Grant Administration: Section 7.5 Methods of Procurement

Grantees must select from one of four methods of procurement based on the type of products and/or services being procured and their cost.

Micro Purchase Procedures
Procurement by micro-purchase is the acquisition of goods or supplies, the aggregate dollar amount of which does not exceed the current micro-purchase threshold of $10,000. To the extent practicable, the municipality must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the municipality considers the price to be reasonable.

Small Purchase Procedures
Small purchase procedures entail a relatively simple and informal process that can be used when cost of goods or supplies, in the aggregate, are no more than $150,000. Under this process, the grantee must:

  • Obtain price or rate quotations either by phone or in writing from an adequate number of qualified sources (at least two sources).
  • Maintain documentation regarding the businesses contacted and the prices quoted.
  • Make the award to the lowest responsive and responsible source.
  • If applicable, prepare and sign a contract formalizing the scope of work and the terms of compensation.

Competitive Sealed Bid
The Competitive Sealed Bid method is the required method for procuring CDBG-funded construction work. (See Chapter 8: Labor Standards for detailed information on preparing construction bid documents.) The following requirements apply to the competitive sealed bid procurement process:

  • Competitive sealed bids are initiated by publishing an Invitation to Bid (IFB).
  • The IFB must be advertised in the newspaper of daily general circulation at least one time not less than fourteen days before the date set for the opening of bids.
  • The IFB must also be distributed to all trade publications (construction services).
  • The grantee must provide a copy of the Invitation for Bids to the New Hampshire Department of Transportation EEO Coordinator.  Department of Transportation Disadvantaged Business Program
  • The IFB will include specifications that define the services or items required in order for the bidder to properly respond.
  • 2 CFR Part 200 requires a bid guarantee from each bidder equal to five percent of the bid price. This guarantee serves as an assurance that the chosen contractor will execute the contract within the time specified.
    – Bid guarantees can be in the form of a Bond or Cashier’s check that are returned to the unsuccessful bidders.
  • All bids must be publicly opened at the time and place stated in the Invitation for Bids.
  • The bids must be tabulated and reviewed.
  • The contract is awarded to the lowest, responsible and responsive bidder.
  • Preparation and signing of a contract formalizing a scope of work and the terms of compensation is required.
    – The contract must be a firm-fixed-price contract (lump sum or unit price with a maximum amount identified).
  • If alternates (additives or deducts) will be taken, the bid documents must be clear as to the priority order in which those alternates will be applied.

Competitive Negotiation
This method of procurement is used if the selection can be based on factors other than cost, such as experience and capacity. Procurement of architectural, engineering, planning and administrative services fall under this category. Grantees shall seek permission from CDFA prior to using competitive negotiation for contracts other than architectural, engineering, planning or administrative services. Only fixed-price contracts or hourly contracts with a not-to-exceed figure may be awarded.

Caution: Cost plus a percentage of cost contracts are not acceptable. This means that standard architectural and engineering contracts cannot be used without changing the fee structure that is based on a percentage of costs.

NOTE: Consultants must not assist the grantee with procurement if they intend to respond to the solicitation for services.

Competitive negotiations are initiated by publishing a Request for Proposals (RFP) or Request for Qualifications (RFQ). The RFP is used when price is a factor in selection; the RFQ is used when price is considered after selections (RFQ may ONLY be used for architectural or engineering services). In both the RFP and RFQ, all significant evaluation factors and their relative importance should be clearly stated. In addition, the grantee should provide or make available any materials such as reports, maps, and site plans to assist interested firms in preparing responsible submissions. A sample RFQ is provided as Attachment 7-8 to this Chapter.

The following requirements apply to the competitive negotiations procurement process:

  • The RFP or RFQ must be advertised in a newspaper of daily general circulation in the area at least one time not less than fourteen days before the date set for the opening of proposals.
  • The grantee must provide a copy of the Invitation to Bid to the DOT.
  • If an RFP is used, it should specify the scope of services to be provided and the type of contract to be used: fixed price, or an hourly rate with a not to exceed figure.
  • An RFP should also:
    – Specify that cost and pricing data is required to support the proposed cost;
    – State anticipated start and completion dates; and
    – List evaluation criteria that will be used in ranking proposals.
  • All proposals received must be reviewed and ranked according to the selection criteria, and the review must be documented in writing. Attachment 7-11 provides a sample Professional Services Evaluation.
  • For both RFPs and RFQs, selection is made on the basis of the most responsible offer or price with consideration given to the factors identified in the Request for Proposal or Qualifications.
  • For RFQs, an invitation is then made to one or more respondents to negotiate a price or fee. Document the reason the firm is chosen and that the price established is reasonable.
  • The grantee must maintain documentation for all services and reasons for selection.
  • The grantee must send an award letter to the selected contractor and document the file with it.
  • The grantee must prepare and sign a contract formalizing a scope of work and the terms of compensation.
  • The grantee should promptly notify unsuccessful bidders in writing and document the file with the rejection letters.

Non-Competitive Negotiations
Non-competitive negotiation is procurement through solicitation of a proposal from one source and is often referred to as sole source procurement. A contract may be awarded by noncompetitive negotiation only when the award is infeasible under small purchase procedures, competitive sealed bids, or competitive negotiations and one of the following circumstances applies:

  • There is some public emergency that will not permit delay resulting from competitive solicitation (the grantee must declare an emergency as authorized by law); or
  • The results of the competitive negotiations are inadequate; or
  • The product or service is available only from a single source.

Caution: The use of the non-competitive negotiation procurement method must be authorized in advance by CDFA.

The following requirements apply to the non-competitive negotiation procurement process:

  • Negotiations must be conducted with the selected company regarding a scope of work and price; and
  • Preparation and signing of a contract formalizing a scope of work and the terms of compensation is required.
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