Common use of Permitted Approaches to Procurement Clause in Contracts

Permitted Approaches to Procurement. Depending on the scarcity of the item or service desired, and the size of the purchase, different methods of procurement are available for use by subrecipients under the Federal regulations. • Small purchases may be used for procurement of $100,000 or less in the aggregate: (24 CFR 85.36(d)(1) and 84.44(e)(2)) • Small purchases are made through the use of purchase orders. Competition is sought through oral or written price quotations. A subrecipient must document the receipt of an adequate number of price or rate quotations from qualified sources. • A procurement of more than $100,000 may not be inappropriately broken up into smaller components solely to qualify for the less complicated procedures followed under the “small purchases” approach. • Competitive sealed bids (formal advertisement, 24 CFR 85.36(d)(2)): • The procurement must lend itself to a firm, fixed price contract (lump sum or unit price) where the selection can be principally made on the basis of price. • A subrecipient must advertise the Invitation for Bid (IFB) in publications of general circulation. • The IFB must include complete and accurate specifications and pertinent attachments and clearly define items or services needed, in sufficient detail for the bidders to properly respond. 1 Subrecipients need to be aware, however, that local or state laws or policies may require additional procedures or set lower dollar-value thresholds for some forms of procurement. Therefore, it is important to check with your grantee to learn whether any such additional procurement provisions apply. • Bids must be opened publicly at the time and place stated in the IFB. • A subrecipient must receive at least two or more responsible bids for each procurement transaction. • If awarded, the contract must be given to the lowest responsive and responsible bidder (the subrecipient, however, can decide not to make the award to any of the bidders). The competitive sealed bid method is the preferred approach for procuring construction services. • Competitive proposals (24 CFR 85.36(d)(3)): • A subrecipient should use this method only when conditions are not appropriate for the use of formal advertising. • The Request for Proposal (RFP) must clearly and accurately state the technical requirements for the goods and services required. • A subrecipient must publicize the RFP, and to the maximum extent practicable, honor reasonable requests by parties to have an opportunity to compete. • Proposals must be solicited from an adequate number of qualified sources, consistent with the nature and requirements of the procurement. • The subrecipient must conduct a technical evaluation of the submitted proposals to identify the responsible offerors. • As necessary, the subrecipient conducts negotiations with those offerors who are deemed responsive and responsible and fall within a competitive price range, based on the subrecipient’s evaluation of the bidders’ pricing and technical proposals. After negotiations, these bidders may be given the opportunity to submit a “best and final” offer. • The subrecipient must award the contract to the most responsive and responsible offeror after price and other factors are considered through scoring the proposals (or “best and final” offers) according to predetermined evaluation criteria. The successful proposal/offeror must clearly be the “most advantageous” source of the goods and services for the subrecipient. For procurement involving architecture or engineering (A/E) services, subrecipients may use competitive proposal procedures whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. In these instances, price is not used as a selection factor. Once the most-qualified firm is identified, only that firm is asked for a price proposal that is subject to negotiation of a fair and reasonable price. If negotiations with the selected firm are unsuccessful, this process is repeated with the next highest-ranked firm, until a fair and reasonably priced contract can be awarded. The subrecipient must be careful to document the bases for its determination of the most qualified competitor and the reasonableness of the contract price. This qualifications-based approach to the competitive proposals method may not be used to purchase other than A/E services. (See 24 CFR 85.36(d)(3)(v).) In addition, the Federal procurement regulations generally discourage the use of local geographical preferences in the evaluation of bids or proposals (except where mandated by Federal statutes), due to the restrictions on open competition which result. However, in procuring A/E services, geographic location is permitted as a selection criteria provided this criterion leaves an appropriate number of qualified firms (24 CFR 85.36(c)(2)). • Noncompetitive proposals/sole source procurement (24 CFR Part 85.36(d)(4)): Noncompetitive negotiations may be utilized only under very limited circumstances. The subrecipient must show that another method of procurement was infeasible because: • The item or service was only available from a single source. • A public emergency or condition requiring urgency existed which did not permit the use of competitive procurement. • Competition was determined to be inadequate after receiving proposals from numerous sources. It is important to note that many states have laws which require the use of qualifications-based selection (QBS) procedures when purchasing professional A/E services. In those states, the discretion afforded by 24 CFR 85.36(d)(3)(v) is removed. Absent a state QBS law, a recipient could opt to use QBS or competitive proposals. In the latter instance, prices are solicited from all contractors and considered in the selection process. Among the procurement approaches described in the preceding section, the competitive sealed bid resulting in a firm, fixed price contract is the preferred procurement approach when there are a number of available and qualified providers, when the requirements and specifications are thoroughly detailed and are unlikely to change, and where the subrecipient has the opportunity to make the provider assume a large share of the risk for non-performance. In other instances, for example, complicated rehabilitation projects, or unique human service activities, other forms of competitive and noncompetitive procurement may be necessary or desirable. In cases where price is not the single most important objective, it is still important to try to assure the highest possible quality of procurement at the lowest reasonable price through “open and free competition.”

Permitted Approaches to Procurement. Depending on the scarcity of the item or service desired, and the size of the purchase, different methods of procurement are available for use by subrecipients under the Federal regulations. •  Small purchases may be used for procurement of $100,000 or less in the aggregate: (24 CFR 85.36(d)(1) and 84.44(e)(2)) •  Small purchases are made through the use of purchase orders. Competition is sought through oral or written price quotations. A subrecipient must document the receipt of an adequate number of price or rate quotations from qualified sources. •  A procurement of more than $100,000 may not be inappropriately broken up into smaller components solely to qualify for the less complicated procedures followed under the “small purchases” approach. •  Competitive sealed bids (formal advertisement, 24 CFR 85.36(d)(2)): •  The procurement must lend itself to a firm, fixed price contract (lump sum or unit price) where the selection can be principally made on the basis of price. •  A subrecipient must advertise the Invitation for Bid (IFB) in publications of general circulation. •  The IFB must include complete and accurate specifications and pertinent attachments and clearly define items or services needed, in sufficient detail for the bidders to properly respond. 1 Subrecipients need to be aware, however, that local or state laws or policies may require additional procedures or set lower dollar-value thresholds for some forms of procurement. Therefore, it is important to check with your grantee to learn whether any such additional procurement provisions apply. •  Bids must be opened publicly at the time and place stated in the IFB. •  A subrecipient must receive at least two or more responsible bids for each procurement transaction. •  If awarded, the contract must be given to the lowest responsive and responsible bidder (the subrecipient, however, can decide not to make the award to any of the bidders). The competitive sealed bid method is the preferred approach for procuring construction services. •  Competitive proposals (24 CFR 85.36(d)(3)): •  A subrecipient should use this method only when conditions are not appropriate for the use of formal advertising. •  The Request for Proposal (RFP) must clearly and accurately state the technical requirements for the goods and services required. •  A subrecipient must publicize the RFP, and to the maximum extent practicable, honor reasonable requests by parties to have an opportunity to compete. •  Proposals must be solicited from an adequate number of qualified sources, consistent with the nature and requirements of the procurement. •  The subrecipient must conduct a technical evaluation of the submitted proposals to identify the responsible offerors. •  As necessary, the subrecipient conducts negotiations with those offerors who are deemed responsive and responsible and fall within a competitive price range, based on the subrecipient’s evaluation of the bidders’ pricing and technical proposals. After negotiations, these bidders may be given the opportunity to submit a “best and final” offer. •  The subrecipient must award the contract to the most responsive and responsible offeror after price and other factors are considered through scoring the proposals (or “best and final” offers) according to predetermined evaluation criteria. The successful proposal/offeror must clearly be the “most advantageous” source of the goods and services for the subrecipient. For procurement involving architecture or engineering (A/E) services, subrecipients may use competitive proposal procedures whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. In these instances, price is not used as a selection factor. Once the most-qualified firm is identified, only that firm is asked for a price proposal that is subject to negotiation of a fair and reasonable price. If negotiations with the selected firm are unsuccessful, this process is repeated with the next highest-ranked firm, until a fair and reasonably priced contract can be awarded. The subrecipient must be careful to document the bases for its determination of the most qualified competitor and the reasonableness of the contract price. This qualifications-based approach to the competitive proposals method may not be used to purchase other than A/E services. (See 24 CFR 85.36(d)(3)(v).) In addition, the Federal procurement regulations generally discourage the use of local geographical preferences in the evaluation of bids or proposals (except where mandated by Federal statutes), due to the restrictions on open competition which result. However, in procuring A/E services, geographic location is permitted as a selection criteria provided this criterion leaves an appropriate number of qualified firms (24 CFR 85.36(c)(2)). •  Noncompetitive proposals/sole source procurement (24 CFR Part 85.36(d)(4)): Noncompetitive negotiations may be utilized only under very limited circumstances. The subrecipient must show that another method of procurement was infeasible because: •  The item or service was only available from a single source. •  A public emergency or condition requiring urgency existed which did not permit the use of competitive procurement. •  Competition was determined to be inadequate after receiving proposals from numerous sources. It is important to note that many states have laws which require the use of qualifications-based selection (QBS) procedures when purchasing professional A/E services. In those states, the discretion afforded by 24 CFR 85.36(d)(3)(v) is removed. Absent a state QBS law, a recipient could opt to use QBS or competitive proposals. In the latter instance, prices are solicited from all contractors and considered in the selection process. Among the procurement approaches described in the preceding section, the competitive sealed bid resulting in a firm, fixed price contract is the preferred procurement approach when there are a number of available and qualified providers, when the requirements and specifications are thoroughly detailed and are unlikely to change, and where the subrecipient has the opportunity to make the provider assume a large share of the risk for non-performance. In other instances, for example, complicated rehabilitation projects, or unique human service activities, other forms of competitive and noncompetitive procurement may be necessary or desirable. In cases where price is not the single most important objective, it is still important to try to assure the highest possible quality of procurement at the lowest reasonable price through “open and free competition.”

Permitted Approaches to Procurement. Depending on the scarcity of the item or service desired, and the size of the purchase, different methods of procurement are available for use by subrecipients under the Federal regulations. regulations.1 • Small purchases may be used for procurement of $100,000 or less in the aggregate: (24 CFR 85.36(d)(1) and 84.44(e)(2)) • Small purchases are made through the use of purchase orders. Competition is sought through oral or written price quotations. A subrecipient must document the receipt of an adequate number of price or rate quotations from qualified sources. • A procurement of more than $100,000 may not be inappropriately broken up into smaller components solely to qualify for the less complicated procedures followed under the “small purchases” approach. • Competitive sealed bids (formal advertisement, 24 CFR 85.36(d)(2)): • The procurement must lend itself to a firm, fixed price contract (lump sum or unit price) where the selection can be principally made on the basis of price. • A subrecipient must advertise the Invitation for Bid (IFB) in publications of general circulation. • The IFB must include complete and accurate specifications and pertinent attachments and clearly define items or services needed, in sufficient detail for the bidders to properly respond. 1 Subrecipients need to be aware, however, that local or state laws or policies may require additional procedures or set lower dollar-value thresholds for some forms of procurement. Therefore, it is important to check with your grantee to learn whether any such additional procurement provisions apply. • Bids must be opened publicly at the time and place stated in the IFB. • A subrecipient must receive at least two or more responsible bids for each procurement transaction. • If awarded, the contract must be given to the lowest responsive and responsible bidder (the subrecipient, however, can decide not to make the award to any of the bidders). The competitive sealed bid method is the preferred approach for procuring construction services. • Competitive proposals (24 CFR 85.36(d)(3)): • A subrecipient should use this method only when conditions are not appropriate for the use of formal advertising. • The Request for Proposal (RFP) must clearly and accurately state the technical requirements for the goods and services required. • A subrecipient must publicize the RFP, and to the maximum extent practicable, honor reasonable requests by parties to have an opportunity to compete. • Proposals must be solicited from an adequate number of qualified sources, consistent with the nature and requirements of the procurement. • The subrecipient must conduct a technical evaluation of the submitted proposals to identify the responsible offerors. • As necessary, the subrecipient conducts negotiations with those offerors who are deemed responsive and responsible and fall within a competitive price range, based on the subrecipient’s evaluation of the bidders’ pricing and technical proposals. After negotiations, these bidders may be given the opportunity to submit a “best and final” offer. • The subrecipient must award the contract to the most responsive and responsible offeror after price and other factors are considered through scoring the proposals (or “best and final” offers) according to predetermined evaluation criteria. The successful proposal/offeror must clearly be the “most advantageous” source of the goods and services for the subrecipient. For procurement involving architecture or engineering (A/E) services, subrecipients may use competitive proposal procedures whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. In these instances, price is not used as a selection factor. Once the most-qualified firm is identified, only that firm is asked for a price proposal that is subject to negotiation of a fair and reasonable price. If negotiations with the selected firm are unsuccessful, this process is repeated with the next highest-ranked firm, until a fair and reasonably priced contract can be awarded. The subrecipient must be careful to document the bases for its determination of the most qualified competitor and the reasonableness of the contract price. This qualifications-based approach to the competitive proposals method may not be used to purchase other than A/E services. (See 24 CFR 85.36(d)(3)(v).) 85.36(d)(3)(v).)2 In addition, the Federal procurement regulations generally discourage the use of local geographical preferences in the evaluation of bids or proposals (except where mandated by Federal statutes), due to the restrictions on open competition which result. However, in procuring A/E services, geographic location is permitted as a selection criteria provided this criterion leaves an appropriate number of qualified firms (24 CFR 85.36(c)(2)). • Noncompetitive proposals/sole source procurement (24 CFR Part 85.36(d)(4)): Noncompetitive negotiations may be utilized only under very limited circumstances. The subrecipient must show that another method of procurement was infeasible because: • The item or service was only available from a single source. • A public emergency or condition requiring urgency existed which did not permit the use of competitive procurement. • Competition was determined to be inadequate after receiving proposals from numerous sources. It is important to note that many states have laws which require the use of qualifications-based selection (QBS) procedures when purchasing professional A/E services. In those states, the discretion afforded by 24 CFR 85.36(d)(3)(v) is removed. Absent a state QBS law, a recipient could opt to use QBS or competitive proposals. In the latter instance, prices are solicited from all contractors and considered in the selection process. Among the procurement approaches described in the preceding section, the competitive sealed bid resulting in a firm, fixed price contract is the preferred procurement approach when there are a number of available and qualified providers, when the requirements and specifications are thoroughly detailed and are unlikely to change, and where the subrecipient has the opportunity to make the provider assume a large share of the risk for non-performance. In other instances, for example, complicated rehabilitation projects, or unique human service activities, other forms of competitive and noncompetitive procurement may be necessary or desirable. In cases where price is not the single most important objective, it is still important to try to assure the highest possible quality of procurement at the lowest reasonable price through “open and free competition.”