1. 2 CFR 200 Procurement September 2016 Larry Wood
U.S. Department of Housing & Urban Development
Milwaukee Field Office

2. If it is NOT written down – It never happened.
Basic Tenet
If it is NOT written down – It never happened.

3. 2 CFR 200
Notice SD : 26 Feb 2015
Removed 24 CFR with transition to CFR 200 Parts 317 to 326
Intended implementation date 31 Dec 2015
HUD – “Lead the Way” Training – Procurement Practices at Public Housing.

4. Official Advice – Wait on Policy Revisions
“HUD is revising the HUD PIH Procurement Handbook Rev. 2 to synchronize with the new Part 200.
With the exception of the procurement thresholds, the requirements are substantially the same and PHAs should continue to use this handbook.”

5. Now the real SCOOP – Procurement is about MONEY

6. PHA Financial Overview
First – a look at the financial process, a ReCap

7. System Thinking Process is intended to take a broad view
Look for hidden problems
Find Root Causes
Make short term and long term plans
Change and then monitor results
Continuous improvement

8. A Quick and Easy Guide to the Procurement Process

9. Funding Overview Process involves ACC – HUD form 53012
5 Year Plan - 24 CFR Part 903
PNA/GPNA
PHA Budget
Capital Funds - 24 CFR Part 905
Operating Funds
LOCCS Accounts
Procurement – 2 CFR 200 Parts 317 to 326

10. ACC HUD Fm 53012 a & b – Your Basic Contract
Capital Fund ACC Amendments Fm 52840
Follow 24 CFR Part 905
Follow approved 5 Year plan
Obligate within 24 months/Expend in 48 mos.
Authorizes HUD to impose penalties for non-compliance.

11. Now – On to Contracting

12. Basics of Procurement 2 CFR 200 Governs procurement activities at PHAs
PHA’s Procurement Policy & Procedures
Sets directives & administrative responsibilities
Procurement Handbook for PHAs REV 2 dated February 2007 (Obsolete, but valuable)
Provides administrative & managerial guidance
PIH Notices and other guidance
Provides additional directives
State and local laws
If more stringent, overrides Federal Law
PART 85 - entitled Administrative requirements for grants and cooperative agreements to State, local and Federally recognized Indian tribal governments:
There have been no significant regulatory changes to since 1988; the last change was in 1995 when the Federal Simplified Acquisition Threshold was increased from $25K to $100K
The regulations are the law that PHAs must follow: they are very specific in that they discuss PHA’s responsibilities, codes of conduct, competition, procurement procedures, cost and price analysis, records and contract administration, etc.
The POLICY sets the specific directives at a PHA while the PROCEDURES spelled out the how.
In recent times, due to the implementation of the Asset Mgmt. mode and the ARRA provisions, HUD has issued new procurement directives. (See Slides 87 & 88.)

13. First Steps Revise the PHA procurement policy to be IAW 2 CFR 200
Ask for HUD FO advice
Issue a Board Resolution adopting the Policy
Reach an agreement with the board on the role of the ED

14. Once the new Policy is in place
ED is the Contacting officer – Only person to obligate funds, execute contracts, POs, change orders.
Issue Contracts IAW policy
Maintain sufficient Records
Settle Contract issues/disputes
Implement a Contract Administration System
Ensure Open Competition

15. Ensure Competition 2 CFR 200.319 (a)
(a) All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section.
Some of the situations considered to be restrictive of competition include but are not limited to:

16. Activities that may restrict Competition:
(1) Placing unreasonable requirements on firms in order for them to qualify to do business;
(2) Requiring unnecessary experience and excessive bonding;
(3) Noncompetitive pricing practices between firms or between affiliated companies;
(4) Noncompetitive contracts to consultants that are on retainer contracts;
(5) Organizational conflicts of interest;
(6) 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
(7) Any arbitrary action in the procurement process.

17. 10 Basic Procurement Steps
Develop a Statement of Work (SOW)
Complete an Independent Cost Estimate (ICE)
Determine rationale for procurement method
Solicit & receive quotes/bids/proposals
Determine responsive/responsible bidder, as applicable
Determine price reasonableness
Award the contract or solicitation
Implement contract administration system
Close out the contract
Maintain records for minimum of 3 years
Denotes the 10 basic steps that PHAs must undertake with all procurement activities. However, some of them can be simple actions, such as developing the SOW for the purchase of equipment of materials or determining the rational for the specific procurement method to use. On the other hand, PHAs are poor at developing the ICE or either the Price or Cost Analysis.

18. 3 Methods of Procurement 2 CFR 200.320
Micro Purchase - $3k limit or PHA policy
Small Purchase - Under $150k limit or PHA policy
Simplified Acquisition - $150k Federal limit, or Policy
Competitive Procedures
Non Competitive Procedures
Note: Above $150k see “Sealed Bids”

19. Micro Purchases 2 CFR 200.67 A subset of Small purchases.
Must be outlined in the PHA procurement Policies.
Price limit of $3,000 ($2,000 if Davis Bacon applies)
Against regulations to break up purchase to stay under a limit.

20. Small Purchase Procurement 24 CFR 200.320
Defined by PHA Policy
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. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.

21. Simplified Acquisition Threshold
FAR -- Part 13 Simplified Acquisition Procedures
“Simplified Acquisition Threshold” means $150,000, some exceptions apply.

22. Competitive Procedures 24 CFR 200.319
Conditions require the use of the method, such as unclear or incomplete specifications.
Action is based on technical merits and price.
There are 2 or more qualified offerors in the market
Cannot award a firm fixed-price contract (e.g., IFB).
Formal procurement used when the cost estimate is more than the $150,000 Federal regulatory threshold or the limit specified in the PHA’s Procurement Policy.

23. Competitive Procedures 7 Steps
Develop a Cost Estimate
Draft the Request for Proposals (RFP)/ Competitive Based Proposal (CBP) & Publish
Receive the bids but DO NOT open them Publicly.
Rate the proposals based on Technical merits and price if appropriate.
Choose the highest rated proposal.
Negotiate the price with the highest ranked firm.
Execute a fixed price or cost reimbursement contract.

24. Sealed Bids 24 CFR 200.320 Fixed price Normally used for Construction
Award based on Price ONLY – 5 Steps
Develop a Cost Estimate – 24 CFR
Draft the Request for Proposals (RFP) & Publish
Publicly open the bids
Determine the lowest responsible and responsive bid.
Execute a fixed price contract with the selected bidder.

25. Non Competitive Procedures 24 CFR 200.320
Only used for Emergencies or when Competition is lacking.
PHA or A/E Must perform a Cost Estimate
24 CFR
Must be Justified by the Cost estimate and other conditions.

26. Non Competitive Methods
Sole Source
One source selected due to no competition.
The item or service is available from only one entity.
Single Source
Solicitation sought, but only one bid received.
PHA was not aware of the lack of competition resulitng in only one bid.
Emergencies and Public Exigencies
Justified based on a health and safety issue mandating immediate corrective action.
No HUD approval required in order to facilitate a rapid response.

27. Terms Section 10-8 of the Procurement Handbook
All Contracts must have a finite term including options to extend.
Not to exceed 5 years including options to extend.
Options to extend must be outlined in the original Contract.
Extension must be evaluated at each renewal prior to activation – is it still a good choice?

28. Section 3 per 24 CFR Part 135
Promotes economic opportunities for low-income residents and certified low-income businesses through professional services and other labor contracts
For all work funded using operating/capital funds, PHAs must provide - to the greatest extent feasible - employment, training, contracting and other economic opportunities to Section 3 residents and businesses (no $ threshold for PHAs)
Reference requirement and attach Section 3 clause to applicable solicitations subject to the requirement
Document contract file of efforts undertaken to meet goals
Support and promote Minority Business Enterprise (MBE), Woman Business Enterprise (WBE) & Resident-Owned Businesses
Goals apply to entire amount of Section 3 covered assistance awarded to a PHA every Fiscal Year
Requirements typically apply to construction-type contracts: new constr., rehab, abatement, etc.
Goals: 30% for Training and Employment; 10% for Contracts: see regs.
Housing Manager’s Procedures Manual for PHA dated Nov states that the Section 3 requirements do not apply to purchases of less than $25K involving goods and supplies; this is partially correct. Per 24 CFR 135, ”Section 3 covered contracts’’ do not include contracts for the direct purchase of supplies and materials except when a contract for materials includes installation. Section 15.2 C of the Proc. Handbook states that the Section 3 requirements do not apply to the direct purchase of supplies and materials unless purchased thru a PHA resident-owned business.
Consistent with 24 CFR 85.36(c)(2), Section 3 is a Federal statute that expressly encourages - to the maximum extent feasible - a geographic preference in the evaluation of bids or proposals.
Section 3 firm - at least 30% of employees are low-income, or is 51% owned by residents, or the firm subcontracts at least 25% of the value of the work with the Section 3 business concern.
MBE – a business enterprise that is 51% or more owned, controlled or actively operated by one or more persons which are classified as part of a racial or ethnic minority group
WBE – a business enterprise that is 51% or more owned, controlled or operated by woman/women.

29. Small Business 24 CFR
Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms.
(a) 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.
(b) Affirmative steps must follow this section

30. Federal Labor Standards and Wage Rates
For construction and maintenance contracts > $2,000, PHAs must pay workers applicable wages per established classifications of work
Davis-Bacon wages for construction work via IFB
PHAs must post wages in job site, interview employees and review certified payrolls
HUD-determined wages for routine and non-routine maintenance work
PHAs must post wages in public places and interview employees, as applicable
Davis-Bacon Wages:
Service contracts are exempt: extermination, security guard services, dumpster/trash pickup, alarm systems, routine servicing and testing of HVAC; inspections of units/bldgs., copier/office equipment maintenance, vehicle service and repairs, etc.
Interviews (HUD-11) ensures that work performed and salaries paid to workers are consistent with job classifications reported and wages reported in the payrolls.

31. Procurement Information:
Copy of Procurement Handbook REV 2:
Public Housing internet web page:
Regulatory references:
List of debarred entities from doing business with the Federal Government
LDP:
GSA:
Wage Rates:
List acceptable sureties for the issuance of Performance & Payment Bonds:

32. Where to Get WI Information
HUD Milwaukee Field Office
Suite 950
310 West Wisconsin
Milwaukee WI
Larry Wood
(For Now)
9/18/2018
HUD Milwaukee Field Office