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Best Prac*ces for

Procurement and TERO

New Construc*on – White Earth Reserva*on Housing Authority

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Rehabilita*on – Tulalip Tribes

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Federal Procurement and Contrac*ng Regula*ons

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24 CFR Part 85 24 CFR 85.36 Procurement • (a) States • (b) Procurement Standards • (c) Competition • (d) Methods of Procurement to Be Followed • (e) Contracting with small and minority firms, women’s business enterprise and labor surplus area firms. • (f) Contract Cost and Price • (g) Awarding Agency Review • (h) Bonding (1000.26(a)(11) provides acceptable methods when inconsistencies exist) • (i) Contract Provisions

2CFR PART 225—COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS (OMB CIRCULAR A–87) Section 7(b) of the Indian Self-Determination and Education Assistance Act, 25 USC 450e(b) Section 3 of the HUD Act of 1968

•  Indian Housing Block Grant Recipients are required to follow applicable Tribal, State or local laws on procurement. – Be aware of which law is stricter regarding specific issues that pertain to a specific procurement acAvity.

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Tribal Laws and Ordinances

Other Special Legal Issues •  Sovereign Immunity and Waivers

•  Trust Land Status •  Tribal Courts

Other Sources of Procurement Regula*ons and Requirements

•  Bank Loans •  Low Income Housing Tax Credits

•  State Housing Finance Agencies

•  USDA Rural Development •  Bond Projects

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Fundamentals of Government Procurement

•  Fair and compeAAve process •  Reasonable and low price from a responsible and responsive contractor/vendor

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Procurement Procedures

•  Required by 24 CFR 1000.26 and 24 CFR 85.36

•  Establish Tribal Housing program procurement rules and pracAces that do not conflict with 24 CFR 85.36

•  Assemble and integrate requirements imposed by others with Tribal Housing program requirements

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Procurement Methods Micro Purchases ( less than $5,000)

Small Purchases ( $5,000 up to $150,000)

Sealed Bidding (IFB) (greater than $150,000)

CompeAAve Proposals (RFP)

Non-‐CompeAAve Procurement

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CONTRACTOR QUALIFICATIONS

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Contractor Qualifica*ons •  Past Performance •  References •  Background check •  Suspension & Debarment

•  24 CFR 1000.44 Debarment and Suspensions

–  www.sam.gov (System for Award Management) •  Limited Denial of ParAcipaAon •  Tribal or Indian Preference

Bidders, Proposers, and Vendors

•  Responsive •  Provides all of the

documents and informa*on required

– bid/proposal meets specifica*ons

• Responsible •  Has the capacity and capability to perform

the work and/or provide the goods

properly and on Ame

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Na*ve Preference

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•  (a) In accordance with SecAon 101(k) of NAHASDA, a recipient shall apply the tribal employment and contract preference laws (including regulaAons and tribal ordinances) adopted by the Indian tribe that receives a benefit from funds granted to the recipient under NAHASDA.

Tribal or Indian Preference 24 CFR 1000.48 to 54

•  In the absence of tribal employment and contract preference laws, a recipient must, to the greatest extent feasible, give preference in the award of contracts for projects funded under this part to Indian organizaAons and Indian-‐owned economic enterprises in accordance with SecAon 7(b) of the Indian Self-‐DeterminaAon and EducaAon Assistance Act (25 U.S.C. 450e(b)).

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Na*ve Preference Op*ons 24CFR 1000.52(1)(C )ii

• If two or more NaAve-‐owned firms express interest

NaAve-‐Owned Only

• If less than two NaAve-‐owned firms express interest

Open Bidding

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Indian Preference

24 CFR 1000.52(2) •  If any method of Indian preference results in only one bid or proposal being received, then – Re-‐adver*se using any approved method of Indian preference under (a), OR

– Re-‐adver*se to all en**es using X-‐factor or other points for preference, OR

– Ask HUD-‐ONAP for approval.

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X – Factor Example When the lowest responsive bid is: X = Lesser of:

Less than $100,000 10% of that bid or $9,000

At least $100,000 but less than $200,000 9% of that bid or $16,000



At least $400,000 but less than $$500,000 6% of that bid or $25,000

At least $500,000 but less than $1 million 5% of that bid or $40,000

At least $1 million but less than $2 million 4% of that bid or $60,000



$7 million or more 1.5% of the lowest responsive bid

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Where Tribal or Indian Preference Is Applied

•  In selecAon of contractors or vendors •  In the contractor’s selecAon of subcontractors and suppliers

•  During employment and training by contractors

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Who is Eligible for Indian Preference? •  Preference in the award of contracts and subcontracts

shall be given to Indian organiza*ons and Indian-‐owned economic enterprises as defined in sec*on 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452).

•  The Indian Self-‐DeterminaAon and EducaAon Assistance Act defines “Indian” to mean a person who is a member of an Indian tribe and defines “Indian tribe” to mean any Indian tribe, band, na*on, or other organized group or community, including any Alaska Na*ve village or regional or village corpora*on as defined or established pursuant to the Alaska NaAve Claims Seflement Act, Federally recognized tribes

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Qualify Bidders, Proposers, Vendors •  Specifically determine if the individuals and enAAes are qualified to receive Indian preference.

•  Do not rely on determinaAons and cerAficaAons made by others.

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51% Ownership AND 51% Control

•  EnAty owned by a tribe or a tribal member must show evidence of 51% ownership AND 51% control.

•  Control includes voAng rights, management, decision making, and allocaAon of profits.

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Common “Fron*ng” Prac*ces

•  Disguise how lifle profit tribe or member receives

•  Indian tribe or member appears on paper as 51% owner, but management/control are with non-‐Indian

•  Less than truthful in explaining resources that each owner brings to enAty

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Preference Must Be Requested

•  Advise all bidders, proposers, and vendors Indian preference is required in contract awards

•  ParAes seeking preference must request preference

•  Indian Preference QualificaAon ApplicaAon

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Indian Preference Cer*fica*on Applica*on Applicant Checklist for Submission

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Sole Proprietor

( ) Drivers License

( ) CerAficate of Degree of Indian Blood

( ) Tribal Membership Card

( ) Federal IdenAficaAon Number or

( ) Social Security Number

( ) Equipment List

( ) Current Financial Statement

( ) Current and Prior Two years Federal Income Tax Returns

( ) Copy of Bank Signature Card

( ) Three cancelled checks for accounts payable

( ) One weeks cancelled payroll checks

( )Other minority cerAficaAons

Partnership

( ) Agreement or Amendments

( ) TERO FORMS

( ) Drivers License



( ) Federal IdenAficaAon Number or ( ) Social Security Number

( ) Equipment List







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Corpora*on

( ) Type of CorporaAon

( ) ArAcles of IncorporaAon

( ) Complete copy of by-‐laws & cerAficaAon of incorporaAon

( ) Copies of all issued and/voided stock cerAficaAons

( ) Minutes of first & last corporate organizaAon meeAng, all resoluAons affecAng ownership

( ) Complete copy of stock transfer ledgers & stock register ( ) Proof of stock purchase

( ) List of officers & numbers of shares

( ) Sworn statement of proper officer that states: •  Total number of shares •  Stock sold •  Amount of cash •  Total indebtedness

( )TERO Forms

( )Drivers License




( ) Equipment List







Indian Preference Cer*fica*on Applica*on Applicant Checklist for Submission

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Limited Liability Company (LLC)

( ) ArAcles of OrganizaAon

( ) Copy of CerAficate

( ) TERO forms

( ) Drivers License




( ) Equipment List







Indian Preference Cer*fica*on Applica*on

Applicant Checklist for Submission

Addi*onal Informa*on a. Percent of Indian Ownership: ______________________ b. For each Indian owner to provide name, address, tribal affilia*on, enrollment #, percent of ownership, amount of investment in the firm, method of investment, (cash, equipment, loan or promissory note indica*ng who the loan is from, percent of vo*ng control and posi*on in the firm. ) c. For each non Indian owner, list name, address, percent of ownership amount of investment in firm, method of investment (cash, equipment, loan or promissory note indica*on who the loan or note is from, percent of vo*ng control, posi*on in firm, name of all other firms owner holds in other than publicly-‐held corpora*ons and similar ownerships solely for investments, or a management posi*on in. )

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Management For each owner of more than 50% interest, all senior management personnel and members of the Board of Directors provide the following: 1. Name, address and social security number. If Indian, tribe and enrollment number 2. Present posi*on (descrip*on of all du*es). 3. Previous business experience. 4. Previous work experience in areas in which firm intends to engage. 5. Other previous work experience. 6. Educa*on and training. 7. Other jobs presently held.

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Control Iden*fy by name, race, sex and *tle on company those individuals (owners and non-‐owners) who are responsible for day-‐to-‐day management, including, but, not limited to those with prime responsibility for: 1. Financial decisions. 2. Management decisions, such as: a. Marke*ng and sales; b. Hiring and firing; c. Purchase of major equipment of supplies: d. Supervision of field personnel.

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•  A list of all employees with each employee’s job descripAon, designaAon of the employee as full-‐Ame or part-‐Ame, salary, and designa*on of Tribal Member or Indian status.

•  A list of the number and types of clients or customers for the previous calendar year.

•  Copies of W-‐2’s issued the previous year to all owners and current key employees. Copies of 1099s issued the previous year to subcontractors.

•  Copies of all insurance policies for the Applicant that are currently in-‐force, including, but not limited to, general liability policies, professional liability policies, worker’s compensaAon insurance policies, and automobile policies.

•  Copies of all necessary licenses and cer*fica*ons held by any owner and employees of the applicant.

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Have you or any owner of your enAty had any of the following occur in the past 10 years and, if so, please explain with an

afached narraAve: q  filed bankruptcy or been peAAoned into bankruptcy q  sued regarding a contract or payment of a contract q  sued regarding contract performance or payment of a contract q  failed to complete a contract on Ame q  failed to finish a contract q  had a claim made on a bond provided on your behalf q  involved in arbitraAon regarding a contract or its performance q  had a contract terminated for cause q  denied Indian preference aler seeking it q  debarred, suspended or other sancAons q  failed to properly pay a supplier, subcontractor, employee as required by contract q  any legal judgments entered against you q  any other incident involving performance of a contract where claims or disputes

arose

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Document, Document, Document

•  Carefully record decision in wriAng •  Be prepared to provide further explanaAon to anyone you disqualify

•  Explain to any disqualified party that they may sAll submit a bid or proposal

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Sec*on 3 •  SecAon 3 requires that, to the greatest extent feasible,

opportuniAes for training and employment arising from Federal funding be provided to low-‐income persons residing in the program service area.

•  The requirements of secAon 3 apply only to those secAon 3 covered projects or acAviAes for which the amount of assistance exceeds $200,000.

•  (c) Tribal preference. Recipients meet the secAon 3 requirements when they comply with employment and contract preference laws adopted by their tribe in accordance with secAon 101(k) of NAHASDA.

Managing Procurement

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PRICE AND COST ANALYSIS

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Contract Cost and Price 24 CFR 85.36(f)

Perform cost / price analysis for every procurement (including contract changes) • Micro & Small Purchases – Price Analysis • Sealed Bidding -‐ Comparison of an independent cost es*mate and the compe**ve bids received • CompeAAve Proposals – Cost Analysis • NoncompeAAve Proposals -‐ Request a breakdown of the proposed costs and use cost analysis (i.e., verifying the proposed cost data, the projecAons of the data, and the evaluaAon of the specific elements of cost and profit).

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Small Purchases

•  Small purchase up to $150,000 – If the tribal or local threshold is lower the lower requirement must be followed.

•  Procurement needs over the $150,000 must not be broken down to avoid the threshold requirement.

Key Elements •  No adverAsing •  Adequate number of qualified bidders/proposers

•  UAlize a wrifen checklist in solicitaAon •  Request esAmates by:

– Internet – Catalog -‐ phone -‐ fax -‐ or in person

•  Phone -‐ quesAons must be uniform and consistent

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Award and Contract

•  Award and Contract: – Only to responsive and responsible bidder – Reasonable price

•  UAlize appropriate contract forms and methods aler obtaining legal advice

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Sealed Bidding •  CondiAons for using sealed bidding method:

Ø  A complete, adequate, and realisAc specificaAon or purchase descripAon is available;

Ø Two or more responsible bidders are willing and able to compete effecAvely for the work; 85.36(d)(2)(i)(B)

Ø The procurement lends itself to a firm-‐fixed price contract; and

Ø The selecAon of the successful bidder can be made principally on the basis of price.

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Solicita*on of Bids •  AdverAsement for Bids or Restricted SolicitaAon •  Invita*on for Bids (IFB)

Ø Cover Lefer Ø Face Page Ø Bid Proposal Forms Ø SpecificaAons/Statement of Work Ø Mandatory Clauses – 24 CFR 85.36(i) Ø InstrucAons to Bidders/Offerors Ø Afachments Ø Alternate Bid Proposal Forms

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Sealed Bid Prepara*on Outline •  Prepara*on Outline •  Bid Proposal Form

Base Bid Form Alternate Bid Form

•  Non-‐Collusive Affidavit •  Previous Work History Form •  TERO Cer*fica*on or Prevailing Wage Cer*fica*on •  Statement on providing Indian Preference in employment & Training

Opportuni*es •  Statement on providing Indian Preference in the award of Subcontracts •  Representa*ons, Cer*fica*ons , and Other Statements of Bidders

–  HUD 5369A •  Bid Bond •  Special Instruc*ons

Bonding Requirements

•  Bid bonds •  Performance bonds

•  Payment bonds

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Bonding Requirements – Bid Bond: assures that if awarded the contract the bidder will accept and perform the contract

– Performance Bond: assures that contract will be completed if contractor fails to do the job

– Payment Bond: assures that the contractor will pay his/her subcontractors

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Alterna*ves to Bonding •  Deposit with the recipient of a cash escrow of not less than 20

percent of the total contract price, subject to reducAon during the warranty period, commensurate with potenAal risk;

•  Leser of credit for 25 percent of the total contract price, uncondiAonally payable upon demand of the recipient, subject to reducAon during any warranty period commensurate with potenAal risk; or

•  Leser of credit for 10 percent of the total contract price uncondiAonally payable upon demand of the recipient subject to reducAon during any warranty period commensurate with potenAal risk, and compliance with the disbursements by the contractor.

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Wage Rates for Construc*on Contracts

•  Tribally determined wage rates may be used under condi*ons set forth in the regula*ons and related no*ces.

•  Or workers must be paid minimum wages in accordance with a wage determinaAon issued pursuant to the Davis-‐Bacon Act.

•  The ContracAng Officer must make applicable wage rates available as part of the solicitaAon.

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Contract Award Process •  Qualify Contractor –

– Responsive – Responsible – Reasonable Price

•  Award of Non-‐Restricted Contracts – 24CFR 1000.52

•  RejecAon of Bids •  Use Recipient-‐approved contract form (e.g., by AIA, AGC, HUD) or get legal advice before signing

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Addi*onal Clauses: TERO Etc…….

Auer Execu*on of Contract

•  In some cases, issue a NoAce to Proceed

•  AdministraAon transferred from Procurement Officer to Contract Manager

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Compe**ve Proposals Condi*ons for Use

•  Used to procure goods & services when price is not the only factor

•  The advantage of this approach allows for discussions with offerors to ensure that there is a complete understanding of the work to be undertaken.

•  Condi*ons for use is usually spelled out in the recipient’s Procurement Policy.

•  Primary use is for professional service contracts.

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Solicita*on of Offers •  Public NoAce or Restricted SolicitaAon •  Preparing the SolicitaAon:

Ø Cover lefer Ø Face page Ø Prices Ø SpecificaAons/ Statement of Work Ø Mandatory Clauses Ø InstrucAons to Bidders/Offerors Ø EvaluaAon Criteria

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Sample Criteria With Point Scale Maximum Points 100

•  Quality of Proposal 15 •  General Experience 10 •  Resumes 10 •  Experience working with NaAve OrganizaAons 15 •  Experience working in tribe’s region or area 20 •  Past Performance 10 •  References 10 •  NaAve Preference 10

TOTAL 100

Award of Contract

•  Cost or price analysis required

•  Award to responsive and responsible proposer whose proposal is most advantageous to recipient

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Contracts

•  Contract of Sale used for manufactured housing and turnkey construcAon

•  Professional services contracts olen based on hourly rate

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Addi*onal Clauses: TERO Etc…….

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Qualifica*on Based Selec*on A/E services may be procured using the small purchase method, compeAAve proposals, or

qualificaAon-‐based (QBS) procedures.

In areas where QBS is required by law, the ContracAng Officer must follow QBS procedures.

Non-‐Compe55ve Method 24 CFR 85.36 (d)(4) (i)May be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or compeAAve proposals and one of the following circumstances applies: (A) The item is available only from a single source; (B) The public exigency or emergency for the requirement will not permit a delay resulAng from compeAAve solicitaAon; (C) The awarding agency authorizes noncompeAAve proposals; or (D) Aler solicitaAon of a number of sources, compeAAon is determined inadequate.

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Non-‐Compe**ve Method

•  NegoAate with a single source

•  Provide preferences when feasible

•  Cost analysis is required

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Contract Administra*on

•  Primary Documents –  Budget –  Contracts

•  Architect •  Inspector •  Materials tesAng •  ConstrucAon

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Forms and Reports •  NoAce to Proceed •  Job meeAngs •  Progress schedules •  InspecAons •  Daily reports •  Reports of deficiencies •  Payroll reports •  Pay ApplicaAons •  CerAficate of Occupancy

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Successful Project Comple*on

•  Closing documents •  As-‐built drawings •  WarranAes

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Common Monitoring Findings •  Did not use fair and open compeAAon in awarding professional service contracts

•  No method of applying Indian Preference •  Inadequate or no procurement policy •  Inconsistent with adopted procurement policy •  Records not maintained; no documentaAon •  Lack of cost/price analysis •  Small purchases not in accordance with regulaAons •  Conflicts of Interest and/or no policy 63

Consequences

•  Disallow expenses/recapture funds •  RestricAon on spending •  Terminate current funding

•  Terminate eligibility for future funding

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Best Prac*ces •  Audits and Self-‐Monitoring: IdenAfy weaknesses with

prompt remedies

•  Annual review of procurement policy

•  Training •  Establish high ethical standards •  Document………………………….. •  UAlize exisAng tools and systems for compliance

– Maintain internal controls and segregaAon of duAes –  Enforce policies and procedures

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Ques*ons??????? Comments………..

Miigwetch!

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