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Section 11: Procurement Standards

Introduction

This section highlights the procurement standards that must be adhered to when purchasing goods or services for TxDOT Traffic Operations Division-Traffic Safety Section (TRF-TS) grants. Specific requirements are provided for sole source procurements, procurement records, contractual services, and contract management. These standards are furnished to ensure that materials and services are obtained in an effective manner and in compliance with the provisions of applicable federal statutes and executive orders. In general, subgrantee agencies must follow the same policies and procedures it uses for procurements from its non-federal funds provided they conform to applicable federal laws and standards.

Federal Laws and Standards

The federal laws and standards contained in 2 C.F.R. §§ 200.318-200.326 must be adhered to when procuring goods or services for TRF-TS grants.

NOTE: State agencies must comply with contract and procurement policies and procedures as set forth in the State of Texas Procurement Manual, Texas Government Code and Texas Administrative Code. All other subgrantee agencies must have copies of established procurement procedures available for audit purposes upon request by TRF-TS.

Subgrantee Responsibilities

The standards contained in this section do not relieve the subgrantee of the contractual responsibilities arising under its contract(s). The subgrantee is the responsible authority, without recourse to the State, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of an award or other agreement. This includes disputes, claims, protests of award, source evaluation or other matters of a contractual nature, as well as civil liability arising out of negligence or intentional misconduct of the subcontractor(s). Matters concerning violation of statute are to be referred to the federal, state or local authority that may have proper jurisdiction.

Codes of Conduct

The subgrantee must maintain written standards of conduct governing the performance of its employees engaged in the award and administration of subcontracts. No employee, officer, or agent shall participate in the selection, award, or administration of a subcontract supported by federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when the employee, officer or agent, any member of his/her immediate family, his/her partner, or an organization which employs or is about to employ any of the parties indicated above, has a financial or other interest in the firm selected for an award.

The officers, employees, and agents of the subgrantee shall neither solicit nor accept gratuities, favors, or anything of monetary value from subcontractors or parties to subcontracts. However, subgrantees may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the subgrantee.

Competition

All procurement transactions must be conducted in a manner to provide full and open competition consistent with the standards outlined in 2 C.F.R. §§ 200.318 - 200.326. The subgrantee shall be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective subcontractor performance and eliminate unfair competitive advantage, subcontractors that develop or draft specifications, requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded from competing for such procurements.

Awards shall be made to the bidder whose bid or offer is responsive to the solicitation and is most advantageous to the subgrantee, price, quality and other factors considered.

Solicitations shall clearly set forth all requirements that the bidder shall fulfill in order for the bid or offer to be evaluated by the subgrantee.

Any and all bids or offers may be rejected when it is in the subgrantee's interest to do so.

Procurement Procedures

(a) All subgrantees shall establish written procurement procedures. These procedures shall provide, at a minimum, that the conditions in paragraphs (a) (1),(2), and (3)of this section apply.

  • (1) Subgrantees avoid purchasing unnecessary or duplicate items.
  • (2) Where appropriate, an analysis is made of lease and purchase alternatives, and any other appropriate analysis, to determine which would be the most economical and practical procurement for the use of federal funds.
  • (3) Solicitations for goods and services provide for all of the following: A clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description shall not contain features which unduly restrict competition.
    • (i) Requirements which the bidder must fulfill and all other factors to be used in evaluating bids or proposals.
    • (ii) A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards.
    • (iii) The specific features of “brand name or equal” descriptions that bidders are required to meet when such items are included in the solicitation.
    • (iv) The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement.
    • (v) Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient.

(b) Positive efforts shall be made by subgrantees to utilize small businesses, minority-owned firms, and women's business enterprises, whenever possible. Subgrantees of federal awards shall take all of the following steps to further this goal.

  • (1) Ensure that small businesses, minority-owned firms, and women's business enterprises are used to the fullest extent practicable.
  • {2) Make information on forthcoming opportunities available and arrange time frames for purchases and subcontracts to encourage and facilitate participation by small businesses, minority-owned firms, and women's business enterprises.
  • (3) Consider in the subcontract process whether firms competing for larger subcontracts intend to subcontract with small businesses, minority-owned firms, and women's business enterprises.
  • (4) Encourage subcontracting with consortiums of small businesses, minority-owned firms and women's business enterprises when a subcontract is too large for one of these firms to handle individually.
  • (5) Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce's Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms, and women's business enterprises.

(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) shall be determined by the subgrantee, but shall be appropriate for the particular procurement and for promoting the best interest of the Traffic Safety Program or project involved. The “cost-plus-a-percentage-of-cost” or “percentage of construction cost” methods of contracting shall not be used.

(d) Subcontracts shall be made only with responsible subcontractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement. Consideration shall be given to such matters as subcontractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources.

Methods of Procurement

2 C.F.R. § 200.320 states that a subgrantee must use one of the following methods of procurement. Since Traffic Safety subgrantees rarely exceed the Simplified Acquisition Threshold (small purchase) of $150,000 in the acquisition of goods or services, the particulars of sealed bid or RFP requirements can be found in the Uniform Guidance (2 C.F.R. Part 200) or Title 41 of the United States Code (Public Contracts).

  • Procurement by micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $3,000 (or $2,000 in the case of acquisitions for construction subject to the Davis-Bacon Act). To the extent practicable, the subgrantee must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the subgrantee considers the price to be reasonable.
  • Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold ($150,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.
  • Procurement by sealed bids (formal advertising). See 2 C.F.R. § 200.320 or Title 41 of the United States Code for details.
  • Procurement by competitive proposals. See 2 C.F.R. § 200.320 or Title 41 of the United States Code for details.
  • Procurement by noncompetitive proposals. See below for more information.

Cost and Price Analysis

Some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action in excess of the small purchase threshold. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.

Procurement Records

Subgrantees must also maintain records sufficient to detail the significant history of procurement. These records will include, but are not limited to the following:

  • A rationale for the method of procurement and selection of contract type
  • Written selection procedures and documented reasons for rejections, and
  • The basis for the subcontract price.

NOTE: Procurement documentation must be made available for audit purposes upon request from TRF-TS.

Non-Competitive (Sole Source) Procurements

Purchases or award of subcontracts by noncompetitive processes may be used only when small purchase procedures, sealed bids, or competitive proposals are not feasible and one of the following applies:

  • Goods or services are only available from a single source.
  • Public exigency or emergency for requirement will not permit a delay resulting from competitive solicitation.
  • After solicitation of a number of sources, competition is determined inadequate.

NOTE: Sole source approvals must be in accordance with the subgrantee’s procurement and contracting directives regarding noncompetitive procurement and contracting.

Sole Source Records

Procurement records supporting a sole source approval must be consistent with subgrantee’s procedures, but at a minimum, must contain the following:

  • Justification why the purchase/service cannot logically and reasonably be made through a competitive bidding process, including consequences if not approved
  • A list of the vendor’s/subcontractor’s unique qualifications, experience, etc., and
  • A cost analysis, i.e., verifying the proposed cost data, the projections of data, and the evaluation of the specific elements of cost is necessary, unless reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public, or based on prices set by law or regulation.

Subcontract Administration

The subgrantee must maintain “oversight” to ensure that subcontractors perform in accordance with the terms, conditions and specifications of the subcontract and to ensure adequate and timely follow up on all purchases. Subgrantees shall evaluate subcontractor performance and document, as appropriate, whether subcontractors have met the terms, conditions, and specifications of the subcontract.

The subgrantee is responsible for the management of all subcontracts issued using TRF-TS funds, and must:

  • ensure that no services are performed, or any expenses are incurred, until a subcontract is fully executed. Project activity and costs can be incurred on the day of grant execution.
  • ensure the subcontractor’s compliance with subcontract provisions
  • ensure services are performed according to the quality, quantity, objectives, time frames, and manner specified in the subcontract
  • ensure that all work is completed and accepted by the agency before the subcontract expires
  • assess and request amendments, renewals, or new subcontracts as required, allowing sufficient time to process and execute the changes before the subcontract expires in order to prevent a lapse in service
  • ensure that subcontracts are amended subsequent to any grant agreement revision that affects the subcontract terms
  • review and approve invoices for payment to ensure payments are made in accordance with subcontract terms, costs are budgeted and allowable, and work has been performed
  • monitor subcontract expenditures to ensure there are sufficient funds to pay for all services rendered as required by the subcontract
  • verify all requirements of the subcontract are fulfilled before submitting the final invoice, and
  • ensure all Personnel Activity Reporting (PAR) requirements are met ( NHTSA Highway Safety Grant Funding Guidance).

Subcontract Terms and Conditions

If approved as part of the grant agreement, and after a subcontractor is selected in accordance with all requirements of the grant agreement and this section, the subcontractor is subject to all of the Texas Traffic Safety Program Grant Agreement General Terms and Conditions of the Grant Agreement and the required provisions outlined in 2 C.F.R. § 200.326. Specifically, all terms and conditions outlined in 2 C.F.R. § 200.405 (Allowable Costs), and Appendix II to Part 200 (Contract Provisions for Non-federal Entity Contracts Under Federal Awards). Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion must be adhered to. The subgrantee is responsible for verifying the subcontractors’ eligibility by checking the national List of Parties Excluded from Federal Procurement and Non-procurement Programs or adding a self-certification clause or condition to the subcontract.

Potential subcontractors are required to become familiar with the contents of the Texas Traffic Safety Program Grant Agreement General Terms and Conditions, because failure to do so will not excuse nonperformance or noncompliance once a subcontract has been awarded.

Subcontract Template

A subcontract agreement template is available in the “Instructions” section on the eGrants Help Page under “Subcontract Agreement.” The template has been approved for use in all subcontracts and contains all applicable terms and conditions of the Texas Traffic Safety Program. The use of this subcontract agreement template is not mandatory, but is highly encouraged. Subgrantees that use their own subcontract agreement must ensure that it contains all components and the terms and conditions contained in the template.

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