Section 7000 Procurement

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1 Section 7000 Procurement Table of Contents 7100 Conflicts of Interest 7110 Conduct of Employees 7200 Procurement Methods 7210 Small Purchase 7220 Competitive Sealed Bids 7230 Competitive Negotiation 7240 Non-Competitive Negotiation 7300 Procurement Action and Procedures 7310 Invitation for Bids 7320 Competitive Bidding Procedures 7330 Contract Award 7340 Documentation of Procurement Action 7350 Contract Provisions 7400 Texas Department of Agriculture Approval of Contracts 7410 Submitting Documents to Texas Department of Agriculture (TDA) 7500 Additional Guidance 7510 Solicitation of Small and Minority Businesses 7520 Compensation for Purchased Services 7530 Disputes Texas Department of Agriculture April 2013 Procurement -- 1

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3 Section 7000 Procurement Procurement is the orderly process of acquiring, by lease or purchase, goods and services such as equipment, bookkeeping and auditing. Contracting entities (CEs) must comply with state and federal procurement procedures. These procedures enable CEs to purchase goods and services at the best available price and avoid conflicts of interest when making purchases. Costs incurred through improper procurements will be disallowed. If this happens, the Texas Department of Agriculture (TDA) may reduce a CE s benefits or terminate participation in the program Conflicts of Interest CEs cannot allow a conflict of interest or potential conflicts of interest when procuring goods and services. CEs must establish and maintain a written code of standards of conduct. No officer, agent, consultant, contractor, volunteer or other employee of a CE may engage in any activity that causes or could cause a conflict of interest in the operation of the Farmers Market Nutrition Program (FMNP), including but not limited to Renting or leasing from a firm in which any officer, agent, consultant or employee (or relative) has an interest, and Soliciting or accepting gratuities, favors or anything of monetary value from contractors, potential contractors or subcontractors Conduct of Employees CEs must maintain standards of conduct governing the performance of all officers, employees and agents who participate in awarding and administering contracts using FMNP funds. Standards of conduct include the following items: An officer, employee or agent must not participate in the selection, award or administration of a contract if they, their immediate family or a partner has any financial interest in or is arranging prospective employment with a contractor or potential contractor. No officer, employee or agent may solicit or accept gratuities, favors or anything of monetary value from the contractors or potential contractors. CEs must impose penalties, sanctions or other disciplinary action against any officer, employee, agent or subcontractor or their agents who violate these standards. Texas Department of Agriculture April 2013 Procurement -- 3

4 7200 Procurement Methods Depending on the circumstances, CEs must choose from the following methods of purchasing: Small purchase, Competitive sealed bids, Competitive negotiation, or Noncompetitive negotiation. CEs must maintain written procurement procedures for how they will Make purchases, Advertise (if needed) the items that CEs plan to purchase, Select and evaluate various bids or proposals, and Evaluate potential contractors (for example, criteria may include integrity, compliance with public policy, past performance and financial and technical resources). Regardless of the dollar amount or the method of procurement used, CEs must ensure free and open competition. CEs cannot Require unreasonable credentials for potential bidders when qualifying them to do business. Allow noncompetitive practices between suppliers. Allow potential bidders or suppliers to draft or write specifications, requirements, statements of work, invitations for bids, requests for proposals, contract terms and conditions or other documents for use in conducting a procurement for the CE, Permit organizational conflicts of interest, and Impose unnecessary experience and bonding requirements on suppliers who seek your business. Although CEs have broad discretion in gathering information for use in connection with procurements, any information from potential bidders must be appropriately modified to develop tailored specifications. Otherwise, these potential bidders must be excluded from competing for such procurements. This is to ensure objective CE performance and eliminate unfair competitive advantage in the awarding of procurement contracts. CEs are prohibited from awarding contracts to any entity that develops or drafts procurement documents. CEs cannot allow any entity bidding for a contract award to develop Specifications Requirements Statements of work 4 Procurement Texas Department of Agriculture April 2013

5 Invitations for bids Requests for proposals Contract terms and conditions Other procurement documents Any FMNP CE that copies a list of features or evaluation and ranking criteria drafted by a potential vendor and then permits that potential vendor to submit a bid has violated both federal and state procurement regulations. FMNP CEs must draft specifications and procurement documents that ensure The standards comply with Texas and local laws, rules and regulations. Procurements made with FMNP funds comply with 7 CFR, part 3016 or 7 CFR, part 3019, as applicable. The standards are consistent with the standards in Section 7000, Procurement. EXCEPTION: If the FMNP CE chooses to use a vendor's information or assistance in developing procurement documents and the vendor is allowed to compete for the award, then the FMNP CE must not use any FMNP funds for the resulting award. FMNP CEs may establish their own procurement standards. CEs must have written protest procedures in place to handle and resolve any dispute relating to procurements, and must disclose information regarding any protest of a procurement action to TDA Small Purchase If purchasing services, supplies or other property with an aggregate cost under $25,000 in a contract year, CEs may use small purchase procedures. The $25,000 aggregate limit applies to single items (for example, rent) and many items of the same general type of product (for example, office supplies). Even if CEs use these procedures, they must try to obtain the best possible price. CEs should solicit price or rate quotations and other relevant information from as many sources as possible. CEs must follow formal bid procedures for each procurement with an aggregate value of more than $25,000. Texas Department of Agriculture April 2013 Procurement -- 5

6 7220 Competitive Sealed Bids CEs must use competitive sealed bids if a purchase is $25,000 or more and can Completely and accurately describe the item wanted for purchase. Locate two or more responsible suppliers that are willing to compete for business. Award a firm fixed-price contract. Make an award mainly on the basis of price. When conducting a competitive sealed bid, a CE will Advertise publicly (for example, in a newspaper), Solicit bids from an adequate number of known suppliers, Clearly describe the item wanted for purchase in the invitation to bid, Publicly open the bids at the time and place stated in the invitation, and Award the contract to the lowest bidder that meets the requirements of the invitation. EXCEPTION: If the FMNP CE chooses to use a vendor's information or assistance in developing procurement documents and the vendor is allowed to compete for the award, then the FMNP CE must not use any FMNP funds for the resulting award Competitive Negotiation CEs should use competitive negotiation for purchases of $25,000 or more when the conditions for sealed bids do not exist. The competitive negotiation method of procurement requires CEs to publicize a request for proposals (RFP) and solicit proposals, as well. After CEs receive the proposals, negotiations will be conducted with two or more contractors. When using competitive negotiation, CEs must Publicize the RFP, Solicit proposals from an adequate number of qualified sources, Honor all requests to compete as far as practical, Identify in the RFP how the successful bidder is chosen, Have a written procedure for evaluating proposals, for determining with whom CEs will negotiate and for selecting the successful bidder, Award contracts to the most advantageous bidder, and Promptly notify unsuccessful bidders. EXAMPLE: A CE wants to purchase accounting services that would cost more than $25,000 per year. Since several factors are of equal or greater importance than price, the CE may want to use competitive negotiation for this purchase. 6 Procurement Texas Department of Agriculture April 2013

7 7240 Non-Competitive Negotiation In noncompetitive negotiation, CEs negotiate with a single source. CEs may use this method only when they have been granted permission from TDA. TDA may permit CEs to use this method under one or more of the following conditions: The item wanted for purchase is only available from one source, An emergency exists, and/or The CE determines that competition is inadequate after soliciting several sources Procurement Action and Procedures CEs must maintain written selection procedures for procurement transactions. These procedures must ensure that all solicitations are handled appropriately. Include a clear and accurate description of the technical requirements for the material, product or service to be procured. The description shall not contain features that would unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible; and Identify all requirements that a contractor must fulfill, and all other factors to be used in evaluating bids or proposals Invitation for Bids CEs must ensure that an invitation for bids does not specify a minimum price or requirements to meet ethnic or religious needs unless the special requirements are necessary to meet the needs of participants served Competitive Bidding Procedures The following steps should be followed when soliciting competitive bids: 1. Solicit bids from an adequate number of known suppliers in sufficient time before the established date for opening of the bids. 2. Publicly announce the proposed contract at least once and not less than 14 calendar days before the opening of bids. Include the time and place of the bid opening in the public announcement. Texas Department of Agriculture April 2013 Procurement -- 7

8 3. Notify TDA about the time and place of bid opening at least 14 days before the bids are opened. A TDA representative will be present at bid opening if you expect to receive $100,000 or more in program payments. 4. Open the bids publicly at the time and place stated on the invitation for bid. 5. If required, obtain TDA approval before awarding the contract. Refer to Item 7400, Texas Department of Agriculture Approval of Contracts. 6. Select the responsible contractor who submits the lowest bid that conforms to the invitation for bid. Note: If specified in the bidding document, consider factors such as discounts, transportation costs and life cycle costs in determining the lowest bid. Payment discounts may be used only if prior experience with the bidder indicates that these discounts are generally taken. Reject any or all bids if there are sound, documented reasons to do so in the best interest of the program. 7. Before program operations begin, CEs must Submit copies of all bids that were received, the name of and reason for selecting the contractor, a copy of the awarded contract and certification of independent price determination. Notify the chosen contractor by telephone, and then in writing, to provide the contractor with the necessary time to prepare an acceptance letter. Notify the rejected bidders, in writing, of the name of the selected contractor Contract Award CEs can only award a contract to a responsible contractor with the potential to perform successfully under the specified terms. CEs should consider factors such as the contractor's integrity, compliance with policy, record of past performance and financial and technical resources Documentation of Procurement Action CEs must document the history of procurement action. At a minimum, the following information must be included in a CE s records: The reasons for choosing the specific method of procurement. Copies of all opened bids, a certificate of independent price determination and an explanation for selecting a particular contractor. List of contractors to whom a copy of the IFB was sent. List of newspapers, magazines or other method of public notification in which advertisements were placed and the dates that they appeared. Copy of the contract. Basis for the cost or price of a contract. 8 Procurement Texas Department of Agriculture April 2013

9 7350 Contract Provisions The following provisions or conditions must be included in procurement contracts and subcontracts: 1. Administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate. (Contracts more than the simplified acquisition threshold.) 2. Termination for cause and for convenience by the CE including the manner by which it will be effected and the basis for settlement. (All contracts in excess of $10,000.) 3. Compliance with Executive Order of September 24, 1965, entitled Equal Employment Opportunity: as amended by Executive Order of October 13, 1967, and as supplemented in Department of Labor regulations. (All construction contracts awarded in excess of $10,000 by CEs and the contractors or sub-grantees.) 4. Compliance with Copeland Anti-Kickback Act as supplemented in Department of Labor regulations (All contracts and sub-grants for construction or repair.) 5. Compliance with the Davis-Bacon Act as supplemented by Department of Labor regulations. (All contracts and sub-grants for construction or repair.) 6. Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act as supplemented by Department of Labor regulations. (Construction contracts awarded by CEs in excess of $2,000, and in excess of $2,500 for other contracts which involve the employment of mechanics and laborers.) 7. Notice of awarding agency requirements and regulations pertaining to reporting. 8. Notice of awarding agency requirements and regulations pertaining to patent rights with respect to any discovery or invention that arises or is developed in the course of or under such contract. 9. Awarding agency requirements and regulations pertaining to copyrights and rights in data. 10. Access by the CE, the federal grantor agency, the Comptroller General of the United States or any of their duly authorized representatives to any books, documents, papers, and records of the contractor which are directly pertinent to that specific contract for the purpose of making audit, examination, excerpts, and transcriptions. 11. Retention of all required records for three years and four months after the program year. See Item 4710 for retention requirements. 12. Compliance with all applicable standards, orders, or requirements issued under Section 306 of the Clean Air Act (42 U.S.C (h)), Section 508 of the Clean Water Act (33 U.S.C. 1368, Executive Order 11738, and Environmental Protection Agency regulations (40 CFR, Part 15). (Contracts, subcontracts, and subgrants of amounts in excess of $100,000.) 13. Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Pub. L , 89 Stats. 871.) [53 FR 8044, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19641, Apr. 19, 1995] Texas Department of Agriculture April 2013 Procurement -- 9

10 7400 Texas Department of Agriculture Approval of Contracts CEs must forward the bid(s) to TDA for approval before awarding a contract if one or more of the following conditions apply: Only one bid was received in response to the solicitation, The bid selected was not the lowest bid that was received. The CE must also include an explanation for the award decision, The bid will be awarded by competitive or noncompetitive negotiation, and/or The bid totals $100,000 or more. TDA responds to the request for contract approval within five workdays of receipt Submitting Documents to Texas Department of Agriculture (TDA) CEs must submit the following items to TDA: Notification of the date, time and location for bid opening a minimum of 14 calendar days before the bid opening date (for competitive bidding). Copies of all opened bids, a certificate of independent price determination and explanation for selecting a particular contractor. CEs cannot award a contract until TDA has reviewed all bids and supporting documentation and has contacted a representative of the contractor. The list of contractors to whom a copy of the IFB was sent. A list of newspapers, magazines or other method of public notification in which advertisements were placed and the dates that they appeared. A copy of the contract between the contractor and CE before the start of program operations. A copy of the award letter and a copy of each letter sent to all rejected bidders after the bid award has been determined Additional Guidance 7510 Solicitation of Small and Minority Businesses CEs are encouraged, whenever possible, to attempt to procure goods and services from minority business enterprises on solicitation lists. A minority business enterprise is managed and operated on a daily basis by members of minority groups. 10 Procurement Texas Department of Agriculture April 2013

11 Affirmative steps must be taken to ensure that small and minority businesses are allowed to compete whenever possible. CEs must Include qualified small and minority businesses on solicitation lists. Divide total contract requirements into smaller tasks or quantities when appropriate to permit maximum participation by small and minority businesses. Establish delivery schedules that encourage the participation of small and minority businesses. Use the services of the o Small Business Administration, o Office of Minority Business Enterprise of the Department of Commerce, and o Community Service Administration; Procure goods and services from labor surplus areas whenever possible. Require each prime contractor to take these affirmative steps when subcontracting Compensation for Purchased Services If a CE agrees or contracts with a consultant or subcontractor for the purchase of a service, the CE will compensate the consultant or subcontractor for that service based on the provisions of the contract or agreement. When a contract or agreement identifies a fee or compensation that is based on a set percentage, the subcontractor or consultant cannot require additional fees from you. EXAMPLE: A subcontractor or consultant cannot charge sales tax on services in addition to a set percentage that is assessed for that service as stated in the contract or agreement. If a subcontractor or consultant charges sales tax on the service provided, the tax must be extracted from the compensation (set percentage) that is stated in the contract or agreement Disputes It is a CE s responsibility to obtain legal counsel for the resolution of any disputes arising from participation in a third-party arrangement outside of the program agreement. Texas Department of Agriculture April 2013 Procurement -- 11

ARCHIVED - MAY 20, 2014

ARCHIVED - MAY 20, 2014 TEXAS POLICY In Texas, organizations contracting directly with the Texas Department of Agriculture (TDA) to operate nutrition programs federally funded through the United States Department of Agriculture