§ 200.318 - General procurement standards.

§ 200.318 General procurement standards.

(a) The non-Federal entity must have Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement procedures, transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.

(b) Non-Federal entities Oversight of contractors. Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. See also § 200.501(h).

(c) Conflicts of interest.

(1) The non-Federal entity recipient or subrecipient must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. No employee, officer, or agent agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by a the Federal award if he or she has a real or apparent conflict of interest. Such a . A conflict of interest would arise includes when the employee, officer, or agent, or board member, any member of his or her their immediate family, his or her their partner, or an organization which that 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 an entity considered for a contract. The officersAn employee, employeesofficer, agent, and agents board member of the non-Federal entity recipient or subrecipient may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities the recipient or subrecipient may set standards for situations in which where the financial interest is not substantial or the a gift is an unsolicited item of nominal value. The recipient's or subrecipient's standards of conduct must also provide for disciplinary actions to be applied for violations of such standards by its employees, officers, employeesagents, or agents of the non-Federal entityboard members.

(2) If the non-Federal entity recipient or subrecipient has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian tribeTribe, the non-Federal entity recipient or subrecipient must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means mean that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity recipient or subrecipient is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.

(d) The non-Federal entity's Avoidance of unnecessary or duplicative items. The recipient's or subrecipient's procedures must avoid the acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where When appropriate, an analysis will should be made of lease versus purchase alternatives, and any other appropriate analysis between leasing and purchasing property or equipment to determine the most economical approach.

(e) To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is Procurement arrangements using strategic sourcing. When appropriate for the procurement or use of common or shared goods and services, recipients and subrecipients are encouraged to enter into state State and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions transactions. These or similar procurement arrangements using strategic sourcing may foster greater economy and efficiency. Documented procurement actions of this type (using strategic sourcing, shared services, and other similar procurement arrangements) will meet the competition requirements of this part.

(f) The non-Federal entity Use of excess and surplus Federal property. The recipient or subrecipient is encouraged to use Federal excess and surplus Federal property in lieu instead of purchasing new equipment and property whenever such use when it is feasible and reduces project costs.

(g) The non-Federal entity Use of value engineering clauses. When practical, the recipient or subrecipient is encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of means analyzing each contract item or task to ensure that its essential function is provided at the overall lower lowest cost.

(h) The non-Federal entity Responsible contractors. The recipient or subrecipient must award contracts only to responsible contractors possessing that possess the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contract. The recipient or subrecipient must consider contractor integrity, compliance with public policy compliance, record of past performanceproper classification of employees (see the Fair Labor Standards Act, 29 U.S.C. 201, chapter 8), past performance record, and financial and technical resources when conducting a procurement transaction. See also § 200.214.

(i) The non-Federal entity Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records will include, but are not necessarily limited to, the following: Rationale must include the rationale for the procurement method of procurement, selection of contract type selection, contractor selection or rejection, and the basis for the contract price.

(j) Time-and-materials type contracts.

(1) The non-Federal entity recipient or subrecipient may use a time-and-materials type contract only after a determination that no other contract is suitable and if the contract includes a ceiling price that the contractor exceeds at its own risk. Time-and-materials type contract means a contract whose cost to a non-Federal entity recipient or subrecipient is the sum of:

(i) The actual cost of materials; and

(ii) Direct labor hours charged at fixed hourly rates that reflect wages, general and administrative expenses, and profit.

(2) Since Because this formula generates an open-ended contract price, a time-and-materials contract provides no positive profit incentive to the contractor for cost control or labor efficiency. Therefore, each contract must set a ceiling price that the contractor exceeds at its own risk. Further, the non-Federal entity recipient or subrecipient awarding such a contract must assert a high degree of oversight in order to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls.

(k) The non-Federal entity alone must be responsible, in accordance with good administrative practice and sound business judgment, Settlement of contractual and administrative issues. The recipient or subrecipient is responsible for the settlement of all contractual and administrative issues arising out of procurementsits procurement transactions. These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the non-Federal entity recipient or subrecipient of any contractual responsibilities under its contracts. The Federal awarding agency will not substitute its judgment for that of the non-Federal entity recipient or subrecipient unless the matter is primarily a Federal concern. Violations The recipient or subrecipient must report violations of law will be referred to the localFederal, stateState, or Federal local authority having proper jurisdiction.

[85 FR 49543, Aug. 13, 2020, as amended at 86 FR 10440, Feb. 22, 2021]

with proper jurisdiction.

(l) Examples of labor and employment practices.

(1) The procurement standards in this subpart do not prohibit recipients or subrecipients from:

(i) Using Project Labor Agreements (PLAs) or similar forms of pre-hire collective bargaining agreements;

(ii) Requiring construction contractors to use hiring preferences or goals for people residing in high-poverty areas, disadvantaged communities as defined by the Justice40 Initiative (see OMB Memorandum M-21-28), or high-unemployment census tracts within a region no smaller than the county where a federally funded construction project is located. The hiring preferences or goals should be consistent with the policies and procedures of the recipient or subrecipient, and must not prohibit interstate hiring;

(iii) Requiring a contractor to use hiring preferences or goals for individuals with barriers to employment (as defined in section 3 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102(24)), including women and people from underserved communities as defined by Executive Order 14091;

(iv) Using agreements intended to ensure uninterrupted delivery of services; using agreements intended to ensure community benefits; or

(v) Offering employees of a predecessor contractor rights of first refusal under a new contract.

(2) Recipients and subrecipients may use the practices listed in paragraph (1) if consistent with the U.S. Constitution, applicable Federal statutes and regulations, the objectives and purposes of the applicable Federal financial assistance program, and other requirements of this part.