2026-010 - Adopting Procurement Policies and Procedures for Federal Grant Contracts

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transactions. These or similar procurement arrangements using strategic sourcing may foster greater economy and efficiency. Documented procurement actions of this type (using strategic sourcing, shared services, and other similar procurement arrangements) will meet the competition requirements of this part. Use of excess and surplus Federal property. The city is encouraged to use excess and surplus Federal property instead of purchasing new equipment and property when it is feasible and reduces project costs. (g) Use of value engineering clauses. When practical, the city is encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering means analyzing each contract item or task to ensure its essential function is provided at the lowest overall cost. (h) Responsible contractors. The city must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The city must consider contractor integrity, public policy compliance, proper classification of employees (see the Fair Labor Standards Act, 29 U.S.C. 201, chapter 8), past performance record, and financial and technical resources when conducting a procurement transaction. See also § 200.214, (i) Procurement records. The city must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. (j) Time -and -materials type contracts. 1. The city 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 city 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. Because this formula generates an open-ended contract price, a time -and -materials contract provides no positive profit incentive to the contractor for cost control or labor efficiency. Therefore, each contract must set a ceiling price that the contractor exceeds at its own risk. Further, the city awarding such a contract must assert a high degree of oversight to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls. (k) Settlement of contractual and administrative issues. The city is responsible for the settlement of all contractual and administrative issues arising out of its procurement transactions. These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the city of any contractual responsibilities under its contracts. The Federal agency will not substitute its judgment for that of the city unless the matter is primarily a federal concern. The city must report violations of law to the Federal, State, or local authority with proper jurisdiction. (1) Examples of labor and employment practices. 1. The procurement standards in this subpart do not prohibit recipients or subrecipients from: i. Using Project Labor Agreements (PLAs) or similar forms of pre -hire collective bargaining agreements; ii. Requiring construction contractors to use hiring preferences or goals for people residing in high -poverty areas, disadvantaged communities as defined by the Justice40 Initiative (see OMB Memorandum M-21-28), or high -unemployment census tracts within a region no smaller than the county where a federally funded construction project is located. The hiring preferences or goals should be consistent with the policies and procedures of the city, and must not prohibit interstate hiring; iii. Requiring a contractor to use hiring preferences or goals for individuals with barriers