Procurement 1 1
Fd edera l Procurement Regulations lti Rules: State and Local Governments 10 CFR 600.236 Non-Profit Organizations 10 CFR 600.140-148 2 2
Fd Federal Procurement Regulations lti Standards: Recipient is responsible for all procurement contractual and administrative i ti issues Maintain Code of Conduct All procurement transactions must provide for open and free competition 3 3
Fd Federal Procurement Regulations lti Grantees and Subgrantees must have procurement procedures that include: Procedures that avoid the purchase of unnecessary or duplicative items. Analysis of lease and purchase alternatives. Preference for products and services that conserve natural resources and protect the environment. Grantees are encouraged to enter into State and local inter- governmental agreements for purchasing common goods and services. 4 4
Fd Federal Procurement Regulations lti Grantees are encouraged to use Federal excess and surplus property. Procedures to ensure awards are only to responsible contractors. Records that detail the significant history of a procurement. Grantees will have protest procedures. 5 5
Fd Federal Procurement Regulations lti All procurement transactions will be conducted in a manner providing full and open competition. There must be written selection procedures. Also, the solicitation must include a clear and accurate description of the service or material being procured. 6 6
Methods of Procurement 7 Small purchase procedures for services and goods that will not cost more than $25,000 in the aggregate. g Sealed bids (formal advertising). Competitive proposals. Non-competitive proposals may only be used when the item is available from one source, emergency situations, the awarding agency authorizes, or competition is determined inadequate. Pre-award review may be required. 7
Methods of Procurement Sealed Bid Proposals: Made early in the procurement cycle: Allows vendors time to prepare their bids to meet the specification of the solicitation Solicitation information includes: What is being purchased Terms & conditions the vendors must meet Where & when sealed bids will be opened 8 8
Methods of Procurement Sealed Bid Proposals: Awards are made to the lowest priced responsible vendor: Capable of compliance will all bid specification Capability of performing the work Has administrative capacity Award becomes a firm, fixed price contract 9 9
Methods of Procurement Sealed Bid Proposals: Vendor s payments: Lump sum -paid for successful performance Unit price - paid for each deliverable unit is completed in the contract Must have at least 2 responsive suppliers competing for contract t 10 10
Methods of Procurement Competitive Proposal Procurements: Proposal types: Request for Proposal Request for Qualifications Request for Information 11 11
Methods of Procurement Competitive Proposal Procurements: Publicized method same as sealed competitive process (invitation for bids) All evaluation factor publicized & their importance All vendor submittals received and evaluated Proposals must be solicited from a number of qualified sources Organization must have a method for conducting technical evaluation of all proposals & for selecting awardees 12 12
Methods of Procurement Competitive Proposal Procurements: Award made to the most responsive firm whose proposal is most advantageous to the program Price and other factors considered to determine most advantageous offer Must have at least 2 responsive suppliers competing for contract 13 13
Methods of Procurement Non Competitive Procurements: Non competitive procurements must be approved by funding agency before awarding Organization must devise & document its own analysis process to ensure fair prices are being charged Non competitive contracts become negotiated contracts Organization determines what level of organizational leadership is required to approve this method 14 14
Methods of Procurement Non Competitive Procurements: May be used only when it is not feasible for: Small purchase procedures Sealed bid or competitive proposals and one of the following conditions applies: Item only available from a single source Emergency exist that will not permit a delay resulting from completive biding 15 15
Methods of Procurement Non Competitive Procurements: Organization authorized noncompetitive proposals After solicitation of a number of sources, competitive is determined as inadequate Cost analysis is required which verifies: Proposed cost data Projection of the data Evaluation of costs and profits 16 16
Methods of Procurement Grantees are to encourage minority firms, women s business enterprises, and labor surplus area firms. 17 17
Methods of Procurement There must be a cost price analysis in connection with every procurement. 18 18
Methods of Procurement Grantees must make available proposed procurement technical specifications upon request by the awarding agency. 19 19
Methods of Procurement The bonding requirements of a recipient will be accepted if the awarding agency s interest is adequately protected. If not, there are specific requirements described in 10 CFR 600. 20 20
Contracts t The regulations require a number of provisions that must be included in all contracts awarded with Federal government funds. 21 21
12 Steps to Procurement 1. Determine what you will be purchasing 2. Establish the timeframe for the purchase. 3. Identify the lead individual to handle the purchase. 4. Prepare the general instructions. 5. Prepare the specifications and price quote sheets. 6. Advertise the solicitation 22 22
12 Steps to Procurement 7. Conduct bidder s conference. 8. Receive bids/proposals/quotations. 9. Evaluate the bids/proposals/quotations. 10. Select the contractor(s)/vendor(s) 11. Establish the solicitation file. 12. Enter into agreements with contractor(s)/vendor(s). 23 23
Procurement Procedures Procedures are administrative communications. Written Prescribed Standing 24 24
Procurement Procedures Procedures assure that: Staff know what is expected of them Staff know what is expected of others Staff interact properly Policies can be complied with Practices are uniform and fair Operating errors are reduced d Oral instructions minimized Knowledge does not leave with a staff person 25 25
Procurement Procedures 26 Good procedures are: Understandable Unambiguous Unequivocal Uncluttered Detailed Logical Consistent 26
Sample Procedure Structure t Purpose Specific Procedure with Staff Assignments Additional Information Mandated Forms 27 27
Determination ti of Procurement Methods Purpose: The purpose is to establish the appropriate procurement method to be used for the goods or services to be purchased. The methods allowable comply with agency, state and federal regulation requirements. 28 28
Determination ti of Procurement Methods 29 Activities: 1. Establish cost estimate for the purchase in the aggregate g and submit to Contract Officer 2. Select the appropriate method for the procurement. a. $ in the aggregate, and lower will follow small purchase procedures. b. $ in the aggregate, and over will follow large purchase procedures 29
De term inati on of Procurement Method s Activities: 3. Sub mit d escription and cost estimate t for approval. 4. Authorize purchases over $ and Program Director will authorize purchases under $. 30 30
Small Purchase Procedures Purpose: To provide guidance to Program Directors making 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 $ in the aggregate. Small Purchase Procedures Fall under Agency Requirements 31 31
Bid/Proposal Package Purpose: To establish the process for development of a standard bid package for goods and services. 32 32
Bid/Proposal Package Development Activities: 1. Prepare the scope of work statement and/or specifications of materials/services to be solicited. 2. Establish the solicitation timeframe which includes: a. Date and time period for advertisement. b. Closing date for receipt of bids/proposals. c. Opening date of bids/proposals. 33 33
Bid/Proposal Package Development Activities: 3. Establish minimum requirements. 4. Establish evaluation criteria, i if applicable. 34 34
Bid/Proposal Package Development 35 Activities: 5. Prepare the bid package which includes: a. Cover sheet (closing and opening date) b. Statement of work specifications or materials to be purchased. c. Minimum requirements d. Evaluation criteria e. Work quality standards 35
Bid/Proposal Package Development Activities: 5. Prepare the bid package which includes: f. Proposal format g. Sample contract h. Date of bidder's conference i. Right of the agency to accept or reject all bids j. Period of contract 36 36
Sliitti Solicitation of Bid/P Bids/Proposals Purpose: To establish a standard method of advertising procurement activities iti to assure maximum open and free competition. 37 37
Sliitti Solicitation of Bid/P Bids/Proposals Activities: 1. Prepare the advertisement for newspaper. 2. Prepare notice to be posted. 3. Submit to Contracts. 4. Submit advertisement to newspaper and post advertisement. 38 38
Sliitti Solicitation of Bid/P Bids/Proposals Activities: 5. Secure documentation of advertisement, i.e. newspaper - tear sheet, posting signed statement t t from the office where it was posted. 6. Notify all individuals on the bidders list of solicitation, if applicable. 39 39
Sliitti Solicitation of Bid/P Bids/Proposals Activities: 7. Record the name of the individuals or firms requesting bid packages, the date the request was received, and the date the bid package was sent. 8. Prepare technical information for bidder s conference. 9. Facilitate bidder's conference. 40 40
Sliitti Solicitation of Bid/P Bids/Proposals Activities: 10. Provide sign-in sheet for bidder s conference and ensure all individuals id sign. 11. Record minutes of bidder s conference. 41 41
Receipt of Bids/Proposals Purpose: To establish procedures that will be followed to assure equal treatment t t to all prospective bidders. 42 42
Receipt of Bids/Proposals Activities: 1. Log all sealed bids/proposal into the bid/proposal control sheet. 2. Stamp each bid with the date and time received and initial the date and time stamp. 43 43
Receipt of Bids/Proposals Activities: 3. Store bids/proposals in a locked location unopened until the time of opening. 4. Return all bids/proposals received/submitted after the closing date unopened to bidder including a letter of explanation as to the reason it was returned. 44 44
Evaluation of Bids/Proposals and Contract t Awards Purpose: To evaluate the bids/proposals submitted, select the contractor t and award the contract. t 45 45
Eval ua ti on o f Bid s /Proposa ls and Contractor t Selection 1. Conduct bid opening (public or private). 2. For public bid openings (IFB's) the bid amounts will be announced at the opening. 3. Schedule meeting of evaluation panel. 46 46
Evaluation of Bids/Proposals and Contractor t Selection 4. Evaluate bids/proposals for compliance with all requirements. 5. Evaluate the responsive bids/proposals based on cost of criteria established in the bid package. 6. Prepare summary of points/costs for all of the responsive bidders. 47 47
Evaluation of Bids/Proposals and Contractor t Selection 7. Submit the name, the bid amount and justification for selection of the individual/firm selected for contract award to administration for approval. 48 48
Eval ua ti on o f Bid s /Proposa ls and Contractor t Selection 8. Send the notice to contract to select contractor and secure the following information. a. Certification of insurance, if applicable. b. Review and approve suppliers list, if applicable. c. Secure a copy of all required licenses, if applicable. d. Certification regarding suspension and debarment from suppliers and subcontractors. 49 49
Evaluation of Bids/Proposals and Contractor t Selection 9. Verify that the insurance meets requirements, if applicable. 10. Secure fully executed contract. 11. Provide written notification to unsuccessful bidders. 12. Schedule debriefing conference for bidders based on individuals requests. 50 50
Protest t Procedures Purpose: To provide specific actions which will be taken should a protest t be filed by an unsuccessful bidder. 51 51
Protest t Proced dures Activities: 1. Notify contractor that a complaint of protest has been filed. 2. Schedule the meeting of protest committee to review complaint. 3. Conduct meeting to evaluate protest within ten (10) wor king days of the filing of the receipt of protest t. a. Record minutes of evaluation of protest committee meeting. 52 52
Protest t Procedures Activities: 4. Issue a decision to agency administration within five (5) working days of the meeting of the protest t committee. 5. Notify protester of the decision of the protest committee. 53 53
Records Management Purpose: To detail the required information that must be maintained in the bid process, contract, t and protest t (if applicable) to ensure proper documentation. 54 54
Records Management Activities: 1. Establish and maintain the bid file(s) which includes: a. Cost estimated t and approval to proceed with the procurement. b. Documentation of advertisement. c. Bid/proposal p package. d. List of individuals attending the bidders conference (sign-in sheet). 55 55
Records Management Activities: 1. Establish and maintain the bid file(s) which includes: e. Minutes of the bidders conference. f. List of evaluation panel members. g. Bids received. h. Summary sheet and work papers. i. Rejection letters. 56 56
Records Management Activities 2. Establish and maintain contractor files which include the following information: a. Bid/Proposal b. Notice to Contract c. Certificate of Insurance d. Licenses, if applicable e. Payment Requests 57 f. Performance Evaluations 57
Records Management Activities 2. Establish and maintain contractor files which include the following information: g. Change Order, if applicable h. Contract i. Certifications Suspension and Debarment Lobbying 58 Drug Free Workplace 58
Records Management Activities: 3. Protest File a. List of protest committee members. b. Copy of the protest committee correspondence, meeting minutes, and work papers. 59 59
Cost Principles i The Cost Principles Address Four Major Areas: Basic Guidelines for Costs Cost Allocation Plan Indirect Cost Allowability for selected costs 60 60
Basic Guidelines for Costs Costs are allowable if they are necessary and reasonable, not prohibited under state or local laws, conform to laws and regulations, given consistent treatment, comply with generally accepted accounting principles, and are not included as a cost under other federal programs. Allocable costs assigned must be in proportion to the benefits received, cannot be shifted to overcome deficiencies in other programs, must be supported by a cost allocation plan. 61 61
Basic Guidelines for Costs Applicable credits are to be used to reduce expenditures applicable to a given grant. The total cost of a grant program is comprised of the allowable direct and allowable indirect costs less applicable credits. 62 62
Allocation of Costs Identify each of the shared costs that should be allocated. Identify each of the shared costs that will be included as part of the indirect cost pool, if applicable. Determine the method in which costs will be allocated so that each program is paying proportionately for the benefits from the cost. Prepare the cost allocation plan and submit for internal approval. 63 63
Steps in Preparing a Cost Allocation Plan Identify the service and costs of each service to be allocated. Determine the method (unit) for allocating the costs of each service to user programs. Allocate costs mathematically to user programs. 64 64
Direct Cost Allocation Plan Documentation ti The following supporting information would be a part of a cost allocation plan. List of grants, contracts t and agreements. Agency organization chart. Job description - for each general and administrative staff person. 65 65
Direct Cost Allocation Plan Documentation ti The following supporting information would be a part of a cost allocation plan. Work sheet for each individual id showing personnel and non personnel costs, chargeable hours and calculation of that employee's billing rate. Summary of non-personnel general administrative costs and allocation to each general and administrative position. 66 66
Direct Cost Allocation Plan Documentation ti The following supporting information would be a part of a cost allocation plan. Copy of the previous audit report supporting the total t general and administrative costs use in these calculations. Copy of the time sheet form which will be used by general and administrative staff. Copy of the monthly billings summary form that will be used to invoice each program. Space cost allocation for each property 67 67
Idi Indirect Costs Indirect costs are shared costs, to be distributed by an indirect cost rate, that must be grouped into one or more equitable cost pools to determine appropriate p rate(s). A formal indirect cost proposal must be submitted and approved. Once approval is granted, charges can then be distributed by means of an indirect cost rate. 68 68
Idi Indirect Costs Application of indirect cost rates must be supported by formal accounting records available for auditing. Indirect costs (or administrative costs) are no different than direct costs in that they have to be allowable under the federal government cost principles. 69 69
Types of Indirect Cost Rates Predetermined rate - negotiated, usually for one year and not subject to adjustment. Fixed rate with carry forward -adjusted td in ft future period. id Final rate - not subject to adjustment. Provisional rate - temporarily subject to adjustment. 70 70
Cognizant Agency Receive the grantee's indirect cost proposal. Review it in the detail it deems necessary to reach a conclusion. Try to reach an agreement with the proposing agency on a rate both will find acceptable. 71 71
Key Points to Remember Costs included as indirect costs should not also be charged directly to programs. All costs could be charged to programs on a direct basis, if one wanted to incur the time and expenses to do so. Costs must be allowable under the cost principles. 72 72
Key Points to Remember Funds spent on administrative costs are unavailable for programmatic use. Funds spent on administrative i ti costs, which h are not charged to the program receiving the benefit, must be paid for by other funds of the agency. Many funding sources limit the amount of total administrative costs (direct and indirect). 73 73
Cost Category A-87 A-122 A-21 Allowable with State & Local Nonprofit Educational Allowable Approval Governments Organization Institutions Not Allowable Accounting X X Advertising Read Allowability X X X Advisory Council X X Alcoholic Beverages X X X X Alumni Activities X X Audit Services X X Automatic Data Processing X X Bad Debts X X X X Bid and Proposal Costs (reserved) X Bonding Costs X X X Budgeting X X Building Lease and Management X X Civil Defense Costs Read Allowability X Commencement and Convocation Costs Read Allowability X Communication Costs X X X X Compensation for Personal Services X X X X Contingency Provisions X X X X Contributions X X X Deans of Faculty/Graduate Schools X X 74 74
Cost Category Defense and Prosecution A-87 State & Local Governments A-122 Nonprofit Organization A-21 Educational Institutions Allowable Allowable with Approval Not Allowable Read Allowability X X X Depreciation of Use Allowance X X X X Disbursing Services X X Donations X X X Employee Morale, Health and Welfare Costs and Credits X X X X Entertainment Costs X X X X Equipment and other Capital Expenditures X X X X Executive Lobbying Costs X X Fines and Penalties X X X Fringe Benefits X X X X General Government Expenses X X Goods/Services for Personal use X X X Housing and Personal Living Expenses X X X Lobbying X X X X Idle Facilities and Idle Capacity X X X Independent Research and Development (reserved) X Insurance and Indemnification X X X X 75 75
Cost Category Interest, Fund-Raising, and Investment Management Costs Read the Regulations A-87 A-122 A-21 Allowable with State & Local Nonprofit Educational Allowable Not Allowable Approval Governments Organization Institutions X X X X Labor Relations Costs X X X Legal Expenses X X X Losses on Other Awards X X X X Maintenance and Repair Costs X X X X Materials and Supplies X X X X Meetings, Conferences X X X Memberships, Subscriptions and Professional Activity Costs X X X X Motor Pools X X Organization Costs X X Overtime, Extra Pay, Shift and Multi-Shift Premiums X X A-87 A-122 Page Charges in Professional Journals X X Participant Support Costs X X Patent Costs X X X Payroll Preparation X X Pension Plans X X X Personnel Administration X X 76 76
Financial Management Cost Category A-87 A-122 A-21 Allowable with State & Local Nonprofit Educational Allowable Approval Governments Organization Institutions Not Allowable Plant Security Costs X X Preagreement Costs X X Pre-award Costs X X X Professional Costs X X X X Profit and Losses on Disposition of Depreciable Property or Other Capital Assets X X X X Proposal Costs X X X Publication and Printing Costs X X A-87 A-122 Rearrangement and Alteration Costs X X X X Reconversion Costs X X X Recruiting Costs Read Allowability X X Relocation Costs Subject to Limitations X X Rental Costs X X X X Royalties and other costs for use of patents and copyrights X X Scholarships and Student Aid Costs X X X Selling and Marketing X X Severance Pay X X X X Specialized Service Facilities X X X Student Activity Costs X X 77 77
Financial Management Cost Category A-87 State & Local Governments A-122 Nonprofit Organization A-21 Educational Institutions Allowable Allowable with Approval Not Allowable Taxes Termination Costs Training and Education Costs X X X X X X X X X X Transportation Costs Travel Costs Trustee Travel and Subsistence X X X X X X X X X Under Recovery X X 78 78
Real Property and Equipment Requirements Equipment is defined as tangible, nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. Title to equipment acquired under a grant or subgrant will vest with the grantee or recipient unless specified. 79 79
Real Property and Equipment Requirements Equipment shall be used for the program or project it was acquired. The equipment may be used for other Federally supported projects if it does not interfere with the project for which it was originally acquired. Equipment shall not be used to provide services to nonfederal outside organizations for a fee less than private companies charge. 80 80
Real Property and Equipment Requirements If replacement equipment is needed the equipment to be replaced may be used as a trade-in. The property management requirements include the following: Property records must include a description, serial number, source, title, cost, acquisition date, percent of Federal participation, location, use, condition, and ultimate disposition. 81 81
Real Property and Equipment Requirements The property management requirements include the following: Physical inventory must be done at least every two years. A control system to ensure safeguards against loss, damage, or theft. 82 82
Real Property and Equipment Requirements Adequate maintenance procedures. Proper sales procedures. Items with a fair market value (F.M.V.) of $5,000 or less that are no longer needed can be disposed of with no further obligations. Items over $5,000 F.M.V. require the awarding agency to receive its fair share. 83 83
Real Property and Equipment Requirements Federally owned equipment requires a recipient to submit an annual inventory listing. When the equipment is no longer needed a grantee will request disposition instructions from the Federal agency. 84 84
Real Property and Equipment Requirements Weatherization Program Notice 12-3 Vehicles: General rule, DOE will not approve the purchase of any vehicles using Recovery Act funds from date of notice forward. Equipment: General rule, DOE will not approve the purch hase of any equipment using Recovery Act funds from date of notice forward. 85 85
Real Property and Equipment Requirements DOE FAQs How do Grantees and Subgrantees dispose of vehicles and equipment purchased with Recovery Act funds? Should we still be considering approval of vehicle purchases that are not replacement items,? 86 86
Real Property and Equipment Requirements DOE FAQs What should Grantees and Subgrantees do if additional vehicles are needed to complete Recovery Act activities? What is the guidance governing the disposition of vehicles and capital equipment that were purchased with Recovery At Act funds? d? 87 87
Supplies Requirements Title to supplies acquired under an award will vest with the recipient. If there is a residual inventory of unused supplies exceeding $5,000 in total fair market value upon termination or completion of the award and if the supplies are not needed for any other federally sponsored programs the recipient shall compensate the awarding agency for its share. 88 88
Supplies Requirements Weatherization Program Notice 12-3 Materials: Grantees and Subgrantees should not use Recovery Act funds to purchase inventory or materials in bulk for homes that cannot be completed prior to the performance period end date. Material balances should follow state and federal disposition requirements. 89 89
Supplies Requirements DOE FAQs Can Recovery Act purchased materials be carried forward beyond March 31, 2012? Can remaining Recovery Act inventory be transferred to the regular WAP grant? 90 90