32. For the section 5310 program, what is meant by “acquisition of public transportation service”?

Under the Formula Grants for the Enhanced Mobility of Seniors and Individuals with Disabilities (Section 5310) program, 49 U.S.C. 5310(b)(4) provides that the acquisition of public transportation services is an eligible capital expense.  FTA circular 9070.1G provides, on page III-11, the following:

e. Acquisition of transportation services under a contract, lease, or other arrangement. This may include acquisition of ADA-complementary paratransit services when provided by an eligible recipient or subrecipient as defined in section 5 of this chapter, above. Both capital and operating costs associated with contracted service are eligible capital expenses. User-side subsidies are considered one form of eligible arrangement. Funds may be requested for contracted services covering a time period of more than one year. The capital eligibility of acquisition of services as authorized in 49 U.S.C. 5310(b)(4) is limited to the Section 5310 program;

Acquisition of public transportation service, previously known as purchase of service, is the procurement of third party public transportation service by either a recipient or subrecipient.  Passing funds through from the recipient to the subrecipient for an operating project is not considered an acquisition of service.  Additionally, passing funds from a recipient to a subrecipient who in turn passes the funds onto a non-profit agency is not considered an acquisition of service. Only service that is competitively procured is considered an acquisition of service.