# PROCUREMENT

PROCESS

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# METHOD

OF

PROCUREMNET

A.  [SMALL PURCHASES (See 24 CFR 85.36 (d)(1).)]{.underline}

Small purchases procedures are those relatively simple and informal
procurement methods for securing services, supplies, or other property
that do not cost more than the simplified acquisition threshold fixed at
41 U.S.C. (403(11) (currently set at \$100,000). If small purchase
procedures are used, price or rate quotations shall be obtained from an
adequate number of qualified sources.

> 1\. Document receipt of price or rate quotations from at least three
> sources. Whenever
>
> practicable, request quotations or offers from two sources not
> included in the
>
> previous solicitation.

B.  [COMPETITIVE SEALED BIDS (Formal Advertising) (See 24 CFR 85.36
    (d)(2).)]{.underline}

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. The sealed bid method is the preferred method
for procuring construction, if the conditions in Sec. 85.36(d)(2)(i)
apply.

i.  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 and

for the business; and

\(C\) 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.

ii. If sealed bids are 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 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 in order for the bidder
to properly

respond;

C.  All bids will be publicly opened at the time and place prescribed in
    the invitation for

bids;

D.  A firm fixed-price contract award will be made in writing to the
    lowest responsive

> and responsible bidder. Where specified in bidding documents, factors
> such as
>
> discounts, transportation cost, 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.

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1.  As with small purchases, receipt of sealed bids must be documented.

2.  It must be documented that the procurement lend itself to a
    firm-fixed-price contract and

> that selection of the successful bidder be made principally on the
> basis of price.

3.  The Invitation For Bid (IFB) must be advertised in a publication of
    general circulation.

4.  The IFB, including specifications and pertinent attachments, clearly
    define the items or

> services needed in order for the bidders to properly respond to the
> invitation.

5.  The bids (all) must be opened publicly at the time and place stated
    in the IFB.

6.  The contract must be awarded to the lowest responsive and
    responsible bidder.

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C.  [COMPETITIVE PROPOSALS (See 24 CFR 85.36 (d) (3).)]{.underline}

The technique of competitive proposals is normally conducted with more
than one source submitting an offer, and either a fixed-price or
cost-reimbursement type contract is awarded. It is generally used when
conditions are not appropriate for the use of sealed bids. If this
method is used, the following requirements apply:

i.  Requests for proposals will be publicized and identify all
    evaluation factors and their

> relative importance. Any response to publicized requests for proposals
> shall be honored to the maximum extent practical;

ii. Proposals will be solicited from an adequate number of qualified
    sources;

iii. Grantees and sub-grantees will have a method for conducting
     technical evaluations of the

proposals received and for selecting awardees;

\(iv\) Awards will be made to the responsible firm whose proposal is
most advantageous to the

program, with price and other factors considered; and

v.  Grantees and sub-grantees may use competitive proposal procedures
    for qualifications- based procurement of architectural/engineering
    (A/E) professional services whereby competitors' qualifications are
    evaluated and the most qualified competitor is selected, subject to
    negotiation of fair and reasonable compensation. The method, where
    price is not used as a selection factor, can only be used in
    procurement of A/E professional services. It cannot be used to
    purchase other types of services though A/E firms are a potential
    source to perform the proposed effort.

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1.  It must be documented that this method of procurement was utilized
    because conditions

> were not appropriate for the use of competitive sealed bids.

2.  The Request For Proposal (RFP) must state clearly and accurately the
    technical

> requirements for the goods or services to be procured.

3.  As with the aforementioned procurement methods, you must solicit
    proposals from an adequate number of qualified sources, consistent
    with the nature and requirements of the procurement.

4.  The RFP must be publicized and you must honor all requests by
    parties to compete to the

> maximum extent practicable.

5.  The RFP must identify all significant evaluation factors, including
    price or cost where

> required, and their relative importance.

6.  Technical evaluations of submitted proposals must be conducted and
    documented;

> determine responsible offerors from such evaluations; as necessary,
> conduct negotiations, written or oral, for final contract award; and,
> then document and make the award to the most responsive, responsible
> offeror whose proposal is the most advantageous to the grantee after
> price and other factors have been considered.

7.  If proposals involving architectural/engineering (A/E) professional
    services are evaluated

> with respect to factors other than price, you must document the basis
> for negotiation of fair and reasonable compensation (See 24 CFR 85.36
> (f) for more details regarding what must be done to perform a cost or
> price analysis.) [UNDER NO CIRCUMSTANCES SHALL A COST PLUS PERCENTAGE
> OF COST AND PERCENTAGE OF CONSTRUCTION COST METHODS OF CONTRACTING BE
> USED.]{.underline}

D.  [NONCOMPETITIVE PROPOSALS (See 24 CFR 85.36 (d) (4).)]{.underline}

Procurement by noncompetitive proposals is procurement through
solicitation of a proposal from only one source, or after solicitation
of a number of sources, competition is determined inadequate.

i.  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 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.  The awarding agency authorizes noncompetitive proposals; or

D.  After solicitation of a number of sources, competition is determined
    inadequate.

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ii. Cost analysis, i.e., verifying the proposed cost data, the
    projections of the data, and the

> evaluation of the specific elements of costs and profits, is required.

iii. Grantees and sub-grantees may be required to submit the proposed
     procurement to the

> awarding agency for pre-award review in accordance with paragraph (g)
> of this section.

1.  It must be documented that another method of procurement (small
    purchases, sealed

bids or competitive proposals) was infeasible because the item is only
available from a single source, a public exigency or emergency is of
such urgency to not permit use of competitive solicitation, after
solicitation of a number of sources, competition is determined
inadequate, or approval was granted by HUD.

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## OTHER ASPECTS

> OF THE
>
> PROCUREMENT PROCESS

A.  [GENERAL PROVISIONS / PROCEDURES (See 24 CFR 85.36
    (i).)]{.underline}

> Federal agencies are permitted to require changes, remedies, changed
> conditions,
>
> access and record retention, suspension of work, and other clauses
> approved by the
>
> Office of Federal Procurement Policy. There is a host of these other
> clauses at the above
>
> mentioned CFR.

1.  It must be documented that award is not made to any party on the
    General Services

> Administration's list of Parties Excluded from Federal Procurement or
> Non-Procurement
>
> Programs.

2.  The contract file must be documented with the rationale for: the
    selection of the

> procurement method; the selection of contract type; the contractor
> selection or rejection;
>
> and, the basis for the cost or price of the contract.

3.  Procurement procedures must be in place to ensure that: purchase
    orders and

> contracts are signed by an authorized program official; items
> delivered and paid for are
>
> consistent with the items contained in the corresponding purchase
> order and/or contract;
>
> timely payment of vendors occurs once requested orders have been
> delivered, inspected, and accepted and payment of the vendor has been
> approved; a cost or price analysis is performed in connection with
> every procurement action, including contract modifications; and,
> profit is negotiated as a separate element of price where price
> competition is lacking or a cost analysis is performed.

4.  The contract provisions listed at the above CFR are appropriately
    included in the

> contract.

5.  There must be a written code of conduct governing employees,
    officers or agents

> engaged in the award and administration of contracts supported by
> grant funds (See
>
> 24 CFR 85.36 (b).)

6.  There must be a documented system of contract administration for
    determining the

> adequacy of contractor's performance.

7.  There must be documentation that shows your sub-grantees are
    required to follow

> applicable procurement policies and procedures in the administration
> of their contracts
>
> and purchase orders.

A.  [BONDING AND INSURANCE (See 24 CFR 85.36 (h).)]{.underline}

> For construction or facility improvement contracts or subcontracts
> exceeding the simplified acquisition threshold, the awarding agency
> may accept the bonding policy and requirements of the grantee or
> sub-grantee provided the awarding agency has made a determination that
> the awarding agency's interest is adequately protected. If such a
> determination has not
>
> been, the minimum requirements shall be as follows:
>
> \(i\) A bid guarantee from each bidder equivalent to five 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 his bid, execute
> such contractual documents as may be required within the time
> specified.
>
> \(ii\) A performance bond on the part of the contractor for 100
> percent of the contract
>
> price. A "performance bond" is one executed in connection with a
> contract to secure fulfillment of all the contractor's obligations
> under such contract.

(iii) A payment bond on the part of the contractor for 100 percent of
      the contract price.

A "payment bond" is one executed in connection with a contract to assure
payment as required by law of all persons supplying labor and material
in the execution of the work provided for in the contract.

1.  Basically, the contract file must be documented accordingly with
    respect to bonding

> and insurance.

### CONTRACTING WITH SMALL AND MINORITY FIRMS, WOMEN'S BUSINESS

> [ENTERPRISE AND LABOR SURPLUS AREA FIRMS (See 24 CFR 85.36
> (e).)]{.underline}
>
> The grantee and sub-grantee will take all necessary affirmative steps
> to assure that minority firms, women's business enterprises, and labor
> surplus area firms are used when possible.
>
> Affirmative steps shall include:

i.  Placing qualified small and minority businesses and women's business

> enterprises on solicitation lists;

ii. Assuring that small and minority businesses, and women's business
    enterprises

> are solicited whenever they are potential sources;

iii. Dividing total requirements, when economically feasible, into
     smaller tasks or

quantities to permit maximum participation by small and minority
business,

and women's business enterprises;

iv. Establishing delivery schedules, where the requirement permits,
    which encourage

> participation by small and minority business, and women's business
> enterprises;

v.  Using the services and assistance of the Small Business
    Administration, and the

> Minority Business Development Agency of the Department of Commerce;
> and

vi. Requiring the prime contractor, if subcontracts are to be let, to
    take the affirmative

steps listed in paragraphs (e)(2) (i) through (v) of this section.

1.  Basically, the contract file must be documented accordingly with
    respect to the

> affirmative steps mentioned above.

2.  If the steps above are not being taken, then the contract file must
    be documented

> with the steps that are being taken.

D. [QUESTIONS]{.underline}