**Chapter 4**

**4 - [Methods of Solicitation and Selection]{.underline}**

4.0 [Overview]{.underline} (5/96)

4.1 [Micro-Purchases]{.underline} (6/03)

4.1.1 [Purchase Cards BART]{.underline} (6/98)

4.1.2 [Consolidation of Micro-Purchases]{.underline} (11/03)

4.2 [Small Purchases]{.underline} (5/96)

4.3 [Competitive Procurement Methods]{.underline} (5/96)

4.3.1 [Overview \-- Sealed Bids v. Competitive Proposals]{.underline}
(5/96)

4.3.2 [Common Elements of Solicitation Process]{.underline} (5/96)

4.3.2.1 [Advertising and Publicizing Solicitation]{.underline} (5/96)

4.3.2.2 [Solicitation Mailing List]{.underline} (5/96)

4.3.2.3 [Solicitation]{.underline} (5/96)

4.3.2.4 [Pre-Bid and Pre-Proposal Conferences]{.underline} (11/03)

4.3.2.5 [Amendment of Solicitations]{.underline} (5/96)

4.3.3 [Common Elements of Offers]{.underline} (5/96)

4.3.3.1 [Receipt of Offers]{.underline} (5/96)

4.3.3.2 [Federally Required Submissions with Offers]{.underline} (5/96)

> 4.3.3.2.1 [Certification Regarding Debarment, Suspension, and Other
> Responsibility Matters]{.underline} (5/96)

4.3.3.2.2 [Buy America Certification]{.underline} (11/03)

4.3.3.2.3 [Lobbying Certification]{.underline} (5/96)

4.3.3.3 [Other Submissions]{.underline} (5/96)

4.3.3.3.1 [Acknowledgment of Solicitation Addenda]{.underline} (5/96)

4.3.3.3.2 [Bid Guarantee]{.underline} (5/96)

4.4 [Sealed Bids (Invitation for Bids)]{.underline} (5/96)

4.4.0 [Overview]{.underline} (5/96)

4.4.1 [Solicitation]{.underline} (5/96)

4.4.2 [Bid Opening]{.underline} (5/96)

4.4.3 [Single Bid]{.underline} (3/04)

4.4.4 [Responsive Bidder]{.underline} (5/96)

4.4.5 [Bid Mistakes]{.underline} (5/96)

4.4.6 [Bid Withdrawal]{.underline} (5/96)

4.5 [Competitive Proposals (Request for Proposals)]{.underline} (5/96)

4.5.1 [Solicitation & Receipt of Proposals]{.underline} (5/96)

4.5.2 [Evaluation of Proposals]{.underline} (11/03)

4.5.3 [Competitive Range]{.underline} (5/96)

4.5.4 [Discussions and Clarifications]{.underline} (5/96)

4.5.5 [Additional Submissions]{.underline} (5/96)

4.5.5.1 [Request for Revised Proposals]{.underline} (5/96)

4.5.5.2 [Request for Best and Final Offer]{.underline} (5/96)

4.5.6 [Award Based on Initial Proposals]{.underline} (5/96)

4.5.7 [Withdrawal of Proposals]{.underline} (5/96)

4.5.8 [Debriefing Unsuccessful Offerors]{.underline} (5/96)

4.6 [Non-Competitive (Sole Source) Proposals]{.underline} (5/96)

4.6.1 [Justification for Use]{.underline} (5/96)

4.6.2 [Negotiation of Contract]{.underline} (5/96)

4.6.3 [Associated Capital Maintenance Item]{.underline} (5/96)

4.6.4 [Unsolicited Proposals]{.underline} (10/05)

4.7 [Special Procurement Methods]{.underline} (5/96)

4.7.1 [Multi-Step Procurements]{.underline} (5/96)

4.7.2 [Governmental Prices and Contracts]{.underline} (5/96)

4.7.2.1 [Procurements from General Services Administration]{.underline}

> [Schedules]{.underline} (5/96)

4.7.2.2 [State and Local Schedules]{.underline} (6/03)

4.7.2.3 [State versus FTA Requirements]{.underline} (5/96)

::: Definition-Term
4.7.3 [E-Commerce: Reverse Auctions]{.underline} (6/03)
:::

**4.0 OVERVIEW**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| The methods of solicitation and selection allowed within the Federal  |
| contractual sphere [^1] are listed in § 9 of FTA Circular 4220.1E.    |
| You may choose:                                                       |
|                                                                       |
| -   micro-purchases only for contract amounts less than \$2,500;      |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   small purchase procedures only for contract amounts less than the |
|     simplified acquisition threshold (currently \$100,000);           |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   sealed bids where                                                 |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   you have a complete, adequate, and realistic specification or     |
|     purchase description,                                             |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   two or more responsible bidders are willing and able to compete,  |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   the procurement lends itself to a firm fixed price contract and   |
|     the selection can be made primarily on the basis of price, and    |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   no discussion with bidders is needed after receipt of offers;     |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   competitive proposals; or                                         |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| -   noncompetitive proposals (sole source) procurement                |
|     [only]{.underline} if you can justify not soliciting additional   |
|     competition in the manner explicitly defined in FTA Circular      |
|     4420.1E § 9.h.                                                    |
|                                                                       |
| ::: Definition-Term                                                   |
| State law usually restricts the method of procurement more tightly    |
| than these Federal requirements.                                      |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DEFINITION**

[Solicitation]{.underline} ‑ A purchasing entity\'s request for offers,
including a telephone request for price quotations, an invitation for
bids, or a request for proposals.

[Offer]{.underline} ‑ A promise to provide goods or services according
to specified terms and conditions in exchange for material compensation.

[Acceptance]{.underline} ‑ Agreement to the terms of an offer. In most
jurisdictions, \"award\" by a public agency can constitute acceptance,
and may create an enforceable contract.

**DISCUSSION**

**Based on your procurement plans and the specification developed with
your customer, you will generally initiate the procurement by soliciting
offers. Depending on the requirements of the method of procurement you
choose, you may solicit offers in a telephone call or in many other
forms ranging up to multi‑volume requests for proposals. When you
receive offers (whether quotations, bids, or proposals), you may accept
one, reject them all, or (unless you are using the sealed bidding
method) request additional offers. Regardless of the procurement method,
when you accept an offer, you create a binding contract according to the
terms of the offer.**

**Best Practices**

When you and your customer have specified the requirement, you will
generally solicit offers from suppliers. The solicitation ranges from a
telephone call to make a reasonable price determination (in the case of
a micro‑purchase), to a lengthy request for proposals in the case of a
competitive proposal. The terms in your solicitation of offers are
substantially determined by the method of selection you will use.
Because your contract will ultimately be based on the terms of the
offers, the selection of a method of procurement and the terms in your
solicitation of offers are important and you will have the most success
if they are based on well‑tested practices and documents.

The solicitation of offers places you in the position of controlling the
competitive process. You, rather than the supplier, decide whether to
accept or reject the offers. A technical exception to this competitive
model occurs in some micro-purchases and small purchases when, based on
catalogues or other supplier information, you issue a purchase order (or
similar document) without receiving a direct offer. In this case you are
technically making the offer, and the supplier is in a position to
accept (usually by performing) or reject (usually by notice to you).

A solicitation does not bind your agency to purchase the goods or
services solicited, although it may create an implied contract of fair
dealing with your suppliers. [^2] Although you will want to treat
suppliers as partners and with respect for the purposes of long run
competition and cost‑effective business relations, many agencies make
clear in their solicitations that they reserve the right to reject all
offers, i.e., that they are merely soliciting offers and that the
solicitation does not create any rights in suppliers. The price
quotations, bids, or proposals submitted by suppliers should be firm
offers to your agency to supply the goods or services upon the material
terms in your solicitation.

In sealed bidding, there is generally no further modification of
material terms: your agency either accepts one of the offers or rejects
all bids. In the other procurement methods, you may request or receive
additional offers before you accept one.

Although FTA Circular 4220.1E provides you broad choice and discretion,
state laws and local policy often require that you use sealed bids in
certain procurements and that you use competitive proposals in others.
Based on state law and your own practice, you may find the method of
procurement is largely determined by the type of services or goods you
are procuring. [^3] If the procurement is too large for micro‑purchase
or small purchase procedures, you will generally invite sealed bids for
selection primarily based on price, or request proposals which will be
evaluated according to additional criteria before a selection is made.
Under certain restricted circumstances, you may solicit a
non‑competitive proposal from a sole source. Purchases under contracts
with sister states or local agencies may also meet the Federal
requirements. [^4]

If the legal and policy requirements leave you with more than one
available procurement method, your choice among these methods will
depend largely on:

-   the time and expense required of you and your suppliers for the
    respective methods, and

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-   the likelihood of getting the best buy for your customers.

When you accept an offer, you establish a contract.

**4.1 MICRO‑PURCHASES**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| § 9.a. of FTA Circular 4220.1E authorizes the use of micro‑purchases  |
| as a method of procurement, when appropriate. If used, the following  |
| apply:                                                                |
|                                                                       |
| 1\. Micro‑purchases are defined as those purchases under \$2,500.     |
|                                                                       |
| 2\. Micro-purchases may be made without obtaining competitive         |
| quotations if the grantee determines that the price to be paid is     |
| fair and reasonable.                                                  |
|                                                                       |
| 3\. Micro‑purchases are exempt from the Buy America requirements.     |
| [^5]                                                                  |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| 4\. Micro‑purchases should be equitably distributed among qualified   |
| suppliers in the local area and purchases should not be split to      |
| avoid the requirements for competition above the \$2,500              |
| micro‑purchase threshold.                                             |
|                                                                       |
| 5\. The requirements of the Davis‑Bacon Act apply to construction     |
| contracts between \$2,000 and \$2,500. [^6]                           |
|                                                                       |
| 6.  Other than the Davis-Bacon Act clauses for construction contracts |
|     between \$2,000 and \$2,500, no other Federal clauses are         |
|     required.                                                         |
|                                                                       |
| 7\. Minimal documentation is required: (a) a determination that the   |
| price is fair and reasonable and (b) how this determination was       |
| derived.                                                              |
+-----------------------------------------------------------------------+

**DEFINITION**

[Micro‑purchasing]{.underline} ‑ A method of procuring goods and
services under \$2,500. A micro-purchase does not require obtaining
competitive quotations if you determine that the price to be paid is
fair and reasonable.

**DISCUSSION**

**If permitted by state and local requirements, purchases under \$2,500
no longer require more than one price to satisfy Federal requirements,
as long as you determine that the price paid is fair and reasonable. You
can include a \"fair and reasonable price\" determination in your forms
used for micro‑purchases. Rotating through a list of the suppliers is
one method to equitably distribute the micro‑purchases among qualified
suppliers.**

**Best Practices**

A threshold question you must get an answer to is whether or not your
state law allows you to implement a micro‑purchase method of procurement
that does not require \"full and open competition.\" If you have the
legal authority under your state law to implement a micro‑purchase
program, you must comply with the procedural requirements stated as
items 1, 2, 4, & 5 under the Requirements portion of this section. Once
you are satisfied that you can legally have a

micro‑purchase program under your state\'s laws, you need to develop a
procedure or regulation that addresses the FTA requirements and provides
practical guidance to your organization.

[Limits and Procedures]{.underline} ‑ **How will you guide the use of
micro‑purchase procedures?** In accordance with the general requirement
to have procurement procedures and a contract administration system
(including written selection procedures),[^7] larger agencies often
maintain formal written procedures that address the circumstances under
which micro‑purchase procedures should be used. Although these
circumstances shall not include purchases greater than \$2,500, you may
wish to set your limit lower depending on state law and your own
experience with the cost‑effectiveness of price competition using small
purchase procedures. If you can efficiently ascertain the lowest cost
supplier, you may not always wish to use micro‑purchase procedures.

This method of procurement is intended to be used as creatively as
possible and to minimize the paperwork that is inherent in other
procurement practices. In establishing policies relating to
micro‑purchases at the grantee level, you must always be mindful of the
\"equitably distribute\" requirement and the prohibition against
splitting procurements. [^8] The latter requirement is one you already
deal with at all levels of your procurement processes. However, a
significant requirement is to meet the documentation requirement of the
FTA ‑‑ a determination that the price is fair and reasonable and how
this determination was derived.

[Equitable Distribution]{.underline} ‑ **How will you equitably
distribute your purchases among local suppliers?** Do you have an
automated purchasing and materials management system in place that
allows you to track purchases by line item and vendor the item was
purchased from? If so, and if you have multiple vendors for that item or
service, you can alternate among those vendors. Do you have blanket
purchase agreements in place with multiple vendors for multiple products
which were established as a competitive process? If so, micro‑purchases
could be made from those vendors, again on a rotating basis. It is a
good practice to keep records on dollar amounts awarded during the year
to assist in monitoring distribution.

[Bid Splitting]{.underline} ‑ **How will you monitor procurements so
that requirements are not being split to avoid another procurement
method?** You may have a system in place now that allows you to monitor
any tendency to split requirements over your small purchase maximum into
small purchases. Micro‑purchasing would be an additional method of
procurement addressed in your procedures and training within your
agency. If you have an automated system which records individual
procurements, that system may have to be reviewed periodically to
analyze the

procurement patterns for a particular product or service. Many times,
you simply rely on your buyer or contracting officer to monitor not only
bid splitting but also equitable distribution.

[Fair and Reasonable Determination]{.underline} ‑ **How do you document
your determination that the price is fair and reasonable and the basis
for that determination?** You may want to prepare some \"boilerplate\"
determinations for signature that address specific ways you buy products
or services. You may want to say that based upon a telephone quote from
John Doe Company for the widget and comparing that price with a price
paid 6 months ago for the same widget, it is fair and reasonable ‑‑ you
would fill in the blanks in your form, sign it, and file in the
procurement file. Alternatively, you may use an existing form such as a
buyer\'s tabulation that is filed. You may want to have another form
that indicates the procurement is being made from an existing Blanket
Purchase Agreement for which competition was obtained. You may want to
prepare a form that addresses sales items ‑‑ you are buying this widget
from X Company based upon an advertisement that the widget normally
sells for \$35 each and is on sale for \$29.50 and this is fair and
reasonable. Finally, you may want to have a form that simply addresses a
standard commercial item ‑‑ the price is fair and reasonable because it
is a standard commercial item sold in the open marketplace. [^9]

In implementing this requirement at the Federal level, the regulations
recognize the paperwork cost of verifying the reasonableness of price
may more than offset the potential savings. The price is also
essentially assumed to be reasonable unless the contracting officer
suspects or has information to indicate that the price may not be
reasonable (higher than recent price paid or has personal knowledge of
price for the supply or service), or a supply or service is being
purchased for which there is not comparable pricing information readily
available. [^10]

[Other Federal Precedent]{.underline} ‑ In response to requests from its
own field offices for more guidance, the Federal Government recently
revised its regulations dealing with direct Federal micro-purchases.
[^11] Because these changes give more flexibility to procuring agencies,
you might want to review these provisions as you consider policies and
guidance for your agency\'s micro-purchases. Among the changes were:

-   the Government‑wide commercial purchase card is the preferred means
    (but not the only means) to purchase and pay for micro‑purchases;
    [^12]

-   agencies are encouraged to delegate micro‑purchase authority to
    employees of the agency who will actually be using the supplies or
    services being purchased; [^13]

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-   contract clauses are not required for micro-purchases; and

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-   documentation to support micro‑purchases is to be minimized. [^14]

A recent report by the General Accounting Office [^15] that addresses
use of credit cards by Federal agencies is expected to result in more
relaxed guidance being issued by the Federal agencies and increased
usage of the credit card. The report discusses the savings in time and
money that an agency can realize by utilizing credit cards for
micro‑purchases and the fact that there has been no apparent increase in
procurement fraud through the utilization of these cards.

There is no absolute guidance that can be given in this area as to what
works best or even well. The authority to use micro‑purchases is
intended to provide a very flexible procurement method which will allow
you to buy low‑priced items in a cost‑efficient manner.

**4.1.1 [Purchase Cards]{.underline}**

**DISCUSSION**

**This section deals with the use of purchase cards for micro-purchases,
which are those of \$2,500 or less. Since micro-purchases are exempt
from the requirements of publicizing and obtaining competitive quotes,
they are well suited to being delegated by the procurement department to
the end users of the supplies or services. And since purchase cards have
proven to have certain advantages in making micro-purchases, the
delegation of authority to use purchase cards will be the focus of this
section.**

**A *purchase card* works like a personal credit card, such as VISA or
MasterCard. Purchase cards offer a number of tangible advantages over
the traditional purchasing methods of issuing individual purchase orders
or blanket purchase orders, but they also present new challenges,
especially in the area of internal controls and the equitable
distribution of the agency\'s business to various vendors, including
Disadvantages Business Enterprises (DBE\'s).**

**Best Practices**

The San Francisco Bay Area Rapid Transit District (BART) instituted a
pilot program for purchase cards on July 1, 1996. The results of the
BART program have generally been very positive. The BART experience has
demonstrated a number of important lessons which other grantees should
be aware of, and these are discussed below. The detailed procedures
adopted by BART for implementing its purchase card system are included
in Appendix B.13, *BART Purchase Card System.*

[Delegation of Authority]{.underline} - All purchase cards should be
centrally controlled out of the Procurement Department**.** The
Procurement Department must be responsible for training those
individuals who are to be given authority to use the purchase cards. In
order to maximize the benefits of micropurchasing with purchase cards,
the persons authorized to use the card should be those whose department
will be using the supplies or services being purchased. The delegation
of authority to end users should involve the appointment in writing of
these end users as \"contracting officers\" (or such other title as the
grantee may use to describe those having authority to award contracts).
Such an appointment procedure has been adopted by BART, and is also
followed by Federal agencies (See FAR 1.603-3, *Appointment*). All
purchase card activity would function, therefore, as re-delegated
procurement authority requiring a valid warrant, training and periodic
review by the Procurement Department. Cardholders would be subject to
the same *Standards of Conduct* as other procurement personnel (See BPPM
§ 2.4.2.2.2 - *Written Standards of Conduct).* They would also be
subject to the procurement policies issued by the Procurement
Department. The grantee\'s written procurement procedures must be
expanded to give specific guidance for purchase card activity, including
the internal controls and the best business practices for users to
follow.

[Advantages of the Purchase Card]{.underline} - BART has identified a
number of advantages in using the purchase card. These include:

-   Vendors are now getting paid much more quickly; i.e., within 1-2
    days.

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-   Vendors are responding rapidly to the agency\'s orders; i.e., within
    20-30 minutes of an order.

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-   If a vendor does not have the needed part, the end user \"shops\"
    the street until they can find another vendor who has the part,
    instead of ordering the part from the initial vendor who would have
    to \"buy\" the part and pass it through the blanket purchase order
    with an additional \"markup.\"

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-   There is more price competition with the card than with using the
    traditional blanket purchase order system. In the past, vendors knew
    how difficult it was to get a blanket purchase order established, so
    their pricing tended to be inflexible. With the card, vendors know
    that BART has the ability to go to other vendors, so there is now
    more price competition. The bottom-line result is that there are
    fewer vehicles out for parts and the budget performance has
    improved.

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-   The card provides a complete electronic listing of all cardholder
    activity. This activity can be analyzed using PC software such as MS
    Office-Access and Excel to look at trends in the data; for example:

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-   Were any individual transactions over the micro-purchase threshold
    of \$2,500? Are requirements being artificially split to stay within
    the \$2,500 limit?

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-   Were purchases of similar items for different vendors reasonably
    uniform in pricing? In other words, does the data prove the
    reasonableness of prices being paid?

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-   Is the business being equitably distributed among vendors?

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-   Are Disadvantaged Businesses receiving an equitable portion of the
    business? This can become a problem area with the card, and end
    users need to work to identify potential DBE vendors. The agency's
    written procedures for the card should make the cardholders
    responsible for meeting the agency's reasonable and attainable DBE
    goals.

4.1.2 [Consolidation of Micro-Purchases]{.underline}

If you have a large volume of repetitive buys, you should consider
whether it is feasible to consolidate these purchases into larger
quoting packages in order to get better pricing, reduce inventory
levels, and make the procurement operation more efficient in terms of
effort expended. The best practice described below may be something you
should consider for your agency if you have circumstances similar to
those at the Whidbey Island Naval Air Station.

##### Best Practices

This describes an initiative taken by the Purchasing Manager at Whidbey
Island Naval Air Station to analyze the repetitive procurements for
standard items from the several different shops at this government
facility, and consolidate them into larger quoting packages. The result
was a dramatic lowering of unit prices and a much more efficient
procurement office in terms of effort spent. This procurement manager
also used this technique for her next employer, Community Transit, with
similar savings.

When she assumed the duties of Purchasing Manager, this individual began
to develop lists of items bought repetitively during the last six-month
period. She entered the items into a database for easy retrieval and
updating. A list of items was developed for each of the functional user
shops that initiated procurements. These included: paint supplies,
building supplies, plumbing supplies, grounds keeping supplies, liquid
oxygen plant supplies, vehicle maintenance, office supplies, electrical
supplies and waste & heating plant chemicals. Once the historical
purchases information was developed, the Procurement Manager sent the
data to each of the shop managers and had them review it and update it
for their anticipated needs in the upcoming six-month period.

With the anticipated six-month requirements lists in hand, the
Purchasing Manager then developed vendor lists for each of the different
shop's requirements. Vendors were notified that the anticipated needs
for the next six-month period were based on actual historical usage so
that there was a certain degree of confidence that the items on the list
would be ordered during the upcoming period, although no guarantee was
given to the vendors that the Navy would buy the same quantities they
had bought in the past. It should also be noted that the six-month
contract period was chosen after dialogue with vendors who suggested
they would be willing to bid prices without contingencies for inflation
if the contract was six months and not, for example, one year. So the
contract terms were chosen with the vendors' advice as to what would
achieve the best pricing arrangement. For each list of standard items
bid, no more than two or three vendors were awarded each list. Then
blanket agreements were processed with unit prices that were firm for
the six-month period of the contract. This entire procedure was then
repeated every six months. The end result was not only dramatically
lower pricing and more efficient procurement operations, but also lower
inventory levels since the vendors were willing to stock the various
items knowing they would in all likelihood get orders for the items.
This meant the Navy received the items expeditiously when orders were
placed. [^16]

**4.2 SMALL PURCHASES**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Small purchase procedures may not be used if the services, supplies,  |
| or other property costs more than \$100,000. If small purchases       |
| procedures are used, price or rate quotations shall be obtained from  |
| an adequate number of qualified sources. FTA Circular 4220.1E § 9.b.  |
+-----------------------------------------------------------------------+

**DEFINITION**

[Small Purchase]{.underline} ‑ Acquisition of services, supplies or
other property that cost less than the federal simplified acquisition
threshold, currently fixed at \$100,000.

[Small Purchase Procedures]{.underline} ‑ Those relatively simple and
informal procurement methods used to make small purchases. If these
procedures are used, price or rate quotations shall be obtained from an
adequate number of qualified sources.

**DISCUSSION**

**As a method of procurement, small purchase procedures recognize that
up to some statutory level (\$100,000 for federal procurements) it could
cost more to conduct formal competition than the value expected to be
yielded by the formal competition. This procedure requires obtaining
only limited competition from an \"adequate\" number of \"qualified\"
sources (at least two). Solicitations and quotations for small purchases
may be either oral or written.**

**Best Practices**

[State and Federal Thresholds]{.underline} ‑ As with most other
procurement methods, it is important that you determine the dollar
threshold for small purchases in your state law and local requirements.
In many cases, the definition will not define a small purchase but,
rather, will establish at what dollar value competitive sealed bids or
proposals are required ‑‑ e.g., \"before a contract can be awarded in
excess of \$15,000, the procedures of this statute relating to
competitive sealed bids or competitive sealed proposals shall be used.\"
Contracts awarded at the lower of this state level or \$100,000 are
considered small purchases for the purposes of this discussion and the
provisions of FTA Circular 4220.1E.

If your state and local threshold for small purchases is substantially
less than \$100,000, you may wish to recommend that these requirements
be changed to conform more closely to Federal requirements.
Alternatively, if the state\'s requirements above its small purchase
threshold are substantially less cumbersome than Federal requirements,
you may wish to create an intermediate procedure for small Federal /
competitive state purchases. For example, if your state required that in
all construction and equipment contracts over \$10,000, competition be
obtained by a simple posting and solicitation without advertisements,
you could establish a procedure for bids between \$10,000 and \$100,000
that avoided the time and expense of advertising the procurement and
relied on direct solicitation to known sources.

[Initiating a Small Purchase]{.underline} ‑ **What documentation do you
use to initiate this procurement method?** Most transit properties use
some sort of requisition that is typically prepared by the unit that has
the requirement (your customer) which details how many widgets are
required and by when. Many times, this same document will include
estimated pricing and this estimate will frequently dictate which method
of procurement you will use. Obviously, if the requirement is for
\$500,000 worth of widgets, you will use a competitive process (IFB or
RFP). Your procedures can encourage your customers to attach a draft
specification or scope of work to the requisition, particularly if the
small purchase method is to be used; otherwise you may assist your
customer. (See Chapter 3, \"Specifications.\")

**Should you establish a practice of rotating buyers that are involved
in using these procedures from one commodity to another?** In rare
instances, it has been found that a buyer gets \"too close\" to a
particular vendor and, because of the informality of the procedures,
that vendor starts to receive most of the purchase orders for those
requirements. Purchase order records can be reviewed (perhaps through
your agency\'s accounts payable records) to see if one vendor has
received an abnormal amount of purchase orders. On the other hand, a
buyer who is familiar with the supply industry characteristics of a
commodity, such as the manufacturing cycle, lead time, distribution
practices, etc., can bring both efficiency and more optimal buying to
the work.

[Solicitation]{.underline} ‑ **What level of competition is required?**
Stated another way, how many individuals or firms must be solicited? It
is not unusual to have a requirement that three firms be solicited up to
an expected contract value of \$5,000, and between \$5,000 and \$15,000
(the hypothetical maximum), five firms would be solicited. If your
source list has more firms than you are required to notify, do you have
a procedure to rotate sources? For example, on one procurement you will
contact firms 1 through 5, and on the next one you will contact firms 6
through 10. It is not unusual to have procedures that require you to
rotate your sources in this manner. By doing so, you are broadening your
base of competitors and enhancing your competition.

**Is the small purchase for architectural or engineering (A&E)
services?** If so, A&E services may be procured using small purchase
procedures. However, the language in FTA Circular 4220.1E that requires
the procurement of A&E services using the Brooks Act procedures also
applies. [^17] The selection must be based initially on qualifications;
price may be considered only for the most qualified offeror. You may
proceed to the next most qualified if you cannot agree on a fair and
reasonable price. [^18]

**What level of documentation is required to solicit prices for small
purchase non‑Brooks procurements?** Can you use oral descriptions only,
up to a certain dollar value? Are written descriptions (specifications
or statements of work) required above a certain level? It is not unusual
for small purchase procedures to allow oral descriptions, (particularly
if the procurement is decentralized or the buyer has expertise in the
item), up to one estimated dollar level and then require written
descriptions above that level. Remember, that for construction using
federal dollars, the Davis‑Bacon Act requirements apply to all
procurements (including small purchases) over \$2,000. [^19] The level
of documentation may also be tied to whether or not an off‑the‑shelf
item is being bought or whether the item or service being bought is as
per an agency specification. Oral solicitations and quotations may be
allowed at a higher dollar level for off‑the‑shelf products than for
products built to agency specifications.

**Is there a requirement that you include a certain number of DBE firms
in the firms you contact?** This is a fairly common requirement transit
properties use for DBE participation. Compliance with your policies can
be systematically documented.

**How do vendors indicate their price(s) to you in response to your
request?** Do you accept oral prices? Do you require written quotations?
If so, do you allow faxes? You could do any of these. You must, however,
determine what complies with the laws governing your property and then
develop and follow appropriate procedures. The format and level of
detail in these procedures should be commensurate with the size of your
agency and they can be well enough promulgated so that they are well
known to members of your procurement staff and your internal customers.

[Award]{.underline} ‑ **What happens if the quotations are all higher
than your small purchase threshold?** Can you still issue a purchase
order or do you have to change methods and perform a competitive
procurement? In many states, you will not be able to award an order that
is in excess of your state\'s small purchase threshold. This is why it
is a good idea to try to develop an estimate prior to initiating the
quotation process. If it is \"close\", it will probably be better to
commence a formal competitive procurement to begin with.

**How do I award a small purchase?** The most common contractual
instrument used to accomplish a small purchase is a purchase order.
Typically, after you determine who will provide the best price for the
widget, you will prepare a purchase order with the price and other terms
and conditions required by your agency and send it to the vendor. In
most instances, this document transmission does not create a binding
contract ‑‑ it is your offer to the vendor to do the work or provide the
widget at the price quoted. A contract comes into existence when the
vendor demonstrates some level of acceptance of the offer ‑‑ usually
when accepted in writing, performance commences, or delivery is made.
[^20]

[Documentation]{.underline} ‑ **How much documentation of the
procurement process do I need to keep?** One standard you may find
useful is to how much would satisfy a third party (an auditor), that you
have complied with your agency\'s policies and procedures and that the
price you are paying is \"reasonable.\" This will typically include the
requisition (or purchase request), what specification was used (if any),
who were quotations requested from, when and what quotations were
received and from whom (a simple abstract of quotes received), and a
copy of the purchase order. Much of the documentation for small
purchases can be accomplished on pre‑printed forms or completed on‑line
if your computer system will allow for that type of input. Remember, it
is supposed to be simple, but never forget that we must make an audit
trail that can be followed --

the clearer and more complete the trail is, the better. Procurement
documentation is discussed in Section 2.4.1, \"File Documentation.\"

**4.3 COMPETITIVE PROCUREMENT METHODS**

**4.3.1 [Overview ‑‑ Sealed bids v. Competitive Proposals]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| There is no Federal requirement that grantees use the sealed bid or   |
| competitive proposal method of procurement for any procurement. These |
| are methods identified by the FTA as methods that may be used as      |
| appropriate. [^21] The following conditions should be present for     |
| sealed bidding to be feasible:                                        |
|                                                                       |
| > 1\. A complete, adequate, and realistic specification or purchase   |
| > description is available;                                           |
| >                                                                     |
| > 2\. Two or more responsible bidders are willing and able to compete |
| > effectively for the business;                                       |
| >                                                                     |
| > 3\. The procurement lends itself to a firm fixed price contract and |
| > the selection of the successful bidder can be made principally on   |
| > the basis of price; and                                             |
| >                                                                     |
| > 4\. No discussion with bidders is needed. [^22]                     |
|                                                                       |
| Sealed bidding is the preferred method for construction if the above  |
| conditions are present. [^23] If sealed bidding is used, FTA Circular |
| 4220.1E places general requirements on the advertisement, bid period, |
| bid opening, price adjudication, and contract award or rejection of   |
| bids. [^24]                                                           |
|                                                                       |
| If, however, a grantee decides to use the competitive proposal method |
| of procurement, the FTA prescribes requirements for publication       |
| including evaluation factors, solicitation, evaluation, selection,    |
| and award. [^25]                                                      |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| ::: Definition-Term                                                   |
| For some agencies, state law requires the sealed bidding or           |
| competitive proposal method in procuring certain goods or services,   |
| or in certain circumstances.                                          |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**If you and your customer (using department) can specify what you need
accurately enough, you may be confident you will receive a satisfactory
product or service from any responsible and responsive bidder. In these
cases you can maximize price competition and simplify the process by
using sealed bids. E.g., supply of diesel fuel normally fits this
procurement method.**

**There are commodities and services that your customers need that are
very difficult, if not impossible, to obtain through a sealed bidding
process under which award is made to the low responsive responsible
bidder. You may not be able to define your requirement precisely enough
and/or you may be concerned with performance specifications which are,
by their nature, more subjective than design specifications.** [^26]

**There may be technical and price tradeoffs in what you are trying to
buy. You may be willing to pay a somewhat higher price to obtain a
commodity that does more for your system, but there is a limit to what
you will pay. You may find that the quantities or time required are
unknown. The price risk associated with a fixed price contract may be
burdensome on the contractor and would be borne at too high a price to
the agency to use that type of contract. Consequently, you need the
ability to negotiate cost elements for the contract that could result in
a cost reimbursement type contract.**

**There may be a variety of good sound business reasons why you need the
ability to negotiate a contract and are willing to spend the time to do
so. The competitive proposal method is a flexible procurement tool for
you to use. E.g., development of a new information system to serve a
unique need would probably require a negotiated procurement.**

**Purpose**

Sealed bidding (sometimes called \"invitation for bid method\" or
\"formal competition\") and competitive proposals (sometimes called
\"request for proposal method, or \"competitive negotiation\") are the
two principal procurement methods. The sealed bid method is preferred
because:

-   it is a simple process without complex evaluation criteria or
    repeated requests for and receipt of offers;

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-   it maximizes price competition by basing the selection among
    responsive, responsible bidders on price alone; and

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-   it is the most easily understood by suppliers and the public,
    maximizing public acceptance and minimizing the opportunity for
    unethical practice.

However, it requires a very clear specification since it could result in
you not getting what you want, and the successful bidder can use
ambiguity in the specification to reduce its costs and increase its
profit. Nevertheless, this method is required by many state laws for
many major transit procurements.

Your customers may not embrace sealed bidding as eagerly. In addition to
the burden of specification which often falls on them, they may believe
that sealed bidding requires them to set minimums on these parameters
just to maximize price competition. Hence, the negative connotation of
\"low bid\" equipment or services. Most states require, or at least
permit, use of the competitive proposal method for professional
services. Computer system procurements were often classified as
professional services, recognizing the design and software development
content which made it difficult to specify computer systems for price
competition. Today, software systems often have their own exemptions
from competitive bidding requirements.

Where it is permissible, there is a growing trend to use competitive
proposals. An increasing number of states permit competitive proposals
for bus procurements and the American Public Transit Association
*Standard Bus Procurement Guidelines* encourage the use of this method.
The competitive proposal method is intended to permit competition on
quality and other factors,\
as well as on price. [^27] It is a good practice to become familiar with
your state laws and work with counsel to maximize flexibility of the
procurement process to be used.

**Best Practices**

[Similarities between the Sealed Bidding and Competitive Proposal
Methods of Procurement]{.underline} ‑ The competitive proposal method
has many common attributes with the sealed bidding process:

-   Like an Invitation for Bids, the Request for Proposals is a written
    document published to the \"world\", soliciting the submission of
    offers in response to the Request.

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-   The objective is to promote full and open competition.

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-   The terms and conditions of the solicitation and the resulting
    contract are spelled out in the Invitation or Request.

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-   If determined necessary, an opportunity is provided (through a
    pre‑bid or pre‑proposal conference) for prospective offerors to meet
    with procuring agency officials to get answers to questions prior to
    the submission of the bids or initial proposals.

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-   A reasonable amount of time is provided prospective offerors in
    which to prepare and submit their offers.

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-   Rules are normally provided that specify treatment of offers that
    are submitted late.

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-   Award will only be made to an offeror determined to be
    \"responsible.\"

[Differences between the Methods of Procurement]{.underline} ‑ The
competitive proposal procurement method differs from the sealed bidding
process in that:

-   A complete, adequate and realistic specification or purchase
    description allowing for competition primarily on the basis of price
    alone may not be available.

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-   The contract award amount, whether a firm‑fixed price or some type
    of cost reimbursement contract, can only be determined on the basis
    of costs of the contractor derived from a negotiation process.

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-   Discussions or negotiations may be needed to address technical
    requirements as well as proposed cost or price aspects of the
    offeror\'s proposal. Discussions may be conducted with one or more
    offerors who have submitted proposals.

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-   An opportunity may be given to revise proposals and to submit a
    final proposal at the completion of the discussion phase of the
    process.

**4.3.2 [Common Elements of Solicitation Process]{.underline}**

**4.3.2.1 [Advertising and Publicizing Solicitation]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| § 8.a. of FTA Circular 4220.1E requires that all procurement          |
| transactions be conducted in a manner providing full and open         |
| competition.                                                          |
|                                                                       |
| § 9.c. of FTA Circular 4220.1E requires that invitations for bids are |
| to be \"publicly\" advertised.                                        |
|                                                                       |
| § 9.d. of FTA Circular 4220.1E requires that requests for proposals   |
| are to be publicized.                                                 |
|                                                                       |
| ::: Definition-Term                                                   |
| State law requirements are sometimes more specific as to the content  |
| and manner of advertising, particularly when using the sealed bidding |
| method.                                                               |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**IFBs and RFPs must be publicly advertised and publicized
(respectively) but the precise manner and content is at your discretion
within your state law requirements. While the major local newspapers in
your commercial community are the most commonly used media, varying
procurements will dictate varying media and varying notice periods to
most cost‑effectively notify the greatest feasible number of
competitors.**

Outreach through diverse media may be the most cost‑effective means to
increase competition, e.g. through market communication networks such as
trade associations, commercial procurement listing services, or mailing
list enhancement as discussed in Section 4.3.2.2, \"Solicitation Mailing
List.\" However, advertising in appropriate media is a prudent manner of
ensuring unbiased notification and of making new contacts. In addition
to increasing competition, advertising procurement actions also broadens
industry participation in meeting industry requirements, as well as
provides assistance to small businesses and DBE firms interested in
obtaining contracts and subcontracts.

**Best Practices**

Your state legislature, in recognizing a causal relationship between
advertising and competition, may have addressed the need for advertising
procurements by enacting a requirement to advertise. As with other
procurement issues, you should check to see what, if any, specific
requirements you are obligated to follow under your state\'s law. The
requirement for advertisement generally takes the form of requiring a
notice inviting bids be published at least once in at least one
newspaper of general circulation in the state not later than the
fourteenth day before the day set for receipt of bids ‑‑ the numbers
vary from state to state but these parameters are typical.

There are many variations to this general type of notice requirement
including the number of times the notice must be published, the number
of newspapers it must be advertised in, the target circulation of those
newspapers, and the number of days prior to receipt of bids it must be
published. The contents of the notice itself are frequently mandated as
well: e.g., must include a general description of the items to be
purchased, must state the location at which bid forms and specifications
may be obtained, and must state the time and place for opening bids. The
same rules and notice requirements may apply to both competitive bids
and competitive proposals. If you have scheduled a pre-bid or
pre-proposal conference, this is also one of the first pieces of
information upon which the offerors will act. Remember, what you want to
gain from this advertisement are responses from potential bidders or
proposers to your up‑coming procurement and their interest in receiving
the solicitation you plan to issue.

If you are in a position to adopt regulations governing the
advertisement of solicitations, you should keep in mind that one of your
goals through this effort is to maximize competition. With that as your
goal, the following may be of assistance:

-   Deciding into which newspapers to place your notices, determine
    which (if you have a choice) reaches the broadest readership,
    particularly in the business community (i.e., prospective bidder or
    proposer).

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-   Because advertisements are such an expense, try to negotiate with
    the newspaper to include your notices for free as a \"public
    service.\" It doesn\'t hurt to ask, particularly if you have
    competition for the business. Even if you are unsuccessful in having
    the notices placed for free, you might be able to obtain a reduced
    rate.

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-   Does the city or county have a place where they post notices and is
    it used by bidders? Can you post there? You may have a place where
    your agency is required by law to post notices of its meetings (a
    public meeting act notice) which may be a good place to place these
    procurement notices as well.

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-   Does your agency have a \"home page\" on the Internet\'s World Wide
    Web? Getting the word out on upcoming procurements is one of the
    primary purposes many transit agencies establish a home page in the
    first place (the other is posting job vacancies). You may also want
    to consider using existing state‑level home pages or bulletin
    boards. Don\'t overlook this as a real medium to reach potential
    bidders and proposers. The federal government is really encouraging
    companies of all sizes to utilize computers in the procurement
    process, and has many initiatives to go \"paperless.\" This is
    particularly evident in small purchases. As the procurement
    community becomes more sophisticated in accessing and effectively
    using the Internet, consider utilizing this relatively inexpensive
    medium to advertise your procurements to a national audience.

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-   If your commercial environment supports many broad‑based newspapers,
    it may be appropriate to competitively procure newspaper
    advertising.

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-   If your advertising volume is significant and your media market
    complex, you may find that an agency can cost effectively negotiate
    media availability.

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-   One of the most effective ways to increase DBE participation in your
    procurement processes is to advertise in media read by that target
    community. Your DBE program may require you to advertise in
    target‑specific newspapers to enhance participation by those
    entities. Your agency\'s program may be large enough to distribute a
    regular publication to all vendors certified under your program or
    to membership lists of such organizations as minority chambers of
    commerce. Whatever is being done by your agency in terms of
    advertising the program, you can take advantage of that opportunity
    and advertise up‑coming procurements as well. Because of time
    requirements in advance of the actual publication, you may not be
    able to give all of the detail about a specific procurement, but you
    still can put the community on general notice about the opportunity.

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-   Does the construction industry in your community (AGC, ASA, etc.)
    advertise to its membership notices of up‑coming procurements in the
    public sector? If so, try to get your notices published there as
    well. Frequently there is no charge for this service.

We have identified in the \"Requirements\" discussion above, the only
FTA requirements that exist in terms of publicizing notices about
up‑coming procurements. Even though there are no detailed discussion or
set of guidelines other than these general statements. [^28] It is a
good practice to advertise your procurements in a manner that will
encourage maximum competition. Find out if your \"general circulation\"
newspaper has national circulation. That is the sort of information that
circulation departments of newspapers love to pass on to prospective
customers! Consider advertising your large rolling stock and
systems‑type contracts in national trade association publications such
as APTA\'s *Passenger Transport* and other trade magazines. Also,
consider advertising your procurements in the *Commerce Business Daily*
(*CBD*) which is the required publication for federal government
contract actions. [^29]

**4.3.2.2 [Solicitation Mailing List]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| ::: Definition-Term                                                   |
| In addition to the general requirement for full and open competition  |
| which we have discussed above, the only additional requirement        |
| dealing (indirectly) with a mailing list is the requirement in FTA    |
| Circular 4220.1E § 9.c. that, if the IFB method is used, \"bids shall |
| be solicited from an adequate number of known sources.\"              |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**The development and use of a solicitation mailing list is a critical
part of the procurement process. This list includes all eligible and
qualified concerns that have expressed an interest in receiving the
solicitation, or that the agency considers capable of filling the
requirements of a particular procurement. Over a period of time and
after repetitive procurements for the same items or services, your
mailing list for some items will stabilize and you will not be adding
too many new names to the list, even after an aggressive and
comprehensive advertisement campaign. However, it is important that you
continue to \"manage\" that list and ensure it is kept current and that
firms expressing an interest or desire to participate in up‑coming
procurements are added. During the actual solicitation process (after
the solicitation is released), the list takes on added significance
because it is the record detailing which firms received the solicitation
and to whom amendments should be issued.**

**Best Practices**

[Procurement Role of Solicitation Mailing Lists]{.underline} ‑ Very
simply put, the solicitation mailing list contains the names, addresses
and frequently the point of contact for entities that will receive your
solicitation.

[Development of Solicitation Mailing Lists]{.underline} ‑ This list can
be developed from a variety of sources:

-   Prior procurements are reviewed and the names of entities that
    submitted bids or proposals in response to those procurements are
    included in the list for this new procurement.

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-   If what you are going to buy is currently under contract, the
    incumbent contractor is normally included on the list. [^30]

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-   Firms that responded to your advertisement expressing an interest in
    obtaining the solicitation you are issuing should be added to the
    mailing list.

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-   You may encourage your internal customer to provide you with names
    of firms it considers capable of filling the requirements of the
    procurement for inclusion on your list. If the specifications for
    your requirement were prepared by third party consultants or\
    \
    \
    contractors, they may be a source for firms that are considered
    capable of filling the requirements. [^31]

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-   The DBE program office within your agency can identify any DBE firms
    that may be interested in receiving the solicitation. Depending upon
    how your database is established, you may need to identify the
    Standard Industrial Classification (SIC) Code number (or however
    your agency identifies firms within your database) and furnish that
    Code to the appropriate office to aid in their search. Any firms so
    identified can be added to your list as well.

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-   National, state, and local agencies may be able to assist with
    lists; e.g., your state economic development office or national
    trade associations.

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-   Particularly in construction solicitations, you will want to add to
    your mailing list plan rooms that are operated by various trade
    associations or chambers of commerce and any Dodge Room services in
    your locale. These are ideal locations for specialty subcontractors
    to review the plans and specifications that are applicable to only
    their particular specialty without buying the entire solicitation
    package. The more knowledgeable multiple subcontractors are about
    your procurement, the better the competition to the prime
    contractors who will be submitting bids or proposals.

If you will be charging bidders or offerors for your solicitation
package (typically the case in construction service solicitations), you
may want to send out a pre‑solicitation notice indicating the cost and
how payment (or deposit) is to be made. Have that payment information
returned to your office. You may then include those firms that have
provided the required payment or deposit in your ultimate solicitation
list.

Similarly, if your mailing list is very long, you may want to mail a
pre‑solicitation notification to all entities on your list advising them
of the upcoming solicitation and asking if they want to receive the
solicitation for this procurement. If they fail to respond, you may
assume they do not wish to receive the solicitation. This action could
result in a smaller (and therefore less expensive) solicitation process,
while still allowing everyone on your list the opportunity to compete in
the procurement. You may also ask in some or all of these mailings if
the firm\
wishes to withdraw from the list; the quality and maintenance of the
mailing lists is important to fostering robust competition.

[Management of Solicitation Mailing Lists]{.underline} ‑ You are now
ready to issue your solicitation using the list that has been developed.
There are a number of management issues associated with the list at this
time:

-   When mailing the solicitation to the entities on the list, some
    agencies include a post card indicating that if the entity does not
    respond to the solicitation (furnish a bid or proposal) it will be
    removed from the list for future solicitations unless they indicate
    (on the post card) that they want to be included on future lists.
    This is a practical recognition that the issuance of solicitations
    is an expensive process for the agency and only entities that have a
    real interest in the procurements should receive future
    solicitations.

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-   If you have a separate mail room, that group may be responsible for
    the actual physical issuance of the solicitation. You may wish to
    double check that the list of entities furnished for the
    solicitation is the same as the list you have maintained ‑‑ be
    particularly concerned that the incumbent contractor (if there is
    one) is on the list. Notify the mail room that if a solicitation is
    returned because of an incorrect address or no forwarding address is
    available for the entity, you are to be notified immediately so that
    you can try to determine the cause of the return.

Once the solicitation has been issued, using the mailing list to ensure
that any solicitation amendments are furnished to all entities that
received the original solicitation is important, as discussed in Section
4.3.2.5, \"Amendment of Solicitations.\"

After the solicitation process is completed, the final administrative
task associated with the mailing list is to update it. Indicate which
firms on the list responded to the solicitation, which firms did not but
asked to receive future solicitations (if you asked for this), and which
firms did not respond nor indicate they wanted future solicitations. An
updated list will make preparation of the next solicitation that much
easier to accomplish.

**4.3.2.3 [Solicitation]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| § 9.c.(2) of FTA Circular 4220.1E requires that invitations for bids  |
| be issued with sufficient time to prepare bids prior to the date set  |
| for opening the bids. Further, the invitation for bids will include   |
| any specifications and pertinent attachments and shall properly       |
| define the items or services sought in order for the bidder to        |
| properly respond.                                                     |
|                                                                       |
| § 9.d.(1) of FTA Circular 4220.1E requires that requests for          |
| proposals identify all evaluation factors along with their relative   |
| importance. [^32]                                                     |
+-----------------------------------------------------------------------+

**DISCUSSION**

**Your solicitation, whether an invitation for bids or a request for
proposals, identifies the procurement, the agency and the contact
person(s). It contains simple, clear instructions for preparing an
offer, often including a checklist of the items in the offer. It clearly
states the time and manner for submitting the offer, and the length of
time for which the offer must remain firm (not subject to withdrawal).
Many agencies use a three‑part, one page form for simple bids; called a
\"solicitation, offer, and award form.\" The form invites bids on a list
of items, provides space for prices and the bidder\'s execution of the
offer, and space for the agency acceptance.**

**In more complex procurements where the specification or scope of work
is more extensive, a two‑part \"Offer and Award\" form incorporates the
specification by reference but still crystallizes the essence of the
solicitation in one page to be signed and submitted by the offeror, and
signed upon award by the contracting officer. The most expeditious
procurements often result from the inclusion of a complete contract in
the solicitation. When this is incorporated in the offer, no further
terms have to be discussed or executed when the agency accepts the
offer.**

**It is important not to include any unnecessary requirements and keep
the solicitation as simple as possible. Large or complex solicitation
packages discourage some potential offerors.**

**Best Practices**

Regardless of the method used, there are certain common elements that
will be present in a solicitation issued under either the competitive
bidding or competitive proposal method of procurement. [^33] Many
transit properties have developed procurement forms that detail what is
included as \"boilerplate\" in the solicitation process and include the
common elements of both methods. Other properties have established, as a
procedure, a requirement that \"boilerplate\" common provisions be
included in all solicitations that are then prepared as originals for
each procurement. Regardless of which method you use (or any variation
of them), the common elements include:

[Common Solicitation Contents (IFB and RFP)]{.underline}

1\. **A form which acts as the solicitation document ‑** When signed by
the bidder or proposer, this acts as the offer which, if accepted by the
contracting officer or buyer, results in a binding contract. Although it
is typically a single page, it is not unusual for the acceptance
document (the contract) to be a separate form. The form typically
identifies:

-   A solicitation number for reference;

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-   Who to contact for questions;

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-   If there will be a pre‑bid or pre‑proposal conference and where and
    when it will be held;

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-   The date, time, and place bids or proposals are to be received;

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-   What additional documents are included in the solicitation and what
    documents will be included in the contract;

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-   Space for the price (offer) to be included;

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-   Space where amendments to the solicitation can be acknowledged;

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-   Space where the firm can be identified; and

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-   Space for the firm official to sign and date the bid or proposal.

If the form is multi‑purpose and also acts as the contract, it will
typically have space for the contract number, contract amount, line
items awarded (if applicable), and a place for the contracting officer
to sign and date the contract.

If the instructions are lengthy, and because of the many certification
forms typically required, it is becoming more common to provide a
separate checklist of all the documents or other submissions required in
a responsive offer.

Of special importance is the **address to which offers should be
submitted**. Many agencies utilize post office box addresses for their
mail, and that is all that is included in the solicitation. All
solicitations normally clearly indicate a mailing address to which
offers can be mailed as well as a street address to which offers can be
delivered, because of the increased use of overnight and courier
services. If your agency has the ability, it is recommended that you
have a unique post

office box number to which only offers are mailed. In your \"delivery\"
address, you reduce errors by including a specific room number to which
offers should be delivered. [^34]

2\. **A document that describes the various representations and
certifications that are required to be made by the bidder or offeror in
conjunction with the procurement at the time of bid or proposal
submission.** [^35] Many of these relate to responsibility‑type issues
and typically include:

-   A representation as to the type of business the offeror is
    (individual, partnership, sole proprietorship, etc.);

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-   A representation as to the DBE status;

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-   A representation that no gratuities have been offered or given with
    a view toward securing the contract;

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-   A certification of independent price determination (prices in offer
    have been arrived at independently without any communications for
    the purposes of restricting competition);

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-   A certification regarding compliance with the DBE provisions of the
    contract;

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-   A certification of restrictions on lobbying; [^36]

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-   A certification regarding debarment, suspension, ineligibility and
    voluntary exclusion; [^37]

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-   A certification regarding compliance or non‑compliance with the Buy
    America provisions of the Federal Transit Act and 49 CFR Part 661
    and; [^38]

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-   Any submissions required by state law.

3\. **A document that includes solicitation instructions and conditions
‑** These typically include instructions relating to: offer preparation;
instructions relating to acknowledging amendments to the solicitation;
rules relating to late submissions, modifications and withdrawals of
offers; instructions relating to the DBE participation goals and
program; instructions as to how the contract will be awarded; advice as
to agency and FTA bid/proposal protest procedures; advice as to ability
of agency to cancel the solicitation; and establishment of an order of
precedence covering how inconsistencies between provisions of the
solicitation are to be resolved.

4\. **A document that includes special contract requirements or
provisions (as opposed to general provisions) relating to this
particular solicitation and contract that are not addressed elsewhere in
the solicitation** ‑ These provisions typically address such things as
bonding requirements; insurance requirements; any special permits or
licenses required; what property the authority will furnish the
contractor and rules relating to that property; liquidated damages;
warranties; indemnity provisions; options; contract administration; and
rules relating to royalties and patents. If you are going to award a
cost‑type contract, special provisions relating to those contracts are
typically included in the special provisions.

5\. **Special provisions required by the FTA through FTA Circular
4220.1E** **or the Master Agreement which must be included in the
solicitation and the contract ‑** Model clauses for compliance with
these requirements are discussed in Section 8.1 and Appendix A.1, and
include such provisions as EEO clauses; affirmative action clauses; DBE
program clauses; Contract Work Hours and Safety Standards Act
provisions; Davis‑Bacon Act provisions; Title VI of the Civil Rights Act
of 1964 compliance provisions; Clean Air and Water Acts provisions;
Energy Policy and Conservation Act provisions; Cargo Preference Act
clause; Buy America Provisions; Officials Not to\
Benefit clause, and Restrictions on Lobbying provisions. Some properties
include these as part of the special provisions document, and state law
may require similar provisions.

6\. **The contractual requirements of the DBE programs ‑** (Sometimes
included in special provisions.) Although the DBE programs for FTA
funded projects must comply with 49 CFR Part 23, the contractual
language details included in the contracts vary between the individual
authorities. Chapter 8 includes model DBE contract clauses that could be
used in your contract.

7\. **The last of the \"boilerplate\" forms are the general
provisions.** You may have different forms for construction services,
A&E services, supplies, services contracts and cost type contracts. It
is in the general provisions that you include such clauses as: changes
clause; termination for default and convenience; inspection; assignment;
the impact of federal, state and local taxes; differing site conditions;
excusable delay; variation in quantity; disputes; governing law;
indemnification; order of precedence; pricing of adjustments;
examination of records; and payment terms.

8\. **Each solicitation will have some sort of specification or
statement of work or scope of work describing what it is that you are
buying**. As we discussed in the Specification section of the Manual,
the detail furnished will vary from contract to contract, but it is
against this document that you will measure satisfactory performance of
the contractor ‑‑ did the contractor furnish you with what you
requested?

There is no real \"best\" way to create your solicitation. We have
presented the common elements of the solicitation and highlighted those
issues or matters that solicitation documents typically address. How you
package it is in many respects a function of what is already in place in
your

organization or, if you are creating a solicitation for the first time,
a function of what your prior procurement experiences have been.

The bottom line is that you want to create a document that will get you
through the solicitation and contract award process with little or no
controversy and through contract performance on time and within budget
while complying with the terms of your contract.

**4.3.2.4 [Pre‑Bid and Pre‑Proposal Conferences]{.underline}**

##### DISCUSSION

**Pre‑bid and pre‑proposal conferences are generally used in complex
acquisitions as a means of briefing prospective offerors and explaining
complicated specifications and requirements to them as early as possible
after the solicitation has been issued and before offers are received.
This is also an open forum for potential respondents to address
ambiguities in the solicitation documents that may require
clarification. Notice of the conference is included in the solicitation
at the time of issuance.**

**Best Practices**

When utilized properly, a pre‑bid or pre‑proposal conference is a
valuable tool for both the agency and the prospective offerors. There
are certain common practices and policies relating to this conference
that will aid you in achieving a successful procurement.

You will decide with your customer in your solicitation preparation
process whether or not you will conduct a pre‑proposal or pre‑bid
conference. It is recommended that you hold one if you believe that your
acquisition is so complex or contains peculiar requirements that can
only be addressed by holding a conference for the benefit of your
prospective offerors. It may be advantageous if you anticipate that the
offerors will not be familiar with your procurement process. Determine
if a conference is necessary and put the time and location details in
your solicitation.

If you hold a conference, it is helpful to include in your solicitation
a format for questions submitted in advance of the conference that will
be answered at the conference. Explain that if you have the questions in
advance, better and more timely responses can be made to those
questions. You normally do not preclude questions from being raised at
the conference itself.

Develop an agenda for the conference and arrange to have the appropriate
staff members at the conference who can respond knowledgeably to
questions. In addition to the procurement official, large agencies
generally have a technical representative and a representative from the
DBE department, if appropriate, at the conference.

At the conference, have someone present who can develop a record of what
transpired, including a sign‑in list of attendees. Normally, this list
is made available to attendees as a matter of information. One of the
uses of this list by potential offerors is determining who else is
interested in the project and who might be interested in teaming.

At the conference, advise conferees that remarks and explanations at the
conference shall not qualify the terms of the solicitation, unless a
written amendment is furnished to everyone. You may actually want to
develop a script for this and make it a matter of practice to repeat
this at every conference ‑‑ it is that important.

Your pre-bid conference or general provisions in your solicitation
document may also limit the effect of unwritten statements at the
conference or of any other oral or unauthorized changes or
qualifications of the solicitation terms. The specifications and
solicitation document must stand alone representing the contractual
commitment.

During the conference, in addition to responding to any questions raised
by the conferees, explain anything unusual about the special provisions
or bidding conditions. Your DBE staff member may explain the DBE program
and the goals set for the procurement. Your technical staff member may
give an overview of the specifications or scope of work. If you have
received questions in advance, you can provide both the questions and
answers.

At the conclusion of the conference, determine which questions have been
raised that will necessitate the issuance of a solicitation amendment.
You may have received other questions during this period of time that
highlighted the need for an amendment, or an issue might have been
raised by internal reviews that necessitated an amendment. It is
recommended that you do not leave material questions unanswered ‑ if you
don\'t answer them, you may end up shifting the risk for that ambiguity,
conflict or other problem from the contractor back to your agency.

As soon as possible after the conference, finalize the record of the
conference and promptly furnish it to all prospective offerors (those on
your final solicitation mailing list); whether they were in attendance
at the meeting or not. It is important that all prospective offerors be
furnished the same information concerning the proposed acquisition. This
can be furnished with the amendment if one is to be issued.

Although it is not normally part of a pre‑bid or pre‑proposal
conference, if you want to offer prospective offerors an opportunity to
actually visit the site (in an appropriate procurement) it is a good
time to do this in conjunction with this conference. You should be
sensitive to the cost offerors incur in preparing a bid or proposal and
try to allow them to accomplish multiple tasks on the same trip,
particularly for those entities that are traveling to your location from
another city, state or country.

[Mandatory Attendance]{.underline} -- The question sometimes arises as
to whether grantees may require prospective offerors to attend pre-bid
or pre-proposal conferences in order to submit bids or proposals. The
answer to this question is that FTA has issued no specific policy
statement on this issue. However, the consensus of opinion is that
attendance at pre-bid conferences should not be made mandatory. Anything
that happens at a pre-bid conference to change what is expected under
the contract must be included in the contract document by means of an
amendment to the solicitation. It's true that a better understanding may
be obtained by being present for face-to-face discussions regarding
contract issues but the bottom line remains the clarity of the contract.
Experience would suggest that pre-bid conferences sometimes bring out
the existence of ambiguities or inconsistencies in contract language.
These are then changed in the solicitation/contract and made available
to all offerors. The result of this process is that changes in the
contractual obligations of the parties find their way into the
solicitation by means of an amendment to the original solicitation that
is issued to all potential offerors. [^39] It can also be conjectured
that mandatory attendance at the conference could work a hardship on
some potential bidders, especially small businesses. Mandatory
attendance may also tend to promote poor contract language because of
the feeling that everyone understands the intent of the contract as a
result of the discussions at the pre-bid conference, with the result
that clarifications to the written contract requirements are not issued.

**4.3.2.5 [Amendment of Solicitations]{.underline}**

**DISCUSSION**

**Frequently, in the course of the solicitation process and prior to
receipt of offers, you will find something within the solicitation
package that needs to be corrected. This is something that can be done
easily and may enhance competition if the changes are significant (i.e.,
impact quantity, specifications, or delivery). Each recipient of the
solicitation should receive the amendments and should acknowledge that
receipt by the time of submitting its offer. You should consider
extending the time for receipt of offers, if necessary, to permit
offerors to compete effectively under the modified terms.**

**Best Practices**

In many solicitations, someone will bring to your attention a problem
with the package that necessitates a change. The problem may have
something to do with the \"boilerplate\", changes in quantity, the
specifications, delivery schedules, opening dates, or drawings. It may
have to do with correcting an ambiguous provision or resolving
conflicting provisions. Regardless of what

(or who) requires the amendment, there are a few simple
steps/considerations that are normally followed.

As discussed in the pre‑bid/pre‑proposal conference section, even if a
change was mentioned during that conference, an amendment to the
solicitation should be issued. When you change the written terms of the
solicitation, it must be done formally in writing. This serves two
purposes: (1) It documents the change in writing so there are no
misunderstandings, and (2) It provides the changes to offerors who were
not at the conference.

As with other normally repetitive requirements in the procurement
process, many agencies have adopted a pre‑printed form for amending
solicitations. Those forms normally include the following elements
(which can also be included in your amendment if you do not use a form):

-   Identify the solicitation number of the original solicitation;

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-   Identify the amendment number;

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-   Identify the contact person and phone number within your department
    for further information;

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-   Indicate whether or not the time and date specified in the original
    solicitation is changed as a result of the amendment;

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-   Advise offerors of the need to and how they should acknowledge
    receipt of the amendment;

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-   Advise offerors what the changes are; and

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-   Have the amendment signed by the appropriate procurement official,
    most frequently the contracting officer.

Amendments are typically sent to every firm that has been furnished the
original solicitation (the IFB or RFP). Once the solicitation has been
issued, using the mailing list to ensure that any solicitation
amendments are furnished to all entities that received the original
solicitation is important, as discussed in Section 4.3.2.2,
\"Solicitation Mailing List.\" This is an obvious issue, but some
agencies don\'t realize there is a problem until bids are received that
do not acknowledge a material amendment. You then declare the bidder
non‑responsive. Some agencies include clauses in solicitations making it
the offeror\'s responsibility to obtain addenda. While this may assist
in overcoming a protest from a bidder held non‑responsive, it will not
necessarily transform the bid into a responsive or acceptable one.

You cannot over‑emphasize the administrative importance of furnishing
amendments to all entities who received the original solicitation. It is
important to have a single point of contact within your organization
responsible for issuing solicitations and addenda. Some agencies post a
notice at the receipt of offers of the addenda that have been issued.
While there is little an offeror can do other than hold back the offer
at that point, the offeror may be able to perfect the acknowledgment of
addenda and live with the rest of the offer as prepared without the
addendum.

One of the critical issues when issuing an amendment is whether or not
to extend the time and date for receipt of offers. You should consider
the impact of the changes you are making in light of the time it will
take a prudent offeror to incorporate those changes. This includes the
time impact on the work already done in preparing the bid or proposal.
The impact could be minimal or very significant and there is no \"cookie
cutter\" answer to how much additional time, if any, should be allowed
‑‑ you want to allow sufficient time for the changes to be considered in
a meaningful manner.

One \"warning:\" this may be the first time in the solicitation process
you run into the schedule your internal customer has established. Your
instincts may say that the time and date set for receipt should be
extended but your customer may say the change is negligible and no time
is warranted. Early planning and communication with your customer may
build in some time for changes like this. If not, the consequences may
be fewer competitors, a protest, pricing that includes unnecessary
contingencies, or post‑award discovery of specification conflicts that
require compensation for changes.

If a decision is made to amend the solicitation with bids due in two
days, consider notifying prospective offerors by telephone, FAX, or
telegram of the new date and time [and]{.underline} follow that
notification up with an amendment to the solicitation. If you have
already received offers in your bid room, it is recommended that you
notify the offeror of the amendment to inquire if they want their offer
returned. [^40]

There are special rules regarding solicitation amendments that
incorporate revisions or modifications of Davis‑Bacon Act wage
determinations. These rules are discussed in detail in Section 8.1.3.

If, because of schedule distress, you proceed with the procurement
without a necessary amendment, adverse consequences are likely when the
change is brought forward with the ultimate contractor and the contract
must be modified. [^41] It is even possible that the change would
constitute a cardinal change if attempted after award, and would require
a new competition; in this case you have little choice but to amend and
postpone.

**4.3.3 [Common Elements of Offers]{.underline}**

**4.3.3.1 [Receipt of Offers]{.underline}**

**DISCUSSION**

**The culmination of your solicitation process is the receipt of bids or
proposals. Regardless of the method used, great importance is attached
to the time of receipt. Preparations are made to ensure that offers are
not delayed and are properly recorded. Your solicitation may contain a
checklist of items to be submitted with the offers, and the individual
submittals are discussed in the following sections.**

**Best Practices**

[Timeliness]{.underline} [^42] - Why do you care if a bid or offer is
late or not? If the price is the lowest or the best response of the
group, what difference does it make if it was received on time or not?
The rationale for having rules against considering late bids or offers
is tied to the importance of maintaining the integrity of the
competitive procurement process and that this outweighs the possibility
of any savings the public entity might realize in a particular
procurement by considering a late offer.

Unfortunately, late offers are such a common problem that language has
been developed to address what rules would be followed if an offer is
received late. [^43] That language is typically included in the
solicitation so that offerors know ahead of time what the consequences
will be if their offer is received late at the place designated for
receipt. A solicitation provision, and the explanatory rules relating to
the provision, generally include some or all of the following:

1\. **What are the consequences of an offer that is received after the
exact time specified for receipt?** Generally, the offer [will not be
considered]{.underline} at all. [^44] You may want to carve out
exceptions to this absolute rule, and some will be suggested below.
These exceptions consist generally of the sets of circumstances which
you can determine in advance and set out in your solicitation which,
when proven within a specified time by the offeror, would demonstrate
that the delay was due solely to some independent event or action, such
as the documented failure of a registered delivery service. If the offer
is received after the contract is awarded, there are generally no
exceptions. That offer will not be considered at all.

2\. **If you decide to allow consideration of \"late\" offers, under
what conditions will you consider them?**

-   *Will you consider offers that are hand‑delivered late?* It is the
    responsibility of the offeror to make sure its offer is at the place
    designated in the solicitation by the time indicated. If it chooses
    to use a delivery/courier service or deliver its offer in person, it
    must allow sufficient lead time to get it there on time. Normally,
    such excuses as \"I was in an accident\", \"The traffic was heavier
    than usual\", or \"I couldn\'t find a place to park\" are not
    acceptable to excuse a late hand‑delivered offer. If, however, the
    reason the proposal is late is because of problems at your agency
    (e.g., your security guard directed the courier to the wrong room)
    you may want to consider those excuses ‑‑ in effect, you (the
    agency) were the reason the offer was late.

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-   *Will you consider offers that were mailed but not received until
    after the time and date set?* It is not unusual to consider mailed
    offers if certain facts can be established. If they were sent by
    registered or certified mail five calendar days (or some greater or
    lesser number of days) prior to the date specified for receipt of
    offers, they will be considered if the postmark on both the envelope
    or offer wrapper and the original receipt clearly establishes the
    offer was mailed before the five day window. If you want to allow
    this exception, a provision which clearly and unambiguously
    establishes the rules which will be acceptable to you will save
    extended argument and resentment in the inevitable test cases.

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-   *Will you consider an offer that was mailed (not registered or
    certified) but you are able to ascertain that it was mishandled in
    the mailroom?* It was properly addressed and, in the normal course
    of business at your agency, should have been delivered to your bid
    room on time. However, it was sent to the wrong department or fell
    behind a desk in the mailroom. Again, if you can establish it was
    received in your agency prior to the time and date set for receipt
    but didn\'t get to you until \"late\", your policy might want to
    allow consideration of that offer. If so, spelling that exception
    out in your solicitation clause avoids many questions.

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-   *Will you consider offers that were sent via an \"overnight\"
    service? If so, which service(s) will you consider?* It is not
    unusual to limit the service to the U.S. Postal Service Express Mail
    Next Day Service and, even in that limited situation, the package
    must be dispatched by 5:00 p.m. at the place of mailing two working
    days prior to the date set for receipt of offers. If you include
    Federal Express and other reliable overnight courier services, be
    sure you spell out exactly what service(s) you will allow.

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-   As a result of an increase in procurements being conducted via
    electronic commerce, rules have been developed addressing late
    offers received through that medium. Generally, the offer must have
    been received by the contracting agency no later than 5:00 p.m. one
    working day prior to date specified for receipt of offers. If you
    are into electronic commerce procurements, you need to consider the
    consequences of late offers through that medium as well.

> \"I\'ve got this great policy patterned after the FAR clauses on
> consideration of late offers and here it is, a day after I opened bids
> and another bid comes to my office through the mail. What do I do?\"
> If it was mailed \"regular\" first class mail, you normally would
> retain the bid, unopened, and advise the offeror that its bid was
> received late and will not be considered. If the envelope or wrapping
> indicates it was mailed registered or certified (the clause may have
> been complied with), you need to notify the bidder that its bid was
> received late and will not be opened unless, by a reasonable date
> [established in your notification]{.underline}, it can furnish you
> with the original post office receipt establishing compliance with the
> exceptions you have adopted in your provision.
>
> Because these issues have such a high probability of being protested
> or litigated, it is recommended that as soon as you become aware of
> the receipt of a late offer, you notify your legal counsel for advice
> on what action to take. Many of the exceptions recognized in the law
> are very fact‑intensive and care must be taken in ascertaining all of
> the facts and responding appropriately to what facts existed.

[Completeness of Offer]{.underline} ‑ Besides the obvious things (like
the bid or price schedule), there are a number of matters that are
normally submitted with the offer, whether it is a bid or a proposal.
These items either are required by law or the natural development of the
procurement process has resulted in this being a good (or the best) time
for some things to get into the hands of the procurement officials. Many
of these matters are taken care of in the various representations and
certifications that are submitted with the offer and which normally
address responsibility‑type questions that aid in processing the
ultimate contract for award. Others, such as acknowledgment of
solicitation amendments and bid bonds can go to the issue of whether the
offeror is responsive ‑‑ did it consider a material amendment when it
submitted its offer?

In our discussion on common elements of the solicitation (see Section
4.3.2.3), we covered the common practice of developing a separate
document to include in your solicitation for all the representations and
certifications that you want each offeror to complete and return with
its offer to you. If they are all in one place, it is much easier for
the offeror to ensure it has furnished you

everything you need as well as you don\'t have to worry about forgetting
to ask for something ‑‑ Everything you need is on one form.

**4.3.3.2 [Federally Required Submissions with Offers]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| § 16 of FTA Circular 4220.1E, entitled \"Statutory and Regulatory     |
| Requirements\" states that:                                           |
|                                                                       |
| > \"A current but not all inclusive and comprehensive list of         |
| > statutory and regulatory requirements applicable to grantee         |
| > procurements (such as Davis‑Bacon Act, Disadvantaged Business       |
| > Enterprise, Clean Air, and Buy America) is contained in the FTA     |
| > Master Agreement. [^45] Grantees are responsible for evaluating     |
| > these requirements for relevance and applicability to each          |
| > procurement. For example, procurements involving the purchase of    |
| > iron, steel and manufactured goods will be subject to the \'Buy     |
| > America\' requirements in 49 CFR Part 661. Further guidance         |
| > concerning these requirements and suggested wording for contract    |
| > clauses may be found in FTA\'s Third Party Procurement Manual.\"    |
+-----------------------------------------------------------------------+

**DISCUSSION**

**The FTA has included a comprehensive listing of contract clause
requirements in the Master Agreement. A copy of that Agreement is an
appropriate item for the procurement official\'s desk book of reference
materials. We will, in this subsection, highlight generally the federal
requirements that are germane to our discussion here of items that
should be submitted to the transit property as part of the solicitation
process involving either IFBs or**

**RFPs. We will also discuss in more depth four specific certifications
that are federally required.** [^46]

**4.3.3.2.1 [Certification Regarding Debarment, Suspension, and other
Responsibility Matters]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Executive departments and agencies shall participate in a             |
| government-wide system for (nonprocurement) debarment and suspension. |
| [^47]                                                                 |
+-----------------------------------------------------------------------+

**DISCUSSION**

**Much like the \"common grant rule\" (49 CFR Part 18), the federal
government has adopted a \"common rule\" on the government‑wide effect
of debarments and suspensions. DOT\'s implementation of that common rule
is found at 49 CFR Part 29. The policy behind this rule is that a person
or entity who is debarred or suspended shall be excluded from Federal
financial and non‑financial assistance and benefits under Federal
programs and activities. As stated in the regulations, debarment** [^48]
**and suspension** [^49] **are serious actions which should be used only
in the public interest and for the protection of the federal government
and not for the purposes of punishment.** [^50]

**In order to protect the public interest, it is the policy of the
federal government to conduct business only with responsible persons.**
[^51] **Persons who have been debarred or suspended are not
\"responsible\" and, unless approved by the FTA, contracts will not be
awarded to those persons.** [^52] **The certification required by this
common rule must be submitted with the offers, and is also an aid to
expedite the procurement process by providing critical information as to
the responsibility determination that the contracting officer must
ultimately make.** [^53]

**Best Practices**

The debarment and suspension [certification]{.underline} found at
Appendix B of Part 29 (and as set forth in Appendix A.1 of this manual)
is mandatory for use in contracts over \$100,000 involving federal
funds.

Include the [instructions]{.underline} for the certification as well as
the certification. Don\'t try to save space in your solicitation by only
including the certification ‑‑ the instructions are too critical. It is
recommended that you make this certification a topic at your [pre‑bid or
pre‑proposal conference]{.underline} if the resulting contract will
exceed \$100,000.

Even though you request this certification from all offerors, failure to
receive it with a bid (in the sealed bidding method of procurement) is
not a responsiveness question ‑‑ this goes to a contractor\'s
responsibility and may be received and talked about [after bids are
received]{.underline}. It must be received prior to award.

The certification and regulations allow you to [rely]{.underline} on
your contractor\'s certification that it is not debarred, suspended,
proposed for debarment, declared ineligible, or voluntarily excluded
from participation in your contract as an element of your responsibility
determination. However, if you know that the certification is erroneous,
you may not rely on the certification.

The certification and regulations state that you may, but are not
required to, check the *List of Parties Excluded from Federal
Procurement and Nonprocurement Programs* to determine the eligibility of
your contractor and its subcontractors. The *List of Parties Excluded
from Federal Procurement and Nonprocurement Programs* is available from
the General Services Administration in either a printed version or an
electronic version. The printed version is published monthly and may be
obtained by purchasing a yearly subscription. [^54] The electronic
version is updated daily and provides access to the names of firms and
individuals on the list

through your computer. [^55] GSA also offers a telephone inquiry service
to answer general inquiries about entries on the *List* at (202)
501‑4873 or 4740. [^56]

Although not required by the FTA, some transit properties check the
*List* on all their procurements, [whether or not federally
funded]{.underline}. Even if you are using local dollars, do you want to
award a contract to, or approve a subcontract for, a
contractor/subcontractor that has been debarred, suspended, or proposed
for debarment by the federal government? Is that entity responsible? You
may at least want to inquire about the action prior to making your final
responsibility determination. If you know you would want to use
debarment information in a non‑Federally funded procurement, you may
wish to mention it in your solicitation\'s responsibility clause.

If the apparent awardee of your solicitation (e.g., the lowest
responsive bidder) has submitted a [conditioned
certification]{.underline}, you can use that information in arriving at
your responsibility determination and find the firm non‑responsible.
However, the firm may have submitted information you believe is
extenuating enough to warrant award consideration. Remember, if you want
to award a contract to a firm that has submitted a conditioned
certification, you cannot make an award until you have received approval
for the award from the FTA. [^57] It is recommended as soon as it
appears you will be faced with this situation, you notify your regional
FTA office for guidance and instructions on what information they need
and submit it promptly.

**4.3.3.2.2 [Buy America Certification]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| § 14.a of the Master Agreement states that:                           |
|                                                                       |
| a\. [Buy America]{.underline}. The Recipient agrees to comply with 49 |
| U.S.C. § 5323(j), FTA regulations, \"Buy America Requirements,\" 49   |
| C.F.R. Part 661, and any implementing guidance FTA may issue.         |
+-----------------------------------------------------------------------+

##### SUMMARY 

The Buy America requirements apply to all contracts for rolling stock,
steel, iron, or manufactured products with a value greater than
\$100,000. For these contracts, the grantee must obtain a certification
of compliance or non-compliance with the Buy America requirements with
each bid or offer. If the bidder or offeror is not able to comply by
using the requisite American content and certifies non-compliance, it
may qualify for a waiver, which the grantee must request before award.
FTA may grant a waiver if it is found that it is in the public interest,
there are no U.S. products available, or there is a 25 percent
price-difference between the foreign and domestic products.

##### REQUIREMENTS

[Steel and iron]{.underline}: All steel and iron manufacturing processes
must take place in the U.S. These requirements apply to all construction
materials made primarily of steel or iron and used in infrastructure
projects such as transit or maintenance facilities, rail lines, and
bridges. The requirements do not apply to steel or iron used as
components or subcomponents of other manufactured products or rolling
stock. 49 C.F.R. 661.5(a), (b), and (c).

[Manufactured products]{.underline}: The product itself must be
manufactured in the U.S. with 100 percent U.S. components; foreign
subcomponents are allowed. 49 C.F.R. 661.5(d).

[Construction contracts]{.underline} - Except for the iron and steel
used in a construction contract, FTA treats the procurement of a
construction project as the procurement of a \"manufactured product\"
subject to 49 CFR 661.5(d). Final assembly of the project takes place at
the construction site, and items directly incorporated into the project
at the job site are considered \"components.\" For instance, if the
deliverable under a particular contract is the building of a passenger
terminal, the terminal itself is the end product, and the main elements
incorporated into the terminal, e.g., shelters, elevators, and
platforms, are components of the end product. These main elements are
generally specified in the construction contract. *However, you must
first satisfy the steel and iron requirements, as discussed in 661.5(b)
and (c), before applying the manufactured product section as discussed
above, to the balance of the construction contract.*

[Rolling stock (including train control, communication, and traction
power equipment)]{.underline}: The cost of components and subcomponents
produced in the U.S. must be more than 60 percent of the cost of all
components and final assembly must take place in the U.S. 49 U.S.C.
5323(j)(2)(C) and 49 C.F.R. 661.11. Part 661.11 is a road map for
grantees and contractors to follow when determining compliance with the
domestic content requirements for rolling stock. It discusses in detail
what constitute components and subcomponents. It also illustrates train
control equipment, communication equipment, and traction power equipment
(at subsections (t), (u), and (v)); and provides a list of typical
components of rail and bus rolling stock in the Appendix. The March 18,
1997, Dear Colleague letter lays out the requirements for final
assembly. The March 30, 2001, Dear Colleague letter discusses
calculation of domestic content, specifically noting that all items
included in the list of typical components in the Appendix to 661.11
must be considered components, not subcomponents. For more discussion,
please see the Notice of Dear Colleague letter published in the Federal
Register. 66 Fed. Reg. 32412 (June 14, 2001).

\[Note: The Buy America requirements are different from the *Buy
American* requirements. The latter applies to direct federal
procurements. The Buy America regulations discussed here, apply only to
federal assistance programs funded by the Federal Transit
Administration.\]

**Best Practices**

If you spend much time in procurement, a copy of 49 C.F.R. Part 661 is
one of those \"mandatory\" documents for your procurement desk book. You
will be constantly referring to these rules throughout your career in
transit, whether you are buying buses, rail cars, computers or a
construction project. Because these rules are so critical, it is also
important that you keep abreast of FTA guidance and final rules
impacting these regulations as published in the *Federal Register* or on
the website. FTA's Buy America web page is:

<http://www.fta.dot.gov/legal/buy_america/14328_ENG_HTML.htm>. The web
site has links to the regulations, all relevant Federal Register
publications, waivers and letters of interpretation, frequently asked
questions, rolling stock handbooks, and related Dear Colleague letters.

##### Notice Requirements

When a contract for rolling stock, steel, iron, or manufactured products
is estimated to exceed \$100,000, 49 C.F.R. 661.13 requires that the
solicitation include \"an appropriate notice of the Buy America
provision.\" A model clause addressing that requirement is included in
Appendix A.1, \"Federally Required Model Clauses\" of this Manual. This
suggested language is written as a preamble to the certifications
required by Parts 661.6 and 661.12.

Other grantees have satisfied this notice requirement in their general
or special provisions by including language substantially as follows:

> *[Buy America Provision]{.underline}*
>
> *This solicitation and the resulting contract are subject to the Buy
> America requirements of 49 U.S.C.* §*5323(j) and the Federal Transit
> Administration\'s implementing regulations found at 49 C.F.R. Part
> 661. These regulations require, as a matter of responsiveness, that
> the bidder or offeror submit with its offer a completed certification
> in accordance with Part 661.6 or 661.12, as appropriate. These
> certifications are set forth in this solicitation at \[identify where
> the certifications are\].*

**Certification Requirements**

49 C.F.R. 661.13(b) requires that you include in your solicitation a
requirement, [as a condition of responsiveness]{.underline}, that the
bidder or offeror submit with the bid or offer a completed Buy America
certificate in accordance with Part 661.6 for steel, iron, and
manufactured products, or Part 661.12, for rolling stock (including
train control, traction power, and communication equipment).

In a sealed bid, the bidder is bound by its certification and cannot
change it after bid opening, except as provided for clerical error. If
the bidder does not submit a signed certification with the bid, submits
the wrong certification of compliance, or certifies both compliance and
non-compliance, that bid is non-responsive and cannot be considered.
Except as discussed below for clerical error, you cannot go back and
ask, in a competitive sealed bidding procurement, for the bidder to
complete the certification and submit it after bids are opened.

In competitive negotiated procurements (i.e., requests for proposals),
certifications submitted as part of an initial proposal may be
superseded by subsequent certifications submitted with revised
proposals, and the certification submitted with the offeror's final
revised proposal (or best and final offer) will control. However, where
the grantee awards on the basis of initial proposals without discussion,
the certification submitted with the initial proposal will control.

The clerical error provision allows bidders and offerors to change a
certification of non-compliance to one of compliance *only if the bidder
or offeror certified wrongly due to a clerical or inadvertent error.* 49
C.F.R. 661.13(b). More explanation of this provision can be found in the
Final Rule published in the Federal Register. 68 Fed. Reg. 9797 (Feb.
28, 2003). If the

bidder or offeror certifies it will comply with the Buy America
requirements, it will not be eligible later for a waiver of those
requirements. 49 C.F.R. 661.13(c).

The certification requirement for procuring steel, iron, or manufactured
products is at 49 C.F.R. Part 661.6. This certification language refers
to sections of the Surface Transportation Assistance Act of 1982 (steel
and manufactured products) and not to the most recent version of the
statute, found in 49 U.S.C. 5323(j) (steel, *iron*, and manufactured
products). The certification language in Appendix A.1, \"Federally
Required Model Clauses\" accurately references the correct statutory
provision. You should use this until the FTA publishes technical
corrections to this C.F.R. section. The bidder or offeror has a choice
of two certifications to complete, either:

-   it will comply with 49 U.S.C. 5323(j)(1) and 49 C.F.R. 661.5; or

-   it cannot comply with 49 U.S.C. 5323(j)(1) and 49 C.F.R. 661.5, but
    may qualify for an exception under 49 U.S.C. 5323(j)(2)(A),
    5323(j)(2)(B), or 5323(j)(2)(D), and 49 C.F.R. 661.7.

The certification requirement for procuring rolling stock (including
traction power, train control, and communication equipment) is at Part
661.12. This certification language also refers to sections of the
Surface Transportation Assistance Act of 1982 and not to the most recent
version of the statute, found in 49 U.S.C. 5323(j). The certification
language for 661.12 in Appendix

A.1, \"Federally Required Model Clauses\" of this Manual accurately
references the correct\
statutory provision. You should use this until the FTA publishes
technical corrections to this

C.F.R. section. The bidder or offeror has a choice of two certifications
to complete, either:

-   it will comply with 49 U.S.C. 5323(j)(2)(C) and 49 C.F.R. 661.11; or

-   it cannot comply with 49 U.S.C. 5323(j)(2)(C) and 49 C.F.R. 661.11,
    but may qualify for an exception under 49 U.S.C. 5323(j)(2)(A),
    5323(j)(2)(B), or 5323(j)(2)(D), and 49 C.F.R. 661.7.

##### Waiver Requirements 

If a bidder or offeror executes the certification indicating that it
cannot comply but may qualify for an exception, you must review the
circumstances to determine if you should request a waiver from FTA. If
you do not request a waiver or you request it and it is denied, you must
award to a compliant bidder or offeror if you plan to use federal funds.
The Buy America requirements may be waived in three specific instances:

-   [If the requirements are inconsistent with public
    interest]{.underline} - Unless a general exception is set out in the
    Appendix to Part 661.7 of the regulation, this waiver requires a
    determination by the FTA Administrator, on a case-by-case basis,
    that to require compliance is \"inconsistent with the public
    interest.\" 49 U.S.C. 5323(j)(2)(A) and 49 C.F.R. 661.7(b).

-   [If the materials are not available in from the U.S.]{.underline} -
    This waiver requires a determination by the FTA Regional
    Administrator that the materials for which a waiver is requested are
    not produced in the U.S. in sufficient and reasonably available
    quantities and of a satisfactory quality. If no responsive and
    responsible bid is received offering an item produced in the U.S.,
    it will be presumed the conditions exist to grant this
    non-availability waiver. In the case of a sole source procurement,
    the waiver will be granted only if the grantee provides sufficient
    information which indicates that the item to be procured is only
    available from a single source or that the item to be procured is
    not produced in sufficient and reasonably available quantities of a
    satisfactory quality in the U.S. 49 U.S.C. 5323(j)(2)(B) and 49
    C.F.R. 661.7(c).

-   [If the cost of the domestic product is more than 25 percent higher
    than the foreign product]{.underline} - This waiver requires a
    determination by the FTA Regional Administrator that including a
    domestic item or domestic material will increase the cost of the
    contract between the grantee and its supplier of that item or
    material by more than 25 percent. This waiver cannot be applied to
    components or subcomponents. 49 U.S.C. 5323(j)(2)(D) and 49 C.F.R.
    661.7(d).

```{=html}
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```
-   [General waivers]{.underline} - Appendix A to Part 661.7 lists
    specific waivers for which applications are not necessary. This list
    includes all waivers published in 48 C.F.R. 25.104, [^58] Chrysler
    vans, microcomputers and small purchases under \$100,000. A general
    waiver has also been granted under the rolling stock requirements of
    Part 661.11 at Appendix A. Under this waiver, the provisions of this
    section do not apply when foreign source spare parts for buses and
    other rolling stock whose total cost is 10 percent or less of the
    overall project contract cost are being procured as part of the same
    contract for the major capital item. If the product offered
    qualifies for a permanent discussed here, the bidder or offeror
    should certify compliance with Buy America.  

Generally, only grantees may apply for a waiver. However, if a bidder or
offeror is seeking a waiver under Part 661.7(f)(waiver for component or
sub-component under rolling stock procurements) or Part 661.7(g) (waiver
for specific item used a manufactured product), FTA will consider a
request for waiver directly from the bidder, offeror, or supplier.

The grantee may request a waiver from FTA when there is a viable public
interest argument supporting award to a non-compliant bidder or offeror
when there is a compliant bidder or offeror; when there are no compliant
bids or offers (including a justified sole source to a non-compliant
bidder or offeror); or when there is more than a 25 percent price
difference between the compliant and non-compliant bid or offer.
*Otherwise, the grantee must award to the compliant bidder or offeror
meeting all requirements for award.*

Applications for waivers are processed following 49 C.F.R. 661.9. Except
as noted above, the waiver request must be obtained \"in a timely
manner\" through the grantee. Grantees should therefore review the bids
or offers and request a waiver, if one is necessary, before award. The
grantee\'s request for waiver must be made in writing and include all
facts and justification to support the waiver, and be submitted to the
FTA Administrator through the appropriate FTA Regional Office. The
Administrator (or Regional Administrator, in cases where authority has
been delegated) will issue a written determination setting forth the
reasons for granting or denying the waiver.

##### Investigations

FTA's Buy America investigative procedures establish a presumption that
a bidder who has submitted a Buy America certificate is in compliance
with the regulation. FTA will investigate if it finds that this
presumption has been overcome. FTA may initiate an investigation on its
own or in response to a third-party petition. The regulation requires
that the petition include a statement of the grounds of the petition and
any supporting documentation. 49 C.F.R. 661.15.

**Intentional Violations**

49 C.F.R. 661.18, states that any person determined by a Federal agency
or court to have intentionally affixed a false \"Made in America\" label
to, or misrepresented the origin of, a product that was used in the
project but which was not produced in the United States is ineligible to
receive an FTA-funded contract.

For instance, if a person has been convicted by a court of making a
false certification under these provisions, that person would be
ineligible for award of a contract. If there was a violation but not a
conviction, the information could still affect your responsibility
determination. Similarly, if it was determined (perhaps through a
suspension or debarment proceeding conducted by a federal agency) that
the person falsely represented the American origin of a product, that
person would similarly be ineligible for award of a contract.

If the violation is discovered after award, the contractor remains
responsible for performing the contract, including satisfying the Buy
America requirements. A typical resolution is to permit the contractor
to substitute a different product that meets the specifications
including the Buy America requirement at the contractor\'s expense. In
rare instances, FTA may approve a public interest waiver allowing the
non-compliant product to be used.

**4.3.3.2.3 [Lobbying Certification]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| §3.d of the Master Agreement states that:                             |
|                                                                       |
| > d\. [Lobbying Restrictions]{.underline}. The Recipient agrees as    |
| > follows:                                                            |
| >                                                                     |
| > \(1\) Refrain from using Federal assistance funds to support        |
| > lobbying, and                                                       |
| >                                                                     |
| > \(2\) Comply, and assure the compliance by each third party         |
| > contractor at any tier and each subrecipient at any tier, with      |
| > applicable requirements of U.S. DOT regulations, \"New Restrictions |
| > on Lobbying,\" 49 CFR Part 20, modified as necessary by 31 U.S.C. § |
| > 1352.                                                               |
+-----------------------------------------------------------------------+

**DISCUSSION**

**The requirements set forth above have been included in all grants
between the FTA and its grantees with a requirement that the
certification flow down to all contractors and subcontractors for whom a
contract involving federal funds in excess of \$100,000 is contemplated.
The requirement has two aspects to it: First, the certification itself
must be executed and returned with the bid or proposal. Second, in the
event funds of any sort have been used for lobbying activities** [^59]
**by the contractor or any subcontractor; a Standard Form‑LLL,
\"Disclosure Form to Report Lobbying\" must also be completed. It is
your ultimate responsibility to ensure that these certifications and
disclosure forms are submitted to the FTA.** [^60]

**Best Practices**

[Certifications Required]{.underline} ‑ In all solicitations that are
expected to result in contract amounts in excess of \$100,000, the
certification set forth in Appendix A to 49 CFR Part 20 must be
included. The certification is also included in Appendix A.1,
\"Federally Required Model Clauses\" of this Manual under the
\"Lobbying\" contract provisions.

Although it is not required that you include a copy of the Standard Form
LLL in the solicitation, it is recommended that you have a copy
available to furnish to an offeror if one is requested. A copy is
included in the CFR section and may be reproduced. [^61] A copy may also
be available from your legal counsel or federal grants office because
the agency had to furnish a copy to the FTA as well as part of the
Grant‑making process.

[Timeliness]{.underline} ‑ The certification (and Standard Form LLL if
applicable) should be executed and returned with the bid or proposal.
Because the language of the regulations refers to needing the
Certification and applicable disclosures at time of award, failure to
submit the executed certification with the offer would not be considered
a responsiveness issue in a competitive bidding procurement.

[Subcontracts]{.underline} ‑ You may not always know who your prime
contractor subcontracts with, particularly in fixed price contracts. It
is recommended that during any pre‑performance conference you have with
the prime, you remind him or her of the requirement to forward the
certification and disclosure statements made by subcontractors at any
tier who have subcontracts in excess of \$100,000 through the tiers to
the contracting officer.

**4.3.3.3 [Other Submissions]{.underline}**

**4.3.3.3.1 [Acknowledgment of Solicitation Addenda]{.underline}**

**DISCUSSION**

**Although the topic has been discussed in different contexts,**[^62]
**one of the most critical submissions that should be received with
offers is an acknowledgment of any amendments to the solicitation. These
are the changes to the terms of the solicitation (including to the
\"boilerplate,\" the drawings, specifications, scope of work, etc.) that
in all likelihood have an impact on price or schedule. If an amendment
is not acknowledged, you do not know if the offeror is really offering
the same product or service that you want.**

**Best Practices**

There are two ways most agencies allow offerors to acknowledge receipt
of amendments.

As we discussed in the section on the Solicitation, [^63] many agencies
include on the **solicitation form** itself, space for solicitation
amendments to be acknowledged.

A second way is for the offeror to actually sign and date the amendment
cover sheet and return it either at the time of receipt or include it
with the offer.

Seldom is it required by the agency, but it is not unusual for an
offeror to fill in the space on the solicitation form and return the
amendment too. No problem from your standpoint ‑‑ just \"overkill\" by a
concerned offeror. If you see this situation frequently, you may want to
check the instructions you have provided to offerors and determine if
there is some ambiguity about your acknowledgment requirements.

If you receive a bid or proposal and one or more of the issued
amendments are not acknowledged, what do you do?

Many times you are initially only looking at the low bidder\'s bid ‑‑
look at the other bidders and see if they acknowledged the amendment. If
not, there may be a mailroom or timeliness problem.

Are the changes to the solicitation made by the amendment material?

If the amendment is material, accumulate the documents and seek the
advice of your legal counsel. Particularly in an IFB procurement, you
may have a low bid that is non‑responsive and cannot be considered for
award. Depending upon how your agency conducts RFPs, the failure to
acknowledge an amendment is not usually \"fatal\" and you can ask for an
acknowledgment during negotiations or discussions.

You may wish to include in your procedures or solicitations a provision
for your determination regarding the responsiveness of offers which do
not acknowledge material addenda. Such a provision will reinforce your
discretion.

**4.3.3.3.2 [Bid Guarantee]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| ::: Definition-Term                                                   |
| In discussing bonding requirements, § 11 of FTA Circular 4220.1E      |
| provides:                                                             |
| :::                                                                   |
|                                                                       |
| > For those construction or facility improvement contracts or         |
| > subcontracts exceeding \$100,000, FTA may accept the bonding policy |
| > and requirements of the grantee, provided FTA determined that the   |
| > policy and requirements adequately protect the Federal interest.    |
| > FTA has determined that grantee policies and requirements that meet |
| > the following minimum criteria adequately protect the Federal       |
| > interest:                                                           |
|                                                                       |
| a.  A bid guarantee from each bidder equivalent to five (5) percent   |
|     of the bid price. The \"bid guarantee\" shall consist of a firm   |
|     commitment such as a bid bond, certified check, or other          |
|     negotiable instrument accompanying a bid as\                      |
|     assurance that the bidder will, upon acceptance of its bid,       |
|     execute such contractual documents as may be required within the  |
|     time specified;                                                   |
|                                                                       |
| §15.m of the Master Agreement states that:                            |
|                                                                       |
| > \(m\) [Bonding]{.underline} - The Recipient agrees to comply with   |
| > the following bonding requirements.                                 |
| >                                                                     |
| > \(1\) [Construction Activities]{.underline} -- The recipient agrees |
| > to provide bid guarantee, contract performance, and payment bonding |
| > to the extent deemed adequate by FTA and applicable Federal         |
| > regulations, and comply with any other bonding requirements FTA may |
| > issue.                                                              |
|                                                                       |
| ::: Definition-Term                                                   |
| > \(2\) [Other Activities]{.underline} -- The Recipient agrees to     |
| > comply with any other bonding requirements or restrictions FTA may  |
| > impose. [^64]                                                       |
| :::                                                                   |
|                                                                       |
| ::: Definition-Term                                                   |
| State laws are sometimes specific in requiring or prohibiting         |
| security and guarantees in public procurements. Performance bonds are |
| often required, and the requirement may also affect bid guarantees.   |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**The primary function of obtaining a bid guarantee is to financially
protect the owner from loss should the successful offeror fail to
execute further contractual instruments and furnish performance bonds or
insurance certificates as required. As required by the FTA, this
financial protection on construction contracts is 5% of the amount of
the offer. Bid guarantees are usually used only where there is a
requirement for performance and/or payment bonds are required prior to
the commencement of performance.**

**We will discuss in other sections of the Manual bonding requirements
in particular types of procurements, such as for construction,** [^65]
**equipment and supplies,** [^66] **and rolling stock.** [^67] **In this
section, we will discuss the submission requirements for the various
types of bid guarantee, such as bid bonds, certified checks, and other
allowable negotiable instruments.**

**As with many other aspects of the procurement process, the use of bid
security and the types of security may be addressed in your state laws.
In these cases, you will be obligated to follow those laws as long as
they meet the minimum requirements of the federal regulations set forth
above.**

**Best Practices**

[Solicitation]{.underline} ‑ If a bid guarantee is to be required, a
solicitation clause is included that details:

-   the requirement;

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-   the amount of the guarantee (typically 5 percent of offer price) and
    how it should be calculated;

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-   acceptable forms of guarantee (usually, cashier\'s check, letter of
    credit, or bond from a licensed agency); and

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-   that the guarantee must be submitted with the offer.

[Nonresponsiveness]{.underline} ‑ You can include in your policy
regarding bid guarantees the actions to be taken if one is not furnished
in accordance with the solicitation requirement.

-   Normally in a *bidding* environment, if the proper guarantee is not
    furnished with the bid, the bid is non‑responsive. If you allowed
    the bidder to submit the missing guarantee or correct a defective
    guarantee after the bids were \"exposed\", you would be allowing
    \"two bites from the apple.\" Once the bids are known, the bidder
    could decide to submit (or not) the bid guarantee based on how much
    money is left on the table!

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-   In a *competitive proposal* process, if a guarantee was required and
    was not submitted, your solicitation document would determine
    whether it could be asked for during negotiations. But what do you
    do if you could award a contract without negotiations, (a right you
    will frequently reserve to yourself)? If you have to ask one offeror
    for its bid guarantee, is that considered discussions or
    negotiations? If so, that would necessitate opening discussions with
    all offerors in the competitive range. [^68] For these reasons, and
    because proposers have other means of effectively withdrawing from
    competitive proposal processes, proposal guarantee is less
    frequently used than bid guarantee (even if a performance bond is
    ultimately required).

What if the bid guarantee is not signed, but the bid is? What if you
only received one offer and the guarantee was not included with that
offer? What if the guarantee is received late? What if the amount of the
guarantee is insufficient? What if the guarantee is not dated or has an
incorrect date? These are all questions that could arise and can be
considered in your policy formulation.[^69] Your policy would provide,
e.g., that deficiencies affecting offer price would be material and
would establish nonresponsiveness.

[Custody of Guarantee]{.underline} ‑ What do I do with the bid
guarantee? It is recommended that if the guarantee is a bond or letter
of credit, it be retained with the procurement file. If it is other than
a

bid bond, it is recommended that it be placed in a secure area (safe or
locked file cabinet) with a notation in the procurement file its
location.

[Unused Guarantee]{.underline} ‑ Guarantees have a financial impact on
proposers as long as they are in effect. Therefore, you will want to
return it to the unsuccessful offerors as soon as it is prudent to do so
(e.g., you have awarded the contract or the offeror is too far down the
bid list to reasonably expect an award). You may establish a rule that
all offerors beyond a certain rank (e.g., the fourth lowest and all
higher bids, all proposers outside the competitive range) will
immediately have their guarantee returned.

Return unused guarantees to contractors after the contingencies have
been met ‑‑ all contractual requirements have been met and the required
performance and payment bonds and insurance certificates are in place as
protection for the owner in the event of default or non‑performance of
the contractor.

[Collection of Bond]{.underline} ‑ Although you will seldom be involved
in collecting funds from a bonding agency under a bid bond, collection
is like the capture of the king in chess. It dictates many of the moves
you will want to make to use a bid bond effectively without imposing
unnecessary burden on your offerors. The conditions which discharge the
bond should be specified in your solicitation. Generally, the principal
condition that discharges the bond or guarantee is the furnishing of a
performance bond. Often the terms of the bid guarantee also guarantee
that the offeror will provide executed contract documents, insurance
certificates, payment bonds, or evidence of DBE compliance.

Once the performance bond is in place, it guarantees performance of all
other contractor obligations. The most likely reasons a performance bond
would not be furnished (which are the conditions you might look for in
deciding whether to require bid guarantee) are: a financial condition so
weak that bonding companies will not participate, such a large amount of
bonds already issued that the bond cannot be obtained, second thoughts
about the contract based on the information revealed up to the point in
time of bonding, or a frivolous bid.

If the performance bond is not provided, you can specify the right under
your bid guarantee provision to immediately accept the next ranked offer
and to collect *from the defaulting offeror* the price and value
difference between the offers. (Estimating this difference is one way to
set the amount of the bid guarantee.) If the guarantee is a bond or
equivalent letter of credit, you may need to obtain a judgment against
the offeror before you can actually collect from the bonding company or
bank. As indicated above, it is critical to most suppliers who provide
bid guarantee that they retain the confidence of bonding companies. The
bonding company\'s concern may assist in collection from a defaulting
offeror.

**4.4 SEALED BIDS (INVITATION FOR BIDS)**

**4.4.0 [Overview]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| The FTA does not require use of the sealed bid (invitation for bids)  |
| method of procurement for any particular procurement. This method is  |
| simply one of many that may be used, as appropriate. If, however, the |
| grantee decides this method of procurement is appropriate, § 9.c.\    |
| of FTA Circular 4220.1E sets forth some definitions, parameters for   |
| use, and some specific requirements to be followed:                   |
|                                                                       |
| > c\. Procurement by Sealed Bids/Invitation for Bid (IFB). Bids are   |
| > publicly solicited and a firm‑fixed‑price contract (lump sum or     |
| > unit price) is awarded to the responsible bidder whose bid,         |
| > conforming to all the material terms and conditions of the          |
| > invitation for bids, is the lowest in price.                        |
| >                                                                     |
| > \(1\) In order for sealed bidding to be feasible, the following     |
| > conditions should be present:                                       |
| >                                                                     |
| > \(a\) A complete, adequate, and realistic specification or purchase |
| > description is available;                                           |
| >                                                                     |
| > \(b\) Two or more responsible bidders are willing and able to       |
| > compete effectively for the business;                               |
| >                                                                     |
| > \(c\) The procurement lends itself to a firm fixed price contract   |
| > and the selection of the successful bidder can be made principally  |
| > on the basis of price; and                                          |
| >                                                                     |
| > \(d\) No discussion with bidders is needed.                         |
| >                                                                     |
| > \(2\) If this procurement method is used, the following             |
| > requirements apply:                                                 |
| >                                                                     |
| > \(a\) The invitation for bids will be publicly advertised and bids  |
| > shall be solicited from an adequate number of known suppliers,      |
| > providing them sufficient time to prepare bids prior to the date    |
| > set for opening the bids;                                           |
| >                                                                     |
| > \(b\) The invitation for bids, which will include any               |
| > specifications and pertinent attachments, shall define the items or |
| > services sought in order for the bidder to properly respond;        |
| >                                                                     |
| > \(c\) All bids will be publicly opened at the time and place        |
| > described in the invitation for bids;                               |
| >                                                                     |
| > \(d\) A firm fixed‑price contract award will be made in writing to  |
| > the lowest responsive and responsible bidder. When specified in     |
| > bidding documents, factors such as discounts, transportation costs, |
| > and life cycle costs shall be considered in determining which bid   |
| > is lowest;                                                          |
| >                                                                     |
| > Payment discounts will only be used to determine the low bid when   |
| > prior experience indicates that such discounts are usually taken    |
| > advantage of; and                                                   |
| >                                                                     |
| > \(e\) Any or all bids may be rejected if there is a sound           |
| > documented reason.                                                  |
| >                                                                     |
| > \(3\) The sealed bid method is the preferred method for procuring   |
| > construction if the conditions in paragraph c(1) above apply.       |
|                                                                       |
| ::: Definition-Term                                                   |
| State law typically places additional and more specific requirements  |
| on the sealed bidding process.                                        |
| :::                                                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**Having said there is no FTA requirement that grantees use the sealed
bidding method of procurement, it should be recognized that, as a
practical matter, many more grantee procurements are accomplished with
this method as opposed to the competitive proposal/request for proposal
method which will be discussed in more detail below.**

**There is a mixture of history and tradition behind the use of sealed
bidding in the public sector which is frequently embodied in legislative
requirements at both the federal and state levels. Although federal
legislative requirements mandating the use of this method have been
relaxed in recent years, many states still require its use for many
commodities or services being procured and it is still the \"preferred\"
method for the acquisition of construction services in the public
sector, even by the FTA. Sealed bidding is perceived to be a faster
method of procurement; who gets the contract can be determined fairly
objectively; and the fixed price contract which results is easy to
understand and budget, as well as manage after award.**

**Purpose**

As with so many other aspects of public procurement, we must begin with
a recommendation that you check you state or local law or ordinance to
determine if a legislative body has decided for you what flexibility, if
any, you have to use a procurement method other than the IFB method. If
you are limited on what methods you can use under what circumstances,
you will be obligated to comply with those laws, ordinances or
regulations. We will address this method in this section as though there
were no limiting constraints on your ability to use this method. As a
practical matter, the constraints you are likely to be faced with would
be limitations on your ability to use the competitive proposal method
rather than the sealed bidding method.

Because of the way this Manual has been drafted, it is important to read
Section 4.3 in conjunction with this Section because many of the
features or elements of both the IFB and RFP methods of procurement are,
if not the same, very similar. Rather than duplicate the discussion of
those features in our discussions of both methods, we suggest you read
that section first and then this section on the sealed bidding
method**.**

**Best Practices**

When do I use the sealed bid/IFB method of procurement?

-   In deciding whether or not to use the sealed bidding method of
    procurement, the conditions detailed in § 9.c.(1) of FTA Circular
    4220.1E are excellent and very self‑explanatory. Go down the list,
    do all of the conditions exist? If you need more information about a
    particular condition, this Manual is designed to provide you with
    that additional detail. For information about specifications, refer
    to Chapter 3*,* \"Specifications.\" For more information about
    \"responsibility\", refer to Section 5.1, \"Responsibility of
    Contractor.\" For questions about what a firm fixed‑price contract
    is, refer to Section 2.4.3.1, \"Fixed Price.\"

What steps are involved in the sealed bidding method of procurement?
Most of these steps have been addressed in Section 4.3, \"Competitive
Procurement Methods,\" but the following is an overview of those
necessary steps:

-   [Preparation of the Invitation\
    ]{.underline}

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-   The invitation must describe your requirements as completely,
    clearly, accurately and unambiguously as possible. Stated another
    way, the invitation should define the items or services sought in
    order for the bidders to properly respond. In addition to\
    the danger of inadequate goods or services, the claims arising from
    errors make this a\
    daunting task, but not an impossible one. [^70]

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```
-   Requirements that restrict or act as restraints on full and open
    competition should be avoided. [^71]

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```
-   The invitation typically includes all documents (whether actually
    attached or incorporated by reference) furnished to all prospective
    bidders for the purpose of bidding.

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```
-   [Publicizing the Invitation\
    ]{.underline}

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```
-   The invitation must be publicly advertised and distributed to
    prospective bidders. [^72]

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```
-   The amount of time after publication and distribution of the
    invitation to prepare and submit their bids and prior to the time
    and date set for opening of bids is important.

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```
-   [Submission of bids\
    ]{.underline}

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```
-   Sealed bids are submitted to you by bidders by the time and place
    stated in the invitation.

-   Bids are publicly opened at the time and place described in the
    invitation.

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```
-   [Evaluation of bids]{.underline}

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```
-   FTA requires that sealed bidding be used only if no discussion with
    bidders \"is needed;\" bids are, as a rule, evaluated without any
    discussions with bidders. [^73]

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```
-   [Contract Award\
    ]{.underline}

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-   A fixed price contract will be awarded to the responsible bidder
    whose bid, conforming to the terms and conditions of the invitation,
    [^74] is the lowest in price.

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```
-   If stated in the invitation, price‑related factors may be considered
    in determining the lowest price ‑‑ e.g., discounts, [^75]
    transportation costs, life cycle costs. A provision in the IFB that
    explains how the calculation of bids will be made will avoid
    confusion at the time of bid opening. The explanation can include
    options, escalators, currency issues, unit prices, etc. To preserve
    the right to exercise options with Federal funds, FTA requires that
    the option prices be evaluated in the selection process. You can
    also address how the rare instance of tie bids will be treated,
    e.g., with the traditional coin toss.

**4.4.1 [Solicitation]{.underline}**

**DISCUSSION**

**In addition to the material in Section 4.3.2.3, (the common elements
of the solicitation process for both the IFB and RFP), the rigidity and
precision of the sealed bid method require that your solicitation
anticipate the procedural issues that may arise. Although these items
may be appropriate to an RFP as well, an IFB should be particularly
clear regarding requested amendments and approval of items equal to
those specified, bid opening time and place, the price schedule, the
offer form, and the clarity of the technical specifications.**

**Best Practices**

In this section, we will provide you with a nominal checklist of things
for you to consider in the development of your solicitation ‑‑ some of
the items noted here may not be applicable to every procurement.

+----------------------+-----------------------------------------------+
| > [Identification of | > \- Solicitation number                      |
| > Solic              | >                                             |
| itation]{.underline} | > \- Date of solicitation issuance            |
+----------------------+-----------------------------------------------+

+----------------------+-----------------------------------------------+
| > [Identification of | > \- Name and address (street and mailing if  |
| >                    | > different) of your agency                   |
|  agency]{.underline} | >                                             |
|                      | > \- Name and telephone number (voice and     |
|                      | > facsimile) of contact within your agency    |
+----------------------+-----------------------------------------------+
| > [Instructions to   | > \- Date, time, and place of bid opening     |
| >                    | >                                             |
| bidders]{.underline} | > \- Instructions channeling communication    |
|                      | > regarding the procurement -- typically with |
|                      | > the designated procurement official only    |
|                      |                                               |
|                      | -   Instructions relating to rules regarding  |
|                      |     late submission of bids                   |
|                      |                                               |
|                      | -   Instructions relating to how amendments   |
|                      |     of the solicitation should be             |
|                      |     acknowledged                              |
|                      |                                               |
|                      | > \- Instructions on what documents should be |
|                      | > returned with bid                           |
|                      | >                                             |
|                      | > Bid guarantee                               |
|                      | >                                             |
|                      | > Price schedule                              |
|                      | >                                             |
|                      | > Representations and certifications          |
|                      | >                                             |
|                      | > Bid samples                                 |
|                      | >                                             |
|                      | > Descriptive literature                      |
|                      | >                                             |
|                      | > \- Notification of bid acceptance period is |
|                      | > a concept that may also be addressed in the |
|                      | > competitive proposal method, but is more    |
|                      | > prevalent in the IFB process. You can tell  |
|                      | > bidders in the solicitation that they must  |
|                      | > allow a minimum period in which your agency |
|                      | > can accept their bid after its submission.  |
|                      | > Further, if they want to include a lesser   |
|                      | > period than your minimum, the bid will be   |
|                      | > rejected as nonresponsive. What is your     |
|                      | > normal processing time for bids ‑‑ 30, 60,  |
|                      | > 90, 120 days? Be realistic but also         |
|                      | > understand that the longer the period you   |
|                      | > allow to accept, the greater will be the    |
|                      | > contingency the bidder put in its bid to    |
|                      | > reflect price fluctuations in the           |
|                      | > marketplace. Also take into consideration   |
|                      | > that you can (and sometimes will) request   |
|                      | > offerors to voluntarily extend their offers |
|                      | > for an additional period if you encounter a |
|                      | > delay.                                      |
+----------------------+-----------------------------------------------+
| > [Boilerplate       | > \- Instructions and Conditions of           |
| > attachments or     | > Solicitation                                |
| > e                  | >                                             |
| xhibits]{.underline} | > \- General Provisions                       |
|                      | >                                             |
|                      | > \- Special Provisions                       |
|                      | >                                             |
|                      | > \- Bonds (Bid, Performance, Payment)        |
+----------------------+-----------------------------------------------+
| > [Specifications,   |                                               |
| > Scope of Work,     |                                               |
| > D                  |                                               |
| rawings]{.underline} |                                               |
+----------------------+-----------------------------------------------+

**4.4.2 [Bid Opening]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| \"All bids will be publicly opened at the time and place prescribed   |
| in the invitation for bids;\" [^76]                                   |
+-----------------------------------------------------------------------+

**DISCUSSION**

**The day that you have all been waiting for has arrived. Bids for your
project are due in Room 407 at 2 P.M. Will we get any bids? Where will
the price of the bids be in relation to the estimate? What do I do if
all of the bids exceed my budget? What if there\'s only one bid? What if
a bidder delivers its bid at 2:02 P.M.? What do I actually do at 2 P.M.?
Do I read the bids out loud? What if the bidders want to look at the
bids we received?**

These are some of the many concerns that you probably have every day you
receive bids. Although many of these issues are beyond the scope of this
manual since they are defined by your agency and its own peculiar
personality, a few of these issues are very important to the sealed
bidding procurement process. The time and date set for the receipt of
bids and the public announcement of those bids are very critical to the
success and integrity of a public procurement process.

**Best Practices**

As with the other sealed bidding issues, the procedures surrounding the
receipt and opening of bids may be dictated by your state law or
procedures. As a general concept of public procurement, the opening of
bids is the point in time when completion of the procurement
(acquisition) process begins and the contract administration process
starts. It also initiates the rules relating to \"responsiveness\" and
\"responsibility\" which are discussed in Sections 4.4.3 and 5.1
respectively.

[The process of receiving bids]{.underline}. As you approach the date
and time set in your solicitation for receipt of bids, you will begin to
receive bids. A simple step to eliminate many questions that could arise
later is to keep the bids unopened in a secured location, preferably a
locked bid box, file cabinet, or safe.

-   The identity and number of bids received need not be disclosed
    within your agency prior to the time and date set for receipt of
    bids except to those personnel with a real \"need to know.\"

-   As discussed in Section 2.3.2, \"Independent Grantee Cost
    Estimate,\" when you receive the "independent estimate\" it can also
    be secured, logically in this same location. It is also a good
    practice to have on your \"procurement checklist\" to be sure you
    have received this estimate, particularly if this is a
    federally‑funded procurement.

-   On the day of receipt of bids (maybe an hour ahead of time), you may
    want to establish a place in the room where the bids will be read
    where bids can be deposited and time‑stamped in.

**[Opening, reading, and recording bids]{.underline}.**

-   Bid opening is a public event and is open to the general public.

-   As the [time]{.underline} for receipt of bids approaches on the day
    bids are due, if you are the bid opening official, consider checking
    the time with a reliable source and using that time as the official
    time.

-   Shortly (10 minutes?) before the time for receipt of bids, you may
    also want to call your office, the mailroom, the security desk, and
    anywhere else you can think of where a bid might be and get it
    logged in. \"Do you have an envelope indicating it is a bid for IFB
    No. 123‑4456? If so, please bring it to Room 407 immediately.\"

-   Bidders are apt to be coming into the room at the last minute to
    submit bids. Don\'t be surprised when a breathless bidder comes
    running into the bid room frantically waving a bid and wanting you
    to consider it.

-   At the designated time, you may announce to those in attendance that
    the time set for receipt of bids has arrived and that no further
    bids will be received.

-   At that time, personally and publicly open the bids, read the bids
    aloud (if practical) to those persons present, and have the bids
    recorded. Some procedures also include opening, reading aloud, and
    recording the independent estimate. Other agencies believe this
    information could help a disappointed bidder to interfere with the
    process, or could be used by a single bidder to the agency\'s
    disadvantage.

-   The bids are usually recorded on a document called an Abstract of
    Bids and this document is available for public inspection after
    completion.

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-   Unless it unduly interferes with the conduct of your business, you
    may allow time after the bids are read for interested members of the
    public to review the bids submitted under the immediate supervision
    of an agency official and under conditions that preclude the
    possibility of a destruction, substitution, addition, deletion, or
    alteration of the bid.

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```
-   If irregularities or discrepancies are discovered during this review
    process, or if you noticed something irregular during the public
    reading, it is best to simply note them and not discuss these in
    public. These matters are best discussed only with appropriate
    agency personnel, including the appropriate procurement,
    engineering, maintenance, and legal staff members. [^77]

[Late bids]{.underline} ‑ Many instructions for bidders include a clause
that addresses the late submission, modification, and withdrawal of
bids. The clause may be required by state law or patterned after a
Federal provision. [^78] The clause specifies any circumstances (e.g.
documented failure by specific mail or delivery services) that are
exceptions to the general rule ‑‑ bids received at the place designated
in the IFB after the exact time set for bid opening are late and will
not be

considered under any circumstances. [^79] Whether or not the late bid
would have been low in price is of no consequence. It must be rejected,
the argument goes, because maintaining the integrity of the sealed bid
procurement process is more important than the possible advantage to be
gained by considering a late bid in a particular procurement. [^80]

-   Although the burden of getting the bids to the bid opening location
    on time is on the bidder, it is easier to take extra precautions to
    ensure all bids are at the proper location at the proper time, than
    to explain later the integrity of the process. As we alluded to
    earlier, you might want to consider the following as \"preventive\"
    measures designed to reduce the possibility of this happening to
    you:

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```
-   Consider placing clear instructions in the mailroom and at the
    reception area as to what is to happen with bids and bidders,
    particularly on the day bids are due.

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```
-   Consider calling your mailroom, your office, and the location where
    bids are \"normally\" received and secured shortly before the time
    for receipt of bids and inquire if any bids were received in the
    last mail delivery or delivered to the other location(s).

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-   Include labels or envelopes clearly marked with Bid \# and date and
    time due in the solicitation package for use by bidders.

3.  **[Single Bid]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Within the discussion of sole source contracts, the FTA Circular      |
| 4220.1E, Paragraph 9.h -- *Procurement By Noncompetitive Proposals    |
| (Sole Source)* also deals with the situation when a number of         |
| offerors are solicited but only one response is received:             |
|                                                                       |
| > *Sole Source procurements are accomplished through solicitation of  |
| > a proposal from only one source, or after solicitation of a number  |
| > of sources, competition is determined inadequate.* . . .[^81]       |
|                                                                       |
| FTA Circular 4220.1E, Paragraph 10 requires grantees to perform a     |
| cost or price analysis in connection with every procurement action:   |
|                                                                       |
| > 10.a. [Cost Analysis]{.underline}. A cost analysis will be          |
| > necessary when adequate price competition is lacking and for sole   |
| > source procurements . . .unless price reasonableness can be         |
| > established on the basis of a catalog or market price of a          |
| > commercial product sold in substantial quantities to the general    |
| > public or on the basis of prices set by law or regulation.          |
| >                                                                     |
| > 10.b. [Price Analysis.]{.underline} A price analysis may be used in |
| > all other instances to determine the reasonableness of the proposed |
| > contract price.                                                     |
+-----------------------------------------------------------------------+

**DEFINITIONS**

[Single Bid]{.underline} ‑ Only one bid has been received at the time
and date set for bid opening.

[Single Responsive Bid]{.underline} ‑ Only one responsive bid received
at the time and date set for bid opening. This may result from having
only one bidder or from all other bidder(s) being nonresponsive.

[No Responsive]{.underline} Bids ‑ All bids received at the time and
date set for bid opening are nonresponsive.

##### DISCUSSION

**[State or Local Law]{.underline} - As with many other areas of
procurement, procedures for handling a single bid in response to an
invitation for bid may be addressed specifically by your state or local
law. In the absence of a prescribed procedure, this section presents
ways to analyze and move forward with your procurement.**

**[Adequacy of Competition]{.underline} - When only one bid is received
in response to a solicitation that was issued to multiple sources, you
will first have to determine if there was adequate competition. The FTA
interpretive comment in the annotated Circular 4220.1E, paragraph 10,
makes clear the fact, that when only one bid is received, this does not,
in itself, mean that competition was inadequate. In order to make this
determination, it may be necessary to talk to those firms solicited to
find out why they did not submit bids. If the reason is a restrictive
specification or a delivery requirement that only one bidder could meet,
you have a situation of inadequate competition. If this is the case then
the procurement is a sole source and you must process it as such with
internal agency approvals, or cancel the solicitation, change the
requirements to allow for more bids, and re-solicit bids. On the other
hand, if the reasons given by the non-responders are unrelated to the
specification and/or solicitation terms, then you may presume
competition was adequate and proceed with the award as a competitive
one. You should document your file so that there is a clear audit trail
for reviewers to understand how you reached your determination.**

**[Cost or Price Analysis]{.underline} - If the competition is deemed to
be adequate, then a *price analysis* must be performed to determine the
reasonableness of the bid price**. [^82] **If, on the basis of a price
analysis, you are able to document your determination that the price is
fair and reasonable, and if the bid is responsive and the bidder
responsible, you may proceed with award. If, however, you cannot
determine the reasonableness of the bid on the basis of a price
analysis, then you will have to request a detailed breakdown of costs
and profit from the bidder and perform a *cost analysis*.**

**If competition is deemed to be inadequate, and you decide to process
the award as a sole source, then you will have to perform a *cost
analysis* (i.e., request from the bidder a detailed breakdown of the
estimated costs and profit) unless you can establish the reasonableness
of the price based on the bidder's catalogue or market price (note that
the item must be sold in substantial quantities to the general public),
or the price is set by law or regulation. For a discussion of cost and
price analysis techniques, see BPPM section 5.2 -- *Cost and Price
Analysis*. If the bidder refuses to furnish a cost breakdown for your
analysis, then you will have to request a waiver from FTA of the
Circular requirement in paragraph 10.a that a cost analysis be conducted
on every sole source procurement, or cancel the procurement and
re-solicit bids.** [^83]

**[Negotiation]{.underline} ‑ If you have been unsuccessful in
determining through a price or cost analysis that the bid price is fair
and reasonable, you may wish to enter negotiations with the offeror to
attempt to establish a different price that can ultimately be determined
to be reasonable. Some authorities view this as canceling the sealed
bidding method of procurement and converting, through documentation, the
procurement either to a competitive proposal (a negotiated procurement)
or a sole source procurement. This is another area that may be
controlled or regulated by state law. For instance, your state may
require that construction services only be awarded by accepting a sealed
bid, with no exceptions. (If this is the case, you really have no choice
but to cancel the solicitation and, if your requirement continues, to
re‑advertise the procurement.) If, however, your state allows
flexibility and you are able to justify conversion of the procurement to
a negotiated process, this may allow you to negotiate a contract with a
price that is fair and reasonable so that award can be made.**

**4.4.4 [Responsive Bidder]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| The concept of \"responsiveness\" is discussed in § 9 of FTA Circular |
| 4220.1E as an integral element of the sealed bidding method of        |
| procurement:                                                          |
|                                                                       |
| > c\. Procurement by Sealed Bids/Invitation for Bid (IFB). Bids are   |
| > publicly solicited and a firm‑fixed‑price contract (lump sum or     |
| > unit price) is awarded to the responsible bidder whose bid,         |
| > conforming with all the material terms and conditions of the        |
| > invitation for bids, is the lowest in price.                        |
|                                                                       |
| Subparagraph 9.c.(2) of FTA Circular 4220.1E, in discussing the       |
| requirements to be used if the sealed bid method of procurement,      |
| lists the following:                                                  |
|                                                                       |
| > \(d\) A firm fixed‑price contract award will be made in writing to  |
| > the lowest responsive and responsible bidder. When specified in     |
| > bidding documents, factors such as discounts, transportation costs, |
| > and life cycle costs shall be considered in determining which bid   |
| > is lowest;                                                          |
+-----------------------------------------------------------------------+

**DEFINITION**

[Responsive]{.underline} ‑ If an offer conforms in all material aspects
to the requirements of the solicitation at the scheduled time of
submission and does not require further discussions with the offeror,
the offer is responsive.

**DISCUSSION**

**Although it may be stated differently in the rules or statutes
governing your procurement processes, the concept of awarding a contract
to the lowest responsive and responsible bidder is a common precept in
public contracting at the Federal, state, and local levels throughout
the country. It is helpful to maintain the distinction among these
concepts in reviewing bids, and to consider them in the stated sequence.
First identify the lowest bid, then find the lowest responsive bid, then
find the lowest responsive and responsible bidder.**

[Evaluation Sequence]{.underline}

The following is a sequence of evaluation that is useful for explanation
and may also be useful in practice; however, the concepts and correct
determinations are far more important to successful procurement than is
the sequence. Examination of bids logically begins with the lowest
bidder.

Once the lowest bidder is determined, look to see if the bidder is
responsive. \"Responsiveness\" is a concept critical to the sealed
bidding process. In public contracting, in order for a bid to be
acceptable, it must conform in all material respects to the requirements
stated in the invitation.

Responsiveness is determined from the bid documents themselves and, with
very few exceptions, is determined with no discussions or further input
from the bidder.

The precise definition of \"responsiveness\" may vary from jurisdiction
to jurisdiction and the definition applicable to your organization may
be stated in your procurement regulations or statute. If the initial low
bidder is not responsive (the bid does not conform to the material
requirements of the invitation), you need go no further with that
bidder. Instead you may go back and look at the second lowest bid and
determine if it is responsive.

Once you have determined that you have a low priced bidder who is
responsive, you then begin the more subjective process of determining
the bidder\'s responsibility.

\"Responsibility\" is also a term with specific connotations in
procurement. What is involved in determining a bidder\'s responsibility
may vary from jurisdiction to jurisdiction.

FTA defines \"responsibility\" to be a contractor who possesses the
ability to perform successfully under the terms and conditions of the
proposed procurement. In determining whether a contractor possesses this
ability, you may consider such matters as contractor integrity,
compliance with public policy (e.g., EEO record, attainment of DBE goal,
not debarred or suspended, etc.), record of past performance, and
financial and technical resources. Unlike responsiveness, which normally
can be finally determined based on the bids, a determination of
responsibility may be affected by new information up to the time of
contract award. Thus, in ascertaining whether or not a bidder is
responsible, discussions may be held with the bidder to discuss these
factors so that, by the time of award, a positive determination can be
made. If you do not determine that the bidder is responsible, look
through the list of bidders again to determine a low, responsive,
responsible bidder to whom a contract can be awarded.

[Strict Responsiveness]{.underline} ‑ To understand the concept of
\"responsiveness\" and its practical rigidity in the public contracting
environment, recall that the IFB issued by the agency is designed so
that all bidders who respond can make comparable offers under the same
terms and conditions. When a bidder submits its bid to the entity in
response to the IFB, the entity must be able to accept that bid as
submitted, thereby creating a binding contract. [^84] The following
discussion of responsiveness will cover general principles and
parameters of Federal procurement precedents. You may have to ensure
compliance with your state\'s laws and precedents and your agency\'s
procedures. The best practice is to establish a clear, unambiguous
agency policy on which bidders can rely, so that, in preparing their
bids, they can be confident that no material deviations will be allowed
to any bidder in complying with the solicitation and its specifications.

**Purpose**

Requiring strict responsiveness, i.e. compliance in all material
respects with the IFB \"enables bidders to stand on an equal footing and
maintains the integrity of the sealed bidding system.\" [^85] Examples
of bids typically considered nonresponsive include:

-   The bid fails to conform to material requirements;

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-   The bid does not conform to applicable specifications (unless the
    invitation allowed alternates);

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-   The bid fails to conform to delivery schedule or permissible
    alternates;

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-   The bid imposes conditions that would modify the requirements of the
    invitation or limit the bidder\'s liability to the entity;

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-   There is a condition of the bid which affects the substance of the
    bid (i.e., affects price, quantity, quality, or delivery of the
    items offered) or works an injustice on other bidders;

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-   The bid contains prices for line items that are materially
    unbalanced, i.e., figures in the bid conflict with the total bid
    price;

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-   date;

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-   ::: Definition-Term
    The bidder fails to furnish a bid guarantee in accordance with the
    requirements of the invitation; [^86] or
    :::

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-   Failure to submit Buy America Certification.

Responsiveness is a fairly objective concept and is ascertainable at the
time of bid opening. [^87] Further, the bidder\'s intent to be bound by
the IFBs requirements can normally be determined from the bid itself.
[^88] A \"second bite at the apple\" is a phrase commonly heard in
discussions pertaining to the precept that responsiveness be determined
at the bid opening solely from the bid documents and without
explanation. You will not want an apparently low bidder to re‑evaluate
its bid after the public opening and effectively withdraw the bid by
refusing to respond or responding in a subversive way; the bidder should
not have a second bite at the apple. This means that the bid package
must be examined thoroughly. Some of the questions you may ask are:

-   Does the cover letter take exception to any material terms and
    conditions?

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-   Is the bid ambiguous? Is it susceptible to two or more reasonable
    interpretations?

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-   Were all material amendments to the solicitation acknowledged?

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-   Was the bid signed?

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-   Were all material representations and certifications completed?

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-   Is the Buy America certificate required by 49 CFR § 661.6 or §
    661.12 signed? [^89]

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-   Were required descriptive literature and bid samples included with
    the bid?

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-   If required, was a bid bond or bid guarantee submitted?

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-   Was the bid defective?

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-   Was the price offered firm and definite?

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-   Were the material items or information required by the invitation
    submitted with the bid?

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-   Was the bid received at the place designated in the invitation at
    the exact time specified or was it late?

If something is questionable, is the issue one of responsibility or
responsiveness? [^90] Your customers may want to gain greater confidence
in the bids by specifying, purportedly as a condition of responsiveness,
that bidders have specific capacities. You may also find a defect (e.g.
in certifications or requested information) that relates primarily to
the ability of the bidder to perform. Precedent for direct Federal
procurement is that merely by the language in an IFB, a contracting
agency cannot change a matter of responsibility (ability to perform)
into one of responsiveness (unequivocal offer to perform). [^91] The
best practice is to maintain this distinction.

[Materiality]{.underline} ‑ Whole courses are taught on sealed bidding
and the issue of responsiveness. The list of questions and issues raised
in this discussion should not be considered as all encompassing.
Instead, they are intended to raise sensitivity to some of the issues
that impact responsiveness. It should be apparent from this discussion
that the single most important concept impacting responsiveness is
\"materiality\" ‑‑ does the inclusion or omission of the fact, item, or
requirement affect price, quantity, quality, or delivery of the items
offered? If so, the bid is probably nonresponsive. If not, the bid is
probably responsive. There are, however, many facts and situations that
do not clearly fall within these parameters and become issues that may
require analysis and input from your legal advisor. If in doubt, ask!

[DBE]{.underline} ‑ Although DBE program compliance is more often a
responsibility requirement, some processes make DBE compliance a
condition of responsiveness. This issue is discussed further

in the discussion of DBE submissions and award in Chapter 7,
\"Disadvantaged Business Enterprise.\"

**4.4.5 [Bid Mistakes]{.underline}**

**DISCUSSION**

**It may not be as certain as death and taxes, but inevitably and
unfortunately, a mistake may be discovered in your low bid. A mistake
doesn\'t necessarily mean you cannot award a contract to the low bidder,
but that could be the result. How you typically treat the mistake will
depend upon what the mistake is and when it is discovered. State law in
some states explicitly addresses bid mistakes.**

**Best Practices**

Mistakes in bids are usually discovered after bids are opened [^92] and
before the contract is awarded. The mistake, or suspicion of a mistake,
may be discovered by the procurement official in its review of the bids.
Some procedures call for the identification of clear defects (e.g.,
absence of a bid bond) at the bid opening and the rejection without
reading of the bid. This minimizes the discussion and likelihood of
protest. The mistake may be discovered by an unsuccessful bidder ([not
just the low bidder]{.underline}) when it is reviewing the bids after
bid opening. Or it may be discovered by the apparent low bidder upon
returning to its office after bid opening ‑‑ sometimes driven to an
examination of its bid after it has learned how much money was \"left on
the table!\" Regardless of how it is discovered, it is a problem in the
sealed bidding method of procurement because of the strict rules of
responsiveness, because bids have been exposed, and because the
integrity of the procurement process is at stake.

The four generally accepted categories of bid mistakes are:

> 1\. Minor informalities or irregularities in bids prior to award of
> the contract;
>
> 2\. Obvious or apparent clerical mistakes discovered prior to award;
>
> 3\. Mistakes other than minor informalities or irregularities in bids,
> or obvious or apparent clerical mistakes that are discovered prior to
> award; or
>
> 4\. Mistakes discovered after award.

If a mistake fits within one of these categories, three things can
happen: the mistake can be corrected, the mistake will be recognized and
the bid allowed to be withdrawn, or the mistake will not be recognized
and the bid not allowed to be withdrawn.

We will discuss each of these categories of mistakes and what the
consequences of each are if it is established that a mistake has been
made. One final thought before that discussion: many transit properties
in their procurement regulations have adopted rules relating to the
treatment of these categories of mistakes and, in most cases, have
patterned their rules after the rules in either the FAR [^93] or the
*Recommended Regulations* for the American Bar Association\'s *Model
Procurement Code for State and Local Governments*. [^94] If you have
rules addressing this common problem, it makes the administration of
your procurement process much easier because the rules are known, not
decided on a case‑by‑case basis.

The following tables analyze the types of mistake and one set of
actions; many variations on the illustrative rules presented here are
successfully in use.

+------------------------+---------------------------------------------+
| **[Minor informalities | **Remedy:** the contracting officer shall   |
| or irregularities in   | give the bidder an opportunity to cure the  |
| bids prior\            | deficiency or waive it, whichever is in the |
| to award of the        | best interests of the owner.                |
| co                     |                                             |
| ntract.]{.underline}** | **Examples** of minor informalities or      |
|                        | irregularities include failure of the       |
| Merely a matter of     | bidder to:                                  |
| form and not of        |                                             |
| substance.             | Return the incorrect number of signed bids  |
|                        | required by the IFB (1 submitted, 3         |
| May be an immaterial   | required).                                  |
| defect in a bid that   |                                             |
| can be corrected or    | Sign the bid, but only if the unsigned bid  |
| waived without being   | [is accompanied]{.underline} by other       |
| prejudicial to other   | material indicating the bidder\'s intent to |
| bidders.               | be bound, such as a bid guarantee or letter |
|                        | signed by the bidder referring to and       |
| The defects is         | clearly identifying the bid itself.         |
| immaterial when the    |                                             |
| effect on price,       | Acknowledge receipt of an amendment to the  |
| quantity, quality, or  | IFB, but only if                            |
| delivery is            |                                             |
|                        | it is clear from the bid itself that the    |
| negligible when        | bidder received the                         |
| contrasted             |                                             |
+------------------------+---------------------------------------------+

+-----------------------+----------------------------------------------+
| with the total cost   | amendment and intended to be bound by its    |
| or scope of the       | terms [^95] or the amendment involved had no |
| requirement being     | (or a negligible) effect on price, quantity, |
| procured.             | quality, or delivery.                        |
|                       |                                              |
|                       | Furnish required information that goes to    |
|                       | the issue of responsibility (e.g., number of |
|                       | employees bidder has, information concerning |
|                       | parent company and any affiliates,           |
|                       | certifications concerning EEO and            |
|                       | Affirmative Action programs, certification   |
|                       | concerning Lobbying. [^96])                  |
+-----------------------+----------------------------------------------+
| **[Obvious or         | **Examples** include:                        |
| apparent clerical     |                                              |
| mistakes discovered   | Obvious misplacement of decimal point.       |
| prior to              |                                              |
| award]{.underline}.** | Obvious reversal of the price f.o.b.         |
| [^97]                 | destination and price f.o.b. origin --higher |
|                       | price for you picking the product up at the  |
| Mistake must be       | origin than for the bidder to deliver the    |
| obvious or apparent   | product to the place designated by you.      |
| on the face of the    |                                              |
| bid.                  | \- Obvious mistake in designation of unit.   |
|                       |                                              |
| This is the category  | \- Typographical errors.                     |
| of mistake most       |                                              |
| frequently discovered | \- Error in extending unit prices.           |
| by the contracting    |                                              |
| officer during its    | \- Transposition errors.                     |
| examination of the    |                                              |
| bid after bid         | \- Arithmetical errors.                      |
| opening.              |                                              |
|                       | **Procedure:** What do you do if you have    |
| If you know, or have  | this category of mistake?                    |
| reason to know or     |                                              |
| suspect, that a       | Recommend you [make your legal counsel       |
| mistake in a bid has  | aware]{.underline} of situation so proper    |
| been made, there is a | legal advice can be obtained as you proceed  |
| real issue of whether | through the mistake evaluation process. This |
| you can, in good      | is an area that is prime for a later protest |
| faith, accept that    | by either the firm requesting relief from a  |
| bid.                  |                                              |
|                       | \"mistake\" or from another bidder that      |
| The bidder may also   | feels it could be impacted by your decision  |
| discover this         | regarding the mistake.                       |
| category of mistake   |                                              |
| and bring it to your  | [Request verification of the                 |
| attention and request | bid]{.underline}. This is necessary to       |
| that it be allowed to | assure the contracting officer that the bid  |
| correct the mistake.  | as confirmed is without error, or to elicit  |
|                       | the allegation of a mistake by the bidder.   |
|                       |                                              |
|                       | This process normally includes the following |
|                       | steps:                                       |
|                       |                                              |
|                       | Prepare a written request to the bidder that |
|                       | it verify its bid price.                     |
|                       |                                              |
|                       | The request puts the bidder on notice of a   |
|                       | mistake suspected by the contracting officer |
|                       | as appropriate. For instance, the bid is so  |
|                       | much lower than the other bids or the agency |
|                       | independent estimate as to indicate a        |
|                       | possibility of error. Or, highlight          |
|                       | important or unusual characteristics of the  |
|                       | specification. Point out the fact that there |
|                       | were changes in the specifications or        |
|                       | requirements from previous purchases of a    |
|                       | similar item. Your notice can include any    |
|                       | information, [which is proper for            |
|                       | disclosure]{.underline}, that lead you (as   |
|                       | the contracting officer) to believe that     |
|                       | there is a mistake in the bid.               |
|                       |                                              |
|                       | [Evaluate the verification                   |
|                       | response]{.underline} from the bidder. If    |
|                       | the bidder verifies its original bid, you    |
|                       | may consider the bid as originally           |
|                       | submitted. If, however, the bidder alleges a |
|                       | mistake was made, it is recommended you take |
|                       | the following actions.                       |
|                       |                                              |
|                       | Advise the bidder to make a written request  |
|                       | to withdraw or modify its bid.               |
|                       |                                              |
|                       | Advise the bidder that it must support its   |
|                       | request with [any and all]{.underline}       |
|                       | evidence to support the position it is       |
|                       | taking.                                      |
|                       |                                              |
|                       | Advise the bidder of definite time deadlines |
|                       | in which to provide the information          |
|                       | requested.                                   |
+-----------------------+----------------------------------------------+
|                       | Be suspicious -- don\'t forget that          |
|                       | everyone\'s bid has been exposed to the      |
|                       | world!                                       |
|                       |                                              |
|                       | **Remedy**: After verification, the          |
|                       | contracting officer may correct an apparent  |
|                       | or obvious clerical mistake. It is           |
|                       | recommended that you:                        |
|                       |                                              |
|                       | Attach the verification to the original bid. |
|                       |                                              |
|                       | Reflect the correction in the award          |
|                       | document.                                    |
|                       |                                              |
|                       | Document the procurement file to indicate    |
|                       | why you took the action you did.             |
|                       |                                              |
|                       | You should only allow a bid to be corrected  |
|                       | if the bid, as submitted, was responsive ‑‑  |
|                       | you should not allow correction of a bid     |
|                       | that would make a non‑responsive bid a       |
|                       | responsive bid.                              |
|                       |                                              |
|                       | If correction of the bid would displace one  |
|                       | or more lower bids, it is recommended that   |
|                       | you not allow correction unless the evidence |
|                       | of the mistake and bid actually intended are |
|                       | ascertainable substantially from the         |
|                       | invitation and bid itself as\                |
|                       | opposed to evidence brought in to you by the |
|                       | bidder in response to your request for       |
|                       | verification.                                |
|                       |                                              |
|                       | Do not allow the bid to be withdrawn.        |
+-----------------------+----------------------------------------------+
| **[Mistakes other     | **Procedures:** It is recommended that you   |
| than minor            | follow the procedures outlined in the        |
| informalities or      | previous discussion when a bidder alleges a  |
| irregularities in     | mistake has been made. Pay particular        |
| bids, or obvious or   | attention to the evidence the bidder         |
| apparent clerical     | furnishes that establishes the existence of  |
| mistakes that are     | the mistake -- remember, it is not obvious   |
| discovered prior      | from the bid itself. Be                      |
| to]{.underline}**     |                                              |
|                       | particularly sensitive to the bidder that    |
| **[                   | wants out of its bid simply because it made  |
| award]{.underline}.** | a judgmental error in preparing its bid and, |
| [^98]                 | after bid opening, discovered it \"left too  |
|                       | much money on the table.\"                   |
| ::: Definition-Term   |                                              |
| These mistakes are    |                                              |
| generally raised by   |                                              |
| the bidder along with |                                              |
| a request to withdraw |                                              |
| its bid.              |                                              |
| :::                   |                                              |
+-----------------------+----------------------------------------------+

+-----------------------+----------------------------------------------+
| Examples include:     | **Remedy:** You should allow the bidder to   |
|                       | withdraw its bid if:                         |
| ::: Definition-Term   |                                              |
| A pricing element     | The mistake is clearly evident on the face   |
| from a vendor was     | of the bid document but the intended correct |
| received but not      | bid is not similarly evident; or             |
| included in the bid   |                                              |
| -- the electrical     | The bidder submits proof which clearly and   |
| subcontractor\'s      | convincingly demonstrates that a mistake was |
| quote was not         | made.                                        |
| included.             |                                              |
| :::                   | You may make a determination to correct the  |
|                       | bid and not allow its withdrawal if:         |
| ::: Definition-Term   |                                              |
| The material cost for | The bidder requests permission to withdraw a |
| an element of work    | bid rather than correct it; [^99]            |
| was included but the  |                                              |
| labor to install it   | The evidence is clear and convincing both as |
| was not included.     | to the existence of a mistake and as to the  |
| :::                   | bid actually intended; and                   |
|                       |                                              |
|                       | ::: Definition-Term                          |
|                       | The bid, both as originally submitted and as |
|                       | corrected, is the lowest bid received.       |
|                       | :::                                          |
+-----------------------+----------------------------------------------+
| **[Mistakes           | **Remedy**: What you do with mistakes        |
| discovered after      | discovered and proven after award are really |
| award]                | policy questions that you should consider    |
| {.underline}**.[^100] | when adopting your regulations. There really |
|                       | is no \"best\" practice in this area but it  |
| Although it is much   | appears that transit properties have taken   |
| rarer than other      | one of the two approaches outlined below:    |
| allegations of        |                                              |
| mistake, a contractor | The \"hard line\" approach: do not allow     |
| may raise the issue   | correction except where the contracting      |
| of mistake in bid     | officer makes a written determination that   |
| after award of the    | it would be unconscionable not to allow the  |
| contract is made.     | mistake to be corrected. [^102]              |
|                       |                                              |
| Obviously, the burden |                                              |
| of proving a mistake  |                                              |
| was made at this time |                                              |
| is great and must be  |                                              |
| carried by the        |                                              |
| contractor. [^101]    |                                              |
+-----------------------+----------------------------------------------+

+-----------------------+----------------------------------------------+
|                       | The FAR approach [^103] offers more          |
|                       | alternatives other than the                  |
|                       | \"unconscionable\" approach:                 |
|                       |                                              |
|                       | The mistake may be by contract amendment if  |
|                       | correcting the mistake would be favorable to |
|                       | the transit property without changing the    |
|                       | essential requirements of the specification. |
|                       |                                              |
|                       | Additionally, a determination could be made  |
|                       | to (a) rescind the contract; (b) reform the  |
|                       | contract to delete the items involved in the |
|                       | mistake or to increase the price if the      |
|                       | contract price (as corrected) does not       |
|                       | exceed that of the next lowest acceptable    |
|                       | bid under the original IFB; or (c) allow no  |
|                       | change to be made.                           |
|                       |                                              |
|                       | ::: Definition-Term                          |
|                       | It is recommended that you proceed very      |
|                       | carefully through this process and with      |
|                       | advice of legal counsel.                     |
|                       | :::                                          |
+-----------------------+----------------------------------------------+

**4.4.6 [Bid Withdrawal]{.underline}**

**DISCUSSION**

**It\'s two days after bid opening. You\'re sitting at your desk basking
in the great procurement you conducted and all the competitive bids you
received. The phone rings, breaking the self‑congratulatory mood, and
you pick it up. \"Hi, I\'m Mr. Low Bidder and\
we have decided we really don\'t want this contract and want to withdraw
our bid!\" Talk about messing up your day. What do you do next?**

**Section 4.4.5 addresses the rules relating to the withdrawal of bids
because of a mistake in bid. Those rules govern almost all of the
instances in public contracting in which a bidder\
is allowed to withdraw its bid after bid opening in the sealed bidding
process. Bidders are usually permitted to modify or withdraw their bids
prior to bid opening.**

**Best Practices**

[When to allow withdrawal of bids]{.underline}

If you receive a written request from a bidder prior to the time and
date set for receipt of bids that it wishes to withdraw a bid it has
previously submitted, that request is honored under most

procurement policies. If the request to withdraw is received after the
time and date set for receipt of bids, the same rules apply to that
request as would apply to the late receipt of a bid.

As we discussed in Sections 4.3.2.3, \"Solicitation,\" and 4.4.1,
\"Solicitation\" (Sealed Bids), we recommended inclusion of a clause
that addresses the Late Submissions, Modifications, and Withdrawals of
Bids. This clause sets forth the only contractual period during which
bids can be withdrawn. Subparagraph (g) of the FAR clause, which forms
the basis for many transit property clauses, provides:

> \(g\) Bids may be withdrawn by written notice or telegram (including
> mailgram) received at any time before the exact time set for receipt
> of bids. If the solicitation authorizes facsimile bids, bids may be
> withdrawn via facsimile received at any time before the exact time set
> for receipt of bids, subject to the conditions specified in the
> provision entitled \'Facsimile Bids.\' A bid may be withdrawn in
> person by a bidder or its authorized\
> representative if, before the exact time set for receipt of bids, the
> identity of the person requesting withdrawal is established and the
> person signs a receipt for the bid.

If a bidder has established the existence of a mistake in its bid prior
to award of the contract, it should be allowed to withdraw its bid if:

-   The mistake is clearly evident on the face of the bid document but
    the intended correct bid is not similarly evident; or

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-   The bidder submits proof which clearly and convincingly demonstrates
    that a mistake was made.

[What if the request to withdraw does not fit into those
categories]{.underline}?

For the reasons that follow, you will probably not allow the bidder to
withdraw its bid without legal counsel. This is an issue that may be
impacted by an interpretation of your state law on public contracting,
particularly in the absence of a clause as will be discussed next.

Of critical importance to being able to take this position is the
inclusion in your solicitation document of two clauses which we have
referred to in previous sections of the Manual. The first clause (which
we have included a suggested provision earlier in this discussion) is
the Late Submissions, Modifications, and Withdrawals of Bids clause. The
second is a clause addressing the bid notification period as discussed
in Section 4.4.1, \"Solicitation.\" Just as an example, the following is
the clause that accomplishes this level of protection by federal
agencies:

> **Period of Acceptance of Bids**
>
> In compliance with the solicitation, the bidder agrees, if this bid is
> accepted within \_\_\_\_ calendar days (60 calendar days unless a
> different period is inserted by the bidder) from the date specified in
> the solicitation for receipt of bids, to furnish any or all items
> upon\
> which prices are bid at the price set opposite each item, delivered at
> the designated point(s), within the time specified in the Schedule.
> [^104]

There is nothing magical about the particular language in this clause,
but the legal context is very important. If this language is part of the
solicitation that the bidder signs when submitting its bid, as part of
its offer, it is telling you that you have 60 days to accept its bid. It
has agreed to hold its offer open for that period of time and you can
take that long to act upon that offer. Under this example, you do not,
however, have 61 days to accept the bid!

\"What is the rationale for this result? I thought you could always
withdraw your offer prior to it being accepted.\" There is a lot of law
on this subject, but one of the earliest articulations of this
philosophy is contained in the quote from a 1909 decision of the United
States Court of Claims that is still good law on this issue:

> What are the rights of bidders as to the withdrawal of their bids
> after they have been opened and they have been informed thereof, but
> before they have been accepted? The agents of the Government stand
> upon a different footing from private individuals in the matter of
> advertising for the letting of contracts in behalf of the United
> States. They have no discretion. They must accept the lowest or the
> highest responsible bid, or reject all and re‑advertise. Private
> individuals are not required thus to act. Hence, it is apparent that
> the government agents should be allowed a reasonable time after the
> opening of bids before they are allowed to be withdrawn, so they can
> be afforded opportunities to ascertain whether collusion or fraud had
> been perpetrated against the United States by the parties engaged in
> the bidding. It is also apparent that if the rule of allowing
> immediate withdrawals after the results of the bidding are known,
> frauds innumerable could be perpetrated against the United States and
> thus public justice would be greatly hampered. [^105]

You need to check with your legal counsel to see how this language might
be addressed under your particular state law. If the matter has not been
challenged and you are faced with a challenge, this case is a good
starting point to see how and why this rule has developed in the way it
has. This rule is also referred to as the \"firm bid rule.\"

\"But I didn\'t have that language in the solicitation. What do I do?\"
Again, the answer may well lie in your state laws and your lawyer will
have to advise you on what to do.

However, in the absence of this clause, you might want to check § 2.205
of the Uniform Commercial Code, which may be the law in your state.
[^106] In addressing the FAR clause (or a predecessor clause), the
General Services Board of Contract Appeals opined (and reiterated the
*Scott* rationale):

> This rule for Government procurements also finds support in commercial
> settings. Under the Uniform Commercial Code, UCC 2‑205, \'firm\'
> offers are irrevocable. In *Western Adhesives*, GSBCA No. 7449, 85‑2,
> BCA § 17,961, the appellant attempted to dispute the validity of a
> contract and default termination on the basis that it withdrew its bid
> prior to award. The Board found that Government acceptance of a bid
> during an extended acceptance period granted by the bidder created a
> valid contract because the solicitation was a formally advertised
> procurement for which bids were irrevocable during the acceptance
> period. Failure to perform after acceptance justified default
> termination. The Board concluded, \'this appeal turns on the firm bid
> rule. A bid submitted in a formally advertised procurement ‑‑ sealed
> bid ‑‑ is irrevocable, and an acceptance after an attempted withdrawal
> will create a contract.\' *Western Adhesives*, 85‑2 BCA \[§17.961\] at
> 90,018. [^107]

If a bidder withdraws its bid according to the allowances in the prior
section, you will normally proceed to the next lowest bidder without
expecting compensation from the erring bidder. However, if the bidder is
refused permission to withdraw, and attempts to withdraw by failure to
perform (e.g., failure to produce a performance bond), you may be in a
position to terminate the bidder for default, minimize your damages by
awarding to the next lowest bidder, and recover the damages including
the bid differential from the defaulting contractor. You should evaluate
all the costs of undertaking this course of action, (including long run
effect on competition and pricing) if any, before proceeding.

**4.5 COMPETITIVE PROPOSALS (REQUEST FOR PROPOSALS)**

**4.5.1 [Solicitation & Receipt of Proposals]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Requests for proposals shall be publicized. [^108]                    |
+-----------------------------------------------------------------------+
| RFPs shall identify all evaluation factors along with their relative  |
| importance. [^109]                                                    |
|                                                                       |
| ::: Definition-Term                                                   |
| Proposals will be solicited from an adequate number of qualified      |
| sources. [^110] You shall make award only to responsible contractors  |
| possessing the ability to perform successfully under the terms and    |
| conditions of a proposed agreement. Consideration shall be given to   |
| such matters as contractor integrity, compliance with public policy,  |
| record of past performance, and financial and technical resources.    |
| [^111]                                                                |
| :::                                                                   |
|                                                                       |
| Awards will be made to the responsible firm whose proposal is most    |
| advantageous to the grantee\'s program with price and other factors   |
| considered. [^112]                                                    |
|                                                                       |
| In architectural and engineering services procurements, grantees      |
| shall use competitive proposal procedures based on the Brooks Act,    |
| which requires selection based on qualifications and excludes price   |
| as an evaluation factor provided the price is fair and reasonable.    |
| (See Section 6.5 -- *Architect-Engineering Services.*) [^113]         |
+-----------------------------------------------------------------------+

**DISCUSSION**

A request for proposals typically includes all of the elements of an
invitation for bids, and in addition shall contain the evaluation
factors and their relative importance, e.g., by stating that the factors
are listed in declining order of importance. The request can specify the
information needed to perform the evaluation, and may require that
cost/price information be physically separated so that the technical
evaluation can be performed separately from price evaluation. RFPs are
typically publicized in newspapers and/or trade journals, and are issued
to qualified mailing lists maintained in a manner similar to IFB lists.
(See Section 4.3.2.2, \"Solicitation Mailing List\")

**Purpose**

The required feature that principally distinguishes an RFP from an IFB
is the listing of evaluation factors. These factors typically include
not only responsibility factors (such as financial, human, and physical
capacity to perform), but also technical factors (such as the degree to
which the proposer is expected, based on information submitted and
available, to achieve the performance objectives, to provide the quality
expected, and on the relative qualifications of the proposer\'s
personnel). Many RFPs go beyond listing these factors in order of
importance, and also describe the evaluation process in detail, listing
weights for each factor, illustrating the scoring method, and specifying
the procedure for weighing price into the selection.

The purposes for disclosing the evaluation process are so that:

-   offerors can more accurately respond to your needs rather than
    solely rely on the technical specifications alone;

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-   proposers will be able to clearly present the information you need
    to conduct your evaluation; and

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-   the appearance of favoritism or unethical practice in offeror
    selection will be diminished.

The competitive proposal process involves a subjective evaluation
process and discussions that are typically confidential. Public
acceptance and acceptance by disappointed offerors might be less than in
the case of sealed bids, if the evaluation and selection process is not
well documented and disclosed in advance.

**Best Practices**

[Evaluation and Award]{.underline} ‑ The following is a listing of
elements commonly found in the competitive proposal method of
procurement.

-   Both a technical and cost proposal are requested so that they may be
    evaluated, frequently by separate staff. Where the appearance of
    technical objectivity is important, it is a better practice to
    initially evaluate the technical proposals without knowledge of
    costs, so that an objective and impartial evaluation can be
    obtained.

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-   The evaluation factors to be considered in the award are identified
    in the RFP along with the relative importance of each. While this
    requires only the ranking of the factors without quantifying the
    importance or describing the process for applying the factors to
    proposals, some agencies disclose their selection process in detail.

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-   [Disclosure Disadvantages]{.underline}. Disclosing the specific
    weights and scoring processes may encourage proposers to distort
    their proposals, and may strengthen the disappointed proposer\'s
    attack on the agency decision;

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-   [Disclosure Advantages]{.underline}. The full description of the
    process guides proposers in understanding your needs, bolsters the
    objectivity of your evaluation team, encourages candor from the
    proposers during negotiations, and encourages competition through
    the perception of fair treatment.

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-   Many standard RFPs notify prospective offerors that award may be
    made on the basis of initial proposals submitted without any
    negotiations or discussions. The implication is clearly, that the
    initial proposal should be their best effort.

[Proposal Guarantee]{.underline} ‑ Although performance bonds are often
appropriate and required by RFPs, the use of a proposal guarantee is
less common than bid guarantee. Because the proposers generally have
unavoidable opportunity during negotiations to render their proposals
unacceptable, part of the purpose of bid guarantees cannot be achieved
in the case of proposals. (See Section 4.3.3.3.2, \"Bid Guarantee\" and
Section 8.2.1*,* \"Performance Bonds.\") However, if it is particularly
important that the initial proposals be firm commitments by the
offerors, that frivolous proposals not be submitted, or that proposers
be able to provide performance bonds, then a proposal guarantee in the
form of a cashier\'s check, letter of credit, or approved bond may be
cost effective.

**4.5.2 [Evaluation of Proposals]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| FTA Circular 4220.1E, paragraph 9.d, requires the following when      |
| procuring by competitive proposals:                                   |
|                                                                       |
| > d\. [Procurement By Competitive Proposal/Request for Proposals      |
| > (RFP)]{.underline}. . . . If this procurement method is used the    |
| > following requirements apply:                                       |
|                                                                       |
| \(1\) Requests for proposals will be publicized. All evaluation       |
| factors will be identified along with their relative importance;      |
|                                                                       |
| ::: Definition-Term                                                   |
| \(2\) Proposals will be solicited from an adequate number of          |
| qualified sources;                                                    |
| :::                                                                   |
|                                                                       |
| > \(3\) Grantees will have a method in place for conducting technical |
| > evaluations of the proposals received and for selecting awardees;   |
| >                                                                     |
| > \(4\) Awards will be made to the responsible firm whose proposal is |
| > most advantageous to the grantee\'s program with price and other    |
| > factors considered; and                                             |
| >                                                                     |
| > \(5\) In determining which proposal is most advantageous, grantees  |
| > may award (if consistent with State law) to the proposer whose      |
| > proposals offer the greatest business value to the Agency based     |
| > upon an analysis of a tradeoff of qualitative technical factors and |
| > price/cost to derive which proposal represents the "best value" to  |
| > the Procuring Agency as defined in Section 6, *Definitions*. If the |
| > grantee elects to use the best value selection method as the basis  |
| > for award,                                                          |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| > however, the solicitation must contain language which establishes   |
| > that an award will be made on a "best value" basis. [^114]          |
|                                                                       |
| In architectural and engineering services procurements, grantees      |
| shall use competitive proposal procedures based on the Brooks Act,    |
| which requires selection based on qualifications and excludes price   |
| as an evaluation factor provided the price is fair and reasonable.    |
| (See Section 6.5 -- *Architect-Engineering Services.*) [^115]         |
+-----------------------------------------------------------------------+

**DISCUSSION**

**[FTA Circular 4220.1E]{.underline} -- The most recent edition of the
FTA Procurement Circular added an item (5) in paragraph 9.d.
-*Procurement By Competitive Proposals/Request for Proposals (RFP)* in
order to recognize the concept of best value in evaluating offerors'
proposals and selecting successful contractors in negotiated
procurements. The FTA Circular, paragraph 6.g, defines *best value* in
these terms:**

> ***Best Value: A selection process in which proposals contain both
> price and qualitative components, and award is based upon a
> combination of price and qualitative considerations. Qualitative
> considerations may include technical design, technical approach,
> quality of proposed personnel, and/or management plan. The award
> selection is based upon consideration of a combination of technical
> and price factors to\
> determine (or derive) the offer deemed most advantageous and of the
> greatest value to the procuring agency.*** [^116]

For purposes of this discussion, it may be helpful to distinguish the
concept of "best value" selections from the more traditional practice of
identifying the lowest price, technically acceptable proposal (although
that too actually represents what the grantee feels will be the "best
value" selection given the nature of the requirements it is procuring).
Both approaches will require technical evaluations and price analysis,
and both will require the solicitation to clearly inform the prospective
offerors of how the selection decision will be made:

-   ***Best value* - requires tradeoffs between price and non-price
    factors to select the best overall value to the grantee.**

-   ***Lowest price technically acceptable proposal* - requires
    selection of the lowest price proposal meeting the minimum RFP
    requirements.**

**[The FAR Background]{.underline} - The concept of "best value" owes
its origin to acquisition reforms espoused in the Clinton-Gore
administration's "Report of the National Performance Review: Creating a
Government That Works Better and Costs Less." In that report, it was
recommended that Federal acquisition regulations should be revised and
restated with a major objective being (among others) a " . . . shift to
a new emphasis on choosing best value products."** [^117] **That reform
objective was eventually translated into a completely re-written Federal
Acquisition Regulation (FAR) Part 15 *-- Contracting By Negotiation.***
[^118] **Now the FAR makes *best value* the one stated objective of
every negotiated procurement:**

> ***15.302 -- Source Selection Objective*: *The objective of source
> selection is to select the proposal that represents the best value*.**

##### Best Practices

##### 

##### The Federal Approach

The FAR describes a "best value continuum" in negotiated procurements
where agencies are free to use any one of a combination of source
selection approaches. For example, in acquisitions where the requirement
is clearly definable and the risks of unsuccessful performance are
small, cost or price may play a dominant role in source selection; i.e.,
the selection may be based on the lowest price technically acceptable
proposal. [^119] Where, however, the agency's requirement is less
definitive, or where there is development work, or greater performance
risk, then the less important price will be and the more important will
be technical or past performance considerations in the source selection.
[^120]

The FAR goes on to describe both *the tradeoff process* that is used
when selecting a proposal other than the lowest price technically
acceptable proposal, as well as the process to be used when the lowest
price technically acceptable proposal method is appropriate. Several
important principles may be noted from the FAR guidance on source
selection that grantees should consider in their own acquisitions:

1.  Best value selection methodology affords the agency an opportunity
    to structure the source selection process in a way that is suitable
    for the nature of the agency's requirement. No longer is the
    emphasis on defining one's "minimum needs," with its corollary
    selection process of choosing the lowest price technically
    acceptable proposal. While that approach will probably be the one
    most often used by grantees, agencies are now encouraged to
    structure selection procedures based on the realities of their
    requirements, and they are not expected to force-fit all
    acquisitions into a lowest-price-technically-acceptable-proposal
    mold when that may result in unacceptable performance risks or
    preclude the agency from selecting products that are a *better
    value* to them than the lowest price products or services.

2.  When the agency decides that its requirements are sufficiently
    defined to use the lowest price technically acceptable selection
    process, *the evaluation factors that establish the requirements of
    acceptability must be stated in the solicitation.* Solicitations
    must specify that award will be made on the basis of the lowest
    evaluated price of proposals meeting or exceeding the acceptability
    standards for non-price factors.

3.  When the agency decides that its requirements are not defined with
    sufficient precision, or where there are performance risks, so that
    selection of the lowest priced proposal is not in the best interests
    of the agency, then a tradeoff process should be used to select the
    best value proposal. In this case the importance of the non-price
    evaluation factors that will affect the contract award must be
    stated in the solicitation. The Federal approach in the solicitation
    is to state whether all evaluation factors other than price, when
    combined, are significantly more important than, approximately equal
    to, or significantly less important than price. This permits the
    agency to make tradeoffs between price and technical merit. It also
    permits the offerors to know what is important to the agency -
    whether to focus on higher quality at the expense of cost, or lower
    cost at the expense of quality. It is not necessary to publish the
    specific weights (numerically) of the individual evaluation factors,
    only their relative importance (i.e., conceptually or adjectivally).
    Some Federal agencies have found through practice that the approach
    which gives the greatest degree of flexibility in selecting the best
    value proposal is to place equal weight on the price and technical
    factors. This then allows a choice in either direction as
    circumstances warrant.

4.  It is important to note that the perceived benefits of the higher
    priced proposal must merit the additional cost, and the rationale
    for tradeoffs must be documented in the file. It is not sufficient
    to say in the file that company X received a higher total score than
    company Y, and therefore deserves the award. Scores, without
    substantive explanations of the relative strengths and weaknesses of
    the competitive proposals, including the perceived benefits to the
    agency, are an insufficient basis for paying a higher price. The
    file must explain why company X represents the best value to the
    agency. The necessity of documenting the specific reasons why
    proposal A offers a better value to the grantee than proposal B is
    why a mathematically driven selection decision is not appropriate.

### Proposal Evaluation Mechanics

There are many different methods of conducting proposal evaluations to
determine best value, and many opinions as to which is the best
approach. Grantees may employ any rating method or combination of
methods, including: color or adjectival ratings, numerical weights and
ordinal rankings. Whatever the method, the important thing is that a
statement of the relative strengths, deficiencies, significant
weaknesses, and risks supporting the evaluation ratings be documented in
the contract file.

Some agencies have employed a quantitative approach of assigning scores
to both technical and cost proposals, thereby compelling a source
selection that is basically mathematically derived. Proponents of this
method usually argue it is the most "objective," and therefore the
fairest, approach to determining a winner. On closer examination,
however, all approaches are to one degree or another, subjective. The
decision regarding what score to assign any given factor is subjective,
and any formulas employed after the initial scoring cannot make the
process an "objective" one. Further, grantees must be allowed the
flexibility of making sound, factually based decisions that are in their
agency's best interests. Any approach that assigns a predetermined
numerical weight to price, and then seeks to "score" price proposals and
factor that score into a final overall numerical grade to automatically
determine contract award, is a mistake. Rather, agencies should evaluate
the prices offered but not score the price proposals. Prices should be
evaluated and brought along side the technical proposal scores in order
to make the necessary tradeoff decisions as to which proposal represents
the best overall value to the agency. Agencies should carefully consider
the technical merits of the competitors and the price differentials to
see if a higher price proposal warrants the award based on the benefits
it offers to the agency as compared to a lower price proposal. This is a
subjective decision-making, tradeoff process.

The difficulties in trying to assign a predetermined weight to price and
then scoring price proposals is that no one is smart enough to predict
in advance how much more should be paid for certain incremental
improvements in technical scores or rankings (depending on what scoring
method is used). For example, no one can predict the nature of what will
be offered in the technical proposals until those proposals are opened
and evaluated. Only then can the nature of what is offered be
ascertained and the value of the different approaches proposed be
measured. It is against the actual technical offers made that the prices
must be compared in a tradeoff process. Agencies cannot predict in
advance whether a rating of "Excellent" for a technical proposal will be
worth X\$ more that a rating of "Good," or whether a score of 95 is
worth considerably more or only marginally more than a score of 87. It
is what is underneath the "Excellent" and the "Good" ratings, or what
has caused a score of 95 vs. a score of 87, that is critical. The goal
is to determine if more dollars should be paid to buy the improvement,
and equally important, how many more dollars those improvements are
perceived to be worth. It could well be that the improvements reflected
in the higher ratings are worth little in terms of perceived benefits to
the agency. In this case the grantee does not want to get "locked in" to
a mathematically derived source selection decision. This may very well
happen when price has been assigned a numerical score and the selection
is based on a mathematical formula instead of a well-reasoned analysis
of the relative benefits of the competing proposals.

Some agencies have recognized the pitfalls of using arithmetic schemes
to make source selection decisions. They have opted to not use numerical
scores to evaluate technical proposals and they have gone to adjective
ratings instead; e.g., "Acceptable," "Very Good," and "Excellent." They
have also heavily emphasized the need for substantive narrative
explanations of the reasons for the adjective ratings, and the Source
Selection Official then focuses on the narrative explanations in
determining if it is in the agency's best interest to pay a higher price
for the technical improvements being offered. In this scenario price is
evaluated and considered alongside technical merit in a tradeoff fashion
using good business judgment to choose the proposal that represents the
best value to the agency.

#### **Proposal Evaluation Criteria**

The solicitation will be more easily planned and developed, the criteria
will be more accurately listed and ranked, and the evaluation process
will be smoother and more objective if the evaluation process is
thoroughly planned in advance. The evaluation process begins with the
identification of the criteria that will be most meaningful in assessing
the relative advantage of the proposals to your agency. You will
generally include:

1\. [Past Performance]{.underline} -- The solicitation should advise
offerors of your approach in evaluating past performance, including
evaluating offerors that have no relevant performance history, and
should also advise offerors to identify past relevant contracts for
efforts similar to your requirement. The solicitation should also allow
offerors to provide information on problems encountered on the
identified contracts and corrective measures taken. This evaluation
should also consider the past performance of key personnel and
subcontractors that will perform major or critical aspects of the work.
This evaluation of past performance, as one indicator of an offeror's
ability to perform the contract successfully, is separate from the
responsibility determination discussed in Section 5.1.

2\. [Technical Criteria]{.underline} -- Technical factors regarding the
specific methods, designs, and systems proposed to be used by the
offeror will be considered and they must be tailored to the specific
requirements of your solicitation. These factors must represent the key
technical areas of importance that you intend to consider in the source
selection decision. *Technical factors should be chosen to support
meaningful comparison and discrimination between competing proposals*.
If the agency has established minimum standards for determining
technical acceptability of proposals, these standards must be clearly
set forth in the solicitation.

3\. [Key Personnel]{.underline} -- An evaluation of key personnel is
often suggested when the procurement involves services or requirements
where management of the work is a critical factor in determining its
success. Qualifications and experience of key personnel may be an
important evaluation factor. Some agencies have required oral
presentations by key personnel during which the agency officials may ask
these key personnel relevant questions to determine the depth of their
knowledge in critical areas.

4\. [Cost or Price]{.underline} -- Cost or price must be considered in
every procurement, even those for professional services (e.g., legal,
accounting, etc.), unless the services are those defined by Federal
statutes as requiring a qualifications-based selection. [^121]
Competition normally establishes price reasonableness. Therefore, when
contracting on a fixed price basis, comparison of the proposed prices
will normally satisfy the requirement to perform a price analysis and no
cost analysis will be necessary.\
\
If the contract is to be a cost reimbursement one, then a *cost realism
analysis* should be performed to determine what the grantee should
realistically expect to pay for the proposed effort. Grantees should
never simply accept at face value the total estimated cost in the
proposal and base a selection decision on the proposed amount since many
offerors tend to understate the estimated cost in hopes of winning the
contract as the "low bidder." A cost realism analysis would use each
offeror's specific labor and overhead rates as estimating factors
(assuming they are not understated) and the agency's own estimates for
labor hours,

travel, materials, etc. The award decision would be made with the cost
realism analysis in mind.

5\. [Relative Importance of Price and Non-Price Factors]{.underline} -
The solicitation must advise offerors if the selection is to be made on
a "best value" basis. And as already noted, the solicitation must also
advise offerors if price is approximately equal to, less than, or
greater in importance than the technical evaluation factors as a
whole*.*

One agency with extensive experience in conducting negotiated
procurements uses language in its solicitations that informs offerors of
how the agency will select that proposal that is the most advantageous
to the agency, which may not necessarily be the highest ranked
technically nor the lowest proposed price. They also inform offerors of
how price may become a more important selection factor than technical
merit when the technical proposals are evaluated as essentially equal.
Following is the language used:

*The Authority will make the award to the responsible Proposer whose
proposal is most advantageous to the Authority. Accordingly, the
Authority may not necessarily make an award to the Proposer with the
highest technical ranking nor award to the Proposer with the lowest
Price Proposal if doing so would not be in the overall best interest of
the Authority. . . .*

*The overall criteria listed below are listed in relative order of
importance. As proposals are considered by the Authority to be more
equal in their technical merit, the evaluated cost or price becomes more
important so that when technical proposals are evaluated as essentially
equal, cost or price may be the deciding factor.* [^122]

*Evaluation Criteria:*

*A. Technical Qualifications (With Details)*

*B. Overall Price*

> *C. Other Relevant Matters (With Details)*

**4.5.3 [Competitive Range]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Grantees will have a method in place for conducting technical         |
| evaluations of the proposals received and for selecting awardees.     |
| [^123]                                                                |
|                                                                       |
| As discussed in this section, \"competitive range determination\" is  |
| a concept that can be used when developing methods for selecting      |
| awardees under the competitive proposal method of procurement.        |
+-----------------------------------------------------------------------+

**DISCUSSION**

**At this stage in the competitive proposal procurement, you have
received the proposals from interested offerors and have begun the
process of evaluation and selection. Negotiation and the repeated
analyses and evaluations required can be very time\
consuming and there is often a wide range of competence or
cost‑effectiveness in the initial proposals. You may not wish to expend
this effort on all the proposals for two reasons:**

-   **certain proposals, upon evaluation, may be so much worse than
    others for price or other reasons, that the possibility of accepting
    a subsequent offer is so remote as to make negotiations unnecessary;
    and**

-   you may have enough proposals so that you can be assured of
    negotiating the best buy in dealing only with several of the best;
    negotiating with more would be wasteful of both your resources and
    the marginal proposers\'.

For these reasons, a commonly used technique is to conduct negotiations
only with offerors determined to be within the competitive range. In
assessing the competitive range, competition remains an important
objective, and the effort in determining the competitive range is to
preserve those proposals which stand a reasonable chance of being found
acceptable, not to unduly limit competition by eliminating viable
proposers.

**Purpose**

Competitive range is a difficult concept to define in specific terms
which would apply to all potential procurements, because professional
judgment must be used in establishing the\
competitive range. Procedures and factors for determining the
competitive range may differ from procurement to procurement.

The competitive range can be determined so that it is:

-   Not used to unfairly eliminate offerors;

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-   Based on factors and criteria known to all offerors;

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-   Applied uniformly to all proposals; and

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-   Well documented in the procurement files.

One of your considerations may be that as many offerors as possible be
given the opportunity to be considered within the competitive range, so
as to attain the goal of full and free competition. Only those offerors
whose proposals are determined to be so deficient or so out of line as
to preclude meaningful negotiation need be eliminated from the
competitive range.

The competitive range can consist of those offerors whose proposals have
a reasonable chance of being selected for award, i.e., are acceptable as
submitted or can be made acceptable through modification. All
responsible offerors whose proposals are determined to be within the
competitive range would be invited to participate in any oral and/or
written discussions.

**Best Practices**

While it is not possible to identify all of the specific steps and
analyses that could be performed in determining which proposals are
within the competitive range, the following are provided for
consideration in making this determination:

-   The determination of which proposals are within the competitive
    range is usually made by the evaluation team (or procuring official,
    if there is no evaluation team).

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-   Competitive range determinations can be made using cost/price,
    technical and other factors identified in the solicitation.

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-   Detailed independent estimates prepared by the initiating department
    or project office can be considered when assessing the cost/price
    aspects of competitive range.

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-   The evaluation team\'s scoring of offerors\' technical and
    management proposals is a logical basis for establishing which
    proposals are within the competitive range, as is scoring of other
    evaluation/award criteria specified in the solicitation. However,
    you may paint yourself into a corner if you commit to competitive
    range determinations based on predetermined \"cutoff scores.\"

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-   Borderline proposals need not automatically be excluded from the
    competitive range, if they are reasonably susceptible of being made
    acceptable. Remember that as a general rule, if there is doubt as to
    whether a proposal should be in the competitive range, the goal of
    competition is served by including it.

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-   Only those proposals that are judged to be so deficient or so out of
    line as to preclude further meaningful negotiations need be
    eliminated from the competitive range.

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-   Competitive range determinations are significant documents in the
    procurement file. This documentation is helpful to serve as a basis
    for debriefing offerors, and for responding to inquiries and
    protests. Many systems notify, in writing, any offerors whose
    proposals have been eliminated from consideration for award. Such
    notification occurs at the earliest practicable time after this
    determination is made.

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-   Written and/or oral discussions are usually conducted with all
    offerors determined to be within the competitive range.

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-   At the conclusion of discussions with offerors in the competitive
    range, the procuring official may ask all offerors to submit their
    best and final offers in writing. This combines complete fairness
    for each offeror, with competitive incentive for each to make its
    best realistic offer. For a discussion on best and final offers,
    reference Section 4.5.5.2 "*Request for Best and Final Offer*."

**4.5.4 [Discussions and Clarifications]{.underline}**

**DEFINITIONS**

[Negotiation]{.underline} ‑ A procedure that includes the receipt of
proposals from offerors, permits bargaining and usually affords offerors
an opportunity to revise their offers before award of a contract.

[Discussion]{.underline} ‑ Any oral or written communication between a
procurement official and a potential offeror (other than communication
conducted for the purpose of minor clarification) whether or not
initiated by the procurement official, that (1) involves information
essential for determining the acceptability of a proposal, or (2)
provides the offeror an opportunity to revise or modify its proposal.

[Clarification]{.underline} ‑ A communication with an offeror for the
sole purpose of eliminating minor irregularities, informalities, or
apparent clerical mistakes in a proposal.

**DISCUSSION**

**You may wish to obtain clarifications from one or more proposers, or
hold discussions with all proposers immediately after receipt of
proposals. However, it is also possible to proceed with evaluations and
determination of a competitive range as described in the following
sections, before discussions are held. Most typically, the first
discussions are oral presentations made by a short list of proposers
within a competitive range. If discussions are held with any proposer at
any phase of the procurement, holding discussions with all remaining
proposers (not already excluded from the competitive range as described
in**

**Section 4.5.3, \"Competitive Range\") will increase the likelihood and
the appearance of the most accurate and objective evaluation and
negotiation.**

**Best Practices**

You are not required to conduct discussions with any offeror provided:
(1) the solicitation did not commit in advance to discussions or
notified all offerors that award might be made without discussion, and
(2) the award is in fact made without any written or oral discussion
with [any]{.underline} proposer. Normally, however, you will need to
conduct discussions. If this is the case, you will preserve the
competitiveness and fairness of your procurement by conducting
discussions with [all]{.underline} offerors who submitted proposals in
the competitive range. The competitive range is determined on the basis
of cost or price and other factors and includes the proposals that have
a reasonable chance of being selected for award. The content and extent
of the discussions is a matter of your judgment based on the particular
facts of the procurement.

Confidentiality has many advantages during the evaluation process. The
name and number of proposals received is not normally considered a
public record and need not usually be released to the competitors or the
public at large. Your control of this information may ease the
proposers\' competitive tension and allow you to conduct more meaningful
negotiations. Competitive information provided relative to both the
technical and cost proposals may include trade secrets protected by
statute and can usually be kept confidential during the evaluation
process, and, in some instances, after the award of contract. However,
state public information laws and the Federal Freedom of Information Act
can also affect your latitude, particularly if there is public interest
in the procurement and inquiries are made by non‑competitors.

If you enter negotiations or discussions (as opposed to simple requests
for clarification) with one offeror, an automatic impression of
unfairness is avoided by entering them with all remaining offerors. An
occasional mistake is to circumvent the process merely by requesting
\"clarifications\" when you are in fact conducting discussions. If the
questions, and the concurrent opportunity to respond, are sufficient to
lead an offeror into areas of perceived deficiency in its proposal,
discussions have been held. If discussions are held, what should the
content be or how should they start? Competition and fairness are served
by conducting meaningful discussions with offerors.

This includes advising them of deficiencies in their proposals and
affording them the opportunity to satisfy the requirements by the
submission of revised proposals. You are not, however, obligated to
afford offerors all‑encompassing discussions, or to discuss every
element of a technically acceptable, competitive‑range proposal that has
received less than a maximum possible score. Also, if a proposal is
technically unacceptable as submitted and would require major revisions
to become acceptable, you are not required to include the proposal in
the competitive range for discussion purposes.

Sometimes you may be in the uncomfortable position of having concluded
discussions only to discover there is a significant mistake or an aspect
the evaluators do not understand in one proposal. Since allowing one
bidder to correct its proposal would constitute discussions with that
firm, discussions must reopened with all bidders in the competitive
range and the must be allowed the opportunity to submit revised
proposals.

During discussions with offerors, you may be requested to ask all
proposers to submit proposals with an advantageous approach proposed by
one of them. Someone on your team may suggest that a technique used by
proposer A would complement proposer B\'s approach well and could result
in an advantageous offer from B. Also, after price proposals have been
evaluated, someone may suggest that a proposer with a high technical
score should be asked if it can meet a price which happens to be the
price of a competitor. Such techniques are considered technical
leveling, technical transfusion or auctioning. The disadvantage of these
techniques is that proposers may react adversely. Because they are
concerned about their position relative to their competitors, and want
to keep their strengths confidential from their competitors, they may
become more secretive in their discussions with you if they sense you
may relay their ideas, pricing, or positions to their competitors. This
is not to discourage discussion of price or suggesting major revisions
in a proposal, but rather to discourage the disclosure, even indirect,
of one proposer\'s information to another. They may hold back their
strengths and valuable information, waiting for a BAFO. This can greatly
inhibit the negotiation of the most advantageous proposal.

**4.5.5 [Additional Submissions]{.underline}**

**4.5.5.1 [Request for Revised Proposals]{.underline}**

**DISCUSSION**

**The most common tool used by procurement officials in competitive
negotiations is a request for a revised proposal. Typically, the
deficiencies of a proposal are listed and explained. A complete revised
proposal, including price (except under the Brooks Act) is requested
from each offeror in the competitive range. Unless explicitly stated
otherwise, the revised offer extinguishes the prior offer. The proposer
should identify all changes in the revised offer. The submission of the
revised offers can trigger another round of evaluations, determination
of a new competitive range, and discussions. You may repeat this cycle
as many times as necessary to obtain the most advantageous offers. If
you conclude you have obtained the most advantageous offer possible, you
may recommend award.**

**Purpose**

The purpose of the request for revised proposals, like the original
request for proposals, is to harness the competitiveness and creativity
of the proposers to produce the most advantageous proposal for your
customers. You and the proposer may understand only gradually each
other\'s capabilities and constraints. Each written proposal may raise
new questions and new possibilities. You can elicit the best improvement
each time a revised proposal is prepared by listing clearly the
deficiencies of the current proposal as you understand it.

Although you expect proposers to respond primarily to your requests in
preparing revised offers, you also want to learn how your requests
affect other aspects of their proposals. Based on the format of the
proposals and the nature of the changes you are requesting, you may
require that revised proposals be submitted in a form that will both
easily allow you to identify the changes and also form the basis of a
coherent contract, if accepted.

Private parties in bilateral negotiations would probably make
counter‑offers to each other to advance the process. There are
disadvantages to your making a counter offer in a competitive proposal
procurement. Not only would a counter‑offer on your part extinguish the
proposer\'s last offer, it would place the proposers (possibly more than
one) in the position to accept or reject. Therefore, counter‑offers are
usually not made by procuring agencies.

**4.5.5.2 [Request for Best and Final Offer]{.underline}**

**DEFINITION**

A best and final offer (BAFO) can be requested of each offeror in the
competitive range at the conclusion of discussions (negotiations) with
those offerors. If an offeror does not respond to your request, your
procedures may allow you to consider the most recent offer to be the
best and final offer.

**DISCUSSION**

**As the procuring official, you are now at the stage of your
competitive negotiation process where you are ready to receive final
offers from the offerors still within the competitive range. You now ask
for a \"best and final offer\" from those offerors. If the other offers
have no viable chance of being made competitive by this time, then you
may request the BAFO from only one proposer; of course there is little
competitive pressure under those circumstances. Upon timely receipt of
the BAFO(s) and final evaluation by the agency, you should be in a
position to recommend award to a firm or individual in accordance with
the terms and conditions of the solicitation.**

**Purpose**

During the course of the evaluation process of the competitive proposal
procurement, you have entered into discussions (negotiations) and
clarifications [^124] with those offerors still in the competitive
range. [^125] As a result of those discussions, you may have amended
some parts of the solicitation and may have asked for revised proposals
during the negotiation process. You now feel that you have completed
negotiations and are ready to ask for and then evaluate the offerors\'
best and final offers. If you believe there is a significant possibility
that even if a BAFO is requested, you will probably want to improve
further on the next offers, then you are not ready to request BAFOs and
should, instead, request revised offers. This provides the offerors an
opportunity to respond to the requests and to provide their best offer
in response to the current solicitation.

**Best Practices**

The ability to enter into discussions with offerors in the competitive
range is one of the greatest advantages of utilizing the competitive
proposal method of procurement. This process allows offerors to resolve
questions and concerns they may have about the commodity or service
being procured and the public agency to resolve questions and concerns
it may have about the offerors\' proposals. At some point during the
negotiation process, a decision is made that all out‑standing issues
have been resolved to the satisfaction of the parties involved. This is
the time to formally conclude the discussions by requesting that each
offeror remaining in the competitive range submit its best and final
offer. The request normally would include the following elements:

-   Specific notice that discussions are concluded;

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-   Notice that this is the opportunity for the offeror to submit a best
    and final offer;

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-   A definite, common cutoff date and time that allows a reasonable
    opportunity for the preparation and submission of the best and final
    offer; and

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-   Notice that the final offer must be received at the place designated
    by the time and date set in the request and is subject to any
    provisions dealing with late submissions, modifications and
    withdrawals of proposals set forth in the solicitation.

Following receipt of the best and final offers, you will evaluate them
in accordance with terms of the solicitation and recommend award in
accordance with those terms.

[Request for subsequent best and final offers]{.underline} ‑ It is the
preferred practice to only ask for one \"best and final offer.\"
Requests for additional best and final offers should be avoided if at
all possible. [^126] However, additional technical or price/cost‑related
issues may surface as a result of the offeror\'s final submission or
other factors that preclude a reasonable justification for contractor
selection and award. If it is clearly in the procuring agency\'s best
interests, discussions may be reopened and the issues resolved. Again,
at the conclusion of the round of discussions, an additional request for
best and final offers would be issued to all offerors still within the
competitive range.

**4.5.6 [Award Based on Initial Proposals]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| You shall make award only to responsible contractors possessing the   |
| ability to perform successfully under the terms and conditions of a   |
| proposed agreement. Consideration shall be given to such matters as   |
| contractor integrity, compliance with public policy, record of past   |
| performance, and financial and technical resources. [^127]            |
|                                                                       |
| Awards will be made to the responsible firm whose proposal is most    |
| advantageous to the grantee\'s program with price and other factors   |
| considered. [^128]                                                    |
+-----------------------------------------------------------------------+

You may accept one of the initial proposals if it can be clearly
demonstrated that acceptance of the most favorable initial proposal
without discussion would result in a fair and reasonable price.
Therefore, as a general matter, it is advantageous for solicitations to
contain a notice that award may be made without discussion of proposals
received, and that proposals should be submitted initially on the most
favorable terms possible, from a price and technical standpoint*.*

You are not required to conduct discussions with any offeror provided:
(1) the solicitation did not commit in advance to discussions or notify
offerors that award might be made without discussion, and (2) the award
is in fact made without any written or oral discussion with
[any]{.underline} proposer. This is often the case where the proposal is
for services where rates are regulated and the competition is on the
basis of service, e.g., certain types of insurance. If you accept an
initial offer, the determination of fair and reasonable price will be an
important document in your file. Normally, however, you will need to
conduct discussions.

**4.5.7 [Withdrawal of Proposal]{.underline}**

**DEFINITION**

[Firm offer]{.underline} ‑ A promise to undertake specified obligations
in exchange for consideration which promise may be accepted for a
specified or implied period of time; a firm offer cannot be withdrawn
during the period for which it remains firm.

**DISCUSSION**

**Your solicitation normally states a date and time by which offers must
be submitted, and a period following that date during which the offers
remain firm. (See Section 4.3.2.3, \"Solicitation\") Competition is best
served and unnecessary alternate proposals are avoided by allowing
proposers to withdraw or modify their proposals up to the time due.
However, after the due date, the proposals are usually firm and cannot
be withdrawn during the validity period. To ensure the legitimacy of
proposals and discourage frivolous proposals, you should have the right
to accept an initial proposal without regard to whether the proposer has
had second thoughts.**

**Purpose**

As in the case of sealed bids, it is important to the integrity of your
procurement that all offers are serious and not submitted for
exploratory reasons or to cast a certain light on other offers. Although
the negotiation process, in contrast to sealed bidding, reduces the
incentive to this sort of gamesmanship, the concern is still valid,
particularly where you may wish to accept an initial offer. It will be
important to proceed from offer to offer, eliminating offerors from the
competitive range on a firm basis, to ensure that you arrive smoothly at
a conclusion. It is customary, therefore, not permit proposals to be
withdrawn after submission.

**Best Practices**

The terms of your solicitation and your requests for revised offers or
BAFOs can state a period during which the offers remain firm. (See
Section 4.3.2.3, \"Solicitation\") A good practice is to note this
period on the offer form used by proposers to summarize their proposals.

Solicitations also often state that modifications or withdrawals will be
permitted until the time due. In the case of a revised offer or BAFO,
your solicitation can provide that the withdrawal of the offer would
result in the continued validity of the most recent offer.

**4.5.8 [Debriefing Unsuccessful Offerors]{.underline}**

**DISCUSSION**

**Proposers excluded from the competitive range or from award may
request a debriefing or you may offer to provide a debriefing. A candid
explanation of the process can serve the purposes of defusing any
potential dispute by the disappointed proposer and encouraging future
proposals. If a dispute is already probable, there is no requirement to
notify or debrief unsuccessful offerors, but the litigation and other
risks must be carefully weighed.**

**Best Practices**

Your decision not to include a proposer in the competitive range or to
recommend award to another proposer may have to be explained to the
public and to the offeror. [^129] If the reasons and rationale are
documented, you can proceed with confidence. Here, the advantages of an
objective, quantified scoring process [^130] implemented by a qualified
committee become obvious; even if you choose not to reveal the details
of the scoring, you will be more convincing when speaking with the
support of a wealth of independent, objective data. In some cases, the
details of the scoring may be subject to disclosure as public
information after the contract is awarded.

By notifying the disappointed firm expeditiously, you will not permit
doubts to grow, you can approach the firm on the basis of openness and
candor, and you will share the common perspective of the events to date
of your decision, rather than any subsequent developments which may cast
a different light. Be prepared to discuss the reasons with the offeror.
This may be a good opportunity to educate a firm or individual on the
competitive proposal process. Avoid comparisons to the successful
offeror. Focus on the strengths and weaknesses of the offer itself ‑‑ be
specific. If done properly and professionally, you may see this
\"smarter\" proposer again in a future procurement. This is your
ultimate goal, to maximize competition.

On the other hand, unless your procedures require you to notify the
disappointed proposer immediately, you may be able to wait to inform the
firm until contract award is made to the successful proposer.
Particularly if you have reason to believe a firm is inclined to dispute
or delay the action, you may be able to proceed unilaterally without
encouraging any delaying tactics. To maximize the likelihood of award
without delay, this alternative school of thought faces a number of
problems. The disappointed firm may be suspicious because you have not
contacted him/her about any further discussions, or may otherwise learn
that its offer is not being considered for award. If you wait until
award is made (which is a public action), the proposer will be left with
only two choices, to do nothing or to file legal action. If the firm
chooses the first course of action, he/she may be reluctant to propose
on your jobs again because they may believe \"games\" were played. If
the proposer chooses the second course of action, to file either a
protest or a lawsuit, this may result in a delay in the commencement of
contract performance and substantial other costs to your agency.

**4.6 NON‑COMPETITIVE (SOLE SOURCE) PROPOSALS**

**4.6.1 [Justification for Use]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| In addressing the various methods of procurement that may be used,    |
| Section 9.h of FTA Circular 4220.1E provides:                         |
|                                                                       |
| > Procurement By Noncompetitive Proposals (Sole Source). Sole source  |
| > procurements are accomplished through solicitation or acceptance of |
| > a proposal from only one source, or after solicitation of a number  |
| > of sources, competition is determined inadequate. A contract        |
| > amendment or change order that is not within the scope of the       |
| > original contract is considered a sole source procurement that must |
| > comply with this subparagraph.                                      |
| >                                                                     |
| > 1\. Procurement by noncompetitive proposals may be used only when   |
| > the award of a contract is infeasible under small purchase          |
| > procedures, sealed bids, or competitive proposals and at least one  |
| > of the following circumstances                                      |
| >                                                                     |
| > applies:                                                            |
|                                                                       |
| (a) The item is available only from a single source;                  |
|                                                                       |
| > \(b\) The public exigency or emergency for the requirement will not |
| > permit a delay resulting from competitive solicitation;             |
| >                                                                     |
| > \(c\) FTA authorizes noncompetitive negotiations;                   |
| >                                                                     |
| > \(d\) After solicitation of a number of sources, competition is     |
| > determined inadequate; or                                           |
| >                                                                     |
| > \(e\) The item is an associated capital maintenance item as defined |
| > in 49 U.S.C. § 5307(a)(1) that is procured directly from the        |
| > original manufacturer or supplier of the item to be replaced. The   |
| > grantee must first certify in writing to FTA: (i) that such         |
| > manufacturer or supplier is the only source for such item; and (ii) |
| > that the price of such item is no higher than the price paid for    |
| > such item by like customers.                                        |
| >                                                                     |
| > 2\. A cost analysis, i.e., verifying the proposed cost data, the    |
| > projections of the data, and the evaluation of the specific         |
| > elements of costs and profit, is required.                          |
+-----------------------------------------------------------------------+

**DISCUSSION**

**Sole source solicitations may not be issued nor may noncompetitive
proposals be accepted except under the unusual conditions listed above.
Often, there are practical means of obtaining competition which are not
at first apparent. If a non‑competitive proposal is accepted, a careful
cost analysis must be done. Because of the strict scrutiny applied to
sole source procurements, painstaking documentation of the justification
for the noncompetitive proposal and of the cost analysis is valuable in
the long run. FTA approval for noncompetitive negotiation is not
required unless you are relying on justification (c) in the Circular.
This places a heavy burden on you to ensure you use noncompetitive
negotiation only in the public interest and according to the Federal
requirements. State requirements may be more restrictive than Federal.**

**Purpose**

Public procurement essentially operates in an environment where full and
open competition is the primary goal or aspiration and, in many cases,
is a mandate. [^131] However, there may be very legitimate reasons or
situations when, as opposed to \"full and open\" competition, limited or
no competition exists The FTA, through the requirements set forth above,
has established guidelines when sole source procurements may be used if
FTA funds are involved.

Even though we will address federal requirements in this section, you
should also be aware of any limitations or restrictions that your state
law or agency regulations may place on you.

Because procurement by sole source is a noncompetitive procurement, it
is treated as an \"exception‑to‑the‑norm\" in public procurements and,
as a result, your ability to use it requires justification and,
frequently, pre‑approval before you award a sole source contract. In
this context, \"justification\" equates to paperwork and documentation,
the bane of all procurement professionals but a necessary part of our
genetic make‑up.

**Best Practices**

As quoted above, FTA Circular 4220.1E establishes a matrix that should
be followed in justifying the use of noncompetitive or sole source
procurements.

[Step One]{.underline} ‑ You must first determine that your requirement
cannot be obtained under small purchase procedures, [^132] sealed bids,
[^133] or competitive proposals. [^134] Does more than one source exist?
Does adequate time exist to obtain your requirement through a
competitive process? Is Item B (for which competition exists) an
acceptable substitute for Item C (for which there is only one source)?

-   Stated another way, contracting officers should take reasonable
    steps to avoid using sole source procurement except in circumstances
    where it is both necessary and in the best interest of the agency.

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-   If one of the three methods can be used (or is feasible), even if
    you would rather not, sole source is not an option for you.

[Step Two]{.underline} ‑ If one of the competitive processes is not
feasible in your situation, you may use sole source procurement if at
least one of the following circumstances is present:

-   [The item is available only from a single source]{.underline} ‑ In
    justifying the use of this circumstance, you will frequently address
    such factors as:

+--------------------------------+-------------------------------------+
| Single Source Factors:         | **Examples**:                       |
|                                |                                     |
| How did you arrive at the      | *Utility services* (how many        |
| conclusion this item           | sources do you have for electricity |
| represents your minimum need   | in your community?) *Limited rights |
| or requirement? Is this a      | in data, patent rights, copyrights, |
| \"nice to have\" with all the  | or secret processes* (If one entity |
| \"bells and whistles\" or does | owns the patent on a process or     |
| it really represent your       | product you require, can anyone     |
| requirement or minimum need?   | else meet your need?) *Relocation   |
|                                | of a major natural gas distribution |
| How did you determine          | line from your rail right of way*   |
| availability? Did you check on | (the natural gas utility company is |
| prior procurements for the     | the only source available to work   |
| same or similar items?         | on the gas line)                    |
|                                |                                     |
| Are there other sources? Are   |                                     |
| they responsible? Are          |                                     |
| identical or compatible parts  |                                     |
| or equipment available from    |                                     |
| any other source?              |                                     |
|                                |                                     |
| ::: Definition-Term            |                                     |
| Who prepared the specification |                                     |
| or statement of work? Did a    |                                     |
| vendor or contractor assist?   |                                     |
| If so, will they benefit       |                                     |
| somehow by the decision to     |                                     |
| proceed with a sole source     |                                     |
| contract?                      |                                     |
| :::                            |                                     |
+--------------------------------+-------------------------------------+

-   [The public exigency or emergency for the requirement will not
    permit a delay resulting from competitive solicitation]{.underline}
    ‑ Two factors: public exigency or emergency and no time to
    competitively procure!

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-   When your agency\'s need for the supplies or services is of such an
    unusual or compelling urgency that the agency would be seriously
    injured unless sole source procurements were utilized, it can be
    justified.

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-   In an emergency situation, it is not unusual for health and safety
    issues to be a factor in the decision to proceed with a sole
    source.\
    If the agency itself is responsible for being short of time ‑‑ i.e.,
    lack of advance planning, delays in procurement administration due
    to shortage of procurement personnel or incompetence of procurement
    personnel, money in the budget balance expires the end of next
    month, particular caution should be exercised in making a
    determination regarding whether the emergent consequences of delay
    warrant noncompetitive negotiation and to what extent the agency
    contributed; an independent opinion may be warranted.

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-   If the emergency is to repair a hole in the roof of your maintenance
    facility where a tree limb fell through it because of the storm last
    night, is the sole source procurement a patch job or a replacement
    of the roof because it was getting old anyway? One school of thought
    is that you should only perform the minimal work necessary to
    alleviate the exigency or the emergency. Don\'t use it as an excuse
    to do remedial work or buy a year\'s supply of something you
    intended to do competitively next month anyway.

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-   While many state laws parallel the other conditions under which
    Federal funds may be used for non‑competitive proposals, state laws
    for emergency situations are often more restrictive.\
    Furthermore, *the most critical delay in an emergency may be
    obtaining your agency\'s authority*, e.g. at a monthly board
    meeting; inquire about (and recommend changes to, if appropriate)
    your Board\'s policy for emergency procurements.

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-   [FTA authorizes noncompetitive negotiations]{.underline} ‑ You may
    have a situation you feel warrants the utilization of sole source
    procurements but it doesn\'t quite fit into one of the other
    circumstances. You are a small transit property with a vehicle
    monitoring system you installed last year. The accuracy and utility
    of the system is exceeding all expectations and you now need to
    display the schedule adherence information in three new downtown
    transfer locations. Could you go sole source to Brand X? If you
    justify why (compatibility requirements, interfaces with proprietary
    software, unavailability of interested competition, etc.), this may
    be the sort of procurement you should discuss with the FTA and
    request its permission to use sole source.

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-   [After solicitation of a number of sources, competition is
    determined inadequate]{.underline} ‑ You have issued an IFB and only
    received one bid from a responsible contractor, but you cannot
    determine its price to be reasonable. If you are satisfied about the
    bidding environment and the reasons why you only received one bid,
    you can negotiate a sole source contract to arrive at a reasonably
    priced contract.

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-   The item is an associated capital maintenance item as defined in 49
    U.S.C. § 5307(a)(1) that is [procured directly from the original
    manufacturer or supplier of the item to be replaced]{.underline}. ‑
    This topic is discussed in greater detail in § 4.6.3, \"Associated
    Capital Maintenance Item.\"

[Step Three]{.underline} ‑ **DOCUMENTATION** of justification. It is
recommended that you document very thoroughly and carefully the
rationale you went through to justify your sole source procurement. Your
agency may have very specific requirements for \"Findings and
Determinations\" that must be followed. You may have pre‑approval
requirements at a certain dollar threshold that must be met ‑‑ your
Board of Directors may require its approval of any proposed sole source
procurement in excess of \$250,000 prior to the commencement of the
negotiations. You may have other documentation requirements peculiar to
your agency, state, or local government that you must meet prior to the
initiation of negotiations which must be met.

**4.6.2 [Negotiation of Contract]{.underline}**

**DISCUSSION**

\"Once I have justified the use of procurement by noncompetitive
proposals, what do I do next? How do I negotiate this thing?\"

**Best Practices**

[Single Offer after Competitive Solicitation]{.underline} ‑ As
previously discussed in Section 4.4.3, \"Single Bid,\" you may conclude
after receiving only a single bid that competition is inadequate and
that you should negotiate with the single bidder to establish a fair and
reasonable price. You may be in this situation because you only received
one bid or proposal from one source or you have determined that the
competition you received was otherwise \"inadequate.\" To proceed in
this case, you must meet the requirements for noncompetitive
negotiation. However, you do not need to issue a new solicitation
because your requirement is adequately stated. You may, after meeting
the requirements of the previous section, proceed to negotiate a
reasonably priced contract using the negotiation procedures discussed in
Sections 4.5.2, \"Evaluation of Proposals,\" through 4.5.8, \"Debriefing
Unsuccessful Offerors.\"

[All Other Cases]{.underline} ‑ In other circumstances you have
justified, it is recommended that you request a proposal from the
source. There is no need to advertise ‑ there will be no competition!
Your request for a proposal can be as formal as you want ‑‑ from letter
requests up to a full blown solicitation document. Regardless of the
form used, you want to:

-   refer to, or attach, all terms and conditions of the solicitation.
    You still need to comply with federal representation and
    certification requirements. You still will want to have special and
    general provisions. You may have additional agency requirements that
    must be met. What is the DBE goal for this procurement ‑‑ how will
    it be met?

-   refer to, or attach, the specifications or statement of work for the
    supply or service being procured.

-   request the applicable cost or pricing data. [^135]

Allow adequate time for the contractor to prepare its proposal prior to
submission back to you.

Review the proposal with impacted internal agency staff ‑‑ really
prepare for your negotiations with this sole source.

Negotiate the final terms and conditions of the contract using the
negotiation procedures you would use in your competitive proposal method
of procurement. [^136] These negotiations can be more pointed and open
because there is no competitive environment involved ‑‑ the integrity of
a procurement process is not involved so issues like \"technical
leveling\" and \"transfusion\" do not have to be considered.

As discussed in Section 5.2, \"Cost and Price Analysis,\"{and as
required by FTA Circular 4220.1E § 9.h.(2)}, a cost analysis is
required. This includes verifying the proposed cost data, the
projections of the data, and the evaluation of specific elements of
costs and profit.

**4.6.3 [Associated Capital Maintenance Item]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| Original Equipment Manufacturer components may be procured by         |
| competitive negotiations only if:                                     |
|                                                                       |
| > \(e\) The item is an associated capital maintenance item as defined |
| > in 49 U.S.C. § 5307(a)(1) that is procured directly from the        |
| > original manufacturer or supplier of the                            |
+-----------------------------------------------------------------------+
| > item to be replaced. The grantee must first certify in writing to   |
| > FTA: (i) that such manufacturer or supplier is the only source for  |
| > such item; and (ii) that the price of such item is no higher than   |
| > the price paid for such item by like customers. [^137]              |
+-----------------------------------------------------------------------+

**DEFINITION**

[Associated capital maintenance item]{.underline} ‑ Equipment, tires,
tubes, or material, each costing at least 0.5 percent of the current
fair market value of rolling stock comparable to the rolling stock for
which the equipment, tires, tubes, and material are to be used. [^138]

**DISCUSSION**

**If you can purchase a replacement part or component for rolling stock
only from the original manufacturer, and the item costs at least 0.5% of
the vehicle price, then you may procure the item by noncompetitive
proposal provided you make the requisite certifications in advance to
FTA and determine the price to be reasonable based on a cost analysis.**

**Best Practices**

In order to \"qualify\" to use this circumstance to justify sole source,
the FTA has established the following requirements:

-   The item must be an associated capital maintenance item as defined
    above.

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-   The item must be procured directly from the original manufacturer or
    supplier of the item to be replaced.

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-   Prior to execution of the contract, you must first certify in
    writing to the FTA that such manufacturer or supplier is the only
    source for such item; and that the price of such item is no higher
    than the price paid for such item by like customers.

Approval of the FTA is not required ‑‑ just certification of the grantee
(you).

When you read these requirements carefully, you are still essentially
justifying a sole source {as in FTA Circular 4220.1E § 9.h.(1)(a)} and
certifying that fact to the FTA. Also, even though you are certifying
that the price of the item is no higher than the price paid for such
item by like customers, you are still required to perform a cost
analysis as part of the contract negotiation and award process.

**4.6.4 [Unsolicited Proposals]{.underline}**

### DISCUSSION

**The subject of unsolicited proposals is one not covered in transit law
or the common grant rule. In cases like this, FTA would look to the
Federal Acquisition Regulations (FAR) provisions as a guide concerning
the circumstances under which a sole source award would be appropriate.
The FAR covers this subject as FAR Part 15.6. The FAR is available
online at <http://www.arnet.gov/far/>.**

**When unsolicited proposals are submitted to a grantee, the agency must
never assume that the product being offered in the unsolicited proposal
is the only, or best, product available to meet the needs or objectives
of the agency. The essential consideration in whether or not to accept
an unsolicited proposal without competition (i.e., to make a sole source
contract award) is whether or not the proposal is presenting an
innovative, proprietary concept that is itself essential to
accomplishing the agency's objective. If a company is merely presenting
a rationale for doing certain work that could be done by others if given
the chance to compete, then there is no permissible basis to award a
sole source contract.**

**In the case of a proprietary software product that is being offered to
achieve a certain goal, the transit agency receiving the proposal could
not, for example, release the offeror's proprietary programming codes in
a competitive solicitation. But the agency should, if it deems the
mission one it wants to pursue, compete the contract award in terms of
describing what the agency's objective or mission is in order to see
what other firms might offer in terms of software solutions.**

**New York City Transit (NYCT) requires that any contract resulting from
an unsolicited proposal be justified in writing by the Procurement
Office, regardless of the department that received the proposal. Each
proposal is reviewed to determine if the goods or services being offered
are essential to NYCT and whether the proposer is simply offering
something that can be obtained through open and competitive bidding. If
it is determined that the goods or services being offered would benefit
NYCT, and could be obtained through competitive bidding, then there is
not sufficient justification for a sole source award*.***

**[Revenue Contracts]{.underline} - The subject of unsolicited proposals
is discussed in the context of revenue contracts in BPPM section 1.3.3.8
-- *Revenue Contracts.* With respect to unsolicited proposals in the
context of companies seeking to use FTA funded assets for business
purposes, the BPPM offers the following guidance:**

** **

**"Unsolicited Proposals - These may come forth when companies see an
opportunity to use the transit system (an FTA-funded activity) to
enhance their business interest. It may appear from such proposals that
no other company could offer the same product or service. However, this
does not justify a sole source contract. If the idea or activity is of
interest to you, the concept should be evaluated on its own merit and
revenue producing potential. If the decision is to implement it, then a
competitive process should be used to select the contractor, *unless you
determine that the proposed concept itself is proprietary*."**

**New York City Transit (NYCT)** **was approached recently by a company,
which submitted an unsolicited proposal, wanting to install an
electronic information system on the subway cars. The company wanted to
program the system so that riders would know what was overhead, e.g.
Wall Street, theater district. New York City decided to investigate the
concept first to determine if it was something that they wanted to do to
enhance the subway system. Deciding that they liked the idea, they then
prepared an RFP and solicited vendors on a competitive basis.**

**Metropolitan Atlanta Rapid Transit Authority (MARTA) received an
unsolicited proposal from a company about use of subway right-of-way for
linking Atlanta with fiber optic cable using MARTA\'s system-wide
conduits. MARTA determined that they had unused conduits and could lease
space in them to various telecommunication companies. They contacted the
regional FTA office and received their approval for a non-exclusive RFP
to seek competitive proposals for twenty-year leases. This has produced
successful revenue contracts.**  

**4.7 SPECIAL PROCUREMENT METHODS**

**4.7.1 [Multi‑Step Procurements]{.underline}**

**DISCUSSION**

**You have discussed in detail the differences between the competitive
bidding process and the competitive proposal process but I\'ve got one
of those \'tweeners\' ‑‑ something that falls somewhere between those
two processes. There are a number of various technical approaches that
would probably meet our requirement and, if we determined which firms
met our minimal technical requirements, we could compete amongst them on
the basis of the lowest responsive, responsible bidder. But we may have
to enter into discussions with all offerors in order to determine
technical acceptability. Can this be done?**

**FTA Circular 4220.1E** **permits a great number of procedures that
vary from the classic procedures discussed in most of this Manual. For
example, a variation that has long‑been recognized in public procurement
is referred to as the two‑step, sealed bidding method of procurement.
While it has some characteristics of both sealed bidding and competitive
proposals, it complies with all FTA Circular 4220.1E** **requirements
for the competitive proposal process. This process allows, in the first
phase, for the submission of unpriced technical proposals in response to
the request. In the second phase, only those firms that have been found
to be technically qualified in the first phase are invited to submit
sealed bids, as though it were a regular sealed bid procurement. Award
is then made to the lowest, responsive and responsible bidder.**

**Best Practices**

[Overview]{.underline}

Two‑step bidding is a two-phase process generally consisting of a
technical first phase composed of one or more steps in which bidders
submit unpriced technical proposals (and discussions are held with
offerors of those proposals, if necessary) to be evaluated by the
transit property, and a second phase in which those bidders whose
technical offers are determined to be acceptable during the first phase
have their priced bids considered.

The process is designed to:

-   Obtain the benefit of sealed bidding by award of a contract to the
    lowest responsive, responsible bidder, and, at the same time,

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-   Obtain the benefit of the competitive proposal method of procurement
    through the solicitation of technical offers and conducting
    discussions to determine the acceptability of the technical offers.

The process may be recognized by your state law as a separate method of
procurement or may be allowed as a variation of a sealed bidding
statute, particularly in those states where limitations on the use of
the competitive proposal method exists.

[Conditions for Use]{.underline}

Transit properties generally follow one of two stated policies. Either
this method may be used when it is not considered practical to initially
prepare a definitive purchase or contract description which is suitable
to permit an award based on price. Or alternatively, in the absence of
factors or laws that require the use of sealed bidding, some authorities
[^139] establish a preference of the two‑stepped process over
negotiations when all of the following conditions are present:

-   Available specifications are not definite or complete or may be too
    restrictive without technical evaluation (and any necessary
    discussion), of the technical aspects of the requirement to ensure
    mutual understanding between each source and the Authority;

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-   Definite criteria exist for evaluating technical proposals;

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-   More than one technically‑qualified source is expected to be
    available;

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-   Sufficient time will be available for use of the two‑step method;
    and

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-   A firm‑fixed‑price contract or a fixed‑price contract with economic
    price adjustment will be used.

[Phase One of Process]{.underline}

This process normally includes the following steps:

*Solicitation phase* ‑ In addition to the normal requirements for an
IFB, [^140] the first phase solicitation also generally provides:

-   That unpriced technical offers are requested; [^141]

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-   That the procurement is a two‑step sealed bid procurement and that
    priced bids will be considered in the second phase and only from
    those bidders whose unpriced technical offers are found to be
    acceptable in the first phase;

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-   The criteria to be used in evaluating the unpriced technical offers;

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-   That the Authority, to the extent determined to be necessary, may
    conduct oral or written discussions regarding the technical offers;

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-   A statement that bidders should submit proposals that are acceptable
    without additional explanation or information and that the Authority
    may make a final determination regarding the acceptability of the
    proposals based solely on the basis of the proposals as submitted
    and may proceed with the second step without requesting further
    information from any bidder;

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-   That bidders may designate those portions of the technical offers
    which contain trade secrets or other proprietary data which are to
    remain confidential; and

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-   That the item being procured shall be furnished generally in
    accordance with the bidder\'s technical offer as found to be
    technically acceptable and shall meet the requirements of the
    solicitation.

*Amendments to solicitation in two‑step process*:

-   Amendments issued prior to the receipt of technical offers are
    important to all prospective bidders as in a \"normal\" IFB. [^142]

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-   Amendments issued after receipt of the technical offers need be
    submitted only to those bidders who submitted unpriced technical
    offers and they should be allowed to submit new technical offers or
    amend those previously submitted. [^143]

*Receipt of unpriced technical offers*. Unless required by law, unpriced
technical offers need not be publicly opened.

-   Offers are typically opened in front of two or more authority
    employees as witnesses.

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-   Offers are usually not disclosed to unauthorized persons.

*Evaluation of unpriced technical offers should be in accordance with
the criteria set forth in the solicitation.* The unpriced technical
offers should be categorized as \--

-   Acceptable;

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-   Potentially acceptable (i.e., reasonably susceptible of being made
    acceptable); or

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-   Unacceptable, in which case the contracting officer records in
    writing the basis for this finding and makes it part of the
    procurement file. [^144]

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-   Any proposal which modifies or fails to conform to the essential
    requirements or specifications of the solicitation can be considered
    nonresponsive and categorized as unacceptable.

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-   When an unpriced technical offer has been determined to be
    unacceptable, the bidder may be notified of that fact and is not
    normally afforded additional opportunities to submit supplemental
    information amending its technical offer.

*Discussions involving unpriced technical offers may be conducted with
any offeror who submitted an acceptable or potentially acceptable
technical offer.*

-   Discussions can be conducted in accordance with the principles
    discussed in § 4.5.4 involving the competitive proposal method of
    procurement.

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-   Once discussions have commenced, any offeror who has not been
    notified that its offer has been found unacceptable may submit
    supplemental information amending its technical offer at any time
    until the closing date established.

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-   Such submission may be made at the request of the Contracting
    Officer, or upon the offeror\'s own initiative.

*Phase Two of the process may be initiated without discussions* if there
are a sufficient number of acceptable proposals to ensure adequate price
competition under Phase Two. Based upon the results of Phase 1, you may
wish to revise the technical specifications (minimum technical
requirements) in your Phase 2 IFB, in a manner that does not conflict
with the final unpriced proposals. While you have no assurance that the
prices will be close to each other, you know to what degree the
proposals have competitive technical merit.

[Phase Two of the Process]{.underline}

The procedures discussed in Section 4.4, \"Sealed Bids,\" can be
followed in Phase Two.

Each bidder who submitted an unpriced offer that was determined to be
acceptable in Phase One is invited to submit a priced offer. The IFB
states that the bidder shall comply with the specifications and the
offeror\'s acceptable technical proposal. No additional public notice or
advertisement of the IFB need be given because such notice was given
during the Phase One Process.

Award would be made to the lowest, responsive responsible offeror as
discussed in Section 4.4, \"Sealed Bids.\"

**4.7.2 [Governmental Prices and Contracts]{.underline}**

**4.7.2.1 [Procurements from General Services Administration
Schedules]{.underline}**

**CURRENT STATUS**

The Federal Supply Schedule program has provided Federal agencies with a
simplified process of acquiring commonly used supplies and services in
varying quantities at lower prices while\
obtaining discounts associated with volume buying. Congress, in enacting
 1555 of the Federal

Acquisition Streamlining Act of 1994 (Public Law 103‑455), [^145]
extended the cooperative purchasing provisions of GSA enabling
legislation:

> (b)(2)(A) The Administrator may provide for the use of Federal supply
> schedules of the General Services Administration by any of the
> following entities upon request: (i) a State, any department or agency
> of a State, and any political subdivision of a State, including a
> local government. . .

However, Section 4309 of the National Defense Authorization Act for
Fiscal Year 1996 [^146] suspended the authority of the Administrator of
the General Services to allow state and local governments to use the
federal supply schedules. The provision suspended the authority until
the later of the period ending 18 months after the date of enactment of
this Act or the period ending 30 days after the date after the
Administrator has reviewed a General Accounting Office report that
assesses the effects of state and local governments use of the federal
supply schedules and has submitted the report and comments on the report
to Congress. The Act also directed the General Accounting Office to
include in its report to the Administrator an assessment of the impact
on costs to federal agencies from the use of federal supply schedules by
state and local governments.

In light of this recent legislation, what is the status of state and
local government (including most transit properties theoretically) being
able to use the GSA federal supply schedules? It is understood that at
least one transit property (Washington Metropolitan Area Transit
Authority) has at least limited authority from the GSA to utilize the
federal supply schedules. However, we are not aware of other Authorities
being able to utilize those Schedules. With this legislation, we must
await at least until August 1997 (18 months from the date of enactment
of the Defense Authorization Act of 1996) before we know what the GSA
and GAO reports to Congress will say and it could be longer than that if
the required reports are later than then. This does not appear to be a
source that we should expect to be able to use anytime soon.

At such time as this matter is clarified, the FTA, through this Manual,
will provide instruction and guidance to its grantees.

**4.7.2.2 [State and Local Schedules]{.underline}**

+-----------------------------------------------------------------------+
| ##### REQUIREMENT                                                     |
+-----------------------------------------------------------------------+
| An additional general procurement standard applicable to third‑party  |
| procurements included in FTA Circular 4220.1E encourages (at § 7.e)   |
| the use of intergovernmental procurement agreements as follows:       |
|                                                                       |
| \(e\) [Intergovernmental Procurement Agreements]{.underline}.         |
|                                                                       |
| > \(1\) Grantees are encouraged to utilize available state and local  |
| > intergovernmental agreements for procurement or use of common goods |
| > and services. When obtaining goods or services in this manner,      |
| > grantees must ensure all federal requirements, required clauses,    |
| > and certifications (including Buy America) are properly followed    |
| > and included, whether in the master intergovernmental contract or   |
| > in the grantee's purchase document.                                 |
| >                                                                     |
| > \(2\) Grantees are also encouraged to jointly procure goods and     |
| > services with other grantees. When obtaining goods or services in   |
| > this manner, grantees must ensure all federal requirements,         |
| > required clauses, and certifications are properly followed and      |
| > included in the resulting joint solicitation and contract           |
| > documents.                                                          |
| >                                                                     |
| > \(3\) Grantees may assign contractual rights to purchase goods and  |
| > services to other grantees if the original contract contains        |
| > appropriate assignability provisions. Grantees who obtain these     |
| > contractual rights (commonly known as 'piggybacking') may exercise  |
| > them after first determining the contract price remains fair and    |
| > reasonable.                                                         |
+-----------------------------------------------------------------------+

**DISCUSSION**

**FTA has historically encouraged grantees to consider combining efforts
in their procurements to obtain better pricing through larger purchases.
Joint procurements offer the additional advantage of being able to
obtain goods and services that exactly match each cooperating grantee's
requirements. FTA believes this is superior to the practice of
"piggybacking" since "piggybacking" does not combine buying power at the
price stage and may limit a grantee's choices to those products excess
to another grantee's needs.**

**Does your state, county, city, or other local government have a
schedule program similar to the GSA Federal Supply Schedule? Are you
legally eligible to utilize those schedules? In many ways, this is a
topic that is so State and locale‑specific, it is impractical to address
with any specificity in this Manual. This is an area of the Manual where
we solicit comments and best practices from your jurisdiction that would
(or could) have application on a national basis.**

**Purpose**

One of the challenges of a transit authority\'s procurement office is to
try to be more responsive to its customers from timeliness and
cost‑efficient perspectives. It is almost inevitable that someone will
take months trying to decide what is required and then is perplexed that
the procurement staff cannot procure it \"yesterday!\" We devoted an
extensive discussion in Chapter

2 on the importance of planning in the procurement process and the need
for cooperative efforts among the different staff elements of the
Authority.

One of the ways that Federal and State governments (to a greater extent)
and local governments (to a much lesser extent) have tried to address
the timeliness issue is through the use of \"schedule\" contracts that
can be mandated for use on a government‑wide basis. If an entity at the
state‑wide level has a contract that consolidates all requirements for
sedans and buys those off a schedule contract, all public purchasers
theoretically benefit from this larger quantity buy and do not have to
go through a procurement process to obtain those benefits.

**Best Practices**

Ascertain if your State has a schedule program. It may be for standard
commodities such as office supplies and equipment including vehicles of
all sorts and sizes as well as computer equipment on either a lease or
purchase basis.

Ascertain if your authority is eligible to participate in the program
and, if so, how.

-   Is an intergovernmental agreement required before you can
    participate?

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-   Is the order issued with the State agency or the contractor?

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-   Do you have any flexibility to make minor changes to the item being
    bought?

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-   How is the order funded?

These questions, and obviously many others, all must be worked out with
the \"parent\" agency. It may be difficult to track all of this
information down the first time, but after you go through the process
once, it will be much easier with each successive procurement you
process through these centralized contracts. You will then be able to
gauge the savings in time and money that may accrue to your agency by
using these contracts.

The same questions can be addressed at the local level. A program might
exist at a city, county, parish, school district or any other public
special districts. One of the most effective ways to participate in
cooperative purchases at the local level is through some sort of
inter‑local cooperative purchasing agreement. To be able to do this may
require special legislative authority, but most States have some sort of
Intergovernmental [^147] and/or Inter‑local [^148] Cooperation Act.
These statutes usually define not only what can be the subject of
agreements consummated pursuant to their provisions, but also define who
can participate and under what conditions.

Never underestimate the buying power (in terms of quantity you) bring to
the local public government buying community, particularly in such areas
as diesel, vehicle parts, office supplies and vehicles.

There is some real public relations benefit for your agency by being
actively involved in the local government buying community in helping
all public bodies get \"more bang for the buck\" through volume buying
of similarly‑used commodities.

**4.7.2.3 [State versus FTA Requirements]{.underline}**

  -----------------------------------------------------------------------
  **REQUIREMENT**

  The requirements and standards of FTA Circular 4220.1E apply to
  procurements entered into under such agreements using FTA funds. [^149]
  -----------------------------------------------------------------------

**DISCUSSION**

**\"I\'ve got no control over what the State puts into its contracts in
terms of FTA requirements. The State is concerned with state laws and
that contracts fully comply with the competitive requirements of the
state. What do I do?\"**

**There really is no easy answer! The problem most agencies face with
this requirement is not the competitive methods utilized by the State
(or local) governmental entity in establishing these contracts ‑‑ most
States have a small purchase procedures, sealed bidding and sealed
proposal methods of procurement that in all likelihood comply with the
federal standards set forth in FTA Circular 4220.1E and discussed
earlier in Section 4. Most States similarly buy architect and
engineering services in a procedure similar to the federal requirements
of the Brooks Act and as discussed in FTA Circular 4220.1E paragraph 9.e
and in paragraph 6.5** -- ***Architect-Engineering Services.***

**The problem most of us face is squaring State laws or regulations that
differ substantively with the FTA requirements of FTA Circular
4220.1E.**

-   **How do we reconcile State‑geographic preference statutes with the
    full and open competition requirements of the FTA and the Common
    Grant Rule? These statutes frequently establish a preference for
    certain services or commodities to in‑State sources and may even
    set‑aside certain procurements to in‑State sources. If you are using
    federal funds to procure something off a State schedule and your
    State has such a restriction, can you participate? Probably not.\
    **

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-   **Recent changes in the applicability of the Buy America provisions
    of 49 CFR Part 661 (and discussed in Section 4.3.3.2.2, \"Buy
    America Certification\") make compliance with those requirements
    less of an issue now than it used to be because of the \$100,000
    threshold. However, for procurements in excess of that amount, you
    will probably have problems participating because of the
    certification requirements imposed by Part 661.**

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-   **The current \$2,000 threshold of the Davis‑Bacon Act may preclude
    you from participating in any State construction contract because,
    in all likelihood, any wage rate requirement of the State is going
    to be a State law issue, not the Davis‑Bacon Act.**

**The list could go on. Under current federal statutory and regulatory
guidance and requirements, some of the conflicts between those
requirements and the procurement procedures and practices of your State
are irreconcilable. Unless the State or local agency is willing to
include the FTA requirements in its solicitations and contracts, you may
be effectively precluded from participating in those intergovernmental
or inter‑local procurements. Some relief could come in the future as the
FTA continues to examine its policy relative to the applicability of FTA
Circular 4220.1E to all procurements if the grantee accepts operating
assistance.** [^150]

**Until more clarification is obtained and as long as operating
assistance is an issue, you may not be able, realistically, to
participate in these procurements. You can, however, effectively
participate at the truly local level where you can either control the
procurement (you buy the diesel fuel using all the federal requirements)
and allow the city and school district draw off your contract or,
because of the one‑on‑one interface this process requires, you are able
to have the city or school board include the federal requirements in its
unleaded regular gasoline contract you want to order from. That works!**

Again, we specifically solicit input from you on your successes (and
failures) in the area of utilizing State and local government contract
schedules or inter‑local/intergovernmental procurement agreements and
how they have been reconciled with conflicting State and Federal
requirements.

4.7.3 [E-Commerce: Reverse Auctions]{.underline}

+-----------------------------------------------------------------------+
| ## REQUIREMENT                                                        |
+-----------------------------------------------------------------------+
| Reverse auctions are subject to all the procurement requirements of   |
| FTA Circular 4220.1E, Paragraph 7.q.                                  |
|                                                                       |
| > "E-Commerce is an allowable means to conduct procurements. If a     |
| > grantee chooses to utilize E-Commerce, written procedures need to   |
| > be developed and in place prior to solicitation and all             |
| > requirements for full and open competition must be met in           |
| > accordance with this Circular."                                     |
|                                                                       |
| We would note that *some* states, such as New York, require a sealed  |
| bid procedure for competitive procurements. *Where state law requires |
| sealed bidding, reverse auctions may not be legal*. In these          |
| situations grantees may still make use of online bidding but the bids |
| must be kept sealed and not disclosed. Grantees must check their      |
| state procurement statutes to determine if reverse auctions are       |
| permissible. For example, the state of Texas recently enacted         |
| legislation allowing reverse auctions. Grantees should consult with   |
| their counsel to determine whether reverse auctions are legally       |
| permissible under State law.                                          |
+-----------------------------------------------------------------------+

DISCUSSION

**One of the innovations arising out of e-commerce has been the use of
*reverse auctions*. The term *reverse auction* refers to a live online
auction in which the roles of buyer and seller are "reversed." In a
*normal* *(forward*) *auction*, sellers offer to sell at prices
determined by the bids of buyers. In a *reverse auction*, buyers are
offering to buy something at prices being bid by sellers. "Reverse"
refers to the relationship of buyer and seller and who does the bidding.
Sellers bid for the right to sell to the buying organization and buyers
agree to buy at the price established by the auction process. In a
reverse auction proceeding, the buyer advertises and defines on line the
commodity for which it is soliciting bids. The buyer may also post a
price at which the bidding will begin. These prices will usually be the
buyer's "last good buy" price or an industry standard price, and it
should be a price that will encourage suppliers to bid. If the price is
set too low, it will discourage sellers from participating. Suppliers,
whose identity is kept confidential, then post prices online anytime
within the duration of the auction (usually one day to several weeks) so
that suppliers can see their competitors' bids and respond immediately
with counter offers. Suppliers can reevaluate and adjust their bid in
response to other bidders' offerings. Some auctions provide for
automatic time extensions if a bid is placed in the last five minutes of
an auction, in which case an automatic five-minute extension prevents
last-second bidding and keeps all participants on an even playing field.
It is possible to have several automatic time extensions when bids are
submitted in the last five minutes of the event. The transparency of the
marketplace creates rigorous competition among the participants, which
tends to drive prices lower. Reverse auctions live up to their name by
having prices fall. Experience to date with reverse auctions indicates
that savings of 15% - 20% from prices previously paid may be possible,
especially if additional vendors can be found to bid on the
requirement.**

Most of the work to be done in a reverse auction takes place prior to
the actual event. This includes identifying suppliers who will bid,
pre-qualifying them and informing them about the technology that is
being used. It is important to define everything up front, including
quality, delivery terms, payment terms, location of use, quantity
required and in what lot size. In some cases buyers have issued a
Request for Proposals (RFP) as a first step in a "best value"
competition in order to evaluate prospective bidders' products,
capabilities, etc. A reverse auction is then conducted among qualified
suppliers as a technique to elicit the best possible prices.

**Anything that can be described well can be reversed auctioned. This
includes goods and services. The key is that the item have features that
are measurable, with a clear purchase description in terms of quality
and specificity, so that suppliers are bidding on a requirement that is
clear to everyone. Doing this will ensure you are able to compare bids
for essentially identical goods or services. In deciding if a reverse
auction is right for a particular commodity, the agency will need to
determine if it has long-term relationships with any one or two
suppliers for the commodity, and if so, why? What is valuable about the
relationship? Would an auction harm the relationship? Another
consideration will be whether there are enough suppliers of this
commodity to make it competitive. Any efforts taken to increase the
number of bidders who participate in the auction will pay dividends in
the end. Finally, the commodity must be such that there is a sufficient
profit margin to make prices compressible, so that suppliers have room
to bid. And finally, as has already been suggested, reverse auctions
need not be limited to lowest - price contract awards; they may be used
in "best value" procurements where technical proposals are required and
price auctions follow, with contract award being made to the firm
offering the best overall value to the buying agency, with both price
and technical merits considered.**

**Best Practices**

**[Federal Government Experience]{.underline}** - A number of Federal
agencies are now using reverse auctions. The Federal Government began to
use this technique with the re-write of the FAR Part 15 in 1997. FAR
1.102.4(e) now states that if a practice is not expressly addressed or
prohibited by statute or regulation, Government employees should feel
free to innovate and use sound business judgment in making procurement
decisions. With respect to auctions, FAR 15.306(e)(3) requires bidders
to agree to disclose their prices prior to their participation in an
auction event. Based on the FAR, government procurement personnel may
use reverse auctions as long as the vendors agree to participate.
(Grantees are not required to follow the FAR, and this information on
Federal procedures is provided for information purposes).

[Navy Department]{.underline} - The Navy Department's first auction was
for aircraft ejection seat mechanisms. This auction lasted 51 minutes,
with three bidders, and Navy estimates it saved over 28% off the
historical price for these mechanisms. Navy has conducted over fifteen
additional reverse auctions since the first in May 2000, for supplies as
well as services, using both price and best value as evaluation
criteria. Following are some of the "lessons learned" by the Navy
Department, as published at their web site: [^151]

-   The reverse auction technique may not drastically change or
    streamline the procurement process.

-   It is a highly effective pricing tool.

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-   Prior to opening the auction, all participating vendors should log
    on and verify their connection to the system.

-   A set period of time for the reverse auction should be established
    based on the number of participants and the complexity of the
    acquisition.

-   The time established for the auction needs to be flexible in case
    there is an offer at closing time. For example, if a bid is received
    within one minute of the closing time for the auction, the auction
    period should be extended for an additional number of minutes to
    allow bidders to respond to the last bid.

[Marine Corps]{.underline} - The U.S. Marine Corps has also published
their experiences with reverse auctions. The Marine Corps took concerted
efforts to build a database of vendors for various product types and to
include more vendors, train them on the reverse auction tool, and get
them to participate in their first auction. The result was significantly
increased competition. The average auction has lasted 30 minutes with
award made directly thereafter. The average savings for the eight
auctions thus far have been 25% from the estimated values based on
historical and retail prices. The Marine Corps reports that vendors
actually prefer this process to the sealed bid process. The Marine Corps
Regional Contracting Office Southwest (RCO SW) received the Department
of the Navy Competition Excellence Award for the implementation of this
innovative practice.

[Army]{.underline} - The Army is using reverse auctions for *best value*
types of procurements. Following is an excerpt from the Army procurement
procedures guide as reproduced in the DOD *Defense Acquisition
Deskbook*:

### *Applicability to Best Value Acquisitions*

> *Reverse auctions are legal as long as the identity of the bidders is
> not disclosed. You may use them for trade-off acquisitions as a
> pricing tool. Once you have finished with technical discussions, you
> may conduct a reverse auction to establish the offerors' final prices.
> Provide these prices, along with the rest of the evaluation results,
> to the Source Selection Official for his/her use in selecting the
> proposal that represents the best value. A potential benefit is that
> competition will drive the prices down as the offerors have visibility
> of the other prices being proposed.*
>
> *You may use reverse auctions to purchase a variety of products and
> services. Reverse auctions work especially well on acquisitions of
> manufactured items. While you can use reverse auctions to buy
> commodities, these items usually have smaller profit margins and
> therefore, the potential benefits are less.*
>
> *\
> When using reverse auctions in a best value acquisition, ensure the
> auction does not drive prices down to the point that the resultant
> contract does not provide enough incentive for the contractor to
> provide quality supplies and services.*
>
> *Use of reverse auctions is appropriate at different points in an
> acquisition. For example, you may use them to achieve the offerors'
> final price or you may use them to downsize the number of offerors,
> but decide not to use them for the final negotiations.* [^152]

[Air Force]{.underline} - The Air Force *Contracting Policy Memo* *on
Reverse Auctions* (February 19, 2001) was issued after research on how
reverse auctions are being used in private industry, and the memo
provides a number of "lessons learned." Among these were:

-   Reverse auctions are being used by industry more for "best value"
    acquisitions than for lowest price acquisitions. (The Sun
    Microsystems' case discussed below under "Private Industry
    Experience" illustrates this.)

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-   Suppliers are normally pre-qualified, including past performance,
    and then a reverse auction is used for the submission of competitive
    prices.

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```
-   A responsibility determination is performed on the apparent
    successful bidder.

> The Air Force procured a motorized security gate for one of its
> facilities and requested technical proposals first. Those firms
> submitting acceptable technical proposals then submitted prices online
> through a reverse auction. The apparent low bidder was then required
> to submit a cost proposal for evaluation. Finding the proposal
> satisfactory, a contract was awarded. Air Force was pleased with the
> results of the process.
>
> [Treasury Department]{.underline} -- The U.S. Treasury Department
> (IRS) conducted, in May 2001, its first auction and one of the largest
> Federal auctions to date: \$131 million for PCs, laptops and monitors.
> Treasury estimates it saved about \$68 million in a very successful
> auction. An example of the savings achieved was the reduction in the
> unit price of a top-end desktop computer from a pre-auction price of
> \$1,434 to \$625 (a savings of 56 percent). There were three
> distributors that submitted bids, representing IBM, Gateway and Dell.
> The IRS requirements were solicited on a best value basis. [^153]
>
> Treasury has also had success with small buys. Many of those buys were
> below \$25,000 and several were below \$1,000. More than \$300,000 in
> purchases have been made in 2002, with some impressive results.
> Customs saved 43 percent on the purchase of a shredder and the
> Financial Crimes Enforcement Network saved 87 percent on two
> 265-megabyte memory kits. Vendor interest has been great. For example,
> the Bureau of Public Debt has been averaging 72 bids per auction. In
> all, close to 2,000 bids have been received from over 330 firms.
> Another noteworthy achievement is that the Bureau of Public Debt, the
> ATF and Customs have awarded 100 percent of their auction results to
> small businesses. [^154]

[General Services Administration (GSA)]{.underline} -- GSA maintains a
reverse auction web site for Federal agencies. On July 25, 2002 the GSA
Federal Technology Service awarded a number of contracts for reverse
auction services to various companies ("enablers") that provide services
ranging from conducting the complete auction ("Hosted Services") to
providing enabling software so that the

user agency can conduct its own auctions ("Desktop Services"). The
enablers that received GSA contracts are listed on the web site. [^155]

GSA conducted a reverse auction pilot program from May 2000 to May 2001.
GSA reports that various government agencies participating in the pilot
program realized savings of 12% - 48% through the reverse auction
process. For example, the Defense Financing and Accounting Service paid
22 percent, or \$2.1 million less, than normal prices for desktop
computers, laptops and printers. The National Institutes of Health (NIH)
paid 25 percent, or \$395,000, less than normal prices for utility
wipes, a type of cleaning supplies. The Coast Guard paid 22 percent, or
\$300,000, less than normal prices for spare parts for HU-25 Falcon
jets.

The Deputy Assistant Commissioner for Service Development, GSA Federal
Technology Service, Mr. Manny DeVera, is credited with developing "Ten
Commandments for Reverse Auctions:"

######## Reverse Auction

***Ten Commandments***

*1. Link reverse auction strategy to acquisition strategy. When
developing the acquisition strategy ask, "Could reverse auctioning apply
to this requirement?"*

*2. Follow the Federal Acquisition Regulation. These guiding principles
still apply.* [^156]

*3. Choose a solid performing enabler. (Enablers are firms that perform
reverse auctions.) With the troubles currently being experienced in the
digital economy, a few enablers may not be around in the future and
could present risks.\
*

*4. Educate suppliers in advance of conducting a reverse auction. Full
service enablers provide this service in their fees.*

*5. Be prepared for publicity and use it to your advantage. Publicity
happens because reverse auctions are relatively new and the media, trade
associations, senior government officials and others are all carefully
watching the government's entry into this new way of doing business.
Enablers are also aggressively publicizing their activities*.

*6. Begin with simple requirements and move gradually to more complex
ones. The more experience an organization has with conducting auctions,
the more complex requirements they can put out for bid.*

*7. Establish the rules of the reverse auction up front. Some examples
of these rules are the bid increments to be used, time extensions,
logistics and other considerations*.

*8. Conduct a mock auction. The adage "practice makes perfect" is very
appropriate here.*

*9. Consider conducting an auction where bidders bid to provide a
quantity of a commodity, as opposed to price based bidding. For example,
reverse auctions are being conducted where the buyer has a set amount
they want to spend, say \$1 million for PCs, and is not focused on the
unit cost. In these auctions, bidders base their bids on the number of
PCs that they will provide for the \$1 million.*

*10. The Contracting Officer is in control of the reverse auction event
at all times.*

[FIRSTGOV.gov]{.underline} -- The U.S. Government's official web portal
is www.firstgov.gov. [^157] Inserting "reverse auctions" in the *Search*
box will give you access to more than 186 million web pages from federal
and state governments where you will find information regarding these
agencies' experience with reverse auctions.

**[Private Industry Experience]{.underline} --** The private industry
sector has been using reverse auctions since the mid-1990's. A recent
white paper presented data indicating that 20 percent of all private
industry firms may be using on-line auctions (real-time bidding) to
procure a portion of their goods and services. [^158]

A current magazine article discusses the experience of one major private
industry player in the reverse auction arena -- Sun Microsystems. Sun
implemented its *Dynamic Bidding* program in May 2000 with a goal of 20
percent reduction of their targeted budget, and they achieved this in
their first pilot auction. It has since been used for more than 100
procurements and covers all the commodities Sun buys. One of the
important facets of the Sun method is that the company uses a "best
value" approach to source selection with their price auctions. Sun
believes its supplier relationships are strategic and it will not switch
to an untested company simply to get a lower price. Past performance in
areas such as quality, manufacturing flexibility, facility location and
engineering support are also considered in the final decision. Sun
emphasizes that the reverse auction approach does not replace the
strategic relationship between companies. Prices bid are only one factor
in the final selection decision process, but the auctions mean that less
time is spent on negotiating the price, terms and conditions than was
previously the case. "The end result is that it takes Sun an hour to
find the true market price, eliminating weeks or even months of
negotiating back and forth. It has also resulted in significant
bottom-line savings for Sun. They used this process on \$1 billion of
their direct spend in fiscal year 2001, and have raised the goal for
this fiscal year." [^159]

A recent article in an E-business publication suggested a number of
areas that might be good candidates for reverse auctions. [^160] The
author's recommendations for reverse auctions include:

-   *Strategic Relationship is Less Important*

> The author believes it is difficult to build cooperative relationships
> with suppliers through an auction process and thus auctions are more
> suitable for purchases of off-the-shelf, near-commodity direct
> materials.

-   *Price is Main Decision Factor*

> Auctions work best for categories where the main discriminator between
> suppliers is price.

-   *Many Qualified Suppliers*

> Auctions need adequate competition to succeed. Where there is limited
> competition because of a scarcity of suppliers, a commitment of supply
> is more important than any incremental price savings that could be
> achieved through an auction.

-   *Low to Medium Strategic Importance*

> The most strategic categories should not be subject to a stand-alone
> auction. This would include components critical to the company's end
> product. In these cases the auction, if conducted, should be combined
> with some sort of face-to-face discussions with key suppliers.

-   *Purchases Can be "Lotted"*

> It may be cumbersome to run individual auctions for each of many line
> items. Line items can be bundled into "lots" and suppliers will be
> required to bid on all the parts in that lot or none. This concept of
> "lotting" works well with office products.

-   *Benchmarks*

> When a company is satisfied with a current supplier but feels a need
> to test the market to ensure they are receiving a competitive price,
> they may do this through an auction. Potential suppliers can be
> required to respond to an RFP in order to qualify for the auction. The
> key is to adequately document one's service, delivery, payment terms
> and other "non price" requirements up-front to ensure that suppliers
> are bidding on an apples-to-apples basis.

**[Transit Agency Experience]{.underline}** -- Transit Agency experience
with reverse auctions has been extremely limited in comparison to both
the private sector and the Federal government. The Los Angeles County
Metropolitan Transit Authority (LACMTA) has used this process
successfully on a limited basis but does not feel it has significant
potential for their needs. [^161] LACMTA believes it can work well for
common materials but may be inconsistent with good long-term partnership
relationships with suppliers. For example, where there is a need for
technical support or for quick reaction time in order to meet critical
agency needs, the auction process does not lend itself to the kind of
agency/supplier relationships that are required for long-term mission
success. But LACMTA believes that if price is the only consideration,
and supplier partnerships for the commodity also is not a consideration,
then reverse auctioning can work well.

The Southeastern Pennsylvania Transportation Authority (SEPTA) conducted
a pilot program to test the process on a procurement of fluorescent
tubes and they were successful. But they also do not feel that their
agency will adopt this technique to any significant degree. One of the
lessons learned by SEPTA is the criticality and difficulty of informing
potential bidders of the auction and getting them prepared to bid.
[^162]

The Houston Metropolitan Transit Authority (MTA) is considering the use
of a reverse auction for furniture. [^163]

[^1]: \- *See* Section 1.3.2, \"Federal Contractual Sphere.\"

[^2]: \- United States v. John C. Grimberg Co., 702 F.2d 1362, 1367 (Fed
    Cir. 1983) (in banc).

[^3]: \- See Chapter 6 for a discussion of the procurement methods
    commonly used for each object of procurement.

[^4]: \- FTA Circular 4220.1E § 7.f.

[^5]: \- 49 CFR § 661.7, Appendix A to § 661.7, subparagraph (e).

[^6]: \- As a practical matter, you may wish to adopt the statutory
    threshold for the Davis Bacon Act of \$2,000 as the micro‑purchase
    threshold for construction services. This is what has been done with
    the Federal Acquisition Regulation ‑‑ see, FAR § 13.601(a) which
    defines micro‑purchases for construction as being limited to
    \$2,000. However, if you have a requirement for \$2,300 of
    construction, you no longer need competitive quotations, but you
    still need Davis-Bacon wage rate submissions and compliance.

[^7]: \- FTA Circular 4220.1E § 8.c.

[^8]: \- You must not split a procurement that would be in excess of
    \$2,500 (three widgets worth \$1,500 apiece for a total of \$4,500)
    into smaller purchases (three sequential purchases of \$1,500) in
    order to use this method of procurement.

[^9]: \- Although it is written for the more detailed \"price analysis\"
    required in competitive procurements, FAR § 15.805 discusses price
    analysis techniques that may be used or adapted to support your
    determinations for these micro‑purchases.

[^10]: \- FAR § 13.106(a)(3).

[^11]: \- These changes were published as part of Federal Acquisition
    Circular 90‑40 in Volume 61 of the Federal Register on pages 39189
    through 39199 (61 Fed. Reg. 39189‑39199 (July 26, 1996)).

[^12]: \- FAR § 13.103(e).

[^13]: \- FAR § 13.106(a)(3)(i) and 1.603‑3(b). See also Section 2.1.2,
    \"Autonomy\" regarding decentralization, generally.

[^14]: \- FAR § 13.106(b).

[^15]: \- GAO/NSIAD‑96‑138 (8/6/96). GAO Reports are available on the
    Internet at the Government Printing Office web site:
    [www.access.gpo.gov](http://www.access.gpo.gov/).

[^16]: \- For further information contact Ms. Sandra Kuykendall at
    <skuykendall@islandtransit.org>.

[^17]: \- *See* FTA Circular 4220.1E § 9.e ‑‑ \"Grantees [shall
    use]{.underline} \[the Brooks Act\] for contracting for A&E
    services. . . (emphasis supplied)\" *See* Section 6.5 -
    *Architect-Engineering Services* for a complete discussion.

[^18]: \- *See* Section 6.5 - *Architect-Engineering Services*.

[^19]: \- *See* discussion of these requirements in Section 8.1.3,
    \"Davis Bacon Act.\"

[^20]: \- A \"delivery order\" as opposed to a purchase order, is issued
    typically under the terms of a requirements type contract that has
    been competitively procured under formal procedures. The delivery
    order is simply an ordering mechanism under that contract and is not
    an independent contract like a purchase order.

[^21]: \- FTA Circular 4220.1E § 9.

[^22]: \- FTA Circular 4220.1E § 9.c.(1).

[^23]: \- FTA Circular 4220.1E § 9.c.(3).

[^24]: \- *See* [Section 4.4, \"Sealed Bids]{.underline},\" and FTA
    Circular 4220.1E § 9.c.(2).

[^25]: \- *See* [Section 4.5, \"Competitive Proposals]{.underline},\"
    and FTA Circular 4220.1E § 9.d.

[^26]: \- *See* Chapter 3, \"Specifications\" for a discussion of these
    and other specification issues.

[^27]: \- The Brooks Act procedures, required for Architectural and
    Engineering services and described in Section 6.5, go one step
    further by prohibiting price competition and requiring selection
    based solely on technical criteria.

[^28]: \- In 1990, the FTA published *Procurement Guidelines for Third
    Party Contracting* which included, in Chapter II, Paragraph 7.I, a
    statement that \"All IFBs should be advertised in a manner that
    promotes participation in the bidding by all qualified and capable
    firms. Advertising only in the local news media is not normally
    adequate.\" This document was canceled by the publication of FTA
    Circular 4220.1C in 1995 and no further guidelines have been issued.
    The concept of \"all qualified and capable firms\" is a viable one
    under federal law, and suggests that you should tailor your
    publicity programs to the supply markets for your procurement. This
    is why we have discussed national and local advertisement in the
    text of this subsection and why, under the subsequent discussion of
    mailing lists, it is important that all known firms that provide the
    item or service being procured be solicited.

[^29]: \- If you are interested in more details about the *CBD* and
    other federal government policies relating to publicizing contract
    actions, those details are spelled out in FAR Part 5. FAR § 5.207
    details with the specifics of preparing and transmitting the notices
    for inclusion in the *CBD*.

[^30]: \- If you are not satisfied with the performance of the current
    contractor, the appropriate remedy is not to arbitrarily decide not
    to issue the firm a solicitation for the follow‑on procurement. If
    your performance concerns are well documented, you have two
    alternatives. First, include the firm on the list, address
    performance record under any appropriate technical criteria. If it
    is ultimately the apparent awardee, address your performance
    concerns as part of the responsibility determinations ‑‑ the firm
    may be able to address your concerns at this time to your
    satisfaction. Second, if the performance concerns are irretrievably
    deep, it may even be possible to initiate debarment or suspension at
    the local, state, or Federal level. Debarments and Suspensions as
    well as Responsibility Determinations are specific topics that are
    discussed in subsequent sections of this Manual.

[^31]: \- If you do receive names of firms from the consultant that
    prepared the specifications, it is recommended you try to ensure
    there are no conflict of interest situations existing (e.g., the
    recommended firm is wholly‑owned subsidiary of the specification
    preparer) or that the specifications are not drafted in such a
    manner as the only product that will meet the specification
    requirement is the product of the firm they want added to the list.
    Don\'t let this caveat discourage your solicitation of
    recommendations from that consultant (they are a very good source),
    just be sensitive to the firms provided.

[^32]: \- While the IFB requirements of §9.c.(2) are good practices for
    both IFBs and RFPs, the evaluation criteria requirement of § 9.d.(1)
    is relevant only to RFPs and is discussed in Section 4.5.1,
    \"Solicitation & Receipt of Proposals.\"

[^33]: \- As a matter of information only, reference is made to the FAR
    § 14.201‑1 and 15.406‑1 for the \"Uniform Contract Format\" and FAR
    § 14.201‑9 for the \"Simplified Contract Format\" used in bidding
    fixed price contracts. These are optional formats used by Federal
    departments which include a good discussion of what is included in
    those formats and why.

[^34]: \- A very helpful item to include with your solicitation package
    is an address label which includes the exact address you want offers
    mailed to and a separate address label which includes your street
    address and room number for offers that are delivered to you. With
    these labels, offerors can affix the applicable one to their offer
    and you will be assured it is coming to the right place. It is also
    a good idea for you to include the solicitation number on the labels
    which is of aid to your mailroom and your staff responsible for
    receipt of offers.

[^35]: \- These representations and certifications have legal
    significance that should not be overlooked by either the offeror or
    the agency. The offeror certifies, for instance, that it is not
    presently debarred or suspended by any federal agency. The
    contracting officer can rely on that certification and does not have
    to \"look behind it\" in determining the firm\'s responsibility. If
    it is later discovered that the firm was in fact debarred by a
    federal agency, it has made a false certification. There are
    administrative sanctions that can be imposed (contract terminated
    for default) and possible criminal sanctions under either federal or
    state laws (or both) for submitting a false statement.

[^36]: \- This certification is discussed in more detail in Section
    4.3.3.2.3, \"Lobbying Certification.\"

[^37]: \- This certification is discussed in more detail in Section
    4.3.3.2.1, \"Certification Regarding Debarment, Suspension, and
    Other Responsibility Matters.\"

[^38]: \- This certification is discussed in more detail in Section
    4.3.3.2.2, \"Buy America Certification.\"

[^39]: \- FAR Part 15.201(f), for example, requires the CO to make
    available to "all potential offerors," upon request, any information
    distributed at a pre-solicitation conference. The clear presumption
    of the FAR is that "potential offerors" may not be (and need not be)
    present at the conference.

[^40]: \- If you cannot identify who the offeror is in this situation
    without opening the bid or proposal, it is recommended that you open
    it in the presence of a witness. Write down the name and address of
    the offeror only, and reseal the envelope or package. Return it to
    the offeror with a cover letter that the package was opened only so
    the offeror could be identified. It is also recommended that a
    memorandum to the file be made by you and your witness describing
    what happened and why. You might want to copy the outside of the
    envelope to show no identification but it is recommended that no
    copies be made of any of the offer documentation.

[^41]: \- *See* Section 9.2, \"Changes\" for a more general discussion
    of the costs of changes.

[^42]: \- *See* also the discussion of timeliness in Section 4.4.2,
    \"Bid Opening.\"

[^43]: \- As a matter of reference, your attention is invited to FAR §
    52.214‑7 and 52.215‑10 for language addressing late submissions,
    modifications, and withdrawals of offers that is incorporated in
    FAR‑covered solicitations for IFBs and RFPs respectively. For
    commentary in the FAR itself relating to those solicitation clauses,
    *see* FAR § 14.304 and 15.412 respectively. Primarily because of the
    body of law that has developed interpreting these clauses, many
    transit properties have either adopted this language or have
    modified it slightly to meet their individual requirements.

[^44]: \- Some practitioners erroneously refer to the consequences of a
    late offer as one of \"non‑responsiveness.\" In fact, you never open
    the offer (unless needed to for identification purposes) and thus
    cannot determine whether it is responsive to the material
    requirements of the solicitation (the general definition of
    responsiveness). Had the offer been received on time, it may well
    have been responsive but, in this case, the offer is not even
    considered!

[^45]: \- These requirements and applicable clauses are discussed in
    depth in Chapter 8.

[^46]: \- *See* also Chapter 8*,* \"Contract Clauses,\" and Appendix
    A.1, \"Federally Required Model Clauses.\"

[^47]: \- 49 CFR Part 29, \"Debarment and Suspension (Nonprocurement)
    and Governmentwide Requirements for Drug‑Free Workplace (Grants).\"

[^48]: \- \"*Debarment*. An action taken by a debarring official in
    accordance with these regulations to exclude a person from
    participating in covered transactions. A person so excluded is
    \'debarred\'.\" 49 CFR § 29.105.

[^49]: \- \"*Suspension*. An action taken by a suspending official in
    accordance with these regulations that immediately excludes a person
    from participating in covered transactions for a temporary period,
    pending completion of an investigation and such legal, debarment, or
    Program Fraud Civil Remedies Act proceedings as may ensue. A person
    so excluded is \'suspended\'.\" 49 CFR § 29.105.

[^50]: \- 49 CFR § 29.115(b).

[^51]: \- 49 CFR § 29.115(a).

[^52]: \- *See* § 3b of the Master Agreement, Form FTA MA(12).

[^53]: \- Because it is discussed as an aspect of responsibility, and
    can be objectively determined at any time up to the time of award,
    late submission of the debarment certification can be permitted.

[^54]: \- You may subscribe by writing the Superintendent of Documents,
    U.S. Government Printing Office, Washington, DC 20402 or by calling
    the Government Printing Office Inquiry and Order Desk at (202)
    783‑3238.

[^55]: \- The list can be accessed 7 days a week, 24 hours per day and
    aside from normal costs of local or long‑distance telephone calls,
    the access is free to the user. To obtain a copy of the user\'s
    manual for accessing the system, contact GSA at (202) 501‑4740.

[^56]: \- GSA advises that responses to these inquiries should be
    furnished within one working day.

[^57]: \- *See* § 3b of the Master Agreement, Form FTA MA(12).

[^58]: \- The text of the regulation refers to Part 25.108, but this
    section has been moved to Part 25.104.

[^59]: \- The payment to any \"person\" to influence or attempt to
    influence an officer or employee of any federal department or
    agency, a member of Congress, an officer or employee of Congress, or
    an employee of a member of Congress in connection with the awarding
    of any federal contract, the making of any Federal grant, the making
    of any federal loan, the entering into of any cooperative agreement,
    and the extension, continuation, renewal, amendment, or modification
    of any federal contract, grant, loan, or cooperative agreement. 49
    CFR § 20.100(a).

[^60]: \- Because the language of the regulations refers to needing the
    certification and applicable disclosures at time of award, unless
    your solicitation specified otherwise, failure to submit the
    executed certification with the offer would probably not be
    considered a responsiveness issue in a competitive bidding
    procurement, and would not disqualify the offer.

[^61]: \- The \"Lobbying Disclosure Act of 1995\" (Pub. L. 104‑65) made
    some amendments to 31U.S.C. § 1352, which simplified the information
    that needed to be disclosed on this Form. Those changes are detailed
    at 61 *Fed. Reg.* 1412 (January 19, 1996) and will be eventually
    incorporated into a new Standard Form. Three items of the SF‑LLL are
    impacted: Item 10a is amended by revising \"Name and Address of
    Lobbying Entity\" to read \"Name and Address of Lobbying
    Registrant\"; in Item 10, the statement \"(attach Continuation
    Sheet(s) SF‑LLL‑A, if necessary)\" is removed; and Items 11 through
    15 are removed.

[^62]: \- *See* discussion at Section 4.3.2.5, \"Amendment of
    Solicitations.\"

[^63]: \- *See* discussion at Section 4.3.2.3, \"Solicitation.\"

[^64]: \- The requirements of § 15.m of the Master Agreement mirror
    those of § 11 of FTA Circular 4220.1E and refer the grantee to the
    provisions of 49 CFR § 18.36(h).

[^65]: \- *See* Section 6.1, \"Construction.\"

[^66]: \- *See* Section 6.2, \"Equipment and Supplies.\"

[^67]: \- *See* Section 6.3 \"Rolling Stock.\"

[^68]: \- *See* discussion in Section 4.5.4, \"Discussions and
    Clarifications.\"

[^69]: \- As an example of how these and other situations have been
    addressed in the federal environment, *see* FAR § 28.101‑4.

[^70]: \- *See* Chapter 3*,* \"Specification\" for guidance on
    specification development.

[^71]: \- *See* Section 2.4.2.1, \"Full and Open Competition
    Principle,\" for a discussion of full and open competition and the
    effect of restraints on competition.

[^72]: \- *See* discussion of advertisement and publicizing invitations
    in Section 4.3.2.1, \"Advertising and Publicizing Solicitation.\"

[^73]: \- One instance requiring discussion is the evaluation of
    apparent errors; *see* Section 4.4.5, \"Bid Mistakes.\"

[^74]: \- *See* discussion in Section 4.4.3, \"Responsive Bidder.\"

[^75]: \- As stated in the Requirements discussion, discounts, such as
    prompt payment discounts, should only be used in the calculation of
    low bid if the history within your agency indicates discounts
    offered are usually taken advantage of.

[^76]: \- FTA Circular 4220.1E § 9.c.(2)(c).

[^77]: \- You should understand that if an unsuccessful bidder discovers
    an error, they will likely file a protest (or formal query) almost
    immediately. It is very important, therefore, that you proceed very
    carefully. Some procedures, to discourage false hopes and resulting
    arguments, prohibit the reading of bids that are clearly defective
    (e.g., missing bid guarantee).

[^78]: \- *See* the extensive discussion of this in Section 4.3.3.1,
    \"Receipt of Offers,\" where we addressed the considerations that
    are typically weighed when policies are adopted concerning the
    receipt of offers. The FAR provision typically used as a \"model\"
    is FAR § 52.214‑7.

[^79]: \- *See, e.g., J. C. Kimberly Co.*, Comp. Gen. B‑255018.2, 94‑1
    CPD 182 79 (A bid that was hand carried to the bid opening room
    seconds after the bid opening officer declared that time had arrived
    was properly rejected as late.) One of the exceptions addressed in
    FAR §52.214‑7 and elaborated upon in FAR § 14.304‑1(a)(2) addresses
    the situation when late receipt of the bid is due solely to
    mishandling by the agency after receipt at the agency location.

[^80]: \- *Id.* *See also, Swinerton & Walberg Co.*, Comp. Gen.
    B‑242077.3, 91‑1 CPD 318.

[^81]: \- This paragraph was changed from prior versions of the circular
    to eliminate the phrase "or acceptance" of a single proposal when
    discussing what constitutes a sole source procurement. FTA believes
    that, upon receiving a single bid (or proposal) in response to a
    solicitation, the grantee should determine if competition was
    adequate. This determination may include a review of the
    specifications to determine if they were unduly restrictive or
    contacting sources that chose not to submit a bid or solicitation.
    It is only if the grantee determines that competition was inadequate
    that the procurement should proceed as a sole source procurement.
    The mere fact that only one bid or proposal was received does not
    automatically mean competition was inadequate since many unrelated
    factors could cause potential sources not to submit a bid or
    proposal.

[^82]: \- Section 5.2 - *Cost and Price Analysis* discusses various
    price analysis techniques, and they include (among others)
    comparison to previous purchases, comparison to a valid grantee
    independent cost estimate, and value analysis.

[^83]: \- You may have, for example, data from previous purchases, an
    independent cost estimate, etc. with which to compare the bid price,
    but not have a "catalogue or market price of a product sole in
    substantial quantities to the general public' as required by
    paragraph 10.a of the Circular.

[^84]: \- \"Bid responsiveness involves the question of whether the bid
    as submitted, represents an unequivocal offer to do exactly what the
    government has specified, so that acceptance of the bid will bind
    the contractor to meet the government\'s requirements in all
    material aspects.\" *Hankins Lumber Co.*, Comp. Gen. B‑248101, 92‑2
    CPD;50.

[^85]: \- FAR § 14.301(a).

[^86]: \- FAR § 14.404‑2.

[^87]: \- *Northwestern Motor Co.*, Comp. Gen. B‑244334, 91‑2 CPD 249.

[^88]: \- *Record Press, Inc.*, Comp. Gen. B‑229570.2, 88‑1 CPD 161.

[^89]: \- 49 CFR § 661.13(b) provides: The grantee shall include in its
    bid specification for procurement within the scope of these
    regulations an appropriate notice of the Buy America provision. Such
    specifications shall require, [as a condition of
    responsiveness]{.underline}, that the bidder or offeror submit with
    the bid a completed Buy America certificate in accordance with §
    661.6 or § 661.12 of this part, as appropriate. (emphasis added)

[^90]: \- The Comptroller General, in *Staples‑Hutchinson & Associates,
    Inc.*, Comp. Gen. B‑245007, 91‑2 CPD 491 stated: Whereas bid
    responsiveness concerns whether the bid itself as of the time of bid
    opening unequivocally offers to perform in accordance with all
    material terms and conditions of the solicitation, responsibility
    refers to a bidder\'s ability to perform the contract requirements
    and is determined not at bid opening but at any time prior to award
    based on information received by the agency up to that time.

[^91]: \- *EDT Construction, Inc., et al.*, Comp. Gen. B‑240343, 91‑1
    CPD 374.

[^92]: \- Although unusual, it is possible that before the time and date
    set for receipt of bids, a bidder may discover a mistake in a bid it
    has already submitted to you. If you have included a clause in the
    solicitation (or adopted a policy) as suggested in our earlier
    discussion on \"Receipt of Offers\" (*see* Section 4.3.3.1) and the
    problems with late submissions, modifications and withdrawals of
    offers, they should be followed. Essentially, the bidder is advised
    that modification of its bid would be treated the same as the
    original bid ‑‑ must be received timely and should clearly identify
    the bid it is modifying.

[^93]: \- *See* FAR § 14.406.

[^94]: \- *See* § R3‑202.13 (Mistakes in Bid), *Recommended Regulations*
    approved August 2, 1980, implementing *The Model Procurement Code
    for State and Local Governments*, approved by the American Bar
    Association on February 13, 1979 (hereinafter referred to as the
    *Recommended Regulations*).

[^95]: \- For instance, Amendment Number 1 to the solicitation changed
    the quantities for line item 4 on the Schedule from 5 to 12. The bid
    included a Schedule that showed the quantity for line item 4 to be
    12. No other amendments were issued and the bidder did not formally
    acknowledge Amendment No. 1. There was no way it could have used the
    correct Schedule page unless it had received the Amendment ‑‑ clear
    from the bid that it received Amendment No. 1.

[^96]: \- *See* discussion at Section 4.3.3.2, \"Federally Required
    Submissions with Offers.\"

[^97]: \- The *Recommended Regulations* to the *Model Procurement Code*
    \[at § R3‑202.13.4(b)\] refers to this type of mistake as \"mistakes
    where intended correct bid is evident.\" The mistake and the
    intended bid are clearly evident on the face of the bid document.

[^98]: \- The *Recommended Regulations* to the *Model Procurement Code*
    \[at § R3‑202.13.4(c)\] refers to this type of mistake as \"mistakes
    where intended correct bid is not evident.\"

[^99]: \- You should consider all the long run costs of forcing the
    bidder to perform unwillingly.

[^100]: \- For an extended treatment of this topic (and also as the
    source for most policies of transit properties on the matter), it is
    recommended that you review FAR § 14.406‑4 and the *Recommended
    Regulations* at § R3‑202.13.5.

[^101]: \- *See* FAR § 14.406‑4(e) for recommended procedures to follow
    in the event this type of mistake has been alleged or disclosed.

[^102]: \- This is the position taken in the *Recommended Regulations*
    at § R3‑202.13.5.

[^103]: \- *See* FAR § 14.604‑4(a) and (b).

[^104]: \- FAR § 52.214‑15.

[^105]: \- *W. A. Scott v. United States*, 44 C.Cl. 524, 527 (1909).

[^106]: \- *See, e.g.*, § 2.205 of the *Texas Business and Commerce
    Code* which provides: § 2.205. Firm Offers.

    An offer by a merchant to buy or sell goods in a signed writing
    which by its terms gives assurance that it will be held open is not
    revocable, for lack of consideration, during the time stated or if
    no time is stated for a reasonable time, but in no event may such
    period of irrevocability exceed three months; but any such term of
    assurance on a form supplied by the offeree must be separately
    signed by the offeror.

[^107]: \- *Nation‑Wide Reporting and Convention Coverage*, GSBCA No.
    8309, 88‑2 BCA 20,521 at 103,741.

[^108]: \- FTA Circular 4220.1E § 9.d.(1).

[^109]: \- FTA Circular 4220.1E § 9.d.(1).

[^110]: \- FTA Circular 4220.1E § 9.d.(2).

[^111]: \- FTA Circular 4220.1E § 7.h.

[^112]: \- FTA Circular 4220.1E § 9.d.(4).

[^113]: \- FTA Circular 4220.1E § 9.e.

[^114]: \- Sub-paragraph (5), like paragraph 6.g., recognizes the
    concept of *best value*. Once again, FTA does not wish to dictate
    any particular factors or analytic process. Solicitations must, of
    course, tell potential competitors for the contract what the basis
    for award will be.

[^115]: \- FTA Circular 4220.1E § 9.e.

[^116]: This new definition was intended to recognize the concept of
    best value. The language is intended neither to limit nor dictate
    qualitative measures grantees may employ.

[^117]: \- Federal Register Vol. 62, No. 189, Sept. 30, 1997.

[^118]: \- FAR Part 15 was reissued by Federal Acquisition Circular
    (FAC) 97-02 dated October 10, 1997.

[^119]: \- The FAR now sees lowest price technically acceptable proposal
    selection as one end of the best value spectrum but we have
    distinguished it from best value for clarity of discussion purposes.

[^120]: \- FAR Subpart 15.101 -- *Best Value Continuum*.

[^121]: \- See Section 6.5 -- *Architect-Engineering Services*.

[^122]: New York City Transit -- for more information call Mr. William
    DeSantis at 718-694-4339.

[^123]: \- FTA Circular 4220.1E § 9.d.(3).

[^124]: \- *See* discussion in Section 4.5.4, \"Discussions and
    Clarifications.\"

[^125]: \- *See* discussion in Section 4.5.3, \"Competitive Range.\"

[^126]: \- Multiple rounds of best and finals tend to create suspicion
    in the minds of offerors about what the motive is for the subsequent
    requests, particularly if does not appear that negotiations are
    being reopened for a discussion of substantive matters. The
    preparation of proposals can be a very time‑consuming and expensive
    process and it is possible that, for one of these or some other
    reason, an offeror may decide not to submit a response to a 3rd or
    4th request for a best and final offer. Also, if you make a practice
    of multiple BAFOs, you may not receive \"best\" offers in the first
    round during future procurements.

[^127]: \- FTA Circular 4220.1E § 7.h.

[^128]: \- FTA Circular 4220.1E § 9.d.(4).

[^129]: \- A very significant caveat must be issued at this time. If
    your governing body (city council, county commissioners, board of
    directors, etc.) has reserved unto itself the sole authority to
    reject bids for whatever reason, you, as the procurement official,
    have no authority to make that final determination and notify the
    bidder until your governing body has concurred with your
    recommendation.

[^130]: \- *See* Section 4.5.2, \"Evaluation of Proposals.\"

[^131]: \- *See, e.g.*, FTA Circular 4220.1E § 8.a.: \"All procurement
    transactions will be conducted in a manner providing full and open
    competition.\"

[^132]: \- *See* discussion of small purchase procedures in Section 4.2,
    \"Small Purchases.\"

[^133]: \- *See* discussion of sealed bidding procedures in Sections 4.3
    and 4.4.

[^134]: \- *See* discussion of competitive proposals in Sections 4.3 and
    4.5.

[^135]: \- *See* discussion of the submission of cost and pricing data
    in Section 5.2, \"Cost and Price Analysis.\"

[^136]: \- *See* discussion of negotiations under competitive proposal
    method at Section 4.5.2, \"Evaluation of Proposals.\"

[^137]: \- FTA Circular 4220.1E § 9.h.(1)(e).

[^138]: \- 49 U.S.C. § 5307(a)(1).

[^139]: \- This is also the position taken in the FAR § 14.502.

[^140]: \- *See* discussion at Section 4.4.1, \"Solicitation.\"

[^141]: \- One variation that could be used if time is particularly
    tight, would be to ask, as part of Phase One, that the bidders
    include a sealed bid in a separate envelope that would only be
    opened in the event the technical offer was considered acceptable.
    This creates some additional security on the part of the procurement
    staff because you would want to ensure that the technical
    acceptability determination was made without knowledge of the prices
    for the different offers.

[^142]: \- *See* Section 4.3.2.5, \"Amendment of Solicitation.\"

[^143]: \- If, in the opinion of the Contracting Officer, a contemplated
    amendment would significantly change the nature of the procurement
    to the extent that other entities (who did not submit unpriced
    technical offers) would likely become a proposed offeror as a result
    of the amendment, consideration should be given to canceling the
    solicitation and issue a new solicitation.

[^144]: \- Documentation of an unacceptable finding cannot be over
    stressed. Disputes over this determination are the most common area
    of bid protest in the multi‑step process.

[^145]: \- Codified at 40 U.S.C. § 481(b).

[^146]: \- Public Law 104‑106, § 4309, 110 Stat. 186, 670 (1996).

[^147]: \- *See, e.g.*, Chapter 741, Texas Government Code, V.T.C.A.

[^148]: \- *See, e.g.*, Chapter 791, Texas Government Code, V.T.C.A.

[^149]: \- FTA Circular 4220.1E § 7.e.

[^150]: \- FTA Circular 4220.1E § 4.

[^151]: \- Navy can be contacted by phone at (215) 697-2850. Navy web
    site info for reverse auctions is:
    [http://www.abm.rda.hq.navy.mil/navyaos/acquisition_topics/contracting\_/reverse_auctioning/reverse_auctioning](http://www.abm.rda.hq.navy.mil/revauct.cfm).

[^152]: \- Army Source Selection Guide, June 2001, may be found at:
    <http://www.amc.army.mil/amc/rda/rda-ap/docs/assg-2001.pdf>. Click
    on Appendix I for information on On-Line Reverse Auctions.

[^153]: \- Contact Mr. Geoff Gauger at Treasury for additional
    information: (202) 622-0203.

[^154]: \- *Electronic Bazaar -- Reverse Auctions Save Buyers Time,
    Money* by Geoff Gauger. Federal Times, November 4, 2002. This
    article may be accessed at:
    <http://federaltimes.com/index.php?S=1264522>

[^155]: \-
    <http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_OVERVIEW&contentId=10655>

[^156]: \- Grantees are not required to follow the FAR. However, they
    are required to follow FTA Circular 4220.1E, which would apply to
    procurements using reverse auctions.

[^157]: \- <http://www.firstgov.gov/index.shtml>.

[^158]: \- T*he Strategic Need for Real-Time Competitive Bidding in the
    Public Sector Procurement Process*, by David C. Wyld and Randall P.
    Settoon, September 2002, p.18. This paper may be accessed at:
    <http://learningcenter.ariba.com/wp_resource.cfm>.

[^159]: \- *Reverse Auctions* -- *Strategies and Lessons Learned from a
    Successful Implementation* by Gillian Verga, Jan 2002. This article
    may be accessed at: [www.apics.org](http://www.apics.org/).

[^160]: *- When to Use an Auction* by Ed Goetting, September 4, 2002.
    This article may be accessed at:
    [www.line56.com/print/default.asp?ArticleID=3983](http://www.line56.com/print/default.asp?ArticleID=3983)

[^161]: \- For information re LAMTA call the Director of Purchasing at
    213-922-7210.

[^162]: \- For information about SEPTA's pilot program, call
    215-580-8251.

[^163]: \- For information about Houston MTA, call Paul Como at:
    713-739-4803.