C APITAL FUNDS P RESENTATION Public Housing Capital Funds 201 1
C APITAL FUNDS Pat Thorstad-General Engineer Audience 2
T OPICS OF D ISCUSSION Handbooks, Guidebooks, etc. Procurement Environmental Reviews Lead Based Paint 3
H ANDBOOKS , G UIDEBOOKS , W EBSITES Capital Fund Guidebook 24 CFR Part 905-Use of Public Housing Capital Funds for Financing Activities: Final Rule Guidebook 7510.1G-Finance Accounts Guidebook HUD Handbook 7460.8, REV 2, dated 2/2007-Procurement EPIC User Manual HUD Exchange for environmental reviews is: https://www.hudexchange.info/programs/environmental-review/ PIH Notice 2010-41-Using Energy Star to Promote Energy Efficiency in Public Housing 4
Q UESTIONS
P ROCUREMENT AND C ONTRACT B ACKGROUND – O LD S CHOOL HUD 7460.8, Rev. 2 to 24 CFR 85 to HUD Issues PHA increase small purchase implement Procurement OMB Circular threshold and asset Handbook A-102 management guidance 7460.8, Rev. 1 1980’s 1993 2007 6
P ROCUREMENT AND C ONTRACT B ACKGROUND – N EW S CHOOL HUD is revising the HUD OMB HUD Amended PIH Procurement publishes 2 25 CFR 85 to CFR 200 Handbook to synchronize comply with 2 with Part 200 CFR 200 2014 2014 2015 Combines OMB Circulars: A-102 A-87 A-133 7
P ROCUREMENT AND C ONTRACT R EQUIREMENTS Procurement with Capital Funds, PHAs must: • Comply with 2 CFR 200.317-200.326. (substantially the same as 24 CFR 85.36, except for thresholds for micro/small purchases). • Must have its own Procurement Policy consistent with 2 CFR 200 and State law. • Must have written ethics standards and sanctions. 8
P ROCUREMENT AND C ONTRACT R EQUIREMENTS Procurement with Capital Funds, PHAs must: • Conduct transactions in a manner that provides, to the extent possible, full and open competition. • Perform an independent cost estimate (ICE) for all procurements above micro purchase threshold in 2 CFR Part 200.320. • Determine price reasonableness using either: • Price Analysis. • Cost Analysis. 9
P ROCUREMENT AND C ONTRACT R EQUIREMENTS Independent Cost Estimate (ICE): • Required for all procurements of $3,000 or more ($2,000 for construction contracts subject to Davis-Bacon). • Prepared before PHA receives bids or proposals. • PHA benchmark for evaluating the price reasonableness. • Facilitates the selection of the method of procurement. • Assists in determining type of contract: Below the small purchase (i) threshold requires informal solicitations and contracts. Above the small purchase (ii) threshold requires formal advertising. 10
P ROCUREMENT AND C ONTRACT R EQUIREMENTS Price Reasonableness: • Price analysis – performed when there is adequate competition. Comparison of ICE to prices submitted by competitors. • Cost analysis - performed when an absence of competition (e.g., sole source contracts) or where the PHA requires (e.g., competitive proposals contracts) to facilitate price negotiation. (i) General and Administrative Cost. (ii) Owner Overhead. (iii) Profit. 11
C OST A NALYSIS E XAMPLE …For Example… Work Item: Change Order – Roofing Contract ▫ Break down the change order price into its components of cost. ▫ Examine each item of cost. Materials. Such as plywood, nails, felt, asphalt shingles. Equipment. Such as cranes, dump truck. Labor. Costs for the size of the job at hand, such as hauling asbestos debris out. General, Administrative and Overhead . Contractor costs to administer contract. Profit. Based on risk and industry standards. 12
M ETHODS OF P ROCUREMENT F LOW C HART 13
S MALL P URCHASE P ROCEDURES (SPP) • Appropriate when the ICE is less than Develop ICE and SOW the $150,000 Federal Simplified Acquisition Threshold or lower threshold as specified in the PHA’s Solicit 3 Quotes Procurement Policy. • Less formal than the other types of procurement procedures. Perform Price Analysis • At least an adequate number (3 or more) of oral or written quotes via phone, fax or email should be Execute Purchase Order/Contract obtained. (attach forms) • PHAs may obtain equipment or supplies, or seek professional Manage Contract services typically obtained via the formal solicitation process. 14
S EALED B IDS Used mostly for construction • Develop ICE & contracts and purchase of Specifications for Bid commodities (e.g., equipment and supplies). Receive Bids-Open Used when the cost estimate is • Publicly more than the $150,000 Federal Simplified Acquisition Threshold Determine Lowest or lower threshold specified in Responsible and the PHA’s Procurement Policy. Responsive Bidder Dependent upon good • specifications. Execute Contract Two or more bidders willing in • (attach forms) the open market. Awarded on the basis of price • Manage Contract Fixed-price contract. • 15
C OMPETITIVE P ROPOSALS • Two types of Competitive Develop ICE and Procedures: SOW for Proposal ▫ Price Considered during Evaluation. Panel Rates and Ranks ▫ Price Not Considered during Submitted Proposals (do not open publicly) Evaluation (A/E and Mixed Finance Development Partners). Develop Competitive Range or Choose Highest • Project will be based on technical Rated Proposal merits and price. • There are two or more qualified Contracting Officer negotiates with offerors in the market. competitors, including prices • Award will be made to the firm with the proposal that is most Award and Manage advantageous with price and other contract factors considered. 16
N ON -C OMPETITIVE P ROPOSALS • Used when other methods are not feasible and one of the following circumstances applies: ▫ Item is available only from a single source. ▫ An emergency situation or public exigency exists ▫ HUD authorizes. ▫ After solicitation of a number of sources, competition is determined inadequate , i.e. , only one respondent. • If applicable, use of this method must be justified in writing by the PHA. • Cost Analysis must be performed in all cases. • All technical and cost aspects may be “negotiated” with the sole provider. 17
10 B ASIC P ROCUREMENT S TEPS • Develop a Specification or Statement of Work (SOW) 1 • Complete an Independent Cost Estimate (ICE) 2 • Determine rationale for procurement method 3 • Solicit & receive quotes/bids/proposals 4 • Determine responsive/responsible bidder, as applicable 5 • Determine price reasonableness (Cost vs. Price Analysis) 6 • Award contract 7 • Implement contract administration system 8 • Close out the contract 9 • Maintain records for minimum of 3 years 10 18
K EYS TO P ROCUREMENT • An ICE is required for every procurement above the micro purchase threshold prior to solicitation. • All awards must be supported by documenting price/cost reasonableness prior to award. ▫ Price Analysis: Simple comparison of prices when competition is adequate. ▫ Cost Analysis: More detailed analysis of component parts when competition inadequate. 19
C ONTRACT R ELATED R EQUIREMENTS Mandatory Contract Clauses - incorporate all mandatory contract clauses by attaching HUD forms and incorporating requirements/clauses into the PHA contract. Assurances of Completion - For each Capital Fund construction contract over $150,000, contractor shall furnish assurances of completion. These can take several forms. • A bid guarantee from each bidder equal to 5% of the bid price. • At least one of the following: • Performance bond and payment bond for 100% of contract. • Performance/payment bonds, each for 50% or more of contract price. • A 20% cash escrow. • A 10% irrevocable letter of credit with HUD acceptable terms. • Any other payment method acceptable to HUD. 20
Q UESTIONS
E NVIRONMENTAL R EVIEWS Environmental Reviews By Responsible Entity (RE)
E NVIRONMENTAL R EVIEW CON ’ T . HUD OIG audit, June 2015 Recommendations Better training Increased oversight Additional monitoring
E NVIRONMENTAL R EVIEW CON ’ T . Required for ALL capital improvement work (even if paid with operating reserves) before federal funds can be obligated (contract or purchase order). In fact, required for ALL expenditures of federal funds. RE - your local government with zoning authority over your PHA (i.e., your city or county) Highest elected official (mayor, county manager..) MUST sign off on environmental reviews. Typically zoning or building inspector will conduct review. 24 CFR Part 58
E NVIRONMENTAL R EVIEW CON ’ T . HUD’s new Environmental Review website https://www.hudexchange.info/programs/environmental-review/
E NVIRONMENTAL R EVIEW CON ’ T . Link to categories of review and applicable regulations. Charts for processes and timeframes for notices.
E NVIRONMENTAL R EVIEW CON ’ T .
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