COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF TRANSPORTATION

August 4, 2004

Consultant Engineering Agreement Proposals Allowable Escalation Rate

Dear Mr. VanNatta:

Section 4.4.F of the Department's Publication 442, dated March 13, 2001 indicates that "The percentage of escalation per year should normally not exceed three (3) percent." This publication is attached as a hyperlink to each electronic Legal Agreement in ECMS. The Department will apply the same criteria for all Agreements. Please note that this does not prohibit performance based pay raises.

Construction Inspection wage rates will continue to utilize the etablished policy and agreement language.

The Department will consider exceptions to this policy if acceptable written justifaction is provided. Historical employee data for the previous two (2) escalations should be used, and the justification should include all employees that can reasonable by expected to appear in price proposals or invoices for the following year. The Consultant Agreement Section will hold these acceptable justifications on file for future reference.

You may contact Christopher A. Drda, P.E., at (717) 783-9309 or Bruce Montgomery, P.E. at (717) 787-9849 for any further clarification.

Sincerely,

M. G. Patel

for Gary L. Hoffman, P.E.
Deputy Secretary
Highway Administration