Procurement System Deep Dive FEBRUARY 2, 2017

Procurement System Deep Dive FEBRUARY 2, 2017

Objectives Evolution of a requirement and acquisition process How to prepare a solicitation, develop specifications, and identify sources Procurement methods including, micro-purchase, small purchase, sealed bids, competitive proposals and noncompetitive proposals 2

Objectives (cont.) Competition Contracting with small and minority businesses, women s business enterprises, and labor surplus area firms Contract Provisions Cost and Price analysis Fixed amount subawards 3

Objectives (cont.) Purchasing file documentation requirements Fraud risks in the acquisition process: Conflicts of interest and code of conduct requirements Vendor integrity, capability and performance requirements Summary of Procurement Concepts 4

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 5

Evolution of a Requirement 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 Uniform Guidance s emphasis upon greater economy, efficiency, and avoiding any duplication of effort. 6

Evolution of a Requirement (cont.) Evolution of a Requirement Checklist Is it more economical to lease the requirement rather than purchase it? If yes, consider leasing rather than purchasing Is the requirement for common or shared goods or services? If yes, consider using a State or local intergovernmental agreement, or inter-entity agreement 7

Evolution of a Requirement (cont.) Evolution of a Requirement Checklist Does the requirement allow for used equipment or property as opposed to new? If yes, consider using Federal; excess or surplus property 8

Acquisition Process Manage the Supply Chain Conduct Market Research Avoid Unnecessary Purchasing Consider Bundling or Breaking Out Consider Lease and Purchase Alternatives 9

Acquisition Process (cont.) Conduct Joint Purchasing Permitted and encouraged Use Federal Excess and Surplus Property Conduct Value Engineering 10

How to Prepare a Solicitation, Develop Specifications and Identify Sources Detailed in-house planning is necessary in order to effectively award a contract Determine who will be responsible for overseeing and interacting on different aspects of the contract should be determined in advance of any procurement 11

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Pre-proposal Documentation Requirements Requisition SOW (Negotiated procurement) or Invitation for Bids (competitive, sealed bidding) Evaluation criteria (negotiated procurement) Justification for noncompetitive (sole source contracting) All concurrences that may be required 12

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Solicitation IFB and RFP Contents Clear Description of technical features Specifications or statement of work Limited use of brand name or equal Identification of essential requirements Prequalified Bidders Lists Permitted 13

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Selection of a responsible contractor 2 CFR 200.318 (h) Factors to Consider Contractor integrity Past performance Compliance with public policy Financial and technical resources 14

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Contract to Subawards (subgrants) of Federal Assistance Awards often include factors such as need for the funds Awards to high risk subrecipient are possible (2 CFR 200.207) 15

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Contract Planning Checklist Are grant or cooperative agreement funds available to fund the proposed procurement? Has a market survey been conducted and documented to determine if there are contractors available to satisfy the requirement? Have divisions of labor been identified regarding contractual obligations for administrative, technical, and overall project responsibility? What type of procurement method has been chosen? 16

How to Prepare a Solicitation, Develop Specifications and Identify Sources (cont.) Contract Planning Checklist Has the SOW been developed if required ( or, the Invitation for Bids, if competitive sealed bidding is to be used?) If the contract is be competitively negotiated, have Evaluation Criteria been developed? If the contract is to be negotiated on a sole source basis, has a Sole Source Justification been prepared? 17

200.320 Methods of Procurement-Micro-Purchases In the acquisition of supplies or services, the aggregate dollar amount does not exceed the threshold which is currently $3,000. May be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable Must distribute equitably among qualified suppliers as practical 19

200.320 Methods of Procurement-Micro-Purchases (cont.) The $3,000 limit applies to Purchase Orders and any Purchase Cards Recent requests target an increase to $5,000 or $10,000 20

200.320 Methods of Procurement-Small 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 Set by the Federal Acquisition Regulation (FAR) Currently at $150,000-adjusted for inflation 21

200.320 Methods of Procurement-Small Purchases (cont.) Price or rate quotations must be obtained from an adequate number of qualified sources No cost or price analysis is required 22

200.320 Methods of Procurement-Small Purchases (cont.) Small Purchases Checklist Is the established cost of the requirement at or below the established simplified acquisition threshold? If yes a purchase order may be used Are there available local vendors that may logistically satisfy the requirement? If no consider additional lead-time required to solicit vendors outside the local area 23

200.320 Methods of Procurement-Small Purchases (cont.) Small Purchases Checklist May the requirement by satisfied by an existing Blanket Purchase Agreement (BPA)? If yes use the existing BPA If no conduct a solicitation in accordance with non-federal entity procedures Has the requirement been split to be below the mandatory purchase agreement monetary level? If yes, another method must be used. 24

200.320 Methods of Procurement-Sealed Bid Bids are publically solicited and a firm fixed price contract is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest price. The sealed bid method is the preferred method for procuring construction. 25

200.320 Methods of Procurement-Sealed Bid (cont.) Bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date set for opening the bids. The Invitation for Bids (IFB), which must include specifications and pertinent attachments, must also define the items or services in order for the bidder to properly respond 26

200.320 Methods of Procurement-Sealed Bid (cont.) All bids will be opened at the time and place prescribed in the IFB. Any or all bids may be rejected if there is a sound documented reason 27

200.320 Methods of Procurement-Sealed Bid (cont.) Competitive Sealed Bidding Checklist Is it possible to describe the requirement in exact terms (e.g., design specifications) so the contractor can make fixed price bid? If yes and IFB may be effectively used and the award can be made to the lowest bidder that is responsive and responsible. Can it be expected that advertising will result in two or more responses to the solicitation? If yes consider use of an IFB 28

200.320 Methods of Procurement-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. RFPs must be publicized and identify all evaluation factors and their relative importance 29

200.320 Methods of Procurement-Competitive Proposals (cont.) Proposals must be solicited from an adequate number of qualified sources The non-federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered 30

200.320 Methods of Procurement-Competitive Proposals (cont.) Develop a Statement of Work (SOW) listing essential requirements to accomplish the contract The SOW should be written in a straightforward manner, and at a minimum should contain the following: Background providing necessary introductory information or evolution of the requirement Objectives/scope of work detailing broad parameters that are essential to effectively satisfy the requirement A list of tasks with accompanying deliverables, organized in a logical sequence 31

200.320 Methods of Procurement-Competitive Proposals (cont.) The SOW should be written in a straightforward manner, and at a minimum should contain the following: 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 Acceptance and approval procedures should be indicated Other coverage as may be required: references, licensing, and professional certifications; non-federal entity furnished items; and packing and shipping 32

200.320 Methods of Procurement-Competitive Proposals (cont.) Develop the RFP to identify all evaluation factors and their relative importance. The RFP normally will contain the following: Letter of Transmittal providing certain relevant details concerning the requirement A delivery schedule to be included in the definitive contract, including all necessary administrative details The SOW Required special and mandatory clauses 33

200.320 Methods of Procurement-Competitive Proposals (cont.) The RFP normally will contain the following: Any special instructions to offerors to assist in developing the offer 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 shown Any other information that may be required for the offerors to completely understand the contents and intent of the RFP A due date and time for receipt of all proposals 34

200.320 Methods of Procurement-Competitive Proposals (cont.) Competitive Proposals Checklist Is it necessary to resolve technical questions/unknowns by negotiations with the successful contractor? If yes this requirement is a candidate for the competitive proposal process Is it necessary to develop a SOW, instead of a design specification spelling out specifically what is needed? If yes competitive proposals should be used. 35

200.320 Methods of Procurement-Noncompetitive Proposals Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only if one or more of the following circumstances apply: The item is available only from a single source An emergency or other exigency for the requirement will not permit a delay resulting from a competitive procurement (poor planning is not an emergency); 36

200.320 Methods of Procurement-Noncompetitive Proposals (cont.) Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only if one or more of the following circumstances apply: The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-federal entity; Inadequate competition after multiple attempted solicitations. 37

200.320 Methods of Procurement-Noncompetitive Proposals (cont.) Sample format for requesting prior approval from the awarding agency or pass-through entity to contract sole source: A brief description of the program and the product or service being procured, to include the expected procurement amount An explanation of why it is necessary to contract noncompetitively that provides a justification based on at least one of the four circumstances covered above Must demonstrate how the proposed contractor s unique qualifications or the nature of the procurement necessitate the use of noncompetitive approach given the circumstances cited 38

200.320 Methods of Procurement-Noncompetitive Proposals (cont.) Sample format for requesting prior approval from the awarding agency or pass-through entity to contract sole source: 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. Statement of when contractual coverage is required and, if dates are not met, what impact it will have on the program. Make sure to include the financial impact in dollars 39

200.320 Methods of Procurement-Noncompetitive Proposals (cont.) Sample format for requesting prior approval from the awarding agency or pass-through entity to contract sole source: Description of and the results of any organizational conflict of interest review conducted, or, if none conducted, explain why not Any other points necessary for justification Determination that the proposed noncompetitive procurement action is in the best interest of the awarding agency or pass through entity as applicable 40

200.319 Competition All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations to bid or requests for proposals must be excluded from competing for such procurements. 41

200.319 Competition (cont.) Some of the situations considered to be restrictive of competition include but are not limited to: Placing unreasonable requirements on firms in order for them to qualify to do business, Requiring unnecessary experience and excessive bonding, Non competitive pricing practices between firms or between affiliated companies 42

200.319 Competition (cont.) Some of the situations considered to be restrictive of competition include but are not limited to: Organizational conflicts of interest Specifying only a brand name product instead of allowing an equal product to be offered and describing the performance or other relevant requirements of the procurement; and Any arbitrary action in the procurement process 43

200.319 Competition (cont.) The non-federal entity must have written procedures for procurement transactions and must ensure that all solicitations: Incorporate a clear and accurate description of the technical requirements for the material, product or service to be procured, Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals 44

200.319 Competition (cont.) The non-federal entity must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition 45

200.319 Competition (cont.) Prequalified bidders list A list of prospective bidders who are prequalified as to material, equipment, or services May only be used if they are current and include enough qualified sources to ensure adequate competition Prospective bidders must not be precluded from becoming qualified during the solicitation period 46

200.319 Competition (cont.) Competition Checklist Does the SOW (or Invitation for Bids) contain attributes conducive to a full and open competition? If no the restrictive parts should be rewritten Has a bidders list or market survey been reviewed to determine availability of competitive contractors? If no a review should be done to determine the availability of competitive contractors in the market place 47

200.319 Competition (cont.) Competition Checklist Has an advertising strategy been developed to allow prospective bidders ample time to request a copy of the IFBs and respond accordingly? If no, ample time for advertising should be factored on, when determining the forecasted award date. 48

200.321 Contracting with Small and Minority Businesses The non-federal entity must take all necessary affirmative steps to assure that minority businesses, women s business enterprises, and labor surplus area firms are used when possible. 49

200.321 Contracting with Small and Minority Businesses (cont.) 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 50

200.321 Contracting with Small and Minority Businesses (cont.) Affirmative steps for the above entities must include: Placing qualified entities on solicitation lists; Assuring they are solicited whenever they are potential sources; Dividing total requirements, when economically feasible, into small tasks or quantities to permit maximum participation; Establishing delivery schedules, where the requirement permits, which encourage participation 51

200.321 Contracting with Small and Minority Businesses (cont.) Additional affirmative steps must include: Using the services and assistance of, organizations such as the Small Business Administration or the Minority Business Development Agency of the Department of Commerce as appropriate; and Requiring the prime contractor, if subcontracts are to be let, take the previously described affirmative steps 52

200.321 Contracting with Small and Minority Businesses (cont.) Contracts with Small and Minority Firms, Women s Business Enterprises and Labor Surplus Area Firms Checklist Are statistics readily available concerning contract awards to these firms? If no develop a simplified reporting system 53

200.326 Contract Provisions Requires that non-federal entities contracts contain the applicable provisions described in Appendix II to Part 200- Contract Provision for Non-Federal Entity Contracts Under Federal Awards. 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 54

200.326 Contract Provisions (cont.) 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 it s 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. 55

200.326 Contract Provisions (cont.) Key Contract Provisions: 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 56

200.326 Contract Provisions (cont.) Key Contract Provisions: 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 affected and the basis for settlement Termination for Convenience is when the contract is terminated due to reason 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 57

200.326 Contract Provisions (cont.) Key Contract Provisions: Termination for Cause is when the 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 58

200.326 Contract Provisions (cont.) Key Contract Provisions: Clean Air and Water-Contracts and subrecipients exceeding $150,000, must contain a provision requiring the contractor (or subrecipients) to agree to comply with all requirements of the Clean Air Act and the Clean Water Act. Violations must be reported to the Federal awarding agency and the regional office of the EPA 59

200.326 Contract Provisions (cont.) Key Contract Provisions: Byrd Anti-Lobbying Amendment-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 in connection with obtaining any Federal contract, grant or any other award. Each tier must also disclose any lobbying with non-federal funds that takes place in connection with obtaining a Federal award 60

200.323 Contract Cost and Price Analysis The non-federal entity must perform a cost and price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications The method and degree of analysis is dependent on the facts surrounding the particular procurement situation Must make independent estimates before receiving bids or proposals 61

200.323 Contract Cost and Price Analysis (cont.) The non-federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed Consideration must be given to the complexity of the work to be performed, the risk borne by the contractor and the quality of it s record of past performance What is reasonable profit as no guidelines have been provided to date under the Uniform Guidance 62

200.323 Contract Cost and Price Analysis (cont.) Costs or prices based upon estimated costs for contracts under the Federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the non-federal entity under Subpart E Cost Principles of this part. The cost plus a percentage of cost and percentage of construction cost method of contracting must not be used. 63

200.323 Contract Cost and Price Analysis (cont.) 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 Offeror should certify that individual elements of cost are true, correct and verifiable from the contractors accounting system 64

200.323 Contract Cost and Price Analysis (cont.) Accounting systems differ between contractors and exact dollar comparison between individual cost elements may not constitute a valid comparison A certain expense may be charged differently by various contractor s Direct vs. indirect for the identical expense 65

200.323 Contract Cost and Price Analysis (cont.) Cost and Price Analysis Checklist 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 If no, then further effort is required to make these two figures more compatible 66

200.323 Contract Cost and Price Analysis (cont.) Cost and Price Analysis Checklist Was the overhead (indirect cost) rate used in the contractor s proposal determined by audit? If yes determine when audit was completed and whether the overhead rate can be categorized as current If no determine what basis the overhead rate was calculated and then validate acceptability Was a spreadsheet used to show graphically a comparison of the cost elements? Although not mandatory, its use is highly recommended 67

200.323 Contract Cost and Price Analysis (cont.) Cost and Price Analysis Checklist Were individual results from cost analysis used to determine negotiation cost targets? Remember the proposal is the contractor s. Justification is required for any cost element questioned 68

200.323 Contract Cost and Price Analysis (cont.) Cost and Price Analysis Checklist If possible, entities should adhere to maximum Federal fee limitations under cost reimbursement arrangements 10% on estimated costs 15% of the estimated cost on Research and Development 6% of the estimated cost of Construction or Architectural Engineering Does the negotiated fee fall within these stated limitations 69

Fixed Amount Subawards Fixed amount awards means a type of grant agreement under which the Federal awarding agency or passthrough entity provides a specific level of support without regard to actual costs incurred under the Federal award. This type of Federal award reduces some of the administrative burden and record-keeping requirements for both the non-federal entity and Federal awarding agency or pass-through entity. 70

Fixed Amount Subawards (cont.) Accountability is based primarily on performance and results. With prior written approval from the Federal awarding agency, a pass-through entity may provide subawards based upon fixed amounts up to the Simplified Acquisition thresholds. 71

Fixed Amount Subawards (cont.) The Federal award amount is negotiated using the cost principles (or other pricing information) as a guide. The Federal awarding agency or pass-through entity may used fixed amount awards if the project scope is specific and if adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on a reasonable estimate of actual cost. 72

Fixed Amount Subawards (cont.) Except in the case of termination before completion of the Federal award, there is no governmental review of the actual costs incurred by the non-federal entity in performance of the award. A fixed amount award cannot be used in programs which require mandatory cost sharing or match. 73

Fixed Amount Subawards (cont.) The non-federal entity must certify in writing to the Federal awarding agency or pass-through entity at the end of the Federal award that the project or activity was completed or the level of effort was expended. If the required level of activity or effort was not carried out, the amount of the Federal award must be adjusted. 74

Fixed Amount Subawards (cont.) Periodic reports may be established for each Federal award. Changes in principal investigator, project leader, project partner, or scope of effort must receive the prior written approval of the Federal awarding agency or pass-through entity. 75

Purchasing File Documentation Requirements History of the procurement Rationale for procurement method used Selection of contract type Basis of selection of successful offeror Basis for contract cost or prices Audit readiness OMB 2016 Compliance Supplement 76

200.324 Federal Awarding Agency or Pass-through Entity Review The non-federal entity must make available, upon request of the Federal awarding agency or passthrough entity, technical specifications on proposed procurements when there is a belief by the Federal awarding agency such review is needed to ensure the item or service specified is the one being proposed for acquisition 77

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The non-federal entity must make available, upon request of the Federal awarding agency or passthrough entity pre-procurement review procurement documents such as: Requests for proposals or IFB s, or Independent cost estimates 78

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The above procurement documents must be made available when: The non-federal entity s procurement procedures or operation fails to comply with the procurement standards in 200.318 The procurement is expected to exceed the Simplified Acquisition Threshold and: Is to be awarded without competition or only one bid is received in response to a solicitation Specifies a brand name product 79

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The above procurement documents must be made available when: The procurement is expected to exceed the Simplified Acquisition Threshold and: It is to be awarded to other than the apparent low bidder under a sealed bid procurement; or The proposed contract modification changes the scope of a contract or increases the contract award in excess of the Simplified Acquisition Threshold 80

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The non-federal entity is exempt from the preprocurement review if the Federal awarding agency or pass-through entity determines that its procurement systems comply with this part 81

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The non-federal entity may request that its procurement system be reviewed by the Federal awarding agency or pass-through entity to determine whether its system meets these standards in order for its system to be certified Generally these reviews must occur where there is continuous high-dollar funding, and third party contract are awarded on a regular basis 82

200.324 Federal Awarding Agency or Pass-through Entity Review (cont.) The non-federal entity may self certify its procurement systems: Self certification will not limit the Federal awarding agency s right to survey the system The Federal awarding Agency may rely on written assurances from the non-federal entity that it is complying with these standards The non-federal entity must cite specific policies, procedures, regulations, or standards as being in compliance with these requirements and have its system available for review 83

Fraud Risks in the Acquisition Process Procurement planning Solicitation Evaluation and selection Administration Post procurement 84

Conflicts of Interest and Code of Conduct Requirements 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 must provide for disciplinary actions to be applied for violations by officers, employees or agents of the non-federal entity 85

Conflicts of Interest and Code of Conduct Requirements (cont.) 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. 86

Conflicts of Interest and Code of Conduct Requirements (cont.) Such a conflict would arise when: The employee, officer or agent or Any member of their immediate family or His or her partner, or Any organization that 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 contract. 87

Conflicts of Interest and Code of Conduct Requirements (cont.) 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 to eliminating potential problems. 88

Conflicts of Interest and Code of Conduct Requirements (cont.) Non-Federal personnel should additionally: Be familiar with any code of ethics 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 Avoid, at all times, even the appearance of a conflict of interest Ensure that proposal evaluators (price and technical) or member of their immediate families do not have a financial interest in the companies being evaluated 89

Conflicts of Interest and Code of Conduct Requirements (cont.) Organizational Conflicts of Interest (OCI) If the non-federal entity has a parent, affiliate, or subsidiary organization, the non-federal entity must also maintain written standards of conduct covering organizational conflicts of interest OCI s mean that because of relationships with a parent company, affiliate, or subsidiary organization, the non-federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization 90

Conflicts of Interest and Code of Conduct Requirements (cont.) Code of Conduct Checklist 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? If 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 91

Conflicts of Interest and Code of Conduct Requirements (cont.) Code of Conduct Checklist Is there any indication that the SOW might be restrictive? If yes the SOW must be corrected and the RFP amended or canceled, as appropriate Have there been any protest or hints of improprieties from any outside sources? If yes, the validity must be determined and action taken accordingly 92

Conflicts of Interest and Code of Conduct Requirements (cont.) Code of Conduct Checklist Has there been an appearance of conflicts of interest relating to the proposed contractual actions? If yes a thorough investigation should be conducted and may require corrective actions taken Has brand name or equal been used excessively in similar solicitations that might be interpreted as leading to a conflict of interest? If yes the work specification, if possible should be expanded in order to achieve more competition 93

Conflicts of Interest and Code of Conduct Requirements (cont.) Code of Conduct Checklist 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 no, a signed statement should be obtained from each evaluator 94

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 Contract administration refers to post-award actions by the non-federal entity to ensure the terms and conditions of the contract are met. 95

Contract Administration (cont.) A non-federal entity will follow the same procedures for procuring property and services under a grant as it uses for it s non-federal funds Delegations-Non-Federal entity management shall delegate administration responsibility to designated personnel selected for their technical and administrative capability to administer the contract effectively 96

Contract Administration (cont.) 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 after the non-federal entity determines that contract terms and conditions have been met 97

Contract Administration (cont.) Progress Reports-Under cost reimbursement contracts, progress/status reports are required monthly 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 actions should be taken 98

Contract Administration (cont.) Invoice Processing-Under cost reimbursement contracts, reimbursement invoices are submitted normally by the contractor on at least a monthly basis There must be a correlation between dollars paid incrementally to the contractor and the contract progress in consonance with an acceptable tolerance level that was established 99

Contract Administration (cont.) Consent to Subcontract-Non-Federal entities shall establish procedures to review and give prior consent for subcontracts awarded by a prime contractor. Monetary consent levels may be established at the discretion of the non-federal entity. Non-Federal entity Contract Close-out- Is an important function of contract administration and may characterized logically as the last of the many functions related to contract administration 100

Contract Administration (cont.) Contract Administration Checklist Have delegations been made in writing to include all operational and administrative aspects of contract post award activity? If no, action should be taken to have proper delegation's made in writing For materials and hardware, do invoices submitted by the contractor include evidence of acceptance by the non- Federal entity? If no the invoice should not be paid until evidence of acceptance is indicated 101

Contract Administration (cont.) Contract Administration Checklist On cost reimbursement contracts, before acceptance by the non-federal entity, has contract dollar reimbursement been reconciled with available contract specified funding? If no, procedures shall be developed to verify funding availability before acceptance is made Are progress reports reviewed to validate correctness and to determine if contract delivery schedules/ milestones are being met? If no, progress related to milestones should be analyzed to determine contract status. If the contractor is in violation of the contract requiring progress report, action should be taken to enforce the contract terms and conditions 102

Contract Administration (cont.) Contract Administration Checklist Are invoices submitted by the contractor for materials and equipment analyzed by the non-federal entity before authorizing payment? If no, procedures shall be developed to analyze all invoices submitted to ensure availability Under cost reimbursable contracts, are the dollars requested by the contractor compatible with progress indicated on status reports? If no, percent of contract completion indicated on progress reports should be compatible with total funds requested for reimbursement 103

Contract Administration (cont.) Contract Administration Checklist Is availability of funds determined before approval of the invoice authorizing payment? If no, funds availability must be determined before authorizing the invoice for payment 104

Contract Administration (cont.) Contract Close-out Checklist Have contract funds been reconciled? Have any remaining funds been de-obligated? Have all invoices been paid? Has property furnished or purchased by the non-federal entity been returned or accounted for in accordance with existing procedures? Has the non-federal entity received a certification from the contractor that all bills relating to the contract have been paid? Have all contract deliverables been inspected and accepted by the non-federal entity? 105

Contract Administration (cont.) Contract Close-out Checklist Have any law suits/legal actions relating to contract activity been settled? On cost reimbursement contracts, is the non-federal entity satisfied that all claimed costs are allowable costs relating to contract activity? Has a bi-lateral amendment been executed reflecting contract close-out? Contract close-out is not complete if any of the question reflect a no response. 106

Vendor Integrity, Capability and Performance Requirements Sample questions that could be asked of potential vendors or awardees: Within the past five years have you or any of your affiliates been: Suspended or debarred from any contracting process or been disqualified on any government procurement? Subject to a denial or revocation of a government prequalification? Denied a contract or had a bid rejected based upon a finding of nonresponsibility by a government entity? Cancelled or terminated for cause on any contract? 107

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Within the past five years have you or any of your affiliates been: Had a revocation, suspension, or disbarment of any business or professional permit and/or license? The subject of an investigation, whether open or closed, by any government entity for a civil or criminal violation? The subject of an indictment, grant of immunity, judgment or conviction (including entering into a plea bargain) for conduct constituting a crime? 108

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Within the past five years have you or any of your affiliates been: The recipient of any formal unsatisfactory performance assessment(s) from any government entity on any contract? 109

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Within the past five years, has any individual previously identified, any other key employees not previously identified or any individual having the authority to sign, execute, or approve bids, proposals, contracts or supporting documentation been subject to an investigation, whether open or closed, by any government entity for a civil or criminal violation for any business related conduct? 110

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Within the past five years, has any individual previously identified, any other key employees not previously identified or any individual having the authority to sign, execute, or approve bids, proposals, contracts or supporting documentation been subject to an indictment, grant of immunity, judgment, or conviction of any business related conduct constituting a crime including, but not limited to, fraud, extortion, bribery, racketeering, price fixing, bid collusion or any crime related to truthfulness? 111

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Has the grantee or any of the grantee s related parties paid any third party or agent, either directly or indirectly, to aid in the securing of this grant? Has the grantee or any of the grantee s related parties agreed to select specific consultants, contractors, suppliers or vendors to provide goods or services in connection with the grant funded project as a condition of receiving the grant? 112

Vendor Integrity, Capability and Performance Requirements (cont.) Sample questions that could be asked of potential vendors or awardees: Will any consultants, contractors, suppliers and vendors selected to provide goods or services in connection with the grant funded project result in a conflict of interest, or if consultants, suppliers and vendors retained in connection with the grant funded project have already been selected, could their selection result in a conflict of interest? 113

Vendor Integrity, Capability and Performance Requirements (cont.) Sample certification might contain: I am authorized on behalf of the applicant and its governing body to submit this information. All of the information contained herein and all statements, data and supporting documents which have been made or furnished, are true and correct and complete to the best of my knowledge and belief. I recognize that this questionnaire is submitted for the express purpose of assisting the entity in making responsibility determinations regarding an award of contracts or grants or approval of a subcontract. 114

Vendor Integrity, Capability and Performance Requirements (cont.) Sample certification might contain: I acknowledge that the entity will rely on such information disclosed by me. I acknowledge that the entity may, in its discretion, by means which it may so choose, verify the truth and accuracy of all statements made herein. I understand that if any change occurs in the information I have provided, that I will promptly notify the entity of such changes and that failure to notify the entity of such changes will constitute cause of disapproval of any application or revocation of any agreement made with the entity 115

Summary of Procurement Concepts Contracting Practices to Employ: Ensure adequate competition Prepare IFB/RFP Maintain bidders list(s) Conduct interviews for RFP Obtain prior approval where required 116