5 PROCUREMENT

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5 PROCUREMENT

5.1 POLICY OVERVIEW

The CDBG-DR grant will be administered by the State of Nebraska Department of Economic

Development (DED), through procurement contracts or through Subrecipients or Successful

Applicants. The State of Nebraska maintains ultimate responsibility for ensuring compliance with

procurement policies as outlined in the State of Nebraska Procurement Manual

, which applies

to all programs regardless of source of funds.

This chapter is intended to serve as guidelines for the procurement of supplies, equipment,

construction services and professional services for the implementation of programs using CDBG-

DR funds.

5.2 ROLES AND RESPONSIBILITIES

DED: As Grantee for the CDBG-DR program, has adopted 2 CFR § 200.317 for any procurement

it undertakes with CDBG-DR funds. Subrecipients and non-profit Successful Applicants are

required to adopt the standards set forth in 2 CFR §§ 200.318 through 200.327, as well as State

and local laws and regulations for any procurement it undertakes with CDBG-DR funds. State of

Nebraska procurement is set out in Neb. Rev. Stat. § 73-504(2), and detailed in the

State of

Nebraska Procurement Manual, and is applicable to all procurement in the State of Nebraska.

This chapter is a guide for Subrecipients and non-profit Successful Applicants and does not

supersede the applicable reference documents. DED will review all contracts procured by

Subrecipients and non-profit Successful Applicants with CDBG-DR funds to ensure compliance

with all applicable laws and regulations.

Subrecipient: A governmental entity that is serving as a Subrecipient shall follow the

procurement rules in 2 CFR Part 200, in the State of Nebraska Procurement Manual

, and other

references detailed in this chapter.

Successful Applicant: A non-profit, non-governmental Successful Applicant is responsible for

the same Federal funds oversight responsibilities as a Subrecipient, including the procurement

requirements set out in 2 CFR Part 200. For-profit Successful Applicants (for example, housing

developers) are not required to follow these procurement standards unless specifically mentioned.

See particularly Section 5.8.11: System for Awards Management (SAM) Verification.

The “reciprocal preference” outlined in Section 6.15 of the State of Nebraska Procurement Manual and

set forth in Neb. Rev. Stat. §73-101.01 shall not apply to administration or implementation of projects paid

with CDBG-DR funds.

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5.3 PROCUREMENT POLICY

The Subrecipient and non-profit Successful Applicant must establish and maintain effective

internal control over the CDBG-DR award, providing reasonable assurance that all parties

involved comply with Federal, State, and local statutes, regulations, and the terms and conditions

of the CDBG-DR award. Internal controls should comply with guidance in “Standards for Internal

Control in the Federal Government” issued by the Comptroller General of the US or the “Internal

Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the

Treadway Commission (COSO).

Under internal controls, the Subrecipient or non-profit Successful Applicant establishes standards

of conduct concerning integrity and ethical values. The Subrecipient or non-profit Successful

Applicant uses ethical values to balance the needs and concerns of different stakeholders, such

as regulators, employees, and the general public. The standards of conduct guide the directives,

attitudes, and behaviors of the organization in achieving the entity’s objectives. Furthermore,

these internal controls are critical when a Subrecipient or non-profit Successful Applicant is

working with a contractor to do work on behalf of the organization. For example, a contractor shall

not be involved in the preparation of bid documents should said contractor intend to bid on any

part of the Subrecipient’s or non-profit Successful Applicant’s project. Nor should that entity be

involved in reviewing, scoring, or decision-making involving an award of contract. Internal control

of such procedures may safeguard against loss leader arrangements, conflicts of interest, and

other compliance concerns.

At the application stage, DED will review the procurement policies of Applicants for all programs.

DED will review all primary contracts procured by Subrecipients and non-profit Successful

Applicants for adherence to the requirements outlined in this document. For Infrastructure Match

projects already in progress, this review will happen at the application stage. For other projects,

DED may require submission of a proposed contract before it is signed by the Subrecipient or

Successful Applicant for review. DED will use the Sample Procurement Checklist

as the basis

for its review of proposed contracts. Subrecipients and Successful Applicants are encouraged to

ensure their procurements meet the requirements listed in this chapter.

WARNING: Conducting procurement processes prior to CDBG-DR award does not remove the

requirement to make use of internal controls. It is the Subrecipient’s or non-profit Successful

Applicant’s responsibility to comply with Federal, State, and local statutes, regulations, and the

terms and conditions of Federal awards, including CDBG-DR. The Subrecipient or Successful

Applicant may not execute any contract for goods or services after application for funding and

prior to HUD issuing the Subrecipient or Successful Applicant a written environmental clearance

and Request for Release of Funds (RROF) with the exception of contracts to support program or

project delivery.

2 CFR § 200.303(a).

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5.4 CONFLICT OF INTEREST

DED and its Subrecipients and non-profit Successful Applicants must take significant steps to

avoid conflicts of interest. As set out in 2 CFR § 200.318, “No employee, officer, or agent may

participate in the selection, award, or administration of a contract supported by a Federal award

if he or she has a real or apparent conflict of interest.”

In certain instances, where the

Subrecipient or non-profit Successful Applicant solicited a firm to prepare the CDBG-DR

application for submission to DED, and where that firm may also provide professional services

related to the CDBG-DR project and intends to submit a proposal for those services, that firm may

not in any way assist the Subrecipient or non-profit Successful Applicant in the procurement

process. For example, if ABC & Associates intends to submit a proposal for services, ABC &

Associates, as CDBG-DR application preparer, may not assist the Subrecipient or non-profit

Successful Applicant in the procurement process. Such a conflict of interest may result in DED

disallowing the use of CDBG-DR funds for the payment of such costs of the subsequently

procured contract and may affect future eligibility to receive CDBG-DR funds.

State of Nebraska personnel involved in the procurement of goods and services have the

responsibility to uphold Nebraska procurement laws and act in good faith to serve the best

interests of the State of Nebraska and its taxpayers. All public officers and state employees, not

just procurement professionals, are expected to read and understand these key statutes

prescribing proper conduct. Any alleged violations of these standards of conduct shall be reported

to DED and are subject to review, and if proven, disciplinary action including, but not limited to,

dismissal or transfer. Where violations or infractions appear to be substantial in nature, the matter

may be referred to the appropriate officials for criminal investigation and possible prosecution.

5.5 GENERAL PROVISIONS (2 CFR § 200.318)

The intent of standards and procedures for procurement is to ensure that supplies, equipment,

construction, and other services are:

• Obtained as efficiently and economically as possible; and

• Procured in a manner that provides, to the maximum extent practical, open and free

competition.

Solicitations must explain all the requirements that the bidder or offeror has to meet for the

Subrecipient or non-profit Successful Applicant to evaluate the bid or offer. Solicitations for goods

and services must be based on a clear and accurate description of the material, product, or

A conflict of interest arises when an employee, officer, or agent, any member of his or her immediate

family, his or her partner, or an organization which employs or is about to employ any of the parties indicated

herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.

See 2 CFR § 200.318(c)(1).

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service to be procured, and cannot contain features which unduly restrict competition.

Some of

the situations considered restrictive of competition include, but are not limited to:

• Placing unreasonable qualifying requirements on firms in order for them to qualify to do

business;

• Requiring unnecessary experience and excessive bonding;

• Non-competitive pricing practices between firms or affiliated companies;

• Non-competitive awards to consultants on retainer contracts;

• Organizational conflicts of interest;

• Specifying only “brand name” products instead of allowing an “equal” product; and

• Any arbitrary action in the procurement process.

Subrecipients and non-profit Successful Applicants must award contracts to the bidder or offeror

whose bid or offer is responsive to the solicitation and is most advantageous to the Subrecipient

or non-profit Successful Applicant, price, and other factors considered. Any and all bids may be

rejected when it is in the Subrecipient’s or non-profit Successful Applicant’s interest to do so. The

Subrecipient and non-profit Successful Applicant must ensure to award contracts only to

responsible contractors possessing the ability to perform successfully under the terms and

conditions of the proposed procurement. The Subrecipient and non-profit Successful Applicant

should consider such matters as contractor integrity, compliance with public policy, record of past

performance, and financial and technical resources.

5.6 NEBRASKA PROCUREMENT REQUIREMENTS

When construction contractors are required, a licensed contractor with the State of Nebraska and

local jurisdictions will be required. According to each local jurisdiction, permits may be required

for work conducted utilizing CDBG-DR funding. For all work being performed, construction

contractors will be required to have a one-year warranty.

5.7 FEDERAL PROCUREMENT REQUIREMENTS

Subrecipients and non-profit Successful Applicants receiving CDBG-DR funding will be required

to follow the procurement standards of 2 CFR §§ 200.318 through 200.327 and the contract

provisions within Appendix II to Part 200 (see Text of 2 CFR §§ 200.318 through 200.327 and

Appendix II to Part 200). These procurement standards are to be incorporated into all

Subrecipient Agreements and Funding Agreements with non-profit Successful Applicants.

2 CFR § 200.319.

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Subrecipients and non-profit Successful Applicants will also be required to update procurement

policies and procedures to correspond with these requirements.

Subrecipients and non-profit Successful Applicants should utilize resources to comply with

procurement requirements. The Sample Procurement Checklist

is a prime resource which

should be utilized to identify the action items of the procurement process and ensure all

compliance steps are completed. This, and other guidance is designed to maximize CDBG-DR

resources and avoid common pitfalls of noncompliance that could result in the recapture of funds

and re-procurement. Subrecipients and non-profit Successful Applicants are strongly encouraged

to understand the procurement requirements or risk adverse consequences.

5.7.1 SUMMARY OF FEDERAL REQUIREMENTS

1. Records and Files: Subrecipients and non-profit Successful Applicants must maintain

records sufficient to detail the history of procurement. Subrecipients and non-profit

Successful Applicants must maintain files on the rationale for selecting the methods of

procurement used, selection of contract type, the contractor selection or rejection process,

and the basis for the cost or price of a contract.

2. Pre-Qualified Lists of Vendors or Contractors: If such lists are used, they must be

current, developed through open solicitation, include adequate numbers of qualified

sources to ensure maximum free and open competition, and must allow entry of other

firms to qualify at any time during the solicitation period.

3. Unfair Competitive Advantage: To eliminate unfair competitive advantage, if the

Subrecipient or non-profit Successful Applicant has used a contractor to develop or draft

specifications, requirements, statements of work, or invitations for bids (IFB) or requests

for proposals (RFP), the Subrecipient or non-profit Successful Applicant must exclude that

contractor from the competition for such procurements.

4. Debarred or Ineligible Contractors: The Subrecipient or non-profit Successful Applicant

must ensure that awards are not made to any party which is debarred or suspended or is

otherwise excluded from or ineligible for participation in federal assistance programs under

Executive Order 12549 and 12689, and 2 CFR § 180.700-885, “Suspension and

Debarment."

The Subrecipient or non-profit Successful Applicant must verify and maintain

documentation that the firm or contractor and any subcontractor does not have an active

exclusion on the System for Award Management (SAM). See Section 5.8.11: System for

Awards Management (SAM) Verification for additional information on SAM registration.

Federal agencies maintain the active exclusion/debarred list. To determine eligibility, the

Subrecipient or non-profit Successful Applicants must review SAM (https://www.sam.gov/

)

2 CFR § 200.318(i).

2 CFR § 200.319(e).

2 CFR § 200.319(b).

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for all contractors and firms submitting a bid or proposal. SAM verification should occur at

the time of submission or negotiations and must occur prior to selecting a contractor or

firm for contract award.

NOTE: SAM registration of contractor or firm is not required to verify they are not on the

debarred list nor is an active SAM registration confirmation that they are not

debarred/ineligible.

5. Written Procedures For Contractor Selection: The Subrecipient or non-profit

Successful Applicant must have written selection procedures for procurement

transactions,

adequate to ensure the following:

a. Avoid acquisition of unnecessary or duplicate items. Consider consolidating or

breaking out procurements to obtain a more economical purchase. Where

appropriate, make an analysis of lease vs. purchase alternatives, and any other

appropriate analysis to determine the most economical approach.

b. Whenever possible, use local intergovernmental agreements or inter-entity

agreements for procurement or use of common goods and services to foster

greater economy and efficiency.

c. Whenever possible, use Federal excess and surplus property in lieu of purchasing

new equipment and property whenever such use is feasible and reduces project

costs.

d. Whenever possible, use value engineering clauses in contracts for construction

projects of sufficient size to offer reasonable opportunity for cost reductions.

e. All purchase orders (and contracts) are signed by the Subrecipient’s or non-profit

Successful Applicant’s authorized official(s).

f. Items delivered and paid for are consistent with the purchase order or contract for

the goods or services.

g. Timely payment to vendors occurs once the order is delivered, inspected,

accepted, and payment authorized.

h. Perform a cost or price analysis for every procurement action that exceeds the

Simplified Acquisition Threshold, including contract modifications, and maintain

2 CFR § 200.319(d).

2 CFR § 200.318(d).

See 2 CFR § 200.318(e). Competition requirements will be met with documented procurement actions

using strategic sourcing, shared services, and other similar procurement arrangements.

2 CFR § 200.318(f).

2 CFR § 200.318(g).

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documentation to that effect in the Subrecipient’s or non-profit Successful

Applicant’s files. The method and degree of analysis is dependent on the facts

surrounding the particular procurement situation, but as a starting point, the

Subrecipient or non-profit Successful Applicant must make independent estimates

before receiving bids or proposals.

i. Negotiate profit or fee separately from price for each contract where competition is

lacking or a 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 past performance, and industry profit rates in the surrounding

geographical area for similar work.

6. Contract Pricing: Subrecipients and non-profit Successful Applicants must not use “cost

plus a percentage of cost” pricing for contracts;

in addition, Subrecipients and non-profit

Successful Applicants may use “time and material” type contracts only after a

determination is made that no other contract is suitable and the contract includes a ceiling

price that the contractor exceeds at its own risk.

7. Protest Procedures: Subrecipients and non-profit Successful Applicants must have

protest procedures in place to handle and resolve disputes relating to procurement.

8. Documenting Contractor Performance: Subrecipients and non-profit Successful

Applicants must have a documented system of contract administration for determining the

adequacy of contractor performance.

9. Code of Conduct: Subrecipients and non-profit Successful Applicants must have a

written code of conduct governing employees, officers, or agents engaged in the award or

administration of contracts.

5.8 PROCUREMENT METHODS

Among the procurement approaches described below, the competitive sealed bid resulting in a

firm, fixed-price contract is the preferred procurement approach when there are numerous

available and qualified providers, when the requirements and specifications are thoroughly

detailed and are unlikely to change, and where the Subrecipient or non-profit Successful Applicant

2 CFR § 200.324.

2 CFR § 200.324(b).

2 CFR § 200.324(d).

2 CFR § 200.318(j).

2 CFR § 200.318(k).

2 CFR § 200.318(b).

2 CFR § 200.318(c)(1).

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has the opportunity to make the provider assume a large share of the risk for nonperformance.

For-profit Successful Applicants are not subject to these requirements.

The Federal guidelines listed below are set out in 2 CFR §§ 200.318 through 200.327.

Subrecipients and non-profit Successful Applicants are also subject to the requirements and

standards as set by the

State of Nebraska Procurement Manual.

5.8.1 MICRO PURCHASES (2 CFR § 200.320(A)(1))

DED considers procurement by micro-purchase procedures best suited to obtaining small

quantities of supplies and services. Subrecipients and non-profit Successful Applicants may

follow either their local small purchase procurement policy or the Federal policy. However,

Subrecipients and non-profit Successful Applicants must follow the procurement policy that is

most stringent, whether the local policy or Federal policy (described below).

The micro-purchase method may be used for procurement of supplies or services the aggregate

of which does not exceed the micro-purchase threshold.

As of the publication date of this

chapter, the micro-purchase threshold set by the Federal Acquisition Regulation (FAR) at 48 CFR

§ 2.101 is $10,000, except for construction at $2,000 and services at $2,500. Additionally, a

Subrecipient or non-profit Successful Applicant may establish a higher threshold than the micro-

purchase threshold identified in the FAR. The Subrecipient or non-profit Successful Applicant may

self-certify a threshold of up to $50,000

on an annual basis. The self-certification must include

a justification, clear identification of the threshold, and supporting documentation of any of the

following:

• A qualification as a low-risk auditee, in accordance with the criteria in 2 CFR § 200.520

for the most recent audit;

• An annual internal institutional risk assessment to identify, mitigate, and manage financial

risks; or

• For public institutions, a higher threshold consistent with State law.

A procurement of more than this threshold may not be inappropriately broken up into smaller

components solely to qualify for the micro-purchase approach. The Subrecipient or non-profit

Successful Applicant must distribute micro-purchases equitably among qualified suppliers. Micro-

purchases may be awarded without soliciting competitive price or rate quotations if the

2 CFR § 200.320(a)(1). The “micro-purchase threshold” means the dollar amount at or below which a

subrecipient may purchase property or services using micro-purchase procedures. Generally, the micro-

purchase threshold for procurement activities administered under Federal awards is not to exceed the

amount set by the FAR at 48 CFR Part 2, subpart 2.1, unless a higher threshold is requested by the

subrecipient and approved by the cognizant agency for indirect costs. The subrecipient is responsible for

determining and documenting an appropriate micro-purchase threshold based on internal controls, an

evaluation of risk, and its documented procurement procedures.

2 CFR § 200.320(a)(1)(iv). Micro-purchase thresholds higher than $50,000 must be approved by the

cognizant agency for indirect costs.

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Subrecipient or non-profit Successful Applicant considers the price to be reasonable based on

research, experience, purchase history or other information and documents its files accordingly.

5.8.2 SMALL PURCHASE (2 CFR § 200.320(A)(2))

DED considers procurement by small purchase procedures best suited to obtaining small

quantities of supplies or services. The Subrecipient or non-profit Successful Applicant may

follow either their local small purchase procurement policy or the Federal policy. However,

Subrecipients and non-profit Successful Applicants must follow the procurement policy that is

most stringent, whether the local policy or Federal policy (described below).

The small purchase method may be used for procurement of property or services exceeding the

threshold for the micro-purchase method and up to the simplified acquisition threshold.

As of

the publication date of this chapter, the simplified acquisition threshold is $250,000, but this

threshold is periodically adjusted for inflation. A procurement of more than $250,000 may not be

inappropriately broken up into smaller components solely to qualify for the small purchase

approach.

Competition is sought through oral or written price quotations. The Subrecipient or non-profit

Successful Applicant must document the receipt of an adequate number (usually at least three

[3]) of price or rate quotations from qualified vendors. If an adequate number is not obtained,

contact DED.

All contracts for $10,000 or more should have provisions allowing the Subrecipient or non-profit

Successful Applicant to terminate the contract at any time for cause or for convenience.

Documentation Requirements:

1. Identify in writing the item to be procured.

2. Solicit in writing, written quotes from at least three (3) qualified bidders. Verbal quotes,

documented by the Subrecipient or non-profit Successful Applicant in writing, are

acceptable for purchases of less than $500.

3. Identify the lowest responsible bidder.

See 2 CFR § 200.320(a)(2). The “simplified acquisition threshold” means the dollar amount below which

a subrecipient may purchase property or services using small purchase methods. Subrecipients adopt small

purchase procedures to expedite the purchase of items at or below the simplified acquisition threshold. The

simplified acquisition threshold for procurement activities administered under Federal awards is set by FAR

at 48 CFR Part 2, subpart 2.1. The subrecipient is responsible for determining an appropriate simplified

acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement

procedures. However, in no circumstances can this threshold exceed the dollar value established in the

FAR (48 CFR Part 2, subpart 2.1) for the simplified acquisition threshold.

2 CFR Part 200, Appendix II (B).

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4. Notify each bidder in writing as to whether or not they are the apparent lowest responsible

bidder.

5. Draft and execute a contract with the lowest responsible bidder.

5.8.3 COMPETITIVE SEALED BID (2 CFR § 200.320(B)(1))

DED considers this method of procurement best suited to obtaining contractors for

construction projects and for large quantities of goods or materials. This method must lend

itself to a firm, fixed-price contract (lump sum or unit price) where the selection can be made

principally on the basis of price.

1. The Subrecipient or non-profit Successful Applicant must advertise the IFB in publications

of general circulation, and solicit bids from an adequate number of known suppliers,

providing them sufficient time to respond prior to bid opening;

2. The IFB must include complete and accurate specifications and pertinent attachments,

and clearly define items or services needed, in sufficient detail for the bidders to properly

respond;

3. Bids must be opened publicly at the time and place stated in the IFB;

4. The Subrecipient or non-profit Successful Applicant must receive at least two (2) or more

responsible bids for each procurement transaction. If two (2) or more responsible bids are

not obtained, contact DED;

5. If awarded, a firm-fixed-price contract award must be made in writing to the lowest

responsive and responsible bidder.

The Subrecipient or non-profit Successful Applicant

can, however, decide not to make the award to any of the bidders; and

6. Any or all bids may be rejected if there is a sound documented reason.

5.8.4 PROPOSALS (2 CFR § 200.320(B)(2))

DED considers this procurement method best suited to obtaining professional services.

This is normally conducted with more than one (1) 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 (e.g., consultants, project and service delivery). This

method has two (2) sub-parts:

• Request for Proposals (RFP)

• Request for Qualifications (RFQ)

Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs

must be considered in determining which bid is lowest.

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The review process for both statements of qualification and proposals in response to an RFQ or

RFP, respectively, should be thorough, uniform, and well documented. The committee or board

carrying out the review should, to the extent possible, include persons with technical skills.

Reviewers should have no potential conflicts of interest with the firms or individuals under review

(e.g., family relationships, close friendships, or business partnerships).

Procedures must ensure that all solicitations promote competition:

• Identify all requirements which the offerors must fulfill;

• Identify all factors used in evaluating bids or proposals;

and

• Incorporate a clear and accurate description of the technical requirements for the material,

product, or service to be procured. Such description must not contain features that unduly

restrict competition.

RFPs and RFQs require the following:

1. RFPs or RFQs must be publicized and identify all evaluation factors and their relative

importance. For example: RFP evaluation criteria may include technical expertise of the

firm and its personnel (25 points); past record of performance on projects of similar nature,

including quality of work and cost control (25 points); familiarity with CDBG-DR program

(20 points); capacity of firm to perform the work within time schedule (20 points); and the

nature and extent of services proposed versus estimated fees (10 points); etc. In general,

Subrecipients and non-profit Successful Applicants should use the RFP process for

professional planning services.

2. Proposals must be solicited from an adequate number of qualified sources (at least three

[3]), which means that the individuals or entities meet certification, registration, or other

professional qualifiers for service performance;

3. Subrecipients and non-profit Successful Applicants must have a written method for

conducting technical evaluations of the RFP or RFQ proposals received according to the

criteria specified in the RFP or RFQ and for making selections;

2 CFR § 200.319.

2 CFR § 200.319(d)(2).

2 CFR § 200.319(d)(1). The description may include a statement of the qualitative nature of the material,

product or service to be procured and, when necessary, must 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 equivalent” description may be

used as a means to define the performance or other salient requirements of procurement. The specific

features of the named brand which must be met by offers must be clearly stated.

2 CFR § 200.320(b)(2).

Any response to publicized RFPs must be considered to the maximum extent practical.

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4. Awards must be made to the responsible offeror whose proposal is most advantageous

to the program, with price and other specified factors considered as appropriate; and

5. Subrecipients and non-profit Successful Applicants may use competitive proposal

procedures for qualification-based procurement of Architectural/Engineering (A/E)

professional services, whereby offeror’s qualifications are evaluated, and the most

qualified offeror is selected subject to negotiation of fair and reasonable compensation.

Price is not used as a selection factor for RFQs.

The RFQ method, where price is not used as a selection factor, can only be used in procurement

of A/E services. It cannot be used to purchase other types of services through A/E firms that are

a potential source to perform the proposed effort. (NOTE: this does not include professional

planning services).

In addition to publicly advertising in the local newspaper or journal of record, the Subrecipient or

non-profit Successful Applicant must also publicly advertise in at least one (1) other newspaper

that is widely distributed in its region of the state. The Subrecipient or non-profit Successful

Applicant evaluates the firms responding and may conduct interviews with one (1) or more of the

firms responding and select a consultant. The Subrecipient or non-profit Successful Applicant

then negotiates a contract with terms and conditions to its satisfaction. The Subrecipient or non-

profit Successful Applicant review committee should score all proposals received in accordance

with the terms described and published with the RFP or RFQ, depending on the method used.

DED recommends sending RFPs to firms serving the Subrecipient’s or non-profit Successful

Applicant’s region of the State; however, proximity is not an adequate reason for selection and

the Subrecipient or non-profit Successful Applicant must take measures to ensure fair and open

competition.

Competitive Proposals Evaluation Criteria

The Competitive Proposals Evaluation Criteria consists of the following:

• Specialized experience or technical expertise of the firm and its personnel in connection

with the type of services to be provided and the complexity of the project.

• Past record of performance on contracts, including quality of work, timeliness, and cost

control.

• Capacity of firm to perform the work within time limitations, taking into consideration the

current and planned workload of the firm.

• Familiarity of the firm with the type of problems applicable to the project.

NOTE: Subrecipients and non-profit Successful Applicants may assign weights to each criterion

to indicate relative importance. If interviews are required at any time in the review process, it must

be expressly stated in the RFP. Additionally, Subrecipients and non-profit Successful Applicants

should confirm that no conflicts of interest exist (see Section 5.4: Conflict of Interest).

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5.8.5 REQUEST FOR PROPOSALS (RFP)

1. RFPs must clearly and accurately state the technical requirements for the goods and

services required.

2. The RFP should specify the scope of services and the type of contract to be provided,

cost reimbursement (i.e., cost plus fixed fee) or fixed price. Not allowable are cost plus a

percentage of cost contracts.

3. The RFP also should specify the cost and pricing data required to support the proposed

cost, anticipated start and completion dates, and ranking and evaluation criteria.

Subrecipients or non-profit Successful Applicants shall make every effort to make

available pertinent materials, such as reports, maps and site plans to assist the offerors in

preparing proposals. For complicated projects, Subrecipients or non-profit Successful

Applicants may wish to conduct a pre-bid conference to discuss the project, describe

available materials, and explain relevant CDBG-DR contract regulations.

4. The Subrecipient or non-profit Successful Applicants must publicize the RFP, identify all

evaluation factors and their relative importance, and to the maximum extent practicable,

honor reasonable requests by parties to have an opportunity to compete;

5. Proposals must be solicited from an adequate number of qualified offerors, consistent with

the nature and requirements of the procurement;

6. The Subrecipient and non-profit Successful Applicant must conduct a technical evaluation

of the submitted proposals to identify the responsible offerors;

7. As necessary, the Subrecipient and non-profit Successful Applicant must conduct

negotiations with those offerors deemed responsive and responsible, and those that fall

within a competitive price range, based on the Subrecipient’s or non-profit Successful

Applicant’s evaluation of the offerors’ pricing and technical proposals. After negotiations,

these offerors may be given the opportunity to submit a “best and final” offer; and

8. The Subrecipient or non-profit Successful Applicant must award the contract to the most

responsive and responsible offeror after price and other factors are considered through

scoring the proposals or “best and final” offers according to predetermined evaluation

criteria. The successful offeror must clearly be the most advantageous source of the goods

and services.

5.8.6 REQUEST FOR QUALIFICATIONS (RFQ)

For procurement involving A/E services, the Subrecipient or non-profit Successful Applicant may

use the RFQ competitive proposal procedure whereby offerors’ qualifications are evaluated, and

the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation.

In these instances, price is not used as a selection factor. The Subrecipient or non-profit

Successful Applicant should review and rank every statement received, and either contact the

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first two (2) or three (3) choices to request a proposal covering the scope of services and

estimated costs or select the top firm and begin negotiations.

Once the most-qualified firm is identified, only that firm is asked for a price proposal, which is

subject to negotiation of a fair and reasonable price. If negotiations with the selected firm are

unsuccessful, repeat this process with the next highest-ranked firm, until a fair and reasonably

priced contract can be awarded.

The Subrecipient or non-profit Successful Applicant must take care to document the basis for its

determination of the most qualified offeror and the reasonableness of the contract price. This

qualifications-based approach to the competitive proposal method may only be used in the

procurement of A/E professional services. It cannot be used to purchase other types of services

through A/E firms that are a potential source to perform the proposed effort.

This means that:

• Use qualifications-based procurement only for A/E services. In no other instance is

issuance of an RFQ appropriate.

• Evaluation of offerors’ qualifications culminates in selection of the most qualified offeror,

subject to negotiation of fair and reasonable compensation.

• An RFQ is not allowable to purchase other types of services, even though A/E firms are

potential sources to perform other types of services.

In addition, the Federal procurement regulations generally discourage the use of local

geographical preferences in the evaluation of bids or proposals except where mandated by

Federal statutes, due to the restrictions on open competition, which result. However, in procuring

A/E services, geographic location is permitted as a selection criterion provided this criterion leaves

an appropriate number of qualified firms, given the nature and size of the project, to compete for

the contract.

Note that the resident bidder preference outlined in Neb. Rev. Stat. 72-101.01 does

not apply to projects paid with CDBG-DR funds.

5.8.7 NON-COMPETITIVE PROPOSALS/SOLE SOURCE (2

CFR § 200.320(C))

This method may be used only under very limited circumstances and the Subrecipient or

non-profit Successful Applicant must obtain DED approval before using this method.

When requesting permission to use this method, the Subrecipient or non-profit Successful

Applicant will have to show that another method of procurement was not feasible because:

2 CFR § 200.320(b)(2).

2 CFR § 200.319(c).

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• The aggregate dollar amount for the acquisition of property or services does not exceed

the micro-purchase threshold;

• The item or service was only available from a single source;

• A public emergency or condition requiring urgency existed which did not permit a delay

resulting from publicizing a competitive solicitation; or

• Competition was determined to be inadequate after solicitation of proposals from a

number of sources.

In some cases, the Subrecipient or non-profit Successful Applicant selects one (1) of the other

methods of procurement listed above which does not ultimately solicit an adequate number of

responses. In such instances where the Subrecipient or non-profit Successful Applicant receives

inadequate response, this may trigger 2 CFR § 200.320(c)(5). After solicitation of a number of

sources, where competition is determined inadequate, it may be appropriate to convert the

process into procurement by noncompetitive proposal. Prior to awarding a contract under

these conditions, the Subrecipient or non-profit Successful Applicant must consult with

and obtain DED approval.

5.8.8 CONTRACTING WITH SMALL AND MINORITY

BUSINESSES, WOMEN'S BUSINESS ENTERPRISES,

SECTION 3 BUSINESS CONCERNS, AND LABOR

SURPLUS AREA FIRMS (2 CFR § 200.321)

Subrecipients or non-profit Successful Applicants must take affirmative steps to use minority

businesses, women’s business enterprises, or labor surplus area firms when possible.

For

example, the Subrecipient or non-profit Successful Applicant should:

1. Place qualified small and minority businesses and women's business enterprises on

solicitation lists;

2. Assure that such businesses are solicited whenever they are potential sources;

3. Divide total procurement requirements, when economically feasible, into smaller tasks or

quantities to permit maximum participation of such businesses;

4. Establish delivery schedules, where the requirement permits, which encourage

participation by such businesses;

See previous section for additional information regarding the micro-purchase threshold.

2 CFR § 200.321(a).

2 CFR § 200.321(b).

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5. Use the services and assistance, as appropriate, of such organizations as the Small

Business Administration and the Minority Business Development Agency of the

Department of Commerce; and

6. Require prime contractors, if subcontracts are to be let, to take affirmative steps to select

such firms.

Subrecipients and non-profit Successful Applicants are required to comply with Section 3 of the

Housing and Community Development Act of 1968. Section 3 requires, to the greatest extent

feasible, and consistent with existing Federal, State, and local laws and regulations, the awarding

of contracts in connection with Section 3 projects to eligible business concerns that provide

economic opportunities to Section 3 workers residing within the metropolitan area (or

nonmetropolitan county) in which the project is located.

See also, Chapter 13: Section 3 for

additional information.

5.8.9 DOMESTIC PREFERENCES FOR PROCUREMENT (2

CFR § 200.322)

To the greatest extent practicable, Subrecipients and non-profit Successful Applicants should

provide a preference for the purchase, acquisition, or use of goods, products, or materials

produced in the United States (including but not limited to iron, aluminum, steel, cement, and

other manufactured products).

5.8.10 PROCUREMENT OF RECOVERED MATERIALS (2 CFR

§ 200.323)

Subrecipients which are governmental entities and its contractors must comply with Section 6002

of the Solid Waste Disposal Act. Section 6002 requires Subrecipients to procure items with the

highest percentage of recovered materials possible. It also requires Subrecipients to procure

waste management services that maximize energy and resource recovery.

5.8.11 SYSTEM FOR AWARDS MANAGEMENT (SAM)

VERIFICATION

Consistent with HUD guidance, an active registration in the System for Award Management

(SAM) is required to apply for an award and for DED to make a payment with HUD funds. Any

non-governmental entity (whether for-profit or nonprofit) must have a Unique Entity Identifier

(UEI) and maintain an active listing on sam.gov to be eligible for an award, and throughout the

term of any associated Subrecipient or Funding Agreement involving CDBG-DR funds. It is

recommended that entities maintain a public (not private) listing.

24 CFR § 75.19.

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SAM is an official US government system that was created to provide a comprehensive list of

individuals and entities debarred from contracting with the Federal government. Subrecipients

and non-profit Successful Applicants are responsible for maintaining SAM verification. Based on

the entity’s relationship to the CDBG-DR-funded project, there are two primary (2) types of SAM

verification. For both instances, the Subrecipient and non-profit Successful Applicant must

maintain documentation as to initial verification and confirm verification prior to awarding a

contract and charging any costs to the award.

1. Subrecipient and Successful Applicant: Subrecipients, Successful Applicants, and

vendors/contractors (e.g., businesses participating in a commercial rehabilitation program

or property owner participating in a housing rehabilitation program that is not an individual)

must have a unique entity identifier, currently the DUNS number, active SAM registry, and

have no active exclusions.

2. Contractors, subcontractors, suppliers, and firms providing professional services

(e.g., development districts, engineers, architects, planners, etc.): SAM verification

of contractors, subcontractors, suppliers, and firms providing professional services

consists of confirmation the entity is not debarred and does not have an active exclusion.

To be eligible for a CDBG-DR award, the Subrecipient or non-profit Successful Applicant must

meet the requirements listed for item 1 above. SAM requirements are again verified prior to

processing drawdowns and during performance monitoring.

5.8.12 TIMING OF CONTRACT EXECUTION

After a Subrecipient Agreement or Funding Agreement has been fully executed, the Subrecipient

or non-profit Successful Applicant may enter into contracts to support program or project delivery.

(See Chapter 4: Financial Management for discussion on when and what cost types can be

incurred.) Entering into all other contracts associated with the project must occur after ROF. In

other words, the Subrecipient or non-profit Successful Applicant would enter into construction

management, housing management, professional services, and construction contracts after ROF.

Procurement process(es) may occur prior; however, certain contracts may not be entered into

prior to HUD issuance of environmental clearance and ROF. Conditional contracts are

discouraged. See Section 5.3: Procurement Policy for discussion of contracts entered into prior

to application.

5.8.13 BONDING AND INSURANCE

For construction or facility improvement contracts or subcontracts exceeding $250,000,

the

Subrecipient or non-profit Successful Applicant must ensure that its procurement meets the

minimum Federal requirements

for bid guarantees, performance bonds, and payment bonds.

These include:

$250,000 is the current Simplified Acquisition Threshold.

2 CFR § 200.326.

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1. A bid guarantee from each bidder equivalent to 5% of the bid price. The bid guarantee

must be a firm commitment in the form of a bid bond, certified check or other negotiable

instrument as assurance that the bidder is prepared to execute a contract within the time

specified for the bid amount;

2. A performance bond from the contractor for 100% of the contract price to secure the

contractor’s fulfillment of all obligations under the contract;

and

3. A payment bond from the contractor for 100% of the contract price, to assure payment

of all persons supplying labor and material under the contract.

5.9 BEST PRACTICES FOR PROCUREMENT

DED guidance is a supplement to Federal and State requirements enumerated and discussed in

brief within this chapter. Best practices are included here to encourage successful

implementation. The Subrecipient or non-profit Successful Applicant is responsible for

understanding and complying with Federal or State requirements located within the original

source. In some instances, DED may require a more stringent approach in which case those

requirements are detailed. DED will be available to provide support and technical assistance to

Subrecipients and non-profit Successful Applicants to help ensure compliant and successful

procurement practices.

Where the procurement method requires publication, the advertisement must be such as to inform

interested parties and be available to the public (i.e., publicly solicited). Use of listing services

requiring membership should not be solely relied upon and do not meet the intent of publication.

Where the Subrecipient or non-profit Successful Applicant received an inadequate number of

responses, it is necessary to consult with DED to determine best practice prior to awarding a

contract. In some instances, it may be appropriate to reissue procurement materials. DED can

provide technical assistance to the Subrecipient or non-profit Successful Applicant to determine

the best way forward.

Carry out SAM verification for all offerors responding to a procurement process at the time of

submission and prior to negotiations to ensure that the offerors are not excluded from receiving

Federal funds.

5.9.1 COMPETITIVE PROPOSALS

Be sure to score all proposals received in accordance with the terms described and published

with the RFP or RFQ, depending on the method used. A response to an RFP/RFQ should not be

confused with competitive bid. A bid is an estimate of cost in response to detailed specifications.

A response to an RFP/RFQ in the competitive proposal process is a description of how a

A “performance bond” is one executed in connection with a contract to secure fulfillment of all the

contractor's requirements under such contract.

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consultant proposes to approach solving a Subrecipient’s or non-profit Successful Applicant’s

problem. Competitive proposals refer to the comparison of qualifications and may include fees

where required or deemed appropriate. However, the main focus in selecting the consultant is to

evaluate the content of the proposal and the consultant’s qualifications and demonstrated

competence.

5.9.2 REQUEST REFERENCES

Any time a consultant solicits a Subrecipient’s or non-profit Successful Applicant’s business, the

Subrecipient or non-profit Successful Applicant should always check references prior to

contracting with them. Request a list of prior clients, showing the organization’s name, address,

phone number and contact person, as well as a brief description of the work performed. A list of

the most recent clients is preferable (especially previous CDBG or CDBG-DR projects). Contact

each reference. Some useful questions might be:

• Were you satisfied with the work?

• Was it performed on time?

• Was the consultant knowledgeable about the program?

• Were the tasks or work products prepared by the consultant useful?

• Did the consultant work with local staff to develop local capacity?

• Were the costs or charges reasonable? Did they stay within their original budget?

• Would you hire them again?

In addition, Subrecipients or non-profit Successful Applicants should check to see if the work done

for these clients is similar to what the Subrecipient or non-profit Successful Applicant wants the

consultant to do. The ability to write a grant application does not mean the same consultant has

the capability to assist with managing a grant.

Sometimes the firm a Subrecipient or non-profit Successful Applicant is interested in will be a new

firm with few, if any, client references. New, small firms can be just as good as well established,

large firms, so instead of asking for client references, the Subrecipient or non-profit Successful

Applicant could ask for past employer references.

Checking references prior to contracting is the most important action you can take to avoid

becoming involved with a less than satisfactory firm.

5.9.3 INVOLVE LOCAL STAFF

Whenever a governmental Subrecipient retains a consultant to assist with preparing a grant

application or managing a CDBG-DR project, make sure that someone from the city or county

works with the consultant and understands the community’s application or the management

issues involved. The Subrecipient should have a local staff person become familiar with the

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regulations for the CDBG-DR program and work closely with the consultant in developing the

application or managing the project. A consultant is a technical resource.

5.10 CONTRACT MANAGEMENT

5.10.1 CONTRACT LANGUAGE

All contracts require certain language to be included;

however, construction contracts require

additional provisions to be included. See

Sample Professional Service/Consultant Contract

Provisions and Sample Construction Contract Provisions outline the language to be included

in the respective contracts between Subrecipients and non-profit Successful Applicants and their

contractors and vendors.

For further information on contract information, (see Procurement Procedures and Code of

Conduct) for additional information on wage requirements on construction projects, (see Chapter

14: Davis-Bacon).

5.10.2 CONTRACT FILE

The Subrecipient or non-profit Successful Applicant must establish a contract file and monitor the

contract to assure that the contract is completed in a satisfactory and timely manner. The contract

file must contain:

• Description of method used to select consultants and related documentation;

• Qualification statements, RFP, and proposal(s) received;

• Any documentation used to evaluate respondents, if applicable;

• SAM verification (no active exclusions/debarment);

• Negotiation methods;

• Cost and pricing data;

• Contract for services;

• Records of partial payments and supporting documentation (in financial management

files); and

• Contract amendments, if any, and rationale for amendment.

5.11 CONTRACT COMPLETION AND CLOSEOUT

2 CFR § 200.327 and Appendix II to 2 CFR Part 200.

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All work must be completed, including delivery of any associated reports and documentation,

before a vendor/contractor submits their final invoice. The vendor/contractor’s final invoice must

be submitted within ninety (90) days of work completion. DED will not sign-off or approve a final

payment to a Subrecipient or non-profit Successful Applicant or project closure if the project has

outstanding labor issues (see Chapter 13: Section 3 and Chapter 14: Davis-Bacon for

additional information). It must be ensured that the Subrecipient or non-profit Successful Applicant

has all payrolls, restitution payments, HUD ills and/or discrepancies resolved prior to close out of

any CDBG-DR project. All funding for a CDBG-DR project must be expended before the expiration

date of the Subrecipient Agreement or Funding Agreement with non-profit Successful Applicant.

5.12 REPORTING AND RECORDKEEPING

Subrecipients and non-profit Successful Applicants should document procurement process, bids

received, contractor selection, and contract progress or status as described herein and in the

Subrecipient Agreement or Funding Agreement. See Chapter 17: Recordkeeping and Data

Management for additional information.

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TOOLKIT LIST

The following documents for Chapter 5: Procurement are available on the Toolkit section of

DED’s website:

• Procurement Procedures and Code of Conduct

• Sample Construction Contract Provisions

• Sample Procurement Checklist

• Sample Professional Service/Consultant Contract Provisions

• Text of 2 CFR §§ 200.318 through 200.327 and Appendix II to Part 200