CDBG Procurement Requirements For Local Officials

1. CDBG Procurement RequirementsFor Local Officials

2. Procurement: Overview • State and local recipients of CDBG funds are responsible for ensuring that goods and services are procured competitively and in accordance with established procurement rules and regulations • Local procurement policies should describe how the recipient will procure supplies, materials, services and equipment

3. Overview - continued • The policy should assure that all purchases are handled fairly and in a manner that encourages full and open competition • Recipients should follow the procedures established in the policy and document how all procurements were handled

4. Overview - continued • Local procurement records should • Allow an auditor or other interested party to track the nature of the goods or services bought with public funds • Track the entire process used to purchase those goods and services • Show that the public body obtained high quality goods and services at the lowest possible price through an open, competitive process

5. Procurement Using Part 85 • Determine if the State has adopted the Administrative Requirements for Grants and Cooperative Agreements found at 24 CFR Part 85.36 concerning procurement • All procurements engaged in by local CDBG recipients must comply with the applicable Federal requirements found in Part 85.36

6. ProcurementStandards • CDBG recipients must use procurement procedures that conform to Federal, state and local laws and include the following: • Maintain a contract administration system ensuring that contractors perform in accordance with terms, conditions, and specifications of contracts or purchase orders • Maintain a written code of standards governing performance of employees in contract award and administration

7. Procurement Standards – continued • Review transactions to avoid unnecessary or duplicative purchases • Contract only with responsible contractors • Maintain written records for each procurement action sufficient to detail the significant history of the transaction • Adopt written procedures to handle and resolve disputes relating to procurement actions

8. Competition • Must allow for full and open competition • No geographical preference to bidders (unless specifically allowed by Federal law) • Must have written selection procedures • Prequalified lists of persons, firms or products must be current

9. Procurement Methods • There are four types of procurement methods covered by the requirements of Part 85: • Small Purchase Method • Competitive Sealed Bid Method • Competitive Proposal Method • Noncompetitive or Sole Source Provider Method

10. Contracting with MBE’s and WBE’s • CDBG recipients must make affirmative efforts to use minority and women-owned firms when possible: • Place qualified firms on solicitation lists • Divide total requirements into smaller tasks • Establish delivery schedules that encourage participation • Use SBA and Minority Business Development Agency services • Require prime contractors to take same affirmative steps

11. Determining Contract Costs • CDBG recipients must perform a cost or price analysis with every procurement action • CDBG recipients will negotiate profit as a separate element of the price for each contract (for which there is no price competition) • Costs or prices based on estimated costs are allowed only if they are consistent with Federal cost principles. • “Cost plus” and percentage of construction cost methods of contracting are not allowed

12. Other Requirements • CDBG recipients must make available, upon request: • technical specifications on proposed procurements • pre-award review procurement documents • requests for proposals • invitations for bids

13. Other Requirements - continued • Bonding requirements • Bid guarantee equivalent to 5% of bid price • Performance bond for 100% of contract price • Payment bond for 100% of the contract price

14. Documenting Compliance • Grantees must provide following documentation at a minimum: • A description of the procurement policies and procedures used in the CDBG program • Data on all contracts awarded, such as: • Names of contractors • Types of contractor (for example, small business, minority-owned, etc.) • Amounts of contracts awarded

15. Documenting Compliance - continued • Documentation of contract work, including: • Copies of award letters • Inspection reports • Contract amendments • Payment log • Evidence of state review of procurement records • Required records differ based on the type of procurement, such as small purchase, sealed bid, etc.

16. Conflict of Interest • Black’s Law Dictionary defines a “conflict of interest” as • “A real or seeming incompatibility between a person’s private interests and his or her public or fiduciary duties”

17. Conflict of Interest - continued • Prohibited conflicts • Persons with CDBG responsibilities, decision-making power or information may NOT: • Obtain a financial interest or benefit from CDBG activity • Have any interest in contract or subcontract • Applies to family members and business ties • Applies during tenure and 1 year after • If there is any doubt the affected party should recuse him/herself and disclose conflict

18. Conflict of Interest - continued • Examples: • Grant Administrator cannot help grantee with the procurement of grant administration if they intend to submit proposal • Town Clerk cannot sit on bid committee if husband/brother is bidding on a construction contract

19. Handouts/Attachments Include copies of Conflict of Interest Process, Requests for Exception and Sample Procurement Standards