1. 1 CDBG Procurement Requirements For Local Officials

2. 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. 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. 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. 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. 6 Procurement Standards 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 19 Handouts/Attachments Include copies of Conflict of Interest Process, Requests for Exception and Sample Procurement Standards