CFR PART 85 Administrative Requirements for Grants and Cooperative
Agreements to State, Local and Federally Recognized Indian Tribal
- PROCUREMENT -
- 2001 Edition -
procuring property and services under a grant, a State will follow
the same policies and procedures it uses for procurements from
its non-Federal funds. The State will ensure that every purchase
order or other contract includes any clauses required by Federal
statutes and executive orders and their implementing regulations.
Other grantees and subgrantees will follow paragraphs (b) through
(i) in this section.
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and subgrantees will use their own procurement procedures which
reflect applicable State and local laws and regulations, provided
that the procurements conform to applicable Federal law and the
standards identified in this section.
and subgrantees will maintain a contract administration system
which ensures that contractors perform in accordance with the
terms, conditions, and specifications of their contracts or purchase
and subgrantees will maintain a written code of standards of conduct
governing the performance of their employees engaged in the award
and administration of contracts. No employee, officer or agent
of the grantee or subgrantee shall participate in selection, or
in the award or administration of a contract supported by Federal
funds if a conflict of interest, real or apparent, would be involved.
Such a conflict would arise when:
employee, officer or agent,
member of his immediate family,
or her partner, or
organization which employs, or is about to employ, any of
the above, has a financial or other interest in the firm selected
grantee's or subgrantee's officers, employees or agents will neither
solicit nor accept gratuities, favors or anything of monetary
value from contractors, potential contractors, or parties to subagreements.
Grantee and subgrantees may set minimum rules where the financial
interest is not substantial or the gift is an unsolicited item
of nominal intrinsic value. To the extent permitted by State or
local law or regulations, such standards or conduct will provide
for penalties, sanctions, or other disciplinary actions for violations
of such standards by the grantee's and subgrantee's officers,
employees, or agents, or by contractors or their agents. The awarding
agency may in regulation provide additional prohibitions relative
to real, apparent, or potential conflicts of interest.
and subgrantee procedures will provide for a review of proposed
procurements to avoid purchase of unnecessary or duplicative items.
Consideration should be given to consolidating or breaking out
procurements to obtain a more economical purchase. Where appropriate,
an analysis will be made of lease versus purchase alternatives,
and any other appropriate analysis to determine the most economical
foster greater economy and efficiency, grantees and subgrantees
are encouraged to enter into State and local intergovernmental
agreements for procurement or use of common goods and services.
and subgrantees are encouraged to use Federal excess and surplus
property in lieu of purchasing new equipment and property whenever
such use is feasible and reduces project costs.
and subgrantees are encouraged to use value engineering clauses
in contracts for construction projects of sufficient size to offer
reasonable opportunities for cost reductions. Value engineering
is a systematic and creative analysis of each contract item or
task to ensure that its essential function is provided at the
overall lower cost.
and subgrantees will make awards only to responsible contractors
possessing the ability to perform successfully under the terms
and conditions of a proposed procurement. Consideration will be
given to such matters as contractor integrity, compliance with
public policy, record of past performance, and financial and technical
and subgrantees will maintain records sufficient to detail the
significant history of a procurement. These records will include,
but are not necessarily limited to the following: rationale for
the method of procurement, selection of contract type, contractor
selection or rejection, and the basis for the contract price.
and subgrantees will use time and material type contracts only
a determination that no other contract is suitable, and
the contract includes a ceiling price that the contractor
exceeds at its own risk.
and subgrantees alone will be responsible, in accordance with
good administrative practice and sound business judgment, for
the settlement of all contractual and administrative issues arising
out of procurements. These issues include, but are not limited
to source evaluation, protests, disputes, and claims. These standards
do not relieve the grantee or subgrantee of any contractual responsibilities
under its contracts. Federal agencies will not substitute their
judgment for that of the grantee or subgrantee unless the matter
is primarily a Federal concern. Violations of law will be referred
to the local, State, or Federal authority having proper jurisdiction.
and subgrantees will have protest procedures to handle and resolve
disputes relating to their procurements and shall in all instances
disclose information regarding the protest to the awarding agency.
A protestor must exhaust all administrative remedies with the
grantee and subgrantee before pursuing a protest with the Federal
agency. Reviews of protests by the Federal agency will be limited
of Federal law or regulations and the standards of this section
(violations of State or local law will be under the jurisdiction
of State or local authorities) and
of the grantee's or subgrantee's protest procedures for failure
to review a complaint or protest. Protests received by the
Federal agency other than those specified above will be referred
to the grantee or subgrantee.
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procurement transactions will be conducted in a manner providing
full and open competition consistent with the standards of Sec.
85.36. Some of the situations considered to be restrictive of
competition include but are not limited to:
unreasonable requirements on firms in order for them to qualify
to do business,
unnecessary experience and excessive bonding,
pricing practices between firms or between affiliated companies,
awards to consultants that are on retainer contracts,
conflicts of interest,
only a brand name product instead of allowing an equal product
to be offered and describing the performance of other relevant
requirements of the procurement, and
arbitrary action in the procurement process.
and subgrantees will conduct procurements in a manner that prohibits
the use of statutorily or administratively imposed in-State or
local geographical preferences in the evaluation of bids or proposals,
except in those cases where applicable Federal statutes expressly
mandate or encourage geographic preference. Nothing in this section
preempts State licensing laws. When contracting for architectural
and engineering (A/E) services, geographic location may be a selection
criteria provided its application leaves an appropriate number
of qualified firms, given the nature and size of the project,
to compete for the contract.
will have written selection procedures for procurement transactions.
These procedures will ensure that all solicitations:
a clear and accurate description of the technical requirements
for the material, product, or service to be procured. Such
description shall not, in competitive procurements, contain
features which 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. When it is impractical or uneconomical to
make a clear and accurate description of the technical requirements,
a brand name or equal description may be used as a means to
define the performance or other salient requirements of a
procurement. The specific features of the named brand which
must be met by offerors shall be clearly stated; and
all requirements which the offerors must fulfill and all other
factors to be used in evaluating bids or proposals.
and subgrantees will 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. Also, grantees and subgrantees will
not preclude potential bidders from qualifying during the solicitation
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Methods of procurement to be followed.
by small purchase procedures. 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 fixed
at 41 U.S.C. 403(11) (currently set at $100,000). If small purchase
procedures are used, price or rate quotations shall be obtained
from an adequate number of qualified sources.
by sealed bids (formal advertising). Bids are
publicly solicited and a firm-fixed-price contract (lump sum or
unit price) is awarded to the responsible bidder whose bid, conforming
with all the material terms and conditions of the invitation for
bids, is the lowest in price. The sealed bid method is the preferred
method for procuring construction, if the conditions in Sec. 85.36(d)(2)(i)
order for sealed bidding to be feasible, the following conditions
should be present:
complete, adequate, and realistic specification or purchase
description is available;
or more responsible bidders are willing and able to compete
effectively and for the business; and
procurement lends itself to a firm fixed price contract
and the selection of the successful bidder can be made
principally on the basis of price.
sealed bids are used, the following requirements apply:
invitation for bids will be publicly advertised and bids
shall be solicited from an adequate number of known suppliers,
providing them sufficient time prior to the date set for
opening the bids;
invitation for bids, which will include any specifications
and pertinent attachments, shall define the items or services
in order for the bidder to properly respond;
bids will be publicly opened at the time and place prescribed
in the invitation for bids;
firm fixed-price contract award will be made in writing
to the lowest responsive and responsible bidder. Where
specified in bidding documents, factors such as discounts,
transportation cost, and life cycle costs shall be considered
in determining which bid is lowest. Payment discounts
will only be used to determine the low bid when prior
experience indicates that such discounts are usually taken
advantage of; and
or all bids may be rejected if there is a sound documented
by competitive proposals. The technique of competitive
proposals is normally conducted with more than one source submitting
an offer, and either a fixed-price or cost-reimbursement type
contract is awarded. It is generally used when conditions are
not appropriate for the use of sealed bids. If this method is
used, the following requirements apply:
for proposals will be publicized and identify all evaluation
factors and their relative importance. Any response to publicized
requests for proposals shall be honored to the maximum extent
will be solicited from an adequate number of qualified sources;
and subgrantees will have a method for conducting technical
evaluations of the proposals received and for selecting awardees;
will be made to the responsible firm whose proposal is most
advantageous to the program, with price and other factors
and subgrantees may use competitive proposal procedures for
qualifications-based procurement of architectural/engineering
(A/E) professional services whereby competitors' qualifications
are evaluated and the most qualified competitor is selected,
subject to negotiation of fair and reasonable compensation.
The method, where price is not used as a selection factor,
can only be used in procurement of A/E professional services.
It cannot be used to purchase other types of services though
A/E firms are a potential source to perform the proposed effort.
by noncompetitive proposals is procurement through
solicitation of a proposal from only one source, or after solicitation
of a number of sources, competition is determined inadequate.
by noncompetitive proposals may be used only when the award
of a contract is infeasible under small purchase procedures,
sealed bids or competitive proposals and one of the following
item is available only from a single source;
public exigency or emergency for the requirement will
not permit a delay resulting from competitive solicitation;
awarding agency authorizes noncompetitive proposals; or
solicitation of a number of sources, competition is determined
analysis, i.e., verifying the proposed cost data, the projections
of the data, and the evaluation of the specific elements of
costs and profits, is required.
and subgrantees may be required to submit the proposed procurement
to the awarding agency for pre- award review in accordance
with paragraph (g) of this section.
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Contracting with small and minority firms, women's business enterprise
and labor surplus area firms.
grantee and subgrantee will take all necessary affirmative steps
to assure that minority firms, women's business enterprises, and
labor surplus area firms are used when possible.
steps shall include:
qualified small and minority businesses and women's business
enterprises on solicitation lists;
that small and minority businesses, and women's business enterprises
are solicited whenever they are potential sources;
total requirements, when economically feasible, into smaller
tasks or quantities to permit maximum participation by small
and minority business, and women's business enterprises;
delivery schedules, where the requirement permits, which encourage
participation by small and minority business, and women's
the services and assistance of the Small Business Administration,
and the Minority Business Development Agency of the Department
of Commerce; and
the prime contractor, if subcontracts are to be let, to take
the affirmative steps listed in paragraphs (e)(2) (i) through
(v) of this section.
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Contract cost and price.
and subgrantees must perform a cost or price analysis in connection
with every procurement action including contract modifications.
The method and degree of analysis is dependent on the facts surrounding
the particular procurement situation, but as a starting point,
grantees must make independent estimates before receiving bids
or proposals. A cost analysis must be performed when the offeror
is required to submit the elements of his estimated cost, e.g.,
under professional, consulting, and architectural engineering
services contracts. A cost analysis will be necessary when adequate
price competition is lacking, and for sole source procurements,
including contract modifications or change orders, unless price
reasonableness can be established on the basis of a catalog or
market price of a commercial product sold in substantial quantities
to the general public or based on prices set by law or regulation.
A price analysis will be used in all other instances to determine
the reasonableness of the proposed contract price.
and subgrantees will 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. To establish
a fair and reasonable profit, consideration will be given to the
complexity of the work to be performed, the risk borne by the
contractor, the contractor's investment, the amount of subcontracting,
the quality of its record of past performance, and industry profit
rates in the surrounding geographical area for similar work.
or prices based on estimated costs for contracts under grants
will be allowable only to the extent that costs incurred or cost
estimates included in negotiated prices are consistent with Federal
cost principles (see Sec. 85.22). Grantees may reference their
own cost principles that comply with the applicable Federal cost
cost plus a percentage of cost and percentage of construction
cost methods of contracting shall not be used.
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Awarding agency review.
and subgrantees must make available, upon request of the awarding
agency, technical specifications on proposed procurements where
the awarding agency believes such review is needed to ensure that
the item and/or service specified is the one being proposed for
purchase. This review generally will take place prior to the time
the specification is incorporated into a solicitation document.
However, if the grantee or subgrantee desires to have the review
accomplished after a solicitation has been developed, the awarding
agency may still review the specifications, with such review usually
limited to the technical aspects of the proposed purchase.
and subgrantees must on request make available for awarding agency
pre-award review procurement documents, such as requests for proposals
or invitations for bids, independent cost estimates, etc. when:
grantee's or subgrantee's procurement procedures or operation
fails to comply with the procurement standards in this section;
procurement is expected to exceed the simplified acquisition
threshold and is to be awarded without competition or only
one bid or offer is received in response to a solicitation;
procurement, which is expected to exceed the simplified acquisition
threshold, specifies a ``brand name'' product; or
proposed award is more than the simplified acquisition threshold
and is to be awarded to other than the apparent low bidder
under a sealed bid procurement; or
proposed contract modification changes the scope of a contract
or increases the contract amount by more than the simplified
grantee or subgrantee will be exempt from the pre- award review
in paragraph (g)(2) of this section if the awarding agency determines
that its procurement systems comply with the standards of this
grantee or subgrantee may request that its procurement system
be reviewed by the awarding agency to determine whether its
system meets these standards in order for its system to be
certified. Generally, these reviews shall occur where there
is a continuous high-dollar funding, and third-party contracts
are awarded on a regular basis.
grantee or subgrantee may self-certify its procurement system.
Such self-certification shall not limit the awarding agency's
right to survey the system. Under a self-certification procedure,
awarding agencies may wish to rely on written assurances from
the grantee or subgrantee that it is complying with these
standards. A grantee or subgrantee will cite specific procedures,
regulations, standards, etc., as being in compliance with
these requirements and have its system available for review.
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For construction or facility improvement contracts or subcontracts
exceeding the simplified acquisition threshold, the awarding agency
may accept the bonding policy and requirements of the grantee
or subgrantee provided the awarding agency has made a determination
that the awarding agency's interest is adequately protected. If
such a determination has not been made, the minimum requirements
shall be as follows:
bid guarantee from each bidder equivalent to five percent of the
bid price. The ``bid guarantee'' shall consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance
of his bid, execute such contractual documents as may be required
within the time specified.
performance bond on the part of the contractor for 100 percent
of the contract price. A ``performance bond'' is one executed
in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by law of all persons
supplying labor and material in the execution of the work provided
for in the contract.
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A grantee's and subgrantee's contracts must contain provisions
in paragraph (i) of this section. Federal agencies are permitted
to require changes, remedies, changed conditions, access and records
retention, suspension of work, and other clauses approved by the
Office of Federal Procurement Policy.
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)
for cause and for convenience by the grantee or subgrantee including
the manner by which it will be effected and the basis for settlement.
(All contracts in excess of $10,000)
with Executive Order 11246 of September 24, 1965, entitled "Equal
Employment Opportunity", as amended by Executive Order 11375 of
October 13, 1967, and as supplemented in Department of Labor regulations
(41 CFR chapter 60). (All construction contracts awarded in excess
of $10,000 by grantees and their contractors or subgrantees)
with the Copeland "Anti-Kickback" Act (18 U.S.C. 874) as supplemented
in Department of Labor regulations (29 CFR part 3). (All contracts
and subgrants for construction or repair)
with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) as supplemented
by Department of Labor regulations (29 CFR part 5). (Construction
contracts in excess of $2000 awarded by grantees and subgrantees
when required by Federal grant program legislation)
with Sections 103 and 107 of the Contract Work Hours and Safety
Standards Act (40 U.S.C. 327A 330) as supplemented by Department
of Labor regulations (29 CFR part 5). (Construction contracts
awarded by grantees and subgrantees in excess of $2000, and in
excess of $2500 for other contracts which involve the employment
of mechanics or laborers)
of awarding agency requirements and regulations pertaining to
of awarding agency requirements and regulations pertaining to
patent rights with respect to any discovery or invention which
arises or is developed in the course of or under such contract.
agency requirements and regulations pertaining to copyrights and
rights in data.
by the grantee, the subgrantee, 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.
of all required records for three years after grantees or subgrantees
make final payments and all other pending matters are closed.
with all applicable standards, orders, or requirements issued
under section 306 of the Clean Air Act (42 U.S.C. 1857 (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
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. 94A 163,
89 Stat. 871).
FR 8068, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19642,
Apr. 19, 1995]