HomeMy WebLinkAboutResolution No. R2022-38RESOLUTION NO. R2022-38
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
TEXAS, ADOPTING FINANCIAL POLICIES AND PROCEDURES ALONG WITH
PROCUREMENT POLICIES AND PROCEDURES FOR FEDERAL GRANT
PROGRAMS AND PROVIDING FOR THE EFFECTIVE DATE.
WHEREAS, the City of Friendswood, in consideration for the receipt and acceptance of
federal funding, agrees to comply with all federal rules and regulations, including those rules and
regulations governing procurement and fiscal management; and
WHEREAS, in furtherance of such commitment, the City Council desires to approve the
policies enumerated herein in conformance with federal grant program requirements; NOW
THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
STATE OF TEXAS:
Section 1. That facts and matters set forth in the preamble of this resolution are hereby
found to be true and correct.
Section 2. That the City Council of the City of Friendswood, Texas, hereby adopts the
following policies and procedures in accordance with federal grant program requirements:
A Financial Policies and Procedures for Federal Grant Programs
B Procurement Policies and Procedures for Federal Grant Programs
Exhibits "A" and'B" are attached hereto and incorporated herein for all intents and purposes.
Section 3. That this resolution shall take effect immediately upon its passage.
PASSED, APPROVED, and ADOPTED, by the affirmative vote of the City Council of the
City of Friendswood this the 5' day of December, 2022..,/ _
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LLFTICIA BRYSCH, City
APPROVED AS TO FOR
ZMERMOCRNER, City Attorney
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CITY OF FRIENDSWOOD
Financial Policies and Procedures for Federal Grant Programs
INTRODUCTION
The purpose of financial management policies and procedures are to provide sound guidelines in planning
the City's financial future. The City of Friendswood considers the expenditure of funds to be an important
responsibility and requires all persons involved with the purchase of goods or services to exercise good
judgment in spending taxpayers' money.
SCOPE OF AUTHORITY
The City Council along with the City Manager are responsible for the expenditure of all City funds.
FINANCIALS
1. Bank Depository
The City maintains funds in a Bank, designated as its depository for banking services. The City
Council reviews the selection every two years with up option to extend three additional years unless
circumstances deem otherwise.
2. Accounts Payable
Two (2) individuals are authorized to sign checks written on the bank depository account: City
Manager and Director of Administrative Services. All checks require two authorized signatures, no
exceptions.
3. Accounting
The Director of Administrative Services is responsible for establishing the structure for the City
Chart of Accounts and for assuring that procedures are in place to properly record financial
transactions and report the City's financial position. The Director of Administrative Services shall
provide financial reports to the City Manager, Mayor, and City Council monthly.
4. Audit of Accounts
An independent audit of the City accounts is performed annually. The Auditor is retained by and is
accountable directly to the City Council. The City Council reviews the selection every five years
unless circumstances deem otherwise.
5. Internal Controls
Whenever possible, written procedures will be established, maintained, and assessed per 2 CFR
200.303 by the Director of Administrative Services for all functions involving cash handling and/or
accounting throughout the City. These procedures will embrace the general concepts of fiscal
responsibility set forth in this policy statement.
Whenever possible, the City ensures duties and responsibilities are segregated so that no one
individual has complete authority over a financial transaction.
Exhibit "A " Page I
1. Input Invoice into Record Keeping System
Invoices are recorded in the City's enterprise resource planning (ERP) system, Tyler Technologies
Incode 10, accounts payable and general ledger modules. Purchase orders are issued for payment
of invoices.
2. Review of Invoice
Administrative Services Department Finance staff and the City Department, which is in direct
receipt of the goods, services, or the project management team for capital improvement project, are
responsible for reviewing invoices and recommending payment. Prior to payment, the City of
Friendswood purchase order and corresponding invoice and/or receipt are required.
3. Timeline for Payment
The City of Friendswood operates within a net 30-day payment issuance schedule.
4. Issue Payment
Paper checks or ACH transactions are processed by the City's Administrative Services
Department's Finance Division staff member (Accounts Payable Accounting Assistant) with City
Manager and Director of Administrative Services signatures. Two signatures are required. Council
does not individually approve each payment although it authorizes expenditures in the City's
budget.
Payment Reconciliation
The City's bank statements and payments are reconciled by the Administrative Services
Department's Finance Division staff members (Accountant and Accounting Manager).
6. Record Keeping
The City's Administrative Services Department Finance division documents all expenditures and
maintains the records in the enterprise resource planning software system (Tyler Technologies
Incode 10).
PROCEDURES FOR GRANT PAYMENTS
Invoice is received and, if necessary, a request for payment is prepared by grant consultant and
proper signatures obtained from City Manager and Director of Administrative Services as
authorized in original grant approval. Auditor's office reviews the invoice and compares it to the
grant budget.
2. Invoice must be approved by a City official involved in the grant implementation or the County
Judge/Mayor. Approval is acknowledged by initialing the original invoice or through
Council/Court action.
Once grant funds are received and invoice approval acknowledged by signature on the original
invoice, a payment request is entered into the City of Friendswood's ERP system, then check is
printed or ACH payment is generated and disbursed by the City's Administrative Services
Department Finance division. Both, City Manager and Director of Administrative Services,
signatures appear on the approved checks and ACH transaction detail. Payments are then disbursed
to the appropriate vendors. The Director of Administrative Services is responsible for ensuring that
checks are signed and disbursed within thirty (30) calendar days for the Texas Department of
Exhibit "A," Page 2
Agriculture and twenty (20) calendar days for the Texas General Land Office of receiving grant
funds.
4. Copies of the request for payment, invoice, canceled check copy and bank statement showing
receipt of grant money is retained in the grant file in the Administrative Services Department.
The City Manager/Other Assigned individual and Director of Administrative Services authorize payments
and issues of checks. Two signatures are required on each check, City Manager or Director of
Administrative Services. The Administrative Services Department Finance division staff members
(Accountant) is responsible for reconciling the monthly bank statements.
CASH MANAGEMENT AND DISBURSEMENT - TIMELY EXPENDITURES
The City shall make timely payments to vendors and minimize the time between transferring funds from
the State Treasury and disbursement of funds to vendors in compliance with the terms and conditions of
the federal contract, grant, regulation, or statute.
To ensure vendor compliance, invoices/pay applications/pay estimates will be reviewed for accuracy for
such items but not limited to change order approvals, outstanding lien/payments to subcontractors, labor
standards, and verification of work completed as invoiced prior to disbursement or request for funds from
State Agency. The City shall notify a vendor of an error in an invoice submitted for payment by such
vendor.
ADVANCE PAYMENT PROCEDURES
All advanced payments using federal grant funds will be disbursed within five (5) business days from the
date of the transfer of funds in accordance with 2 CFR 200.305(b), and in accordance with the provisions
in the contract with the vendor.
Advance payments of federal grant funds will be deposited and maintained in a separate insured account.
The City will maintain advance payments of federal awards in interest -bearing accounts, unless one or more
of the following apply: City receives less than $120,000 in Federal awards per year; the City is not expected
to earn interest in excess of $500 per year on Federal cash balances; or the depository would require an
average or minimum balance so high that it would not be feasible within the expected Federal and non -
Federal cash resources. (2 CFR 200.302(b)(6) and 200.305)
These Policies and Procedures are implemented through of the City of Friendswood's administrative team
of the City Manager, Assistant City Manager and Director of Administrative Services.
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(Date)
Exhibit "A." Page 3
CITY OF FRIENDSWOOD
Procurement Policies and Procedures for Federal Grant Programs
The City of Friendswood follows the procurement standards in 2 CFR 200.317 — 2CFR 200.327 and
Appendix 11 to Part 200 for procurement actions to be funded with Federal funds. All attempts are made to
adhere to these policies and procedures and updates are made as needed. The entirety of the language found
in 2 CFR 200.317 — 2 CFR 200.327 may not be applicable in all instances, programs, and/or situations.
This document contains the most current 2 CFR 200.317 — 2 CFR 200.327 language available at the
adoption of these policies and procedures.
§200.317 Procurements by states.
When procuring property and services under a Federal award, a State must follow the same policies
and procedures it uses for procurements from its non -Federal funds. The State will comply with §§200.321,
200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required
by §200.327. All other non -Federal entities, including subrecipients of a State, must follow the procurement
standards in §§200.318 through 200.327.
§200.318 General procurement standards.
(a) The non -Federal entity must have and use documented procurement procedures, 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 must maintain oversight to ensure that contractors perform in accordance
with the terms, conditions, and specifications of their contracts or purchase orders.
(c)(1) The non -Federal entity 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 may participate in the selection, award, or administration of a contract
supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of
interest would arise when the employee, officer, or agent, any member of his or her immediate family, his
or her partner, or an organization which 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 considered for a contract. The
officers, employees, and agents of the non -Federal entity may neither solicit nor accept gratuities, favors,
or anything of monetary value from contractors or parties to subcontracts. However, non -Federal entities
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 must provide for disciplinary actions to be applied for
violations of such standards by officers, employees, or agents of the non -Federal entity.
Exhibit 'B," Page 1
(2) If the non -Federal entity has a parent, affiliate, or subsidiary organization that is not a State, local
government, or Indian tribe, the non -Federal entity must also maintain written standards of conduct
covering organizational conflicts of interest. Organizational conflicts of interest means that because of
relationships with a parent company, affiliate, or subsidiary organization, the non -Federal entity 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 procedures must avoid acquisition of unnecessary or duplicative items.
Consideration should be given to consolidating or breaking out procurements to obtain a more economical
purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other
appropriate analysis 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 encouraged to enter into
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 using strategic sourcing, shared services, and other similar procurement arrangements.
(f) The non -Federal entity is encouraged to use Federal excess and surplus property in lieu of
purchasing new equipment and property whenever such use is feasible and reduces project costs.
(g) The non -Federal entity 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 each contract item or task to ensure that its essential function is provided
at the overall lower cost.
(h) The non -Federal entity must award contracts only to responsible contractors possessing the ability
to perform successfully under the terms and conditions of a proposed procurement. Consideration will be
given to such matters as contractor integrity, compliance with public policy, record of past performance,
and financial and technical resources. See also §200.214.
(i) The non -Federal entity must maintain records sufficient to detail the history of procurement. These
records will include, but are not necessarily limited to, the following: Rationale for the method of
procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
6)(1) The non -Federal entity 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 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 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 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.
Exhibit "B;' Page 2
(k) The non -Federal entity alone must be responsible, in accordance with good administrative practice
and sound business judgment, for the settlement of all contractual and administrative issues arising out of
procurements. These issues include, but are not limited to, source evaluation, protests, disputes, and claims.
These standards do not relieve the non -Federal entity of any contractual responsibilities under its contracts.
The Federal awarding agency will not substitute its judgment for that of the non -Federal entity unless the
matter is primarily a Federal concern. Violations of law will be referred to the local, state, or Federal
authority having proper jurisdiction.
[85 FR 49543, Aug. 13, 2020, as amended at 86 FR 10440, Feb. 22, 2021]
§200.319 Competition.
(a) All procurement transactions for the acquisition of property or services required under a Federal
award must be conducted in a manner providing full and open competition consistent with the standards of
this section and §200.320.
(b) In order to ensure objective contractor performance and eliminate unfair competitive advantage,
contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or
requests for proposals must be excluded from competing for such procurements. Some of the situations
considered to be restrictive of competition include but are not limited to:
(1) Placing unreasonable requirements on firms in order for them to qualify to do business;
(2) Requiring unnecessary experience and excessive bonding;
(3) Noncompetitive pricing practices between firms or between affiliated companies;
(4) Noncompetitive contracts to consultants that are on retainer contracts;
(5) Organizational conflicts of interest;
(6) Specifying only a "brand name" product instead of allowing "an equal' product to be offered and
describing the performance or other relevant requirements of the procurement; and
(7) Any arbitrary action in the procurement process.
(c) The non -Federal entity must conduct procurements in a manner that prohibits the use of statutorily
or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or
proposals, except in those cases where applicable Federal statutes expressly mandate or encourage
geographic preference. Nothing in this section preempts state licensing laws. When contracting for
architectural and engineering (A/E) services, geographic location may be a selection criterion provided its
application leaves an appropriate number of qualified firms, given the nature and size of the project, to
compete for the contract.
(d) The non -Federal entity must have written procedures for procurement transactions. These
procedures must ensure that all solicitations:
(1) Incorporate a clear and accurate description of the technical requirements for the material, product,
or service to be procured. Such description must not, in competitive procurements, contain features which
Exhibit "B " Page 3
unduly restrict competition. The description may include a statement of the qualitative nature of the
material, product or service to be procured and, when necessary, must set forth those minimum essential
characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product
specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear
and accurate description of the technical requirements, a "brand name or equivalent" description may be
used as a means to define the performance or other salient requirements of procurement. The specific
features of the named brand which must be met by offers must be clearly stated; and
(2) Identify all requirements which the offerors must fulfill and all other factors to be used in
evaluating bids or proposals.
(e) The non -Federal entity must ensure that all prequalified lists of persons, firms, or products which
are used in acquiring goods and services are current and include enough qualified sources to ensure
maximum open and free competition. Also, the non -Federal entity must not preclude potential bidders from
qualifying during the solicitation period.
(f) Noncompetitive procurements can only be awarded in accordance with §200.320(c).
§200.320 Methods of procurement to be followed.
The non -Federal entity must have and use documented procurement procedures, consistent with the
standards of this section and §§200.317, 200.318, and 200.319 for any of the following methods of
procurement used for the acquisition of property or services required under a Federal award or sub -award.
(a) Informal procurement methods. When the value of the procurement for property or services under
a Federal award does not exceed the simplified acquisition threshold (SA7), as defined in §200.1, or a lower
threshold established by a non -Federal entity, formal procurement methods are not required. The non -
Federal entity may use informal procurement methods to expedite the completion of its transactions and
minimize the associated administrative burden and cost. The informal methods used for procurement of
property or services at or below the SAT include:
(1) Micro purchases—(i) Distribution. The acquisition of supplies or services, the aggregate dollar
amount of which does not exceed the micro -purchase threshold (See the definition of micro purchase in
§200.1). To the maximum extent practicable, the non -Federal entity should distribute micro -purchases
equitably among qualified suppliers.
(ii) Micro purchase awards. Micro -purchases may be awarded without soliciting competitive price or
rate quotations if the non -Federal entity considers the price to be reasonable based on research, experience,
purchase history or other information and documents it files accordingly. Purchase cards can be used for
micro -purchases if procedures are documented and approved by the non -Federal entity.
(iii) Micro purchase thresholds. The non -Federal entity is responsible for determining and
documenting an appropriate micro -purchase threshold based on internal controls, an evaluation of risk, and
its documented procurement procedures. The micro -purchase threshold used by the non -Federal entity must
be authorized or not prohibited under State, local, or tribal laws or regulations. Non -Federal entities may
establish a threshold higher than the Federal threshold established in the Federal Acquisition Regulations
(FAR) in accordance with paragraphs (a)(1)(iv) and (v) of this section.
(iv) Non -Federal entity increase to the micro purchase threshold up to $50,000. Non -Federal entities
may establish a threshold higher than the micro -purchase threshold identified in the FAR in accordance
Exhibit 'B." Page 4
with the requirements of this section. The non -Federal entity may self -certify a threshold up to $50,000 on
an annual basis and must maintain documentation to be made available to the Federal awarding agency and
auditors in accordance with §200.334. The self -certification must include ajustification, clear identification
of the threshold, and supporting documentation of any of the following:
(A) A qualification as a low -risk auditee, in accordance with the criteria in §200.520 for the most
recent audit;
or,
(B) An annual internal institutional risk assessment to identify, mitigate, and manage financial risks;
(C) For public institutions, a higher threshold consistent with State law.
(v) Non -Federal entity increase to the micro purchase threshold over $50,000. Micro -purchase
thresholds higher than $50,000 must be approved by the cognizant agency for indirect costs. The non-
federal entity must submit a request with the requirements included in paragraph (a)(1)(iv) of this section.
The increased threshold is valid until there is a change in status in which the justification was approved.
(2) Small purchases--(i) Small purchase procedures. The acquisition of property or services, the
aggregate dollar amount of which is higher than the micro -purchase threshold but does not exceed the
simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be
obtained from an adequate number of qualified sources as determined appropriate by the non -Federal entity.
(ii) Simplified acquisition thresholds. The non -Federal entity is responsible for determining an
appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its
documented procurement procedures which must not exceed the threshold established in the FAR. When
applicable, a lower simplified acquisition threshold used by the non -Federal entity must be authorized or
not prohibited under State, local, or tribal laws or regulations.
(b) Formal procurement methods. When the value of the procurement for property or services under
a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non -Federal
entity, formal procurement methods are required. Formal procurement methods require following
documented procedures. Formal procurement methods also require public advertising unless a non-
competitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The
following formal methods of procurement are used for procurement of property or services above the
simplified acquisition threshold or a value below the simplified acquisition threshold the non -Federal entity
determines to be appropriate:
(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed -price
contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the
material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the
preferred method for procuring construction, if the conditions.
(i) In order for sealed bidding to be feasible, the following conditions should be present:
(A) A complete, adequate, and realistic specification or purchase description is available;
(B) Two or more responsible bidders are willing and able to compete effectively for the business; and
Exhibit 'B." Page 5
(C) The procurement lends itself to a firm fixed price contract and the selection of the successful
bidder can be made principally on the basis of price.
(ii) If sealed bids are used, the following requirements apply:
(A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient
response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for
bids must be publicly advertised;
(B) The invitation for bids, which will include any specifications and pertinent attachments, must
define the items or services in order for the bidder to properly respond;
(C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local
and tribal governments, the bids must be opened publicly;
(D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible
bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle
costs must be considered in determining which bid is lowest. Payment discounts will only be used to
determine the low bid when prior experience indicates that such discounts are usually taken advantage of;
and
(E) Any or all bids may be rejected if there is a sound documented reason.
(2) Proposals. A procurement method in which either a fixed price or cost -reimbursement type
contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed
bids. They are awarded in accordance with the following requirements:
(i) Requests for proposals must be publicized and identify all evaluation factors and their relative
importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to
publicized requests for proposals must be considered to the maximum extent practical;
(ii) The non -Federal entity must have a written method for conducting technical evaluations of the
proposals received and making selections;
(iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the
non -Federal entity, with price and other factors considered; and
(iv) The non -Federal entity may use competitive proposal procedures for qualifications -based
procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are
evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable
compensation. The method, where price is not used as a selection factor, can only be used in procurement
of A/E professional services. It cannot be used to purchase other types of services though A/E firms that
are a potential source to perform the proposed effort.
(c) Noncompetitive procurement. There are specific circumstances in which noncompetitive
procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following
circumstances apply:
Exhibit "B " Page 6
(1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the
micro -purchase threshold (see paragraph (a)(1) of this section);
(2) The item is available only from a single source;
(3) The public exigency or emergency for the requirement will not permit a delay resulting from
publicizing a competitive solicitation;
(4) The Federal awarding agency or pass -through entity expressly authorizes a noncompetitive
procurement in response to a written request from the non -Federal entity; or
(5) After solicitation of a number of sources, competition is determined inadequate.
§200.321 Contracting with small and minority businesses, women's business enterprises, and labor
surplus area firms.
(a) The non -Federal entity must take all necessary affirmative steps to assure that minority businesses,
women's business enterprises, and labor surplus area firms are used when possible.
(b) Affirmative steps must include:
(1) Placing qualified small and minority businesses and women's business enterprises on solicitation
lists;
(2) Assuring that small and minority businesses, and women's business enterprises are solicited
whenever they are potential sources;
(3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit
maximum participation by small and minority businesses, and women's business enterprises;
(4) Establishing delivery schedules, where the requirement permits, which encourage participation by
small and minority businesses, and women's business enterprises;
(5) Using the services and assistance, as appropriate, of such organizations as the Small Business
Administration and the Minority Business Development Agency of the Department of Commerce; and
(6) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in
paragraphs (b)(1) through (5) of this section.
§200.322 Domestic preferences for procurements.
(a) As appropriate and to the extent consistent with law, the non -Federal entity should, to the greatest
extent practicable under a Federal award, provide a preference for the purchase, acquisition, or use of goods,
products, or materials produced in the United States (including but not limited to iron, aluminum, steel,
cement, and other manufactured products). The requirements of this section must be included in all
subawards including all contracts and purchase orders for work or products under this award.
(b) For purposes of this section:
Exhibit "B." Page 7
(1) "Produced in the United States" means, for iron and steel products, that all manufacturing
processes, from the initial melting stage through the application of coatings, occurred in the United States.
(2) "Manufactured products" means items and construction materials composed in whole or in part of
non-ferrous metals such as aluminum; plastics and polymer -based products such as polyvinyl chloride pipe;
aggregates such as concrete; glass, including optical fiber; and lumber.
§200.323 Procurement of recovered materials.
A non -Federal entity that is a state agency or agency of a political subdivision of a state and its
contractors must comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act. The requirements of Section 6002 include procuring only items designated
in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest
percentage of recovered materials practicable, consistent with maintaining a satisfactory level of
competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired
during the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner
that maximizes energy and resource recovery; and establishing an affirmative procurement program for
procurement of recovered materials identified in the EPA guidelines.
§200.324 Contract cost and price.
(a) The non -Federal entity must perform a cost or price analysis in connection with every procurement
action in excess of the Simplified Acquisition Threshold including contract modifications. The method and
degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a
starting point, the non -Federal entity must make independent estimates before receiving bids or proposals.
(b) The non -Federal entity must negotiate profit as a separate element of the price for each contract in
which there is no price competition and in all cases where cost analysis is performed. To establish a fair
and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk
borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record
of past performance, and industry profit rates in the surrounding geographical area for similar work.
(c) Costs or prices based on estimated costs for contracts under the Federal award are allowable only
to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the
non -Federal entity under subpart E of this part. The non -Federal entity may reference its own cost principles
that comply with the Federal cost principles.
(d) The cost plus a percentage of cost and percentage of construction cost methods of contracting must
not be used.
§200.325 Federal awarding agency or pass -through entity review.
(a) The non -Federal entity must make available, upon request of the Federal awarding agency or pass -
through entity, technical specifications on proposed procurements where the Federal awarding agency or
pass -through entity believes such review is needed to ensure that the item or service specified is the one
being proposed for acquisition. This review generally will take place prior to the time the specification is
incorporated into a solicitation document. However, if the non -Federal entity desires to have the review
accomplished after a solicitation has been developed, the Federal awarding agency or pass -through entity
may still review the specifications, with such review usually limited to the technical aspects of the proposed
purchase.
Exhibit "B " Page 8
(b) The non -Federal entity must make available upon request, for the Federal awarding agency or
pass -through entity pre -procurement review, procurement documents, such as requests for proposals or
invitations for bids, or independent cost estimates, when:
(1) The non -Federal entity's procurement procedures or operation fails to comply with the
procurement standards in this part;
(2) The procurement is expected to exceed the Simplified Acquisition Threshold and is to be awarded
without competition or only one bid or offer is received in response to a solicitation;
(3) The procurement, which is expected to exceed the Simplified Acquisition Threshold, specifies a
"brand name" product;
(4) The proposed contract is more than the Simplified Acquisition Threshold and is to be awarded to
other than the apparent low bidder under a sealed bid procurement; or
(5) A proposed contract modification changes the scope of a contract or increases the contract amount
by more than the Simplified Acquisition Threshold.
(c) The non -Federal entity is exempt from the pre -procurement review in paragraph (b) of this section
if the Federal awarding agency or pass -through entity determines that its procurement systems comply with
the standards of this part.
(1) The non -Federal entity may request that its procurement system be reviewed by the Federal
awarding agency or pass -through entity to determine whether its system meets these standards in order for
its system to be certified. Generally, these reviews must occur where there is continuous high -dollar
funding, and third -party contracts are awarded on a regular basis;
(2) The non -Federal entity may self -certify its procurement system. Such self -certification must not
limit the Federal awarding agency's right to survey the system. Under a self -certification procedure, the
Federal awarding agency may rely on written assurances from the non -Federal entity that it is complying
with these standards. The non -Federal entity must cite specific policies, procedures, regulations, or
standards as being in compliance with these requirements and have its system available for review.
§200.326 Bonding requirements.
For construction or facility improvement contracts or subcontracts exceeding the Simplified
Acquisition Threshold, the Federal awarding agency or pass -through entity may accept the bonding policy
and requirements of the non -Federal entity provided that the Federal awarding agency or pass -through
entity has made a determination that the Federal interest is adequately protected. If such a determination
has not been made, the minimum requirements must be as follows:
(a) A bid guarantee from each bidder equivalent to five percent of the bid price. The "bid guarantee"
must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance of the bid, execute such contractual
documents as may be required within the time specified.
Exhibit "B;' Page 9
(b) A performance bond on the part of the contractor for 100 percent of the contract price. A
"performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's
requirements under such contract.
(c) A payment bond on the part of the contractor for 100 percent of the contract price. A "payment
bond" is one executed in connection with a contract to assure payment as required by law of all persons
supplying labor and material in the execution of the work provided for in the contract.
§200.327 Contract provisions.
The non -Federal entity's contracts must contain the applicable provisions described in Appendix II to
this part.
Appendix II to Part 200 - Contract Provisions for Non -Federal Entity Contracts Under Federal
Awards
In addition to other provisions required by the Federal agency or non -Federal entity, all contracts made by
the non -Federal entity under the Federal award must contain provisions covering the following, as
applicable.
(A) Contracts for more than the simplified acquisition threshold, which is the inflation adjusted
amount determined by the Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (Councils) as authorized by 41 U.S.C. 1908, must address administrative,
contractual, or legal remedies in instances where contractors violate or breach contract terms, and
provide for such sanctions and penalties as appropriate.
(B) All contracts in excess of $10,000 must address termination for cause and for convenience by
the non -Federal entity including the mannerby which it will be effected and the basis for settlement.
(C) Equal Employment Opportunity. Except as otherwise provided under 41 CFR Part 60, all
contracts that meet the definition of "federally assisted construction contract" in 41 CFR Part 60-
1.3 must include the equal opportunity clause provided under 41 CFR 60-1.4(b), in accordance
with Executive Order 11246 "Equal Employment Opportunity" (30 FR 12319, 12935, 3 CFR Part,
1964-1965 Comp., p. 339), as amended by Executive Order 11375, "Amending Executive Order
11246 Relating to Equal Employment Opportunity," and implementing regulations at 41 CFR part
60 "Office of Federal Contract Compliance Programs, Equal Employment
Opportunity, Department of Labor."
(D) Davis -Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program
legislation, all prime construction contracts in excess of $2,000 awarded by non -Federal entities
must include a provision for compliance with the Davis -Bacon Act (40 U.S.C. 3141-314,4
and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5. "Labor
Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted
Construction"). In accordance with the statute, contractors must be required to pay wages to
laborers and mechanics at a rate not less than the prevailing wages specified in a wage
determination made by the Secretary of Labor. In addition, contractors must be required to pay
wages not less than once a week. The non -Federal entity must place a copy of the current prevailing
wage determination issued by the Department of Labor in each solicitation. The decision to award
a contract or subcontract must be conditioned upon the acceptance of the wage determination. The
non -Federal entity must report all suspected or reported violations to the Federal awarding agency.
The contracts must also include a provision for compliance with the Copeland "Anti -Kickback"
Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3,
Exhibit "B," Page 10
"Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part
by Loans or Grants from the United States"). The Act provides that each contractor or subrecipient
must be prohibited from inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the compensation to which he or she is
otherwise entitled. The non -Federal entity must report all suspected or reported violations to the
Federal awarding agency.
(E) Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-3708). Where applicable, all
contracts awarded by the non -Federal entity in excess of $100,000 that involve the employment of
mechanics or laborers must include a provision for compliance with 40 U.S.C. 3702 and 3704, as
supplemented by Department of Labor regulations (29 CFR Part 5). Under 40 U.S.C. 3702 of the
Act, each contractor must be required to compute the wages of every mechanic and laborer on the
basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible
provided that the worker is compensated at a rate of not less than one and a half times the basic rate
of pay for all hours worked in excess of 40 hours in the work week. The requirements of 40 U.S.C.
3704 are applicable to construction work and provide that no laborer or mechanic must be required
to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous.
These requirements do not apply to the purchases of supplies or materials or articles ordinarily
available on the open market, or contracts for transportation or transmission of intelligence.
(F) Rights to Inventions Made Under a Contract or Agreement. If the Federal award meets the
definition of "funding agreement" under 37 CFR & 401.2 (a) and the recipient or subrecipient
wishes to enter into a contract with a small business firm or nonprofit organization regarding the
substitution of parties, assignment or performance of experimental, developmental, or research
work under that "funding agreement," the recipient or subrecipient must comply with the
requirements of 37 CFR Part 401. "Rights to Inventions Made by Nonprofit Organizations and
Small Business Firms Under Government Grants, Contracts and Cooperative Agreements," and
any implementing regulations issued by the awarding agency.
(G) Clean Air Act (42 U.S.C. 7401-7671a.) and the Federal Water Pollution Control
Act (33 U.S.C. 1251-138 , as amended - Contracts and subgrants of amounts in excess of
$150,000 must contain a provision that requires the non -Federal award to agree to comply with all
applicable standards, orders or regulations issued pursuant to the Clean Air Act 42 U.S.C. 7401-
IkLlo and the Federal Water Pollution Control Act as amended 33 U.S.C. 1251-1387 .
Violations must be reported to the Federal awarding agency and the Regional Office of
the Environmental Protection Agency (EPA).
(H) Debarment and Suspension (Executive Orders 12549 and 12689) - A contract award (see 2
CFR 180.2201 must not be made to parties listed on the goverumentwide exclusions in the System
for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that
implement Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR part
1989 Comp., p. 235), "Debarment and Suspension." SAM Exclusions contains the names of parties
debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under
statutory or regulatory authority other than Executive Order 12549.
(1) Byrd Anti -Lobbying Amendment (31 U.S.C. 1352)- Contractors that apply or bid for an award
exceeding $100,000 must file the required certification. Each tier certifies to the tier above that it
will not and has not used Federal appropriated funds to pay any person or organization for
influencing or attempting to influence an officer or employee of any agency, a member of Congress,
officer or employee of Congress, or an employee of a member of Congress in connection with
obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier must
also disclose any lobbying with non -Federal funds that takes place in connection with obtaining
any Federal award. Such disclosures are forwarded from tier to tier up to the non -Federal award.
Exhibit'B " Page 1 I
(d) See 20S 0.323*
(IC) See 200.216**
(L) See 2$ 00,322***
*§ 200.323 Procurement of recovered materials.
A non -Federal entity that is a state agency or agency of a political subdivision of a state and
its contractors must comply with section 6002 of the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act. The requirements of Section 6002 include procuring only items
designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain
the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level
of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired
during the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner
that maximizes energy and resource recovery; and establishing an affirmative procurement program for
procurement of recovered materials identified in the EPA guidelines.
**§ 200.216 Prohibition on certain telecommunications and video surveillance services or equipment.
(a) Recipients and sub recipients are prohibited from obligating or expending loan or grant funds to:
(1) Procure or obtain;
(2) Extend or renew a contract to procure or obtain; or
(3) Enter into a contract (or extend or renew a contract) to procure or obtain equipment, services, or
systems that uses covered telecommunications equipment or services as a substantial or essential
component of any system, or as critical technology as part of any system. As described in Public Law
115-232, section 889, covered telecommunications equipment is telecommunications equipment
produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such
entities).
(i) For the purpose of public safety, security of government facilities, physical security surveillance
of critical infrastructure, and other national security purposes, video surveillance and
telecommunications equipment produced by Hytera Communications Corporation, Hangzhou
Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or
affiliate of such entities).
(il) Telecommunications or video surveillance services provided by such entities or using such
equipment.
(ili) Telecommunications or video surveillance equipment or services produced or provided by an
entity that the Secretary of Defense, in consultation with the Director of the National Intelligence or
the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or
controlled by, or otherwise connected to, the government of a covered foreign country.
(b) In implementing the prohibition under Public Law 115-232, section 889, subsection (f), paragraph (1),
heads of executive agencies administering loan, grant, or subsidy programs shall prioritize available
funding and technical support to assist affected businesses, institutions and organizations as is reasonably
necessary for those affected entities to transition from covered communications equipment and services, to
procure replacement equipment and services, and to ensure that communications service to users and
customers is sustained.
(c) See Public Law 115-232, section 889 for additional information.
(d) See also 4 200.471.
Exhibit 'B;' Page 12
***§ 200.322 Domestic preferences for procurements.
(a) As appropriate and to the extent consistent with law, the non -Federal entity should, to the greatest extent
practicable under a Federal award, provide a preference for the purchase, acquisition, or use of goods,
products, or materials produced in the United States (including but not limited to iron, aluminum, steel,
cement, and other manufactured products). The requirements of this section must be included in
all subawards including all contracts and purchase orders for work or products under this award.
(b) For purposes of this section:
(1) "Produced in the United States" means, for iron and steel products, that all manufacturing processes,
from the initial melting stage through the application of coatings, occurred in the United States.
(2) "Manufactured products" means items and construction materials composed in whole or in part of
non-ferrous metals such as aluminum; plastics and polymer -based products such as polyvinyl chloride
pipe; aggregates such as concrete; glass, including optic_aWjber; and lumber.
(Date)
Exhibit'B " Page 13