BOARD OF COMMISSIONERS
TRAINING
U. S. Department of Housing and Urban Development
PROCUREMENT AND CONTRACTING
OVERVIEW
April 2009
1
BOARD OF COMMISSIONERS
TRAINING SERIES
V.
The Commissioner’s Role
The Executive Director’s Role
Program Management
Financial Operations and Oversight
Physical Facilities and Maintenance
VI.
Procurement and Contracting Overview
I.
II.
III.
IV.
VII.
VIII.
Preventing and Resolving Audit Findings
Performance Measures
PHAS, MASS, FASS, PASS, SEMAP
IX.
X.
Conducting an Effective Board Meeting
Emergency and Disaster Preparedness
2
PROCUREMENT AND CONTRACTING
TRAINING
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
The Key to Good Procurement Actions
Basic Procurement Requirements
Roles and Responsibilities
Procurement Planning
Resident Businesses and Section 3
Cost and Price Analysis
Types of Procurement
Types of Contracts
Closeout
1. Appendix I – Summary of Procurement Methods Chart
2. Appendix II - Glossary
3
I. The Key to Good Procurement
Actions
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Common Sense
Sound business approach
Integrity and ethical standards
Planning
Internal management controls
Clear and detailed conditions, terms
and specifications
Open and free competition
4
Good Procurement Actions Cont’d.
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Careful award
Confidentiality
Conformance with Federal, State and Local laws and
regulations
Adherence to the requirements of the HA’s
procurement policies, procedures and contract
administration system
Oversight
Consistent application and enforcement of standards
5
The Down Side of Poor Procurement
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Cancelled and reissued actions
Poor or untimely service or delivery
Incomplete, inadequate or useless items
Inappropriate acquisition costs
Litigation
Audit findings and repayment $s
Waste and misuse of PHA resources, i.e.
time, personnel, and money
6
II. BASIC PROCUREMENT AND
CONTRACTING REQUIREMENTS

Housing Authorities are required to develop and use
procurement policies and procedures and contract
administration systems

Procurement procedures must:
•
•
•
Conform to applicable Federal, State and local laws and
regulations
Provide for internal management controls
Cover all phases of procurement activity from plan
development through award to close out and oversight
7
II. BASIC PROCUREMENT AND
CONTRACTING REQUIREMENTS

Federal Requirements
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•
•
24 CFR 85.36
• Provides regulations and
administrative guidance
Procurement Handbook 7460.8 Rev-1
PIH Procurement Policy
•
PIH Notices
• State and Local Law Interagency
Agreements
8
II. BASIC PROCUREMENT AND
CONTRACTING REQUIREMENTS

Procurement and Contracting Policies
• Board approved
• Written and officially issued
• Establish parameters for procurement and
contracting procedures
• Designate the Contracting Officer
• Establish levels of contracting authority
9
II. BASIC PROCUREMENT AND CONTRACTING
REQUIREMENTS
•
•
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Establish detailed written guidance and operating instructions for
implementing ALL procurement and contracting actions
Incorporate the HA’s applicable internal management controls [IMC]
and Standard Operating Procedures [SOP]
Cover every phase of procurement process
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Designations of levels of authority and approval
Contract Administration system
Procurement planning
Determining the procurement methodology
Public Notice
Selection
Award
Monitoring, oversight and evaluation of performance
Closeout
10
II. BASIC PROCUREMENT AND
CONTRACTING REQUIREMENTS
CONTRACT ADMINISTRATION SYSTEM [CAS]
•
Covers every phase of procurement and
contracting activity - without exception
•
Operational processes
•
Authorizations and justifications
•
Data/transaction entry and verification,
•
Internal management controls and accountability
11
II. BASIC PROCUREMENT AND
CONTRACTING REQUIREMENTS
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Records modifications and terminations
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Provides documentation and paper trail
•
Provides for evaluation of contractorsupplier performance
•
Tracks Dollars and Performance Time
•
Documents closeouts
12
III. Roles and Responsibilities
The Board of Commissioners is responsible for:
•
Developing, approving and officially issuing the
HA’s procurement policies and procedures
•
Appointing a contracting officer and establishing the
levels of authority
•
Monitoring the contracting officer’s performance,
which must comply with 24 CFR Part 85.36
13
III. Roles and Responsibilities

The Executive Director is responsible for:
•
Carrying out the procurement policies and procedures
established by the Board
•
Developing or revising as appropriate the
procurement procedures and obtaining Board
approval.
•
Serving as the Contracting Officer when so
designated and supervision of procurement and
contracting by the HC
14
III. Roles and Responsibilities

The Contracting Officer’s duties are:
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Implementing the procurement procedures
Exercising sound judgment in carrying out
procurement and contracting responsibilities
Ensuring that contractors receive impartial, fair
and equitable treatment;
Adherence to high standards of conduct and
avoiding conflicts of interest
15
III. Roles and Responsibilities
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Providing procurement assistance to HA staff
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Acquiring HA supplies, equipment and services
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Utilizing the advice of specialists in audit, law,
engineering and other subjects, as appropriate;
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Analyzing bids and proposals
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Signing all contracts, modifications, purchase orders,
intergovernmental purchasing agreements within
authority level
16
III. Roles and Responsibilities
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Detecting and minimizing contract irregularities
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Reviewing and ratifying unauthorized actions upon
receipt of adequate justification
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Recommending and instituting remedial action
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Operation of the Contract Administration System
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Supervision and oversight of all HA staff involvement in
procurement and contracting.
17
IV. Procurement Planning
What •
are the program requirements
•
steps are taken to accomplish it
•
is the timing of required actions
?
18
The Procurement Plan
A. Procurement Plan Requirements
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Written
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Approved by the Board
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Directly linked to the PHA Budget and PHA Plan
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Includes all procurement and contracting activity
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Periodically reviewed and modified as appropriate
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Evaluated and monitored by Board and ED
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The Procurement Plan
B. Procurement Plan Scope and Timing
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Identifies the item or scope of work required;
Is supported by documentation that includes: the
proposed use and description of item, requesting
source, etc.,
Considers time constraints
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Type and size of job, market considerations, urgency of need
Includes a cost estimate for each procurement action
Identifies the source and availability of funds
20
The Procurement Plan
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Sets the schedule and timeframe of all actions
Considers:
•
•
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local, state and interagency purchasing agreements
Consolidation vs. breakout and lease vs. purchase options
Provides for special objectives and programs
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Resident contracting, training and employment
Section 3
Multi-year requirements and projections
21
V. Resident Businesses and Section 3
Resident-owned businesses, training and employment
•
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Direct HA training and employment of residents is not a
procurement action.
Issuing a contract to a resident owned and staffed company is
a procurement action
Special conditions for resident contracting must be included
in the HA’s policies and procedures.
An alternative procurement process which limits solicitation
to resident-owned businesses can be used
The resident-owned business must be ‘responsible’
22
V. Resident Businesses and Section 3

SECTION 3
•
The 1968 Act requirement that individuals or firms located in or owned
in substantial part by persons residing in the area of a HA project be
used when possible.
•
Provision for Section 3 actions must be included in the HA procurement
plan
•
All solicitations must advise contractors of this requirement
•
Appropriate clauses must be included in all covered contracts
•
Contractors and subcontractors must make good faith efforts to award
contracts, purchase supplies or hire and train Section 3 eligible persons
or companies
23
VI. Cost and Price Analysis
Cost And Price Analysis And Estimates Must Be:
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Independent and Confidential
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Performed as part of procurement planning for all actions
including modifications and terminations
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In writing and retained in the HA records
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VI. Cost and Price Analysis
A cost analysis is usually completed to:
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Evaluate the proposals
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Prepare for
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A review or comparison of components and the end price or value of the
items to be obtained: wages, materials, time/hours, etc.
received in response to a
• IFBs when only one bid is received
• RFPS
negotiations
Contract modifications
Terminations
PROFIT MUST be negotiated separately when a cost analysis is required
25
VI. Cost and Price Analysis
A Price Analysis is:
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A review or comparison of the amount for which the item or service
can be obtained
Usually performed for small purchases and Invitation for Bids
[IFB]s
May be as simple as reviewing prior recent procurements for similar
items and factoring inflation or conducting a simple survey of
suppliers.
More complex analyses may be required for large purchases or
contracts including estimated labor categories and hours required,
materials needed and subcontractors required, etc.
Must sufficient enough to properly evaluate offers and proposals
26
VII. Types Of Procurements
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•
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Small Purchases
IFB
Competitive
• Qualifications – Based Proposals
• Competitive Proposals
Noncompetitive Proposals
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VII. Types Of Procurements
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Small Purchases
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The category covers a range of types of procurements and
materials - copy paper, plumbing supplies, computer software.
$100,000 or lower as set in local law and the HA’s Procurement
Policy.
Less formal than other types of procurement
At least 3 oral or written quotes
•
•
Oral quotes – notes should be made during discussions and follow-up
documentation obtained – fax, e-mail, etc., obtained from supplier or sent out
as confirmation
Documentation is required for all small purchases – paper trail for
bookkeeping, budget development and audits
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VII. Procurement
Small Purchases Continued
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Factors to be considered in setting the small
purchase limit:
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The size of the HC and the overall procurement budget
The level of experience of the CO[s]
The HC Board assessment of past CO performance
Local law where appropriate
The CO’s bonding level
Availability of HA Board and ED time for oversight
29
VII. PROCUREMENT
INVITATION FOR BID OR SEALED BID
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Primarily used for construction contracts and major
purchases of equipment and supplies
Requires public notice of item/work to be obtained
•
IFBs issued should include:
•
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A detailed description of item to be purchased, specifications, schedule
for delivery, all terms and conditions.
•
Deductive alternatives may be included and must be used in the order
listed
•
Additive alternatives or pre-priced future work may not be included
•
Sealed bids are submitted, Firm fixed-price contracts are awarded –
negotiation with lowest bidder is not permissible.
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VII. PROCUREMENT
IFB or SEALED BID OPENING
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Sealed Bids are received and handled in strictest
confidentiality
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Bids are opened in public at the announced time and place
Names of bidders and bid price information is read out
loud and made part of the permanent record
[no other information is made public at this time]
Any issues raised are taken under advisement and no
determinations are made at this time. Information on
decisions reached must made available to all bidders.
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VII. PROCUREMENT
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IFB Contract Issuance
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Contract issuance is the next step in the IFB
procurement process
Firm fixed-price contracts are awarded
Negotiations with lowest bidder is not
permissible
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Contracts will be discussed in more detail in VIII
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VII. PROCUREMENT
RFP – REQUEST FOR PROPOSAL
TWO TYPES
Qualifications-Based Proposals
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Used only for A/E
Price is not used as a selection factor
but is negotiated at a later date.
Bidder must be responsible
Competitive Proposals
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Used for procuring
professional and consulting
services, including A/E
• Ex.
Architects, lawyers,
accountants, master
plumber
Price is used as one of the
selection factors
Bidder must be responsible
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VII. PROCUREMENT
RFP – REQUEST FOR PROPOSAL
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For all competitive proposals, the HA must
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Establish an evaluation committee to review the technical factors
A cost analysis must be conducted by the procurement staff before
negotiations. The results are confidential!
Profit must be negotiated separately
Proposals are time and date stamped at the time of receipt.
Late proposals must be marked accordingly at the time of
receipt and rejected as required by HA policy.
Proposals are not opened publicly. No information is made
public prior to final decisions for award.
34
VII. PROCUREMENT
COMPETITIVE PROPOSALS
PERMISSIBLE ACTIVITIES
• The HA may
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Hold a pre-bid conference
Make an award based on initial proposals
Request and receive best and final offers
Conduct negotiations
35
VII. PROCUREMENT
NONCOMPETITIVE PROPOSALS
Allowed in the following circumstances:
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Emergency situations
Procurement under other methods is not feasible
Numerous solicitation efforts have not been successful and
competition is determined to be inadequate
Written justification exists and meets procurement policy
Cost analysis data existed prior to the solicitation
HUD approval is obtained under the original ACC. An
approval is not required under a new ACC.
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VII. PROCUREMENT
RECOMMENDED PROCEDURES FOR ALL
PROCUREMENTS
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No withdrawals or corrections are allowed after bid
opening unless obvious error – clear and convincing
documentation of intended price and error.
All bids/offers and qualifications of potential
contractors/suppliers are reviewed for
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Responsiveness – meets all solicitation terms
Price/cost analysis – within guidelines
Responsibility – capacity to fulfill contract
37
VIII. Contracts
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Contract – a legal document that outlines
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The terms and conditions that guide the performance of
the parties
Pricing and payment arrangements
Established time limits and delivery schedule
Limits, options, incentives and penalties
Clauses and terms required by Federal, State and local
law and HA policies
Provisions for special events and requirements
38
VIII. CONTRACTS
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The Contract must:
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Be complete – in general if a provision is not in the
contract the supplier/contractor cannot be required to
provide the service/product
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Modifications of contracts if and when possible are costly and
time consuming and must be mutually agreeable
Exceptions exist contact your legal counsel
Include all solicitation provisions
Provide guidance and criteria for monitoring,
evaluation of performance, product
acceptance/rejection, payment and termination
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VIII. CONTRACTS
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Two basic types of contracts:
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Fixed Price – the contractor must deliver the
product or perform the service for the price
and other conditions agreed upon.
•
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This is the preferred contract type
Minimizes HA risk and provides maximum incentive for the
contractor to carryout the work effectively and in a timely
manner
The only contract type permitted with a sealed bid
procurement
40
VIII. CONTRACTS
Cost Reimbursement Contract
•
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The contractor agrees to make best efforts to complete
contract statement of work within estimated agreed
upon amount, however, if work is not completed and
funds are expended the contractor has no obligation for
further performance unless the contract is modified.
This type of contract:
•
•
must be justified prior to issuance
is used in situations where some aspect of the specifications is
not known or complete, e.g.. labor hours
41
VIII. CONTRACTS
Prohibited Contract Types:
Cost plus a percentage of cost
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Requires HA to pay costs to be incurred in future
plus [a commission on those costs] that can not be
determined at the time of contract award
•
There is no incentive for the contractor for
controlling costs or carrying out the contact with
“best efforts”
42
VIII. CONTRACTS
Prohibited Contract Types Continued:
Percentage of construction cost
•
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Cost is determined by applying a percentage of
actual construction costs as a fee to the total
construction cost. Similar to process used in A/E
costing.
There is no incentive for timely, cost effective
work and frequently has the result of encouraging
the contractor to conduct an overly expensive
construction job.
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IX.
CLOSEOUT
Closeout is the last stage of procurement and CAS
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Receipt of product - delivery
Review and inspection
Acceptance
Determination that all contract terms have been fulfilled and no
incentives or penalty clauses should be implemented
Process of acceptance and fulfillment of contract terms, issue order
for payment
Payment
Paper work and final documentation completion
•
Evaluation
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