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 and prepared a detailed final inspection report for the Washington office. The final payment of the remaining Federal share of the project costs was contingent upon the final acceptance of the work by the District Engineer.
 * Maintenance, the State’s responsibility with no Federal funding, was monitored by the ORPPE District Engineer’s staff through annual inspections and reports to the Washington office. At the local level, deficiencies were discussed and corrective action was normally initiated promptly by the State.

The project costs not eligible for Federal participation were:
 * Administrative costs of maintaining the State highway department and its staff, except those direct costs involved in providing the engineering supervision of the work after construction was initiated by contract or the actual costs of construction by force account (costs of labor, equipment, materials and overhead).
 * Cost of surveys and preparing the plans, specifications and estimates.
 * Costs of advertising projects for construction by contract.
 * Costs of necessary right-of-way related damage costs.
 * Costs incurred as a result of acceptance of other than the lowest bid unless the acceptance of a higher bid was justified and concurred in by the Federal agency.
 * Costs of work not included in the approved PS&E or changes that were not approved by the Federal agency.
 * Engineering inspection and contingency costs in excess of 10 percent of project estimate.
 * Costs in excess of the amount provided for in the Project Agreement.

After enactment of the Federal Highway Act of 1921, two significant changes were made in the rules and regulations: (1) Because the States were required in 1921 to designate a limited State highway system of main roads, Project Statements submitted by a State for proposed construction thereafter were limited to routes or sections of routes that were a part of the approved system and (2) when the PS&E for an approved project was recommended for approval by the local Federal District Engineer, the State was authorized to proceed immediately with initiating the steps leading to construction.

In addition to selecting their Federal-aid systems, each State was required to prepare an annual program of those specific highway improvements it wished to undertake with available Federal assistance during the year and their costs. This measure was required to assure an orderly development of projects.

Another step not mentioned in the foregoing was the requirement that if a project was to be built on a new location, rather than an improvement of an existing road, the State would have to study alternative locations to decide the best route and the most economical type of road to construct. In the early days of the program, this step did not come up too often because the major portion of the work was the improvement of existing roads. However, the location of a new road was another item needing Federal approval before the project could be designed. The project design might also have several alternative designs in order that the most economical and serviceable product could be obtained.

These procedures were relatively simple and remained so until the 1950’s. The separate roles of the States and the Federal Government in the step-by-step project procedures that were thus established set the basic pattern for the cooperative administration of the Federal-aid program. For many years thereafter an evolutionary period existed during which the States and Bureau of Public Roads (BPR) were continuously developing methods and ways to improve, simplify and expedite the movement of projects through the various steps. Some of the more important efforts and actions taken were:
 * The authority of the States to proceed with construction upon recommendation of the District Engineer was extended to include subsequent major revision of the plans, even when the changes would require additional Federal-aid funds.
 * Arrangements for “sectionalizing” projects were developed to give the States wide latitude in placing work under contract by sections and completing sections independently of each other. At the same time, the number of Project Statements and Project Agreements was substantially reduced.
 * Project Agreements were prepared in Washington for the signature of the Secretary before they were sent to the State for signature to expedite subsequent Federal payments.
 * A separate division was established in the BPR Washington office to handle the review and approval of Federal-aid payment vouchers; a minimum voucher amount of $1,000 was established; and, to avoid sending vouchers back to the States for correction of small errors, a practice was adopted using a 5 percent retent or withholding to cover as many of these errors as possible.
 * The principle of using stage construction on Federal-aid construction was adopted, e.g., approval of a project for grading and drainage only, with deferral of paving until a later time when justified.

To assure uniform quality of the roads and to speed up the detailed work, both at the State level and the Federal level, some standardization was needed: 220
 * Standard specifications and format were developed by most States, eliminating the need for the development and submission of individual specifications for each project.
 * Standards were developed jointly between State and BPR engineers for uniform methods of sampling, testing and reporting on road materials, and the standards were published in a department bulletin.
 * Through AASHO committee action, minimum design standards were developed for various classes of roads and structures.
 * Standard forms of various types were developed and approved for use, such as bid forms