[Code of Federal Regulations] [Title 20, Volume 3] [Revised as of April 1, 2003] From the U.S. Government Printing Office via GPO Access [CITE: 20CFR627.420] [Page 202-206] TITLE 20--EMPLOYEES' BENEFITS CHAPTER V--EMPLOYMENT AND TRAINING ADMINISTRATION, DEPARTMENT OF LABOR PART 627--GENERAL PROVISIONS GOVERNING PROGRAMS UNDER TITLES I, II, AND III OF THE ACT--Table of Contents Subpart D--Administrative Standards Sec. 627.420 Procurement. (a) General. (1) For purposes of this section, the term procurement means the process which leads to any award of JTPA funds. (2) The Governor, in accordance with the minimum requirements established in this section, shall prescribe and implement procurement standards to ensure fiscal accountability and prevent waste, fraud, and abuse in programs administered under this Act. (3) When procuring property and services, a State shall follow the same policies and procedures it uses for procurements from its non- Federal funds, provided that the State's procurement procedures also comply with the minimum requirements of this section. (4) Each subrecipient shall use its own procurement procedures which reflect applicable State and local laws [[Page 203]] and regulations, provided that the subrecipient's procurement procedures also comply with the requirements of this section and the standards established by the Governor, pursuant to paragraph (a)(2) of this section. (5) States and subrecipients shall not use funds provided under JTPA to duplicate facilities or services available in the area (with or without reimbursement) from Federal, State, or local sources, unless it is demonstrated that the JTPA-funded alternative services or facilities would be more effective or more likely to achieve performance goals (sections 107(b) and 141(h)). (6) Awards are to be made to responsible organizations possessing the demonstrated ability to perform successfully under the terms and conditions of a proposed subgrant or contract. A determination of demonstrated ability shall be done in accordance with the requirements contained in Sec. 627.422 (b) and (d). (b) Competition. (1) Each State and subrecipient shall conduct procurements in a manner which provides full and open competition. Some of the situations considered to be restrictive of competition include, but are not limited to: (i) Placing unreasonable requirements on firms or organizations in order for them to qualify to do business; (ii) Requiring unnecessary experience and excessive bonding; (iii) Noncompetitive pricing practices between firms or organizations or between affiliated companies or organizations; (iv) Noncompetitive awards to consultants that are on retainer contracts; (v) Organizational conflicts of interest; (vi) Specifying only a ``brand name'' product instead of allowing ``an equal'' product to be offered and describing the performance of other relevant requirements of the procurement; (vii) Overly restrictive specifications; and (viii) Any arbitrary action in the procurement process. (2) Each State and subrecipient shall have written procedures for procurement transactions. These procedures shall ensure that all solicitations: (i) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured (including quantities). Such description shall not, in competitive procurements, contain features which unduly restrict competition; and (ii) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. (3) Each State and subrecipient shall ensure that all prequalified lists of persons, firms, or other organizations which are used in acquiring goods and services are current and include sufficient numbers of qualified sources to ensure maximum open and free competition. (c) Conflict of interest. (1) Each recipient and subrecipient shall maintain a written code of standards of conduct governing the performance of persons engaged in the award and administration of JTPA contracts and subgrants. To the extent permitted by State or local law or regulation, such standards of conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the awarding agency's officers, employees, or agents, or by awardees or their agents. (2) Staff conflict of interest. Each recipient and subrecipient shall ensure that no individual in a decisionmaking capacity shall engage in any activity, including participation in the selection, award, or administration of a subgrant or contract supported by JTPA funds if a conflict of interest, real or apparent, would be involved. (3) PIC conflict of interest. (i) A PIC member shall not cast a vote, nor participate in any decisionmaking capacity, on the provision of services by such member (or any organization which that member directly represents), nor on any matter which would provide any direct financial benefit to that member. (ii) Neither membership on the PIC nor the receipt of JTPA funds to provide training and related services shall be construed, by itself, to violate provisions of section 141(f) of the Act or Sec. 627.420. [[Page 204]] (4) A conflict of interest under paragraphs (c) (2) and (3) of this section would arise when: (i) The individual, (ii) Any member of the individual's immediate family, (iii) The individual's partner, or (iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm or organization selected for award. (5) The officers, employees, or agents of the agency and PIC members making the award will neither solicit nor accept gratuities, favors, or anything of monetary value from awardees, potential awardees, or parties to subagreements. States and subrecipients may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. (d) Methods of procurement. (1) Each State and subrecipient shall use one of the following methods of procurement, as appropriate for each procurement action: (i) Small purchase procedures--simple and informal procurement methods for securing services, supplies, or other property that do not cost more than $25,000 in the aggregate. Recipients and subrecipients shall not break down one purchase into several purchases merely to be able to use small purchase procedures. The Governor shall establish standards for small purchase procedures to ensure that price or rate quotations will be documented from an adequate number of qualified sources. (ii) Sealed bids (formal advertising)--bids are publicly solicited procurements for which a firm-fixed-price award (lump sum or unit price) or other fixed-price arrangement 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 Governor shall establish standards for sealed bids which include requirements that invitations for bids be publicly advertised, and that bids be solicited from an adequate number of organizations. (iii) Competitive proposals--normally conducted with more than one source submitting an offer and either a fixed-price or cost- reimbursement type award is made. The Governor shall establish standards for competitive proposals which include requirements for the establishment of a documented methodology for technical evaluations and award to the responsible offeror whose proposals are most advantageous to the program with price, technical, and other factors considered. (iv) Noncompetitive proposals (sole source)--procurement through solicitation of a proposal from only one source, the funding of an unsolicited proposal, or when, after solicitation of a number of sources, competition is determined inadequate. Each State and subrecipient shall minimize the use of sole source procurements to the extent practicable, but in every case the use of sole source procurements shall be justified and documented. On-the-job training (OJT) awards (except OJT brokering awards, which shall be selected competitively) and the enrollment of individual participants in classroom training may be sole sourced. For all other awards, procurement by noncompetitive proposals may be used only when the award is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies: (A) The item or service is available only from a single source; (B) The public exigency or emergency need for the item or service does not permit a delay resulting from competitive solicitation; (C) For SDAs, SSGs and subrecipients, the awarding agency authorizes noncompetitive proposals; for States, the noncompetitive proposal is approved through the State's normal sole source approval process; (D) After solicitation of a number of sources, competition is determined inadequate; (2) Pass Throughs--The procurement rules do not apply to pass throughs of monies from any unit of State or local government (or SDA or SSG administrative entities) to other such units, such as a local educational agency or public housing authority. To qualify as a pass through, the receiving entity must either further pass through the [[Page 205]] monies to another such entity or procure services in accordance with the procurement rules. (e) Cost or price analysis. (1) Each recipient, in accordance with the minimum requirements established in this section, shall establish standards on the performance of cost or price analysis. (2) Each recipient and subrecipient shall perform a cost or price analysis in connection with every procurement action, including modifications (except for modifications where a determination has been made that they do not have a monetary impact). The method and degree of analysis depends on the facts surrounding the particular procurement and pricing situation. At a minimum, the awarding agency shall make independent estimates before receiving bids or proposals. A cost analysis is necessary when the offeror is required to submit the elements of the estimated cost (e.g., as in the case of subrecipient relationships), when adequate price competition is lacking, and for sole source procurements, including modifications or change orders. A price analysis shall be used when price 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 (including situations involving inadequate price competition and sole source procurements where a price analysis may be used in lieu of a cost analysis). When a cost analysis is necessary and there is inadequate price competition, the offeror shall certify that to the best of its knowledge and belief, the cost data are accurate, complete, and current at the time of agreement on price. Awards or modifications negotiated in reliance on such data should provide the awarding agency a right to a price adjustment to exclude any significant sum by which the price was increased because the awardee had knowingly submitted data that were not accurate, complete, or current as certified. (3) JTPA procurements shall not permit excess program income (for nonprofit and governmental entities) or excess profit (for private for- profit entities). If profit or program income is included in the price, the awarding agency shall negotiate profit or program income as a separate element of the price for each procurement in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit or program income, consideration shall be given to: (i) The complexity of the work to be performed; (ii) The risk borne by the awardee; (iii) The offeror's investment; (iv) The amount of subcontracting/subgranting; (v) The quality of the offeror's record of past performance; (vi) Industry profit rates in the surrounding geographical area for similar work; and (vii) Market conditions in the surrounding geographical area. (4) Each recipient and subrecipient may charge to the agreement only those costs which are consistent with the allowable cost provisions of Sec. 627.435 of this part, including the guidelines issued by the Governor, as required at Sec. 627.435(i) of this part. (5) The cost plus a percentage of cost method shall not be used. (f) Oversight. (1) Each recipient and subrecipient shall conduct and document oversight to ensure compliance with the procurement standards, in accordance with the requirements of Sec. 627.475 of this part, Oversight and monitoring. (2) Each recipient and subrecipient shall maintain an administration system which ensures that vendors and subrecipients perform in accordance with the terms, conditions, and specifications of their awards. (g) Transactions between units of government. (1) Except as provided in paragraph (g)(2) of this section, procurement transactions between units of State or local governments, or any other entities organized principally as the administrative entity for service delivery areas or substate areas, shall be conducted on a cost reimbursable basis. Cost plus type awards are not allowable. (2) In the case of procurement transactions with schools that are a part of [[Page 206]] these entities, such as State universities and secondary schools, when tuition charges or entrance fees are not more than the educational institution's catalogue price, necessary to receive specific training, charged to the general public to receive the same training, and for training of participants, the tuition and/ or entrance fee does not have to be broken out by items of cost. (h) Award provisions. Each recipient and subrecipient agreement shall: (1) Clearly specify deliverables and the basis for payment; and (2) In the case of awards to subrecipients, contain clauses that provide for: (i) Compliance with the JTPA regulations; (ii) Assurance of nondiscrimination and equal opportunity as found in 29 CFR 34.20, Assurance required; duration of obligation; covenants. (3) In the case of awards to vendors, contain clauses that provide for: (i) Access by the recipient, the subrecipient, the Department of Labor, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records (including computer records) of the contractor or subcontractor which are directly pertinent to charges to the program, in order to conduct audits and examinations and to make excerpts, transcripts, and photocopies; this right also includes timely and reasonable access to contractor's and subcontractor's personnel for the purpose of interviews and discussions related to such documents; (4) In the case of awards to both subrecipients and vendors, contain clauses that provide for: (i) Administrative, contractual, or legal remedies in instances where contractors/subgrantees violate or breach agreement terms, which shall provide for such sanctions and penalties as may be appropriate; (ii) Notice of 29 CFR 97.34 requirements pertaining to copyrights (agreements which involve the use of copyrighted materials or the development of copyrightable materials); (iii) Notice of requirements pertaining to rights to data. Specifically, the awarding agency and the Department of Labor shall have unlimited rights to any data first produced or delivered under the agreement (agreements which involve the use/development of computer programs/ applications, or the maintenance of databases or other computer data processing program, including the inputing of data); (iv) Termination for cause and for convenience by the awarding agency, including the manner by which the termination will be effected and the basis for settlement; (v) Notice of awarding agency requirements and regulations pertaining to reporting; (vi) Audit rights and requirements; (vii) Payment conditions and delivery terms; (viii) Process and authority for agreement changes; and (ix) Provision against assignment; (5) The Governor may establish additional clauses, as deemed appropriate, for State and subrecipient procurements. (i) Disputes. (1) The Governor shall ensure that the recipient and each subrecipient have protest procedures to handle and resolve disputes relating to their procurements. A protester shall exhaust all administrative remedies with the subrecipient before pursuing a protest at a higher level. (2) Violations of law will be handled in accordance with the requirements contained in Sec. 627.500(c). (j) Each recipient and subrecipient shall maintain records sufficient to detail the significant history of a procurement. These records shall include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of agreement type, awardee selection or rejection, and the basis for the agreement price.