Regulatory Alert: FAA Releases Updated Guidelines on Airport Contract Provisions

This afternoon, the Federal Aviation Administration (FAA) released updated guidelines on contract provisions that airport sponsors, as grant recipients, must include in any procurement and contract documents associated with certain projects. These contract provisions apply to airport contractors (which must also ensure any subcontractors comply) and are used by airport sponsors to ensure they remain in compliance with their federal grant obligations under the Airport Improvement Program (AIP) and Infrastructure Investment and Jobs Act (IIJA). FAA last updated the guidelines on contract provisions in 2023 under the Biden administration.

As further discussed below, many of the changes made in the guidelines reflect executive orders that President Trump has issued this year, the implementation of certain provisions from the FAA Reauthorization Act of 2024, and recent amendments to the Disadvantaged Business Enterprise (DBE) Program. We highly encourage airport sponsors to carefully review the updated guidelines, which are particularly important for AIP- and IIJA-funded projects.

Background. Under federal law, airport sponsors that have accepted federal financial assistance under the AIP or any of the three airport-related programs under IIJA agree to comply with certain terms and conditions outlined in grant agreements executed with FAA. In addition, sponsors must ensure that specific language and provisions are included in certain procurement and contract documents, especially for projects that are funded with AIP or IIJA grants.

FAA maintains a document, “Contract Provision Guidelines for Obligated Sponsors and Airport Improvement Program Projects,” which provides guidance to airport sponsors on which provisions need to be included in which types of contracts and solicitations. The last update was made in 2023, and our members have been anxiously awaiting an updated version from the new administration.

Overview of Changes to Guidelines. Based on our initial review of the updated guidelines, FAA made several material changes that will affect the contract provisions required in certain procurement and contract documents. These updates include the following:

• Affirmative Action, Equal Employment Opportunity (EEO), and Related Provisions: The contract provisions relating to affirmative action, EEO, and the prohibition of segregated facilities have been removed from FAA’s guidelines. The removal of these provisions is consistent with an executive order that President Trump issued in January, which revoked a 1965 executive order requiring nondiscrimination and affirmative action for government contractors. You can read our January 23 Regulatory Alert for additional details. Keep in mind that other nondiscrimination laws and regulations still apply and remain in effect.

• Disadvantaged Business Enterprise Program: In the guidelines, FAA updated the appendix that is applicable to airport sponsors with DBE programs and discusses contract provisions required in certain solicitations and contracts. The appendix was updated to (a) reflect changes made to the DBE Program by the U.S. Department of Transportation’s (DOT) interim final rule (IFR) in early October and (b) outline bid information requirements for negotiated procurements and design-build projects. Further details regarding DOT’s IFR are provided in our October 3 Regulatory Alert.

• Federal Funding for Certain Unmanned Aircraft Systems (UAS): Under section 936 of the FAA reauthorization law, Congress prohibited DOT and FAA from awarding an AIP grant to an airport sponsor that operates a UAS, UAS detection system, or UAS mitigation system in the performance of the grant, with limited exceptions, if the system was manufactured by an entity located in China, Russia, Iran, North Korea, Venezuela, or Cuba. Congress clarified that state and local governments may procure or operate these systems if purchased with non-federal funds. In the guidelines released today, FAA created a new appendix to fully implement the provision.

• Notable Omissions from FAA’s Contract Provision Guidelines: Perhaps most notably, based on our review, FAA’s updated guidelines do not appear to include or discuss any provisions relating to diversity, equity, and inclusion (DEI) programs or immigration enforcement, which were controversial conditions included in FAA’s grant agreement released earlier this year. Additional details on the provisions and the grant agreement update are discussed in our April 28 Regulatory Alert.