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grantee's or subgrantee's officers, em ployees or agents will neither solicit nor accept gratuities, favors or any thing of monetary value from contractors, potential contractors, or parties to subagreements. Grantee and subgrantees may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. To the extent permitted by State or local law or regulations, such standards or conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the grantee's and subgrantee's officers, employees, or agents, or by contractors or their agents. The awarding agency may in regulation provide additional prohibitions relative to real, apparent, or potential conflicts of interest.
(4) Grantee and subgrantee procedures will provide for a review of proposed procurements to avoid purchase of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.
(5) To foster greater economy and efficiency, grantees and subgrantees are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services.
(6) Grantees and subgrantees are encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs.
(7) Grantees and subgrantees 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 anaylsis of each contract item or task to ensure that its essential function is provided at the overall lower cost.
(8) Grantees and subgrantees will make awards only to responsible contractors possessing the ability to perform successfully under the terms and
conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
(9) Grantees and subgrantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not 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.
(10) Grantees and subgrantees will use time and material tūpe contra only
(i) After a determination that no other contract is suitable, and
(ii) If the contract includes a ceiling price that the contractor exceeds at its own risk.
(11) Grantees and subgrantees 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. These issues include, but are not limited to source evaluation, protests, disputes, and claims. These standards do not relieve the grantee or subgrantee of any contractual responsibilities under its contracts. Federal agencies will not substitute their judgment for that of the grantee or subgrantee unless the matter is primarily a Federal concern. Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction.
(12) Grantees and subgrantees will have protest procedures to handle and resolve disputes relating to their procurements and shall in all instances disclose information regarding the protest to the awarding agency. A protestor must exhaust all administrative remedies with the grantee and subgrantee before pursuing a protest with the Federal agency. Reviews of protests by the Federal agency will be limited to:
(i) Violations of Federal law or regulations and the standards of this section (violations of State or local law will be under the jurisdiction of State or local authorities) and
(ii) Violations of the grantee's or sub- restrict competition. The description grantee's protest procedures for failure may include a statement of the qualito review a complaint or protest. Pro tative nature of the material, product tests received by the Federal agency or service to be procured, and when other than those specified above will be necessary, shall set forth those minreferred to the grantee or subgrantee. imum essential characteristics and
(c) Competition. (1) All procurement standards to which it must conform if transactions will be conducted in a
it is to satisfy its intended use. Demanner providing full and open com
tailed product specifications should be petition consistent with the standards
avoided if at all possible. When it is of $ 600.236. Some of the situations con
impractical or uneconomical to make a sidered to be restrictive of competition
clear and accurate description of the include but are not limited to:
technical requirements, a "brand name (i) Placing unreasonable require
or equal" description may be used as a ments on firms in order for them to
means to define the performance or qualify to do business,
other salient requirements of a pro(ii) Requiring unnecessary experience
curement. The specific features of the and excessive bonding,
named brand which must be met by (iii) Noncompetitive pricing practices between firms or between affiliated
offerors shall be clearly stated; and companies,
(ii) Identify all requirements which (iv) Noncompetitive awards to con
the offerors must fulfill and all other sultants that are on retainer contracts,
factors to be used in evaluating bids or (v) Organizational conflicts of inter
(4) Grantees and subgrantees will en(vi) Specifying only a “brand name”. sure that all prequalified lists of perproduct instead of allowing “an equal”. sons, firms, or products which are used product to be offered and describing in acquiring goods and services are curthe performance of other relevant re rent and include enough qualified quirements of the procurement, and sources to ensure maximum open and
(vii) Any arbitrary action in the pro free competition. Also, grantees and curement process.
subgrantees will not preclude potential (2) Grantees and subgrantees will bidders from qualifying during the soconduct procurements in a manner licitation period. that prohibits the use of statutorily or (d) Methods of procurement to be foladministratively imposed in-State or
lowed. (1) Procurement by small purlocal geographical preferences in the
chase procedures. Small purchase proceevaluation of bids or proposals, except
dures are those relatively simple and in those cases where applicable Federal
informal procurement methods for sestatutes expressly mandate or encour
curing services, supplies, or other propage geographic preference. Nothing in
erty that do not cost more than the this section preempts State licensing laws. When contracting for architec
simplified acquisition threshold fixed
at 41 U.S.C. 403(11) (currently set at tural and engineering (A/E) services, geographic location may be a selection
$100,000). If small purchase procedures criteria provided its application leaves
are used, price or rate quotations shall an appropriate number of qualified
be obtained from an adequate number firms, given the nature and size of the
of qualified sources. project, to compete for the contract.
(2) Procurement by sealed bids (for(3) Grantees will have written selec mal advertising). Bids are publicly sotion procedures for procurement trans
licited and a firm-fixed-price contract actions. These procedures will ensure (lump sum or unit price) is awarded to that all solicitations:
the responsible bidder whose bid, con(i) Incorporate a clear and accurate forming with all the material terms description of the technical require and conditions of the invitation for ments for the material, product, or bids, is the lowest in price. The sealed service to be procured. Such descrip bid method is the preferred method for tion shall not, in competitive procure procuring construction, if the condiments, contain features which undulytions in $ 600.236(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.
(3) 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 costreimbursement 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:
(1) 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 subgrantees 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 subgrantees 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.
(4) 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.
(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 subgrantees may be required to submit the proposed procurement to the awarding agency for
pre-award review in accordance with unless price resonableness can be esparagraph (g) of this section.
tablished on the basis of a catalog or (e) Contracting with small and minority market price of a commercial product firms, women's business enterprise and sold in substantial quantities to the labor surplus area firms. (1) The grantee general public or based on prices set by and subgrantee will take all necessary law or regulation. A price analysis will affirmative steps to assure that minor- be used in all other instances to deterity firms, women's business enter- mine the reasonableness of the pro. prises, and labor surplus area firms are posed contract price. used when possible.
(2) Grantees and subgrantees will ne (2) Affirmative steps shall include: gotiate profit as a separate element o
(i) Placing qualified small and minor the price for each contract in which ity businesses and women's business there is no price competition and in al enterprises on solicitation lists;
cases where cost analysis is performed (ii) Assuring that small and minority To establish a fair and reasonable prof businesses, and women's business en it, consideration will be given to the terprises are solicited whenever they complexity of the work to be per are potential sources;
formed, the risk borne by the con (iii) Dividing total requirements, tractor, the contractor's investment when economically feasible, into small the amount of subcontracting, th er tasks or quantities to permit max quality of its record of past perform imum participation by small and mi ance, and industry profit rates in th nority business, and women's business surrounding geographical area fo enterprises;
similar work. (iv) Establishing delivery schedules, (3) Costs or prices based on estimate where the requirement permits, which costs for contracts under grants will b encourage participation by small and allowable only to the extent that cost minority business, and women's busi- incurred or cost estimates included i ness enterprises;
negotiated prices are consistent wit (v) Using the services and assistance Federal cost principles (see $ 600.422 of the Small Business Administration, Grantees may reference their own cos and the Minority Business Develop- principles that comply with the appl: ment Agency of the Department of cable Federal cost principles. Commerce; and
(4) The cost plus a percentage of cos (vi) Requiring the prime contractor, and percentage of construction cos if subcontracts are to be let, to take methods of contracting shall not b the affirmative steps listed in para- used. graphs (e)(2) (i) through (v) of this sec- (g) Awarding agency review. (1) Gran tion.
ees and subgrantees must make avai (f) Contract cost and price. (1) Grant- able, upon request of the awardin ees and subgrantees must perform a agency, technical specifications on pre cost or price analysis in connection posed procurements where the award with every procurement action includ ing agency believes such review : ing contract modifications. The meth- needed to ensure that the item andic od and degree of analysis is dependent service specified is the one being pro on the facts surrounding the particular posed for purchase. This review gei procurement situation, but as a start- erally will take place prior to the tim ing point, grantees must make inde- the specification is incorporated into pendent estimates before receiving bids solicitation document. However, if th or proposals. A cost analysis must be grantee or subgrantee desires to hav performed when the offeror is required the review accomplished after a solic to submit the elements of his esti tation has been developed, the aware mated cost, e.g., under professional, ing agency may still review the spec consulting, and architectural engineer- fications, with such review usually lin ing services contracts. A cost analysis ited to the technical aspects of the pre will be necessary when adequate price posed purchase. competition is lacking, and for sole (2) Grantees and subgrantees must o source procurements, including con- request make available for awardin tract modifications or change orders, agency pre-award review procuremer documents, such as requests for pro- tracts or subcontracts exceeding the posals or invitations for bids, inde simplified acquisition threshold, the pendent cost estimates, etc. when:
awarding agency may accept the bond(1) A grantee's or subgrantee's pro- ing policy and requirements of the curement procedures or operation fails grantee or subgrantee provided the to comply with the procurement stand awarding agency has made a deterards in this section; or
mination that the awarding agency's (ii) The procurement is expected to interest is adequately protected. If exceed the simplified acquisition such a determination has not been threshold and is to be awarded without made, the minimum requirements shall competition or only one bid or offer is be as follows: received in response to a solicitation; (1) A bid guarantee from each bidder
equivalent to five percent of the bid price. (iii) The procurement, which is ex
The "bid guarantee" shall consist of a pected to exceed the simplified acquisi
firm commitment such as a bid bond, tion threshold, specifies a “brand
certified check, or other negotiable inname" product; or
strument accompanying a bid as assur(iv) The proposed award is more than
ance that the bidder will, upon acceptthe simplified acquisition threshold
ance of his bid, execute such contracand is to be awarded to other than the
tual documents as may be required apparent low bidder under a sealed bid
within the time specified. procurement; or
(2) A performance bond on the part of (v) A proposed contract modification
the contractor for 100 percent of the conchanges the scope of a contract or in
tract price. A “performance bond” is creases the contract amount by more
one executed in connection with a conthan the simplified acquisition thresh
tract to secure fulfillment of all the old.
contractor's obligations under such (3) A grantee or subgrantee will be
contract. exempt from the pre-award review in
(3) A payment bond on the part of the paragraph (g)(2) of this section if the
contractor for 100 percent of the contract awarding agency determines that its
price. A "payment bond" is one exeprocurement systems comply with the standards of this section.
cuted in connection with a contract to (1) A grantee or subgrantee may re
assure payment as required by law of quest that its procurement system be
all persons supplying labor and matereviewed by the awarding agency to de
rial in the execution of the work protermine whether its system meets
vided for in the contract. these standards in order for its system
(i) Contract provisions. A grantee's to be certified. Generally, these re
and subgrantee's contracts must conviews shall occur where there is a con
tain provisions in paragraph (i) of this tinuous high-dollar funding, and third
section. Federal agencies are permitted party contracts are awarded on a reg
to require changes, remedies, changed ular basis.
conditions, access and records reten(ii) A grantee or subgrantee may self
tion, suspension of work, and other certify its procurement system. Such clauses approved by the Office of Fedself-certification shall not limit the eral Procurement Policy. awarding agency's right to survey the (1) Administrative, contractual, or system. Under a self-certification pro- legal remedies in instances where concedure, awarding agencies may wish to tractors violate or breach contract rely on written assurances from the terms, and provide for such sanctions grantee or subgrantee that it is com- and penalties as may be appropriate. plying with these standards. A grantee (Contracts more than the simplified acor subgrantee will cite specific proce- quisition threshold) dures, regulations, standards, etc., as (2) Termination for cause and for being in compliance with these require- convenience by the grantee or subments and have its system available grantee including the manner by which for review.
it will be effected and the basis for set(h) Bonding requirements. For con- tlement. (All contracts in excess of struction or facility improvement con- $10,000)