Contracting & Procurement

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Procurement under a federal grant award has requirements that may be different from your usual practices. The key guidance for actions related to contracting and procurement is found in 2 CFR 200, particularly 2 CFR 200.317 to 200.326. State governments should follow their own standards and practices; all other grant recipients, including organizations that receive a sub-grant from a state government, need to comply with 2 CFR 200. In all procurement actions, the general objectives are to:

• provide full and open competition for government-funded work
• to guard against real and perceived favoritism and profiteering at taxpayer's expense by using an open and fair competitive bid process (when required)
• to provide equal opportunities to participate in public business

In addition to complying with 2 CFR 200 to determine the allowable procurement methods and policies, the Historic Preservation Fund Grant Manual also provides information on unallowable costs. Before undertaking a procurement action, whether for goods or services, grantees should review 2 CFR 200 to understand methods and generally allowable or unallowable costs as well as the grant manual for additional guidance on allowable and unallowable costs.

Getting Ready for Procurement

• identifying the need -- is the purchase necessary?
• write specifications, estimate cost; your grant manager may need to review these specifications before they are published or released (more information will be in your grant agreement)
• choose the procurement type
• solicit bids (informal or formal)
• allow sufficient time for submission
• evaluate bids and select offeror after confirming with your grant manager
• notify unsuccessful bidders
• award the contract
• manage and monitor the contract
• document everything!

Your Role as a Grantee

In addition to being aware of the applicable federal procurement standards, you should also be aware of any state or local procurement requirements that you may need to follow in addition to federal requirements. Remember: all contractual and administrative disputes and claims resulting from procurements are your responsibility and you cannot execute a contract until the grant agreement is signed.

Common Mistakes in Procurement

Based on data from the Federal Emergency Management Agency (FEMA), the top 10 procurement mistakes that lead to questioned or disallowed costs under a grantee's audit are:

• Restricting full and open competition

  • Don't place unreasonable restrictions on firms or specify only a specific, brand name product

  • Don't use geographical preferences in the evaluation of bids or proposals

  • Don't allow contractors to draft contract documents or specification and then also bid or compete for the same contract

  • Don't award noncompetitive contracts to firms on retainer contracts

  • Do review 2 CFR 200, your grant agreement, and the HPF Grants Manual

  • Do have written standards of conduct covering conflicts of interest and governing the performance of your employees engaged in contract award and administration
• Not performing a detailed price or cost analysis for procurement actions above $250,000
• Improper sole-sourcing (noncompetitive) procurement
• Continuing work that was approved to be sole-sourced during a public emergency after the urgent need has ended
• Not making and documenting efforts to take all socioeconomic "affirmative" steps, particularly those described in 2 CFR 200.321
• Improper awarding of a "time-and-materials" contract. A time-and-materials contract will require significant oversight on your part. See 2 CFR 200.318(j)
• Not including the required contract clauses as required by 2 CFR 200.326 and Appendix II to 2 CFR 200
• Awarding "cost-plus-percentage-of-cost" or "percentage-of-construction-cost" contracts
• Awarding a contract to contractors that have been suspended or debarred.
  • A contractor that has been suspended or disbarred by a federal agency cannot receive a federal award or contract. You can (and should) easily check to verify that a potential vendor has not been disbarred by checking the System for Award Management
• Not documenting all steps of a procurement action
  • You should be able to demonstrate, through documentation, what actions you took, why, and why a choice was reasonable

Is Your Organization Located in a Territory or Freely Associated State?

The Office of Insular Affairs, part of the Department of the Interior, offers a free webpage on which government and non-government organizations within any of the territories of American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the US Virgin Islands as well as the Freely Associated States (Federated States of Micronesia, Republic of the Marshall Islands, Republic of Palau) can advertise procurement opportunities.

Common Steps in Procurement

The most common steps in procurement for Historic Preservation Fund competitive grants follow a process called competitve negotiation. This method lends it self to the architectural, engineering, or professional services commonly used by grantees. Key elements of this method are that:

• proposals are requested from a number of sources via a publicized Request for Proposals
• the Request for Proposals identifies evaluation factors, including price/cost
  • note that your primary concern should be the experience of the vendor in working with historic resources
• you have a written method for evaluating responses; this includes the creation of a score sheet or similar document to record evaluation of received proposals
• you make an award based on price and other factors
• you notify unsuccessful bidders promptly after your grant manager approves your selected vendor

Note that the competitive negotiation procurement method is not optional for architectural/engineering services where the procurement action is for more than $250,000.

Exceptions to Standard Procurement Methods

Noncompetitive negotiation, also called "sole sourcing" may only be used when:

• the item is only avilable from a single source
  • this is often best documented after no responses have been received from a preliminary publication of an RFP
• public exigency or emergency, when the unrgency for the requirement will not permit a delay
• you should work with your NPS grant manager to authorize noncompetitive negoitation; this authorization should be in writing and retained with your grant file

Unallowable Procurement Methods

There are two types of contracts that are not allowed, as decribed in 2 CFR 200.320 and the Federal Acquisitions Regulations, Part 16. These types of contracts are: cost-plus-a-percentage-of-cost and percentage-of-construction-cost. Any goods or services acquired under these types of contracts are not allowable for federal share or non-federal matching share expenses.