U. S. Department of Justice
Office of Justice Programs
Office of the Chief Financial Officer

GUIDE TO PROCUREMENTS
UNDER DOJ GRANTS
AND COOPERATIVE AGREEMENTS

July 2016

Table of Contents
Introduction ............................................................................................................... 4
Chapter 1

General Principles ...................................................................................................... 5

Chapter 2

Evolution of a Requirement ....................................................................................... 6

Chapter 3

Acquisition Planning/Developing the Procurement Package .................................... 7
Contracting Planning Procedures Checklist ............................................................... 8

Chapter 4

Methods of Procurement .......................................................................................... 9

Chapter 5

Competition ............................................................................................................. 10
Competition Checklist .............................................................................................. 11

Chapter 6

Shared Services and Other Agreements between Agencies (Entities) .................... 12
Shared Services/Other Agreements Checklist ......................................................... 12

Chapter 7

Small Purchases (and Micro-Purchases) .................................................................. 14
Small Purchases Checklist ........................................................................................ 16

Chapter 8

Competitive Sealed Bidding ..................................................................................... 17
Competitive Sealed Bidding Checklist...................................................................... 18

Chapter 9

Competitive Proposals (Negotiated Procurement) ................................................. 19
Competitive Proposals Checklist .............................................................................. 21

Chapter 10 Procurement by Noncompetitive Proposals (Sole Source Contracting).................. 22
Justification for Non-Competitive Procurement ..................................................... 23
Chapter 11 Contract Provisions .................................................................................................. 25
Chapter 12 Contract Type Selection ........................................................................................... 28
Contract Type Checklist ........................................................................................... 31
Guide to Selection of Contract Types ...................................................................... 32
Chapter 13 Code of Conduct ...................................................................................................... 35
Code of Conduct Checklist ....................................................................................... 37
Chapter 14 Price and Cost Analysis ............................................................................................ 38
Price and Cost Analysis Checklist ............................................................................. 39
Chapter 15 Protests .................................................................................................................... 40
Protests Checklist ..................................................................................................... 41
Chapter 16 Contracting with Small and Minority Firms, Women’s Business Enterprises, and
Labor Surplus Area Firms ......................................................................................... 42
Contracts with Small and Minority Firms, Women’s Business Enterprises, and Labor
Surplus Area Firms Checklist .................................................................................... 43
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Chapter 17 Contract Administration .......................................................................................... 44
Contract Administration Checklist ........................................................................... 46
Chapter 18 Other Considerations ............................................................................................... 49
Chapter 19 Contracting Concepts Summary .............................................................................. 51

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Introduction
This document is intended for use by non-Federal entities (that is, recipients and subrecipients)
of Federal financial assistance program funds administered by the Department of Justice (DOJ).
As used throughout this guide, the term “non-Federal entity(ies)” includes for-profit entities.
This guide is based on the Procurement Standards set out at 2 C.F.R. Sections 200.317 through
200.326 and given regulatory effect by way of 2 C.F.R. Part 2800, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards by the Department
of Justice (hereafter, the “Part 200 Uniform Requirements”). This document should be used in
conjunction with the DOJ Grants Financial Guide as a tool to assist DOJ recipients and
subrecipients in conducting procurements of property or services under DOJ grants or
cooperative agreements that conform to the procurement standards and other applicable law.

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Chapter 1
General Principles
This “Guide to Procurements under DOJ Grants and Cooperative Agreements” is intended to be
used by States and other non-Federal entities.
States (including their agencies and instrumentalities thereof) must follow the same policies
and procedures they use for procurements from their non-Federal funds. See 2 C.F.R. §
200.317. In addition, States must comply with the requirements set out at 2 C.F.R. § 200.322 for
procurements of recovered materials and must ensure that procurement contracts funded
with DOJ grant or cooperative agreement funds contain any clauses required by 2 C.F.R. §
200.326. All other non-Federal entities (including, for purposes of this guide, for-profit entities),
including subrecipients of a State, must follow 2 C.F.R. § 200.318 through § 200.326.
All non-Federal entities should be aware that any disbursement of Federal program funds to
another party may cast that party as either a subrecipient or a contractor. For guidance on
subrecipient and contractor determinations, see 2. C.F.R. § 200.330. This guide deals with
procurement (i.e. contracts) under grants and not with subawards to subrecipients. Under the
Part 200 Uniform Requirements, a contractor is an entity that receives a contract, which is
defined as a legal instrument by which a non-Federal entity purchases property or services
needed to carry out the project or program under a Federal award (2 C.F.R. § 200.22, 2 C.F.R. §
200.23). A subaward in contrast is an award provided by a Non-Federal entity to a subrecipient
so that the subrecipient can carry out a part of the Federal award (2 C.F.R. § 200.92). Whether
the agreement is a subaward or a contract will be determined by the substance of the
relationship, regardless of whether the parties consider the agreement to be a contract.
When conducting procurements under Federal grant and cooperative agreement awards, a
Non-Federal entity must establish and maintain written procurement policies and procedures
that reflect any applicable State, tribal, or local laws and regulations. These procurements must
also conform to applicable Federal law, including the Part 200 Uniform Requirements.
Finally, those engaged in construction activities funded under federal grants and cooperative
agreements should be aware that special rules may apply to their activities. See 2 C.F.R. §
200.325.

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Chapter 2
Evolution of a Requirement
A grant or cooperative agreement application may incorporate the prospective non-Federal
entity contracting parts of a project, such as when equipment or materials are required in order
to carry out the project funded under the Federal award.
The preliminary decision to contract is based upon the prospective recipient’s best knowledge
of the project requirements. Front-end logistical planning is necessary to conclude how best to
meet the requirement. Dollar estimates for contracting efforts should be determined first, and
then later included in the grant application.
The non-Federal entity should consider the most economical approach to the acquisition,
including whether a procurement contract is the best option for meeting a project requirement.
Multiple options may be available, depending on the goods and services required. Each should
be considered in light of the Part 200 Uniform Requirements’ emphasis upon greater economy,
efficiency, and avoiding any duplication of effort. 200 C.F.R. § 200.318(d).
No. Question
1.

Yes

No

Is it more economical to lease the requirement rather than purchase
it?
If the answer is “Yes”, consider leasing rather than purchasing. See
Chapter 18 “Other Considerations” of this guide.

2.

Is the requirement for common or shared goods or services?
If the answer is “Yes”, consider using a State or local
intergovernmental agreement, or an inter-entity agreement.

3.

Does the requirement allow for used equipment or property as
opposed to new?
If the answer is “Yes”, consider using Federal excess or surplus
property.

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Chapter 3
Acquisition Planning/Developing the Procurement Package
Detailed in-house planning is necessary in order to effectively award a contract. Who will be
responsible for overseeing and interacting on different aspects of the contract should be
determined in advance of any procurement. Therefore, there should be an agreement among
personnel concerning details of any proposed contract well in advance of performance on the
contract taking place.
If competitive sealed bidding is to be used, the contract is to be awarded on a fixed-price basis
to the lowest responsible and responsive bidder. The procuring agency’s invitation for bids
should include a complete, clear, accurate, and realistic specification or purchase description
(including any necessary design specifications).
If a negotiated procurement approach is to be used to obtain the goods or services, the
solicitation’s Statement of Work (SOW) should incorporate a clear and accurate description of
the technical requirements. The request for proposals also must identify all evaluation factors
and their relative importance.
When it is impractical or uneconomical to make a clear and accurate description of the
technical requirements, a “brand name or equivalent” description may be used instead. The
solicitation must clearly state any specific features of any named brand that offerors must
address in an offer in order to meet requirements under the procurement. 2 C.F.R. §
200.319(c)(1).
The checklist below lists the types of documents that should be completely developed before
the procurement action begins.
Pre-Procurement Documentation Requirements:
 Requisition.
 SOW (negotiated procurement) or Invitation for Bids (competitive, sealed bidding)
(include design specifications, if applicable).
 Evaluation Criteria (negotiated procurement).
 Justification for noncompetitive procurement (sole source contracting). See Chapter 10 Procurement by Noncompetitive Proposals.
 All concurrences that may be required.

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Contracting Planning Procedures Checklist
No.

Question

1.

Are grant or cooperative agreement funds available to fund
the proposed procurement?

2.

Has a market survey been conducted and documented to
determine if there are contractors available to satisfy the
requirement?

3.

Have divisions of labor been identified regarding contractual
obligations for administrative, technical, and overall project
responsibility?

4.

What type of procurement method has been chosen?

Yes

No

Micro-purchases
Small Purchases
Competitive Sealed Bidding
Competitive Proposal (Negotiated Procurement)
Procurement by Noncompetitive Proposals
5.

Has the SOW been developed if required (or, the Invitation
for Bids, if competitive sealed bidding is to be used)?

6.

If the contract is to be competitively negotiated, have
Evaluation Criteria been developed?

7.

If the contract is to be negotiated on a sole source basis, has
a Sole Source Justification been prepared? (See Chapter 10)

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Chapter 4
Methods of Procurement
Details on the following methods of procurement are found in the chapters indicated below:
•
•
•
•
•

Shared Services and Other Agreements between Agencies (Entities) (Chapter 6)
Small Purchases (and Micro-Purchases) (Chapter 7)
Competitive Sealed Bidding (Chapter 8)
Competitive Proposal (Negotiated Procurement) (Chapter 9)
Procurement by Noncompetitive Proposals (Chapter 10)

As mentioned earlier in Chapter 2 (“Evolution of a Requirement”), multiple options may be
available to obtain goods or services. As an example, if the product or service is available from
another government agency or department, it may be appropriate to enter into a state, local,
or tribal intergovernmental (or intra-governmental) or inter-entity agreement. Such
agreements, under appropriate circumstances, may provide more economical, cost-effective,
and efficient ways to obtain or use common or shared goods or services. If acquisition planning
and research indicate that a procurement contract is the most cost-effective approach to
meeting a particular requirement, then the procuring entity needs to apply its procurement
procedures and policies – and the Procurement Standards in the Part 200 Uniform
Requirements – to help identify the appropriate procurement method and its requirements.
For purchases below the Simplified Acquisition Threshold, procurement by micro-purchase or
by small purchase procedures may be used.
Where the contract value costs more than the Simplified Acquisition threshold, the main types
of procurement are procurement by competitive proposals (Competitive Negotiation) and
procurement by sealed bid (Competitive Sealed Bidding). The sealed bid method is the
preferred method for procuring construction if the following conditions apply:
•
•
•

A complete, adequate, and realistic specification or purchase description is available;
More than one responsible bidder is willing and able to compete effectively,
and
The procurement lends itself to a firm fixed price contract and the selection of
contractor can be made principally on the basis of price.

Procurement by competitive proposals is generally used when conditions are not appropriate
for the use of sealed bids.
Procurement by Noncompetitive Proposal is used in limited circumstances, see Chapter 10.

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Chapter 5
Competition
All procurement transactions must be conducted in a manner that provides for
full and open competition, consistent with the procurement standards. 1
All non-Federal entities should have written procedures for procurement transactions. These
procedures must ensure that all solicitations incorporate clear and accurate descriptions of the
technical requirements for the goods or services being procured. This description should not,
however, in competitive solicitations, unduly restrict competition.
In order to preserve full and open competition, contractors that develop or draft statements of
work, requirements, specifications, or invitations for bids or requests for proposals must be
excluded from competing for those procurements. Further, undue restrictions on full and open
competition must be avoided, such as:
•
•
•
•
•

•

Making unreasonable requirements in order to qualify for competition;
Requiring unnecessary experience or excessive bonding;
Engaging in noncompetitive practices between firms or in noncompetitive contracts
with consultants on retainer;
Organizational conflicts of interest;
Specifying a “brand name” product without provision for an equivalent product to be
offered (and without performance requirements or features being clearly described in
procurement documents), or
Any arbitrary action in the procurement process.

The SOW (or Invitation for Bids) itself should encourage such full and open competition.
Bidders’ lists or market surveys can be used to help determine whether there will be a sufficient
number of prospective offerors or bidders for a full and open competition to take place. If a
bidders list is not considered adequate with respect to a requirement, a market survey of the
marketplace should be conducted. Advertising the requirements in local newspapers and trade
publications is one way to achieve a more effective, full and open competition.
Recommendations and prohibitions regarding how to make these competitions as full and open
as possible are examined in detail at 2 CFR § 200.319.

1

Part 200 Uniform Requirements 2 CFR § 200.319.

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Some organizations choose to maintain a prequalified bidders list, i.e., a list of prospective
bidders who are prequalified as to material, equipment, or services. However, if not
administered properly, this prequalification may run counter to the goal of full and open
competition. Accordingly, prequalified bidders lists may be used only if they are current and
include enough qualified sources to ensure adequate competition. If a pattern of “no response”
is indicated for one or more bidders, organizations should consider whether removal of such
bidder(s) from a bidders list may be justifiable and appropriate. Also, maintaining these lists by
functional category may make them easier to use and maintain. If bidders’ lists are used,
prospective bidders must not be precluded from becoming qualified during the solicitation
period. 2
Local preference laws/ordinances have always required special attention by the grantor agency
when there are Federal dollars involved. Therefore, the non-Federal entity must conduct
procurements in a manner that prohibits the use of statutorily or administratively imposed
state, local, or tribal geographical preferences in the evaluation of bids or proposals, except
where expressly encouraged by applicable Federal law. 3

Competition Checklist
No.

Question

1.

Does the SOW (or Invitation for Bids) contain attributes
conducive to a full and open competition?”

Yes

No

If the answer is “No,” the restrictive parts should be
rewritten.
2.

Has the bidders list or a market survey been reviewed to
determine availability of competitive contractors?
If the answer is “No,” a review should be done to determine
the availability of competitive contractors in the market
place.

3.

Has an “advertising” strategy been developed to allow
prospective bidders ample time to request a copy of the
invitation for bids and respond accordingly?
If the answer is “No,” ample time for advertising should be
factored in, when determining the forecasted award date.

2
3

2 C.F.R. § 200. 319(d).
2 C.F.R. § 200.319(b).

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Chapter 6
Shared Services and Other Agreements between Agencies (Entities)
(May normally apply to state, tribal, or local governments)
In certain instances, one way to satisfy a requirement is to meet the requirement through the
transfer of funds from one unit of an organization to another, or through an agreement
between or among governments (or entities) to share – or use common – goods or services.
These approaches may help foster greater efficiency and economy. See 2 C.F.R. § 200.318(e).
Such approaches to obtain goods or services may be possible where, for example:
•
•

•

Another part of the government (or organization) has the in-house capability or has a
contract vehicle already in place that may be available to satisfy the requirement; or
Another State, tribal, or local government has an existing contractor currently
performing an activity, such as supplying a good or service, and that contractor would
be capable (and available consistent with any applicable rules and contract terms) of
satisfying the requirement; or
Two or more neighboring jurisdictions may enter into an agreement (and may transfer
or pool funds or share infrastructure) to share certain services or resources and take
advantage of economies of scale.

The use of shared or common services arrangements or other agreements between or among
agencies may offer certain advantages. For example, valuable procurement lead-time (or costs)
may be saved. In addition, the preparation of a SOW, as well as the requirements for invitations
for bids or requests for proposals, may become unnecessary under certain circumstances.

Shared Services/Other Agreements Checklist
No.

Question

1.

Is there already a contractor under contract elsewhere
within your jurisdiction (such as with another agency or
department), or with another jurisdiction, that may be
capable of and available to provide goods or services that
may satisfy your agency’s requirement?

Yes

No

If the answer is “Yes,” use of an existing contract with the
contractor may be considered, assuming that any applicable
rules and the existing contract’s terms would allow your
agency to use it to meet your requirement.
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No.

Question

2.

Is there an opportunity to share or use common goods or
services with a neighboring jurisdiction or organization to
meet your agency’s needs?

Yes

No

If the answer is “Yes”, an intergovernmental (or intragovernmental) or inter-entity agreement may be explored in
order to help satisfy your agency’s requirement.

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Chapter 7
Small Purchases (and Micro-Purchases)
Small purchase 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 [(currently set at $150,000)]. 4
Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar
amount of which does not exceed the micro-purchase threshold (currently set at $3,500). 5
This method is an important part of the logistics support function. Simplified procedures to cut
down procurement lead time for day-to-day support items should be used. Simplified
procedures may include the following:
1. Telephone or Electronic Solicitations (normally for local vendors). Price quotes are
received by telephone or electronically. Where the purchase is anticipated to exceed
the micro-purchase threshold, at least three (3) vendors should be solicited and price,
availability, delivery, etc., should be
requested. The purchase order is then
TIP: Non-Federal entities must
awarded to the vendor quoting the lowest
follow their own dollar threshold
price, including consideration of all other
policy limitations if they do not
factors. Supporting documentation must be
exceed Federal thresholds.
maintained in the purchase order file and
include the date contacted, vendors
contacted, and quoted amounts and quantities.
2. Unadvertised Written Quotations. This procedure applies to more complex low dollar
items when a quote in writing is desirable. Purchase Order Award is made to the vendor
quoting the lowest price and meeting the technical requirements. Where the purchase
is anticipated to exceed the micro-purchase threshold, quotations should be sought
from at least three (3) vendors. Supporting documentation must be maintained that is
similar to that for telephone solicitations.
3. Blanket Purchase Agreements and Credit Cards. Blanket Purchase Agreements (BPAs)
may be described as a “Charge Account” that a procuring entity with frequent recurring
requirements establishes with qualified sources of supply. Depending upon threshold

4

2 C.F.R. § 200.320(b). The Simplified Acquisition Threshold is set by the Federal Acquisition Regulation (FAR). The
FAR currently sets the Simplified Acquisition Threshold at $150,000, though it is periodically adjusted for inflation
in accordance with 41 U.S.C. § 1908. See 2 C.F.R. § 200.88.
5
2 C.F.R. § 200.320(a). The Part 200 Uniform Requirements defines “Micro-purchase” at 2 C.F.R. § 200.67. The
Micro-purchase threshold is set by the FAR. The FAR currently sets the Micro-purchase threshold at $3,500, subject
to certain exceptions. 48 C.F.R. § 2.101.

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limits established under non-Federal entity procurement rules, purchase cards (or,
credit cards) may sometimes be used for these transactions. Non-Federal entities
should have documented procedures that include control limits, authorized users and
approving officials. Orders are placed against the BPA and the agreed-to-discount is
included on the resulting invoice. Normally, billings are made by the vendor on a
monthly basis. Caution should be taken to ensure discipline in assigning authority to
purchase, including through the use of purchase cards. Orders should be placed to
satisfy only legitimate requirements.
4. Imprest Fund (Petty Cash Fund). Paying cash for small dollar purchases is a viable way
to accommodate small dollar requirements. There is only one overriding prerequisite for
successful operation of the fund: Strict Dollar Accountability. Only designated personnel
should be given safe access and combination numbers. Any change in designated
personnel should require a change in the safe combination. Cash advances may be
made and reconciled with a paid invoice at the completion of the purchase.
Documented policy and procedures are needed including approving officials and
periodic audits of the fund.
Micro-purchases (defined at 2 C.F.R. § 200.67) may be awarded without soliciting competitive
quotations if the non-Federal entity considers the price to be reasonable. To the extent
practicable, micro-purchases should be distributed equitably among qualified suppliers.
When seeking to use either small purchase or micro-purchase methods, procuring agencies
must avoid the intentional “splitting” of purchases or transactions to circumvent the dollar
threshold limitations. Periodic internal review of buying patterns that focuses on repetitive
transactions would be a good approach to address this potential issue. A repetitive buying
pattern for a good or service without auditable evidence of a strong business case or
programmatic reason to support the awarding of multiple contracts under small- or micropurchase thresholds at frequent intervals may indicate that inappropriate purchase splitting has
occurred.

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Small Purchases Checklist
No.

Question

1.

Is the estimated cost of the requirement at or below the
established simplified acquisition threshold?

Yes

No

If the answer is “Yes,” a purchase order may be used.
2.

Are there available local vendors that may logistically satisfy
the requirement?
If the answer is “No,” consider additional lead-time required
to solicit vendors outside the local area.

3.

May the requirement be satisfied by an existing “Blanket”
purchase agreement?
If the answer is “Yes,” use the existing Blanket Purchase
Agreement.
If the answer is “No,” conduct a solicitation in accordance
with Non-Federal entity procedures.

4.

Has the requirement been “split” to be below the mandatory
purchase agreement monetary level? (Order splitting, an
unallowable practice, is reducing an order below the small
purchase threshold to avoid a more complex procurement
method.)
If the answer is “Yes,” another method must be used.

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Chapter 8
Competitive Sealed Bidding
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. 6
Competitive Sealed Bidding is the preferred method for procurement and is properly used
when the following conditions exist:
1. The requirement can be described and is finite and specific in detail, i.e., no unknowns
or no contingencies. The contract will be awarded to the
a. lowest (fixed price) (where specified in bidding documents certain factors such
as discounts, transportation costs, and life cycle costs must be considered in
determining which bid is lowest),
b. responsive (the bid meets all the requirements of the invitation for bids,
including design specifications), and
c. responsible bidder (the contractor has the capability in all respects, including
technical and financial).
2. There are two or more contractors that could satisfy the requirement and are willing
and able to compete for the contract.
3. There is enough time available to issue the invitation for bids, conduct a public bid
opening, and award a firm fixed-price contract to the lowest responsive and responsible
bidder.
If sealed bids are used, bids must be solicited to an adequate number of known suppliers,
providing them with a sufficient amount of time to respond. Under the sealed bidding method
of procurement, it is not necessary to conduct discussions with bidders in order to obtain the
greatest value for the procuring agency, as the award is to be made to the lowest responsive
and responsible bidder. For local and tribal governments, the invitation for bids must be
publically advertised.
However, if a procurement could be of the type that it may need to involve negotiation with
vendors or discussions in order for the procuring agency to obtain the best value based on the
requirement, it may be the case that competitive sealed bidding is not the right approach and
the competitive proposals procurement method should be used instead.

6

2 C.F.R. § 200.320(c).

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Competitive Sealed Bidding Checklist
No.

Question

1.

Is it possible to describe the requirement in exact terms (e.g.,
design specifications) so the contractor can make a fixed
price bid?

Yes

No

(Note: If a contractor must provide a deliverable for a fixed
price where “unknowns” are involved, contingency dollars
usually are included in the price. Then, if these contingencies
do not generate or occur, the material/service may be
overpriced.)
If the answer is “Yes,” an Invitation for Bid (IFB) may be
effectively used and the award can be made to the lowest
bidder that is responsive and responsible.
2.

Can it be expected that “advertising” will result in two or
more responses to the solicitation?
If the answer is “Yes,” consider use of an IFB.

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Chapter 9
Competitive Proposals (Negotiated Procurement)
Procurement by competitive proposals. 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. 7
Procedures involve the following:
1. Develop a Statement of Work (SOW) listing essential requirements to accomplish the
contract. For instance, in the case of a desired service, the SOW should spell out the
particular problem to be solved including any essential requirement, without needlessly
mandating the approach the contractor must take unless required by law. The SOW
should be written in a straightforward manner, and, as a minimum, should contain the
following:
a. Background providing necessary introductory information or evolution of the
requirement.
b. Objectives/scope of work detailing broad parameters that are essential to
effectively satisfy the requirement. (Note: Do not needlessly mandate how the
contractor should satisfy the objectives of the contract. Performance measures
must be used to ensure the quality of the outputs/outcomes.)
c. A list of tasks with accompanying deliverables, organized in a logical sequence.
d. A delivery schedule in increments as required to satisfy the requirement. The
schedule may include performance bonuses for early completion and penalties
for late delivery.
e. Acceptance and approval procedures should be indicated.
f. Other coverage as may be required:
i. References, licensing, and professional certifications.
ii. Non-Federal entity furnished items.
iii. Packing and shipping.
iv. Any other points that require coverage.
2. Develop the Request for Proposals (RFP) to identify all evaluation factors and their
relative importance.

7

2 C.F.R. § 200.320(d).

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3. The RFP normally will contain the following:
a. Letter of Transmittal (or local standard form) providing certain relevant details
concerning the requirement.
b. A delivery schedule to be included in the definitive contract, including all
necessary administrative details.
c. The SOW (see no. 1 on the previous page).
d. Required special and mandatory clauses (Reference: Contract Provisions,
Chapter 11).
e. Any special instructions to offerors to assist in developing the offer.
f. A listing of evaluation criteria to be used by the non-Federal entity in the
evaluation of the offers received. Percentage weights may be assessed each
criterion or the order of importance of each indicated criterion may be shown.
g. Any other information that may be required for the offerors to completely
understand the contents and intent of the Request for Proposals.
h. A due date and time frame for receipt of all proposals.
4. The RFP must be solicited to an adequate
number of qualified sources. Any timely
response to the RFP must be considered to
the maximum extent practicable.
5. Evaluation of the proposals received must
be accomplished in accordance with
written Non-Federal entity procedures.
Each proposal must be scored based upon
the evaluation criteria contained in the
RFP. Evaluation criteria must not be
changed after receipt of offers.

TIP: Clauses for bonuses for early
completion and penalties for late
delivery may be developed if they
are in the public interest. Clauses
may be added to the contract to
cover these points. Also a prior
approval key-personnel clause
may be needed for personal
services to ensure that qualified
individuals are employed.

6. Contracts must be awarded to the responsible firm whose proposal is the most
advantageous to the program, with price and any other evaluation criteria considered.
7. When a procurement involves conducting negotiations, negotiations must be conducted
with those offerors submitting the most promising proposals (those most highly rated in
terms of technical factors and other evaluation criteria) in accordance with the
determination of a procurement official (e.g., a contracting officer) designated by the
non-Federal entity for that purpose. Issues (unforeseen requirements) raised during the
negotiation phase by one respondent may be communicated to all remaining offerors,
so that all may respond to the issue during the best and final phase of the negotiations.

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Competitive Proposals Checklist
No.

Question

1.

Is it necessary to resolve technical questions/unknowns by
negotiations with the successful contractor?

Yes

No

If the answer is “Yes,” this requirement is a candidate for the
competitive proposal process.
2.

Is it necessary to develop a Statement of Work, instead of a
Design Specification spelling out specifically what is needed?
If the answer is “Yes,” competitive proposals should be used.

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Chapter 10
Procurement by Noncompetitive Proposals (Sole Source Contracting)
Procurement by noncompetitive proposals is procurement through the
solicitation of a proposal from only one source and may be used only under
specified circumstances. 8
As indicated in Chapter 5 (“Competition”), non-Federal entities must provide for full and open
competition, consistent with the procurement standards. However, there are certain
circumstances that may call for other than full and open competition. These circumstances may
result in “sole source” contracting.
The Part 200 Uniform Requirements is quite clear regarding the necessity to have full and open
competition to satisfy non-Federal entity procurement requirements. Procurement through
the solicitation of a proposal from only one source may be used only if one or more of the
following circumstances apply:
1. The item or service is available only from a single source (see page 23 for the format to
be submitted to DOJ awarding agency or pass-through entity for approval).
2. The public exigency or emergency for the requirement will not permit a delay resulting
from competitive solicitation.
3. The Federal awarding agency or passTIP: Prior written approval is
through entity expressly authorizes
required for all proposed sole
noncompetitive proposals in response to a
source contracts over the
written request from the non-Federal entity.
Simplified Acquisition Threshold
4. After solicitation of a number of sources,
(currently $150,000).
competition is determined inadequate.
In any event, documentation reflecting actions taken and the position of the non-Federal entity
is extremely important in order to establish an audit trail.
The following page contains a sample format for requesting prior approval from the DOJ
awarding agency or pass-through entity to contract sole source.

8

2 C.F.R. § 200.320(f).

Page | 22

Justification for Non-Competitive Procurement
Sample Format
Paragraph

Content

1

A brief description of the program and the
product or service being procured, to include the
expected procurement amount.

2

Explanation of why it is necessary to contract
non-competitively that provides a justification
based on at least one of the four circumstances
previously listed in this chapter (also see 2 C.F.R.
§ 200.320(f)). This explanation must demonstrate
how the proposed contractor’s unique
qualifications or the nature of the procurement
necessitate the use of a noncompetitive
approach given the circumstance(s) cited.
•

If the product or service to be procured is
available from only a single source or
from only one supplier with unique
capabilities, the justification should
clearly demonstrate why this is so and
how these circumstances are relevant
given the nature of the acquisition.

•

A justification based on public exigency or
emergency should explain the nature of
the public exigency or emergency,
including why procurement other than
through noncompetitive proposals would
cause unacceptable delay in addressing
the public exigency or emergency.
(Failure to plan does not justify
noncompetitive procurement based on
public exigency or emergency.)

•

If competition among multiple sources
was determined to be inadequate, the
justification should provide a detailed
summary of any prior solicitations
(including the number of sources
solicited) and explain why competition
was determined inadequate.
Page | 23

Paragraph

Content

3

A description of and the results of any market
survey or research conducted to help determine
whether a full and open competition consistent
with applicable law could be conducted (or, if no
market survey or research was conducted,
explain why not).

4

Statement of when contractual coverage is
required and, if dates are not met, what impact it
will have on the program (for example, how long
it would take another contractor to reach the
same level of competence). Make sure to include
the financial impact in dollars.

5

Description of and the results of any
organizational conflict of interest review
conducted (or, if no organizational conflict of
interest review was conducted, explain why
not.).

6

Any other points necessary for the justification.

7

Determination that the proposed
noncompetitive procurement action is in the
best interest of the DOJ awarding agency (or
pass-through entity, as applicable).

Page | 24

Chapter 11
Contract Provisions
The Part 200 Uniform Requirements require that non-Federal entities’ contracts contain the
applicable provisions described in Appendix II to Part 200 —“Contract Provisions for NonFederal Entity Contracts Under Federal Awards.” 9 Non-Federal entities may develop language
suited to accommodate a specific contractual situation, providing such clauses are consistent
with the procurement standards and other applicable law. Non-Federal entities should be
aware that they bear full responsibility for the settlement of all contractual and administrative
issues arising out of their procurements, and that the Federal awarding agency will not
substitute its judgment for that of the non-Federal entity unless the matter is primarily a
Federal concern. Violations of law will be referred to the proper authority in the applicable
jurisdiction.10 A discussion of a few of these provisions is set forth below:
1. Contracts in excess of the simplified acquisition threshold (currently set at $150,000)
must address administrative, contractual, or legal remedies in instances where the
contractors violate or breach contract terms, and provide for such sanctions and
penalties as appropriate.
Reference: Part 200 Appendix II(A).
2. Termination. Any contract over $10,000 must address termination for cause and
termination for convenience by the non-Federal entity, including the manner by which it
will be effected and the basis for settlement.
a. Termination for Convenience. Contract is terminated due to reasons known to
the non-Federal entity, i.e., program changes, changes in state-of-the-art
equipment or technology, insufficient funding, etc. This type of termination is
utilized when the contractor is not in violation of the contract terms and
conditions.
b. Termination for Cause. Contract is terminated due to actions by the contractor,
i.e., failure to perform, financial difficulty, slipped schedules, etc. In certain
instances, termination settlement may include reprocurement costs to be paid
by the contractor.
Termination settlements shall be accommodated by negotiations carefully planned in
order to achieve an equitable resolution.
Reference: Part 200 Appendix II(B).

9

2 C.F.R. § 200.326.
2 C.F.R. § 200.318(k).

10

Page | 25

3. Construction. Contracts awarded for construction (generally DOJ grants do not allow
construction) have special requirements and clauses. Refer to the DOJ Grants Financial
Guide in the procurement chapter for specifications. If you have a DOJ grant allowing
construction costs, please read the associated solicitation, award documents, and
special conditions carefully. Regular contact with your program manager is very
important. Construction contracts must include all relevant clauses found in Appendix II
to Part 200, including Part 200 Appendix II(C) (Equal Employment Opportunity), (D)
(Davis-Bacon Act), and (E) (Contract Work Hours and Safety Standards).
4. Rights to Inventions Made Under a Contract or Agreement. Any discovery or invention
that arises during the course of the contract shall be reported to the non-Federal entity.
This clause should require the contractor to disclose promptly inventions to the
contracting officer (within 2 months) after the inventor discloses it in writing to
contractor personnel responsible for patent matters. The awarding agency shall
determine how rights in the invention/discovery shall be allocated consistent with
"Government Patent Policy" and Title 37 C.F.R. § 401.
If the Federal award meets the definition of “funding agreement” under 37 C.F.R.
§.401.2(a) and the recipient or subrecipient wishes to enter into a contract with a small
business firm or nonprofit organization regarding the substitution of parties, assignment
or performance of experimental, developmental, or research work under that “funding
agreement,” the recipient or subrecipient must comply with the requirements of Title
37 C.F.R. § 401, “Rights to Inventions Made by Nonprofit Organizations and Small
Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and
any implementing regulations issued by the awarding agency.
Reference: Part 200 Appendix II(F)
DOJ award terms and conditions contained in grant or cooperative agreement award
documentation also may contain provisions regarding patents and intellectual property,
specifically including requirements or special instructions, that may require that nonFederal entities include specific contract provisions (as applicable) in procurement
contracts entered into under DOJ grant or cooperative agreement awards.
5. Debarment and Suspension. A contract award meeting the definition in 2 C.F.R. §
180.220 must not be made to parties listed on the System for Award Management
(SAM) Exclusion lists. The debarment and suspension certification requires that agencies
establish and implement procedures to ensure that Federal assistance is not awarded to
entities that are prohibited from receiving Federal funds. Those procedures should
include a review of information in SAM regarding exclusion status. (See OMB guidance
at 2 C.F.R. § 180 implementing Executive Orders 12549 (3 CFR part 1986 Comp., p. 189)
and 12689 (3 CFR part 1989 Comp., p. 235 and DOJ regulations at 2 CFR Part 2867
adopting and supplementing subparts A through I of 2 CFR Part 180), “Debarment and
Suspension.”).
Reference: Part 200 Appendix II(H)
Page | 26

6. Clean Air and Water. Contracts (and subrecipients) exceeding $150,000.00, must
contain a provision requiring the contractor (or subrecipients) to agree to comply with
all requirements of the Clean Air Act (42 U.S.C. 7401 et seq.), and the Clean Water Act
[Federal Water Pollution Control Act] as amended (33 U.S.C. 1251-1387). Violations
must be reported to the Federal Awarding Agency and the Regional Office of the
Environmental Protection Agency (EPA).
Reference: Part 200 Appendix II(G)
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). Contractors that apply or bid for an
award exceeding $100,000 must file the required certification. Each tier certifies to the
tier above that it will not and has not used Federal appropriated funds to pay any
person or organization for influencing or attempting to influence an officer or employee
of any agency, a member of Congress, officer or employee of Congress, or an employee
of a member of Congress in connection with obtaining any Federal contract, grant or
any other award covered by 31 U.S.C. 1352. Each tier must also disclose any lobbying
with non-Federal funds that takes place in connection with obtaining any Federal award.
Such disclosures are forwarded from tier to tier up to the non-Federal award.
Reference: Part 200 Appendix II(I)
8. Procurement of recovered materials. A non-Federal entity that is a state agency or
agency of a political subdivision of a state must include a provision requiring contractors
to comply with section 6002 of the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act. Per Section 6002, where the purchase price of
the item exceeds $10,000 or the value of the quantity acquired during the preceding
fiscal year exceeded $10,000, these non-Federal entities and their contractors must
procure only items, designated in guidelines of the EPA at 40 C.F.R. § 247, containing the
highest percentage of recovered materials practicable, consistent with maintaining a
satisfactory level of competition. These non-Federal entities and their contractors must
procure solid waste management services so that energy and resource recovery are
maximized, and they must establish an affirmative procurement program for
procurement of recovered materials identified in the EPA guidelines.
Reference: Part 200 Appendix II(J), 2 C.F.R. § 200.322.

Page | 27

Chapter 12
Contract Type Selection
The following is a list of various contract types. Contract Type can refer both to
the overall structure of a contract (e.g. task or delivery order) and the pricing
structure of a contract (fixed price vs. cost reimbursement). Determining which
contract type to use is important to ensure cost-effectiveness and performance.
Pricing Structure:
The non-Federal entity must perform a cost or price analysis in connection with
every procurement action (including modifications) in excess of the Simplified
Acquisition Threshold. The exact method and degree of analysis will vary
depending on the exact circumstances and facts of a particular procurement
situation, but the non-Federal entity must, as a starting point, make independent
estimates before receiving bids or proposals. 11
1. Fixed Price. All contracts awarded under a competitive sealed bidding result in some
type of "fixed price" arrangement, normally a firm fixed price. Fixed price contracts may
also be awarded under other contracting methods such as negotiation/competitive
proposals, for instance, where the use of sealed bidding would be inappropriate
because discussions with the contractor are deemed necessary. Fixed price contracts
have the advantage that the risk rests with the contractor. Firm fixed price contracts
may be appropriate when:
a. It is possible to describe exactly what is needed to satisfy the requirement;
b. Across the table discussions are determined not necessary, and
c. It is determined that there is adequate competition available.
Other types of fixed price contracts include:
•
•

Fixed price with fixed price with economic price adjustment, and
Fixed price incentive.
TIP: Recipients must closely monitor
2. Cost Reimbursement. Under cost
cost reimbursement contracts to
reimbursement contracts, contractors are
avoid unneeded cost over-runs.
paid both the allowable incurred cost (i.e.,
allowable actual expenses) and a
predetermined fee or profit. Contractors should be reimbursed for their actual
expenditures (no accruals may be reimbursed) no more often than bi-weekly. Normally,
contractors are reimbursed in monthly increments. Some procuring organizations
11

2 C.F.R. § 200.323.

Page | 28

permit withholding of a small percentage of each reimbursement request to ensure final
delivery and contract close-out. Inasmuch as contractors are incrementally reimbursed
as the contract progresses, the risk to the contractor is minimized.
The most common type of cost reimbursement contract is the cost plus fixed fee (CPFF).
In this type of contract the fee (on fixed price contracts it is defined as profit) is
negotiated front-end and does not change. On cost reimbursement contracts, a ceiling is
placed on the estimated cost. Even though additional dollars may be added under
certain conditions, the fee does not change as long as the contract remains in-scope.
Any contractual situation that automatically increases the fee when additional dollars
are added is known as "cost plus percentage of cost" and is prohibited.12 Other types of
cost reimbursement contracts are:
•
•
•
•

Cost contracts.
Cost sharing contracts.
Cost plus incentive fee contracts.
Time and materials contracts. These contracts are those where the cost to the
non-Federal entity is the sum of the actual cost of the materials plus the direct
labor hours charged at fixed
hourly rates, reflecting wages,
TIP: Time and materials contracts may
general and administrative
be used when the non-Federal entity
expenses, and profit. Labor
makes a determination that no other
Hour contracts are identical to
type of contract is suitable and the
time and materials contracts
contract includes a ceiling price that
except that no materials are
the contractor exceeds at its own risk.
involved. These contracts may
be used only after a
determination that no other contract type is suitable, and only if the contract
includes a ceiling price that the contractor exceeds at its own risk. 13

Overall Structure:
1. Task and delivery order contracts are used when exact time of delivery or the exact
amount needed is unknown. Indefinite delivery contracts may be “indefinite
delivery/indefinite quantity” (ID/IQ) or “indefinite delivery/definite quanity” (ID/DQ). If
the exact amount needed is not known, the contract may include a guaranteed
minimum in the case of an ID/IQ or a promise not to order from others in the case of a
requirements contract.
2. Letter contracts are used when exigency requires an immediate binding agreement so
work can begin, but time does not permit negotiation of a definitive contract. When the

12
13

2 C.F.R. § 200.323(d).
2 C.F.R. § 200.318(j).

Page | 29

definitive contract is awarded, the letter contract is superseded and letter contract
dollars expended will be incorporated in the definitive contract. These contracts should
be used with care and only when truly necessary.
3. State, tribal, or local contractor lists. When pre-approved competition has already
occurred, it may allow for an entity to piggy-back off the existing contract as long as it is
consistent with State, tribal, or local laws and procedures.
The above-listed contracts are summarized on the chart located on pages 32 — 34 of this guide.

Page | 30

Contract Type Checklist
No.

Question

1.

Can the deliverables be specifically identified and the quality
measurable?

Yes

No

If the answer is “Yes,” then a fixed price contract may be
properly utilized, either by using competitive sealed bidding
procedures, or, if discussions are necessary, negotiated
procurement (i.e., competitive proposals) procedures.
2.

Should the contractor logically be able to assume the “risk”
for contract performance?
If the answer is “Yes,” a fixed price contract is appropriate.

3.

Is the contractor’s accounting system capable of segregating
costs so proper charges may be made to the non-Federal
entity contract for invoicing purposes?
If the answer is “No,” another type of contract other than
cost reimbursement must be used.

4.

Realizing that cost reimbursement contracts require more
contract administration responsibilities, is the non-Federal
entity prepared to accept this responsibility?
If the answer is “No,” steps must be taken to correctly
determine whether another type of contract may be
appropriate prior to the award of any cost-reimbursementtype contract vehicle.

5.

Time and Materials, indefinite quantity, and requirements
contracts require that orders against the contract be
negotiated and placed before the contractor begins work.
Will the non-Federal entity be in a position to describe
individual tasks to be accomplished as they generate?
If the answer is “No,” consideration should be given to other
contractual types.

6.

Concerning “Letter Contracts,” are monetary limits along
with a target date for definitization shown on the document?
If the answer is “No,” the letter contract should be changed
to accommodate these two points.
Page | 31

Guide to Selection of Contract Types
The following is a non-exhaustive list of examples of some of the contracts types that are allowed for federal procurement under the
FAR. Non-Federal entities may find it useful to consider these in determining the procurement approach that may be appropriate for
a particular requirement.
Type

Applicability
Fair and reasonable prices can be
established at inception. For example:
•

Firm-Fixed Price

Fixed-Price with
Escalation

Fixed-Price Incentive

•
•
•

Reasonably definite design or
performance specifications;
Realistic estimates;
Adequate competition, and
Valid cost or operating data that
provides reasonable price comparisons.

Market or labor conditions unstable over
extended production period.

Essential Elements
Initial fixed-price places 100%
responsibility and risk on the
contractor.

Non-Federal entity and contractor must
agree on fixed-price at inception.

Ceiling on upward adjustment;
downward adjustment appropriate
where elements escalated may fall
below base levels provided in contract.

Contingencies are industry-wide and
beyond contractor control; contingencies
must be specifically defined in the
contract.

Where cost uncertainties exist and there is
the possibility of cost reduction and/or
performance improvements by giving
contractor (i) a degree of cost responsibility
and (ii) a positive profit incentive.
Firm Target Type: Firm target and final profit
adjustment formula can be negotiated
initially.

Limitations

Adequate Contractor accounting system
required. Must determine that any other
contract type is impractical. Used for
development and production
procurements.
Firm Target: Target cost; target profit;
price ceiling; and profit adjustment
formula.

Page | 32

Guide to Selection of Contract Types
Type

Applicability

Essential Elements

Limitations

Cost-Plus Incentive
Fee (CPIF)

Uncertainties in Performance or
requirements -- Impossible or impractical to
estimate costs firmly or circumstances do
not allow for the contract requirements to
be defined sufficiently for a fixed price
contract.

Uncertainties in Performance or
requirements—Impossible or
impractical to estimate costs firmly or
circumstances do not allow for the
contract requirements to be defined
sufficiently for a fixed price contract.

Adequate Contractor accounting system
required. Non-Federal entities must
closely monitor cost reimbursement
contracts to avoid unneeded cost overruns.

Development and test when incentive
formula can provide positive incentive for
effective management. Where feasible, use
performance incentives together with cost
and schedule incentives.
Uncertainties in Performance or
requirements -- Impossible or impractical to
estimate costs firmly. or circumstances do
not allow for the contract requirements to
be defined sufficiently for a fixed price
contract

Uncertainties in Performance or
requirements -- Impossible or
impractical to estimate costs firmly. or
circumstances do not allow for the
contract requirements to be defined
sufficiently for a fixed price contract

Adequate Contractor accounting system
required. Non-Federal entities must
closely monitor cost reimbursement
contracts to avoid unneeded cost overruns.

Term Form: Research preliminary
exploration, or study when level of effort is
initially unknown (or development and test
when a CPIF is impractical).

-- Impossible to estimate costs firmly.
Negotiated estimate of costs; fee fixed
initially except for changes in the work
or services required.

Cost-Plus-Fixed-Fee

Time and Materials
(Labor-Hours)

Completion Form: Research or other
development effort when the task or job can
be clearly defined, a definite goal or target
expressed, and a specific end product
required.
Not possible initially to estimate extent or
duration of work (L-H used where materials
not involved), e.g., engineering or design
services, repair, maintenance, or overhaul.

Direct labor hours specified at fixed
hourly rates; direct materials at "cost."
Ceiling price shall be established.

Determination that no other type of
contract is suitable. Non-Federal entities
must closely monitor cost
reimbursement contracts to avoid
unneeded cost over-runs.

Page | 33

Guide to Selection of Contract Types
Type

Applicability

Essential Elements
Maximum government liability, type of
definitive contract, as many definitive
contract provisions as possible.

No other contract type suitable.

Letter Contract

Exigency requires immediate binding
agreement so work can begin, but time does
not permit negotiation of a definitive
contract.

State, Tribal, or Local
Contractor Lists

Where adequate competition has occurred
and the product or service offered meets the
needs of the project.

Follow local/tribal/state regulations.

Ensure that state, tribal, or local
geographic presences have not been
used in the procurement evaluation.

Exact time of delivery unknown.
Definite Quantity: Quantity known, delivery
period can be specified; supplies available or
have a short lead time.
Task and Delivery
Orders

Requirements: Preciseness of designated
activities during a definite period not known
initially.
Indefinite Quantity: Impossible to know
precise quantities needed by designated
activities during a definite period and
government cannot commit itself beyond a
minimum.

Definite Quantity: Provision for delivery
to designated points or upon order.

Limitations

Firm fixed-price, fixed-price with
escalation, or fixed-price with
redetermination only.

Requirements: Estimated total
quantity; maximum and minimum total
quantity where feasible; maximum and
minimum order where appropriate.
Indefinite Quantity: Stated maximum
and minimum total quantity; maximum
and minimum order where applicable.

Page | 34

Chapter 13
Code of Conduct
The non-Federal entity must maintain written standards of conduct covering
conflict of interest and governing the actions of its employees engaged in the
selection, award, and administration of contracts. The standards of conduct must
provide for disciplinary actions to be applied for violations by officers, employees,
or agents of the non-Federal entity. 14
No employee, officer, or agent of the non-Federal entity shall participate in selection, award, or
administration of a contract supported by Federal funds if a conflict of interest, real or
apparent, would be involved (DOJ strictly applies this standard). Such a conflict would arise
when:
•
•
•
•

The employee, officer or agent, or
Any member of his/her immediate family, or
His or her partner, or
Any organization which employs, or is about to employ, has a financial or other interest
in or receives or stands to receive a tangible personal benefit from a firm being
considered for a contract.

Non-Federal entity personnel involved in the procurement process must be ever alert for
situations that may create a real, or even apparent, conflict of interest. Common sense and
adherence to standards and codes of conduct will go a long way toward eliminating potential
problems.
Non-Federal entity personnel should additionally:
•
•

•
•

14

Be familiar with any code of ethics guidance published by or available to their
organization.
Neither solicit nor accept gifts, favors, gratuities, or anything of monetary value from
contractors or parties to subcontracts. In this connection, non-Federal entities may set
standards to address situations where the financial interest is not substantial or the gift
is an unsolicited item of nominal intrinsic value.
Avoid, at all times, even the appearance of a conflict of interest.
Ensure that proposal evaluators (price and technical) or members of their immediate
families do not own stock or have other financial interest in the companies being
evaluated.

2 C.F.R. § 200.318(c).

Page | 35

•

Refer any problem that arises concerning conflict of interest to upper management and
legal counsel, as appropriate.

Organizational Conflict of Interest: 15
Organizational conflicts of interest are conflicts of interests that arise where the non-Federal
entity is or appears to be unable to conduct an impartial procurement action due to
relationships with a parent company, affiliate, or subsidiary organization. Where a non-Federal
entity has a parent, affiliate or subsidiary organization that is not a state, local, or tribal
government, the non-Federal entity’s written standards of conduct must also cover
organizational conflicts of interest.

15

2 C.F.R. § 200.318(c)(2).

Page | 36

Code of Conduct Checklist
No.

Question

1.

Is there any indication that there is any inappropriate action
on the part of either the non-Federal entity or the contractor
from either an individual or organizational conflict of interest
standpoint?

Yes

No

If the answer is “Yes,” the non-Federal entity’s top
management, in concert with legal counsel, should
determine the severity of the problem and enforce sanctions
and notify proper authorities.
2.

Is there any indication the SOW might be restrictive?
If the answer is “Yes,” the SOW must be corrected and the
RFP amended or canceled, as appropriate.

3.

Have there been any protests or hints of improprieties from
any outside sources?
If the answer is “Yes,” the validity must be determined and
action taken accordingly.

4.

Has there been an appearance of conflicts of interest relating
to the proposed contractual action?
If the answer is “Yes,” a thorough investigation should be
conducted and any required corrective action taken.

5.

Have cost and technical evaluation committee members
evaluating proposals under competitive negotiation
procedures signed a statement confirming the fact that they
or members of their immediate family do not own stock in
the companies being evaluated?
If the answer is “No,” a signed statement should be obtained
from each evaluator.

6.

Has “brand name or equal” been used excessively in similar
solicitations that might be interpreted as leading to a conflict
of interest situation?
If the answer is “Yes,” the work specification, if possible,
should be expanded in order to achieve more competition.

Page | 37

Chapter 14
Price and Cost Analysis
The non-Federal entity must perform a cost or price analysis in connection with
every procurement action in excess of the Simplified Acquisition Threshold
including contract modifications. 16
Price Analysis involves a comparison of the bottom line price quoted by the offeror with prices
paid on other contracts for the same or similar materials or services; a review of trade publications for comparability; a comparison of prices quoted by other respondents to the solicitation
(does not apply to sole source contracts); and any other comparison available to the nonFederal entity. The purpose of price analysis is to determine that the price quoted is within
range of acceptability to the non-Federal entity.
Cost Analysis involves an analysis of the individual elements of cost (as requested by the
solicitation) as stated in the contractor's cost proposal. Examples of individual elements of cost
include direct labor, fringe benefits, overhead (indirect costs), materials, travel, subcontracts,
etc. Questionable individual elements of cost become negotiation targets for the non-Federal
entity during the subsequent negotiation with the contractor.
Price and Cost Analysis are required for all proposals submitted by offerors for evaluation and
negotiation by the non-Federal entity. Non-Federal entities should make independent
estimates before receiving bids or proposals. Contents of the cost proposal should be in
consonance with the contractor's accounting system which must be operationally capable of
segregating costs by contract. Offerors should certify that individual elements of cost are true,
correct and verifiable from the contractor's accounting system.
Non-Federal entities should compare graphically each contractor's cost proposal using
spreadsheets. However, keep in mind that accounting systems differ between contractors and
exact dollar comparison between individual cost elements may not constitute a valid
comparison. For example, one contractor may charge a certain expense item to overhead
(indirect costs), whereas another contractor may charge an identical expense item as a "direct"
charge to the contract.
Price Analysis and Cost Analysis are normally used in concert with each other. Each should
support the other.
From an operational standpoint, this important facet of an effective negotiation plan cannot be
overlooked or minimized.

16

2 C.F.R. § 200.323.

Page | 38

Price and Cost Analysis Checklist
No.

Question

1.

Is the total price determined to be fair and reasonable? Does
it compare favorably with the sum total of the individual
elements of cost that have been analyzed?

Yes

No

If the answer is “No,” (with a limited tolerance allowed),
then further effort is required to make these two figures
more compatible.
2.

Was the overhead (indirect cost) rate used in the
contractor’s proposal determined by audit?
If the answer is “Yes,” determine when audit was completed
and whether the overhead (indirect cost) rate can be
categorized as current.
If the answer is “No,” determine on what basis the overhead
(indirect cost) rate was calculated and then validate
acceptability.

3.

Was a spreadsheet used to show graphically a comparison of
the elements of cost?
Even though a spreadsheet is not mandatory, its use is highly
recommended.

4.

Were individual results from cost analysis used to determine
negotiation cost targets?
Remember the proposal is the contractor’s. Justification is
required for any element of cost questioned by the nonFederal entities.

5.

If possible, non-Federal entities should adhere to maximum
Federal fee limitations under cost reimbursement
arrangements, i.e., 10% on estimated cost, 15% of the
estimated cost on Research and Development, and 6% of the
estimated cost of Construction or Architectural Engineering.
Does the negotiated fee fall within these stated limitations?
If the answer is “No,” consider alternatives with upper
echelon non-Federal entity management.

Page | 39

Chapter 15
Protests
Non-Federal entities alone will be responsible, in accordance with good
administrative practice and sound business judgment, for the settlement of all
contractual and administrative issues arising out of procurements. 17
Any contractor or aggrieved party has the right to protest actions before or after the award of
the contract. In accordance with good administrative practice and sound business judgment,
non-Federal entities shall be responsible for the settlement of all contractual responsibilities
arising out of contract solicitations and awards. Issues that might initiate a protest include:
1.
2.
3.
4.
5.

Source evaluation activity
Protests
Disputes (differences of opinion)
Claims
Any other pertinent issues.

As a best practice, protests should be in writing to the non-Federal entity. Non-Federal entities
should follow local procedures for resolution in order that effective due process may be
achieved. These standards do not relieve the non-Federal entity of any contractual
responsibilities under its contracts.
In summary, the non-Federal entity is responsible for handling and resolving all contractual
activity protests. Ordinarily, except in matters of direct federal concern, a Federal awarding
agency will not substitute its judgment for that of the non-Federal entity. However, this should
not be construed that Federal advice should not be sought when considered appropriate by the
non-Federal entity.

17

2 C.F.R. § 200.318(k).

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Protests Checklist
No.

Question

1.

Has the aggrieved party submitted his protest in writing?

Yes

No

If the answer is “No,” consider recommending that the
protest be submitted in writing if the magnitude is great
enough to have serious operational impact.
2.

Has non-Federal entity’s top management been alerted to
the seriousness of the protest and has legal counsel been
sought?”
If the answer is “No,” top management and legal counsel
should be advised.

3.

Has the non-Federal entity exerted ample effort toward
resolution of the protest before seeking help from awarding
Federal agency?
If the answer is “No,” the non-Federal entity should exert
ample effort toward resolution before seeking help from
awarding Federal agency.

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Chapter 16
Contracting with Small and Minority Firms, Women’s Business
Enterprises, and Labor Surplus Area Firms
The non-Federal entity must take all necessary affirmative steps to ensure that
small and minority businesses, women’s business enterprises, and labor surplus
area firms are used when possible. 18
Small Business Firms:

Designated by the Small Business Administration.

Minority Business Firms:

51 percent Minority Owned/Operated.

Women’s Business Enterprises: Small business that is at least 51 percent owned by a woman
or women.
Labor Surplus Area Firms:

Firms geographically located in distressed labor surplus areas
designated by the Secretary of Labor.

Non-Federal entities shall ensure the following affirmative steps:
1. Placement of small and minority businesses and women's business enterprises on
solicitation lists;
2. Assuring that small and minority businesses and women’s business enterprises are
solicited whenever they are potential sources;
3. Allocating requirements into smaller amounts, when feasible, to permit maximum
participation by small and minority businesses, and women's business enterprises;
4. Establishing delivery requirements, when feasible, which encourage participation by
small and minority businesses, and women's business enterprises;
5. Using the services of such organizations as the Small Business Administration and the
Minority Business Development Agency of the Department of Commerce, and
6. When the non-Federal entity’s contractor(s) (for these purposes, the “prime”
contractor(s)) may award a subcontract(s), requiring the “prime” contractor(s) to take
these steps (1-5) for its subcontract(s).
Notwithstanding the fact that no contracting goals are established, the non-Federal entity is
expected to provide statistics on contract awards to DOJ upon request.

18

2 C.F.R. § 200.321.

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Contracts with Small and Minority Firms, Women’s Business Enterprises,
and Labor Surplus Area Firms Checklist
No.

Question

1.

Are statistics readily available concerning contract awards to
these firms?

Yes

No

If the answer is “No,” develop a simplified reporting system.

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Chapter 17
Contract Administration
Non-Federal entities will maintain a contract administration system which ensures
that contractors perform in accordance with the terms, conditions, and
specifications of their contracts or purchase orders. 19
Contract administration refers to post award actions by the non-Federal entity to ensure that
the terms and conditions of the contract are met. It takes continual vigilance on the part of the
non-Federal entity to ensure that contract deliverables are met to accommodate mandated
project requirements. A non-Federal entity will follow the same procedures for procuring
property and services under a grant as it uses for its non-Federal funds. Other non-Federal
entities should follow procedures outlined in this guideline.
1. Delegations. Non-Federal entity management shall delegate administration
responsibility to designated personnel selected for their technical and administrative
capability to administer the contract effectively. Any disagreement between technical
and administrative personnel shall be referred to top level non-Federal entity
management for resolution.
2. Inspection and Acceptance. Contractor deliverables shall be inspected before official
acceptance by the non-Federal entity to ensure that contract requirements are met.
Acceptance shall be made officially only after the non-Federal entity determines that
contract terms and conditions have been met.
3. Progress Reports. Under cost reimbursement contracts, progress/status reports are
required normally by the SOW. These reports shall be reviewed by the non-Federal
entity to determine if contract delivery milestones are being met, and, if they are not,
the seriousness of the delinquency should be analyzed and, if appropriate, corrective
action taken.
4. Invoice Processing. Under cost reimbursement contracts, reimbursement invoices are
submitted normally by the contractor on a monthly basis. However, in the case of a
small or disadvantaged contractor, invoices may be submitted every two weeks. There
must be a correlation between dollars paid incrementally to the contractor and contract
progress in consonance with an acceptable tolerance level that is established. Invoices
should be processed as expeditiously as possible with dollar hold-backs (to be paid after
completion/final acceptance) considered in determining the net amount of the
incremental dollar reimbursement.

19

2 C.F.R. 200.318(b).

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5. Consent to Subcontract. Non-Federal entities shall establish procedures to review and
give prior consent for subcontracts awarded by a prime contractor(s). Monetary consent
levels may be established at the discretion of the non-Federal entity.
6. Non-Federal entity Contract Close-out. Non-Federal entity contract close-out is an
important function of contract administration and may be characterized logically as the
last of the many functions related to contract administration.

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Contract Administration Checklist
No.

Question

Yes

No

Delegations
1.

Have delegations been made in writing to include all
operational and administrative aspects of contract post
award activity?
If the answer is “No,” action should be taken to have proper
delegations made in writing.
Inspection and Acceptance

2.

For materials and hardware, do invoices submitted by the
contractor include evidence of acceptance by the nonFederal entity?
If the answer is “No,” the invoice shall not be paid until
evidence of acceptance is indicated.

3.

On cost reimbursement contracts, before acceptance by the
non-Federal entity, has contract dollar reimbursement been
reconciled with available contract specified funding?
If the answer is “No,” procedures shall be developed to
verify funding availability before acceptance is made.
Progress Reports (cost reimbursement contracts)

4.

Are progress reports reviewed to validate correctness and to
determine if contract delivery schedules/milestones are
being met?
If the answer is “No,” progress related to milestones should
be analyzed to determine contract status. If the contractor is
in violation of the contract requiring progress reports, action
should be taken to enforce the contract terms and
conditions.

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No.

Question

Yes

No

Inspection and Acceptance
5.

Are invoices submitted by the contractor for materials and
equipment analyzed by the non-Federal entity before
authorizing payment?
If the answer is “No,” procedures shall be developed to
analyze all invoices submitted to ensure availability.

6.

Under cost reimbursable contracts, are the dollars requested
by the contractor compatible with progress indicated on
status reports?
If the answer is “No,” percent of contract completion
indicated on progress reports should be compatible with
total funds requested for reimbursement.

7.

Is availability of funds determined before approval of the
invoice authorizing payment?
If the answer is “No,” funds availability must be determined
before authorizing the invoice for payment.
Non-Federal Entity Contract Close-Out

8.

Have all contract funds been reconciled? Have any remaining
funds been de-obligated? Have all invoices been paid?

9.

Has any property furnished or purchased by the non-Federal
entity been returned or accounted for in accordance with
existing procedures?

10.

Has the non-Federal entity received a certification from the
contractor that all bills relating to the contract have been
paid?

11.

Have all contract deliverables been inspected and accepted
by the non-Federal entity?

12.

Have any law suits/legal actions relating to contract activity
been settled?

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No.

Question

13.

On cost reimbursement contracts, is the non-Federal entity
satisfied that all claimed costs are allowable costs relating to
contract activity?

14.

Has a bi-lateral amendment been executed reflecting
contract close-out?

Yes

No

Contract close-out is not complete if any of questions 8 to 14
reflect a “No” response.

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Chapter 18
Other Considerations
1. Lease vs. Purchase
Where appropriate, an analysis will be made of lease versus purchase
alternatives, and any other appropriate analysis to determine the most
economical approach. 20
Before entering into a leasing arrangement for equipment or purchasing equipment, a leasepurchase analysis should be performed by the non-Federal entity to determine economic
feasibility. This analysis should reflect a comparison of forecasted costs for both an outright
purchase and a leasing arrangement. If determination is made to enter into a lease/purchase,
non-Federal entities shall ensure that a certain part of the lease cost (dollars) will apply toward
the purchase price of the equipment (indicated in the lease). In addition, non-Federal entities
shall ensure that at a predetermined time, the equipment under lease is either:
•
•

Purchased under the terms of the lease, or
Returned to the lessor and action is taken to cancel the lease.

2. Documentation
Non-Federal entities will maintain records sufficient to detail the significant
history of a procurement. These records will include, but are necessarily limited
to the following: rationale for the method of procurement, selection of contract
type, contractor selection or rejection, and the basis for the contract price. 21
It is extremely important that non-Federal entities document contractual actions in order to
formulate and maintain an audit trail. The official contract file should reflect in detail all of the
steps in the procurement process and serves as the official accountability document.
3. Other Resources 22
Non-Federal entities are encouraged to use other resources such as donated property
and Federal excess and surplus property in lieu of purchasing new equipment and
property whenever such use is feasible and reduces project costs.

20

2 C.F.R. § 200.318(d).
2 C.F.R. § 200.318(i).
22
2 C.F.R. § 200.318(f).
21

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4. Use of Value Engineering 23
Non-Federal entities are encouraged to use value engineering clauses in contracts for
construction projects of sufficient size to offer reasonable opportunities for cost reductions.
Value engineering is a systematic and creative analysis of each contract item or task to ensure
that its essential function is provided at the overall lower cost.

23

2 C.F.R. § 200.318(g).

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Chapter 19
Contracting Concepts Summary
The following lists show 1) practices to employ to have a successful procurement program, and
2) those practices to avoid that may result in unsatisfactory contracts being awarded by the recipient agency.
1. Contracting Practices to Employ
a.
b.
c.
d.
e.

Ensure adequate competition.
Prepare Invitation for Bid (IFB)/Request for Proposal (RFP).
Maintain bidders list(s).
Conduct interviews (for RFP).
Obtain prior approval (where required).

2. Contracting Practices to Avoid
a.
b.
c.
d.
e.
f.

Place unreasonable requirements.
Require unnecessary experience.
Engage in noncompetitive pricing.
Engage in organizational conflicts-of-interest.
Engage in wasteful or needlessly duplicative spending.
Require unreasonable timeframes.

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