

(a) The Commissioner shall fund through project grants and project loans only those costs of an eligible bridge project which he finds necessary and reasonable. A cost is necessary and reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person in the conduct of a competitive business. In determining the necessity and reasonableness of a given cost, the Commissioner shall consider the following:

(1) whether the cost is of a type generally recognized as reasonable and necessary for the performance of the project taking into account established contracting or construction practices;

(2) restraints or requirements imposed by such factors as generally accepted sound business practices, Federal and state laws and regulations, and contract terms and specifications;

(3) generally accepted accounting practices and principles appropriate under the circumstances;

(4) whether the cost would be incurred by a prudent businessman under the circumstances, considering his responsibilities to the owners of his business, his employees, his customers, the government, and the public at large; and

(5) any limitations or exclusions set forth in these regulations or the applicable project grant agreement or project loan agreement.

(b) In any given project the reasonableness or necessity of certain items of cost may be difficult to determine. In order to avoid a possible subsequent disallowance or dispute based on a cost being found unnecessary or unreasonable, a municipality may seek advance approval from the Commissioner as to the treatment to be accorded such cost.

(c) Those items of cost which ordinarily will be considered eligible project costs include:

(1) preliminary engineering activities, including engineering studies undertaken to determine whether a bridge is eligible for inclusion on the priority list of eligible bridge projects, provided that the aggregate cost thereof does not exceed 15% of the construction costs of the project;

(2) property acquisition;

(3) construction engineering services including inspection and materials testing, provided that the cost thereof does not exceed 15% of the construction costs of the project;

(4) construction costs;

(5) municipally owned utility adjustment and relocation costs; and

(6) in the case where a municipality undertakes a project using its own labor, equipment and material, the following:

(A) payroll costs of municipal employees working on the project;

(B) burden and fringe costs, such as FICA, vacation pay, sick leave pay, and pension contributions, of such employees so long as such costs can be audited;

(C) documented costs of materials;

(D) costs per hour of an item of equipment so long as such costs can be audited; if such costs cannot be audited then the then current equipment charges published by the Federal Emergency Management Agency.

(d) Any project costs incurred prior to the start of construction of an eligible bridge project will be eligible for reimbursement so long as actual construction of the project for which such costs were incurred commences no earlier than the date upon which the Commissioner issues a commitment to fund the project.

(e) Those items of cost which ordinarily will not be eligible for local bridge program funding include:

(1) administration, including the wages or salaries of municipal employees not working directly on the project;

(2) overhead costs of a municipality performing construction on its own account; and

(3) interim or final audits.

(Effective October 24, 1984; Amended October 7, 1999)